EXPORT MARKETING

2017
ANS 2
a. Distinguish Between Road Transport and Air
Transport.
Road Transport
 This type of transport is undertaken through artificial tracks
and ways.
 It involves comparatively small investment.
 The speed of this type of transport vary according to the nature
of the vehicles.
 It is useful for internal trade.
 It is carried on over short distance.
 Freight rate of this type of transport rate of this type of transport
is usually low and certain.

Air Transport

 This type of transport is undertaken through natural ways and

tracks.
 It involves very large investment.
 The speed of this type of transport is fastest.
 It is useful for both internal and external trade.
 It is carried on any distance.
 The freight of air transport is usually very high.

b. Key Differences Between Domestic and International

Marketing
 1. The activities of production, promotion, advertising,
distribution, selling and customer satisfaction within
one’s own country is known as Domestic marketing.
International marketing is when the marketing activities
are undertaken at the international level.
2. Domestic marketing caters a small area, whereas
International marketing covers a large area.
3. In domestic marketing, business operations are done in
one country only. On the other hand, in international
marketing, the business operations conducted in multiple
countries.
4. In international marketing, there is an advantage that the
business organisation can have access to the latest
technology of several countries which is absent in case
domestic countries.

c. What is pre shipment credit

Pre-shipment finance refers to the credit extended to exporters
prior to the shipment of goods for the execution of export order.
It is also known as 'Packing Credit. It, refers to any loan granted
to an exporter for financing the purchase, processing
manufacturing or packing of goods as defined by the Reserve
Bank of India.

Pre-shipment finance is of particular importance to small scale

manufacturers and exporters who do not possess sufficient
financial resources to meet the expenditure involved in the
production of goods for export. Exporters can get pre-shipment
credit from:
a) Indian commercial banks.
(b) Branches of foreign commercial banks in India.

d. Cash Compensatory Support (CCS)

The Cash Compensatory Support (CCS) was introduced in the

year 1966. It was planned to present compensation for un-
rebated indirect taxes paid by exporters on higher freight rates,
market development costs and inputs.

e. Duty Drawback System

The main objective of duty drawback system is to repay

exporters for tariff paid on the imported materials &
intermediates & central excise duties paid on locally produced
inputs which penetrate into export production. This is a
universal practice & the rationale is straight - forward.

ANS 3

a. Role or functions of Clearing and Forwarding (C&F)

Agents in Exports

1. Customs Formalities
Goods can be shipped out of India only after obtaining the
customs clearance. To obtain the customs clearance, the
clearing and forwarding agent should submit a shipping bill in
the prescribed form. The shipping bill is to be prepared in
quadruplicate. The shipping bills should be accompanied by the
following documents.
1. Contract with the overseas buyer in original.
2. Invoice for the goods.
3. Packing list.
4. GR-1 form or EP forms prescribed by the Exchange Control
under the Foreign Exchange Regulation Rules.
5. AR 4 or AR 4A forms in original and duplicate.
6. A proforma showing details of drawback of duty if any
claimed.
7. In case deferred payment, a copy of the approval of the RBI.
8. Copy of the L/C if any.
The customs authorities scrutinize the shipping bill and other
requisite documents and if prima facie satisfied, they put it for
export subject to the physical examination of the cargo by the
customs staff. The export cargo can enter the port and can be
kept in the Harbour Transit Shed even before the shipping bill
is passed by the customs. However, only after obtaining the
shipping bill the authorities allows the cargo to ship into the
vessel.
2. Obtaining of the Carting Order
The export cargo lying in the Harbour Transit Shed should then
be moved inside the port area and subsequently loaded on board
the assigned ship. Permission should be obtained from the
Superintendent of the Port Trust, in charge of the shed for
moving the goods into the concerned shed of the port. The order
issued by him is known as carting order.
3. Customs Examination of Cargo at Docks
The main purpose of the customs examination at the dock is to
verify whether the goods packed and kept ready for shipment
are the same as those mentioned in the shipping bill. The
customs‘ appraiser, if necessary, may physically examine the
 goods packed inside. He shall make an endorsement on the
shipping bill thus certifying that the goods have been examined.
Once the endorsement is made, the goods are deemed to be
“Out of Charge” of the customs.
4. Let Ship Order
The preventive officer of the customs department shall
supervise the loading of the cargo on board the vessel
nominated for export. Before the goods are actually loaded,
permission from the preventive officer should be obtained. The
permission is known as “Let Ship Order”. The let ship order is
given as an endorsement on the duplicate copy of the shipping
bill. It is in fact an authorization given by the customs
department to the shipping company to accept the cargo on
board of the vessel.
5. Mate Receipt
As soon as the goods are loaded on board the vessel, the captain
or master of the ship shall issue a document known as Mate
Receipt direct to the port trust superintendent, in charge of the
shed.

