Export Procedure: Comparative analysis of 3 Countries

(INDIA , US & CHINA )

Dissertation submitted to College of Management & Economic Studies for the partial
fulfillment of the degree of

MBA (INTERNATIONAL BUSINESS)

Guided by:

PROF. PRASOON DWIVEDI

(Head Of Department- MBA IB)
Submitted by:

Neelesh Gupta
MBA-IB (IVth SEM)
SAP ID: 500044123
ENROLLMENT NUMBER: R740215015

University of Petroleum and Energy Studies,

Dehradun, Uttarakhand

1
 DECLARATION

I declare that the work embodied in this dissertation, entitled Export Procedure:
Comparative analysis of 3 Countries (INDIA , US & CHINA ), is the outcome of my own
work conducted under the supervision of Prof. Prasoon Dwivedi at College of Legal
Studies, University of Petroleum and Energy Studies, Dehradun.

I declare that the dissertation comprises only of my original work and due
acknowledgement has been made in the text to all other material used.

Signature & Name of Student

2
 CERTIFICATE
TO WHOMSOEVER IT MAY CONCERN

This is to certify that the dissertation report on Export Procedure: Comparative analysis of
3 Countries (INDIA ,US & CHINA ) completed and submitted to University of Petroleum
and Energy Studies, Dehra-dun by Neelesh Gupta in partial fulfillment of the provisions
and requirements for the award of degree of MASTER OF BUSINESS
ADMINISTRATION (INTERNATIONAL BUSINESS), 2015-2017 is a bonafide work
carried by the scholar under my supervision and guidance.

To the best of my knowledge and belief the work has been based on investigation made,
data collected and analyzed by the scholar, and this work has not been submitted anywhere
else for any other university or institution for the award of any degree/diploma.

Prof. Prasoon Dwivedi

(Head Of Department, International Business)

(UPES, Dehradun)

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 ACKNOWLEDGEMENT

First and foremost, I would like to thanks my respective mentor Prof. Prasoon Dwivedi
for his valuable guidance and encouragement throughout my research project on Export
Procedure: Comparative analysis of 3 Countries (INDIA ,US & CHINA ). His expertise,
enthusiasm, and dedication for work have been constant source of motivation for me.

I would like to express my deep gratitude to University of Petroleum and Energy Studies
for extending the opportunity of undergoing the project and providing with all necessary
resources and expertise needed for completion of the project.

Neelesh Gupta

R740215015

MBA-(International Business)

4
 Acronyms

APEC Asia-Pacific Economic Cooperation

ARTNeT Asia-Pacific Research and Training Network on Trade
ASEAN Association of Southeast Asian Nations
BPA Business Process Analysis
BtB Behind-the-border
BRIC Brazil, Russia, India and China
CEIBS China Europe International Business School
CFTEC Committee of Foreign Trade and Economic Cooperation
CIF Cost, Insurance and Freight
FOB Free on Board
ICT Information and communications technology
IDRC International Development Research Centre
LC Letter of Credit
LPI Logistical Performance Index
NTB Non-tariff barrier
OEM Original Equipment Manufacturer
OECD Organisation for Economic Co-operation and Development
RMB Chinese Yuan
UNESCAP United Nations Economic and Social Commission for Asia and the
Pacific
USA United States of America
USD United States Dollars
WB World Bank
WTO World Trade Organization

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Table of contents
CONTENTS PAGE NO.
Declaration 3
Certificate 4
Acknowledgement 5
Acronyms 6
Introduction 8-11
Literature Review 12-33
Research Methodology 34-35
Export Procedure and Documentation 36-43
EXPORT PROCEDURES AND 44-45
DOCUMENTATION FOR TEXTILES AND
APPAREL PRODUCTS

Export procedure followed by CHINA 46-53

Export procedure followed by US 54-59

Conclusion 60-61
References 62-63

6
 INTRODUCTION
EXPORT

The term export means shipping in the goods and services out of the jurisdiction of a
country. The seller of such goods and services is referred to as an "exporter" and is based in
the country of export whereas the overseas based buyer is referred to as an "importer".
In international trade, "exports" refers to selling goods and services produced in the home
country to other markets.

Export of commercial quantities of goods normally requires involvement of the customs

authorities in both the country of export and the country of import. The advent of small
trades over the internet such as through Amazon and eBay have largely bypassed the
involvement of Customs in many countries because of the low individual values of these
trades. Nonetheless, these small exports are still subject to legal restrictions applied by the
country of export. An export's counterpart is an import.

Process

Methods of export include a product or good or information being mailed, hand-delivered,

shipped by air, shipped by vessel, uploaded to an internet site, or downloaded from an
internet site. Exports also include the distribution of information that can be sent in the form
of an email, an email attachment, a fax or can be shared during a telephone conversation.

Introduction To Indian Trade Market

India is fast emerging as a global leader, what with its vast, natural resources, and huge base
of skilled manpower. Combined with cutting edge technology, Indian trade market is
making its presence felt all across the world. Indian products and services are seen as of
international standards and globally competitive. Trade in India has made good progress on
liberalizing trade regimes and cutting tariffs since the recent times, when most of the
countries started with reforms. Get ready for your introduction to Indian trade market.

Until quite recently, considerable protection levels reflected in the significant tariff peaks
and dispersed protection levels were seen in India. Serious constraints to private activity in
infrastructure, economic governance, financial impeded export competitiveness too.
Insufficient and unreliable power supply, inhibiting red tape is a few of the many examples
of these constraints.

Undertaking considerable industrial deregulation and other structural reforms, trade in India
recognizes that strong exports are critical for overall economic growth and poverty
reduction. Export-led growth has thus become a key thrust for the trade in India.

