Export Scenario in India

India is all set to become a major player in the world trade. Indias strategic location gives immense business opportunities. It has high labour advantage & has extensive scientific and technical manpower. Wage rates are competitive compared to international level. Government provides incentives to exporters. Export of $80bn achieved against a target of $ 74Bn 24% Growth rate corresponded to the target of 16%. A growth of 34% in imports. Exports generated incremental employment of 10Lakh jobs in 2004-05.

Export of Principal Commodities (Rs. Crores)

Commodity Apr-Dec 2006 Apr-Dec 2007(p) % Growth % Growth

Plantation Agri. & Allied Prods. Marine Products Ores & Minerals Leather & Mnfrs Gems & Jewelery Sport Goods Chemicals & related products

Rs.3062 Cr. 27556 5681 21052 10138 52534 452 61075

2672 34847 5473 22711 9899 58464 374 63177

-12.74 26.46 -3.68 7.88 -2.36 11.39 -17.29 3.44

0.58 7.61 1.19 4.96 2.16 12.76 0.08 13.79

Export of Principal commodities (Rs. Crores) contd.

Engineering & related products Electronic goods Project goods Textiles Handicrafts Carpets Cotton raw INCL waste Petroleum products Unclassified exports 9800 530 54493 1532 3202 2902 65328 10446 9587 324 52559 1309 2612 3861 79484 47511 -2.17 -38.9 -3.55 -14.59 -18.42 -18.42 21.67 67.62 2.09 0.07 11.47 0.29 0.57 0.51 17.35 3.82 86687 93206 7.29 20.55

Total

416685

458076

9.93

100.00

Export by Region (Rs. Crores)

Region Apr-Dec 2006 Apr-Dec 2007(P) % Growth % Share

1. Europe EU Countries(27) Other WE Countries East Europe 2. Africa Southern Africa West Africa Central Africa East Africa 3. America North America Latin America

93966 87724 5997 244 27850 9511 7680 681 9977 81162 67332 13830

106456 98607 7538 310 33200 9783 10974 760 11681 80768 65211 15555

13.29 12.41 25.70 26.62 19.21 2.86 42.88 11.73 17.08 -0.49 -3.15 12.47

23.29 21.53 1.65 0.07 7.25 2.14 2.40 0.17 2.55 17.63 14.24 3.40

Export by Region (Rs. Crores) contd.

Region Apr-Dec 2006 Apr-Dec 2007(P) % Growth % Share

4. Asia & Asian East Asia Asian Wana NE Asia South Asia 5. CIS & Baltics CARs Countries Other CIS Countries 6. Unspecified regions Total

208094 5448 43155 97357 60676 21456 4971 671 4199 739 416685

230781 3980 43542 89058 699756 24444 5049 707 4341 1819 458076

10.90 -26.94 0.90 15.13 14.96 13.92 3.66 5.42 3.37 146.24 9.93

50.38 0.87 9.51 19.44 15.23 5.34 1.10 0.15 0.95 0.40 100.00

Top 10 Commodities of Export (Rs. Crores)

Rank Region Petroleum (Crude & Products) Gems & Jewellary Machinery & Instruments RMG Cotton INCL Accession Drugs Pharm. Fine Chen. Manufactures of Metals Transport Equipment Other Commodities Cotton Yarn, Fabric Apr-Dec 2006 Apr-Dec 2007(P) % Growth % Share

1. 2. 3. 4. 5. 6. 7. 8. 9.

65328 52534 22226 22388 19504 16908 15203 10430 14103 117.19

79484 58464 24660 20951 20743 19565 19025 17502 13640 13168

21.67 11.29 10.95 -6.42 6.36 15.71 25.14 67.80 -3.28 12.39

17.35 12.76 5.38 4.51 4.53 4.27 4.15 3.82 2.98 2.87

10. Iron Ore

Top 10 Commodities of Export (Rs. Crores)

