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SUMMER INTERNSHIP REPORT

ON

“COST REDUCTION STRATEGIES IN IMPORT LOGISTICS”

BY

GEET CHAUHAN

A1808711013

MBA-3C(2011-13)

Under the supervision of

COL.SHARAD KHATTAR

(L ecturer-AIBS)

In Partial Fulfilment of Award of MASTER OF BUSINESS ADMINISTRATION

(3 CONTINENT-INTERNATIONAL BUSINESS AND OPERATIONS)

AMITY INTERNTIONAL BUSINESS SCHOOL,AMITY UNIVERSITY,UTTAR

PRADESH,SECTOR-125,NOIDA-201301.UTTAR PRADESH,INDIA.2012-13



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AMITY UNIVERSITY

UTTAR PRADESH

DECLARATIONI solemly declare that this report on “COST REDUCTION STRATEGIES INIMPORT-EXPORT LOGISTICS” has been compiled by me and has not beencopied from any student/researcher/employee in any university/ institution/organization or any other pace of distance learning under my knowledge .I

have duly acknowledged the sources of data given to me by my industryguide wherever they have been used in the project.

I further declare that the information presented in this project is true andoriginal to the best of my knowledge.

DATE: GEET CHAUHAN

A1808711013

MBA-3C



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AMITY UNIVERSITY UTTAR PRADESH

AMITY INTERNATIONAL BUSINESS SCHOOL

CERTIFICATE OF APPROVAL

This is to certify that GEET CHAUHAN,a student of MBA(3C),Class of 2011,AmityInternational Business School,Amity University ( Bearing AUUP Enroll.noA1808711013) has undertaken the Summer Internship Training at INDIA YAMAHAMOTOR PVT. LTD ,during 14th may’2012 to 29th june’2012 .He has worked undermy guidance for the project titled ,”COST REDUCTION STRATEGIES IN IMPORTLOGISTICS”.

This project report is prepared in partial fulfilment of MBA(3 CONTINENT-INTERNATIONAL BUSINESS AND OPERATIONS) to be awarded by AMITYUNIVERSITY,UTTAR PRADESH.

To the bet of my knowledge ,this piece of work is original and no part of this reporthas been submitted by the student to any other institute/university earlier.

COL. SHARAD KHATTAR

(Faculty,AIBS)



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ACKNOWLEDGEMENT

The Summer Internship Program undertaken by me at the SURAJPUR,GR.NOIDA corporateoffice of INDIA YAMAHA MOTOR PVT. LTD. ,was an extremely rewarding experience for me interms of learning and industry exposure.

I would like to extend my deep gratitude towards my industry guide Mr. Vinay Gupta(Sr.Manager-IMPORT LOGISTICS) and Ms.Shilpa Tiwari(Astt. Manager) , INDIA YAMAHA MOTORPVT. LTD ,who always motivated me and helped me during the internship. I am extremelythankful to them for giving me their valuable time and guidance in every step of my process.

I would like to thank my faculty guide COL.SHARAD KHATTAR who gave his valuable inputs insuggesting and helping me to decided the topic and preparation of the report.He gave valuabletime from his busy schedule to help me in the analysis and interpretation of my findings.

Student’s name and signature

Enroll.no-A1808711013

Program :MBA (3C) 2011-13



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TABLE OF CONTENTSCHAPTER CONTENTS PAGE NO.

1 EXECUTIVE SUMMARY 62 IMPORTANCE OF STUDY 73 INDUSTRY PROFILE 84 COMPANY PROFILE 125 FOREIGN TRADE POLICY( 2009-14) 166 INCOTERMS 2010 177 FOB-FREE ON BOARD 198 INDIA AND ASEAN-FREE TRADE AGREEMENT 229 IMPORT LOGISTICS

REQUIREMENT FOR IMPORT 24 STEP BY STEP PROCESS OF IMPORT LOGISTICS 25 RISK FACTORS IN IMPORT PROCESS 27 IMPORT DOCUMENTATION 30 IMPORT DUTIES 34 COSTS INVOLVED IN IMPORT PROCESS 35 CUSTOM CLEARANCE PROCESS 37 OTHER IMPORT PROCEDURES 39 CONCLUSIONS 41

10 BIBLIOGRAPHY 42

11 ANNEXURE 43



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1.EXECUTIVE SUMMARY

This project was undertaken to understand the IMPORT and EXPORT LOGISTICS system of India YamahaMotor Pvt.Ltd. The main purpose of this project was to analyze those strategies which wereinstrumental in the phenomenal success,and helps in cost reduction in the entire process of logistics.Yamaha imports various machine parts,autoparts,components,chemicals and other necessaryitems that are required for the final assembly and production of the bikes ,usually from south-east asiancountries (so as to take benefits from ASEAN-FREE TRADE AGREEMENT) like Thailand, Singapore,Malaysia, Indonesia etc.It exports its finished bikes to various countries like Sri lanka,Phillipinnes,Southafrica, Maldives alongwith latin american countries like Brazil,Argentina,Equador etc.

OBJECTIVES :

The primary objective of this project was to see how the logistics department works ,processes theorder ,carries out the entire documentation till final delivery of goods and how it coordinates withfactory ,head-office and C/F agents for the respective functions.

The secondary objective was to find and analyze such strategies that would help the company to reducecost in both import as well as export logistics process.

The project would also includes:

Growth of exports in last few years and future scope for the same.

Provisions from FTP(Foreign trade policy,2009-14) used in EXPORT-IMPORT process Various agreements that benefits the company like ASEAN-FREE TRADE AGREEMENT Study of INCOTERMS-2010 that are used by the company Costs calculation(freight ,insurance and custom duty) Risk factors in both export and import process

DATA COLLECTION :

To serve the purpose mainly secondary data was collected.The population sample comprised of respondents who were already associated with the import and export department and the factory.Myindustry guides were the main source of data collection who provided me entire information of theprocess and also made me to learn how documentation is done and various costs are calculated.



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2.IMPORTANCE OF STUDYThe importance of the study is to see the flow of goods and documentation till the completion of importor export by India Yamaha Motor Pvt.Ltd.Managers try to choose the best path,practices and methodsin order to carry out the logistics-process and give best results in terms of time as well as cost efficiency.

It chooses its best strategy to dispatch final products after manufacturing, for their delivery todestination on time and also to receive imported goods after custom clearance and delivery of theconsignment at its own factory.Management of successful logistics system requires accurate and timelyinformation.It requires efficient planning ,implementation and controlling over the entire procedurewhether in import or the export logistics department.Their are many aspects that are supposed to beconsidered and given priority during the process execution such as:

Quality inspection ,both before dispatch of consignment for export and custom clearance in

import. On-time delivery of goods to the importer and also custom clearance on time at the port. . List of requirements sent by the buyer as well as that sent by Yamaha to the seller. Filling of details in the ERP system of the company. Loading and unloading of goods at port and the factory. Making and receiving the payment (perfect mode and on time). Selection of the mode of transport and shipping line. Selection of the best route to be followed for shipment. Interaction with Clearing and forwarding agents. Selection of the best supplier for efficient results.



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3.INDUSTRY OVERVIEW - INDIANAUTOMOBILE INDUSTRY

Two-wheeler segment is one of the most important components of the automobile sector thathas undergone significant changes due to shift in policy environment. The two-wheeler industryhas been in existence in the country since 1955. It consists of three segments viz. scooters,motorcycles and mopeds. According to the figures published by SIAM, the share of two-wheelers in automobile sector in terms of units sold was about 80 per cent during 2003-¬04.This high figure itself is suggestive of the importance of the sector. In the initial years, entry of firms, capacity expansion, choice of products including capacity mix and technology, all critical

areas of functioning of an industry, were effectively controlled by the State machinery. Thelapses in the system had invited fresh policy options that came into being in late sixties.Amongst these policies, Monopolies and Restrictive Trade Practices (MRTP) and ForeignExchange Regulation Act (FERA) were aimed at regulating monopoly and foreign investmentrespectively. This controlling mechanism over the industry resulted in: (a) several firmsoperating below minimum scale of efficiency; (b) under-utilisation of capacity; and (c) usage of outdated technology. Recognition of the damaging effects of licensing and fettering policies ledto initiation of reforms, which ultimately took a more prominent shape with the introduction of the New Economic Policy (NEP) in 1985.

