International Marketing

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Compliance with legal frame work in india obtaining importee exporter code number(IEC) from Director general of foreign trade. 1. Register with EPC(Export promotion council) 2. Registration with sales tax authority 3. Registeration with excise authorities Pre shipment documents: 1. Commercial documents a. Auxiallary documents (required for procurement of principle documents) b. Proformer invoice c. Shipping institutions d. Insurance declaration e. Intimation for inspection f. Shipping order g. Mate receipts( Given by captain of the ship after the good are received) h. Application for certificate of origin i. Letter to bank for negotiation/ collection of documents 2. Regulatory documents a. Exchange control declaration form( GP form) b. Freight payment certificate c. ARE1/ ARE2 form (Central excise) d. Shipping bill/ bill of export e. Port trust of shipping bill/ export application/ dock challan f. Receipt of payment of port charges g. Vehicle ticket h. Insurance premium certificate Principle documents: These are required for effective physical transfer of goods and then tittle and realization of export sales process.
Exporter bank

Importers bank

Exporters (FOB)

Importers CIF Port of discharge

Port of loading

Commercial invoice: Plus invoice prescribed by importing country 1. Packing cost 2. Cetificate of inspection 3. Bill of landing (airway bill)

4. Certificate of origin 5. Bill of exchange 6. Shipping advice Discrepancies in export documents: 1. 2. 3. 4. 5. 6. 7. 8. Letter of credit Late shipment Dirty bill of landing Short shipment Credit amount exceeded Under insured Description of the goods differs from that of credit Marks and number differ between documents

Bill of lading insurance documents, bill of exchange not endored correctly Absence of documents called for under credit Weight shown in documents differ Insurance cover expressed in currency other than that of the credit Absence of signature required on documents Bill of exchange drawn on the wrong party Bill of lading does bear shipping on board stamp Ammount shown on bill of exchange and invoice differ Transhipment effected when it prohibited ( goods get unloaded and reloaded at a point) INCO terms: ExW: Ex works/ Ex factory FCA- free carrier FAS Free a long side of the ship FOB Free on board CFR cost of freight CIF cost of insurance and freight CPT Carriage paid to CIP Carriage of insurance paid to DAF Delivered at frontier

DES delivery ex ship DDP- delivery duity paid DDU delivery duty unpaid Payment terms: Cash in advance Open account Consignment sale Document against payment Documents against acceptance Letter of credit Pre shipment finance Post shipment finance Supply of credit Line of credit: the transaction between the financial institution and one other country the buyer of the other country are benefited Opener/ Importer (issuer(importer bank) benefiter (exporter bank) Notifying bank Paying/ negotiating bank

Kinds of letter of credit: 1. 2. 3. 4. 5. 6. 7. 8. 9. Clean letter of credit Document letter of credit Assignment letter of credit Non assignment letter of credit Cash credit a. Revocable(can be cancelled) and irrevocable(cannot be cancelled) Back to back credit Revolving letter of credit RED clause credit -> ability to raise credit from letter of credit Green clause credit

Main time risks

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

Peril of sea Fine Mess of war and enemies Pirates, thieves, robberers Jettison:- some goods are thrown into sea to reduce the load of the ship Letter of mail, surprisals, taking at sea Capture of sea Barratry ( wrong full act of master/ captain or crew owner)

Types of insurance policies 1. 2. 3. 4. 5. 6. 7. Time policy ( only time) Voyage policy ( only subject) Mixed policy (both time and subject) Consrtuction policy or building risk (vessel insurance) Floating policy (expressed in terms of shipment to be declared) GIL, NIL, LIC, oriental finance insurance ECGC- export credit of guarantee corporation

Role of ECGC: Provide a range of credit risk insurance covers to exporter against loss in export of goods, cover to exporters again foreign exchange fluctuations risk, insurance cover to banks against exporter credit political risks, offers guarantees to banks and foreign institutions. Insurance covers provided by ECGC: Standered policies to exporters against payment risks, specified policies against payment risk involved, services rendered to foreign payment turn key projects financial guarantee. Standered policies: Shipment( comprehensive and political risk) Contract ( Comprehensive and political risk) Export procedure: Concluding export deals: Export order: Procuring or manufacturing of goods for export Port procedure and customer clearance Functions of C&F agent: 1. 2. 3. 4. 5. Advising the exporters on choice of shipping route Reservation of shipping spare Inland transportation of port Studying provisions of letter of credit or contract and taking necessary action accordingly Ware house insurance

6. 7. 8. 9. 10.