Rank Country Apr-Dec 2006 Apr-Dec 2007(P) % Growth % Share

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

USA UAE China PRP Singapore UK Hong Kong Germany Netherlands Belgium Italy

63573 40672 25493 21479 18671 14855 12818 8523 11075 11792

61561 46140 27259 20743 19804 17936 14682 14439 12109 11235

3.17 13.44 693 463 607 2074 1453 6942 934 473

13.44 1007 595 453 432 392 321 315 264 245

Total

416685

458076

993

100

Export to SAARC Countries & CIS Countries

South Asian Free Trade Area (SAFTA): it provides phased tariff liberalization programme (TLP) under which in two years Non-least developed contracting states (NLDCS). Bangladesh, Bhutan, Maldives & Nepal are (LDCS). NLDCS to bring down tariffs to 20% & LDCS to 30%. Non LDCS to bring down tariffs from 20% to 0.5% in 5 years while LDCS will do in 8 years NLDCS to reduce their tariffs for LDC products to 0.5% in 3 years Preferential trade agreement (PTA) gives access to only certain goods, reduce tariffs India enjoys PTA with Afghanistan, Chile & MERCOSUR (Brazil, Argentina, Uruguay & Paraguay).

Export to Afghanistan
PTA through reduction & elimination of tariffs on the movement of goods. 8 items are covered in preferential tariffs granted by Afghanistan, 38 items granted by India as per agreement.

Export to Bangladesh
Trade is governed by agreement signed in April 2006 & is valid for 3 years. Use of waterways, roadways, railways are permitted for transporting goods between two countries. Under this agreement mutually most favoured nation (MPN) granted to each other. Both nations will grant vessels flag of any third country.

Export to Bhutan
Agreement provides free trade & commerce between two countries. Agreement signed on 29th March, 2006 & is valid for 10 years. All exports & Imports of Bhutan to & from other countries other than India will be free from & not subject to custom duties & trade restrictions of India. India provides transit facility for Bhutans trade. Agreement on excise duty on goods of its origin exported to the other.

Export to Maldives
Governed by agreement signed on 31st March 1981. Most favoured nations to each other. Merchant Cargo Vessel of each country will be given MFN. Both countries shall encourage & facilitate: Visit of commercial and technical representative Participation in trade fair Arranging exhibitions exemption from custom duties as per laws. India has agreed to supply commodities though may be in restricted list as per quota.

Export to Nepal
Indo Nepal treaty of trade valid upto 2012. Treaty of transit. Agreement of cooperation to control unauthorized trade.

Export to Pakistan
There is no formal trade agreement. India has granted MFN status but Pakistan has not. Pakistan imports from India 1075 items.

Export to Sri Lanka

Indo Lanka trade agreement Free trade zone for movement of goods through elimination of tariffs being aimed to achieve Products of origin are eligible for preferential treatment. For development of specific sectors of industry, both countries agree to lower value addition norms being considered. Joint committee/group on customs etc. Duty free access to all exports from Sri Lanka. Sri Lanka to provide tariff concessions on exports to Sri Lanka.

Export to CIS Countries

CIS has no formal political institution. Reasons affecting trade are: distance, language barrier, inadequate transit facility, inadequacy of information regarding business opportunities. Lack of interaction. Inadequate banking facilities in CIS countries Trade facilitation measures were taken International transit agreement for movement of goods Banking facilities in CIS countries created by India Double taxation avoidance agreement (DTAA) Bilateral investment promotion agreement (BIPA)

Trade Promotion Measures

More interaction Joint commissions FICCI/CII etc. Indian trade promotion organization Export Credit & guarantee organization Export promotion councils Apex chamber of commerce EXIM Bank, Indian missions

Export Strategy
Define strategy fo export Layout plan for export Carryout SWOT analysis Study government rules & regulations 1. Decide company objectives for export 2. Study foreign markets with the following in view 3. Economic stability of importing country 4. Political relations between two countries 5. Distance of potential market & cost implications 6. Transport and distribution infrastructure to the importing country

Market Information
Department of Commerce and Government agencies con provide market information. Export promotion councils/commodity boards. Federation of Indian Export Organization. Indian Institute of foreign Trade. Indian Trade Promotion Organization. Overseas Chambers of Commerce & Industry. Embassies & High Commissions. Analyze Trade Economic Statistics. Hire consultant for International Trade & Marketing. Talk with successful exporter. Engage in market research through, internet, yellow pages, advertisements, friends etc. Select a product.

Operations
Export business can be operated through merchant exporter or manufacturer exporter. Agent on behalf of exporter. Channels of export: agent, open a branch office overseas, export through canalized agency, trading house, export house or direct export. Locating buyers from magazines, business directories, export assistance centers etc. Advertisement in TV etc. Brochures, photographs, details of company can be sent to overseas buyers. Open bank account. Import export code number. Registration cum membership certificate (RCMC) for exporter as per foreign trade policy. PAN, VAT registration, export licence.