However, the major set of reforms was launched in the year 1991 in response to the majormacroeconomic crisis faced by the economy. The industrial policies shifted from a regime of regulation and tight control to a more liberalised and competitive era. Two major results of policy changes during these years in two-wheeler industry were that the, weaker players diedout giving way to the new entrants and superior products and a sizeable increase in number of brands entered the market that compelled the firms to compete on the basis of productattributes. Finally, the two-¬wheeler industry in the country has been able to witness aproliferation of brands with introduction of new technology as well as increase in number of players. However, with various policy measures undertaken in order to increase thecompetition, though the degree of concentration has been lessened over time, deregulation of

the industry has not really resulted in higher level of competition.



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National Council of Applied Economic Research (NCAER) had forecast two-wheeler demandduring the period 2002¬-03 through 2011-12. The forecasts had been made using econometrictechnique along with inputs obtained from a primary survey conducted at 14 prime cities in thecountry. Estimations were based on Panel Regression, which takes into account both time seriesand cross section variation in data. A panel data of 16 major states over a period of 5 yearsending 1999 was used for the estimation of parameters. The models considered a large numberof macro-economic, demographic and socio-economic variables to arrive at the best estimationsfor different two-wheeler segments. The projections have been made at all India and regionallevels. Different scenarios have been presented based on different assumptions regarding thedemand drivers of the two-wheeler industry. The most likely scenario assumed annual growthrate of Gross Domestic Product (GDP) to be 5.5 per cent during 2002¬-03 and was anticipated toincrease gradually to 6.5 per cent during 2011¬-12. The all-India and region-wise projectedgrowth trends for the motorcycles and scooters are presented in Table 1. The demand formopeds is not presented in this analysis due to its already shrinking status compared to'motorcycles and scooters.

It is important to remember that the above-mentioned forecast presents a long-term growth fora period of 10 years. The high growth rate in motorcycle segment at present will stabilise after acertain point beyond which a condition of equilibrium will set the growth path. Anotherimportant thing to keep in mind while interpreting these growth rates is that the forecast couldconsider the trend till 1999 and the model could not capture the recent developments that havetaken place in last few years. However, this will not alter the regional distribution to a significantextent.

Following Table suggests two important dimensions for the two-¬wheeler industry. The region-wise numbers of motorcycle and scooter suggest the future market for these segments. At theall India level, the demand for motorcycles will be almost 10 times of that of the scooters. Thesame in the western region will be almost 20 times. It is also evident from the table thatmotorcycle will find its major market in the western region of the country, which will accountfor more than 40 per cent of its total demand. The south and the north-central region will followthis. The demand for scooters will be the maximum in the northern region, which will accountfor more than 50 per cent of the demand for scooters in 2011-12.



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Table : Demand Forecast for Motorcycles and Scooters for 2011-12

2-Wheeler Segment Regions

South West North-Central East & North-East All India

Motorcycle 2835(12.9)

4327(16.8)

2624(12.5)

883(11.1)

10669(14.0)

Scooter 203(2.6)

219(3.5)

602(2.8)

99(2.0)

1124(2.08)

Note: Compound Annual Rate of Growth during 2002-03 and 2011-12 is presented inparenthesisSource: Indian Automobile Industry: Optimism in the Air, Industry Insight, NCAER

The present economic situation of the country makes the scenario brighter for short-termdemand. Real GDP growth was at a high level of 7.4 per cent during the first quarter of 2004.Both industry and the service sectors have shown high growth during this period at the rates of 8.0 and 9.5 per cent respectively. However, poor rainfall last year will pull down the GDP growthto some extent. Taking into account all these factors along with other leading indicatorsincluding government spending, foreign investment, inflation and export growth, NCAER hasprojected an average growth of GDP at 6.7 per cent during the tenth five-year plan. Its mid-termforecast suggests an expected growth of 7.4 per cent in GDP during 2004-05 to 2008-09. Veryrecently, IMF has portrayed a sustained global recovery in World Economic Outlook. Asignificant shift has also been observed in Indian households from the lower income group tothe middle income group in recent years. The finance companies are also more aggressive intheir marketing compared to previous years.Combining all these factors, one may visualise ahigher growth rate in two-wheeler demand than presented in Table 1, particularly for themotorcycle segment.

There is a large untapped market in semi-urban and rural areas of the country. Any strategicplanning for the two¬-wheeler industry needs to identify these markets with the help of available statistical techniques. Potential markets can be identified as well as prioritised usingthese techniques with the help of secondary data on socio-economic parameters. For the two-wheeler industry, it is also important to identify the target groups for various categories of motorcycles and scooters. With the formal introduction of secondhand car market by thereputed car manufacturers and easy loan availability for new as well as used cars, the two-wheeler industry needs to upgrade its market information system to capture the new marketand to maintain its already existing markets. Availability of easy credit for two-wheelers in ruraland smaller urban areas also requires more focussed attention. It is also imperative to initiatemeasures to make the presence of Indian two-wheeler industry felt in the global market.



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The market shares of the segments of the automobile industry

The automobile industry had a growth of 15.4 % during April-January 2007, with the average annual

growth of 10-15% over the last decade or so. With the incremental investment of $35-40 billion, thegrowth is expected to double in the next 10 years.Consistent growth and dedication have made the Indian automobile industry the second- largest tractorand two-wheeler manufacturer in the world. It is also the fifth-largest commercial vehicle manufactureinthe world. The Indian automobile market is among the largest in Asia.



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4.INDIA YAMAHA MOTOR PVT. LTD.-HISTORYYamaha's history goes back over a hundred years to 1887 when Torakusu Yamaha founded thecompany, which began producing reed organs. The Yamaha Corporation in Japan (then Nippon GakkiCo., Ltd.) has grown to become the world's largest manufacturer of a full line of musical instruments,and a leading producer of audio/visual products, semiconductors and other computer related products,sporting goods, home appliances and furniture, specialty metals, machine tools, and industrial robots.

The Yamaha Motor Corporation, Ltd., begun on July 1, 1955, is a major part of the entire Yamahagroup, but is a separately managed business entity from the Yamaha Corporation. The Yamaha MotorCorporation is the second largest manufacturer of motorcycles in the world. Yamaha Motor Corporationowns its wholly-owned subsidiary in the U.S. called Yamaha Motor Corporation, USA, that is handling

not only motorcycles, but also snow mobiles, golf carts, outboard engines, and water vehicles, under thebrand name of Yamaha as well.

In 1954 production of the first motorcycles began, a simple 125cc single-cylinder two-stroke. It was acopy of the German DKW design, which the British BSA Company had also copied in the post-war eraand manufactured as the Bantam.

The first Yamaha, the YAI, known to Japanese enthusiasts as Akatombo, the "Red Dragonfly",established a reputation as a well-built and reliable machine. Racing successes helped boost itspopularity and a second machine, the 175cc YCI was soon in production.

The first Yamaha-designed motorcycle was the twin-cylinder YDI produced in 1957. The racing version,producing 20bhp, won the Mount Asama race that year. Production was still modest at 15,811motorcycles, far less than Honda or Suzuki.

The company grew rapidly over the next three years and in 1959 introduced the first sports model tobe offered by a Japanese factory, the twin-cylinder YDSI with five-speed gearbox. Owners who wantedto compete in road racing or motocross could buy kits to convert the machine for both road andmotocross racing.

