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Page 1: Internet Mktg

International Marketing

“International marketing is

the multinational process of planning and

executing the conception, pricing,

promotion and distribution of ideas,

goods and services to create exchanges

that satisfy individual and organization

objectives.”

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Benefits of International marketing

1. Reduce marketing cost.

2. A much bigger area of marketing.

3. Facilitates centralized control of marketing.

4. Promote efficiency in R&D.

5. Results in economies of scale in production.

6. If international marketing is properly handled, the

payment is Guaranteed and quick.

7. International marketing help in developing domestic

market.

8. Marketer is much less likely to be affected by business

cycle & political of a particular country.

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Problems in International Marketing

1. Unstable government.

2. Exchange Instability

3. Huge Foreign Indebtedness.

4. Foreign government entry requirements.

5. Tariffs and other treacle barriers.

6. Corruption.

7. Technological pirating.

8. High cost of product & communication.

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Difference between Domestic and International Marketing

Domestic marketing

1. One nation, same language and

culture.

2. Transport cost is a major

marketing expenses.

3. One currency.

4. Political environment and

factors are the same.

5. Market is relatively

homogeneous.

6. No problems of exchange

control and tariffs.

International marketing 1. Many nations, many languages &

culture.

2. Transport cost influences only to

same extent.

3. Different currencies in different

countries.

4. Different political environments and

factors in different countries.

5. Markets are diverse and highly

heterogeneous.

6. There are problems of exchange

controls and tariffs and they act

as obstacles.

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Continued….

7. Data available usually accurate

and relatively easily collected at

less cost.

8. Relative freedom from govt.

interference.

9. Individual company has little

effect on environment.

10. Relatively stable business

environment.

11. Uniform financial climate.

7. Data collection a formidable take,

requiring signification higher

budgets and personnel allocation.

8. Govt. influences business decisions.

9. “Gravitational” distortion by large

companies.

10. Multiple environments many of

which are highly unstable.

11. Variety of financial climates

ranging from over conservatives

to widely inflationary.

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Why should go to International Market

1. To achieve the higher rate of profit.

2. Expensing the production capacities beyond the

demand of the domestic country.

3. Severe completion in the home country.

4. Limited home market.

5. Political stability vs. political Instability.

6. Availability of Technology & managerial

competence.

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Continued….

7. High court of transportation court.

8. Neared to Raw materials.

9. Availability of Quality human rescores at Len court.

10. Liberalization & globalization.

11. To increase market share.

12. To avail tariffs and import Quotas.

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Stages of Internationalization

Stages - I: Domestic Company

Stages- II: International Company

Stage -III: Multinational Company

Stage -IV: Global Company

Stage - V: Transnational Company

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Stages-I: Domestic Company

“Domestic companies’ limits in

operations, mission & vision to the

national political boundaries.”

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Stages-II: International company

“These companies believe that the practices

adopted in domestic market, the people and products

of domestic market are superior to those of other

countries. These companies extend the domestic

product, domestic price, promotion & other marketing

practices to the foreign market. These companies

adopt ethnocentric approach.”

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Stage-III: Multinational Company

“The international companies turn into

multinational companies when they start responding

to the specific needs of different country markets

regarding product, price & promotion, multinational

company formulate different strategies for different

markets, the orientation shift from ethnocentric to

polycentric.”

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Stage-IV: Global Company

“Global company is the one which

either global marketing strategy or a

global strategy.”

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Stage-V: Transnational Company

“ Transnational company produces,

markets, invests and operates alum the world

of is an integrated global enterprise which

links global resources with global markets at

profit. There is no pure transnational

corporation.”

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International marketing approach

1. Ethnocentric approach.2. Polycentric approach.3. Regiocentric approach.4. Geocentric approach.

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1. Ethnocentric approach

“The domestic company normally formulates

their strategies, their product design and their

operations to words the national markets, Customers

and competitions. But, the excessive production more

than demand for the product, either due to competition

or due to change in customer preferences push the

company to export the excessive production to foreign

countries.”

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2. Polycentric approach

“The company establishes a foreign

subsidiary company and decentralizes all the

operations and delegate decision-marking and

policy making authority to it executives.

Company appoints the key personnel from the

home country and all other vacancies are filled

by the people of the host country.”

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3. Regiocentric approach

“ The company after operating

successfully in a foreign country thinks of

exporting to the neighboring countries of the

host country, At this stage, the foreign

subsidiary considers the regional environment

(ex. Asia) for formulating policies &

strategies.”

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4. Geocentric approach

“The entire world is just like a single country for

the company. The select the employees from the entire

globe and operate with a number of subsidiaries. The

hard quarter co-ordinates the activities of the

subsidiaries. Each subsidiary functions like an

independent and autonomous company in for making

policies, strategies, product design, human resource

policies, operations etc.”

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Difference between

International

Trade, International Mktg. &

International Business

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International trade

“ The producers used to

export their products to the nearby countries

and gradually extended the exports to for off

countries. India used to export raw cotton; raw

jute and iron are during the early 1900s.”

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International Marketing

“India, during 1980 could

great markets for its products, in addition to mere

exporting. The export marketing efforts include creation

of demand for Indian products like textiles, electronics,

leather products, tea, coffee, etc. arranging for

appropriate distribution channels, attractive package,

product development, pricing etc.”

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International Business

“ The multinational companies which were

producing the products in their home countries

and marketing them in various foreign countries

before 1980 started locating their plants and

other manufacturing facilities in foreign/host

countries. Later, they started producing in one

foreign country & marketing in other foreign

countries exhale.”

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Economic Environment

“ International marketing is mostly and directly

influenced by the economic environment of various

countries. The economics environment change is

revolutionary after 1990. The results of these are

emergence of global markets, establishment of world

trade organization, emergence of global business

houses and global competitors rather than local

competitors.”

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The major changes include

1. Capital flour rather than trade or product

flour across the global.

2. Establishment of production facilities in

various countries.

3. Technological revolution delinked the relation

bet`n the size of production & level of employment.

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Continued….

4. Primary products are delinked from the

industrial economies.

5. The macro economics factors of individual

nation independently do not significantly control the

global economic out comes.

6. The contest between ‘capitalism’ & communism

is over. Capitalism succeeded over communism/

socialism.

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Before going to international marketing we should understand several economic factors such as.

A. Economy System B. Size of the Economy

C. Pattern of Personal Consumption

D. Growth and Stability Pattern

E. Inflationary Trends

F. External Financial Position G. Exchange Rate Trends

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A. Economy System

Economic system is on organization of

institutions established to satisfy human needs/wants.

There are three types of economics system:

1. Capitalism,

2. Communism &

3. Mixed.

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1. Capitalistic Economic System

“ Under this system, customers’ choice for

product/ services decides what will be

produced by whom. This economic system

provides for economic democracy. Ex. USA,

UK etc.”

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2. Mixed Economic System

“ Under this system, major factors of

production and distribution are owned, managed &

controlled by the state. The purpose is to provide the

benefits to the public more or less on equity basis.

The other factors of mixed economic system are

development of strong public sector, agrarian

reforms, control over private wealth, regulation of

private investment & national self reliance. Ex.

India.”

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3. Communistic Economic System

“ Under this system, private property and

property rights to income are abolished. The stat owns

all the factors of production & distribution. The

resource allocation decisions are made by the

government planner. The no. of automobiles, shoes,

shirts, television sets- heir size, color, quality, features

etc. are determined by government planners. Under

this system consumers are free to spend their income

on what is available. Ex. China, Russia etc.”

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B. Size of the Economy

“ Countries are segments based on GNP

per capita. World countries are divided into

four categories, viz. Low-income countries,

Lower-middle-income countries, upper-middle

income countries & High-income countries.”

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I-Low Income Countries

“ These countries are also known as third

world countries or pre-industrial countries.

They are also those with 1992 incomes of

Len than U.S. $ 400 per capita.”

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Characteristics of these countries includes

1. Limited industrialization, and excessive

dependency of population on agriculture.

2. High birth rates.

3. Low literacy rates.

4. Heavy reliance on foreign aid.

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Continued….

5. Political Instability & unrest.

6. Exercise unemployment &

underemployment.

7. Technological backwardness.

8. Under utilization of natural resource.

9. Excessive dependency on imports etc.

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II-Lower-Middle- Income Countries

“ These countries are also known as less

developed countries. These countries are with

a GNP per capita of U.S. $ between 400 &

2000, characteristics of these countries

includes.”

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Characteristics of these countries includes

1. Expansion of consumer markets.

2. Availability of cheap& motivated human

resources.

3. Domestic markets are dominated with the

products like clothing, batteries, tries, building

material, packaged food etc.

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Continued….

4. Early stage of industrialization.

5. Locations for production standardized /

mature products like clothing for exports.

6. Pose threat to the rest of world in labour -

intensive products due to cheap labour.

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III-Upper-Middle-Income Countries

“ These countries are also known as

industrializing countries GNP per capita of

these countries ranges between U.S.$ 2,000

and 12,000.”

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Characteristics of these countries include

1. Less dependency on agriculture.

2. Occupational mobility of the people from agriculture to

industry.

3. People migrate from rural to urban areas which results in

increased urbanization.