7
Integrating with the global economy, India has recorded strong export growth to the United
States and the European Union markets. Getting on with your intro to Indian trade, it is
important to note that Indian government recognizes the need to implement additional
reforms and address significant constraints to ensure that Indian trade supports growth and
benefits the poor. Continuing with trade reforms has become more complex because of
concerns of how these reforms will affect employment, income distribution, poverty and
vulnerability. India is focused on WTO negotiations on agricultural trade policies, and there
is strong interest in services trade.

Indian trade market has made significant progress in integrating with the rest of the world.
But it is interesting to note that intra-regional trade remains very low. The reasons behind
these low levels of trade could be attributed to protectionist trade regimes, which
discriminated against trade among larger neighbors. The continued conflict between India
and Pakistan including transport and trade facilitation constraints has also contributed to
these lower intra-regional trades. Seeking to increase cooperation in the areas of
harmonization of product standards and customs procedures, travel rules and facilities are a
must to ensure an increase in intra-regional trade in goods and services.

The World Bank too has responded to the recent acceleration in Indian trade reforms and
complementary structural reforms by settling its country assistance strategies (CASs) and regional
programs. Increasing and diversifying its trade-related support activities for the reform initiatives,
the World Bank supports India initiative in boosting regional cooperation and intra-regional
trade through analytical work and technical assistance. Trade reports and policy notes,
technical assistance in capacity building and training are other area where the World Bank is
paying attention to in order to support and boost the trade market in India.

Export highlights

Textile exports from India stood at US$ 40 billion in FY 2015-16, contributing 15

per cent to the total export earnings of the country.
India is the largest cotton producer in the world (5,984 million kg production in FY
2015-16)
It is the second largest producer of manmade fibre and filament in the world (2,511
million kg production in FY 2015-16)
Fibre production in the country stood at 9 million tonnes (MT) in FY 2015-16, and
is expected to touch 10 MT by FY 2017-18.
Fabric production in the country stood at 66 billion sq mts in FY 2015-16, and is
expected to 69 billion sq mts by FY 2017-18

Know Your Market and Commodities

In order to effectively import or export, you must clearly understand the products that a
country or region offers and be able to evaluate the potential market for those commodities.
8
Will your chosen import or export sell at its destination? Ask yourself some pertinent
questions before committing to certain India imports. Is what you want to import available
locally for a lower price? Is there an untapped local market for it? Does importing that
commodity increase your businesses competitiveness? Select products that will bring a
good profit but also a steady demand.

Indian Market Particulars

As with all other nations, India imports are subject to taxation by the national government.
Tariffs, or customs duties, are an important part of any nations economy, and help curb
over-dependence on foreign products. Indian customs duties are 5-40%, depending on the
method of entry (land, air or sea) and product type. The country of origin matters too, due to
trade agreements with individual nations for lower tariffs. Indian exports are generally free
of export tariffs, but some are price regulated, such as basmati rice, which has a minimum
foreign sale price.

India Imports and Exportation Rules

Indian export regulations are much more liberal, but, similar to India imports rules, they are
designed to protect the national economy. Many types of finished products such as clothing,
textiles and jewelry, are exported freely, but raw materials such as wood, metals and
minerals, as well as agricultural and animal products, are restricted. The reasoning behind
this is that the government wants to keep cheaper national resources and raw products
available to their own people, rather than becoming dependent upon foreign resources.

USA Trade Analysis

The export of defense-related articles and services on the United States Munitions
List (USML) is governed by the Department of State under the International Traffic in Arms
Regulations (ITAR). The Bureau of Industry and Security (BIS) is responsible for
implementing and enforcing the Code of Federal Regulations Title 15 chapter VII,
subchapter C, also known as Export Administration Regulations (EAR), in the United
States. The BIS regulates the export and reexport of most commercial items. Some
commodities require a license in order to export. There are different requirements to export
lawfully depending on the product or service being exported. Depending on the category the
'item' falls under, the company may need to obtain a license prior to exporting. EAR
restrictions can vary from country to country. The most restricted destinations are countries
under economic embargoes or designated as supporting terrorist activities,
including Cuba, North Korea, Sudan, Syria and Iran (see: Sanctions against Iran). Some
products have received worldwide restrictions prohibiting exports. If any items would
support a proliferation activity, such as nuclear, chemical/biological, or missile proliferation
activities in a country of concern, a license would be required. Part 744 of the Export
Administration Regulations spells out the specific regulations related to end-user and end-
use controls. There are many prohibited end users. See the consolidated U.S. Government
9
screening list, including proscribed parties from the Departments of State and Treasury as
well as Commerce.

An item is considered an export whether or not it is leaving the United States temporarily, if
it is leaving the United State but is not for sale (a gift), or if it is going to a wholly owned
U.S. subsidiary in a foreign country. A foreign-origin item exported from the United States,
transmitted or transhipped through the United States, or being returned from the United
States to its foreign country of origin is considered an export. How an item is transported
outside of the United States does not matter in determining export license requirements.
Refer to U.S. Census Data for data on exports by industry for 2013.

Trade Facilitation in China

In the fourth quarter of 2009, the Chinese economy grew at a pace of 10.7 percent and the
growth rate for the year was 8.7 per cent. International trade, which has been an engine of
growth of the Chinese economy since the beginning of the economic reforms in 1979, was
significantly slower in 2009 than in 2008 (exports and imports decreased by16 per cent and
11.2 per cent, respectively).