By 1960 production had increased 600% to 138,000 motorcycles. In Japan a period of recession

followed during which Yamaha, and the other major Japanese manufacturers, increased their exports sothat they would not be so dependent on the home market.

To help boost export sales, Yamaha sent a team to the European Grand Prix in 1961, but it was notuntil the 1963 season that results were achieved.



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After the Korean War the American economy was booming and Japanese exports were increasing. In1962 Yamaha exported 12,000 motorcycles. The next year it was 36,000 and in 1964 production rose to87,000.

The first overseas factory was opened in Siam in 1966 to supply Southeast Asia. In 1967 Yamaha

production surpassed that of Suzuki by 4,000 at 406,000 units. Yamaha established a lead with theintroduction of the first true trail bike "the 250cc single-cylinder DTI". The company also developed atwo-liter, six-cylinder, double overhead-camshaft sports car unit for Toyota Motor. This proved helpfulwhen Yamaha produced their own high-performance four-stroke motorcycles.In 1969 Yamaha built afull size road racing circuit near their main factory at Iwata.

By 1970 the number of models had expanded to 20 ranging from 50cc to 350cc, with production up to574,000 machines, 60% of which were for export. That year Yamaha broke their two-stroke tradition bylaunching their first four-stroke motorcycle, the 650cc XSI vertical twin modeled on the famous Triumphtwins.

In 1973 production topped one million (1,000,000) motorcycles per year for the first time, leavingSuzuki way behind at 642,000 and catching up on Honda's 1,836,000. During the 1970's Yamahatechnicians concentrated on development of four-stroke models that were designed to pass the ever-increasing exhaust emission laws and to be more economical than the two-strokes that had madeYamaha's fortune.

About India Yamaha Motor Pvt. Ltd.

“Yamaha made i ts ini t ial foray into India in 1985. Subsequently, i t entered into a50:50 joint-venture with the Escorts Group in 1996. However, in August 2001,Yamaha acquired i ts remaining stake becoming a 100% subsidiary of Yamaha MotorCo., Ltd, Japan (YMC). In 2008, Mitsui & Co., Ltd. entered into an a greement withYMC to become a joint investor i n the motorcycle manufacturing company "IndiaYamaha Motor Private Limited (IYM)".

IYM operates from its state-of-the-art-manufacturing units at Surajpur in UttarPradesh and Faridabad in Haryana and produces motorcycles both for domestic andexport markets. With a strong workforce of more than 2,000 employees, IYM is highlycustomer-driven and has a countrywide network of over 400 dealers. Presently, i tsproduct portfolio includes VMAX (1,679cc), MT01 (1,670cc), YZF-R1 (998cc), Fazer(153cc), FZ-S (153cc), FZ16 (153cc), YZF-R15 (150cc), Gladiator Type SS & RS (125cc),Gladiator Graffi t i (125cc), G5 (106cc), Alba (106cc) and Crux (106cc). “



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CORE COMPETENCIES-----------------------------------------------

Customer #1

We put customers first in everything we do. We take decisions keeping the customer in mind.

Challenging Spirit

We strive for excellence in everything we do and in the quality of goods & services we provide. We work hard to achieve what we commit & achieve results faster than our competitors and we never give up.

Team-work

We work cohesively with our colleagues as a multi-cultural team built on trust, respect, understanding &mutual co-operation. Everyone's contribution is equally important for our success.

Frank & Fair Organization

We are honest, sincere, open minded, fair & transparent in our dealings. We actively listen to others andparticipate in healthy & frank discussions to achieve the organization's goals.



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5.FTP - FOREIGN TRADE POLICY(2009-14)The foreign trade policy 2009-14,incorporating provisions relating to export and import of goods andservices came into force from 27th august,2009 and shall remain in force upto 31st march,2014 .Thus itis the sum total of a country’s relationship with internal and external actors while pursuing its goals andobjectives.This five year policy is issued by Ministry of Commerce for five years .It includes number of policies ,initiatives,frameworks and regulations to control and regulate exports as well as imports of thecountry.Some of them which are used by Indian firms for their imports are as follows:

1).GENERAL PROVISIONS REGARDING EXPORTS AND IMPORTS :The itemwise export and importpolicy shall be ,as specified in ITC(HS)notified by DGFT,as amended from time to time.Every importer orexporter shall comply with the provisions of FT(D&R) Act,the rules and orders made under FTP. DGFT

may specify the procedure to be followed for an exporter or importer for the purpose of implementingprovisions of FT(D&R) Act.Restricted goods are mentioned in the list of ITC(HS).Various committesinvolved are:

Norms committe – for fixation/modificationof product norms under all schemes. EPCG committe – nexus with capital goods and benefits under EPCG schemes. Policy relaxation committe – all other issues.

2).DUTY EXEMPTION AND REMISSION SCHEMES:These schemes enable duty free imports of inputsrequired for export production .Duty exemption schemes consist of (a)Advance Authorisation scheme

and (b) Duty Free Import Authorisation scheme.On other hand Duty Remission scheme enables postexport replenishment/remission of duty on inputs used in export product.Duty Remission schemesconsist of (a)Duty entitlement passbook scheme and (b)Duty Drawback scheme.

An Advance authorisation is issued to allow duty free import of inputs,which are physically incorporatedin the export products.It can be issued either to a manufacturer exporter or merchant exporter tied tosupporting manufacturer.

DFIA is issued to allow duty free import of inputs,fuel,oil,energy sources and catalyst which are requiredfor production of export product.

DEPB scheme is not in use,but Duty drawback scheme is used in applicable cases.

3).EXPORT PROMOTION CAPITAL GOODS (EPCG) SCHEME :Concessional 3% duty EPCG schemeallows import of capital goods for pre production,post production and production at 3% customsduty,subject to an export obligation equivalent to 8 times of duty on capital goods imported under EPCGscheme ,to be fulfilled in 8 years reckoned from authorisation issue-date.



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6.INCOTERMS 2010The INTERNATIONAL COMMERCIAL TERMS,are the set of rules which defines the responsibilities of thesellers and buyers for the delivery of goods under sales contracts for domestic as well as internationaltrade.They are published by the ICC and are widely used in international commercial transactions.Firstincoterms were published in 1936 after which they have been revised time to time.The most latest andrecent version of INCOTERMS,2010 were launched in september,2010 and became effective from january 1,2011.

These terms provide a common set of rules to clarify responsibilities of seller and buyers for the deliveryof goods under sales contracts.They significantly reduces the misunderstamdings among traders andthereby minimize trade disputes and litigation.

1).FAS-FREE ALONGSIDE SHIP(named port of shipment)

The seller place the goods alongside the ship at the named port.The seller must clear the goods forexport.It is suitable only for the maritime transport but NO for multimodal sea transport incontainers.Itis usually used for heavy-lift or ulk cargo.

2).FOB-FREE ON BOARD(named port of shipment)

The seller must load the goods on board the vessel nominated by the buyer.Cost and risk are dividedwhen the goods are actually on board of the vessel.The seller must clear the goods for export.The buyermust instruct the seller the details of the vessel and the port where the goods are to be loaded.

3).CFR-COST AND FREIGHT(named port of destination)

Seller must pay the cost anfd freight to bring the goods to the port of destination.However ,risk istransferred to the buyer once the goods are loaded on the vessel.It is used only for maritime transportonly insurance for goods is not included.

4).CIF-COST ,INSURANCE AND FREIGHT(named port of destination)

It is exactly same as CFR except that the seller must in addition procure and pay for the insurancemaritime transport only.



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5).EXW-EX WORKS(named place ofdelivery)

The seller makes the goods available at its premises.It places the maximum obligations on the buyer andminimum obligations on the seller.It means that the seller has the goods ready for the collection at hispremises on the date agreed upon.The buyer pays all transportation costs and also bears the risks forbringing the goods to their final destination.