b. Objectives of Sound Export Packing

These are
(i) To insure the safe arrival of goods at destination. The type
of packing which will deliver the commodity in a good
condition to the foreign customer will vary with:
 The product;
 The port of destination;
 The length of journey;
 The climate of the place of delivery;
 Heat and moisture to which the goods are subjected during the
voyage.
Only experience and experimentation will prove or enable the
exporter to develop the type of container or packing that is best
suited to the particular conditions.
(ii) To economize on the shipping space. Ocean shipping space
is expensive and unless care is taken to ec0nomize on this
space, it can often be as costly to the exporter as the space
actually occupied by the merchandise itself. Only ingenuity and
engineering applied to that end will produce the most
satisfactory results.
(iii) To save expense by use of economical packing materials.
It sin not always necessary or even desirable to use heavy
materials or to use first grade materials. As matter of fact, great
advances have been made in the use of heavy paper cartons,
and some exporters. Have found that certain products can be
successfully shipped overseas in these cartons.
(iv) To prevent pilferage. General safeguard against pilferage
is to pack the goods securely and to put on the case nothing that
will announce the character of its contents to the intending
pilferer.
(v) To insure the lowest possible customs duties. The basic
rules to insure goods export packing are:
 He should ask from the customers for complete instructions:
how to pack his order, what conditions it must withstand during
the voyage, whether the packing will affect the duties to be
levied on the shipment. He should then supplement this with
 advice form the shipping agents and from information gathered
from official reports.
 He should institute test in the factory to determine the strength
of the various styles of packing and should ask the customer to
fill out a slip reporting the condition in which the goods are
received by him. Such a system, with the results tabulated and
kept on office record cards, will quickly and surely culminate
and difficult that packing might present.

c. E-Marketing Advantages and Disadvantages of E-

Marketing

Advantage of E-Marketing

1. Internet provides 24 hours and 7 days “24/7” service to

its users. So you can build and make customers
relationships worldwide, and your customer can shop or
order product at any time.
2. The cost of spreading your message on internet is
nothing. Many social media sites like Facebook,
Linkedin and Google plus allow you freely advertise
and promote your business.
3. You can easy and instantly update your registered
customers or subscribers through email.
4. Visitors or potential customers of your website can get
up to the minute information on each visit.
5. If you are having a sale, your customers can start
shopping at the discounted prices literally as soon as
they open their email.
 6. If a company has an information sensitive business, like
a law firm, newspaper or online magazine, that
company can also deliver its products directly to
customers without having to use a courier.

Disadvantages of E-Marketing
1. If you want a strong online advertising campaign you
have to spend money. The cost of web site design,
software, hardware, maintenance of your business site,
online distribution costs and invested time, all must be
factored into the cost of providing your service or
product online.
2. Almost over 60% of households now a day shop online.
While that numbers are continuously growing, your
company needs to reach maximum people.
3. Some people prefer the live interaction when they buy
any product. And if your company has a small business
with one location, this may also deter customers from
buying who lives on long distances.
4. Your company should have updated information on
your site. This requires research and skills and thus
timing of updates is also critical.
5. Is your company web site secure? There are many
incorrect stereotypes about the security of the internet.
As a result, many visitors of your business web site will
not want to use their credit card to make a purchase. So
there is a fear in the minds of your visitors of having
their credit card info stolen.

d. Types of Export Incentive Schemes & Benefits in India

  Advance Authorization Scheme
As part of this scheme, businesses are allowed to import input
in the country without having to pay duty payment, if this
input is for the production of an export item. Moreover, the
licensing authority has fixed the value of the additional export
products to not below than 15%. The scheme has the validity
period of 12 months for imports and 18 months for carrying
out the Export Obligation (EO) from the date of issue
typically.