Trade facilitation is defined by the World Trade Organization (WTO) as the simplification
and harmonization of international trade procedures, covering the activities, practices and
formalities involved in collecting, presenting, communicating and processing data required
for the movement of goods in international trade In an age of international production
networks and the globalization of markets, inefficient behind-the-border (BtB) activities
could increase the cost of goods by between 2 and 15per cent.

Furthermore, Duval and Utoktham (2009) found that a 5 per cent decrease in the cost of
importing in the importing country can increase bilateral imports by 1.5 percent, while a
similar reduction in the cost of exporting can increase bilateral exports by 4.2 per cent.
Similarly, Wilson (2007) found that a 10 per cent reduction in time at the border of the
importer can increase trade by 6.3 per cent, while a 10 per cent reduction in the number of
documents required by the importer could generate an 11.1 per cent increase in trade.
Similar studies further confirm this relationship.4 More generally, the benefits of reforms in
trade facilitation have outweighed the costs and are often characterized by a relatively short
term payback period.

The activities undertaken to reduce and streamline BtB activities depend on the specific
circumstances, needs and capacities of individual implementing countries. Nevertheless,
trade facilitation measures that can be implemented in any country include simplifying and
standardizing border procedures, managing the risks of border control violation more
efficiently and closer co-operation among customs authorities. These can result in
significant reductions in the cost of doing international trade.

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 LITERATURE REVIEW

The studies relating to textile exports in India and other countries highlighting the impact
of globalization and liberalization have been reviewed and summed up in this chapter.
Some studies predict a substantial increase in the size of exports as a result of phasing out
of quota regime while others predict a very cautious approach to be undertaken by
developing countries. Few studies have also been conducted to estimate the impact of
ATC (Agreement on Textiles & Clothing) expiry on textile trade. This chapter provides
review of related research to the present study.
Pelzman (1984) examined effect on profitability of Textiles and Apparel for 29
textile and 33 apparel industries during the period 1969-79 by using multiple regression
analysis. Pooled cross section, time series data for pre MFA- Multifibre Agreement (1965
-73) and post MFA (1974-79) has been taken. The variables taken were capital output
ratio, concentration of manufacturing index, economies of scale, growth of industry
demand, seller concentration ratio, ad valorem nominal tariff rate, import penetration
index and MFA. It was found that MFA did in fact improve the profit performance of the
protected textile and apparel sector.
Goldar (1989) has analyzed export function of Engineering Products by making
use of secondary time series data for the period 1960-79. A four-input (capital, labor,
material and energy) production model was used at aggregate level. The results indicated
that world demand, cumulative output, exchange rate and total factor productivity are
important determinants of export performance.
Malhotra and Kaur (1993) used binary variable technique to estimate the
quantitative impact of change in industrial policy in terms of liberalization. They found a
significant positive impact of liberalization on industrial production in the economy and
11
provided justification for liberalization and new industrial policy spelled out in July,1991
which was based primarily on the concept of market economy.
Bhalla (1995) analyzed that agricultural growth made a huge impact on the whole
economy. The market surplus in agriculture stimulated increase in trade and transport
which led to increase in per capita income of rural and urban population. The market for

12
consumption goods and services increased which raised income of rural workers and it
led to development of other sectors in the economy.
Sharma (1996) in his study remarked that in the post MFA, improvement in
export performance could be sustained if policy reforms were continued with a view to
debottleneck the constraint on exports. General development of infrastructural facilities
in the country in the form of road and rail network, ports, shipping and air-services;
attention to quality control, packaging etc, awareness of Indian products in terms of
quality, variety, price etc. have to be created in the international markets.
Austria (1996) has examined the effects of the MFA Phase out on the Philippine
Garments and Textiles Industries. Export performance of the industries during the MFA
years focusing on the role of quota and the administration of quota in the country has
been analyzed during 1980 -1994 by using secondary data. Also, prospects for survival in
a quota-less world, investments in the garments and textiles industries and benefits to the
country from the phase out have been examined. It was found that though MFA has
assured the country of markets for its exports of textiles and garments, it has also caused
waste of domestic resources because of inefficiencies in the administration of quota
allocation among exporters which not only affected the amount of export earnings but
also the efficiency with which resources were used.
Singh (1998) analyzed the issues peculiar to a 'small scale of production' in India
in an increasingly globalised scenario. She stated that small and micro producers were
crucial in developing economies, and their role was even greater in the largely rural
economies of South Asia. In India also, the sector was the second largest employer, after
agriculture, and accounted for nearly 6 percent of the country's GDP. India was an
exception, in that, it gave the small scale sector large incentives, and protection, in the
period 1948-1991, going to the extent of reserving certain production lines solely for the
sector. She also examined some of the other issues plaguing the sector such as credit
availability and maintaining quality standards.
Chandra (1999) in his study pointed out that the Indian textile industry has
Islands of Excellence but the capability and performance of average firm was not very
high when compared to those in several other countries .The technology performances,
stock and work practices in textile industry of India were outdated. There were distinct