Appointing Overseas Agent

Agent is someone who acts on behalf of a principal. He can be paid salary or commission. Benefits of appointing agent. a) Local knowledge & established networks. b) Knows demand & supply. c) Can identify immediate & prospective competitors. d) He is a source market knowledge & intelligence. e) He can render valuable advice on future market trends. f) He can provide support for transportation, accommodation, laison with Government depts whenever required by exporter.

Factors for Appointing Agent

Current status & history of agent. Agencies held now by agent Sales coverage, territory etc. Capability to promote sales etc. Trade & bank references Commission & payment terms Type of agent : Commission agent, spare parts, service stocking agent.

Agency Agreement
1. Not have business dealings with competing firms. 2. Not reveal any confidential information to competitor. 3. Not enter into agreement binding to the Indian company. 4. Refer all quarries to India. 5. Performance requirement minimum sales volume. 6. Safeguarding Indian companys interest. 7. Termination. 8. Specify terms of agreement, period of agreement & renewal process. 9. What countys laws will apply. 10. Language of contract.

Export Promotion & Incentives Assistance to States for Infrastructure Development of Exports (ASIDE)
To encourage & participate in promotion of exports Objectives of ASIDE are: a) Developing infrastructures like roods, ports etc b) Setting up ICDs & CFS c) Creation of state level export promotion industrial parks/zones. d) Augmenting common facility in existing zones. e) Equity participation in infrastructure projects. f) Development of minor ports & jetties. g) Assistance in setting up common affluent treatment plants. h) Power supply. i) Any other activity notified by department of commerce. Funds are allocated to the above works for improvement of infrastructure to the states.

Marketing Development Assistance (MDA) Objectives

1. Assist individual exporters for export promotion activities abroad. 2. Assist export promotion councils to undertake export promotion activities abroad for their products. 3. Assist approved organizations/trade bodies to undertake innovative activities for export promotion 4. Assist EPCs to contest countervailing duty/antidumping cases initiated abroad. 5. Assist focus area export promotion programmes in specific regions abroad. Like Focus CIS, Africa. 6. promote residual essential activities connected with marketing promotion efforts abroad. 7. Financial assistance with grant is available to exporters to travel to Latin America, Africa, CIS region, Asian countries, Australia & New Zealand. 8. In other areas financial assistance without travel grant is available. 9. MDA is available for exporters with annual export turnover upto Rs.15 Crores.

Market Access Initiative Scheme (MAI)

MAI has been launched to promote exports on sustained basis. It is based on focus product, focus market. Assistance is extended to EPCs & other bodies involved in exports. Activities funded under MAI are: Market studies, setting up show rooms, warehouse sales promotion companies, participation in international trade fairs, brand promotion, registration charges for Pharma & Testing charges for engineering products. Assistance ranges from 25% to 100% of total cost.

Towns of Export Excellence (TEE)

Some towns have been substantially towards exports. Recognition is being granted to these industrial clusters to maximize their potential & to move up in value chain. Towns producing goods of Rs.1000 Crores or more will be notifies as Towns for Export. However towns for excellence in handlooms, handicrafts, agriculture, fisheries sector threshold limit would be Rs.250 Crores. Recognized associations of units will be able to access funds under MAI for creating technological services. Common service providers are eligible for EPCG. Such areas will receive priority assistance from ASIDE.

Focus Market Scheme

The objective is to offset the high cost and other disabilities to select international market to enhance export competitiveness to these countries. Exporters are entitled for 2.5% duty credit scrip of the FOB value of exports. The scrip & items imported under the scheme are freely transferable. Coverage of FMS increased to include 10 more countries Mongolia, Bosnia, Albania, Macedonia, Croatia, Honduras, Djibouti, Sudan, Ghana, Colombia. Products which have low penetration are considered for export incentives as FPs.

Focus Product Scheme

Incentives export of such products which have high employment intensity. To offset infrastructure inefficiency costs, these incentives are provided. Exports of notified products through EDI enabled ports to all countries are eligible for duty credit scrip equivalent to 1.25% of FOB value of exports. Exports made by EOUs who do not avail tax benefits exemption are eligible. Deemed exports, are not eligible.

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