Agri Export Management
-
Upload
enamul-haque -
Category
Documents
-
view
219 -
download
0
Transcript of Agri Export Management
-
8/10/2019 Agri Export Management
1/59
GETTING STARTED IN INTERNATIONAL TRADE-STEP BY STEP
CHAPTER OBJECTIVES:
A. To understand the broad objectives of firm in international trade and to discuss the factors which
the firms do appraise for getting into International business.
B. To elaborate the various factors which helps the firm in making a decision for getting started?
C. To discuss the various strategic entry routes used by the firms in getting started in international
trade in LPG! era.
D. To e"plain the factors which the firm need to analy#e the competition in international market.
E. To e"plain the various regulatory formalities which the firm has to complete for getting started in
international trade.
CHAPTER OUTLINE:
A. $efining %irm &bjective %or International !arkets
B. The $ecision To Go International &r 'otC. (canning International !arkets
D. !ode &f )ntering Into Potential !arkets
E. Targeting The !arkets
F. *egulatory *e+uirement %or Getting (tarted
The one, who has a trade, may go anywhere.
Spanish Proverb
DEFINING FIRM OBJECTIVE FOR INTERNATIONAL MARKETS:
&rgani#ational strategy of a company or firm is basically concerned with a number of issues but
specifically tries to cover the broad objectives of the organi#ation. In LPG! era, the profit making
organi#ations are likely to have financial profits as an objective. (uch financial profits are e"plained as
wealth creation or wealth ma"imi#ation for the firm or company and in LPG! era each organi#ation tries
to achieve it by increasing it presence in the market through greater sales and profits. -owever, some
organi#ations may have other broad objectives such as interacting with their stakeholders/ in a socially
responsible/ way and does not have profit as an objective for the organi#ation but cater to render services
for cause or problem ensuring minimum returns which is just to keep the organi#ation running.
&rgani#ations are mainly devising their strategies to be competitive, domestically and internationally so
that shareholders risks may be reduced and chances choices of global e"pansion may be brightened up.
Table : To Te! Co"a!#e$ #! %o&l' a!' I!'#a b( Sale$
Ra!) Co"a!( #! %o&l' Sale$ #! *++,
B#ll#o!/
Co"a!( #! I!'#a Sale$ #! *++,
R$. I! C&o&e/
-
8/10/2019 Agri Export Management
2/59
0.
1.
2.
3.
4.5.
6.
7.
8.
09.
)""on!obil
*oyal $utch (hell
:P
Toyota !otor ;o
I'G GroupGeneral )lectric
-(:; -oldings
:erkshire -athaway
:ank of %orbes !aga#ine :usiness (tandard
THE DECISION TO GO INTERNATIONAL OR NOT:
-
8/10/2019 Agri Export Management
3/59
nations are looking at Indian companies as important supplier to their market as it helps these nations to
tame down inflation and outsource product and services from outside. Indian ;ompanies can easily become
Dest countries darling due to the reasons of not only their +uality product but also effectively banking
against its major rival ;hina which is facing a backlash due to inferior +uality products and military build
up all around the world.
In this race for international market, a new force of companies has come up which largely draw their sales
form overseas market. These companies are usually in the knowledge areas and has made a place for them
in international market and are in the areas of IT ET;(, Infosys, DIP*&, ;ogni#ant, Tech !ahindraF, ITes
&utsourcing E(atyam ;apegeminiF, $rug Pharmaceutical E:iocon, *anba"y, ;iplaF, Product
(oftware EPatni ;apegeminiF etc. !icro, (mall and !edium (cale Industry which contribute almost 39
to IndiaBs )"port is fast improving its learning curve in their core areas of activity in Leather and Leather
-
8/10/2019 Agri Export Management
4/59
&nce, the broader objectives of the firm or company are decided it tries to appraise the surrounding
geopolitical and economic realities for selecting the appropriate business, it can enter. (uch appraisal for
geopolitical, social, legal, technological and above all economic realties for selection of business activity is
known as company corporate strategy. < company can decide to enter to only select country with limited
no. of products and such strategy will be referred as niche strategy.
-
8/10/2019 Agri Export Management
5/59
Ge11#!2 S1a&1e'
3. The decision to go international
or not
-
8/10/2019 Agri Export Management
6/59
improve its weakness patiently which may come on its way. Dhile scanning the international markets the
firms shall properly study the all aspects of economic data which may be specific or general or both and
can be effectively used for making decisions on whether to enter markets or not. (uch data analysis can
also help the firm to understand the various aspects of risks and can guide in the degree of its engagement
in that market. The general and specific information which can be of use is as follows>
Table: Se4#6#4 I!6o&"a1#o! 1o Be S4a!!e' Fo& Ge11#!2 S1a&1e' I! I!1e&!a1#o!al T&a'e
3. MARKET INFORMATION
!arketing $ecision (tatistics
-
8/10/2019 Agri Export Management
7/59
Ta"es Legislation governing the Trade and :usiness Incentives, $ividends Ta" *ules,
)arnings, *epatriation &f Profits
(pot, %orward !arket Level of $eveloped, (tage of !aturity
Intervention :y &utside :odies I!% or Dorld :ank KKwww.oecd.orgKfind$ocumentK9,2243,enO1538O25252334O0O008573O0O0O0,99.html
-
8/10/2019 Agri Export Management
8/59
is an important factor as time involved in getting various clearances may increase transaction cost of doing
business in potential markets. The cost of doing business in some potential markets is bench marked with
good markets as under.
Table: Be!40 Ma&) o6 Co$1 o6 Do#!2 B;$#!e$$ #! Vao;$ Ma&)e1$
S.R.No.
Ge&"a!( I!'#a C0#!a N#2ea
0 (tarting a business ErankF 55 77 017 007
1 $ealing with licenses ErankF 10 044 042 018
2 )mploying workers ErankF 018 001 67 45
3 *egistering property ErankF 31 009 10 069
4 Getting credit ErankF 92 54 090 72
5 Protecting investors Erank 72 22 72 35
6 Paying ta"es ErankF 62 047 057 094
7 Trading across borders ErankF 96 37< 27 026
8 )nforcing contracts ErankF 18 062 52 55
09 ;losing a business ErankF 17 022 64 61
So"rce# $ompiled %rom &oing "siness 'eport !(()
(ome other essentially important information to be scanned include the attributes of markets such as total
population, per capita income, economic growth rate, structure of the market, economic conduct, capital
intensity, economic trading blocs, availability of resources such as raw material, skilled human
resources, and cost +uality of such resources. Physical infrastructure such as internet access, tele@
communications, stock markets, and banks are also important guiding factors as they are important for the
business sustainability and survival.
MODE OF ENTERING INTO POTENTIAL MARKETS:
-aving scanned the best potential international markets which meet the corporate competitiveness criteria
of the firm, it has to evaluate the most profitable way of market entry so as to sell its products and services
to potential customers in these markets. There are several methods used in LPG! era for international
market entry such as )"porting, Licensing, %ranchising =oint Menture and Dholly &wned (ubsidiary. The
entry method suitable to firm re+uirement shall depend on a variety of factors such as the nature of firm
product or service, the conditions for market penetration, entry and e"it barriers and financial commitment
re+uired for getting into international markets.
)"porting, which is widely used for the first time traders is accomplished by selling the products orservices directly to a foreign firm or customer.
-
8/10/2019 Agri Export Management
9/59
firm getting started, involves a contractual agreement whereby firm assign the rights to distribute or
manufacture its product or service to a foreign company. Dholly &wned (ubsidiary re+uires either setting
up its own production or manufacturing facility or sub@contracting the manufacturing of its product to an
assembly operator such as ;oco ;ola used %&:& method for bottling in India.
Table: Co"a$o! o6 Fo&e#2! Ma&)e1 E!1&( Mo'e$
S.
NoMo'e
Fa41o&$ Fa5o!2 10e E!1&( Mo'e
#! Ta&2e1 Ma&)e1A'5a!1a2e$ D#$a'5a!1a2e$
3. E=o&1#!2
0. &pportunities for limited sales in
the target countryA
1. ;hances for little product new
Product and adaptation.
2. $istribution channels are
Jsually close to !anufacturing
(ites
3. -igh production costs as
economies of scale can not be
generated in production and
logistics cost.
4. Liberal import policies of target
country.
5. -igh political risk in target
country
0. !inimi#es the potential risk
in trade as firms need not to
make investment in target
market.
