Module 2

Background of India’s Export

Objectives

• Export Potential of States & Essentials of Exports

• Basic Steps to Export
• Export Preliminaries
• How to export?
• Marketing related issues.
• Where to Export
• Pricing and Costing
• FTP related issues
• WTO Related Issues

Introduction

The trade potential of a country depends on a number of parameters. Some of the major
demand side parameters include income of the trading partners, exchange rate movements,
price movements in domestic as well as foreign countries etc. On the other hand, supply side
parameters affect cost of producing export products. Cost of inputs, managerial efficiency,
incentives provided by government schemes etc. affect the competitiveness of export
products. Other than these some qualitative factors like macro policy in home and partner
countries, trade arrangements (in the sense whether the countries are members of Regional
Trading Agreements (RTAs)), trade barriers both tariff and non-tariff etc. also affects trade
potential of a region. Trade potential at the regional level within countries may not differ
from that at the country-level as far as demand side parameters are concerned since national
and international factors affects all the regions equally. But the supply side parameters may
give rise to differences in competitiveness of regions with respect to potential export
products. Depending on the availability of resources and skills cost of producing the same
product may differ across regions. The “Make in India” initiative can support India’s
manufacturing sector, backed by boosting domestic demand and further regulatory reforms.

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Export Potential of States

Important details about your state

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Essentials of Exports

Introduction

There is no question that operating an import/export business is inevitably more complicated

and risky than operating business in the domestic markets. Nevertheless, experiences gained
in the domestic business could help jump start an export/import operation and it can be a
logical expansion of the compans domestic business activities.

If your company has done well in selling or buying products or services in the domestic
markets, the same basic strategy can be used to successfully enter overseas markets.
Incorporating and better understanding the following four key areas will help increase your
chances for success in the export/import business.

Export Preliminaries

• Export-Import is totally free with very limited restriction (96% items are free items)
• To find Buyers-Seller is your decision
• To decide Product and its Price-Qty are your decision
• You must prepare Export Business Plan

Important Steps to Export

Step 1: Point to remember

Step 2: Find item for export
Step 3: Find HS Code
Step 4: Find your item Type
Step 5: Analyse Export Import Data
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Step 6: Find Buyer

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How to Export

• Export Selling
• Indirect Exporting
• Merchant-Exporters

Starting an export business without investment

• Make the Decision

• Acquire the basic knowledge
• How it works
• Get the Tools you need to get started
• Define your market and select target product
• Write a business plan
• Incorporate your business
• Build relationship with those in connected to your line of business
• Get the necessary license and clearance
• Raise the needed capital

Documentation
• Inspection Certificate
• Testing Certificate
• Packing List
• Insurance Policy
• Invoice
• Mate Receipt
• Bill of Entry
• Bill of Lading
• Bank Realization Certificate
• Landing Certificate
• Certificate of Origin
• Scrip/Authorization under different Schemes

Marketing related issues

The more formal definition of marketing" is that it is an organizational function and a set of
processes for creating, communicating, and delivering value to customers and for managing
customer relationships in ways that benefit the organization and its stakeholders.

Marketing activities have been traditionally depicted in terms of a marketing mix, which can
be defined as the set of marketing tools needed to pursue marketing objectives. The
marketing mix consists of four broad groups, popularly referred to as the four Ps of
marketing. These are:

• Product
• Price
• Place
• Promotion

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International Marketing

Marketing as a concept is universal, but the markets and behaviour of consumers vary across
countries and can be quite different. This makes it essential for any student of international
marketing to gain knowledge in three critical areas:
• Cross-cultural knowledge
• Country/regional knowledge
• Cross-border transactions knowledge

Market Information Sources

• Export Promotion Councils/Commodity Boards (Visits, Exhibition, Trade Fair

Participation)
• Federation of Indian Export Organization (FIEO)
• Ministry of commerce: Trade Data
• Directorate General of Commercial Intelligence and Statistics (DGCIS): Trade Data
• Indian Trade Promotion Organization (ITPO), Visits, Exhibition, Trade Fair
Participation
• Indian Institute of Foreign Trade (IIFT)
• Indian Embassies and High Commissions Abroad
• Chamber of Commerce and Industries
• Various International Trade Directories, Journals, Market Survey Reports
• Business Promotion: website
• Friends/Relative/acquaintances
• Participating International Trade Fairs/Exhibitions
• International yellow Pages
• Advertise and Marketing
• Popular Websites/Export Surfing