4. Increase in literacy, formal education & increased wage rate.

5. Low wage cost compared to advanced countries.

6. High exports and rapid economic development.

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IV-High-Income Countries

“ These countries are known as advanced

countries, industrialized, post industrial or

first world countries. The GNP per capita of

these countries is more than us $ 12,000.”

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Characteristics of these countries include

1. Oil rich countries are excluded from this category.

2. Service Sector contributes more than 50% to GNP.

3. Development of information sector.

4. Development of intellectual technology over machine

technology.

5. Emphasis on the future plans.

6. High income countries mostly aim at building the

information society.

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C. Pattern of Personal Consumption

“ Study of personal consumption

information provides adequate idea about the

buying habits to the people- what they buy, in

what quantities, in which part of a country and

so on.”

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D. Growth and Stability Pattern

“Countries that intend to accelerate pace of

industrialization through formation of new industrial

projects and, modernization of existing projects and

that adopt policy of integrating their economics to

world economy, encouraging multinational firms to

make heavy investments in the desired industrial

fields, offer great potentiality for investment by

multinationals.”

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E. Inflationary Trends

“Inflationary trends in different countries

should also be scanned because of their

implications on the operations of multinational

firms. Existence of high inflation erodes the

purchasing power of consumers and reduces

their potentiality as a market segment.”

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F. External Financial Position

“ Countries with strong balance of balance

(BOP) position are ideally suited for

investment by international firm because

these countries in view of their high capacity

to pay for imports are likely to have stiffer

import controls.”

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G. Exchange Rate Trends

“ The management should monitor carefully

the direction of the future movement of

exchange rates of the investee countries.”

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(A) GATT (GENERAL AGREEMENT ON TARIFFS AND TRADE)

GATT is a multilateral treaty between governments that lays

down rules for international trade. Its basic objective is to liberalize

world trade. The most fundamental principal of GATT is non-

discrimination between the contracting parties. GATT contains

rules relating to

* Tariffs

* Quantitative restrictions

* Trade measures for balance of payment purposes

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* Export subsidies

* Anti-dumping and counter - vailing duties

* Customs valuations

* State trading etc.

Special provisions have been made for few developing

countries. GATT also provides a forum for dispute settlement

among member countries.

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Continue…..

Tokyo round, ended on April 12, 1979 dealt with the non-tariff

barriers for the first time in a major way. This resulted in a number of

agreements such as:

(i) Agreement on Anti-dumping practices;

(ii) Agreement on Subsidies and Countervailing Duties;

(iii) Agreement on Import Licensing procedures;

(iv) Agreement on Technical Barriers to trade;

(v) Agreement on customs Valuation; and

(vi) Agreement on Government procurement. India has accepted the

first five agreements.

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(B) UNCTAD (UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT)

The United Nations conference on trade and development

(UNCTAD) was established by the U.N. General Assembly in 1964.

The main function of the UNCTAD is to promote international trade

with a view to accelerating economic development and to

formulate principles and policies on international trade and related

problems of economic development. UNCTAD is the principal

instrument of the General Assembly for deliberations and

negotiations in the field of international trade and development

and related issues of international economic cooperation.

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Continued…..

The activities of UNCTAD cover a wide area which

includes:

* Trade in commodities,

* Trade in manufactures,

* Invisibles and financing related to trade,

* Transfer of technology,

* Shipping and economic cooperation among developing

countries.

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Continued…..

A United Nations conference on trade and development (UNCTAD)

met in Geneva in the early months of 1964, chiefly to consider the trade

needs of the developing countries, and came to the following decisions:

* A continual united nations conference on trade and development to

promote international trade, especially with a view to accelerate

economic development;

* A trade and development board, composed of 55 members to be

elected by the conference;

* A permanent and full- time secretariat, and a secretary- general to

be appointed by the UN secretary- General with the confirmation of the

General Assembly.

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Main purposes of UNCTAD are:

To promote economic development through

international trade.

To formulate new principles and policies in

international trade and related economic fields;

and

To negotiate multilateral trade agreements.

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The major activities of UNCTAD include:

Research and support in connection with the

negotiation of commodity agreements;

Technical elaboration of new trade schemes, such

as a new import preference system; and

Various promotional activities designed to assist

developing countries in the area of trade capital

flows.

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(C) Economic Co-operation among developing countries(ECDC)

The developing countries are becoming increasingly

aware that trade and economic co-operation among themselves

could be a powerful mechanism to promote their economic

development and collective self-reliance. The importance of

such co-operation is enhanced of account of the current

environment of protectionism which has been seriously

impeding their export efforts. Trade preference agreements

have been on e of the major instruments for expanding trade

an d economic links among developing countries.

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Continued….

The agreements of which India is a member are:

(i) The trade expansion and economic co-operation

agreement between India, Egypt and Yugoslavia (popularly

known as the tripartite agreement),

(ii) The Bangkok agreement; and

(iii) GATT protocol relating to preferential arrangement

among developing countries.

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(D) INTERNATIONAL TRADE CENTRE (ITC)

The ITC is of particular interest to developing

countries, for it has been set up to help these

countries to promote their exports. To achieve this

objective, the ITC engages in two major activities:

1. It collects and disseminates information on

potential markets and on marketing techniques that

will be successful in these markets; and

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Continued…..

2. It trains export promotion personnel, and assists

governments in developing adequate export promotion

services. To carry out this activity, the ITC create a

special section in mid-1966, known as TPAS (Trade

promotion advisory services).

TPAS suggests to the developing countries

how to use successfully such promotion methods as

export credit and insurance, trade fairs and exhibitions

abroad.

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(E) WORLD BANK

International bank for reconstruction and development (IBRD)

This is popularly known as the world bank. It has its origin

in wartime preparations for post-war international financial and

economic cooperation that culminated in the United Nations

Monetary and Financial conference which was held in July, 1944,

at Bretton Woods, New Hampshire, and attended by 44 nations.

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The principal purposes of the world bank, set forth in its articles of agreement are:

* To assist in the reconstruction and development of its

member countries by facilitating the investment of capital for

productive purposes, thereby promoting the long-rang growth of

international trade and improvements in standards of living;

* To promote private foreign investment by guarantees of,

and participations in, loan and other investments ma de by

private investors; and

* When private capital is not available on reasonable terms,

to make loans for productive purpose out of its own resources of

the funds borrowed by it.

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Continued….

The world Bank came in to existence on December 27,

1945, when its articles of agreement were signed by 29

government in Washington, D.C. by 1972, the Bank had 119

members. The largest of these, in terms of capital subscribed,

were the USA, the UK, West Germany, France, India, Canada and

Japan. Among the bank member are many other countries,

su8ch as Iceland, Israel, Lebanon, Sri Lanka, Indonesia,

Afghanistan, Libya, Lesotho, Somalia, Ghana, Yugoslavia, all the

Latin-American republics, except Cuba.

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The world bank`s charter authorizes it to engage in the following types of financing:

* It may lend funds directly, either from its capital funds or

from the funds that it borrows from private investment markets;

* It may guarantee loans made by other; or it may participate

in such loans; and

* Loans may be made to member countries directly or to any of

their political subdivisions or to private business or agricultural

enterprises in the territories of members.

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(F) THE INTERNATIONAL MONETARY FUND (IMF)

The IMF was designed to stabilize international monetary

rates. It came into existence in march, 1946, after the ratification

and appropriation of funds by national governments had been

completed; but the Fund was not actually opened until march

1947, and the first transactions were made in may of that year.

The funds of the IMF are subscribed to by member governments.

Each member has a quota, of which an amount equal either to 25

per cent of the quota or 10 per cent of the member`s holding of

gold and US dollars. Whichever is smaller, is subscribed in gold

and the remainder in national currency.

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Main purposes of the IMF are:

As already indicated the IMF was formed for the purpose of

promoting international monetary co-operation and a balanced

growth or world trade. Its articles of agreement came into force

in December, 1945,

* To promote international co-operation;

* To facilitate the expansion and balanced growth

of international trade and to contribute there by to the

promotion of organizations, and maintenance of high

levels of employment and real incomes;

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* To promote exchange stability, to maintain orderly

exchange arrangements among members;

* To give confidence to members by making funds

available to them; and

* To shorten the duration and lessen the degree of

disequilibrium in the balance of payments position of

members.

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Department of Commerce (Ministry of Commerce) Government of India

The Department of Commerce in the Ministry of

Commerce in headed by a Secretary. The Department is

responsible for the country`s external trade and all matters

connected with it such as commercial relations with other

countries, state trading export promotional measures, and the

promotion, development or regulation of certain export oriented

industries and commodities. The Department of Commerce

formulates policies in the sphere of foreign trade particularly the

import and export policy of the country.

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Director General of international Trade*

(CCI&E-Chief Controller of Imports & exports)

CCI & E is responsible for the execution of the export

and import policies of the government. Now the role of

DGIT would be to promote exports and to remove

controls. Now needs promoter of exports and not the

controller of exports.

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Continued…..

CCI & E`s supporting offices are located at

important port towns and commercial centre of the

country. They include:

Agartala, Ahmadabad, Amritsar, Bangalore,

Bombay, Calcutta, Cuttack, Chandigarh, Ernakulum,

Guwahati, Hyderabad, Jaipur, Kandla, Kanpur, Madras,

New Delhi, Panjim, Patna, Pondicherry, Rajkot, Shillong,

Srinagar, and Visakhapatnam.