18
weaknesses in the structure of the industry. Its inherent strengths have to be built upon
and new contemporary strengths needed to be added.
Nanda and Raikhy (2000) pointed out that with the phasing out of MFA over 10
year period regarding textiles, Indias exports in textile could also increase. India may be
able to increase its market share from the current level of 2.4 percent to 4 percent. So,
India had to meet the challenge of a free trade regime in textiles and clothing. There was
need to diversify into a high range and classic garments technology up gradation by
importation, if necessary; up gradation of labour skill, extension of off-shore production
facilities to selected clothing, in special areas like Andaman Nicobar etc.
Banik and Bandopadhyay (2000) tried to examine Indian cotton textile industry
in the wake of MFA phase out. The competitiveness of Indian textiles was measured by
calculating RCA which is ratio of share of product in countrys export to its share in
world export and REC which is ratio of Indias textile exports in worlds textile exports
to share of Indias textiles in its total export. Also, ERP (effective rate of protection) was
calculated and secondary data was taken for 21 years from 1973-74 to 1993-94. It was
found that with rise in competitiveness, exports would increase. With more protective
regime, both competitiveness and production will fall.
Kareem (2001) analyzed determinants of Indias machinery exports from 1970-
87 at aggregate and disaggregate level by using secondary data. Multiple regression
analysis was applied and no unanimity was found as far as significance of the variables
was concerned like world demand, domestic demand and import substitution. It was
found that domestic demand was not significant in case of non electrical machinery and
world demand was significant in case of agricultural machinery and implements, for
Nigeria and Nepal.
Aggarwal (2001) in his study pointed out that Indias garment and textile exports
were likely to face fresh challenges with phasing out of Multifibre agreement by 2005, as
well as several regional trade treaties, such as NAFTA(North American Free Trade
Agreement).
Diao and Somwaru (2001) used trade data from 91 countries over 37 years.
Empirical investigation showed a strong positive relationship between trade in textile and

19
apparel and the standard of living. The possible impact of MFA phase out on the world

20
T&A (Textile & Apparel) trade was studied using an intertemporal, global general
equilibrium model. It was found that MFA phase out would enlarge world trade of T&A
and developing countries would further gain market share in world total exports. Most
countries whose textile and apparel exports were restrained by MFA gain post-MFA.
However, welfare gains could be different among different countries for eg. textile and
apparel exports increase more in the region of other Asian countries than that in India.
However, from welfare point of view, India gained more than the gain of the region of
other Asian countries. One reason was that T&A sector contributed more to GDP in
terms of value added. For this reason, exports of T&A created more employment
opportunities and hence GDP raised more in India than that of other Asian countries.
Banik (2001) in his paper revealed that by 2005, quotas would come to an end,
implying that the importing (buyer) countries could no longer discriminate between any
exporting (seller) countries. As a result there would be greater market access for
exporters from India. But that was a long term benefit. However, in the short run, there
would be little or no gain for Indian apparel exports.
Kathuria et al. (2001) pointed out that the abolition of quotas would create
opportunities for developing countries. The outcome for any individual country, they
said, would depend on its policy response. Countries that took the opportunities to
streamline their policies and improve their competitiveness were likely to increase their
gains from quota abolition.
Mukherjee (2001) observed that small and medium enterprises occupied a
crucial position in the Indian economy not only because they contributed to GDP,
income, exports and employment but they also implied self/group initiative, self
employment and small livelihoods, and a small business. It was important to create and
ensure space and more opportunities for such a sector given three things unemployment
in India, structural changes due to disinvestment and privatization and uncertain
environment faced by SMEs in todays world. It was also observed that SMEs in
exporting activity needed to adapt to technical standards and SPS measures as applicable.
The SMEs were expected to incur high cost as a result of TRIPS Agreement due to
royalty payments related to copyrights and related rights, trademarks, industrial designs,

21
etc. Also under WTO rules, use of QRs (Quantitative restrictions) were discouraged
unless as a safe guard measure.
Liu and Shu (2001) investigated the determinants of exports performance from
Chinese industries. The study was based on cross section data which was published in
1997. Both industry level and sub sector level data was taken into account. The whole of
industry-specific characteristics in affecting export performance at the sectoral level were
empirically examined. It was found that export performance at sectoral level was
significantly influenced by labour costs or labour intensity, the level of FDI and firm size.
The main findings from sub sample estimations also supported those obtained from the
overall sample.
Kumar (2001) remarked that textile industry witnessed positive growth during
1973-94 in capital stocks, output and capital output ratio, more so, in its woolen textile
segment which was relatively stable in demand, domestic as well as international till the
breakdown of East European Market. As expected, the capital efficiency in the industry
was deteriorating over time as was reflected by rising capital output ratio. The pressure
on industry to improve product quality at minimum price was likely to increase in near
future owing to phasing out of MFA by 2005 under Uruguay Round of GATT (WTO).
Ganesh (2002) commented that the Indian textile industry was in a state of decay,
if seen from the perspective of preparedness for the opening of the world textile market in
2005. Those not so concerned with the importance of loss in exports, would still need to
consider the serious implications for local industry and employment when textile imports
opened up further and import duties came down. For almost fifty years, government
policy weighted scales against the organized sector including the state sector, first by
limiting the growth of composite mills, and then by encouraging excise duty avoidance
and evasion as the basis of building competitive advantage in the Indian market.
Apparel Fortnightly (2002) mentioned that phasing out of the MFA was foreseen
as a big achievement in the liberalized world trade and a boom for developing nations
including India. However, the effect of such liberalization would not be the same for all
nations of developed world. Some will emerge as major gainers while others will be
worst hit by the time, the textile trade is integrated with the WTO regime. Those

22
countries, which were well established in the world, apparel markets enjoyed a high