 Advance Authorization for Annual Requirement

Exporters who have a previous export performance for at least
two financial years can avail the Advance Authorization for
Annual requirement scheme or more benefits.

 Export Duty Drawback for Customs, Central Excise,

and Service Tax
Under these schemes, the duty or tax paid for inputs against
the exported products is refunded to the exporters. This refund
is carried out in the form of Duty Drawback. In case the duty
drawback scheme is not mentioned in the export schedule,
exporters can approach the tax authorities for getting a brand
rate under the duty drawback scheme.

 Service Tax Rebate

In the case of specified output services for export goods, the
government provides rebates on service tax to exporters.

 Duty-Free Import Authorization

This is another benefit the government has introduced by
combining the DEEC (Advance License) and DFRC to help
exporters get free imports on certain products.
  Zero duty EPCG (Export Promotion Capital Goods)
Scheme
In this scheme, which applies to exporters of electronic
products, import of capital goods for production, pre-
production, and post-production is allowed at zero
percent customs duty if the export value is at least six times
the duty saved on capital goods imported. The exporter needs
to verify this value(Export Obligation) within six years of
issuing date.

 Post Export EPCG Duty Credit Scrip Scheme

Under this export scheme, exporters who aren’t sure about
paying the export obligation can obtain an EPCG license and
pay the duties to the customs officials. Once they fulfill the
export obligation, they can claim a refund of the taxes paid.

 Towns of Export Excellence (TEE)

Towns that produce and export goods above a particular value
in the identified sectors would be known as towns of export
status. Towns will be given this status based on their
performance and potential in exports to help them reach new
markets.

 Market Access Initiative (MAI) Scheme

An effort to provide financial guidance to eligible agencies for
undertaking direct and indirect marketing activities like
market research, capacity building, branding, and compliances
in importing markets.

 Marketing Development Assistance (MDA) Scheme

This scheme aims to promote export activities abroad, assist
export promotion councils to develop their products and other
 initiatives to carry out marketing activities abroad.

 Merchandise Exports from India Scheme (MEIS)

This scheme applies to the export of certain goods to specific
markets. Rewards for exports under MEIS will be payable as
a percentage of realized FOB value.

Thanks to all these schemes, exports have increased by a right

margin, and there is a favorable atmosphere among the
business community. The government is also upcoming with
many other benefits to strengthen the export sector of the
country further.

ANS 4
a. Foreign Trade Policy
The Foreign Trade Policy (FTP) was introduced by the
Government to grow the Indian export of goods and services,
generating employment and increasing value addition in the
country. The Government, through the implementation of the
policy, seeks to develop the manufacturing and service
sectors. This article is a snapshot of the various aspects of the
policy.

Foreign trade plays an important role in the economic

development of country. It is said, “Foreign trade is not
simply a device for achieving productive efficiency but is an
engine of economic growth.”
Many reasons certify this statement.
(i)Nation can optimally use its resources.
(ii) Technical know-how can be imported.

(iii) Surplus production can be exported.

(iv) Machinery and raw materials can be imported as and when
needed.
(v) Food grains and necessary help can be imported during natural
calamities like earthquake, & flood etc.