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Advisory and policy-making Organizations

These have been set up to ensure that the

collective advice of the commercial interests in

available to the Government of India.

(a) For framing and formulating export promotion and

import policies; and

(b) For successful implementation of these policies.

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Cabinet committee on Exports

The cabinet committee under the

chairmanship of the prime-minister expedites

decisions on important policy matters relating to

exports.

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Board of trade

* The Board consists of 28 members including

representative from different organizations and individuals

with business standing and expertise in the field of

commerce;

* The Board has powers to co-opt. additional

members;

* The members of the Board hold office for two years;

and

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Continued…..

* The Board ordinarily meets twice a year and

advice the Government on matters relating to:

(a) Export and import policy and programmes:

(b) The operation of export and imports controls

(c) Organization and development of commercial

services

(d) Organization and expansion of export production

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Continued…..

* The Board advises the Government on policy

measures for preparation and implementation of both

short and long term plans for increasing exports in the

light of national and international economic scenario.

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Continued…..

* The board also reviews exports performance

of various sectors, indentifies constraints and suggest

measures to be taken by the government and industry

and trade consistent with the need to maximize export

earning and restrict imports.

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Continued…..

* In addition Board also examines existing institutional

framework for exports and suggest practical measures

for reorganization or streamlining it with a view to

ensure coordinated and timely decision making.

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Continued…..

* The Board will review policy instruments, package of

incentives and procedures for exports and suggest

steps to rationalize and channelize incentives to areas

where these are most needed.

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Zonal Export and import Advisory committee

In order to make a detailed study of the export

possibilities of the commodities exported from

different regions and to advice the government on

specific problems of exports from there regions,

Regional Export promotion advisory committees have

been set up:

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Continued…..

These committees were set-up in July 1968 to

consider:

* Difficulties faced in the operation of prevailing

import and export policies and procedures and to

suggest measure for improvement in disbursement of

various assistance,

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Continued….

* Difficult in the matter of:

- Customs clearance;

- Shipping;

- Credit;

- Insurance; and

- Export inspection and to suggest

measures for improvement therein.

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* Suggest improvements in the method of

working and public relations of the DGIT organization

and other government departments, concerned with

trade and industry; and

* Representative of state Governments and the

Customs and central Excise Department are included

in these committees.

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(A) State Government

State Government Liaison Officers

State governments have appointed Liaison officers in charge

of export promotion, whose main function is to develop the

exports trade in the goods produced in their states, in

consonance with the policies of the Central government. The

machinery provided by the State Liaison Officers, on the one

hand, and on the other, the Honorary Export promotion Advisors

and the Regional Export Promotion Officers are particularly useful

in the solution of the problems affecting the export from these

state.

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(B) Commodity Organizations

Export Promotion Councils

EPCS are supported by financial assistance from the

central government. Under the administrative control of ministry

of commerce, EPCS are registered as nonprofit organizations

under the companies Act or Societies Registration Act, as the

case may be. The EPCS perform both advisory and executive

functions, the councils are also the registering authorities under

the import policy for registered exporters. On being admitted to

membership the applicant is granted a Registration-cum-

membership Certificate.

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Continued…..

With a view to secure the active

association of growers, producers and exporter in the

drive for export promotion, a number of export

problems of specific commodities. The functions of

these councils are broadly to advise the government,

the local authorities and public bodies on the policies

to be pursued and the step to be taken to expand the

exports of the commodities grown and/or

manufactured in their states.

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Continued…..

The councils also performs some other promotional

functions, such as

* Study of foreign markets through periodical market surveys and

market research,

* Sending of trade delegations abroad,

* Participation in exhibitions,

* Conducting publicity,

* Disseminating information,

* Administering export promotion schemes,

* Taking measures to ensure quality control, etc.

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Continued…..

There are 19 export promotion councils covering

such items as engineering, leather exports, shellac,

sports goods, basic chemicals, pharmaceutical and

cosmetics, cashew, chemicals and allied products,

plastics and linoleums, overseas construction,

electronics and computer software, apparel handicraft,

handloom, silk, rayon textiles, wool and woolens etc.

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Functions of Export promotion Councils (EPC)

EPC`s main function is to project India`s image

abroad as a reliable suppliers of high quality goods

and services.

* Advise the government of current export

problems and measures necessary for the growth of

exports. Promote interaction between the exporting

community and the government both at the central

and state levels.

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Continued…..

* Assist individual exporters on specific problems

confronting them and help them to overcome these

problems. Provide commercially useful information and

assistance to their members in developing and

increasing their exports.

* Offer services for the development of overseas

markets.

* The council deregisters any defaulting exporter.

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Continued…..

* Disseminate amongst registered exporters the

trade enquiries received from aboard, giving

information on overseas markets, market leads, export-

import procedures, customs tariff, GSP facilities. To

build statistical base and provide data on the exports

and imports of the country, exports and imports of their

members as well as other relevant international trade

data.

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Continued…..

* To offer professional advice to their

members in areas such as technology up gradation,

quality and design improvement, standards and

specifications, product development, innovation etc.

* To organize visits of delegations of its

members aboard to explore overseas market

opportunities.

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Continued…..

* Resolving trade disputes between exporters and

importers.

* Help exporters in shipping and transport

problems.

* Help exporters in obtaining licenses, duty-

drawback etc.

* To organize participation in trade fairs, exhibitions

and buyers and sellers meet in India and aboard.

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Advantage for Units Registered with Exporter Promotion Councils

* Trade enquiries received by the councils from

commercial representatives aboard are circulated

among members, much in advance of their publication

in the usual course;

* The bulletins and publications issued by the

councils contain useful information on trade conditions

in different markets;

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Continued…..

* Exporters may ask for inclusion in trade

delegations and study teams sponsored by the

councils. They organize commercial publicity aboard;

* Exporters may have their products displayed or

advertised in any particular country under the

council`s plans for publicity aboard, including

participation in exhibitions, hold exhibitions with in

India for the benefit of foreign visitors;

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Continued…..

* In case of a survey in foreign country arising from

a dispute, the exporter may ask for the overseas

officer or correspondent of the council to witness the

survey in order that his interests may be safeguarded;

and

* Encourage individual exporters to develop new

product for export

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Continued…..

* The exporter may take any difficulty of a

general nature to the council which, in appropriate

cases, will make recommendations to the government

suggesting measures to remove such difficulties.

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(ii) Commodity Boards

Commodity Boards have been set up to help in

the development of certain commodities. The

Commodity Boards deal with the entire range of

problems of production, development and marketing

etc. Tea Board has opened an office in London to

promote consumption of tea. They, too, have taken

measures to promote the export to commodities with

which they are concerned.

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They advise the government on policy matters,

such as fixing the quotas for exports, the signing of

trade agreements with foreign countries, etc. They also

undertake promotional activities, such as:

- Participation in exhibitions and trade fairs,

- Sponsoring delegations,

- Quality inspection etc.

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Continue…..

Commodity Boards, which deal with the commodities that are

important from the point of view of exports, are:

* Tea Board;

* Coffee Board;

* Coir Board;

* Central Silk Board;

* All India Handicrafts and Handloom Board;

* Tobacco Board;

* Rubber Board: and

* Spices Board.

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Marine Products Exports Development Authority (MPEDA)

This authority came into being September 1972.

It is concerned with the organization, co-ordination,

regulation and growth of the export of marine

products with special reference to the quality of the

material, processing, packaging, storage, transport

shipment, marketing and attendant investigation.

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Continue…..

The authority serves the sea food industry from

to processing down to marketing all over the world.

Importers and exporters both could obtain

information relating to the markets and marine

products from MPEDA. It has regional office at Tokyo.

The authority is entrusted with the task of ensuring a

healthy growth of the industry through judicious

regulations, conservation and control.

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Agricultural and Processed food Products Export development Authority (APEDA)

APEDA came into being on 12th

August, 1986. It serves as the focal point for

agricultural exports, particularly the marketing of

processed foods in value added forms with a view to

increase the exports of a agricultural and processed

food products. Government of India has established

this authority.

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Indian Institute of Foreign Trade (IIFT), New Delhi

The Indian Institute of Foreign Trade, set up by

the Government of India in 1964, is acting as a

nucleus for human resource development in the fields

of foreign trade, international business and marketing

through specialized training programmes.

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The main activities of the IIFT include

training i.e. training of personnel in modern

techniques of the international trade and research

into problems of foreign trade, commodity studies,

and overseas market surveys in India. It provides

consultancy to export enterprises. It distributes

market information though “Foreign Trade

Review” and “Foreign Trade Bulletin”.

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Over the past twenty-six years of its

existence, the Institute has organized nearly 640

programmes with the participation of about 22,300

personnel including 780 foreign nationals, and

completed over 500 research studies.

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Trade Development Authority, New Delhi

The TDA, set up as a Registered society, induces and

organizes entrepreneurs, largely in the medium and small

scale sectors to develop their individual export capabilities.