23
production base, superior technology and marketing acumen, brand equity would be the
beneficiaries.
Verma (2002) analyzed competitive performance of Indian exports in US and EU
markets. In order to calculate this, twin criteria was adopted.
i) Growth rate in unit value of the product imported from India exceeded average
growth rate in unit value of the product from all suppliers in a market.
ii) Its market share grew over the period 1995-2000.
It was found that except made ups, Indian textile export to the US had no future.
The market share of other products was declining. In case of EU, Indias performance
was good in synthetic products (yarn and made-ups) in textiles. Among garments; suits,
coats, jackets and skirts were leaders. The products whose exports to EU had been
constrained by quotas and hence were likely to gain from quota dismantling in
2005 were cotton bleached fabric and woven bed linen.
Singh and Singh (2002) had analyzed the economic growth in Punjab from 1966-
1967 to 1998-99 by using secondary time series data. The determinants of economic
growth, capital accumulation, technological breakthrough and human capital, were
analyzed. It was found that these factors were constraining the growth of Punjab
economy. The decelerating economic growth was rooted in irrational pattern of
investment and declining development expenditure and was compounded by crisis in
agriculture, due to marginalization of small farmer and population pressure on land. The
need was to reorient the governments investment planning and strategy, along with
implementation of change in organizational pattern of production.
Naik (2003) reported that N.K. Singh, member secretary, planning commission;
had cautioned textile exporting countries to be vigilant over other forms of trade
restrictions that would spring after the expiry of the quota regime by the end of 2004.
These disguised forms of the protectionism could be like visas, transshipment and anti
dumping measures.
Chandran (2004) found that Indias three thousand textile mills were on the
threshold of undertaking a massive modernization and expansion programme with a view
to achieve textile export target of US $50 billion for the country by 2010, a target fixed

24
by the Indian Government. The world trade for textile and clothing was expected to

25
increase from the present US $374 billion to US $550 billion by 2010. Only countries
with integrated textile industry such as India, China, Pakistan and Indonesia would
rapidly benefit in the post WTO era.
Elbehri (2004) studied global trade implications of MFA quota removal on cotton
and textile industry. The analysis was based on a new set of MFA- trade restrictiveness
based on 2002 product - level quota trade and price data. Using a multiregional general
equilibrium, the analysis provided comparative static assessment of changes in global
trade patterns in post MFA. The analysis also took into account the MFA-induced
implicit tax on cotton and allowed for inter-fiber substitution. The model was run for
several scenarios including quota removal only or in combination with tariff
liberalization. The analysis confirmed significant shifts in textile and apparel trade from
preferential exporters to Asian and South Asian suppliers that were subject to binding
MFA quotas. However, not all MFA exporters benefit equally from the expanding
apparel trade. The United States showed significant increases in apparel imports
substituting for domestic products, raised overall consumption and produced substantial
welfare gains. The implications for fiber markets on the US showed lower demand for
cotton domestic use but expanding US cotton exports due to higher world demand
particularly when both quotas and tariffs were removed.
Siddharthan (2004) analyzed productivity, efficiency and growth of Indian
economy in globalized era. He concluded that there had been major inter-firm differences
in behaviour relating to technology and growth strategies and the resultant productivity
and efficiency. Some firms had gained by the liberalization and globalization policies
while others had lost. The main gainers had been the MNEs and their affiliates which had
better access to technology and other intangible assets. To survive and succeed in the
global regime and to compete against the MNEs, some of the domestic firms had adopted
a strategy of entering into non-equity strategic alliance with foreign and domestic firms
resulting in technology imports against royalty payments. These networking firms had
also done well. But other domestic firms that had no networking had not done well.
Within MNEs also, there had been differences depending on the source country. By and
large, acquisition of technology was the main vehicle of growth and domestic firms that

26
enjoyed better technology and had a smaller productivity gap in relation to MNEs had

27
benefited by liberalization policies. But firms that were stuck with earlier technological
paradigm with large productivity gaps had lost out.
According to Subrahmanya (2004), globalization and liberalization created
beneficial opportunities for small-scale industry. The removal of quantitative restrictions
and the reduction of import duties, particularly after the setting up of WTO in 1995, had
opened up foreign markets to Indian small industry as much as Indian market had
opened up to foreign goods. Such opportunities should act as an incentive to many a
small firm in India to enhance their competitiveness to penetrate the global market.
Nordas (2004) remarked that the outcome of the phasing out of quotas depended
much more on the prevailing tariff rates and the preference margins of countries
recovering from such preferences that were captured by the conventional estimates. He
concluded that both China and India would gain market shares in the EU, US and Canada
to a significant extent, but the expected surge in market share was expected to be less
than anticipated as proximity to major markets assumed increasing economic significance
and tariffs and increasingly restraining trade due to the fact that products cross bordered
several times. Also, other developing countries were catching up with China in terms of
unit labour costs in the textile and clothing sector and China had not shown competitive
strength in design and fashion segments in the market.
According to study by Nair (2004), the emerging scenario was that EU (European
Union) and USA (United State of America), who together accounted for over sixty
percent of world imports of textile and clothing and for most of the textile quotas,
fortified their market with preferential arrangements, mostly providing for production
sharing by their own industries or for offshore processing of their raw materials. Both had
kept their MFN(Most Favoured Nation) import duties on textile products several times
higher than their average industrial tariff, in order to make imports from non-preferential
sources even more difficult. All this gave a clear message that abolition of quotas should
be expected to accelerate all other forms of Non Tariff Barriers (NTB) and trade defense
measures.
Narayanan (2004) examined the determinants of employment in the Indian
textile industry. He stated that though there seemed to exist substitutability between

28
capital and labour; a fall in employment despite a rise in output was surprising. The