1. )ase in market entry
2. :enefits of utili#ation
available production facility
and resources
0. Trade barriers tariffs and
other cost make products
and services uncompetitive.
1. In case of far away market,
transport, packaging and
logistics costs put additional
burden.
2. Problems in accessing the
local market information.
3. %irm is viewed and regarded
as an alien and outsider
*.
L#4e!$#!2
0. If the firms is facing various
import control and investment
barriers for entry.
1. If country provides protection to
domestic industry and allows
foreign firms through licensing
or franchising only.
2. If the firms foresee low sales
potential in target market.
3. If the firms foresee large cultural
distance in potential market.
4. %irm foresee that licensee lacks
ability to become a potential
competitor in future.
0. Licensing minimi#es risk and
investment of Licensor i.e.
e"porter.
1. )nsures speed in entering the
target market.
2. Licensing help in
circumventing the various
trade barriers
3. Licensing offers higher
return on investments as
investment from firms is
virtually #ero as product
technology offering.
0. In licensing, firm lack the
control of market and use of
assets in target market.
1. (ometimes, licensee
becomes potential
competitor.
2. %irm knowledge, technical
knowhow and *$ get
spillovers to licensees and
may result in proliferation.
3. Jsually, the license period
is limited and offsets firmBs
chances for long term flows
of profits.
Jo#!1 0. Dhen there are import barriers 0. This method overcomes the 0. =oint Mentures are prone to
-
8/10/2019 Agri Export Management
10/59
2. Ve!1;&e$
in target market.
1. Dhen firm have large cultural
distance from target markets and
its way of functioning.
2. %irms itself can employ allresources needed to tap market.
3. ;ountry prescribes certain of
e+uity participation.
4. There are potential chances of
some political risk and
e"propriation.
5. < local partner is better in
distribution knowledgeA
technical skills, naturalresourcesA brand name, etc.
problem of ownership
restrictions and cultural
distance in target markets.
1. =oint Menture helps in
combining the resources of
foreign and local companies.
2. =oint Mentures provide
chances for learning from
partner.
3. %irm is viewed and regarded
as insider
4. %irm re+uire less finances as
local firm also contribute
something.
disputes and are difficult to
manage as power and
authority is diluted.
1. It is tough to control the
administrative, strategic and
operational decisions.
2. =oint Mentures has higher
risk e"posure than e"porting
licensing
3. %irmBs technical and
scientific knowledge get
spill@overed to local partners
and they may eventually
become competitor for firm.
3.%0oll(
O>!e'
S;b$#'#a&(
0. Dhen there are high import
barriers in firms and foreign
ownership is allowed.
1. There is little cultural distance in
target country.
2. The firm has good sales
potential in target market.
3. There is low political risk for the
firm.
1. %irm has good knowledge of
local market and accordingly
devise strategies.
2. %irm can apply speciali#ed
skills in good manner.
3. ;hances of knowhow
proliferation get minimi#ed.
4. The firm is viewed as an
insider.
0. This method has greater risk
than other modes of entry.
1. It re+uires more financial
and non financial resources
and commitment from firm.
2. It is possible that firm could
not manage the local
resources due to change in
working conditions and
technology.
So;&4e> Taking our :usiness International
3. E?PORTING
&f the various methods of foreign market entry, e"porting is most commonly used by small and first time
businesses as e"porting involves limited start@up costs and risks and profit under this method can be
reali#ed as early as firm get started. The most advantages aspect of market entry through e"porting is that it
involves minimal preliminary e"penditures e"cept some which incur on market research and product
promotion. Getting through e"port into international market can be by two basic ways. Dhich are?
a. $irect )"port
b. Indirect )"port
-
8/10/2019 Agri Export Management
11/59
The direct e"porting re+uires the firmK company to find a potential foreign buyer and then the firm is
supposed to make all necessary arrangements for transporting the products into destined market. $irect
e"porting indicate the commitment and dedication on the part of e"porter to engage in international trade in
manner that firm want to be long time player in that market and wish to develop and adapt its product as
per local re+uirement over a period of time. $irect )"port re+uires the e"port company personnel to travel
occasionally so as to find out the buyers and also look into the changing demand and market patterns. In
direct )"porting firm has to handle the logistics part as goods are manufactured in domestic markets and
e"ported to foreign markets. (uch handling of logistics on the part of e"porter has to be prompt, speedy and
time oriented. (ome of the benefits of e"porting are the possibility to diversify, additional revenue for the
firm, use of e"cess production capacity, business operation stability, leverage of purchasing power, product
life cycle e"tension and product innovation, improvement development. %ollowing are different types of
e"porting
a. Through (ales *epresentatives or
-
8/10/2019 Agri Export Management
12/59
to the licensor but usually it has been seen that licensee who produces and markets the product take away
returns from manufacturing and marketing activities due to vague regulatory law in developing countries.
7. JOINT VENTURES:
=oint Mentures are market entry options whereby firm and another company or firm in target market may
join together to form a new incorporated company for business operations in that market. In joint ventures,
both the parties are supposed to provide capital and resources in the agreed proportion and accordingly they
will represent and share management and profits loses. (uch mode of entry is popular in countries where
there are restrictions on foreign ownership. %or e"ample, Mene#uela, ;hina, Mietnam
=oint Menture is also preferred way of market entry as it is good trade off between potential risks and
returns and usually joint ventures is manifested with the following common objectives for market entry in
LPG! era. They areA
a. !arket )ntry into potential marketb. *iskK*eward sharing between parties.
4. Technology sharing between parties
'. =oint product development between partiesA and
e. ;onforming to government regulations.
6. Possible advantages from political connections
%ollowing are advantages and disadvantages of =oint ventures>
A'5a!1a2e$ o6 Jo#!1 Ve!1;&e$ D#$a'5a!1a2e$ o6 Jo#!1 Ve!1;&e$
0. -elps to ac+uire new competencies or skills which are not
domestically available.
1. -elps in +uick penetration of the market and also helpful
in rapid implementation of technological change.
2. *educing the firm risks by sharing it with one or more
than one firms.
3. -elpful in easy and faster entry in to target market and
also enable +uick payback
4. Pooling of firm resources such as capital, technical know
how and manpower with partner firms.5. -elp in avoiding the tariff barriers and non tariff barriers.
6. -elpful in satisfying local content re+uirements due to
partnering with local firm.
0. Lack of full control on management of
the firm.
1. (haring of profit may make it be
impossible to recover capital invested.
2. Potential risk of disagreement with
partner organi#ation on e"ploring new
markets, new operations etc.
3. :locking firm chances of other joint
ventures as e"isting partners may have
different views.4. %ear in partner mind that other may not
take unwanted advantage out of e"isting
operations.
So"rce# *dapted %rom *bo"t +porting, *"strade !((-
8. %HOLLY O%NED SUBSIDIARY:
-
8/10/2019 Agri Export Management
13/59
Dholly &wned (ubsidiary, as the name suggest, is the direct ownership of production facilities in the
potential international market. It re+uire the long term commitment on the part of firm as it involves the
transfer of resources such capital, technology, and personnel to the potential market. Dholly owned
subsidiary can also be made through the ac+uisition of an e"isting firm or the establishment in the target
market. D&( has several advantages as it provides high degree of administrative control in the business
operations of the firm and the firm has better chances to understand and analy#e the consumers and
competitive environment in the target market. &n the other hand such entry strategy re+uires a high level of
physical and capital resources to run the business in the target market.
TARGETTING THE MARKETS:
&ne of the most crucial steps in international trade operations, in LPG! era, is to target the markets by
segmenting that how a particular product and service can be marketed effectively in selected market. It is
mainly defined by factors such as age, gender, per capita income, geography, psychographic behavioral
patterns of customers, socio@economic grouping, or any other combination of the selected countrydemographics. !arket targeting re+uires studying and mapping through secondary data inputs such as lists
and reports containing demographic information of target country and to assess that what impact it may
have on the marketing of key products or services. !arket Targeting can be defined as the process o%
p"lling apart the entire market as a whole and separating it into manageable, disparate "nits based on
demographics.
%ollowing are the various types of target@market strategies which are usually used by firm in targeting the
markets overseas and the same can be categori#ed as one of the following>
3. S#!2le-$e2"e!1 $1&a1e2( This strategy of market targeting is also known as a
concentrated strategy as the firm intend to cater to one segment and wish to have
competitive advantage in that segment by having superior products, lower prices, good
branding etc. such strategy is useful to smaller, first time firm as it provide them leverage
to cater to only one segment of market and provide them opportunity to speciali#e in that
product with firm limited and scare resources.