It provides assistance in a personalized from to individual

exporters from the stage of intention of export through

collection of information, product development, market

research and analysis. It also advises them on export

finance and assists them in securing and implementing

export orders.

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* TDA strives to concentrate on specific products,

specific exporters, specific markets and specific

buyers.

* Being a non-trading institution, TDA does not

enter into direct commercial transactions but confines

itself to a catalyst`s role. As such, TDA does not

charge any commission from its members for specific

business secured by them for its help.

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Export Inspection Council of India, Calcutta

* The EIC, a statutory body, is responsible for the

information of quality control and compulsory pre-

shipment inspection of various export-able commodities.

* This Council organizes through inspection all over

the country, pre- shipment inspection of the products

and commodities notified for compulsory inspection. 850

items are subjected to compulsory inspection. It

establishes labs and test-houses throughout the country.

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Export Credit of Guarantee Corporation of India Ltd. Bombay (ECGC)

The ECGC was incorporated in 1957. It is a

company wholly owned by the government of India,

functioning under the administrative control of the

ministry of commerce and managed by a Board of

Directors representing the Government, Banking,

Insurance, trade and Industrial Sectors.

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* The primary goals of ECGC is to support and

strengthen the export promotion drive in India, by

providing a range of credit risk insurance covers

against loss in export of goods and services and also

by offering guarantees to banks and financial

institutions to enable exporters obtain better facilities

from them.

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ECGC helps exporters to cover both the

commercial and political risks involved in the export

trade and also possible losses in the development of

new export market. Facilities for export credit though

such schemes as packing credit guarantee, post-

shipment export credit guarantee, export finance

guarantee, export production finance guarantee,

export performance guarantee and export finance

guarantee (overseas lending) are also provided.

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India Institute of Packaging, Bombay

The IIP is registered under the Societies

Registration Act. It undertakes research no raw

materials for the packing industry. this organization

effects improvement in packing standers, providing

consultancy services, organizing training activities and

rendering testing facilities in respect of packages. the

main objective of IIP is to stimulate consciousness of

the need for good packing amongst Indian exporters.

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Indian Council of Arbitration, New Delhi

The Indian Council of Arbitration, set-up

under the societies Registration Act, promotes

arbitration as a means of settling commercial

disputes and popularizes arbitration among the

trades particularly those engaged international trade.

This council provides facilities of effecting

arbitration in cases of commercial disputes in relation

to foreign trade.

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Directorate-General of Commercial Intelligence and Statistics, Calcutta

DGCI & S is the primary government agency

for the collection, compilation and publication of the

foreign, inland and ancillary trade statistics and

dissemination of various types of commercial

information. The Directorates bring out a number of

publications, particularly on trade statistics, which

are utilized in framing economic policies, formulating

trade agreement foreign countries and monitoring

these agreements.

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The Directorate conducts studies on various

topics relating to promotion of trade. It helps in the

settlement of commercial disputes and provides

Indian businessmen going aboard with letters of

introduction to Indian commercial representatives

concerned. It also maintains a commercial library

which is widely used by the exporters, importers,

research scholars and others.

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Trade Fair Authority of India (TFAI)

It was set up in 1977, Its main functions

include organizing, promoting and participation in

industrial trade fairs and other exhibitions, setting up

showrooms in India and aboard, to undertake trading

activities in items related with such fair, to promote

exports of new items and diversify India`s exports.

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The journals in brings out include:

(a) Journal of Industry and trade

(b) Udyog Vyapar Patrika

(c) India Export Service Bulletin, and

(d) Economic and Commercial News.

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These periodicals brought out by TFAI provide

information on the country`s economy, business

possibilities offered by foreign markets, government`s

trade policies, facilities available for exports and

imports tenders floated by other countries. They also

provide material to Indian mission for their publicity

effort.

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Federation of Indian Export Organization (FIEO)

It is an apex body of various export

promotion organizations. It was set up in 1965. This

Federation is a common coordinating platform for the

various export organizations, including the

commodity councils and boards, and service

institutions and organizations.

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It is the primary servicing agency to provide

integrated assistance to government and organized

export houses. FIEO is the central coordinating

agency in respect of export promotional efforts in the

field of consultancy services. It serves generally as a

common forum for the national export promotion

effort.

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Export-Import Bank (EXIM Bank)

The Export-Import Bank of India is a public

sector financial institution, established on January 1,

1982. It was established by an Act of parliament, for

the purpose of financing and promoting foreign trade

of India. It is the principal financial institution for

coordinating the working of institutions engaged in

financing exports and imports.

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The EXIM Bank Act also empowers the Bank

to finance export of consultancy and related

services, assist Indian joint ventures in third world

countries, conduct export market studies, finance

export oriented industries and provide international

merchant banking services.

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Export Corporations

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The state Trading Corporation of India Ltd, (STC)

The corporation was set up as a private Limited

company in 1956 and later converted into a public Ltd.

Company in 1959. The corporation helps the development and

promotion of exports of commodities on a long term basis,

exploring new markets, canalizing import of bulk commodities

to bridge temporary gaps between supply and demand in

commodities essential for the economic and industrial

development of the country, internal distribution of any

commodity in short supply with a view to stabilize prices and

rationalize distribution. The Corporation has five subsidiaries:

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* The Handicrafts and Handlooms Export Corporation Of India

Ltd.

* Projects and Equipment Corporation Of India Ltd.

* Cashew Corporation Of India Ltd.

* Central cottage Industries Corporation Of India Ltd., a

subsidiary of HHEC.

* Tea Trading Corporation of India Ltd.

* The Handicrafts and Handlooms Export Corporation of India

Limited (HHEC)

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Projects and Equipment Corporation of India Limited (PEC)

The main objective of PEC is to give a fillip to

export of engineering equipment and project. It

identified the technological competence of

manufacturers of goods and of other agencies for

services and ensures through organized monitoring,

planning and control, fulfillment of contractual

obligations in respect of quality and delivery

schedules.

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Cashew Corporation of India Ltd.

The Cashew Corporation of India is the

canalizing agency for import of raw cashew

nuts to the export oriented sector of the

cashew industry.

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Central Cottage Industries Corporation of India Ltd.

Central Cottage Industries

Corporation of India Ltd. Provides marketing

support for products from cottage of small

scale sector.

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Tea Trading Corporation of India Ltd.

The Tea Trading Corporation of India was

established in 1971 to create a stable export market

for Indian tea, particularly in their value added forms,

namely, packed tea, tea bags, instant tea. Other

activities of this Corporation include marketing of tea

for domestic consumption, management to tea

gardens, warehousing of tea and establishment of

other facilities beneficial to the tea industry.

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Minerals and Metals Trading Corporation (MMTC)

The Minerals and metals trading corporation deals

with export and import of canalized items like iron ore,

manganese ore, coal, chrome ore, bauxite and non-

canalized items like barites, diamonds and import of

non-ferrous metals, industrial raw materials, steels, raw

materials for fertilizer and finished fertilizers, sulphur

and rock phosphate. In addition, the MMTC is providing

valuable market support to the manufactures and

exporters of various products from the country.

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Indian Government Trade Representatives Aboard

The Government of India`s Trade Representatives (Trade

Commissioners, Commercial Counselors and Commercial) function

in almost all the important trading centre of the world as the

government`s “eyes and ears” and help in furthering trading

relations between India and the countries falling with in their

jurisdiction. They report periodically on the economic, financial and

commercial conditions of the country in which they are stationed;

attend to trade enquiries from this country; acquaint importers in

those countries with the kinds of goods available for export from

India, and assist visiting Indian businessmen with suitable

introductions. They also help in the settlement of trade disputes.

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Other Committees and Agencies

Drawback Committee

Problems relating to rebate of excise duty on export or

drawback of customs and excise duty on the export of

manufactured products, and procedural difficulties in exports, are

looked after by a Drawback Committee in the Ministry of Finance

(Department of Revenue), with a Deputy Secretary of that

Ministry Chairman and with representatives of the Department of

Commerce, the Directorate-General of Technical Development

and others as members.

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Freight Investigation Bureau

A Freight Investigation Bureau has been set up

in the office of the Director-General of shipping,

Bombay, to look into the problems of high of

discriminatory ocean foreign rates, the non-availability

of shipping space or shipping service and other allied

problems. The Freight Investigation Bureau has a branch

in Calcutta. The Director (Transport) in the Department

of Commerce under the Ministry of commerce may also

be approached in regard to shipping problems.

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Railway Freight Committee

A committee in the Ministry of railways,

with representatives of other Ministries, considers

requests from exporters for reduction in railway

freight for the export of goods. Requests for railway

freight concessions as well as for priority in the

movement of export cargo may be made to the

Director (transport) in the Department of commerce.

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Customs and Central Excise Department

All the Exports from the country have to pass through

the Customs. There are Customs Houses at Bombay, Madras,

Calcutta and Cochin and at a number of smaller centers, land

customs offices at border stations and foreign post offices at

Bombay, Madras, Calcutta and New Delhi. The procedures for the

examination of export cargo are constantly reviewed and

simplified. Rebates of Central Excise Duty on the exported

products subject to Central Excise duty is allowed by the Central

Excise Department.