29
lagged effect of capital, output shock, wages, past employment, trade regulation index
and the number of man days were studied for 32 sectors of the Indian textile industry
from 1973 to 1999. Of these, 8 were in cotton group, 4 in wool group, 3 in silk group, 3
in manmade fibers group, 6 in jute group and 8 in others. The dependent variable was log
of employment and independent variables were productive capital stock, change in output
and wages per person. Different variants of this dynamic panel data model showed a
positive effect of capital, past employment and output shock and a negative effect of
previous period wages, while in most cases, the other factors were not significant.
Oxfam (2004) attempted to study the export pattern and urged for the third world
to be vigilant in post Quota Regime. He feared that protectionist instincts of the rich
countries would persist which would not be good for the third world. If rich countries
replaced quotas with alternative forms of protectionism, all developing countries would
suffer.
Weeraratne (2004) identified globalization as an increasing integration of
economies around the world, through trade and financial flows and associated mobility of
labour and technology. The negative impact of globalization on textile and Apparel
(T&A) industry in Sri Lanka had been emphasized while strategic options were provided
to survive the height of globalization after 2005 quota free era.
Statistical analysis of a 25 year period revealed a high import dependency for
inputs, which hindered the development of a domestic production base for such inputs
and its associated economic and human development possibilities. The analysis showed
increasing dominance of China in world T&A trading. Survival strategies identified
include stressing better working conditions through buyers market model and
establishment of trading blocs for secured markets.
Mohan and Ray (2004) attempted to compare performance of three categories of
banks Public, Private and Foreign using secondary data. DEA technique was applied.
Physical quantities of inputs and outputs were taken and revenue maximization efficiency
of banks during 1992-2000 was compared. The findings showed that PSBs performed
significantly better than private sector banks but not differently from foreign banks. The
conclusion pointed to conversions in performance between public and private sector

30
banks in the post reform era, using financial measures of performance.

31
 Bhole and Mahakud (2004) analyzed the trends and features of trade credit of
the entire economy, public limited companies, private limited companies and foreign
companies in India from 1966-1967 to 2000-01 and estimated both time series and panel
data models for empirically identifying the determinants of trade credit. The period
analysis was also carried out to measure the impact of liberalization on the determinants
of trade credit. It was found that the government sector had remained a substantial user
of trade credit through the entire period. The nature of behavior of trade credit and the
changes in it over the years depended upon the type/ownership of companies.
Cheng and Lo (2004) estimated the sequential production technology by
computing the Malmquist Productivity index for various size groups of enterprises in
Chinese industry. Secondary data for 87 production units (large, medium and small) for
1994-97 was taken. The output was industrial value added; and labour and capital were
taken as inputs. It was found that large enterprises registered fastest productivity growth
and improvement in technical efficiency in 1994-97 period. It indicated that large scale,
mainly state owned Chinese enterprises had exhibited the potential of making noticeable
improvements and the relevant state policy had its justification.
Rangarajan (2005) attempted to study the post MFA challenges and observed
that a more cautious approach was required by developing countries especially Indian
government, instead of juggling with tariffs, excise and other sops. They should seriously
think of the taxonomy of the sector to face the challenges. Similarly, various industrial
associations, instead of showing their bargaining power in achieving a good deal for a
sop from the government should support its members through market studies,
competition tips and market data bases for future references.
Chakraborty and Chakraborty (2005) pointed out that in the post WTO phase;
the members were expected to bring their trade policies increasingly in line with WTO
directive i.e. to reduce the barriers on imports. It was widely held that Indias exports
would rise significantly in the post WTO phase but at the same time, there was an edge of
Chinese exports over Indian exports and it was possible that a number of Indian export
items might adversely suffer owing to competition from their Chinese varieties. Besides,
the competitiveness of a number of products had declined in the post WTO phase. In all,

32
a gloomy picture on future exports potential emerged and fulfillment of foreign trade
policy (2004-09) objective looked less likely.
Landes et al. (2005) opined that demand for cotton and manmade fibers in India
would likely strengthen in response to rising consumer demand in India and increased
exports of textiles and apparel following the removing of the MFA quotas. The pace of
growth in cotton demand would hinge on execution of reforms to policies, including
taxes that discriminate against the use of manmade fibers and regulations affecting the
scale, technology use and export competitiveness of the textile and apparel industries.
Imports of raw cotton increased along with rising demand in recent years, but future
growth depended on the extent to which India can boost chronically low cotton yields
and improved cotton quality.
Singh and Kundu (2005) analyzed that though globalization had opened vast
market opportunities for Indian cotton textile industry, still the industry was exposed to
the threats of fierce competition. Survival and growth in such environment required
achieving global competitiveness. 81 senior and middle level executives from cotton
textiles manufacturing and exporting firms in India were empirically investigated and it
was found that China, Vietnam, Bangladesh and Malaysia were emerging as major
competitors in international textile market. It was also found that the industry was
competitive in terms of input factors labour, transportation and raw material but not in
terms of finance, power and technology.
Malik (2005) stated that export strategy in India confronted several issues,
especially the choice of policy instruments. Questions were raised about the utility of the
prevailing export promotion schemes, even while these interventions were considered
necessary to keep Indias exports competitive in the international market. A positive
association was found between exchange rate movement and exports. This association
was though not very helpful in predicting the impact of exchange rate on export
performance, but it did provide an indication about the role of explicit or implicit subsidy
and market structure. Historically, subsidies were critical for Indias export growth. In the
past 1991 era too, implicit subsidies played a crucial role. Sector specific data bore the
impact of policy intervention on export performance.