6).FCA-FREE CARRIER(named place of delivery)

The seller hands over the goods ,cleared for export ,into the disposal of the first carrier(named by thebuyer0,at the named place.The seller pays for carriage to the named point of delivery and risk passeswhen goods are handed over to the first carrier.

7).CPT-CARRIAGE PAID TO(named place of destination)

The seller pays for carriage.Risk transfers to buyer upon handling goods over to the first carrier.

8).CIP-CARRIAGE AND INSURANCE PAID TO(named place of destination)

The containerized transport/multimodal equivalent of CIF.Seller pays for carriage and insurance to thenamed destination point ,but risk passes when the goods are handed over to the first carrier.

9).DAT –DELIVERED AT TERMINAL(named terminal at port or place of destination)

Seller pays for change to the terminal,except for costs related to import clearance and assumes all risksupto to the point that goods are unloaded at the terminal.

10).DAP-DELIVERED AT PLACE(named place of destination)

Seller pays for the carriage to the named place,except for costs related to import clearance,and assumesall risks prior to the point that good are ready for unloading by the buyer.

11). DDP-DELIVERED DUTY PAID(named place of destination)

Seller is responsible for delivering the goods to the named place inthe country of the buyer and pays allcosts in bringing the goods to the destination including import duties and taxes.It places maximumobligations on the seller and minimum obligations on the buyer.



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7.FOB – FREE ON BOARD

This term is used usually for the sea or the inland waterway transport.FOB means that seller will deliverthe goods on board the vessel nominated by the buyer at the named port of shipment or procures thegoods already so delivered.The risk of loss or damage to the goods passes when the goods are on boardthe vessel ,and buyer bears all costs from that moment onwards.FOB may not be appropriate wheregoods are handed over to the carrier before they are on board the vessel,for example goods incontainers,which are typically delivered at the terminal.FOB requires the seller to clear the goods forexport,where applicable.The seller has no obligations to clear the goods for import ,pay any import dutyor carry out any import customs formalities.

THE SELLER’S OBL IGATIONS -The seller must provide the goods and the commercial invoice inconformity with the contract of sale of contract of sale and any other evidence of conformity that maybe reaquired by the contract.

1).Licences,authorizations,security clearances and other formalities -Where applicable the sellermust obtain at its own risk and expense any export licence or other official authorization and carry outall customs formalities necessary for the export of goods.

Contract of carriage:The seller has no obligations to the buyer to make a contract of carriage. Contract of insurance:The seller has no obligations to the buyer to make a contract of insurance.

2) .Delivery -The seller is suppose to deliver the goods either by placing them on board the vesselnominated by the buyer at the loading point or by procuring the goods so delivered.In either case theseller must deliver the goods on agrred date or within the agreed period and in manner customary atthe port.If no specific loading point has been indicated by the buyer,the seller may select the point

within the named port of shipment that best suits its purpose.

3).Tranfer of risks -The seller bears all risks of loss or damage to the goods until they have beendelivered in with exception of loss or damage in the circumstances.The seller must pay :



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All costs relating to the goods until they have been delivered other than those payable by thebuyer,

The costs of customs formalities necessary for export as well as all duties , taxes and othercharges payable upon export.

4).Notice to buyer -The seller must ,at the buyer’s risk and expense ,give the buyer sufficient noticeeither that goods have been delivered or that the vessel has failed to take the goods within the timeagreed.There need to be presence of the usual proof that goods have been delivered.

5).Checking-packaging-marking -The seller must pay :

The costs for checking operations (checking quality,measuring,weighing and counting) that arenecessary for the purpose of delivering the goods

Costs of any pre-shipment inspection mandated by the authority of the country of export. Costs of packaging the goods appropriately for their transport (marked properly).

THE BUYER’S OBLIGATIONS -The buyer must pay the price of the goods as provided in the contract of sale.

1).Licenses,authorisations,security clearances and other formalities -It is upto the buyer to obtainat its own risk and expense,any import license or other official authorisation and carry out all customformalities for the import of the goods and for their transport through any countries.

Contract of carriage:The buyer must contract at its own expense for the carriage of the goodsfrom the named port of shipment.

Contract of insurance:The buyer has no obligation to the seller to make a contact of insurance.

2).Taking delivery -The buyer must take delivery of the goods when they have been delivered.

3)Transfers of risks -The buyer bears all the risks of loss or damage to the goods from time they havebeen delivered.The buyer bears all risks of loss of or damage to the goods:

From the agreed date ,or in the absence of an agreed date From the date notified by the seller within the agreed period ,or ,if no such date has been

notified. From the expiry date of any agreed period for delivery ,provided that the goods have been

clearly identified as the contract goods.



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3). Allocation of costs -The buyer must all of the following costs:

All costs relating to the goods from time they have been delivered Any additional cost if buyer fails to give appropriate notice or the vessel nominated fails to

arrive on time. All duties,taxes,charges as well as costs of carrying out customs formalities payable upon import

of the goods and the costs for their transport through any country.

4).Notices to the seller -The buyer must give the seller sufficient notice of the vessel time ,loadingpoint and where necessary the delivery time within the agreed period.The buyer must accept the proof of the delivery provided.

5).Inspection of goods -The buyer must pay the costs of any mandatory pre-shipment inspection .



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8.INDIA AND ASEAN-FREE TRADEAGREEMENTIts now more than 10 years ,the partnership between INDIA and the ASSOCIATION OF SOUTH EASTASIAN NATIONS(ASEAN) comprising Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar,Phillippines, Singapore, Thailand and Vietnam has been developing at quite a fast pace.

India became a sectoral dialogue partner of ASEAN in 1992.Mutual interest led ASEAN to invite India tobecome its full dialouge partner during fifth ASEAN summit in Bangkok in 1995.India also became amember of ASEAN Regional forum (ARF) in 1996.India and ASEAN have been holding summit levelmeetings on an annual basis since 2002.

In August 2010,Singapore,Thailand and Malaysia accepted the FTA on goods .The other seven ASEAN

countries are expected to operationalise the FTA by August ,2010.

India and ASEAN are currently negotiating agreements on trade in services and investment .The servicesnegotiations are taking place on a request offer basis,wherein both sides make request for the openingsthey seek and offers are made by the receiving country based on the requests.

The deepening of ties between India and ASEAN is reflected in the continued buoyancy in trade figures.India’s trade with ASEAN countries has increased from US$ 30.7 billion in 2006-07,to US$ 39.08 billion in2007-08 and to US$ 45.34 billion in 2008-09.

At the second ASEAN - India summit in 2003,the ASEAN-India framework agreement on comprehensive

economic cooperation was signed by the leaders of ASEAN and India.The framework agreement laid asound basis for the eventual establishment of an ASEAN –India regional trade and investmentarea(RTIA),which includes FTA in goods ,services and investment.

The 7th ASEAN –India summit in CHA-AM HUA HIN,Thailand on 24th october 2009 agreed to revise thebilateral trade target to 70 billion USD to be achieved in next two years,noting that the initial target of USD 50 billion set in 2007 may soon be surpassed.

In august 2009,India signed a free trade agreement (FTA) with the ASEAN members in Thailand.Underthe ASEAN – India FTA,ASEAN member countries and INDIA will lift import tariffs on more than 80percent of traded products between 2013-16.India and ASEAN are currently negotiating agreements ontrade in services and investments.



23

BENEFITS OF FTA(FREE TRADE AREA) TO INDIA :

The FTA liberalized tariffs on about 4,000 items accounting for nearly 80% of trade between

INDIA and ASEAN.It includes long list of electronics,chemicals,spare and machine parts. The agreement became effective from Jan,1 2010, tariffs on products covered will sink to zero

between 2013 and 2016. Now,its one of the members of large integrated market of ASEAN with low product cost,high

market competion and lowered tariffs.