The following are the features of foreign trade:

(i) Change in the composition of exports:
After independence many changes took place in export trade.
India exported tea, jute, cloth, iron, spices and leather before
independence. Now chemicals, readymade garments, gems,
jewellery, electronic goods, processed foods, machines.
Computer software etc. are exported along with tea, jute and
cotton textiles.
(ii) Change in the composition of imports:
India imported consumer goods, medicines, textiles, motor
vehicles and electrical goods before independence. After
independence, imports are fertilizers, petroleum, steel,
machines, industrial raw materials, edible oils and unfinished
diamonds.
(iii) Direction of foreign trade:
Direction of foreign trade means those countries with which
India has trade ties. Before independence, India has trade
relations with England and Commonwealth Nations Now
India has trade relations with U.S.A, Russia, Japan, European
Union and Organization of Petroleum Exporting Countries
(OPEC).
(iv) Balance of trade:
Simply speaking balance of trade means the difference
between value of exports and imports. Balance of payments is
favourable if exports exceed imports and un-favourable if
imports exceeds export. India’s balance of payment was
favourable before Independence. It was favourable to Rs. 42
crore, but after independence it becomes un-favourable. It was
Rs. 65741 crore adverse in 2003-04.
(v) Dependent trade:
Before independence, Indian foreign trade was dependent on
foreign shipping, insurance and banking companies. After
independence, cargo ships are being built in India. Banks and
insurance companies have started taking interest in foreign
trade.
vi) Trade through sea routes:
India’s foreign trade is through sea routes. India has very little
trade relations with neighbouring countries like Nepal,
Afghanistan, Pakistan, Bhutan and Sri Lanka etc.
(vii) Dependence on a few Ports:
Indian foreign trade is through Chennai, Kolkata and Mumbai
ports. These ports are always over-crowded. After
independence ports like Kandla, Cochin and Vishakhapatnam
have been developed.
(viii) Less percentage of world trade:
India’s share in world trade has been diminishing. It was 1.8%
of world’s total imports and 2% of world’s total exports in
1950-51. In 2003-04 India’s share in total world imports was
1% and in total world exports was 0.8%.
b. What do you mean by export promotion?
Export promotion means total activities of the government
and state institutions, which have a positive impact on the
export performance of the economy. Pro-export policy of the
 state supports enterprises in penetrating foreign markets and
increases their competitiveness. Export promotion is part of
an overall economic policy of the state. Through the system of
pro-export policy the state helps to accelerate the positive
effects that companies reach in foreign markets.
Instruments used to support the export can be divided into:
1. direct – subsidies for exporters, suppliers and customer
export loans, investments abroad, loans for export
production, tax credits, guarantees and export insurance.
2. indirect – informational support, technical assistance,
promotion of domestic exporters and their products
abroad.
c. What do you mean by commercial documents?
Written record of certain aspects of a commercial transaction,
such as an order, commercial invoice, shipping or transport
document, certificate of origin.

Types of commercial documents used in export trade

1. Bill of Lading
The bill of lading is usually the first common document used in
international shipment and it is a contract between the owner of
the goods and the carrier. It will state what goods are shipping,
where they are going and where the shipment started. In
addition, once the shipment is picked up, the bill of lading
serves as a receipt issued by the carrier.

2. Certificate of Manufacturer
This is a notarized document certifying that the goods have
been produced by the manufacturer, fulfills the general product
requirements and is ready for shipment.

3. Certificate of Origin
This document is prepared by the manufacturer and is certified
by a government entity or chamber of commerce. It’s used to
identify the country of the manufacturer where the goods were
made. For example, the U.S. Food & Drug Administration
requires a certificate of origin for every product imported to
the US.

4. Commercial Invoice
When the international sale is complete and goods are ready to
be shipped out, a commercial invoice is the document used to
describe the entire export transaction from beginning to end
including the shipping terms. It is one of the most important
documents because it provides critical information and
instructions to all parties involved: buyer, freight forwarder,
U.S. and foreign customs, import broker, banks, carriers, etc.
Many countries may require specific invoices or licenses, so if
not done correctly, U.S. businesses will incur fees or delays in
shipments.

5. Consular Invoice
A consular invoice is a form available through a consular
representative of the country you’re shipping to and it certifies
the shipment of goods. It is not required in every country, but
is used to help many emerging nations facilitate customs and
collection of taxes.
6. Dock Receipts
The purpose of this receipt is to provide the exporter with proof
that the delivery of goods to the international carrier was
successful and in good condition.