Compling port, shipping if customers formalities Avenging overseas transportation Rendering assistance in filling claims Monitoring movement of goods to importers General advisors service

Following docs have to be sent to C&F agent by exporters: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Detailed instructions regarding shipment of consignment Original export order Original letter of credit Commercial invoice GR form( Foreign exchange declaration form, original and duplicate indicating IEC number) Certificate of origin Inspection/ quality control certificate RR/ LR Invoice/ coustomer invoice ARE1/ ARE2 forms( excise) Declaration that value, quality of specification of goods in shipping bill are in according with export order

Dispatch of goods to port: 1. 2. 3. 4. RR/ LR Shipping order Receipt of wagon registration ARE 1/ ARE 2 inspection certificate

C & F agents send the following docs to shipping company for getting bill of lading: 1. 2. 3. 4. 5. 6. 7. GR form ( duplicate) ARE 1/ ARE 2 forms Copies of consular invoice/ customer invoice ( if any) Originl letter of credit Original export order Duty drawback copy of shipping bill Copies of commercial invoice attested by customer

The above copies and full set of clean on board bill of lading are given to the exporter Under full set of clean on board bill of lading we have 1. 2. 3. 4. 5. 6. 3 copies + 10 copies original and supliment advices Date of shipment Name of vessel Export arrival date Commercial invoice Packing list

7. Non negotiable copy of bill of lading

Documents required for central excise clearance: 1. 2. 3. 4. 5. PLA personal ledger account LUt legal undertaken with central excise authority ARE 1 : application for removal of exciable goods 1 ARE2 : application for removal of excisable goods 2 CT 1: documents required for procurement of goods without payment of duty for exports

Shipment finance is given to exporters/ importers for different reasons: 1. 2. 3. 4. 5. Packing credit/ shipment loan in local currency Packing credit advances in foreign currency Advance against export incentives Importer for financing letter of credit Export credit normally given on collateral security or third party quarantee of immovable properties.

Procedure for disbursement of export credit: 1. 2. 3. 4. 5. Exporter submit an evidence of export such as unrevocable latter of credit Ammount of packing credit given by bank doesn t exceed total FOB value to goods Generally ask exporters to contribute 10 to 25 % as margin Exporter requires to send goods through approved transport and forward agencies Also requires to take adequate insurance.

Claiming excise rebate: Documents required( Duplicate copy of ARE 1/ ARE 2 certified by customers, non negotiable copy of bill of lading or shipping bill invoice Maintain commission of central excise: At shipment office they need to file these papers

Presentation of documents to banks by exporter for negotiation:
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Bill of exchange Commercial invoice Full set of clean on board bill of lading GR form Export order Letter of credit Packing list Marine insurance policy Consular invoice Bank certificate

Export promotion measures: 1. 2. 3. 4. 5. 6. 7. 8. High tech products exports promotion scheme. Export / trading house. Focus market scheme. Vishesh krishi and gram udyog. Towns of export excellence. Served from India scheme. Focus product scheme. Market assistance for export promotion.

Objectives of this schemes..... Benefits for exports and trading house: Institutional frame work for ex imports: 1. Tier 1: Dept of commerce: Frame trade policy 2. Tier 2: Advisory bodies: Coordinating with industries and port a. Board of trade b. Export promotion board c. Export promotion council 3. Tier 3: Commodity boards: Assists the export effort of specific product group 4. Tier 4: Service organization: facilitate and assist exporters to expand markets a. IIFT new delhi b. ECGC c. Indian council of arbitration d. Indian institute of packaging e. Federation of Indian export organization f. EXIM bank 5. Tier 5: Govt trading organization: Handle export import of specific commodity 6. Tier 6: State ex promotion agency: Facilitate export promotion from state. Frame work for ex im policy: 1. 2. 3. 4. 5. 6. Export prohibition and restitution Im prohibition and restitution Ex promotion schemes and incentives Advanced license Duty entitiled pass port DFRC duty free reperishment scheme

Highlights of recent EXIM policy: 1. Removal of qualitative restriction. 2. Deemed export. Import control regine:

