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Foreign Trade and India
Foreign Trade and India
Ancient maritime trading nation Bay of Bengal was once known as CHOLA LAKE Exports touch $155 billion in 2007-08 India is among the top ten in services exports The export basket
Laws to note
The foreign trade ( development and regulation ) Act The Foreign Trade Policy 2004-09 The FEMA 2000 RBI Regulations The Customs Act The Central excise Act
Steps in Exporting
A business organization Manufacturer exporter Merchant exporter Agent/ intermediary Service provider Product selection Procurement of order
Incoterms
EXW Ex works FCA--- Free Carrier FAS---- Free alongside ship FOB---- Free on board C&F----- Cost and freight CIF----- cost ,insurance and freight CPT Carriage paid to CIP---- Carriage and insurance paid to
Incoterms contd----- DAF delivered at frontier DES--- delivered EX ship DDU--- delivered duty unpaid DDP---- delivered duty paid DEQ delivered ex quay
Export registration
IEC with DGFT PAN Bank account Appointment of agents Export licenses Customs registration Registration with export promotion councils
Export inspection
IPQC In process quality control ISI, AGMARK Fumigation ISO- 9000 & ISO 14000 EIA SA- 8000 Global compact
Currency management
Understanding currency fluctuations Invoicing currency Forward contract Hedging Repatriation EEFC
Reading FTP
The policy The handbook of procedures The ITC- HSN classification Export licenses Import licenses OGL State Trading
Customs procedure contd--- Importance of ICD/CFS/ Customs bonded warehouse Green channel for exporters Assessment New concept of Transaction value
EOU
Minimum investment of INR 10 million 300 warehousing districts as location Nearly 3000 units in existence New or conversion from DTA Manufacturing & services covered Trading units are not permitted
EOU contd------ Widest definition of manufacture Single B 17 Bond Duty-free import of raw materials and inputs and similar sourcing of inputs and capital items from DTA NFE= A B = 0 + EO over 5 years
EOU contd---- Can subcontract part of production to DTA Can sell upto 50% of production in DTA Can sell to other EOU/ BTP/ EHTP/STP/SEZ and count against EO Exempt from state trading and SSI reservation restrictions 100% EEFC retention
EOU contd---- Clubbing of exports with exports of parent company for export house status CST exemption PC and CT3 procedure Self sealing Green channel clearance on import
Drawback
Recouping of duties of customs and central excise and service taxes All industry rates Brand rate Special brand rate Post export documentation
EPCG
Import of capital goods at 5% concessional customs duty EO is 8 times the duty saved in 8 years 12 years for SSI holders and licenses for INR1000million Covers manufacturer exporters or merchant exporters with supporting manufacturers
EPCG contd---- Direct as well as third party exports allowed Shipments under Advance authorization DFIAS , DEPB & draw back will count for fulfillment of EO Physical exports required but certain deemed exports allowed Clubbing of licenses allowed
Advance authorization
Duty free import of inputs Fuel, oil and energy are also allowed to be imported SION norms Ad hoc SION permitted Positive value addition Issued for annual requirement also
Advance authorization contd- Advance release order/ Invalidation Supplies to SEZ counted Actual user condition Disposal of imported items after meeting EO License transferable after meeting EO and with the permission of DGFT
DEPB
Duty free post export remission scheme SION norms Ad hoc SION norms permitted Schedule of rates Can be used to pay for import duties Transferable scrip Scheme valid upto March 2009
SEZ
Exclusive geography Duty free enclave Sales to DTA permitted Special concessions for promoters Positive EO is required Customs duty, excise duty, service tax and VAT & CST are exempt on supplies to SEZ units
Deemed Exports
The concept of deemed exports Covers supply of goods against: Advance authorization/ DFIAS EOU/ STP/EHTP/BTP EPCG Projects under International competitive bidding procedure
Deemed exports contd---- Projects approved by ministry of finance Supplies of capital stock to fertilizer plants Supplies of goods to Refineries and power projects Supplies of goods to UN- funded projects Supplies of goods to Nuclear power projects thro competitive bidding
WTO/ GATT
International Treaty Governing Principles MFN Non discrimination National treatment Reduction of tariffs Elimination of Non tariff barriers
Ports in India
India has 12 major ports and more than 180 lesser ones India has a coastline of nearly 6000 KMs All ports of India together handled 519 million tons of cargo during the fiscal year ended March 2008 Growth rate of 12%
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Steamer agent / Mainline operator Container operating agent ( NVOCC, VOCC ) Stevedore CHA / Exporters / Importers Transport operators CFS / ICD Security agencies / External players
A comparison
Factor JNPT SINGAPORE PORT 4 41 11,754 m 425 ha
Terminals 3 Vessels per terminal 9 Quay length 600 m Total area 133 ha
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Factor JNPT SINGAPORE
Total no of quay cranes 8 Crane moves per hour 20 25 Crane rate per hour 60 -70
131
25 -30 100
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All Indian ports in 2005 -06 together handled cargo of 423.3 million tons Singapore port in the same period handled 423 million tons of cargo Transaction costs at Indian ports are 10 % Transaction costs in leading ports are 6 % The transaction costs at Indian ports are in money terms - $ 12 billion per annum