7. Inspection Certificate
These inspections are usually done with industrial equipment,
perishable merchandise and meat products. It certifies the items
were received in good condition and that the shipment
contained the correct quantity.

8. Insurance Certificate
For export shipments, this document certifies you have bought
an insurance policy for cargo on board. Insurance may be
purchased because liability and large losses are a concern to the
exporter.

9. Packing List
A packing list is similar to a shipping list in that it lists the
goods being shipping, information on how it was packed, how
the goods are numbered, and weight/height dimensions. Even
though it’s not always required, it’s an important document
used by freight forwarders to prepare a bill of lading and to
understand how much cargo is needed.

d. What do you mean by terms of payment

These are the conditions under which the seller will complete
the sale if they are satisfied. The terms include the specific
period within which the buyer needs to pay off the amount
dues, demands related to cash in advance, cash on delivery, 30
days or more deferred payment and similar other provisions. It
is the conditions under which the vendor completes the sale.
The objectives covered within it are:

1. Expected Date of Payment

2. Conditions that are stated for the payment receive
3. Discounts that are entitled to the buyer

e. Factors determining choice of a particular transportation

mode in export marketing:

1 . Cost of Service:
The cost of transportation adds to the cost of the goods so it
should always be kept in mind. Rail transport is comparatively
a cheaper mode of transport for carrying heavy and bulky
traffic over long distances. Motor transport is best suited and
economical to carry small traffic over short distances. Motor
transport saves packing and handling costs.

Water transport is the cheapest mode of transport. It is

suitable to carry only heavy and bulky goods over long
distances where time is not an important factor. Air transport
is the most costly means of transport but is particularly suited
for carrying perishable, light and valuable goods which
require quick delivery.
2. Speed of Transport:
Air transport is the quickest mode of transport but it is
costliest of all. Motor transport is quicker than railways over
short distances. However, the speed of railways over long
distances is more than that of other modes of transport except
air transport and is most suitable for long distances. Water
transport is very slow and thus unsuitable where time is an
important factor.
3.Flexibility:
Railways, water and air transport are inflexible modes of
transport. They operate services on fixed routes and at
preplanned time schedules. The goods have to be carried to
the stations, ports and airports and then taken from there.
Motor transport provides the most flexible service because it
is not tied to fixed routes or time schedules. It can operate at
any time and can reach the business premises for loading and
unloading.
4. Regularity of Service:
Railway service is more certain, uniform and regular as
compared to any other mode of transport. It is not much
affected by weather conditions. On the other hand, motor
transport, ocean transport and air transport are affected by bad
weather such as heavy rains, snow, fog, storms etc.
5.Safety:
Safety and security of goods in transit also influence the
choice of a suitable means of transport. Motor transport may
be preferred to railway transport because losses are generally
less in motor transport. Water transport exposes the goods to
the perils of sea and, hence from safety point of view, sea
transport is thought of as a last resort.
6. Nature of Commodity:
Rail transport is most suitable for carrying cheap, bulk and
heavy goods. Perishable goods which require quick delivery
may be carried through motor transport or air transport
keeping in mind the cost and distance.

f. Meaning of post shipment credit

Post shipment credit is extended to exporters by bank with low
interest rate till realization of their export proceeds. Post
shipment loan helps exporters to get finance without waiting
amount of sales from their overseas buyers.
What is Post Shipment credit?
Post shipment credit means any loan or advance granted or any
other credit provided by a bank to an exporter of goods or (and)
services from India from the date of extending credit after
shipment of goods or (and) rendering of services to the date of
realization of export proceeds as per the period of realization
prescribed by FED, and includes any loan or advance granted
to an exporter, in consideration of, or on the security of any
duty drawback allowed by the Government from time to time.
Banks serves with low interest rate to exporters under post
shipment credit based on the guidelines of Reserve Bank.

