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International Business , as in the case of any other business operates under conditions that influence the business activity. Such factors affecting the international business are called collectively as international business environment. Some factors are favourable / conducive to carrying of international business and some may be adverse. International business can be successful if the favourable factors are exploited to full advantage and control measures are taken to minimize the negative factors that influence international business.
Imports are regulated in a country to conform with its policy of Optimising exports with
minimum corresponding imports without adversely affecting the exports. Regulatory
bodies ensure implementing this policy through lisences and other procedures. With
liberalization policy of the country, much of the stringent restrictions have been
rationalized with a view of promoting the economy.
Imports are resorted to when there is a demand in local market for such product for consumption, production for local consumption / exports. The demand is ascertained, sources established, best rates obtained and documentation/ formalities complied with for movement of goods, clearance at customs, payment of dues etc.
Consumers, industries, government agencies- all of them import goods & services.
Before importing they have to get license and import-export code number from
controller of import \u2013 exports. License is issued for a period of 12 months. The
procedures have been considerably liberalized in order to boost international business.
International business has been steadily growing. India\u2019s Imports in 2005-06 of
Rs.573000 Cr. grew to Rs.737000 Cr. in 2006-07. Our country\u2019s exports in 2005-06 of
Rs.405000 Cr. grew to Rs.511000 Cr. in 2006-07. USA \u2018s share in global market is
substantial with USA being a big importer as well as exporter of goods & services.
to minimize the threats of the negative factors. Clear understanding of the international
business environment gives the perception of opportunities and threats to a global
Diversity of culture & political conditions and social behavior may prove a deterrent if
Not understood clearly by the MNC.
Inflation, weak Foreign Exchange position, low per capita income, high interest and
Restriction on employment of foreign nationals, very stringent immigration control,
government intervention in free movement of foreign exchange, restriction on
repatriation of earnings, tariff barriers make a host country unattractive for international
The Central Bank in India is Reserve Bank of India. It does not involve itself in
providing finance to exporters, but initiates and implements policies that would create a
business environment encouraging international business. It also encourages banks by
providing re finance facilities of advances made to exporters.
Refinance under DBK Credit Scheme: Exporters can avail interest free advance from
commercial banks (upto90 days) against shipping bills provisionally certified by customs
towards refund of customs duty.
Liberal Refinance Facility: commercial banks & financial institutions can avail refinance
facility against medium / long term loans given for exports with the stipulation that
interest should not exceed 1.5% over refinance rate.
Concessional Rate of Exchange: Reserve Bank has introduced a scheme of
concessional rate of exchange for interest, commission, discount and bank charges
encouraging the commercial banks to provide foreign exchange cover for medium and
long term exports.
Customs Clearance Procedures: Since exports and imports involve movement of goods
from one port in a country to another port in a different country, custom clearance
procedures will have to be complied with. The procedure involves \u2018Carting Order\u2019 from
the port authorities to carry the goods inside the port followed by \u2018Loading of goods on
board\u2019. The procedures are long and cumbersome.
A clearing agent is well acquainted with these procedures and availing the help of a
clearing agent would be of assistance to an exporter. Big export houses have in house
staff trained in clearing and forwarding tasks.
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