*. Sele41#5e $e4#al#@a1#o!@
-
8/10/2019 Agri Export Management
14/59
8. Ma&)e1 $e4#al#@a1#o!. Jnder this strategy, the firm speciali#es to cater to a particular
market and offers an array of different products in various market segment of that market.
In LPG! era such strategy is not sustainable as global market is increasingly becoming
borderless.
9. F;ll "a&)e1 4o5e&a2e Jnder this strategy of market targeting, the firm try to cater to
the entire market. !ass production strategy is used so as to cater to all segment of target
market. The products are usually undifferentiated under this strategy.
Be!e6#1$ o6 Ma&)e1 Ta&2e1#!2 #! LPGM e&a:
In LPG! )ra, there are several reasons which motivate the firms to design proper and suitable market
targeting strategies some of which are summari#ed as under.
3. S;#1able U!'e&$1a!'#!2 o6 4;$1o"e& !ee'$:
;ustomer is king and may have different e"pectations from the manufacturer based on his demographic,
behavioral and psychographic profile. !arket targeting helps the firm to understand customer needs andaccordingly designed a customer solution for each segment for the counter.
*. Be11e& &e1;&!$ 6o& 10e 6#&":
;ustomerBs choices of the product and services are based on their disposable income and price sensitivity.
!arketer by segmenting and targeting the markets with variety of products and can sell the products in
higher income segments thereby generating additional income for the firm.
7. H#20e& oo&1;!#1#e$ 6o& E=a!$#o! a!' D#5e&$#6#4a1#o!:
Good segmenting, targeting positioning E(TPF can help the firm to have greater opportunities for growth
as product and market coverage increase with good market targeting. ;ustomer have better chances of
selecting a suitable product as per their choices if firm has good targeting strategy for selling its product in
target market.
8. Re1a#!#!2 C;$1o"e&$ 6o& lo!2e& 1#"e:
!arket targeting helps the international trader to keep a tack of changing customer choices and preferencesA
because they have different set of re+uirement at different stages of life such as when they are young they
have different buying patterns as compared to when they become older. :y designing and targeting the
products as per customer life cycle, firm can retain customer for longer period of time.
9. Hel #! "a)#!2 1a&2e1 4o"";!#4a1#o!$ $1&a1e2(:
!arket targeting also help the firm to devise a suitable communication and promotion policy as help save
important revenue to be spend unnecessarily on wrong advertising campaigns.
. Hel #! #!4&ea$#!2 Ma&)e1 S0a&e:
;reative market targeting helps the firm to achieve competitive production and marketing costs and
automatically become the preferred choice of customers and distributors. -ence it can be said that creative
market targeting offers the opportunity for smaller and first time firms, planning to get started in LPG!
era, to compete effectively with bigger firm in the market.
-
8/10/2019 Agri Export Management
15/59
COMPETITION IN INTERNATIONAL MARKETS:
The famous ;ompetition Guru, !ichael ). PorterCs has given a very crisp, simple and understandable
model for assessing, analy#ing and appraising the competitive strength of the firm keeping in mind its
factor conditions, related industries, demand conditions and corporate strategy. The competition diamond is
given as under.
)"hibit> PorterBs ;ompetition
-
8/10/2019 Agri Export Management
16/59
B. ;ompetitors offer better price performance of substituteBs product and services.
C. ImporterK :uyer have lower switching cost to another product or services.
$. ImporterK:uyer keeps on changing as he has higher perception on level of product differentiation
from one manufacturer to another.
*. THE THREAT OF THE ENTRY OF NE% COMPETITORS
The new firms will enter into the market due to the high returns as profit is one of the driving forces for
selecting a market in LPG! era. This will lead to rivalryK price wars among firms and as a result the
profitability of the firm will decrease. (uch kind of competition can be restrained if the entry of new firms
can be blocked by incumbents or alternately there are high entry and e"it barriers making firms reluctant to
enter new markets. &therwise such entry of new firms will decrease the profit rate towards a competitive
level Eperfect competitionF. %irm can survive in such kind of competition if there areA
A. )ntrant ;ompetitors have greater opportunities product diversification, e"tension and modification
as per importerK buyerBs choice.B. )ntrant competitors have high reputation, prestige and brand e+uity in the target markets.
C. There are low entry and e"it barriers for the firms vis a vis patents, rights, etc.
$. (witching costs or sunk costs are lower for players in target segment.
E. There are lower re+uirement of capital for business in target segment.
%. $istribution channels and logistics are easy for the product and services allowing various players
to get into without any cost and risks involved.
&. )ntrant competitors offer better product or services as it enjoys absolute cost advantages in target
segment.
'. )ntrant ;ompetitors have higher learning curve in this segment.
I. The segment is prone to possibility of price war
(. (egment has favorable government policies vis a vis other segment
7. THE INTENSITY OF COMPETITIVE RIVALRY
In LPG! era, the most important determinant of the competitiveness of any industry is the intensity of
competitive rivalry. *ivals are supposed to compete aggressively and each firm will try to differentiate
their offer from each otherA and sometimes rivals happen to compete each other on the basis of non@price
factors such as technological innovation, marketing, etc. such kind of competition will be marked by
following features.
A. There will be greater number of competitors in market due to higher returns.
B. !arket segment have higher growth rate of industry, economy and disposable income.
C. !arket segment have intermittent industry overcapacity
$. !arket segment has lower e"it barriers
E. There will higher diversity of competitors as they come from different background.
-
8/10/2019 Agri Export Management
17/59
%. !arket segment is manifested with problem of informational comple"ity and asymmetry.
&. ;ompetitors will try to ma"imise their share as they will have fi"ed cost allocation per value
added
'. !arket segment will re+uire higher level of advertising e"pense
I. !arket segment have unsustainable economies of scale prompting others to jump in.(. %irms tries to have sustainable competitive advantage through improvisation
8. THE BARGAINING PO%ER OF CUSTOMERS
In LPG! era, the customer is a king and meeting his e"pectations is rightly described as the market of
outputs. The customers demand new product and their ability of putting the firm under pressure is an
essential factor of competition which the firms has to handle with uni+ue products, better designs etc. (uch
bargaining power of the customer will also affect the customerCs sensitivity to price changes.
A. There is less buyer concentration than the firmBs concentration in the market segment.B. Importer will have a bargaining leverage as industries will like to continue operations due to high
fi"ed costs and minimi#e their losses in short run.
C. Importers K buyer buying volume are higher.
$. ImporterKbuyer switching costs are lower in comparison to the firmBs switching costs.
E. :uyer has easy cost free and prompts first hand information on the market segment.
%. :uyer due to his higher volume can integrate backward with suppliers
&. :uyer has choiceA availability and affordability of substitute products from other sources.
'. ImporterK:uyer is sensitive to price of product or services.
9. THE BARGAINING PO%ER OF SUPPLIERS
In LPG! era, suppliers are getting critical factors in marketing success as input has become a driving
force in managing competition. < recent oil spike is its good e"ample and suppliers of raw materials,
components, and services are increasingly using their lever of power over the firm. (uppliers can refuse to
supply the inputs or may try to charge e"orbitant prices for such uni+ue resources.
A. (upplier has lower switching costs in comparison to buyers.
B. The supplierBs product is highly differentiated and uni+ue from competitors.
C. There is absence of substitute inputs in market segment.
$. < supplier is uni+uely positioned as market segment has few suppliers and large no. of buyers.
E. (uppliers enjoy better space for forward integration than the buyers.
The porter competition model in uni+ue in analy#ing various aspects of completion and it can be of
immense use for a first time entrepreneur, getting started in international trade as it focuses on five different
aspects of potential competition.
-
8/10/2019 Agri Export Management
18/59
REGULATORY REUIREMENT FOR GETTING STARTED: %ollowing are the regulatory
re+uirement which an e"porter has to completer before starting an e"port import business.
3. I"o&1e&$- E=o&1e&$ Co'e IEC/ No.
-
8/10/2019 Agri Export Management
19/59
Dhere an I); 'umber is lost or misplaced, the issuing authority may consider re+uests for grant
of a duplicate copy of I); number, if accompanied by an affidavit.