India’s imported goods worth US$ 26.3 billion in 2008-09 from ASEAN ,during the period april-december2009- 10,India’s imports from ASEAN totalled US$ 18.09 billion,according to data released by the minstryof commerce and industry.

SOME MAJOR SUPPLIERSTO INDIA:

SINGAPORE-It continues to be the single largest investor in India among the ASEAN countries .The totalbilateral trade during 2008-09 was US$ 16.1 billion,an increase of 3.86 percent over US$ 15.5 billion in2007-08.Also, the FDI inflows from Singapore during 2000 and 2010 were US$ 10.2 billion,according todata released by the department of industrial policy and promotion(DIPP).

MALAYSIA-The bilateral economic relationship between India and Malaysia has been steadily movingahead.Bilateral trade among the two countries amounted to US$ 10,604.75 million during 2008-09,(increase of 23.48%) according to data released by the ministry of commerce.

THAILAND- The bilateral trade betweenthe two countries touched US$ 4.6 billion in 2008-09,registering a growth of 12.9 percent ,according to data released by ministry ofcommerce.Also,TotalFDI inflow during the period april 2000-march2010 from Thailand was US$ 77.97 million.

INDONESIA -The bilateral trade between Indonesia and India totalled US$ 9.3 billion in 2008-09 ,anincrease of 32.08 percent after 2007-08.They both are targeting bilateral trade worth US$ 20 billion by2020,according to Indonesian ambassador to India.

MYANMAR,VIETNAM,PHILIPPINES AND CAMBODIA -India’s trade with these countries have alsoshown progress with time in last few years and is increasing continuously.As far as imports are

considered, there is small list of items that India imports from these countries.



24

9.1.REQUIREMENT FOR IMPORT:Yamaha ,at its Surajpur plant produces only some of the components such as fuel tank,body coveretc.Most of the components are locally purchased from other states of India such asMaharashtra,Karnataka,Haryana etc.They constitute the local purchase and rest of the parts areimported from other countries.The ratio goes as :

OWM MADE PARTS-5-10% BOUGHT OUT PARTS(Locally purchased)-70-80% IMPORTED-5-10%

Major Suppliers:

Thailand Singapore China Japan Indonesia Taiwan Malaysia

Imports mainly includes:

Components - like Ignition Coil, CDI unit, Rotor, Stator, Starting Motor etc.

Hardware - like Nuts, Bolts, Screws, Pins, Circlips etc.

Raw materials - like Paints, Welding Wire, Grease, Hot rolled sheets etc.

Machinery parts - like spare parts of CNCmachine, testing machine etc.



25

9.2.STEP BY STEP PROCESS OF IMPORTLOGISTICS:PARTICIPANTS IN IMPORT PROCESS:

BUYER SELLER FORWARDER SHIPPER CUSTOM HOUSE AGENT CUSTOM OFFICIALS BANK

1).PLACING OF ORDER :

The final placing of order by the buyer to the supplier involves number of steps:

Buyer would ask for QUOTATION i.e mainly the price details for the required consignment fromthe supplier.

It includes: ITEM DESCRIPTION, PRICE, INCOTERMS,PAYMENT TERMS,LEAD TIME & VALIDITY etc. Supplier then sends the quotation for consideration to the buyer.

On the basis of Quotation, Buyer finally send PO (Purchase order),alongwith the details of FORWARDER to the supplier.

2).ROLE OF LOGISTICS Department: Selection of the forwarding agent. Selection of CHA(CUSTOM HOUSE AGENT). Tracking of the entire shipment process on behalf of the company. Timely payment of custom duty.

ROLE OF FORWARDER: Arrangement of vessel / flight booking for the consignment. Arrangement of Transportation from Origin Port to Destination Port Other necessary arrangements for receiving order at port. Constant coordination with the shipping line,buyer as well as supplier. Giving timely information to the logistics department regarding shipping process and

proceedings.



26

3).SUPPLIER DELIVERS THE ORDER:Supplier then makes all necessary arrangements as per the buyer’s conditions,for the execution of theorder from dispatch of order from its own port to its delivery at the Buyer’s port.

4).SHIPPING DOCUMENTS TO BUYER:Supplier sends the shipping documents to buyer, which are sent by buyer to their CHA(CUSTOM HOUSEAGENT),for the purpose of custom clearance.

5).ROLE OF CHA OR C/F AGENTS:The CHA on receiving the shipping documents and details,file the BILL OF ENTRY as per details in thedocuments and then confirm the CUSTOM DUTY to the buyer.CHA may also be responsible for followingactivities:

Arrangement of warehousing at the port. Arrangement of containers at the port. Arranging the marine/cargo insurance of the shipment. Arrangement for assessment of damage to the goods to file claim with the insurance company. Arrangement for handling goods if rejected by the importer or not collected on time. Arrangment for transport of goods to the factory after custom clearance.

6).PAYMENT OF CUSTOM DUTY:The buyer would make the payment for the custom duty ,usually through e-payment and then send thebank-receipt to the CHA.

7).CLEARING OF CONSIGNMENT:After the bank-receipt is being received , the CHA clears the consignment from the custom and givesthe shipping arrival information to the buyer.CHA will arrange for the domestic transport of order fromthe port to the buyer’s location or factory.On fi nal delivery of goods the CHA sends the original bill of entry to the BUYER.



27

IMPORT LOGISTICS PROCESS CHART

ACTIVITIES RESPONSIBILITY DURATION REFERENCE

DOCUMENTS

1).Buyer ask for quotation to supplier.

2).Supplier sends quotation and forwarder detailswith full details of item to buyer.

3).Buyer places final order in form of Purchaseorder.

4).Forwarder regulates entire shipment from originport to destination port.

5).Supplier sends the shipping documents to buyer.

6).Buyer sends the shipping documents to CHA.

7).CHA files BILL OF ENTRY and sends the B/Enumber to appraising group.

8).Appraising group carries out examination andverification of the consignment.

9).CHA calculates the custom duty and informs it tobuyer.

10).Payment of custom duty by the Buyer.

11).Final clearing of consignment from the port.

BUYER

SUPPLIER

BUYER

FORWARDER

SUPPLIER

BUYER

CHA

CUSTOM OFFICIALS

CHA

BUYER

WITHIN 1 WEEK

AT THE TIME OFSHIPMENT

NEXT DAY OFSTEP-6

WITHIN 3 DAYSOF SHIPMENT

WITHIN 5 DAYS(AFTER STEP-9)

QUOTATION

PURCHASE ORDER

INVOICE,PACKINGLIST,COA,B/L,AIRWAYB

BILL OF ENTRY



28

9.3.RISK FACTORS IN IMPORT PROCESSThere are various kinds of risks involved while importing goods .They are mainly classified underfollowing categories:

1).TRANSPORT RISK :This involves the risk associated with loss of goods during transportation.

First of all the importer need to ensure that the goods supplied by the exporter is insured. It is always advisable to set out the agreement betwen the parties as to the type of cover to be

obtained in the contract of sale. Importer preferably wish to obtain insurance cover from their own insurance company under

“open policy” thus taking advantage of bulk billing and other relationships.

2).QUALITY RISK :This involves the quality of the final received goods.

It is important for the importer to ensure that the final products are as good as sample.importermust take necessary protective measures in advance.

Importer must investigate the reputation and standing of the supplier. Inspection must be done from the importer side and the exporter side or by the third party

agency. Importer is able to inspect the goods before payment is made to the supplier at the maturity

date in case of Bill of exchange,with documents released against acceptance. It is found better that the importer can have the agent in the supplier’s country for closer

supervision to be maintained over the shipments.