Relation Management

• Employee
• Agent
• CA
• CE
• Advocate
• Custom House Agent
• Logistics
• Consultant

Processing Export Order

• Confirmation & Export Contract

• Procurement of Good
• Quality Control
• Finance
• Levelling, Packaging
• Risk Management
• Delivery
• Custom Procedure/Cha
• Documentation
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 • Taking Export Benefits
Types of Inco Term

Group-E- at the exporter’s premises

• EXW-Ex Work (named place) (Any mode of transportation)

Group-F – to a carrier appointed by importer

• FCA-Free Carrier (named place)

• FAS-Free alongside Ship (Named port of shipment)
• FOB – Free on Board (Named post of Shipment)

Group-C – Obligation of all cost, charge and risks till start of cargo’s journey

• CFR – Cost & Freight (… cost up to named port of destination)

• CIF – Cost, Insurance & Freight (… cost up to named port of destination)
• CPT – Carriage paid to (… named place of destination)
• CIP – Carriage and Insurance Paid to (named place of destination)

Group-D- Obligation of all risk till importers country

• DAF- Delivery of Frontier (… named place – only land transportation)

• DES- Delivery Ex Ship (… named port of destination)
• DEQ- Delivery of Ex Quay (… named place of destination + unloading)
• DDU- Delivery duty unpaid (… named place of destination + all duty)
• DDP- Delivery duty paid (…named place of destination+ all duty)

Risk Management

Credit Currency
Risk Risk

Carriage Country
Risk Risk
(ECGC) (ECGC)

Digital India (E-Governance)

• Electronic Importer Exporter Code (e-IEC)

• Electronic Bank Realization Certificate –17 Aug. 2012
• Mobile Application of FTP
• Online filling Application
• Digitally Signed Certificate
• Online inter-ministerial consultation
• Electronic Data Interchange (EDI)

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Ease of Doing Business: DGFT

Ease of Doing Business :24*7 Custom clearance

WTO and Foreign Trade Policy in India

In order to ensure smooth trading relations internationally and maximize global trade after
Second World War, an international institution in the form of General Agreement on Tariffs
and Trade (GATT) was setup. Its objective was to work for reducing tariff on international
trade in goods and provide a forum for negotiation on trade disputes and trade related issues
among nations. The GATT mandated for trade in goods. The WTO, which replaced GATT in
1995 mandated for trade in goods as well as services and issues affecting international trade.
Hence, WTO has considerably greater influence on trade among nations. The present chapter
discusses various provisions of WTO and its implications and influence on agricultural sector
in India.
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The WTO is a multilateral framework (an agreement among governments) for conduct of
international trade in goods and services and also for protection of intellectual property rights,
i.e., patents, copyrights, trademarks, etc and for discussion of trade related issues. The WTO
has a set of multilateral agreements primarily on the rights and obligations (of governments)
that prescribes for governments in formulation of rules, procedures and practices related to
international trade.

SOME IMPORTANT LINKS FOR READING MATERIAL

• Doing Business Report 2018, 15th Edition, World Bank, Available at :

http://www.doingbusiness.org/~/media/WBG/DoingBusiness/Documents/Annual-
Reports/English/DB2018-Full-Report.pdf

• Doing Business 2018, Economic Profile – India, 14th Edition, World Bank,
Available at : http://www.doingbusiness.org/reports/global-
reports/~/media/WBG/DoingBusiness/documents/profiles/country/IND.pdf

• The Global Competitiveness Report 2017–2018, World Economic Forum,

Available at : http://www3.weforum.org/docs/GCR2017-
2018/05FullReport/TheGlobalCompetitivenessReport2017%E2%80%932018.pdf

• The Future of Manufacturing: Driving Capabilities, Enabling Investments,

World Economic Forum, Available at :
http://www3.weforum.org/docs/Media/GAC14/Future_of_Manufacturing_Driving_C
apabilities.pdf