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Reserve Bank of India (RBI)

The Reserve Bank of India is concerned with the

administration of the foreign Exchange Regulation Act. Exporters

have to satisfy it (under the G.R., etc., from procedure) about the

receipt of foreign exchange on exports, such payment being

collected through banks authorized to deal in foreign exchange.

Applications for the sanction of foreign exchange for business

visits and for opening foreign offices have to be made to the

reserve Bank, which has its major offices at Bombay, Madras,

Calcutta and New Delhi.

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Central Warehousing Corporation

This government Corporation maintains a

chain of warehouses run along scientific lines at

important centers, including port towns. Warehousing

is particularly important for exports in cases where the

availability of shipping and rail transport to a port

cannot be exactly coordinated. The Corporation

considers requests from the trade for putting up or

increasing warehousing facilities at any centre.

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Typing the Master Document

Most typewriters can be used to complete the master

document satisfactorily. Ten to twelve characters per

inch is common to most manual typewriters available

in the country. For better results, the electric/

electronic typewriter may be used, as it offers the

benefit of clearer print and speed.

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Duplicating Methods

After the master document has been typed, the

other documents can be reproduced conveniently by

using different reproduction techniques. As these

vary considerably in cost and benefits, the choice of

the technique by an individual firm will obviously

depend on the volume and the frequency of export

business.

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Standardized Document

The Standard Documents included in the aligned

series which this chapter presents are the Invoice,

Packing List, Certificate of Origin, Bill of landing,

Shipping Order, Mate`s Receipt, Shipping Bill, port

trust Document, Marine Insurance Declaration from

and Marine Insurance Certificate. Each of these

documents can be reproduced from the same master

by using the relevant mask.

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Principal Documents

Export Invoice

Invoice is a document of contents. It is the

exporter's bill for goods and forth the terms of sale. The invoice is a

basic document. As a document of contents it must fully identify the

overseas shipment and serve as a basis for the preparation of all other

documents which in greater or lesser detail reproduce information from

it. The exporter should strictly follow the requirements of the importer in

regard to invoicing. The standard document in respect of the invoice is

based on the United Nations Key Layout which has been accepted as the

basis of this document in many countries.

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Packing List

This may be shown on invoice, or separately, and

should contain item by item, the contents of cases or

containers or of a shipment with its weight and

description set forth in such a manner as to permit

checks of the contents by the customs on arrival at

the port of destination as well as by the recipient.

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Certificate Origin

This certificate certifies the place of origin of the

merchandise. Besides the Federation of Indian

Chambers of commerce and Industry, EPCs and various

other trade associations have been authorized by

government of India to issue certificate of origin. These

certificates are important in the case of shipments to

countries which have preferential rates of tariff for

Indian goods.

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Bills of Lading

A bill of lading is a document issued and signed by a shipping company or its agents acknowledging that the goods mentioned in the bill of lading have been duly received for shipment, or shipped on board a vessel, and undertaking to deliver the goods in the like order and condition as received, to the consignee, or his order or assignee, provided that freight and other charges specified in the bill of lading have been duly paid.

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Bill of lading serves the following purposes: (i) It is receipt for goods received by the shipment company; (ii) A contract with the Carrier. It contains the terms of the contract

between the shipper and the shipping company, between stated points at a specific charge; and

(iii) Evidence of title. It is a certificate of ownership or title of the goods.

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For the bill of lading to be negotiable, in face, three requirements must be fulfilled:

It must be made out to the order to the shipper. It must be signed by the steamship company. It must be endorsed in bank by the shipper.

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Endorsement on Bill of Lading By practice and customs the bill of lading has been transferable.

If, however, the bill requires the goods to be delivered to a particular named person and does not include a reference to his assignees, the bill of landing is not transferable. It is rarely that a bill of lading would be drawn this way.

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Sending of Bill of Lading to Importer B/L are made out in sets and any number of copies may

constitute the set according to the requirements of the particular transaction and the importer. The number of copies to be made out will be indicated by the importer before the shipment takes place. In case there is no such indication, normally two copies of the B/L are prepared together with a number of the non-negotiable copies. One set of documents is sent by the first class airmail and the second by the following mail, so that if one is lost, delivery of goods can be taken by the importer on the basis of the second set.

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TYPE OF BILLS OF LADING Stale B/L A B/L that has been held too long before it is passed on to banks

or consignees is termed as “Stable B/L”. therefore a B/L should be presented to the negotiating or collecting bank soon after it is issued by the shipping company, so that it is made available to the overseas importer before the ship carrying the books arrives, to avoid fines and other inconveniences. If this cannot be done, the bank will consider the bill of lading as stale.

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Clean Vs Claused B/L As an acceptable receipt, the B/L must be a clean one. This

means no adverse notation of any kind must appear on the B/L in regard to apparent order and conditions of goods or packing, etc.

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Shipping Order and Mate`s Receipt: When the cargo is loaded on the ship, the commanding officer of the ship will issue a receipt called the “mate receipt” for goods. The mate receipt is first handed over to the port trust authorities so that all port dues are paid by the exporter to the port trust. After making payment of all port dues, the merchant or the agent will collect the mate receipt from the port-trust. The bill of lading is prepared by the shipping agent only after the mate receipt has been obtained.

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Hipping Bill Shipping bill is required by the customs. It is only after the

shipping bill is stamped by the customs that cargo is allowed to be carted to the docks. The aligned shipping bill has been prepared after taking into consideration the requirement of the custom`s public Notice No. 39 which suggests a uniform shipping bill for different categories of exports, viz. Free goods, Dutiable goods and goods under Claim for Drawback. As the standard A4 size paper defies accommodation of all the informational requirements as per this Public Notice, some columns for duty/cess and drawback particulars have been printed on the back of the standard shipping bill. It is also not possible to accommodate all the declarations as per the Public Notice.

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Marine Insurance Declaration From And Marine Insurance Certificate/policy The Standard Marine Insurance Declaration and the Insurance

Certificate included in this chapter are based on the format approved by Lloyd`s and the Institute of London Underwriters. It is suggested that open cover/policy holders may be supplied with blank forms of these documents. These can be reproduced from the master and then sent to the appropriate office of the General Insurance Corporation. The Insurance Certificates can be issued after completion of necessary entries and certification by the Corporation.

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Annexures needed under FERA GR-1 From. In pursuance of the provisions of FERA and the rules farmed

there under, every exporter has to satisfy the Reserve Bank of India about receipt of the foreign exchange in respect of exports. The Act makes it obligatory on every exporter to complete GR-I in respect of the shipment and submit its copies at the port of shipment and to the authorized dealers in foreign exchanges through whom the bills or documents covering the shipment are negotiated.

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GR-3 form. Those are used when exporters have obtained permission from the RBI to retain the proceeds of their exports with agents aboard and to utilize those proceeds for financing their imports into India.

PP form. Exports to all countries by parcel post, export when made on “value payable” or “cash on delivery” basis should be declared on PP Forms.

EP form. Shipments to Afghanistan and Pakistan other than by post should be declared on EP forms.

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EP-I From. Exporters who have been permitted to relation the proceeds of their exports to Afghanistan with their agents or branches in that country and to utilize those funds to finance their import from that country or to make other approved types of payments, may declare their exports to Afghanistan than by post, on EP-I forms.

VO/COD form. Exports to all countries by parcel post under arrangements to relies the proceeds through postal channels on “Value payable” or “Cash on delivery” is required to be completed on VO/COD Form and it should be submitted to the postal authorities along with the parcel at the time of dispatch thereof.

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B. AUXILIARY DOCUMENTS (1) Letter of Credit It is a written instrument issued by the buyer`s bank,

authorizing the seller to draw in accordance with certain terms and stipulating in a legal form that all such bills (drafts) will be honoured.

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The letter of credit is a means of payment that provides the exporter with more security than open accounts bills of exchange. A commercial letter of is issued by a bank at the request of a buyer of merchandise whereby the bank itself undertakes to honour drafts drawn upon it by the seller of the merchandise concerned. Thus, the letter of credit substitutes the bank`s promise to pay for that of the importer. Before the seller can receive payment, however, all the requirements specified in the letter of credit must be met, including the furnishing of documents, delivery dates, product specification, etc.

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There are three essential to a commercial letter of credit: The opener or importer – the buyer who opens the credit. The issuer – the bank that issues the letter of credit. The beneficiary – the seller in whose favour the credit is opened.

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Types of letters of Credit Letters of credit may be either revocable or irrevocable. The privilege of

revocability refers to the right of the issuing bank to revoke its promise to honour drafts drawn upon it. When the letter is revocable, the issuer can cancel or change an obligation at any time prior to payment. Revocable payments are not legally binding undertakings between banks and beneficiaries. When the letter is irrevocable, the issuer agrees not to cancel or modify the credit without the permission of the beneficiary.

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In addition, the letter of credit may be either confirmed or unconfirmed. If the letter of credit is confirmed, the irrevocable obligation of the issuer is guaranteed by a confirming bank in the beneficiary`s country. Thus, in a confirmed letter of credit, payment is guaranteed by both the issuing and the confirming bank. An exporter may seek confirmation because of dissatisfaction with the security offered by the issuing foreign bank.

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With recourse and without recourse. In the case of the recourse letter of credit, if the buyer fails to pay the bank after a specified period, the bank can have recourse of the exporter. There is no such provision in the letter of credit without recourse.