E. S;&&e!'e& o6 IEC N;"be& :
If an I); holder does not wish to operate the allotted I); number, he may surrender the same by
informing the issuing authority. &n receipt of such intimation, the issuing authority shall
immediately cancel the same and electronically transmit it to $G%T for onward transmission to
the ;ustoms and *egional #10 EPC$ :
A. A;10o#e$ I$$;#!2 RCMC:
-
8/10/2019 Agri Export Management
20/59
be specified in this behalf. In case an e"porter desires to get registration as a manufacturer
e"porter, he shall furnish evidence to that effect. ProspectiveKpotential e"porters may also, on
application, register and become an associate member of an e"port promotion council.
C. Val#'#1( Peo' o6 RCMC:
The *;!; shall be deemed to be valid from 0st
The e"porter shall furnish +uarterly returnsK details of his e"ports of different commodities to the
concerned registering authority. This will be in addition to any other returns as may be prescribed
by the registering authority. -owever, status holders shall also send +uarterly returns to %I)& in
the format specified by %I)&.
F. De-Re2#$1&a1#o!
The registering authority may de@register an *;!; holder for a specified period for violation of
the conditions of registration. :efore such de@registration, the *;!; holder shall be given a show
cause notice by the registering authority, and an ade+uate and reasonable opportunity to make a
representation against the proposed de@registration. Jpon de@registration, the concerned e"port
promotion council shall intimate the same to all the regional authorities.
G. Aeal A2a#!$1 De-&e2#$1&a1#o!:
< person aggrieved by a decision of the registering authority in respect of any matter connected
with the issue of *;!; may prefer an appeal to the $irector General of %oreign Trade or an
officer designated in this behalf within 34 days against the said decision and the decision of the
appellate authority shall be final.
H. D#&e41#5e$ o6 DGFT:
-
8/10/2019 Agri Export Management
21/59
The $irector General of %oreign Trade may direct any registering authority to register or de@
register an e"porter or otherwise issue such other directions to them consistent with and in order to
implement the provisions of the
-
8/10/2019 Agri Export Management
22/59
33. :ank guarantee for a sum of *s. 099,999K@ however, subject to compliance of certain additional
re+uirements e.g. if the premises is owned by the ;ompany, bank guarantee of *s. 49,999K@ may
also accepted by the $epartment.
-
8/10/2019 Agri Export Management
23/59
a. Those persons who are manufacturing e"cisable goods, on which the duty chargeable is at nil rate
or such persons have been fully e"empted from payment of duty by ga#ette notification.
b. (mall scale units which are under the slab e"emption based on the basis value of e"cise clearances
under ga#ette notification. :ut such are supposed to give a declaration to the authorities as
specified under the law, once the value of their e"cise clearances touches *s.89 lakh.
4.
-
8/10/2019 Agri Export Management
24/59
< personK firm have to apply for );; on an application form which has been prescribed for the purpose
under the (ection 5 of the ;entral )"cise
a. The applicant for );; registration or by the authori#ed agent of the applicant provided has
general power of attorney. The *ange &fficer of ;entral )"cise department shall have the powers
if he is not satisfied to call the original documents so as to verify Hpower of attorneyB.
b.
-
8/10/2019 Agri Export Management
25/59
m"ltinational process o% planning and eec"ting the conception, pricing, promotion and distrib"tion o%
ideas, goods, and services to create echanges that satis%y individ"al and organi/ational ob3ectives. R2SIn
contrast to the definition of marketing only the word m"ltinationalhas been added.R2SIn simple words
international marketing is the application of marketing principles to across national boundaries. -owever,
there is a crossover between what is commonly e"pressed as international marketing and global marketing,
which is a similar term.
The intersection is the result of the process of internationali#ation. !any a!1$ 10&o;20 a! e=40a!2e
&o4e$$ #! a 2lobal $($1e"
Dithin this e"change transaction customers will only e"change what they value EmoneyF if they feel that
their needs are being fully satisfied, clearly the greater the benefit provided the higher transactional value
an organisation can charge.
;ateora and Ghauri E0888F I!1e&!a1#o!al Ma&)e1#!2 #$ 10e e&6o&"a!4e o6 b;$#!e$$ a41#5#1#e$ 10a1
'#&e41 10e 6lo> o6 a 4o"a!($ 2oo'$ a!' $e&5#4e$ 1o 4o!$;"e&$ o& ;$e&$ #! "o&e 10a! o!e !a1#o! 6o& a
&o6#1.
International marketing is often not as simple as marketing your product to more than one nation. R3S
;ompanies must consider language barriers, ideals, and customs in the market they are approaching. R3S
Tailoring your marketing strategies to attract the specific group of people you are attempting to sell to is
highly important and can serve the number one cause of failure or success.R3S
http://www.answers.com/topic/international-marketing-1#cite_note-onkvisit-a-2%23cite_note-onkvisit-a-2http://www.answers.com/topic/international-marketing-1#cite_note-onkvisit-a-2%23cite_note-onkvisit-a-2http://www.answers.com/topic/international-marketing-1#cite_note-onkvisit-a-2%23cite_note-onkvisit-a-2http://www.answers.com/topic/internationalization-1http://www.answers.com/topic/marketing-mixhttp://www.answers.com/topic/international-marketing-1#cite_note-eagle-a-3%23cite_note-eagle-a-3http://www.answers.com/topic/international-marketing-1#cite_note-eagle-a-3%23cite_note-eagle-a-3http://www.answers.com/topic/international-marketing-1#cite_note-eagle-a-3%23cite_note-eagle-a-3http://www.answers.com/topic/international-marketing-1#cite_note-eagle-a-3%23cite_note-eagle-a-3http://www.answers.com/topic/international-marketing-1#cite_note-onkvisit-a-2%23cite_note-onkvisit-a-2http://www.answers.com/topic/international-marketing-1#cite_note-onkvisit-a-2%23cite_note-onkvisit-a-2http://www.answers.com/topic/internationalization-1http://www.answers.com/topic/marketing-mixhttp://www.answers.com/topic/marketing-mixhttp://www.answers.com/topic/international-marketing-1#cite_note-eagle-a-3%23cite_note-eagle-a-3http://www.answers.com/topic/international-marketing-1#cite_note-eagle-a-3%23cite_note-eagle-a-3http://www.answers.com/topic/international-marketing-1#cite_note-eagle-a-3%23cite_note-eagle-a-3 -
8/10/2019 Agri Export Management
26/59
*t its simplest level, international marketing involves
the%irmin making one or moremarketing midecisions across national bo"ndaries. *t its most comple
level, it involves the %irm in establishing man"%act"ring %acilities overseas and coordinating marketing
strategies across the globe.R4S 0nternational marketing is the per%ormance o% b"siness activities that
direct the %low o% a company4s goods and services to cons"mers or "sers in more than one nation %or a
pro%it.R5SIt can be also defined as the application o% marketing orientation and marketing capabilities to
international b"siness.R6SThe international market goes beyond the eport marketer and becomes more
involved in the marketing environment in the co"ntries in which it is doing b"siness.R7S
(ome definition refer to the term global marketing> 5lobal6transnational marketing %oc"ses "pon
leveraging a company4s assets, eperience and prod"cts globally and "pon adapting to what is tr"ly "ni"e
and di%%erent in each co"ntry.R7S
5lobal marketing re%ers to marketing activities coordinated andintegrated across m"ltiple co"ntry markets.R8S
To#4$ 4o5e!2 10e "#4&o-4o!1e=1 o6 #!1e&!a1#o!al "a&)e1#!2
-
8/10/2019 Agri Export Management
27/59
;ompetitive strategy>
conceptual developmentA
competitive advantage vs. competitive positioningA
sources of competitive advantage and performance implications.
(trategic alliances>
learning and trustA
recipes for alliance successA
performance of different types of alliance.
Global sourcing>
global sourcing in a service conte"tA
benefits of global sourcingA
country of origin issues in global sourcing.
!ultinationalperformance>
determinants of performanceA
a different interpretation of performance.
!nalytical techniques in cross"national research:
measuerment issuesA
reliability and validity issues.