1. 1956-57 a. Importers were classified as Band, canalised, restricted, open general license 2. 1966 3. Convertibility 4. Excnage rate movement in Indian context (1991 1995) 5. Pros and cons of fixed rate exchange 6. Pros and cons of floating rate exchange Managing foreign exchange fluctuations: When domestic currency is week, firm should: 1. Stress prices benefits 2. Expand product line and add more costly features 3. Shiping stops and send to domestic market When domestic currency is strong: 1. 2. 3. 4. 5. 6. 7. 8. 9. Engage in non price competition Improve productivity Ship the sources Give priority to exports Cut profit margin Keep foreign exhcnage earned income in the host country Buy the leaded serices abroad and pay them in local currency Borrow money needed for expansion in local market Bill the foreign customer in their own currency

Export import positions over the years: 1. 2. 3. 4. 5. 6. 7. 1956-61 1966-69 1974-79 1979-91 1992-2001 2002-2003 2003-06

Following are the consideration for selection of commodity for exchange : 1. 2. 3. 4. 5. 6. 7. 8. Manufacturing capacity Availability of commodity Demand for commodity in importing country Govt of india policy for regulation in respect of exports and imports Total profitability of commodity considering cash incentives Import replenishment Quote fixations Knowledge of experience of similar exporters w.r.t. such commodities.

Source of information about foreign buyers: 1. 2. 3. 4. 5. 6. International trade directories of international yellow pages Various EPc s and commodity boards Trade representation in india/ abroad or foreign emphasis Participating in trade fairs Ads in foreign newspapers and magazines Relative, friend, and other contracts in foreign countries.

Based on the sources of information the exporters will be able to arise the following: 1. Price which he can offer to overseas buyers. 2. Terms of credit which we can offer. 3. Packaging, transportation, storage, distribution and after sales service method we can adopt. 4. The promotional methods which we can offer in terms of publicity, literature , visual publicity, advertisement, depending on product. Aspects to be considered before taking a decision for exporters: Select a quality product Select a particular overseas market. Concentrate only on few product and min 3 countries. Ensure that you can manufacture procure from other sources the selected products at competitive price and in the sufficient quantities. 5. Get the full information of similar products of other manufacturer in selected markets, their purchases and marketing techniques. 6. Asses the degree of competition of products which has proposed to export in a particular markets. Highlights of EXIM policy 2009 2014: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. Higher support for marketing and production diversity: 26 new markets have been added inder FMS scheme. The incentive available under FMS scheme has been raised by 2.5 to 3% The intensive available under FPS scheme has been raised to 1.2% to 2% A large no: of products from various sectors have been included for benifits under FPS. Market link focus product scheme MLFPS A common simplified application form has been introduced for taking benefits under FPS, FMs, MNFPS etc.. Higher allocation for market development assistance mkt intensive scheme have been provided. Technology upgradation Support of green products. EPCG sheme relaxation Status holders. 1. 2. 3. 4.

14. 15. 16. 17. 18. 19. 20. 21. 22. 23.

Stability of foreign trade policy. Agricultural sector Leather sector Enhgancements Marine sectors Gems and jewelary Flexibility provided to exporters Regional authorities have now been authorised to issue license. Automobile industry having their own R&D should be allowed to import freely. Export promotion council have been advised to issue RCMCthrough a web based online system. 24. General provisions for exports: a. All the goods can be exported freely without any exporters expecting the cases of modified foreign trade policy 2009 2014 b. Any of the goods exported or imported of which in restricted may be exported or imported only in accordance with authorisation c. The status holders will be entitled to export freely exported or imported only in accordance with authorisation. d. Goods including edible items not exceeding Rs 5 lakhs may be exported as gifts in an licensing year. However restricted items for importe shall not allowed for gifts. e. Exports through a registered courier services permitted as per the notification of DOP. f. Ex of exhibits including conductive and decorative items for temporary stands in exhibition for a perios of 6 months.

Certificates details: 1. 2. 3. 4. 5. Transhipment permit Shipping order Cart/ carry ticket Dock challan/ export application Export cargo ticket: used only at cochin port which gives the details by name if vessil, export application 6. Shipper declaration form 7. Bill of entry a. Bill of entry for home consumption ( white ) goods b. Bill of entry for warehouse ( yellow) goods c. Bill of entry (green), ex bond bill of entry 8. ATA carnet: in order to faciclitate temporary import of duty free goods of short duration, such as exhibition, trade fail etc. Validity of IEL no: Surrender of IEL no: Balance of payments read completely

Constrains in Indian export growth: Overviews of Indian foreign trade FDI ( foreign direct investment): 1. 2. 3. 4. 5. 6. 7. Institutional frame work. Area where FDI id prohibited. Form of FDI. DEPB: duty entitlement passbook scheme. Advanced license. Export obligation. DFRC: duty free replenishment certificate.

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