Features

a. Eligibility:
Post-shipment finance is available to all types of exporters such as:
 Merchant exporters;
 • Manufacturer exporters;
• Export houses;
• Trading houses;
• Manufacturers supplying goods to Export Houses (EH), Trading
Houses
(TH) or merchant exporters.
b) Documentary Evidence:
Following documents are required to be submitted by the direct
exporter and exporter of capital goods for availing post-shipment
finance facility:
• Shipping documents indicating the fact that the goods have been
actuary shipped for export purpose.
• Necessary documents substantiating the facility under which the
credit has been availed.
Even, indirect exporters who export through export houses/trading
houses, STC, etc. are eligible for post-shipment finance on the
production of the following documents:
• A letter from the concerned export house/trading house certifying that
the goods supplied by the deemed exporter have actually been shipped
for export purpose.
• An and from the concerned export house/trading house stating that
they do not wish to obtain post-shipment facility against the same for
the same transaction for the same purpose till the original post-
shipment finance is liquidated.

c. Purpose:
Post-shipment finance (short-term) is extended to the exporters after
the shipment of goods for meeting working capital requirement. Post-
shipment credit (medium and long-term) is granted to the exporters for
exports on deferred payment terms for a period of over one year. Post-
shipment finance (short-term) is generally granted for the following
purposes:
• To provide working capital so as to fill up the gap between the
shipment of goods and the realisation of sales proceeds.
• To pay insurance charges for insuring goods against perils of sea.
• To pay ECGC premium for insuring commercial and political risks.
• To pay commission and brokerage to overseas agents and distributors.
• To undertake export promotion activities and advertising.
• To pay customs duties, port charges and export duty, if any.
• To pay marine freight and other shipping charges.
• To pay for participation in international trade fairs and exhibitions.
• To undertake market survey abroad and send trade delegations.

d) Period of Credit and Rate of Interest:

Post-shipment finance can be availed for short-term, medium-term or
long-term.
• Short-term finance is extended by the commercial banks usually for a
period of 90 days.
• Medium-term ban is extended by the commercial banks together with
EXIM Bank for a period of 90 days to 5 years.
• Long-term finance is extended by the EXIM Bank for the export of
capital goods and turnkey projects for a period of 5 years to 12 years.
e) Maintenance of Accounts, Monitoring and Repayment: As per
the RBI directives, the banks are required to maintain a separate
account in respect of each packing credit. However, running accounts
are permitted in case of exporters situated in FTZs, EPZs and the
100% EOUs.

g. What do you mean by commodity board?

The Government of India has set up Commodity Board as a

separate organization to promote the export of commodities.
Commodity Boards regard themselves as a match to export
promotion council.

Functions and objectives of Commodity Boards

1. Advising the government on policy matters such as fixing
quotas for exports, entering into trade agreements with foreign
countries, etc.
2. Undertaking promotional activities such as participation in
exhibition and trade fairs, opening of foreign offices abroad,
conducting marketing surveys, sponsoring trade delegations,
etc.
3. Promoting the consumption of commodities in their
jurisdiction by opening branch offices in foreign countries.
4. Resolving all problems relating to commodities in their
jurisdiction.
5. Undertaking research activities to develop production and
marketing activities within the country. Commodity Boards
have research units of their own. Examples include Central
Coffee Research Institute, Rubber Research Institute, Coir
Research Institute at Allepply, the Central Sericulture
Research Station at Berhampur, etc.
6. Imparting training to workers engaged in the production of
the commodity concerned. The National Coir Training and
Design Centre, Institutes of Handloom Technology at Salem
and at Varanasi are the training institutes set up by their
respective commodity Boards.

h. What do you mean by electronic processing of documents?

Text, graphics, or spreadsheets generated by computer on

any media or device for any electronic processing,
including EDI. Electronically stored documents follow no
format or readability requirements except when retrieve for
human-use. It is simply information recorded in a manner
that requires a computer or other electronic device to
display, interpret, and process it.

OR
Document processing involves the conversion of typed and
handwritten text on paper-based & electronic documents (e.g.,
scanned image of a document) into electronic information
using one of, or a combination of, intelligent character
recognition (ICR), optical character recognition (OCR) and
experienced data entry clerks.[1]
 It can be performed in-house or through Business process
outsourcing.