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Checking Export Letters of credit and Documents Exporters are encouraged to check letters of credit

carefully to be sure so that there is no later misunderstanding. The beneficiary should check for the followed:

Has the correct title been used in addressing you as beneficiary? Has the correct title of the buyer been used? Is the amount sufficient? Take into consideration the terms of the sale and

possible addition addition of any charges. Is the tenor of the drafts the same as your quotation to the buyer?

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Is the credit available at the banking institution or in the locality requested by you?

Are the documents required in the credit in accordance with your arrangement with the buyer, and can such document be furnished?

Is the description of the merchandise correct? (Check unit price, trade definition, point of shipment, and destination).

Do you agree with any special instructions which may appear in the credit?

Is the expiration date and place of expiration satisfactory? Is the credit confirmed by a domestic bank, or is an unconfirmed credit

satisfactory? Does the letter of credit permit partial shipments or transshipments?

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C. DOCUMENTS FOR CLAIMING EXPORT ASSISTANCE 1. Application From for Registration Exports, whether manufacturer-exporter or merchant-

exporter, desirous of availing themselves of the benefits of the import policy for registered exporters are required to register themselves with the appropriate registering authority such as Export Promotion Councils, Commodity Board and chief Controller of Imports and Exports, New Delhi or subordinate Licensing offices. The application for registration should be accompanied by a certificate from the exporter`s bankers in regard to his financial soundness. In case of a firm having branches, the application for registration should be made only by the Head Office. The registering authority shall, if satisfied, issue a certificate of registration to the exporter.

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2. Import Licence for Raw Materials, Intermediates Including Components and Spares

Application for import licence should be made only by the registered-exports, whether merchant-exporter or manufacturer-exporter, in the prescribed from to the licensing authority under whose jurisdiction the head office of the registered exporter is situated.

According to the procedure laid down, application for import licence will be made in respect of the exports made during the preceding period. The application should reach the licensing authority within one month after the period to which the exports relate and should be accompanied by the following documents:

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Treasury challan showing the payment of application fee. The documents of export in the name of the registered exporter as

detailed below: (i) Shipping bill duly authenticated by customs; (ii) Bill of lading; and (iii) Invoices duly attested by the negotiating bank.

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Original with a certified copy of the valid actual user licence (including the list of goods attached to the licence) on which the items applied for are based. If the applicant is unable to produce the original licence and the list of goods, a Photostat copy thereof will also be accepted. The Photostat copy should be of such a size and magnitude as may easily be readable.

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3. Allotment of Indigenous Raw Materials on Priority Basis Manufacturer-exporters as well as manufacturers, who sell to

registered merchant-exporters for export, may apply to the Director of Export Promotion, Ministry of Commerce, for replenishment of the indigenous materials used in the manufacture of goods for export.

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4. Drawback of import and Excise Duties The scheme of drawback of export and excise duties has been

formulated by government with the object of relieving the Indian exporter of the burden of import and excise duties on the product exported, so as to put him on par, in the matter of competitive position, with foreign competitors.

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5. General Security/General Surety for Executing Bond (Form B-I) The excisable goods can be exported outside India either under

claim for rebate of excise duty or under bond. The difference between these two procedures is that in the case of former the duty is first paid and its refund claimed after exportation, and in the latter case the goods are allowed to be exported without payment of duty provided a bound in executed in form B-I (General Security).

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6. AR-4 Form Before excisable goods are removed from the factory for export,

each consignment is required to be presented to the Central Excise Officer having jurisdiction over the factory together with an application in form AR-4 for claiming rebate of excise duty. When the goods have been removed from the factory, a copy of this application together with the goods is then presented by the exporter to the Customs Collector or other duty authorized officer at the port who will certify that the goods have been actually exported. On the basis of this endorsement the exporter will claim the rebate of excise duty if he has already paid, or discharged his obligation to that extent in case he has executed the bound.

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7. Drawback shipping Bill In order to take advantage of the drawback of import duty on the

products exported, shippers are required to give the details of the goods intended to be exported under claim of drawback in a shipping bill which should clearly be marked “Under claim for drawback”. Normally four copies of the drawback shipping bill are prepared. Exporters should furnish the information under the various columns in the drawback shipping bill so that the drawback is allowed expeditiously.

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8. Drawback Bill When the goods have been exported “Under claim for drawback”,

a drawback bill is prepared in order to claim the amount. This bill is in addition to the shipping bill and requires information about the date of presentation of original bill of entry, number and date of the drawback shipping bill, marks and number on the packages, description of goods, weigh and quantity of the goods, amount of drawback, etc. It has to be certified by the Collector of Customs that the amount of the bill does not exceed the amount of import duty paid on the goods specified therein and drawback has not been allowed on the same article in any previous bill.

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Export Procedure Having sent out letters and leaflets, it is necessary to be

prepared to answer in a proper manner the enquiries which will be received as a result of these first efforts. No price lists would have been sent in the first instance, and interested parties aboard will ask for these and also for payment terms, and possibly for agency conditions, there will also be requests for samples.

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SEVENTEEN STEPS OF EXPORT PROCEDURE Step I: Receipt of an Enquiry The best way to do ask the enquirers themselves to supply

information about their business, stating (i) Whether or not they already handle any competing products; (ii) How long they have been in that business; (iii) What area of their countries they cover for sales purpose;

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(iv)Whether they intend to purchase goods on their own account or whether they intend to act only as commission agents;

(v) What other products they already sell; and (vi) The names and addresses of at least two firms which they already

represent or have represented in the past.

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When the aforesaid information has been supplied, it is advisable to write to the firms whose names are given as references and ask for the following information, giving the full name and address of the party about whom the enquiry is made:

(i) How long they have dealt with the party about whom the enquiry is made?

(ii) Has the party been their sole agent for the concerned territory? (iii) Does he order goods for himself or does he merely act as a

commission agent?

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(iv) If he orders for himself, does he pay through a letter of credit, through a sight draft or by 30 days or 60 days term draft, or in any other way?

(v) If he is allowed to pay through a sight or term draft, it has to be seen whether the party honours draft drawn on him according to the condition specified therein?

(vi) Has the party in the past done good work in promoting sales?

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Step II: Check on Restrictions on Foreign Exchange and Import in Importer`s Country

When an order is received, the first decision as to whether it will be filled is based upon the approval of credit. The approval of the order for shipment should also be contingent upon the ability of the customs to secure foreign exchange in those countries where there are exchange restrictions. A list of such countries should be kept, and whenever an order comes in from one of these countries, a special approval on the exchange should be required. This is a matter which naturally does not concern the credit standing of the individual customs but does bear specifically upon the customer`s ability to secure the necessary foreign exchange with which to pay for the order when the merchandise is received by him.

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Step- III Scrutinise the Order The exporter should carefully scrutinize and cheek the contents

of an export order before its confirmation. It should broadly be in accordance with the ‘elements of contract’ which might have been conveyed to the overseas buyer, and received along with the duplicate copy duly signed, of the export contract, in case contract was sent by the exporter. In particular, the export order should be scrutinized on the following aspects.

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Terms of payment. The buyer should have agreed to the terms of payment conveyed to him. Where a letter of credit (LC) has been received, it should provide that:

Payment will be available in India. It implies that L/C issued by a foreign bank must be confirmed by Indian bank;

Documents stipulated in L/C will be submitted to an Indian Bank in India.

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Draft to be draw under L/C are to be Usance or sight drafts, and to be drawn on the bank or the buyer.

Credit validity period is sufficient for the collection of relevant documents.

Payment is permissible according to exchange control regulations.

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Documents: What are the documents required by the buyer along with the bill of exchange (draft) to be drawn on him? These documents could be either Master document or:

Commercial and/or consular invoice and customs invoice. Clean on board bill of lading. Certificate of foreign in general, or for availing GSP concessions. Packing list. Ermine insurance policy.

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Delivery Schedule. It should be in conformity with the exporter`s manufacturing/procurement programme.

Inspection of Goods. The pre-shipment inspection stipulated by the buyer is to be effected by the Export Inspection Agency (EIA) and/or any other agency.

It has to be seen whether labeling/packing requirements are usual or some special type of packing is to be effected.

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Step IV: Acknowledgement of the Order Another step in filling the order is to acknowledge it. It may seen

pointless to acknowledge an order before the manufacturer or exporter is able to state definitely when or, in fact, whether he will be able to fill it.

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The acknowledgement of the order should contain the following specific facts:

(i) A courteous acknowledgement of the receipt of the order and “thank you letter”.

(ii) The exported date of shipment from the factory and from the seaboard.

(iii) The price which should, of course, correspond to the original quotation or established price list, and if there is any variation, a sound explanation for the same.

(iv) Credit terms under which the merchandise will be shipped. This, too, should correspond with the original quotation.

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) The method of shipment, that is, whether it is by ship, railway, air, parcel-post or any other mode.

(vi) Method of packing. (vii) Marks, which will be placed on the package, should be

shown in the acknowledgement. (viii) If the shipper must apply for an export licence, a

statement to that effect should be made and shipment should be contingent upon the shipper`s ability to secure the export licence.