3).DELIVERY RISK :This is the risk that arises on when goods are not delivered on time.Delivery ontime is the important factor for importer to reach the target market.

Importer must make the import-contract very specific,so that importer always has an optionof refusing the payment if goods are not delivered on time.

The “latest date if shipment” is included by the issuing bank in the terms of credit.(whenpayment is through documentary credit)

Also,very import the importer need to collect the consignment from the port on time other

wise charges are ready to be paid.

4).EXCHANGE RATE RISK: This involves the risk that arises due to change in the value of currency.

The importer must determine the value of the product in domestic currency because thereis always a gap between the time of entering into the contract and actual payment for thegoods is received.



29

It must enter into foreign exchange contract(HEDGING is most commonly used where rateof exchange is pre-fixed by both the parties to prevent future risk of high rate) throughbank.



30

9.4.IMPORT DOCUMENTATIONThe availability of right documents,the correctness of the information available in the documents as wellas the timeliness in submitting the documents and filling the necessary applications for the customsclearance determines the efficiency of the customs clearance process.Any delay in filling or non-availability of documents can delay the process and thereby importers stands not only to incurdemurrage on the imported cargo but also stand to loose business opportunities.Custom clearanceprocess requires the set of documents to be submitted by the importer .By the airline,shippingline orthe freight forwarder as well as the customs documentation prepared and submitted by the clearingagent on behalf of the importer.Some major documents required in import logistics are as follows:

1).COMMERCIAL INVOICE :This document certifies the sales as well as gives the description of theitems as well as reflects the pricing or the value of the cargo.Custom valuation is based on the valuereflected on the commercial invoice.Some major entries in commercial invoice are as follows:

Customer code Invoice no. Date Shipped by From to/via Payment Currency Mark and number No. of packages Description Quantity Unit-price Total

2).PACKING LIST :It is mandatory to put the shipping marks on all the cargo covering each and everyindividual piece or parcel.The details of the number of parcels in the consignment ,their dimension ,theshipping marks,the gross and net weights of each of the parcels along with the number of unitscontained in each parcel is catalogued in form of the packing list.It is used to identify the parcels asbelonging to the particular consignment under the said invoice.Major entries:

Customer code Invoice no. Date Shipped by From to/via Payment



31

Mark and number No.of packages Description Quantity Gross weight Net weight Measurement

3)BILL OF LADING(NON-NEGOTIABLE OCEAN-SEA TRANSPORT): This is issued by the shippingline certifying carriage of the said cargo under the specific invoice on behalf of the exporter or importerdepending upon terms of sale.In FOB,”ON BOARD BILL OF LADING” is usually considered to be the apt bilof lading that signifies that the cargo has been loaded on board.This is also required for negotiations of payment from importer to the exporter.Major entries:

Consignee

Notify party Pre-carriage by Place of receipt Ocean vessel Port of loading Port of discharge Place of delivery Number of original B/L Carrier’s receipt Particulars furnished by shipper – carrier not responsible Container no./seal no. Marks and numbers No. of containers packages Kinds of packages ,description of goods Gross weight Measurements Total no. containers or packages in words Freight and charges Prepaid

Collect(freight collect) Declared value charges Declared value of US $ Prepaid at Payable at Ex rate Place of issue



32

Date

4).AIRWAY BILL (IN CASE OF AIR TRANSPORT):This is issued by the airline or a freight forwarder who consolidates the air freight cargo.It includes:

Shipper’s name and address Shipper a/c no. Consignee name and address Issuing carrier agent name and city Agent tata code Account no. Airport of departure and requested routing Airport of destination Flight /date

Accounting information Amount of insurance Gross weight Chargeable weight Total Nature and quantity of goods Charges at destination Total collect charges Signature of shiper or his agent

5)CERTIFICATE OF ORIGIN :Certain bilateral agreements and multilateral agreements would enjoyfavorable tariffs for import duties.In such cases when the consignments are exported from such membercountries,the designated export agency issues certificate of origin to the importer for submission tocustoms.Based on this the custom department classifies the cargo under specific schedule.It avoids thethird party countries from routing imports through member countries and effecting third party export toavoid duty ,quantity or license restrictions.It includes:

Goods consigned from Goods consigned to Reference to

Means of transport and route- departure date ,vessel’s name/aircraft,port of discharge For official use:

1.preferential tariff treatment given under ASEAN –India free trade area preferential tariff.2.preferential tariff treatment not given.

Item number Marks and number of packages Description of goods



33

Origin criterion Gross weight or other quantity and value Number and date of invoices Declaration of exporter Certification

6).SOME OTHER IMPORTANT DOCUMENTS :Besides above ,there are various other documents thatare necessary to be filled as per terms and conditions:

Insurance certificate(in case CIF incoterm) Catalouge(in case of machinery items) Fumigation(document for wooden palletisation)

Test report/MSDS certificate (in case of chemicals) Material safety date-sheet(in case of chemicals and hazardous goods)



34

9.5.IMPORT DUTIESThe concept of import duty is applicable to each and every product or item whether its anyequipment ,raw material ,machine or auto parts.Import duties form a significant source of revenuefor the country and are levied on the goods and at the rates specified in the schedules to thecustoms tariff act,1975.Territorial water extends upto 12 nautical miles into the sea from the coastof india and so the liability to pay import duty commences as soon as goods enter the territorialwaters of india.

BASIC DUTY :It is type of duty or tax imposed under the customs act(1962).Basic customduties varies for different items from 5% to 40%.The duty rates in the first schedule of thecustoms tariff act,1975 and have been amended from time to time under the financeact.The central government has the power to reduce or exempt any good from these duties.

COUNTERVAILING DUTY :It is also known as countervailing duty and is equal to excise dutyimposed on a like product manufactured or produced in india.It is implemented under thesection3(1),of the indian custom tariff act.

ADDITIONAL DUTY :This duty is imposed at the rate of 4% in order to provide a levelplaying field to indigenous goods which have to bear sales tax.This is to computed on theaggregate of the: Assessable value+Basic duty of customs+Surcharge + Additional duty of customs leviable ,under section 3 of the customs tariff act,1975.

ANTI-DUMPING DUTY :Dumping means exporting goods in a foreign market at a pricewhich is less than their cost of production or below their “fair”market value.Thus tocounteract this dumping,the indian government has formulated certain guidelines andpolicies.Imposing duty on imported goods is also one of them and is known as anti-dumpingduty.All laws related to anti-dumping duties are mentioned in section 9A,9B and 9C of theindian custom tariff act(1975),and the indian customs tariff rules(1995).These laws arebased on the agreement on anti-dumping which is in pursuance of the article VI of GATT1994.



35

9.6.COSTS INVOLVED IN IMPORTLOGISTICS:1).FREIGHT COST: This is the cost incurred in moving goods.It includes packing , palletizing ,documentation and loading unloading charges ,carriage costs and marine insurance costs.The freightrate is a price at which a cerain cargo is delivered from one point to another.It depends upon:

Mode of transport(ship,air,rail,truck) Weight of cargo Distance to delivery Volumetric weight of the cargo

Calculating freight cost:

FOB(FREE ON BOARD)=PRODUCTION COST+PROFIT+EXPENSES+TRANSPORT TO THE PORT OFORIGIN

CIF(COST INSURANCE FREIGHT)=FOB+FREIGHT FROM PORT OF ORIGIN TO THE PORT OFDESTINY + INSURANCEIt also includes SURCHARGES .

2).CUSTOM DUTY: This is the tax or tariff being imposed on the importation(usually) and exportation(unusually) of goods.To calculate the final landing cost of the imported goods to the factory,followingmethod is used for calculation.

Calculation of the custom duty begins after the calculation of the CIF value of the goods i.e

COST+FREIGHT+INSURANCE .