Short answers :
a. What do you mean by entrepot trade?

Entrepôt trade refers to the practice of re-exporting goods

with or without processing or re-packaging them again.
This type of trade occurs at duty-free ports, where these
goods do not have additional import or export duties, or
taxes, placed upon them.

b. What is free trade zone?

Airport, seaport, or any other designated area for duty-free
import of raw materials, components, sub-assemblies, semi-
finished or finished goods. Such items can be stored,
displayed, assembled, or processed for re-export or entry into
the general market of the importing country (after paying the
required duties). Also called foreign trade Zone or free zone.

c. What is importer exporter code?

Importer Exporter Code. Import Export (IE) Codeis a
registration required for
persons importing orexporting goods and services from
India. IE Code is issued by the Directorate General of Foreign
Trade (DGFT), Ministry of Commerce and Industries,
Government of India.

2016
 SHORT ANSWERS:
a. Export marketing:
Export marketing is the practice by which a company sells
products or services to a foreign country. Products are
produced or distributed from the company’s home country to
buyers in international locations.

b. Pre shipment credit:

Pre-shipment finance refers to the credit extended to exporters
prior to the shipment of goods for the execution of export
order. It is also known as 'Packing Credit. It, refers to any loan
granted to an exporter for financing the purchase, processing
manufacturing or packing of goods as defined by the Reserve
Bank of India.

c. E commerce:

A system for the buying and selling of goods and services

using the Internet as the main means of exchange.
In other words, it is a business that electronically manages
both the collections and payments.
d. Export promotion council:

Export promotional Councils (EPC) are authorities which are

basically promoting, supporting and assisting firms in entering
the International markets and realising their optimum potential
from given resources. They also provide guidance and assistance
to the exporters.
 In legal terms, export promotional councils are non-profit
organisation registered as a company or society. Each Export
promotional council is responsible for his particular group of
products.

e. Marketing logistics:

Marketing logistics involve planning, delivering and controlling

the flow of physical goods, marketing materials and information
from the producer to the market. The aim is to meet customer
demands while still making a satisfactory profit.

f. E CRM:

E-CRM, or Electronic Customer Relationship Management, is

an integrated online sales, marketing and service strategy that
is used to identify, attract and retain an organisation’s
customers. It describes improved and increased
communication between an organisation and its clients by
creating and enhancing customer interaction through
innovative technology.

g. Functions of IMF:

I. To facilitate the expansion and balanced growth of

international trade, and to contribute thereby to the promotion
and maintenance of high levels of employment and real
 income and to the development of the productive resources of
all members as primary objective of economic policy.
II. To promote exchange stability, to maintain orderly
exchange arrangements among members, and to avoid
competitive exchange depreciation.

ANSWERS 3
a. Consequences of poorly completed documentation:
Poor documentation may result in a number of problems in
executing an export order which may lead to additional costs
to the exporter.

These costs may be of three types:

i. The cost of interest charges incurred by exporters as a result
of delays in receiving payment

ii. The cost of putting the problem right, such as telephone

bills, courier charges for sending replacement documents,
bank charges for amending documents, such as letter of credit
and, possibly, loss of credit insurance cover

iii. Perhaps the most serious, but also the most difficult to
quantify, is the cost to the relationship between the exporter
and the customer. More often than not, a new customer will
be so upset by poor documentation and the problems that it
causes that she/he will be reluctant to do further business with
such an exporter.
 The number of documents required for exports and imports
vary considerably across countries.
b. What is consular invoice?
A consular invoice is a document certifying a shipment of
goods and shows information such as the consignor, consignee
and value of the shipment. Generally, a consular invoice can be
obtained through a consular representative of the country we
are shipping to and must be certified by the consul of the
country of destination, who will stamp and authorize the
invoice.

The main purpose of a consular invoice is to provide a

complete and detailed description of the goods to the foreign
customs authority, so as to ensure that the correct import duty
is levied on the goods.

c. Need for export finance

 Increase in production:
Generally, manufacturers, do not enjoy enough financial
support and unless sufficient finance is provided, they cannot
take up increase in production to meet export requirements.