(ix) The name of the Bank, which will be used for the purpose of collecting the drafts; or it some special bank is preferred for a letter of credit, this fact should be mentioned.

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Step V: Arranging the Goods – Export Production/Procurement As soon as the export order has been confirmed or finalized,

preparations are made for the production or procurement of the goods to be exported. The manufacturer-exporter has to raise an internal indent on the production department/division, which may also be sent either to the work Manager or the Factory Manager.

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Step VII: Central Excise Clearance The excisable goods can be exported outside India either under

claim for rebate of excise duty or order bond. The difference between these two procedures is that in the case of former the duty is first paid and it refund claimed after exportation, and in the letter case the goods are allowed to be exported without payment of duty provided is executed in from B-I (General Security) or from B-I (General Surety).

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Step VI: Export Licence If the item being exported requires an export licence, the same

should be procured by the exporter from the licensing authority, i.e., Chief controller of Imports and Exports.

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Step VIII: Apply to Export Inspection Council for Inspection Exporter should apply to EIC for preshipment Inspection. Under

the Export (Quality Control and Inspection) Act, 1963, the EIC will depute an inspector for carrying out quality control and inspection of exportable products. After carrying out the inspection, if the consignment is found to conform to the prescribed specification, each package in the consignment is sealed by the inspecting officers.

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Step XI: Apply for Marine Insurance policy, if it is a C.I.F. Quotation

As soon as the goods are ready for export, the exporter has to apply to insurance company for an insurance cover/policy as the case may be. Where an insurance policy is insisted upon by the importer, an insurance cover will not do. The policy would be C.I.F. value plus 10 per cent to cover expenses. The insurance policy should be obtained in duplicate by the exporter.

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Step X: Issue Instructions to the Clearing and Forwarding Agent A detailed note is prepared for the clearing and forwarding

agent, giving instructions regarding the shipment of the consignment (e.g., the shipment may be made under claim for drawback). Along with this note, a master document and from of bank guarantee should be forwarded to the forwarding agent.

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Step XI: Clearing and Forwarding Agent`s role for shipping and Customs at the port

On receipt of the above documents, the clearing and forwarding agent takes delivery of the consignment from the railway/road authorities and arranges for its storage in a warehouse.

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Step XII: Documents Returned by the Forwarding Agent The master document is returned by the clearing and Forwarding

agent to the exporter at this along with: Shipping bill; Original L/C (contract) Order; AR-4/AR-4A form in duplicate; Full set of clean-on-board bill of lading together with the required

number of non-negotiable copies.

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Step XIV: presentation of Documents by the Exporter to Bank The following documents are now presented by the exporter for

negotiation/collection: Master Document; GR-I form (duplicate and triplicate); Full set of clean-on-board bill of lading (all negotiable copies plus one

non-negotiable) Original L/C Bank certificate in prescribed form (in duplicate); Marine Insurance policy (in duplicate); Export contract/order; and Bill of exchange.

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Step XV: Processing of Documents by the Bank Bank examines the documents with reference to the terms and

conditions of the original order and also of the letter of credit. The exporter`s bank screens the above documents and sends a set of the following documents to the importer`s bank:

Master Document (Original copy); Marine Insurance policy; Negotiable Bill of Lading (Original copy); Bill of exchange (Original copy).

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The banker sends GR-I form (duplicate copy) to the exchange control department of the Reserve Bank of India. The triplicate copy of the form is sent to the Reserve Bank of India of India on receipt of payment from aboard.

The banker returns the following documents to the exporter: Original copy of the bank certificate; and (ii) Attested copies of the Master Document The exporter receives payment against the above documents.

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Step XVI: Central Excise Rebate A claim is filed by the exporter with the concerned maritime

collector of Central Excise for rebate on the central excise duty or for getting credit in his bond account, as the case may be.

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Step XVII: Advance Licence/special Licence The exporter should file an application to the licensing authority

for an advance licence/special licence in accordance with the export-import policy of the country at that point of time.

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INTERNATIONAL MARKETING MIX/4 PS OF MARKETING

The international marketing mix consists of 4 Ps.

1. Product 2. Price 3. Place 4. Promotion

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1. PRODUCT

“ A product is something both tangible and

intangible. The tangible products can be described in terms of

physical attributes like shape, dimension, components, form,

color etc. The intangible products include various services like

merchant banking, mutual funds, insurance, consultancy, air

travel etc. However, sometimes both tangible and intangible are

combined to give a total product. For example, a German

company exports turn key projects (Technology, Machinery,

expertise and service) to USA and developing countries. The

global markets must see the total products which includes

tangible and intangible.”

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The study of product in the international market includes

1. Product development

2. Product life-cycle

3. Branding decisions

4. Packaging decisions

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1. PRODUCT DEVELOPMENT

There are six stage of the product

development :

I. Generating of a product idea: The

development of Salt-Cum-Sweet Biscuits concepts in one

biscuit company is developed by an accident of removing the

divider by an employee.

II. Second stage involves the screening of ideas

regarding their feasibility.

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Continued….

III. Third stage involves business analysis to

estimate the product features, cost, demand and profit.

IV. Fourth stage involves development of the

product by laboratory, technical, production personnel.

V. The fifth stage involves test marketing.

VI. The sixth step is realizing the product as full

scale.

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Market Segmentation

“ American markets give least importance to

market segmentation in this global business. The main

purpose of the market segmentation is to satisfy the

customer needs more precisely. Market segmentation

helps to enter the foreign markets in a phased

manner. The success of Japanese in entering U.S.

market is attributed to this principle.”

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Product positioning

“ Product positioning attempts to occupy an

appealing space in a consumer’s mind in relation to

the space occupied by other competitive products. For

example Bisleri Mineral water in India, Mercedes-Benz

for wealthy, Maruti for the middle income, Xerox

photocopy rather than Canon photocopy, Mc. Donald’s

etc. have positioned effectively.”

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Product Adoption

Product to be adopted in a foreign market must

demonstrate six factors. They are:

1. Relative advantage over existing alternatives.

2. Products cleanliness and sanitation are

accepted in rich countries.

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Compatible with local customs and

habits

Refrigerators find less market in Asia where

people prefer fresh food. Japanese development the technology

to their life styles but they don’t change their life style towards

technology. The electrical kotatsu (foot warmer) is a traditional

form of heater in Japan. New kotatsu are equipped with a

temperature sensor and microcomputer to keep the interior

temperature at a comfortable level. Japanese automobiles have

these factors whereas U.S. automobiles lacks this facility.

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Observism

“If the product is used publicly the others can

observe the product. Blue jeans, watches, woolen

coats etc. have this character. Similarly refrigerators

and TVs are placed in drawing rooms in Asian

countries to enhance the observables.”

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Complexity

If the product’s qualities are difficult to

understand then other product has slow market

acceptance

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PRODUCT LIFE CYCLE

The concept of life cycle of a human being, a

product or a business firm either domestic or global is

well established. The product life cycle concept

generally indicates that, a product starts with a

beginning or introduction stage and passes through

the stages of growth, maturity and eventually

disappears from the market in its declining stage.

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The stages of product life cycle include

Introduction stage:

In this stage, the product

is initially introduced in the market. The product

normally has low sales, other features of this stage

include high cost (per unit) of sales, low competition

and low profits or losses.

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Growth stage

During this stage, the product gains

awareness and acceptance by the customers. The

features of this stage include: fast growth in sales,

profits and competition. Market segmentation and

introduction of other models or sizes are the other

features of this stage.

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Maturity

Product acceptance, sales and profits

are at the peak stage and are stabilized at this stage.

The competition is intensified at this stage profits

starts declining due to severe competition.

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Extension stages

The progressive companies at this stage

introduce new models new sizes, designs etc., in order

to extend the maturity stage and/or to get another

growth stage. The extension stages are characterized

by slow growth of sales and profits.

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Decline stage

Development of new product, change in the existing

product design, improving the quality etc., by the competitors

make the customers to shift from his product to the

competitor’s products. In addition, the new technology brings

substitute product with more value. For example, typewriters

are replaced by computer. MS Office software replaced gold

star and other languages. The stage is characterized by poor

sales, losses etc., which force the company to with draw the

product from the market.

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International product life cycle model

explains

1. High-income, mass-consumption countries initially export,

and later import the product as they lose their export markets.

2. Later, the other advanced countries shift from an importing

country to an exporting country.

3. After some time, even the less development countries shift

from the statue of importing country.

4. New Product are initially introduced in high-income

countries/markets as the latter offer high potential.

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5. Initially products are produced where they are sold.

6. Mostly product inventions take place in high-income

countries.

7. Entrepreneurs in middle-income countries take the

advantage of low cost of lab our and other factors of production

in the production of the new products.

8. Market stabilizes when the product reaches maturity, the

design, technology and markets stabilize.

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9. Production from low income countries displaces the

production of the high income countries due to the cost

advantage.

10. Companies of high-in come countries shift to low –in

come to take the advantage of low cost factors of production.

11. These companies gain the ownership and control over the

production of low- in come countries

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12. The producers of low-income countries produce and sell

higher volumes due to the low cost of production and price

further these producers also export in higher volumes due to

heavy demand, consequent upon low cost of factors.

