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i

Sample copy. Not for distribution.

Export Import Management

(Practical Work Book)

ii


Publishing-in-support-of,

EDUCREATION PUBLISHING

RZ 94, Sector - 6, Dwarka, New Delhi - 110075 Shubham Vihar, Mangla, Bilaspur, Chhattisgarh - 495001

Website: www.educreation.in _____________________________________________________________________________

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ISBN: 978-93-85247-39-2

Price: ` 370.00

The opinions/ contents expressed in this book are solely of the author and do not represent the opinions/ standings/ thoughts of Educreation.

Printed in India

iii


Export Import Management

(Practical Work Book)

By

Ajay Pathak

EDUCREATION PUBLISHING (Since 2011)

www.educreation.in

iv


About The Book

This book is practical approach related to foreign trade. This book

gives professional knowledge in export import procedure &

documentation, customs & bank formalities, government benefits,

exim policies, import sources, taxation, shipping, freight

forwarding with practical assignments & much more.

v


About The Author

Author, Ajay Pathak is a professional Consultant, consulting

documentation & facilitation service for exporter & importer in

India.

His exim consulting division deals with matters of Foreign

Trade Policy & Allied matters. Viz. Selection of firm’s name,

Basic registration with the government & other agencies,

Correspondence with prospective buyer, Arrangement to attend

foreign exhibition abroad, Bank documents negotiation assistance,

Complete freight forwarding assistance, Export benefit

documentation, Duty Drawback, DEPB /DFRC, advance EPCG

License, restricted item license, FEMA matter etc & lastly feeding

them regularly with information related to changes in exim

policies, customs, tariffs, & RBI matters, Custom clearance

matters.

He has assisted 2000 exporters & importers with fabulous result &

kept them satisfied.

vi


Prologue

I am a professional Consultant, consulting documentation &

facilitation service for exporter & importer in India.

Our exim consulting division deals with matters of Foreign

Trade Policy & Allied matters. Viz.

Selection of firm’s name.

Basic registration with the government & other agencies.

Correspondence with prospective buyer.

Arrangement to attend foreign exhibition abroad.

Bank documents negotiation assistance.

Complete freight forwarding assistance.

Export benefit documentation.

Duty Drawback, DEPB /DFRC, advance EPCG License,

restricted item license, FEMA matter etc & lastly feeding them

regularly with information related to changes in exim policies,

customs, tariffs, & RBI matters.

Customs clearance matters.

We have assisted 2000 exporters & importers with fabulous result

& kept them satisfied.

Now we wish to share our experience with new generation by

providing the practical approach related to foreign trade & started

writing this book for giving professional knowledge in export

import procedure & documentation, customs & bank formalities,

government benefits, exim policies, import sources, taxation,

shipping, freight forwarding with practical assignments & much

more.

Regards,

Ajay Pathak (Foreign Trade & Customs Consultant.

vii


Contents Table

S.No. TOPIC/CHAPTER/SUBJECT PAGE

1. Introduction 1-4

2. Choice Of Enterprise 5-8

3. Registration For Export /Import 9-10

4. Export Pricing/Costing 12-16

5. Contacting Prospective Buyer 17-27

6. Contacting Prospective Seller (Importer) 28-30

7. Processing Of An Export Order 31-44

8. Pre Shipment Documentation (Export)Air/Sea 45-57

9. Pre Shipment Documentation For Import(Air/Sea) 58-62

10. Post Shipment Documentation For Export 63-79

11. Post Shipment Documentation In Case Of Import 80-80

12. Guidance For How To Use Customs Tariff 81-81

13. Income Tax Applicability On Exporting

Firms/Companies 82-82

14. Sales Tax Applicability On The Exporting

Firms/Companies 83-83

15. General Banking & Day To Day Accounting 84-84

16. FAQ related to Export/Import /Shipping /Freight

Forwarding/Customs Clearance

85-161

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Ajay Pathak

1

X

Since export & import are growing sector, every year government

claims that export is increasing but due to global competition &

poor government policy, our exportable commodity, their quantity

& especially price is not acceptable in the world market.

Following Are The Few Reasons

Poor licensing policy (Export Import Code).

Direct benefits given by the government (DBK-DEPB).

Government could not control merchant exporter to stop

international competition.

Manufacturer is not exporter & exporter is not manufacturer.

Government is not providing export marketing facility to small

manufacturer (Like MDA).

Because of WTO, import of consumable items are increasing

every year.

Policy makers are not aware of foreign trade & international

trade complications that’s why import export policy is not up to

the mark.

Export order is not against L/C & most of importers are buying

materials on credit basis.

Threats from other country like China, South Korea, Singapore,

Japan, Taiwan etc.

INTRODUCTION 01

Export Import Management (Practical Work Book)

2


Because of the above reasons, Indian export declines every year.

India is the largest manufacturer of rice, leather, goods, garments,

& handmade handicrafts (Wooden, Brass & glass), gem &

jewellery, fruit & vegetable etc. Because of the government policy,

exporter could not achieve their target.