33
 Rameshan (2005) stated that the textiles and clothing export performance of
India and China during the ATC and post MFA period, with focus on USA and EU have
been examined. It was evaluated that in comparison with China, India had not been able
to gain significantly in these markets from the quota removal on textiles and clothing.
Besides, the possible strategic options available to India were explored to become a
major player in the leading export markets of textile and clothing despite competition and
competitors. The results showed that Indias gains in textiles and clothing trade in ATC
and post MFA era had not been commensurate with its hopes.
Tiwari (2005) examined Indias integration into the global apparel market to
understand alternative forms on global insertion that was occurring, especially in light of
elimination of quotas. Though the Indian government was attempted to attract FDI into
textiles, apparel and retail, and domestic firms were scaling up rapidly as well as
exploring global partnerships; these features have followed successful integration into
export markets, rather than led to it. It was argued that Indias rather quick emergence as
a successful textile and garment exporter after years of inward orientation had more to do
with changes in domestic policy that took place throughout the 1980s and 1990s and how
these changes interacted with global trade regulations on the one hand and with ongoing
transformations in the Indian domestic market on the other, than with purely external
factors. The domestic firms were thus playing a stronger role in the internationalization of
Indian textiles and apparel than major external drivers such as the role of global buyers,
FDI, or preferential trade agreements. As Indian textile and apparel industry adjusted to
uncertainties of the post MFA world, an understanding of diverse paths was critical. The
presence of strong set of internationally integrated domestic firms, a growing design
sensibility and emergence of up grading processes that were not necessarily tied to labor
or dependence on global textile value chains was hopeful finding.
Hashim (2005) pointed out that with the Multi Fiber Agreement (MFA) coming
to an end, competition in the Indian textile and garment industry would increase
manifold. One of the main factors determining their competitiveness would be unit cost,
where India had fared poorly in the recent past. The unit cost depended upon factor prices
and productivity level.

34
 Rangarajan (2005) remarked as the ATC process rolled out, trade policy
continued to have a strong influence over clothing value chains, though in modified and
more diffused form, as the broader multilateral framework, and specific, regionally based
trade arrangements, took precedence over sectoral ones (Baden, 2002). The post MFA
period witnessed more concentrated pattern of delocalization towards the large, currently
restricted suppliers including India. In such a competing scenario, the Indian exporter
could no longer talk about the strategies of price, quality and responsiveness.
Exim Bank (2005) estimated that in the short term, both China and India would
gain additional market share proportionate to their current market share. Exim estimated
that India would have a market share of 13.5 percent in textiles and 8 per cent in
garments in USA market. With regard to EU, it was estimated that the benefits were
mainly in the garments sector. The potential gain in textile sector was limited in the EU
market considering the proposed further enlargement of EU. It was estimated that India
would have a market share of 8 percent in EU textiles market as against Chinas market
share of 12 percent.
Kathuria and Singh (2005) remarked that with the MFA phase out in December
2004, India could be the big winner after China. India has the potential to increase its
share from US $6 billion to US $20 billion by 2010. This dismantling of the quota regime
presented both an opportunity as well as threat. Export markets would no longer be
restricted for want of quotas whereas there looms a threat also because markets would no
longer be guaranteed by quotas. There was a need to devise new strategies, thus moving
from cost based competition to time based and value based competition.
Seyoum (2005) empirically investigated determinants of level of high technology
exports. Secondary data of a sample of 55 developed and developing countries was taken
and using factor analysis and multiple regressions; the study examined the effect of
inward FDI, home demand conditions and technological infrastructure on high
technology export. It was found that all the variables had a positive effect on high
technology exports.
Singh (2006) reported that India could be the big winner in textiles after China.
According to the DHL Mc Kinsey Apparel and Textile Trade Report, the value of the

35
global textile and apparel industry was likely to go up to $248 billion by 2008 with

36
China, India and Pakistan expected to be the Clear Winners. The report forecasted that
India had the potential to increase its share from the current 4 percent to 6.5 percent
valued at $16 billion by 2008.
Havrila and Gunawardana (2006) used unrestricted error correction modeling
procedure to determine the export supply of Australian textile industry. Secondary data
from (1970-1999) was used and it was found that in the short run as well as long run,
export supply of textiles was positively and significantly related to relative price of
exports and negatively and significantly related to the effective rate of assistance.
Caparas (2006) examined the determinants of export performance in the
Philippine manufacturing sector. Secondary time series cross sectional data for 2000-02
of 716 firms was used .The Papke-Wooldridge model was determined and estimates of
the model was done using modified quasi- maximum likelihood procedure. Among the
firm level characteristics tested, foreign affiliation was found to be the most prominent
influence on a firms propensity to export.
Kalirajan and Singh (2007) did comparative analysis of Chinas and Indias
recent export performances. Secondary data was taken. Average values of exports during
2000-03 and average size of economies for 2000-02 were taken. Data on trade
restrictions and openness to trade were also taken for the period 2000-02. Sample sizes of
partner countries which were 77 for both China and India were taken. Augmented gravity
model was estimated .It was found that cost competitiveness of China appeared to help its
exports in negotiating large distances and there was a need for India to learn from China.
It needed to develop cost advantage and product process so that high value markets could
be captured.
Papadogonas et al. (2007) examined the determinants of export performance of
firms in Greek manufacturing industry. Cross sectional data from 1652 firms in 1999 was
taken and Tobit regression model was applied. The study found that firms that have
larger size, lower unit labour cost and low capital to labour ratio had a higher propensity
to export. This also confirmed the fact that in Greece, which had the second lowest
capital to labour ratio among EU-15 members, export activities were concentrated among
firms with low capital intensity, exactly as was predicted by theory of Comparative

37
advantage.