STEP1. CALCULATING ACCESIBLE VALUE :

CIF(VALUE OF GOODS)+ 1%HANDLING CHARGES = ACCESIBLE VALUE

STEP2. BASIC CUSTOM DUTY As per the commodity / item-Decided by the CENTRAL BOARD OF EXCISE AND CUSTOMS

STEP3: CVD-COUNTER VAILING DUTY 12% on Accessible value as well as Basic duty.

STEP4: EDUCATION CESS-CUSTOM DUTY 3% on Basic duty and CVD.

STEP5: SAD-SPECIAL ADDITIONAL DUTY 4% Accessible as well as all three kinds af duties(BASIC + EDUCATION CESS + CVD).



36

3). Insurance costs :The incoterm CIF includes all of the freight cost,custom duty as well as cost of insurance.It first ofall, depends upon the consignment i.e item,type,weight,quantity and country fromwhich it is imported.Obviously ,critical items such as chemicals and petroleum products are imposedwith high insurance costs.Their are various policies for the purpose of insurance which are adopted asper the conditions,requirements and their benefits.There are mainly two kinds of policies:

OPEN POLICY – In this,yearly premium is paid by the company depending upon its overallturnover.Rates vary as per the output and turnover.

SHIPMENT TO SHIPMENT POLICY -In this ,insurance cost is paid as per the individualshipment is done depending upon the consignment ,its type and quantity.

4).Port charges :These are the charges that are imposed by the port administration as per their fixednorms and conditions.These are charged for processing the entire proceedings at the port for clearanceof the imported consignment.

5).Custom clearance charges and Inland transport charges :These charges may include costs forCHA/Forwarding agent and the costs for inland transport to carry the goods from domestic port to finaldestination factory.

6).Total landing costs:

CIF + Total custom duty – Recoverable MODVAT(CVD and SAD arerecoverable)= Total landing cost to factory(IMPORTER).

7).Some other irregular costs:a).Detention costs :This is the costs imposed by the shipping line against per container/per day.

b).Demurrage costs :After 3 free days,it is charged by the custom to the buyer whenthe consignment isnot collected by the time.



37

9.7.CUSTOM CLEARANCE

The custom clearance formalities have to be compiled with by the importer after arrival of the goods atthe other customs station.There could also be cases of transhipment of the goods after unloading to aport outside INDIA.Latestly followed is the EDI system as follows:

For the goods which are offloaded , importers have the option to clear the goods for home consumptionafter payment of the duties leviable or to clear them for warehousing without immediate discharge of the duties .

STEP 1.BILL OF ENTRY :

In the case of EDI system,no formal Bill of Entry is filed as it is generated in the computer system ,but theimporter is required to file a cargo declaration having prescribed particulars required for processing of the entry for customs clearance.

STEP 2 .TYPES OF BILL OF ENTRY Bill of Entry ,where filed is to be submitted in a set differentcopies meant for different purposes and also given different colour scheme ,and on the body of the billof entry the purpose for which it will be used is generally mentioned in the non-EDI system.For thepurpose of domestic consumption ,bill of entry has to be filed in 4 copies:

Original for customs Duplicate for customs

One for importer Last for bank for making remittances.

STEP 3.THE EDI SYSTEM :

Under EDI system,the importer does not submit documents as such for assessment but submitsdeclarations in the electronic format containing all the relevant information to the service centre.Achecklist is generated for the verification of data by the importer/CHA.After verification the data is to besubmitted to the system by the service centre operator and system then generates a B/E number ,whichis endorsed on the printed checklist and returned to the importer/CHA.

STEP 4.BILL OF ENTRY NUMBER :

For processing of bill of entry in the EDI system ,the streamer agents get the manifest filed through EDIor by using the service centre of the custom house which also generates bill of entry number.



38

STEP 5.APPRAISING GROUP :

After noting or registration of the bill of entry ,it is forwarded manually or electronically to the

concerned appraising group in the custom house dealing with commodity sought to be cleared.

STEP 6.ASSESSMENT :The basic function of assessing officer in the appraising groups is todetermine the duty liability taking due note of any exemptions or benefits claimed under differentexport promotion schemes.They also check that there are any restrictions or prohibitions on the goodsimported and if they require any permission/license/permit etc.Also if not satisfied then the appeal canbe made to appropriate appellate authority within the time limits and in manner prescribed.

STEP 7.CALCULATION OF DUTY :On the receipt of examination report the appraising officers inthe group assesses the bill of entry .He indicates the final classification and valuation in the bill of entryindicating separately the various duties such as basic,countervailing,anti-dumping,safeguard etc.Allcalculations are done by the system itself.

STEP 8.DUTY PAYMENT: After the assessment and calculation of the duty liability the importer’srepresentative has to deposit the duty calculated with the treasury or the nominated banks,whereafterhe can go and seek delivery of the goods from custodians.

STEP 9.FINAL DELIVERY :Where the goods have already been examined for finalization of classification or valuation no further examination/checking by the dock appraising staff is required at thetime of giving delivery and the goods can be taken delivery after taking appropriate orders andpayments of dues to the custodians,if any.



39

9.8.OTHER IMPORT PROCEDURES

(1).IMPORT OF GOODS BY POST:

When the goods are imported by post parcel,the postal authorities transfer such goods on the receiptof custom office attached to the foreign post office.A demand-cum-show cause notice is issued to theimporter to file requisite documents,namely:

Commercial invoice Packing list Copy of registered post parcel receipt Certificate of origin

Customs purpose copy of import license in original An other registeration certificate in support of eligibility of importer to import such goods.

On the basis of these documents ,goods are examined and assesed for the duties payable in thepresence of importer or agent.Finally,custom duties are paid and goods are received.

This method is used only for small consignments with less quantity/weight/volume.

(2).WAREHOUSING OF IMPORTED GOODS:

If the importer faces any problem while clearing the goods or payment of duty,then it can deposit thegoods in private or public bonded wrehouse.It allows the facility of deferring payment of duty onimported goods,pending actual clearance for home consumption on payment of duty.Followng are theessential steps to be taken:

The importer are required to file a set of yellow coloured bill of entry commonly known aswarehousing or Into —bond bill of entry if they want facility of warehousing.The procedure forthis bill of entry is same as normal bill of entry except that the payment of duty is deferred.

After the assesment of goods for the levy of the import duty is completed,the scutinisingappraiser debits the import license where necessary,and the set of warehousing bill of entry(WR B/E)undergoes usual counterchecks by the assistance collector of customs.



40

The formalities of calculation,license,registration and its pre-audit are also gone through as inthe case of a home consumption B/E.

The W.R Bill of entry,is thereafter audited by the internal audit department and then sent toimport bond department,where the importer’s file the requisite warehousing bond,undersection 59 of custom act,1962.

The bond after scrutiny is accepted by A.C (bond) and registered in the bond department andWR number is impressed on all copies of B.E.The original copy is kept in the bond dpartment,while the others are handed over to importers/clearing agent.

The goods are thereafter examined by the dock appraising staff on the basis of orders of scrutinising appraiser on duplicate copy,and if found in order,the same are allowed to bephysically warehoused by the dock appraiser under the escort of a preventive officer.

In order to clear the dutiable imported goods from the warehouse,the importer is required topresent an ex-bond bill ofentry,printed on green paper in the imported bond department.

The importer after getting the ex-bond B/E registered in the import bond department submits itto the appraising department alongwith triplicate copy of related Into bond B/E and invoicepacking list,for verification of the particulars furnished on the B/E .

The concerned group appraiser classifies and reassesses,if necessary.The assessed B/E isthereafter handed over to the importer/clearing agents for payment of duty and taking deliveryof the goods after the usual counter check,by concerned group A.C and calculation of importduty.