Previous Year - Main Commodities For Export

Rice/Tea/Wheat/Pulses

Readymade garments

Handicrafts (Brass /Glass / Wooden)

Floriculture product

Leather footwear

Gem & Jewellery

Fruit & Vegetable

Marine product

Engineering Goods & Electronic Goods

Wool &Woolen

Textiles

Chemical Products

Computer Software

Allied item (Marbles –Stones)

Furnishing product (Made-ups)

Major Countries - For Export

Europe (ECM Countries)

Belgium, Denmark, France, Germany, Greece, Italy, Spain,

United Kingdom, Sweden, Austria, Finland, Norway, Switzerland,

Bulgaria, Czechoslovakia, Hungary, Poland, Romania, Russia,

Slovenia, Ukraine, Slovakia, Holland , Rest of Europe –Malta ,

Turkey & Cyprus.

Ajay Pathak

3

Asian Countries

Japan, Bangladesh, Iran, Hong–Kong, Indonesia, Korea,

Republic, Singapore, Thailand, Afghanistan, China, Fiji,

Malaysia, Nepal, Pakistan, Sri Lanka,Vietnam, Philippines.

Gulf Countries Bahrain , Iraq , Jordan , Kuwait , Oman , Qatar , Saudi

Arabia,U.A.E, Yemen , Israel .(Credit Market)

America

North - Canada, USA, Australia, New Zealand (HOT).

South - Argentina, Bolivia, Brazil, Chile, Peru, Columbi ,

Uruguay & Venezuela.

Other - Cuba, Guyana, Bahamas, Mexico, Panama,

Nicaragua.

African countries

Algeria, Kenya, Libya, Mauritius, Morocco, Nigeria, Senegal,

Sudan, Ghana , Ethiopia, Egypt, Maladi, Somalia, Swaziland ,

Tanzania, Tunisia, Uganda, Zambia, Zaire.

SAARC Countries

1. Bangladesh ( + )

2. Afghanistan ( + )

3. Pakistan ( - )

4. Nepal (Rupee Trade) ( - )

5. Bhutan (Free Trade) ( - )

6. Maldives ( - )

7. Sri Lanka ( + )


4


Our Country Strength & Foreign Country Weakness

Before deciding the country for locating foreign market & buyer,

we should analyse the following points:

Attitude of foreign buyer /customer.

Social factor Culture of the country: In Europe, U.K, USA people usually

give & take the gift items (Gift Theory) so there is more

demand of the products .We have the strength for the

handicraft items in India.We should take care of buying habits,

eating habits & export the same with standardized products.

We should decide the segments & population ratio.

Acceptance of the product: We should not sell our products

against their religion & hurt their sentiments.

Color, size & number: In Europe, white flower means for

widow.

In Japan, people are of small size.

Japanese is quality concuss .We have great opportunities in

market in Japan .Japan is leader in electronics & so their is

great demand for Buddha statues & handlooms, cotton made

products & wear natural things.

Fashion due to the season: It will change every season & after

the season the product will be outdated.

X

Ajay Pathak

5

X

The first most important decision is regarding the choice of

enterprise. Type of enterprise should be selected on the basis of the

size of the proposed business and availability of fond resources.

An export/import business can start in any of the following forms:'

Proprietorship

It means business owned by a single person.

The proprietorship concern has no separate status apart from its

owner.

Income of the concern is treated as the income of the proprietor.

Liability of the owner is unlimited.

Only plus point is that it can be set up easily.

Partnership

It means business owned by 2 or more persons.

The first requirement for establishing a partnership firm is to

execute a partnership deed between partners on Rs.20 stamp paper

(minimum).

The partnership concerns in India are governed by the Indian

partnership Act 1936.

The limitation of partnership firm is that the personal liability of

the partners is unlimited & retirement or death of any partner may

result in the dissolution of partnership firm (for copy of Performa

deed, refer different clause).

CHOICE OF ENTERPRISE 02


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Registration of Partnership Firm

For registration of an application in the prescribed form 1 or A

under the relative state rules along with the prescribed fee, has to

be submitted to the registrar of firm of the state in which the firm is

situated.

The application form should be signed by all partners in the

presence of gazetted officer or advocate, attorney of a chartered

accountant. A firm shall not be registered in the same name of

existing firm (form 1 or A for reference).

Private limited Company

It can be formed by just 2 persons subscribing its share, capital but

it cannot have more than 50 shareholders. Public cannot be invited

to subscribe.

The main benefits of private limited company is that the liability of

the shareholders are limited to the extent of their share capital.

The disadvantage of private limited company is that the tax rate on

the income of a company is high (Flat rate 35%) & dividend

declared by the company is also taxable U/S 115o of I.T Act.

Steps in Establishing a Private Limited Company

Name Approval from registrar of companies (fees Rs.500) printing

memorandum & articles of association.

Depositing Fee Authorized Capital Fees

Rs.1,00,000

Rs.4800

Rs.5,00,000

Rs.17,200

Rs.10,00, 000

Rs.27,200

Ajay Pathak

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After depositing the fees, ROC will issue a certificate of

incorporation. After all these formalities are completed, business

can be started.

Advice

For establishing a private limited company, please approach a

company secretary or chartered accountant for information.