13. Low-income countries export to high-income countries

and compete with the industries of high –income countries who

enjoyed monopoly at the initial stage of the cycle.

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14. With this stage cycle completes its turn. Textile is an

example of this cycle. This product has gone through the

complete cycle for the investing country (U.K.) other developed

countries and finally the developing countries .12 similarly,

electronics industry passed through all the stages. This product

shifted from USA to Japan to Korea to India.

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Stages of International Product Life

Cycle

Stages Zero: Local Innovation

The product in this

stage is a familiar product in the local market. Product

innovations take place mostly due to the changing

wants of the local people.

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Stage 1: Overseas Innovation

After a product is successful in the domestic

market, the product desires exporting it to the foreign

markets due to excess production compared to its

demand in the domestic company.

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Stage 2: Maturity

The development of the product reaches the

peak stage even in foreign market. The product

modifies it and develops it based on tests and

preference of the customers in foreign markets. The

product exports the product even to less developed

countries in this stage.

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Stage 3: Worldwide Imitation

The local manufacturers in various foreign

countries start to imitate the popular foreign products.

They modify those products slightly based on the local

needs and product the at less cost and sell them at

cheaper prices.

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Stage 4: Reversal

Competitive advantage of innovative or original

manufacturer disappears at this stage as producers in

many foreign countries imitate the product, develop it

further and product it at less cost. This stage also

results in product standardization and competitive

disadvantage.

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(C) PRICING

There is no product without price and there

is no price without product. Thus, price is an integral

part of product. Price may be high from a cost stand

point of view and low from demand point of view. Fair

price reflects the perceived value of the product in

question.

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The study of international pricing includes

1. Pricing decisions

2. Pricing policies

3. Factors Affecting international pricing

4. Price Quotations

5. Dumping

6. Counter Trade

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PRCING DECISIONS

Thought the pricing is significant among the 4ps, it receives the

last attention in the international marketing. Prices decisions can be

studied from the following approaches:

1. Supply and Demand

2. Cost

3. Elasticity or Cross Elasticity of Demand

4. Exchange Rates

5. Market Share

6. Tariffs and Distribution Costs

7. Culture

8. Purchasing Power

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PRICING POLICIES

The Pricing polices of international companies

include:

1. Standard price policy

2. Two-tiered pricing

3. Market pricing

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Standard price policy:

Under the started price policy, the

international company sells the product at the same

price for the customers of any country or nationality.

Crude oil producers like Kuwait oil, Aram co and

premix sell their products to all customers at price

determined by supply of and demand for crude oil in

the world crude oil market.

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Two-tiered pricing policy

International Company under this policy sells its

product at two prices, Viz., one price for the foreign

sales. This policy is adopted due to the insolvent of

shipping costs, tariffs and foreign distribution costs.

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Marketing pricing policy

International companies following this policy

customer their pricing on a market-by-market basis in

order to maximize their profits in each market.

Japanese automobiles follow this policy in pricing their

cars.

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Alternative pricing strategies

There are a number of alternative pricing

strategies in addition to the above-mentioned

strategies. These include:

1. Discounts (cash, quantity, functional etc.)

2. Financing or credit terms.

3. Bundle or unbundled.

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FACTORS AFFECTING INTERNATIONAL

PRICING

Pricing factors of international business

vary from those domestic business .A numbers

of factors affect the international pricing. The

important among them are:

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(a) Cost

Cost is the prime factor that affects the

pricing in international business. The costs include

both manufacturing cost and marketing cost. The

exporters may fix the price below the cost in a short-

run period and recover the losses incurred in the

long-run. But in the long-run, they fix the price

above the cost of production and cost of marketing.

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(b) Competition

The Global Company fix the price not only

based on cost but also on the price of the

comparable competitors. The exporter fixes the

price in the short-run mostly based on the

competitor’s price in order to gain the market share.

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(c) Product Differentiation

The Product Differentiation provides wider

choice to the customer, who in turn pay higher price

for it. Global company uses the Product Differentiation

in order to fix varying prices.

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(d) Exchange Rate

The exchange rate provides opportunities in

fixing the products manufactured in developing

countries and marketed in advanced countries. In

other words, such product can be priced high due to

the advantage of foreign exchange. The vice versa is

true in case of product produced in advanced

countries and marketed in developing countries.

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(e) Economic conditions of the Importing country

Many Global companies take the GDP, per capita

income, disposed income, spending pattern, ability to spend

and such other factors of the importing countries into while

fixing the price for the products to be marketed in that country.

For example, Japanese automobile companies, South Korea’s

Kenyan civil Construction Company, Sony, and Aiwa take these

factors into consideration in fixing the price.

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(f) Government Factors

The Government of the exporting company and

the importing country also affect the pricing policies

and practices. These factors include:

1. Margin regulation (profit rates) formulated and

implemented by the governments.

2. Price floors (lowest level of prices) and price

ceiling (highest level of price) determined by the

governments.

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3. Subsidies provides by the governments in

order to encourage the domestic industry or to protect

the domestic customers.

4. Tax concessions provided by the governments

in order to encourage the export.

5. Other incentives like supply of finance, inputs

etc. at lower prices in order to encourage the domestic

exports.

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ELEMENTS OF EXPORT PRICE STRUCTURE

The normal ex-price structure is as follows:

(i) Cost of production

(ii) Producer’s profit

(i)+ (ii) = Ex-factory gate price

(iii) Packing and Making

(iv) Loading charges at the factory

(v) Transportation charge to docks, railway station or airport

(vi) Handing charges and fee at port, railway station, airport

(vii) Cost of documents (like cost of lading and airway bill)

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(viii) Consular invoice, certificate of origin

(ix) Export duty (if any)

(i)+ (ix) = c and f price

(x) Cost of insurance

(xi) Sea or air freight charges

(i)+ (xii) =CIF price (xii) Unloading charges at destination

(xiii) Import duties and taxes

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(xiv) Fee paid to the clearing Agent

(i)+ (xv) = Landed prices

(xv) Transportation charge to Importer’s Warehouse

(xvi) Importer’s Margin/mark-up

(xvii) Mark-up/Margin of all other market intermediaries in the importing country

(i)+ (xvii) =price of the consumer.

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PRICE QUOTATIONS

Quotation describes several aspects of the

product to be to be sold. The Important among them

are: product specification, price, delivery time,

delivery location, time of shipment, payment terms,

terms of sales etc. Sales terms in international

business include variety of conditions. We shall now,

discuss various price quotations:

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Reworks (EXW) or Ex-Named point of origin

In this, price is quoted from the point of

origin of the product. There are variation in the origins

like ex-factory, ex-warehouse, ex-mill, ex-mine, ex-

plantation etc. the seller, under this quotation, quotes

the place, time of delivery. The buyer takes the

delivery of the product at that origin and bears all

expenses and risks from that point to the point of his

place.

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Free Alongside ship (FAS) – Named

part of shipment

Under this, the seller quotes the price including

delivery of goods alongside the vessel or any other

mode of transportation. The buyer bears all the

expenses and ricks from that point. This includes port

of export as a point of origin. The buyer’s legal

responsibility starts when the seller receivers a clear

wharf age receipt.

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Free on Rail (FOR)/Free on Truck

(FOT)

When the goods are to be sent by rail, the

term free of rail (FOR) is used. Similarly, when the

goods are to be sent by truck, the term free on truck

(KOT) is used. The obligation of the exporter is

fulfilled, when then goods are delivered to the carrier.

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Freight or carriage paid (FCP)

The exporter is responsible for the carriage of

goods to the agreed destination and has to pay freight

up to the first carrier/agreed point. The FCP term is

used when the goods are transported by road; rail or

inland water.

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Free on Board (FOB)- Named Point

Under this, the seller quotes the point where

price is applicable. There are a number of points like

the named inland carrier at a particular inland point of

departure, the moved inland carrier at the named

point of exportation, the named port of shipment, the

named inland point in the importing country. Under

this, seller clears the goods for export.

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Free Carrier -Named Point

Under this mode, the exporter’s responsibility is

fulfilled when he delivers the goods into the custody of

the carrier at the Named point. This mode is used in

case of multimodal transport. The seller’s

responsibilities include local delivery, loading, issuing

bill of loading. The buyer bears all risks and expenses

from the time the goods are placed on board.

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Cost and Freight (C & F) – to

Named Point of destination

Under this, the point of delivery is normally

the port of importing country. The price, therefore,

includes the cost of transportation to the named point

of debarkation. The buyer pays insurance charge. The

buyer bears the rick and cost when the goods pass the

ship’s rail.

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Cost, Insurance and freight (CIF)

- to Named Point of destination

Under this, the used for quotation is

any location. But, the international chamber of

commerce recommends that the point should

be the destination. Thus the price includes

cost of products, insurance and transportation

cost up to the point of destination

(debarkation).

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Ex-ship (EXS)

Under this mode , the exporter makes

the goods available to the importer on the

ship, at the named port of destination at this

cost.

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Delivery Duty paid (DDP)

Under this the seller pays all the duties and

undertaken the delivery of goods to the named place

in the importing country. The seller obtains import

license also, if necessary, arranges for customs

clearance through a broker and arranges for the

delivery of the final destination named by the

importer.


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