D#66e&e!4e$ be1>ee! 'o"e$1#4 "a&)e1#!2 a!' #!1e&!a1#o!al "a&)e1#!2
There are various differences between domestic marketing and international marketing. $ue to a language
barrierit is more difficult to obtain and interpret research data in international marketing. R00SPromotional
messages needs to consider numerous cultural differences between different countries. R00SThis includes the
differences in languages, e"pressions, habits, gestures, ideologies and more. %or e"ample, in the Jnited
(tates the round & sign made with thumb and first finger means 7okay7while in !editerranean countries
the same gesture means 7/ero7or 7the worst7.R01SIn Tunisia it is understood as 704ll kill yo"7meanwhile for
a =apan consumer it implies 7money7.R01S)ven among the 63 )nglish@speaking nations a word with the same
meaning can differ greatly from the )nglish which is spoken in the Jnited (tates as the following e"ample
shows>R01S
Police#bobby E:ritainF, garda EIrelandF, !ountie E;anadaF, police wallah E(outh
-
8/10/2019 Agri Export Management
28/59
Tr"ck#lorry E:ritain and If
you want just condition of warmin your room, please control yourself.
0n an *cap"lco hotel#The manager has personally passed all the water served here.
T0e "a&)e1#!2 4o!4e1
The concept of marketing has changed and evolved over time. Dhilst in todayBs business world, the
customer is at the forefront, not all businesses in the past followed this concept. Their thinking, orientation
or ideology put other factors rather then the customer first. Let us e"amine these below.
P&o';41#o! Oe!1e':The focus of the business is not the needs of the custobmer, but of reducing costs by
mass production. :y reaching economies of scale the business will ma"imi#e profits by reducing costs.
P&o';41 Oe!1a1#o!: The company believes that they have a superior product, based on +uality and
features, and because of this they feel their customers will like it also.
Sale$ Oe!1a1#o!:The focus here is to make the product, and then try to sell it to the target market.
-owever, the problem could be that consumers do not like what is being sold to them.
Ma&)e1 Oe!1a1#o!> Puts the customer at the heart of the business. The organi#ation tries to understand
the needs of the customers by using appropriate research methods,
-
8/10/2019 Agri Export Management
29/59
I!1e&!a1#o!al B;$#!e$$ E!5#&o!"e!1
The world has a long, rich history of international trade among nations that can be traced back to early
-
8/10/2019 Agri Export Management
30/59
economy that relies on e"porting cutting@edge technology as high tech software and computer companies
proliferate.
Pol#1#4al E!5#&o!"e!1
)ach country varies regarding international trade and relocation of foreign plants on its native soil. (ome
countries openly court foreign companies and encourage them to invest in their country by offering reduced
ta"es or some other investment incentives. &ther countries impose strict regulations that can cause large
companies to leave and open a plant in a country that provides more favorable operating conditions. Dhen
a company decides to conduct business in another country, it should also consider the political stability of
the host countryCs government. Jnstable leadership can create significant problems in recouping profits if
the government falls of the host country andKor changes its policy towards foreign trade and investment.
Political instability is often caused by severe economic conditions that result in civil unrest.
-
8/10/2019 Agri Export Management
31/59
what is called aprotective tariff. This type of tariff is designed to make foreign products more e"pensive
than domestic products and, as a result, protect domestic companies. < protective tariff is normally very
popular with the affected domestic companies and their workers because they benefit most directly from it.
In retaliation, a country that is affected by a protective tariff will fre+uently enact a tariff of its own on a
product from the original tariff enacting country. In 0829, for e"ample, the J.(. ;ongress passed the
(moot@-awley Tariff
-
8/10/2019 Agri Export Management
32/59
named doesnCt go. This marketing errorVresulting simply from ignorance of the (panish languageVcost
General !otors millions in initial salesVas well as considerable embarrassment.
:usiness professionals also need to be aware of foreign customs regarding standard business practices. %or
e"ample, people from some countries like to sit or stand very close when conducting business. In contrast,
people from other countries want to maintain a spatial distance between them and the people with whom
they are conducting business. Thus, before business@people travel overseas, they must be given training on
how to conduct business in the country to which they are traveling.
:usiness professionals also run into another practice that occurs in some countriesVbribery. The practice
ofbribery is common in several countries and is considered a normal business practice. If the bribe is not
paid to a businessperson from a country where bribery is e"pected, a transaction is unlikely to occur. Laws
in some countries prohibit businesspeople from paying or accepting bribes.
-
8/10/2019 Agri Export Management
33/59
-
8/10/2019 Agri Export Management
34/59
Export goods are subject to approval of proper ocers of customs before
being loaded to the ship or airlines and can not be loaded without his
permission. As per Customs Act 19!" the person#in#charge of the ship$ truc%$
rail$ airlines is supposed not to allow the loading at a customs station except/0
a f e%port goods other than baggage and mail bags unless a
shipping !illor !ill of e1port or a !ill of transshipment as the
case may be duly passed by the proper o-cer has been handed over
to him by the e%porter
b f baggage and mail bags unless their e%port has been duly
permitted by the proper o-cer.
ection 45 to 5 is important for getting cleared the goods in case of imports whilesection 51 & 52 are important in case of getting the goods cleared in a e%port
business. imilarly e%porter has to take care that which type of shipping bill is to be
submitted for availing the bene$ts of duty drawback under section 64 & 65 of
customs )ct 1+,2. 7oreign 8%change 9egulation s )ct 1+++ deals with the documents
which are to be submitted by the e%porters for realizing the e%port proceeds with the
prescribed time under the act and subsequent rules.
"n the similar fashion various other sections of custom )ct put bar on loading and
unloading of cargo at various stages of e%port & import process. "t is better for an
e%porter to understand the role and importance of these documents in the beginning
of e%port business so as to avoid any unforeseen situation in future.
+'2 E3P,T $,C*ENTATI,N IS I*P,TANT::
#rade documentation is necessary and an integral part of international trade
operations due to variety of reasons. ;hen e%porter sells his goods in international
markets he has to prepare various documents as transportation of cargo from one
country to another is full of various regulatory and commercial requirements. )nother
country may have some legislation in place for quality control and inspection of
certain items such as sanitary photo:sanitary requirements and technical barriers to
trade. ;hen e%porter gives goods to shipping company he must have some
documents to prove the delivery of goods and title of goods. uch goods have to be
4)"cerpted from Indian ;ustoms
-
8/10/2019 Agri Export Management
35/59
insured and crosschecked by customs o-cial for whom one again require some
documents such as packing list insurance certi$cate and shipping bill. #he various
reasons for careful understanding of international trade documentation are as
follows.
A. #rade practices of a country
B.
-
8/10/2019 Agri Export Management
36/59
by importing country so as to administer the e%change control regulations or
import quotas of the country.
7. "n certain cases importing country demands certain documents so as to arrive
on conclusion regarding the safeguard of public and animal health and to
ensure that such commodities shall not be imported which may cause thespread of plant diseases. uch documents are furnished for control of anitary
=hyto:sanitary and #echnical Barriers to trade. 7or 8%ample >ermany imposes
restrictions on import of honey from Cepal as Cepalese Aoney was considered
to be having pesticides due to high use of pesticides insecticides by farmers
on their agricultural crops. 9ecently =akistan has not allowed a passage to
"ndian trucks carrying wheat which was to be e%ported to )fghanistan on the
fear that some pilferage on way to Dourney of "ndian wheat may spread bio
made diseases in =akistan agriculture.
/. *ustoms -cial Dob is not only the evaluation determination and collection ofe%port or import duties on the cargo being e%ported/imported but has a wider
spectrum of functions such as looking after whether the goods are permitted
for e%port/import or not. Cow days customs department act in tandem with
other federal crime prevention agencies such as =olice "ntelligence ervices
=ara ?ilitary 7orces and *oast >uard as there is a greater threat to national
and international security due to international smuggling of radioactive items
opium 9(E and other hazardous materials. *ustoms o-cials have to comply
with the 7oreign #rade =olicy of the country on the pen/ *hannelized/
=rohibited/ 9estricted trade categories of e%port and import as e%porter has to
get his goods checked by customs o-cial and get a let export seal proving
that goods meant for e%port are as per country rules & regulations. #he
e%porter is duty bound to provide such information to customs through e%port
documents. *ustoms o-cials ask the e%porter to authenticate the documents
submitted and ask for certi$cate in this regards if documents submitted are
found to be false e%porter is subDect to penalty and even in certain cases his
goods may be con$scated. #rade (ocuments helps the customs to see verify
and inspect the cargo of e%porter and importer.