Note

Tax rate for both partnership firms & domestic companies are 35%

(Flat) on taxable income with an additional charge of 5% on the

tax calculated.

Public limited company

It can be incorporated with minimum seven members & the

company can invite public to subscribe to its capital .Transfer of

shares are permitted. The liability of shareholders is limited to the

capital subscribed by them.

Disadvantage

Formation of public limited company involves lot of

formalities to be completed & the process is a bit lengthy &

complicated.

The income of a public limited company is subjected to tax

@35% with 5% charge. Moreover, dividend declared by the

company is also subjected to tax.

Advice

For public limited company, please approach company secretary &

chartered accountant for information.


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Firm/ Company Names

Name of the firm/company should be simple & attractive & it

should indicate nature of the business. For e.g.:

Vinayak Export House

Vinayak Impex

Vinayak International

Vinayak Enterprises

Vinayak World wide

Note

Only in case of garment exports, name approval from AEPC

(NBCC Building Bhikaji Cama Place, New Delhi) is mandatory. In

case of proprietorship or partnership, name approval fee is

Rs.100/-.

Letter Heads /Visiting Cards

Letterheads should be simple & all necessary informations namely:

address, telephone /mobile /fax no, E-mail & a brief description

about the nature of business.

X

Ajay Pathak

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X

Establish a firm /company in any name ( Proprietor

,partnership, private limited , or limited)

Open a bank account in any bank dealing in foreign

exchanges.

Obtain income tax pan no. (Form No. 49A) .Get assistance of

income tax lawyer /CA or apply direct to NSDL Mumbai cost

Rs.65/-

Make an application in the prescribed form in duplicate

(Part A,B,C,D).

Fees of Rs.1000 is payable by way of pay order in favour of

joint Director general of Foreign Trade (CLA).

Fill up the form & submit it to the bankers & get one

certificate on banker's letterheads & fix one photograph on the

certificate & get it attested.

Tick mark declaration in the form (S.NOS.NRI).

In case of partnership firm, a list of directors is to be

submitted (With Father's name & complete address).

A consent letter from other partners, duly signed by all

partners has to be submitted.

A board resolution in case of private limited company should

be submitted, signed by at least two directors.

Enclose a photocopy of partnership deed duly signed by the

partnership (Notary Attested).

Enclose two photocopies of pan number duly signed by

proprietor /partner /director (front & back side of the partner).

REGISTRATION FOR

EXPORT/IMPORT 03


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Enclose a copy of Memorandums & articles of association

duly signed by the directors (certified of incorporation &

list of director).

Enclose the self-addressed envelope with 30 Rs. postal stamps

& one envelope with the banker address (In NCR 35Rs).

Make a covering letter & submit it to the Joint Director

General of foreign Trade, Indraprastha Bhavan, ITO, New

Delhi.

A computer receipt will be issued after submitting the

application after 10 days. I.E Code will come by speed post.

In case of duplicate IEC, the government fees is Rs.200/,

original FIR & affidavit notary attested has to be submitted .

In case of any modification behind 60 days, you have to pay

Rs.200-/as penalty.

Export Promotion Council

For export registration with export promotion council is

mandatory.

Only in case of garments, export registration with AEPC is

mandatory to get endorsement.

In case of made ups exports registration with Texprocil is

mandatory (The Cotton Textile export Promotion Council)

to get endorsement.

In case of export of agriculture products , registration form

APEDA is mandatory (PHD House, Asiad Village ,Delhi) to

obtain quality permission in case of export of rice ,pulses &

wheat ( Fees Rs.500/- life time)

Council registration is also required to avail government

benefits like DEPB/Advance License EPCG from DGFT.

Council registration is not required for claiming duty

drawback.

ITPO registration helps export dealing for marketing & market

study of export (Fees Rs.1500-/Yearly).

Ajay Pathak

11

FIEO registration help exporters dealing in multi products for

export (Fees Rs5000-/ Yearly).

X


12


Get Complete Book

At Educreation Store

www.educreation.in

This book is practical approach related to foreign trade. This

book gives professional knowledge in export import procedure

& documentation, customs & bank formalities, government

benefits, exim policies, import sources, taxation, shipping,

freight forwarding with practical assignments & much more.

_______________________________________

ABOUT THE AUTHOR

His exim consulting division deals with matters of Foreign Trade Policy &

Allied matters. Viz. Selection of firm’s name, Basic registration with the

government & other agencies, Correspondence with prospective buyer,

Arrangement to attend foreign exhibition abroad, Bank documents negotiation

assistance, Complete freight forwarding assistance, Export benefit

documentation, Duty Drawback, DEPB /DFRC, advance EPCG License,

restricted item license, FEMA matter etc & lastly feeding them regularly with

information related to changes in exim policies, customs, tariffs, & RBI matters,

Custom clearance matters.

He has assisted 2000 exporters & importers with fabulous

result & kept them satisfied.

You may reach the author at: [email protected]

ACADEMIC

Also available as an eBook

EDUCREATION PUBLISHING (Delhi) www.educreation.in

Author, Ajay Pathak is a professional Consultant, consulting

documentation & facilitation service for exporter & importer

in India.

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