 Improvement in Technology:
Export market requires an updating of technology and without
proper technological support, exporters will not be able to win
over the traditional market. The changing technology has also
resulted in cutting down the cost of production, if the exporter
does not take this into account, he is bound to lose the foreign
market. For upgrading the technology, export finance is
required.
 Importing of capital equipment:
Certain export companies fully depend on foreign machinery.
For example, the export of knitted fabric in India depends on
the foreign machinery. This involves foreign exchange and the
exporter should be given finance in terms of foreign currency.

 Value added exports:

Goods which are exported in the form of raw materials and
semi-finished goods are not exported in the form of finished
products which are value added exports. These involve more
finance for the exporter.

 Non-tariff barriers in the importing country:

After the introduction of WTO norms, certain countries started
imposing restrictions on Indian products through non-tariff
measures, such as banning products manufactured by child
labor or products which cause pollution, etc. To overcome
these, the exporter has to incur more expenditure for which he
needs finance.

 Export finance available to competitors:

In the competing countries, such as China, Hong Kong,
Malaysia, Singapore and Taiwan, the exporters are provided
finance at a very low rate of interest which not only reduces
cost of production by enables them to sell their products on
deferred payments such as hire purchase and installment trade.
An exporter can compete effectively only when he is also
provided export finance at a competitive rate of interest.

 Diversification in exports:
 With product life cycle playing its role, some of the traditional
products are likely to disappear and new products are likely to
replace them. Exporters require more finance to meet this
challenge.

 Project exports:
Of late, India has started getting more export projects, by
undertaking civil construction, oil wealth, erection of plant and
machinery and railways. These not only involve more foreign
exchange but also involve a guarantee for the completion of the
project.

d. Decisions areas of physical distribution in export marketing:

 Locating warehouses
 No.of warehouses
 Types of warehouses
 Materials handling equipments
 Mode of transportation
 Routing
 Size of shipments
 Inventory level
 Protective packaging

These above mentioned areas can be grouped into 4

categories:

 Order processing
 Inventory control system
  Warehousing
 Transportation

(1) Order Processing:

Order processing is the starting point of any distribution activity.

Order processing includes activities like receiving the order,
handling the order, granting credit, invoicing, dispatching,
collecting bills, etc. Each customer expects that the order placed
by him is implemented without delay, and as per the
specifications of the order.

(2) Storage and Warehousing:

Storage means making proper arrangements for retaining the

goods in proper condition till they are demanded by customers.
There are many products which are seasonally produced but are
used throughout the year, they can be stored and later released.

Similarly, there are products which are produced throughout the

year but are seasonally used like umbrella, fans, heaters, etc. Here
also storing plays an important role. Storage reduces the need for
instant transportation which is difficult and costly.

(3) Inventory Control:

 Inventory control refers to efficient control of goods stored in
warehouses. Maintaining adequate level of inventory is very
essential for smooth flow of business. Inventory acts as a bridge
between the orders of customers and production. They are the
reservoir of the goods held in anticipation of sales. Therefore, it
needs to be properly managed and controlled. Neither to small nor
too large inventory should be maintained.

(4) Material Handling:

Material handling includes all those activities which are

associated in moving products when it leaves the
manufacturing plant but before it is loaded on the transport.
This activity has been in existence since very long period of
time, and now it has developed as a system.
Proper management of material handling helps in avoiding
unnecessary movement of goods, avoiding damage to the
goods, facilitate order processing and efficient movement of
goods.

(5) Transportation:
Transportation as a component of physical distribution is
concerned with the movement of goods from the warehouse to
customer destination. It includes loading and unloading of
goods and their movement from one place to another. In doing
so it provides time and place utility. Transport accounts for a
major portion of the distribution cost and of the total price of
the product.
Choice of a particular mode of transportation depends
upon various factors like cost of the transport, availability
of the mode of transport, speed, reliability, frequency,
safety and suitability of the mode to move the product.