8. 8%porter has to declare that these goods are meant for e%ports through trade
documents which the e%porter declare that these goods are meant for e%ports
and ensure that he may avail right insurance cover for the same as
transportation of goods in international trade is full of risks. 8%porter has to
submit such e%port documents indicating that goods are insured to shipping
-
8/10/2019 Agri Export Management
37/59
company importers and banks while negotiating the documents for
realization of e%port proceeds.
9. #here are certain countries which in order to control their imports and keep a
check on them through sound information system ask that the commercial
invoice by the e%porter has to be prepared on the forms of these countries. "ninternational trade such forms are known as customs invoices. n the other
hand certain other countries demand the consular invoice along with the
commercial invoice or legalization/visaed of commercial invoice so as to get
the details of e%port shipments coming to their country. uch documents
create several non tari' barriers for e%porter and countries demand it so as to
control their imports from certain countries. Fnowledge of such various
invoices which have to be prepared is essential for e%porter Aence sound
understanding & knowledge of trade documentation is important part of
international trade for an e%porter and importer.. *ertain documents such as short shipment certi$cate etc are required so as to
prove that only the part of goods has been shipped provided it was either
agreed in "nternational ales *ontract or mentioned in overnment
of "ndia has given immense emphasis to the same and has asked the several trade
promotion organizations & institutions to provide the training to e%porters &
importers in trade documentation etc. "ndian "nstitute of 7oreign #rade set up under
?inistry of *ommerce has been playing an vital role in this regard since its
foundation in 1+,3.
VAI,S ASPECTS ,% E3P,T $,C*ENTATI,N:
#he maDor concern of importing as well as e%porting country parties in international
trade is the accuracy of e%port documents as it helps the importer in making prompt
duty payments which comes to doldrums if e%port documents are not correct or
discrepant. Banks may not negotiate the documents for purchase or discount if
e%porter has submitted inaccurate trade documents. imilarly e%porting country also
-
8/10/2019 Agri Export Management
38/59
emphasize that e%porter shall submit the accurate documents to customs
department with right description so that customs may take least time in assessing
for duty if any and also for clearing the goods promptly. Aence it is advisable that
new e%porters should consider obtaining the training advice or suggestions or
outsource services from freight forwarder before for e%porting the goods with rightaccurate and proper documentation. "t is usually advisable that e%porter should take
the services of reliable competent and dynamic freight forwarder so as to ensure
the compliance in essential documents in international trade. 7reight forwarder
provides an invaluable source of information and help to e%porter regarding the
information on markets packing trend keeping in mind nature of goods shipping
costs as well as documentation & procedure for trade transactions. "nterestingly the
role of freight forwarder has signi$cantly increased and is continuously increasing in
the previous some decades due to rapid e%pansion of trade not only in "ndia but
globally.
(ocumentation is of prime importance in the $nancing transport/ carriage and
control of goods in international trade. "t is only through documents that $nancing of
shipments transportation of cargo and ensuring of payments is possible. 8%port
documents helps in implementing completion and transfer of goods to importer.
Aence 8%port documentation is mandatory in order to ensure that e%porterGs cargo
shall arrive to destination on time and e%porter may realize his payment for the
consignment promptly and safely. "t is the duty of e%porter to ensure the correct &
accurate documents in trade transactions so that whole cycle of trade may run
smoothly without any legal regulatory or commercial hiccups. everal aspects of
e%port documentations are as follows.
I. It is Easy pro#ess:
mall and $rst time e%porters are usually worried about the trade documentation
practices as they $nd it very complicated and cumbersome process. But the fact is it
is very easy to understand and prepare e%port/import documents and trader himself
can use his own e%pertise in preparing them provided he must go for a training
program on trade documentation practices for a hand on knowledge on various
aspects of trade documentation. everal #=s established under ?inistry of
*ommerce help to a $rst time e%porters. #hese organizations use to conduct short
term awareness program/ management development program for to e%porter s and
importers aware about trade documentation framework. )s the volume of trade grow
e%porters can engage a shipping and forwarding agent who are supposed to take
-
8/10/2019 Agri Export Management
39/59
-
8/10/2019 Agri Export Management
40/59
#rade documents clarity and transparency in international sales deals. ne maDor
purpose of the trade documentation is to provide a speci$c and complete description
of the goods to customs o-cials shipping company banks duty drawback
directorate and importers.
*onclusively it can say that whether or not the e%porter uses a hipping and
7orwarding )gent he should be well informed about the international trade
documentation because it plays such an e%tensive role in international trade
transactions.
T'E *A(, $,C*ENTS SE$ IN INTENATI,NA) TA$E
?aDor e%port document used in "ndia *ommon e%port
document used in H8
?aDor e%port
document used in
)ustralia61. =ro:forma "nvoice
2. *ommercial "nvoice
3. =acking
-
8/10/2019 Agri Export Management
41/59
#rust *opy of hipping Bill
2. 9eceipt for =ayment of =ort *harges
21. Kehicle *hit
22. 8%change *ontrol (eclaration (7/>9 /
==/ 7#8E/K= 7orms23. 7reight =ayment *erti$cate
24. "nsurance =remium =ayment *erti$cate
invoice
1. "nsurance
certi$cate
11.8%port =acking
-
8/10/2019 Agri Export Management
42/59
B,3: *A(, C,**ECIA) $,C*ENTS SE$ IN IN$IA
Prin#ipal Commer#ial $o#uments Au1iliary Commer#ial $o#uments4. *ommercial "nvoice5. =acking
-
8/10/2019 Agri Export Management
43/59
4. Performa Invoi#e
=erforma invoice is $rst and important documents of conveying e%porter idea about
the prices description quantity and quality for sale of goods to importer. 8%porter
provides all the information with respect to e%port purposes to importer and such
information may includes
a. #entative prices of per unit of commodity
!. #entative description of goods
#. #entative idea about shipping terms
". #entative idea about payments terms
e. Iuality benchmarks of the commodity
f. ?ode of shipment
g. 8%pected time required by e%port for delivering date etc.
8%porter also e%presses his desire for letter of credit or other mode of payments such
as (/= (/) pen )ccount/)dvance =ayment from importer in case importer is
satis$ed with the description prices mode of shipment payment mode of goods on
the basis of =erforma invoice. 7or preparing a performa invoice e%porter need to do
the following things.
I. *omplete description of commodities goods and services which the importer is
planning to import. #entative idea about the value weight and dimensions of
the shipment such as cubic dimension of the cargo and packaging of cargo etc
clearly e%pressed in performa invoice.
II. 8%porter shall clearly e%press his idea and interest about his preferred mode of
transportation. Aowever such tasks and activities are duly taken care by the
freight forwarder who shall be consulted on all such issues such as
determination of charges with respect to the freight or mode of transportation
insurance premium the charges for legalization of invoices and the charges for
handling the letter of credit. "n case the goods are to be transited through
inland transportation or multimodal transportation the e%porter should provide
the details of possible charges which may so incur.
III. =rocess of packing the cargo and an elaboration on packing material to be used
such as crates pallets or containers for safely transporting the goods from
e%porter country to importer keeping in mind the nature of goods as the ship to
be booked may vary on the nature of cargo for e%ample for cars shipments 9:
9 ship for fruits shipments 9eefer ship etc.
-
8/10/2019 Agri Export Management
44/59
IV. #he name of the place to which cargo is destined by clearly indicating the name
of port and city along with international shipping codes.
=ro:forma invoice is issued by the e%porter to an importer whereby he provides the
detailed knowledge about the consignment. ometimes e%porter sends the =erforma
invoice to importer so that importer can avail an import license in case required
from the authorities so as to purchase the cargo from e%porter. "t is to be considered
that =erforma invoice is not a demand for payment.
5. Commer#ial Invoi#e
*ommercial "nvoice is rightly referred as the bill for e%ports of the goods from the
e%porter to the importer. *ommercial "nvoices are often used by custom o-cial to
decide the actual value of cargo while assessing customs duties. >overnmentGs world
wide use the commercial invoice so as to restrict/control imports as commercial
invoice will often specify the whole description about the e%port and import.
)s a matter of practice some e%porters are using the same invoice *ommercial
"nvoice for domestic and international trade operations. "n certain countries of the
world a commercial invoice is demanded in the speci$ed forms of the country which
his also referred as customs invoice. "n some cases importing countries insist on
legalization/ visaed commercial invoice as such invoice is known as consular
invoice. #his is done by importing country so as to keep the tack on the imports of
the country. "f at any point of time country realized that imports are increasing and
country doesnGt have the foreign e%change to make payment it can control / restrict
certain items from importing lists. uch arrangement is also used to provide
preferential tari's to friendly country and to avoid the enemy countries for the
trading. "t has sometimes been used as diplomatic weapon to settle other issues with
trading countries through use of non tari' barriers.