41

9.9.CONCLUSIONS:

First of all,selection of mode of transport is the critical issue.Sea tranport results in less oceanfreight and port charges while air transport have high freight charges.However,air transport isbeneficiary in faster delivery,minimised breakage and loss of consignment.Thus air transport,isused when time constraint is strict and considering the factors of weight,volume and value.Prominently ,Sea transport is used due to huge difference in frieght charges as compared to airtransport.

Secondly,it is better to have a single insurance company ,preferably on the regular basis due toinherent advantages and convenience.If insurance is arranged continuously with the sameinsurance company ,it would bring in a considerable amount of savings in the long run whichmay be in the range of lakhs

It is found better to use Open policy instead of Shipment to Shipment policy for payment of insurance costs.Shipment to shipment policy results in much more higher costs as it involvespayment of insurance on individual shipments.

In the case,when air transport is used,it could be made more economical by using Consolidatorsfor which the air freight charges are very less.This involves combining of various shipments fordelivery to the carrier in full container load shipment.

Special attention to be paid to approach and timings for negotiations with the counterparts withforeign countries.This requires to provide your counterpart with appropriate future businessplans and proposals to gain their understanding and full cooperation.

Selection of optimal mode of payment is the another important aspect to be considered interms of cost.EX-WORKS,CFR and CIF results in higher cost while FOB results in less cost as wellas less risk factors,thus most efficient as compared to other incoterms.

Integrating and simpifying the import clearance process with brokers at the port reduces anykind of delay in the clearance process at the port.It ensures timely delivery of the consignmentwith documentation,inspection and payment also on time avoiding any kind of demurrage ordetention charges.Also,their should be maintenance of a complete audit trail for each shipment.



42

10.BIBLIOGRAPHY

1).Website links:

http://www.dgft.org/ www.eximguru.com/ indian -customs-duty/Default.asp www. yamaha -motor -india .com/ www. eximpolicy .com pib.nic.in/archieve/ ForeignTradePolicy /ForeignTradePolicy .pdf www.iccwbo.org/ incoterms www. aseans ec.org www.india- asean businessfair.com

commerce.nic.in/eidb/default.asp www.cybex.in/ Indian -Customs/ India -Imports -Data .asp jp. yamaha .com/about_ yamaha /ir/publications/pdf/an- 2011 e.pdf www. yamaha .com/about_ yamaha /ir/publications/pdf.../an-2010e.pdf www. shippersdocs .com www.cbec.gov.in www. custom-duty .com www. exportimports tatistics.com www.infodrive india .com/

www.eximguru.com/ indian -custom s- duty /Default.aspx

2).Other sources:

Company’s annual reports Company’s brouchers Company’s catalogues

http://www.dgft.org/

http://www.eximguru.com/indian-customs-duty/Default.asp




http://www.yamaha-motor-india.com/








http://www.eximpolicy.com/




http://www.iccwbo.org/incoterms



http://www.aseansec.org/




http://www.india-aseanbusinessfair.com/




http://www.cybex.in/Indian-Customs/India-Imports-Data.asp










http://www.yamaha.com/about_yamaha/ir/publications/pdf.../an-2010e.pdf






http://www.shippersdocs.com/




http://www.cbec.gov.in/


http://www.custom-duty.com/




http://www.exportimportstatistics.com/




http://www.infodriveindia.com/

















http://www.dgft.org/



43

11.ANNEXURE

A-1:INCOTERMS



44

INVOICE

Exporter

ADI SPAREPARTS PVT.LTD

6D-87 STREET,MONG PATHOM

BANGKOK 341109THAILAND

Invoice No & Date

83670

22/05/2012

Exporter's reference

Buyer's Order No & Date-S6980

Other reference(s) IECNo-59083219

RBI No

Consignee

INDIA YAMAHA MOTORS PVT.LTD

SURAJPUR,GR.NOIDA

UTTAR PRADESH-201301

INDIA

Buyer (if other than Consignee)

Same

Pre-carriage byTruck

Place of ReceiptNhava sheva-India

Country of Origin of GoodsThailand

Country of finaldestination-India

Vessel:

IYM-5300

Port of loading-

Laem chabang-Thailand Payment term-

FOB

Port of discharge- Final destination-

Noida

Marks & Nos Container No

Mode of Packing

No of pkg

Description of goods

Qty Gross weight Netweight

Unitprice

Totalprice

IYM-530083670

Corrugated

Box 10BRAKEPADS 40000 16000kgs 20

tonnes$5 $200000

Sign & Stamp



45

PACKING LIST

Exporter

ADI SPAREPARTS PVT.LTD

6D-87 STREET,MONG PATHOM

BANGKOK 341109THAILAND

Invoice No & Date-83670

22/05/2012 Exporter's reference

Buyer's Order No & Date-S6980

Other reference(s) IECNo-59083219

RBI No:

Consignee

INDIA YAMAHA MOTORS PVT.LTD

SURAJPUR,GR.NOIDA

UTTAR PRADESH-201301

INDIA

Buyer (if other than Consignee)

Same

Pre-carriage byTruck

Place of ReceiptNhava sheva-India

Country of Origin of GoodsThailand

Country of final destination-India

Vessel:

IYM-4870

Port of loading-

Laem chabang

Port of

discharge-

Nhavasheva

Final destination-

Noida

Marks & Nos Container No

Mode of Packing

No of pkg

Description of goods

Qty Size of pkg LxWxH (inch)

Net wt in kgs

Gr wt kgs

Remark

IYM-530083670

MadeinThailand

Corrugated

Box 10BRAKEPADS 40000 ONE 20 FT.

CONTAINER.16000kgs 20000kgs.

Sign & Stamp



46

INDIA YAMAHA MOTORS PVT.LTDSURAJPUR ,GR.NOIDAUTTAR PRADESH-201301INDIA

PURCHASE ORDER

Serial No… 73409 ……………… Vendors Name & AddressADI SPAREPARTS PVT.LTD. Delivery Date : 20/06/2012

6D-87 STREET,MONG PATHOM Terms of Payment : FOB

BANGKOK-341109 Delivery Point : Nhavasheva

PR REF: IC2013-0126785 Order Date: 16/05/2012Mode of transport:SEA

This document constitutes an agreement between the vendor and the buyer. See terms andconditions of this purchase listed on the reverse side

Item No. Specification Unit Quantity Unit Price Total ValueIYM-

5300 40000 BREAKPADS 40000 $ 5 $200000

Tax

Total ValueAmount in Words : TWENTY FIVE THOUSAND DOLLARS Currency: American dollars

Sign: _________________________ Date:7/06/2012Supplier Acceptance/Stamp Prepared by: ____Date_______

Approval A/C Code: _____________________

Sign: ________________________ Date____________ Financial Review: _________Procurement Manager

ApprovalSign: ______________________ Date____________ Country Director: _________

Program Manager/Director/Head of Dept ( Approval for Capital Items )



47

CERTIFICATE OF ORIGIN(name and address)

AREPARTS PVT.LTD

STREET,MONG PATHOM

OK 341109ND

Reference number:

IC2013-0126785

ee (name and address):

AMAHA MOTORS PVT.LTD

UR,GR.NOIDA

PRADESH-201301

CERTIFICATE OF ORIGIN

MINISTRY OF COMMERCE-THAILAND

shipment: 20/06/2012

transport: SEA

Country of destination of goods:INDIA

Supplementary details:

iage by: Place of receipt:Nhava-sheva

ight no: as-3567w

Port of loading/export:Laem chabang

Place of departure:Thailand

marks: Number of Packages:

Description of commodities, Model/Serial number, harmonized number Gross weight (kg): Invoice no. and date:

00

d

10 (Component parts for YAMAHAMOTORCYCLE):

40000 BRAKEPADS

20000 kgs.8367022/05/2012

It is hereby certified that the above mentioned

goods originate in Thailand.

DEPARTMENT OF FOREIGN TRADE

Place and date:

yamaha import logistics

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