#he commercial invoice includes important information such as the dates of shipping
of cargo packing marks as per importer requirements and "8* code and name of
e%porter terms of payments name of the consignee trade terms such as incoterms
description of goods including A classi$cation numbers of units to be sold total
price of the cargo mode of transportation per unit price and any other important
information which is required in the importerGs country. *ommercial "nvoice is
prepared by e%porter and it is addressed to importer by giving full details of the cargo
to be e%ported.
-
8/10/2019 Agri Export Management
45/59
-
8/10/2019 Agri Export Management
46/59
packing list as it summaries the material in each individual carton/ packet and
describes the type of package such as a bo% crate drum or carton.
7. Shipping Instru#tion
#he signi$cance of furnishing the shipping instructions to freight forwarder clearly
precisely is immense. "n the modern times when e%port activities has become so
comple% it is rightly said that the appointing a freight forwarder is a kind of
e%tension to e%porter e%port department. #he 7reight 7orwarder has to be apprised
the various aspects of shipment through shipping instructions and process of
shipping it. 7reight forwarder needs to know as much about the transaction as
e%porter know so as to comply with all of importerMs requirements for successful and
e'ective e%ecution of contract and for keeping the importer loyal for future purposes.
"n case e%porter make an error or mistake in furnishing the e%act and accurate
shipping instructions to freight forwarder following types of unnecessary problems
may come in trade transactions. ome of them are as follows0
I. #here may be failure to collect/ negotiate against a letter of credit as that the
forwarder was not known that there was a letter of credit involved in trade
transaction.
II. #here may be mistake on the part of freight forwarder in insuring the shipment
as per importer desired risk cover.
III. 7orwarder may make mistake to ship the goods on wrong incoterms such as
freight prepaid instead of collect basis.
IV. 7reight forwarder may make mistake in preparing the certain essential
documents which are important for letter of credit negotiation as freight
forwarder would have thought that the e%porter would prepare them.
V. 7right forwarder may make mistake in returning the original documents to the
shipper so as to distribute them instead of sending them to a bank and/or
consignee for payment negotiation/purchase or discounting of e%port proceeds.
/. Intimation of Inspe#tion:)s per the 8%port Iuality *ontrol and "nspection )ct
1+,3 an e%porter is required to make an application in duplicate in the prescribed
form for intimating to the e%port inspection agency to carry out the pre:shipment
inspection works. uch inspection may be carried out at e%porter premises or at
prescribed e%port agency. #he intimation for the same purpose has to be given to the
8") through
-
8/10/2019 Agri Export Management
47/59
application for "ntimation of "nspection to be the submitted to the nearby 8%port
"nspection )gency0
a= *opy of the *ommercial "nvoice for description of goods to be e%ported.
!= 9equisite fees for inspection of cargo in a crossed cheque/draft or "ndian
=ostal rder.
#= *opy of letter of *redit.
"= (escription of packing speci$cations as instructed by importer.
e= *opy of the e%port order/contract which indicate that goods are strictly
according to the prescribed speci$cations of importer.
8%porter inspection agency on the satisfaction that goods to be e%ported meet to
standards quality norms as per 8%port Iuality *ontrol and "nspection )ct 1+,3 or as
per importerGs speci$cations shall issue a certi$cate of inspection within 4 to 5 days
from the date of receipt of application of the e%porter.
8. Certi>#ate of Inspe#tion:
=re:shipment inspection has to be done by 8%port "nspection )gency which worked
under the administrative control of 8%port "nspection *ouncil depending upon the
nature of products standard quality norms or as per importer speci$cations. uch
inspection usually takes place from consignment to consignment basis at the
premises of e%porter. "f quality control facilities are not available at the e%porter
premises the inspections of consignment can be done at port of shipment. 8%porter
shall give an application in writing to the concerned e%port inspection agencies for
pre:shipment inspection well in advance so as to ensure that shipment is inspected
well in advance from the date of shipment. ometimes inspection is also done by
concerned commodity board o-cials such as #ea Board *o'ee Board due to speci$c
nature of goods requiring e%pertise. "n cases where the pre:shipment inspection is
made mandatory by a particular agency as named by importer e%port inspection has
to take place essentially by the agency as named by importer.
)n application has to be submitted by e%porter to concerned e%port inspectioncouncil along with requisite fees and following documents.
a. =hoto state copy of the *ommercial "nvoice for e%port consignment.
!. =hoto state copy of letter of credit in favor of e%porter
#. =acking speci$cations standard and as per importerGs request
". =hoto state copy of the e%port order or 8%port ales *ontract
-
8/10/2019 Agri Export Management
48/59
n the submission of above documents 8%port "nspection )gency requires at least 4
to 5 days so as to conduct quality test of consignment of e%portable goods. n its
satisfaction about the e%portable quality of consignment as per importer
requirement/standards it issues the certifcate o inspectionto the e%porter in theprescribed pro:forma in $ve copies.
8%porter submits the original copy of such inspection certi$cate to *ustoms
authorities along with shipping bill / bill of e%port at the time of e%port consignment
clearance by "ndian *ustoms. econd copy of e%port inspection is to be sent to the
importer while sending the shipping advice along with various e%port documents.
#hird copy shall be retained by the e%porter for any future reference. 7ourth copy is
to be sent to e%port "nspection *ouncil at its headquarters at Cew (elhi and $fth
copy shall be retained by the concerned 8%port "nspection )gency for futurereferences.
9. Insuran#e $e#laration
#he standard "nsurance declaration which is part of standardized documents is based
on the format which is approved by the "nstitute of eneral insurance company should issue the certi$cate of
insurance to e%porter after completion of necessary entries and certi$cation by the
*ompany.
. Certi>#ate of Insuran#e:
)s international trade transportation is full of risks and ocean carriers doesnGt take
any responsibility for loss/piracy/damage/pilferage etc to the cargo if the cargo is
shipped without the insurance cover. cean carriers consider it negligence on the
part of e%porter. Aence it is mandatory for the e%porter to arrange the cargo/marine
insurance for his e%port shipment. #he insurance certi$cate indicates the amount
insured of the shipments and also describes that what kind of risks are covered under
the particular policy of various "nstitute *argo *lauses of ) B & *.
-
8/10/2019 Agri Export Management
49/59
?.Shipping ,r"er N hipping order is issued by the conference shipping lines for
intimating the e%porter about the reservation of space of shipment. hipping order
also describes that the speci$c vessel along with shipping dates and speci$ed port of
departure.
4@. *ate
-
8/10/2019 Agri Export Management
50/59
acknowledgement of payment of freight and shipping company ensures that it shall
transport the goods to destination.
!.An ,r"er !ill of la"ingis a document that is prepared to the order the foreign
importer or its bank for the payment and custody of goods. "t is negotiable.
#his is the most satisfactory type of receipt and the shipper prefers such a bill as
there is no doubt about the goods being on board and consequent dispute on this
point will not arise with the bankers or consignee thereby facilitating earliest
$nancial settlement of the e%port sale.
2. 9eceived bill of lading0 #his arises where the word QshippedQ does not appear on
the bill of lading. "t merely con$rms that the goods have been handed over to theship:owner and are in his custody. #he cargo may be in his dock warehouse/transit
shed or even inland. #he bill has therefore not the same meaning as a QshippedQ bill
and the buyer under a *.".7. contract need not accept such a bill for ultimate $nancial
settlement through the bank unless provision has been made in the contract.
7orwarding agents will invariably avoid handling Qreceived billsQ for their clients
unless special circumstances obtain.
3. #hrough bills of lading0 "n many cases it is necessary to employ two or more
carriers to get the goods to their $nal destination. #he on carriage may be either by asecond vessel e.g. to the eychelles "slands via ?ombasa or Bombay or by a
di'erent form of transport e.g. to destinations in the interior of *anada. "n such
cases it would be very complicated and more e%pensive if the shipper had to arrange
on carriage himself by employing an agent at the point of transshipment.
4. >roupage Bill of
-
8/10/2019 Agri Export Management
51/59
the use of containers and particularly evident in the continental trade and deep sea
container services. "t will doubtless increase with containerisation development and is
ideal to the shipper who has small quantities of goods available for e%port.
)dvantages of groupage include less packing0 lower insurance premiums usually
quicker transits less risk of damage and pilferage and lower rates when comparedwith such cargo being dispatched as an individual parcel/consignment.
5. #ransshipment Bill of
-
8/10/2019 Agri Export Management
52/59
and including the cost of loading the goods on to the vessel. "t does not include the
cost of sea freight. "n the case of *.".7. the price quoted includes the cost of the
goods the cost of insuring the goods to destination and the freight or cost of
transport.
The o#ean !ill of la"ing means that it is a0
a. ) document carrying title of ownership.
!. ) contract of carriage between the shipping company and the
e%porter/consignee.
#. ) receipt for goods which is given by the shipping company to the
e%porter.
". #he bill of lading con$rms where goods are to be delivered
e. 8nsures process of payment of freight charges.
f. Came of the person to whom the goods are consigned.
#he bill of lading is a document which describes all legal responsibilities and liability
between e%porters importer and shipping company. )s the original bill of lading is a
negotiable document and e%porter shall try to prepare it in such a manner that he
shall retain the title of cargo and title shall be delivered to importer only when he
makes the payments to issuing bank in turn for documents.
rder bills of lading play a signi$cant role in international transactions in cases where
the mode of payment is letter of credit or documentary collections. "t is the usual
practice that bill of lading shall be on boardbills of lading as it provide the proof
to the importer that his cargo has been placed on board to shipment and he will
receive his cargo once he receive documents in e%change for payment to
-
8/10/2019 Agri Export Management
53/59
II. "t is kind of contract between e%porter and shipping company where by shipping
company undertakes the responsibility of transporting the cargo to destination
in e%change for payment of freight charges.
III. Bill of lading is document which indicates and records the transfer of title or
ownership from the e%porter/ consignor to the importer/ consignee on paymentsby importer to e%porter.
B. Airway Bill
#he airway bill is a non#negotiableinstrument meaning that it doesnGt carry the title
of goods as in case of bill of lading. )irway bill refers that goods has been received by
the carrier. )irway bill is issued by the cargo airline carrier or by consolidator of the
cargo. #he airway bill refers that the airlines/carrier has accepted the goods and it
obligates to the carrier to carry the consignment to the airport of destination of
importer country. )irway bill is also documentary evidence that contract has been
e%ecuted. #he airway bill also serves the purposes of providing guidance to
airlines/carrierMs sta' for handling dispatching and delivering of the shipments to
destined port in importer country. ome important features of airway bill are as
follows.
a. )irway Bill is non:negotiable
!. )irway bill cannot be used as a collection instrument for receiving
payments.
#. )irway bill has provision for insurance but some carriers donGt provide
such coverage hence e%porter shall take care.
". )irway bill is not a document of title to the goods.
46. Certi>#ate of ,rigin
*erti$cate of rigin is a document which is used to avail the preferential tari' rates
as per some agreements such as >= >#= & C)7#). *erti$cate of origin indicates
that the goods have been manufactured from the originating country material hence
they shall be entitled to preferential duties. "n certain cases countries which are
giving such preferential treatment require legalization of the document from their
country consular for e%porter entitled to such preferential bene$ts. *erti$cation for
origin of goods in other cases can also be availed from *hamber of *ommerce such
as =A(**" or 7"**". Aowever the certi$cate of origin provided by *hambers of
-
8/10/2019 Agri Export Management
54/59
*ommerce is general has to be authenticated by importer country *hamber of
*ommerce.
47. Bill of E1#hange:
Bill of e%change is a non:interest:bearing written order which is used in international
trade as it provides a sort of guarantee to e%porter to get a speci$ed and $%ed sum
of money from importer at a predetermined future date as has been agreed between
e%porter and importer in e%port sales contract.
Bills of e%change are Dust like the cheque hundi or promissory notes. Bills can be
withdrawn by individuals or banks. Bill of e%change is also a transferable by
endorsements of importer.
4/. Shipping A"vi#e hipping advice is prepared so as to provide information to
the overseas importer about the shipment of goods. #his document is sort of
intimation to the importer that goods has been shipped to importer as per agreed
terms and condition in sales contract and commercial invoice.
48. )etter of Cre"it
-
8/10/2019 Agri Export Management
55/59
#op
-
8/10/2019 Agri Export Management
56/59
riginal ;hite(uplicate Bu'
#riplicate =inkIuadruplicate >reenIuintuplicate Blue
&ource' Central Excise )anual
"t is advisable that the copies of )98.1 shall contain a color band on the top or on the
right hand side according to the color symmetry as given above.
5. Shipping BillD Bill of E1port:
)s per provision of the "ndian *ustoms )ct 1+,2 goods cannot be loaded on board
the carrier unless permission from the customs authorities has not been obtained.
uch permission to e%porter is accorded on a document prescribed by the customs
authorities. "n cases where the goods are sent by sea this document is known ashipping Bill and when goods are sent by land/rail it is known as bill of e%port. Bill of
8%port is also known as )pplication for 8%port. 8%port consignment through post
parcel requires custom declaration form to be $lled in by the e%porter. hipping Bill/
Bill of 8%port is a document which is essentially required by the *ustoms
)uthority/o-cials for allowing shipment for e%port purposes with let export seal.
#he various types of the hipping Bill are mentioned below by having distinction to
the e%port goods0
a 8%port duty/ cessb 7ree of duty/ cess
c 8ntitlement of duty drawback
d 8ntitlement of credit of duty under (8=B cheme
e 9e:e%port of imported goods
#he following are the documents required for the processing of the hipping Bill0
a (7/>9 forms in duplicate for shipment to all the countries.
b 4 copies of the packing list or cargo manifest mentioning the contentsquantity gross and net weight of each package of the cargo to be e%ported.
c 4 copies of invoices which contains all relevant particulars like number of
packages quantity unit rate total f.o.b./ c.i.f. value correct & full description
of goods to be e%ported.
d 8%port ales *ontract
-
8/10/2019 Agri Export Management
57/59
e )98 " & "" both original and duplicate and commercial invoice/ legalized
invoice/ customs invoice as the case may be.
f =re:shipment "nspection/ 8%amination *erti$cate of quality control.
#he shipping bill is presented in the following types of formats as given below0
a ;hite hipping Bill in 3 copies for e%port of duty free of goods.
b >reen hipping Bill in 4 copies for the e%port of goods which are under claim
for duty drawback.
c Tellow hipping Bill in 3 copies for the e%port of dutiable goods.
d Blue hipping Bill in 6 copies for e%ports under the (8=B scheme.
7or the goods which are cleared by
-
8/10/2019 Agri Export Management
58/59
freight forwarder pay such charges on the behalf of e%porter and then chares the
same from e%porter through their fess.
/. Vehi#le Chit:
Kehicle chit is given by the customs o-cial when the goods enter to customs
designated areas so that the duty can be assessed and let e%port seal can be availed
from the customs for loading the cargo to the ship.
8. E1#hange Control $e#laration %orms:
#he 7oreign 8%change ?anagement )ct 1+++ and subsequent rules has prescribed
certain forms to be used by e%porters for declaring the foreign e%change which they
shall be bringing to the country through the e%ports in following forms. "t is to be
noted that declaration has to be made with appropriate forms as mentioned below for
all e%ports as per 7oreign 8%change ?anagement )ct 9ules and regulations to 9B".
a8%change *ontrol (eclaration
(7 />9 7orm
(7/>9 refers to proof of e%ports to all
the countries e%cept by post. (7
7orms are used for e%ports more than
25U and less than that >9 form will
be used. 8V/ 8H have certain
e%ceptions in use of >9 form even in
case of e%port less than 25U.b == 7orm == forms refer to e%ports to all
countries by parcel post e%cept in the
case where e%port is made on
-
8/10/2019 Agri Export Management
59/59
9. %reight Payment Certi>#ate: ) *erti$cate showing that freight for the goods
meant for e%port has been paid. 7reight payment certi$cate is a document which
indicates that the freight for the consignment has been paid to the shipping
company. "t is a supplementary evidence to avail second bill of lading in case the
original has been lost.
. Insuran#e Premium Payment Certi>#ate: hipping company demand
"nsurance premium payment *erti$cate for the insurance cover of the goods. #he
carriage of goods through ship is full of risks and company usually does not want to
be responsible in case of pilferage/loss/piracy etc. and insist that insurance cover
shall be taken by the e%porter for the goods to be e%ported.