38
 Ray and Neogi (2007) applied DEA to firm level data from various years of ASI
(Annual Survey of Industries) to obtain Pareto-Koopmans measure of technical efficiency
in the Indian textile garments industry. The overall efficiency was split up into input and
output oriented Russell type non- radial measure. For the second stage, regression of
DEA efficiency scores in terms of age, ownership, regional location and other
characteristics of a firm was performed. The main findings were that output scale played
major role in calculating output efficiency as well as efficiency of production and non-
production workers. Skill also played a significant role in explaining total efficiency.
There was no significant difference in level of total efficiencies among states except
Delhi. Age did not have significant impact on level of technical efficiency. In general,
levels of output oriented efficiency of firms exceeded their input oriented efficiency.
Kumar and Gupta (2007) examined growth of export of industrial goods from
Punjab during pre-and postreform period. They opined that Punjab was performing well
as far as export of industrial goods was concerned. Still it had the potential to perform
better. Under such circumstances, the government should design supportive industrial
policies and development strategies for EOUs (Export Oriented Units) in the state.
Concerted efforts were required from all the stakeholders like entrepreneurs, state and
union governments, trade and industry, farmers and producers to secure a healthy state
economy and its export performance.
Katti et al. (2007) opined that the textiles sector registered a growth of 18.2
percent in 2004-05 as compared to negative growth in 2003-04 when compared to a
growth of 8.8 percent in manufacturing sector as a whole. As a result of several
incentives provided by the government in the previous budget, there had been a sharp
increase in investments in this sector and the shift was being made from being sunset
sector of the economy to a sunrise sector. There had been a significant increase in the
number of new players wanting to set up textile manufacturing industry with the share of
Letter of Intents/Direct industrial License in textiles, being 29.03 percent of the total and
the share in investments being 32.63 percent.
Bhandari and Ray (2007) analyzed technical efficiency of Indian textile firms
using non parametric DEA. Technical efficiency scores were analyzed. It was observed

39
that amongst six major states considered, regional efficiency of Tamil Nadu was best.

40
Also, smallest average size class of firm had the highest group efficiency. There was a
clear trend of rising regional efficiency over time. Hence, technology gap across regions
seemed to be diminishing over time.
Banerjee (2007) employed a non parametric data envelopment technique to
derive the technical efficiency scores of Indian cement manufacturing firms in two
scenarios, one in which all the firms would take initiatives to abate pollution and the
other, in which no firms take initiatives to abate pollution. Secondary data for two time
periods 1999-2000 and 2003-2004 was taken. It was found that on an average, the
industry could gain in terms of production efficiency by 8 percent age points in 1999-
2000 and 2 percentage points in 2003-2004, which was found to be statistically
significant for both the years. This indicated that cement producing firms in India had an
incentive for opting to comply with the environmental standards set by the regulation for
their own benefits. However, the magnitude of gains in efficiency levels decreased over
time. They were more pronounced in the initial phase of implementation of regulation
than in the subsequent years.
Gupta and Kumar (2008) analyzed growth performance and forecasted exports
of leather industry in Punjab. Secondary data relating to exports of leather industry was
taken for a period of 26 years ie.1980-81 to 2005-06.The performance of exports was
measured by computing yearly and compound annual growth rates, making short term
forecasts and measurement of long term trends. Forecasts of exports were prepared for
lead time of five years by using Double Exponential Smoothing, and long term trends
were captured by fitting ten distinct functional forms and equation of best fit was
selected.
Kavita et al. (2008) observed that Indian textile exports could rise from 6 billion
US Dollars to 18-20 billion US dollars within the next five years. This would add more
than 5 million direct jobs and 7 million indirect jobs in the allied sector, primarily in
cultivation of cotton. Efforts were needed in cotton research, technology generation,
transfer of technology, modernization and upgradation of ginning and pressing factories
and an aggressive marketing strategy.

41
 Sasidaran and Shanmugam (2008) in their study investigated the implications
of unshackling of global textile trade on the efficiency of firms operating in the Indian
textiles industry, following complete phasing out of MFA in 2005. Results of the study
showed that average efficiency declined over the years, indicating presence of
inefficiency in using inputs. Indian textile firms failed to utilize their inputs efficiently
during the phase of liberalization which, if done, would have helped them to withstand
and overcome the intense competition from other players like China.
Goedheuys, et al. (2008) analyzed the knowledge based determinants of
productivity of firms from five countries Brazil, Ecuador, South Africa, Tanzania and
Bangladesh. These countries were active in food processing, textile and garments and
leather products. The knowledge sources driving productivity performance were very
different across sectors. In textiles, firms raised productivity levels by importing new
machinery and through research and development. In garments and leather products,
R&D(Research and Development) and design activities, high quality management and
licensing technology from foreign firms were significant productivity determinants.
Firms productively levels were further depressed by regulatory and financial
constraints.
Singh and Goel (2008) examined the global financial crisis in case of Indian
textile and apparel industry. The data for 79 firms (10 firms under composite mills, 23
under MMTF, 18 under weaving, 12 under hosiery and knitwear and 16 under readymade
garments) were selected for the period 1995-2007. The variables taken were output,
employment, exports, imported capital, imported inputs, domestic capital and domestic
inputs. The relationship between different variables from time to time was calculated by
making use of regression and ratio analysis. Employment was affected by demand and
supply side factors. It was found that there were serious implications for export oriented
labor intensive textile industry. With low export demand, workers were laid off.
Employment depended significantly on imports of intermediate inputs. The impact from
supply side was also studied and it was found that impact of slow down had been felt
through indirect effect of exports through fall in output.

42
 RESEARCH METHODOLOGY

Research Design

Research means different things to different people and the intention behind it are to
investigate innumerable data, theories, experiences, concepts and law. The procedural
framework within which the research is conducted is the definition of research
methodology. The two broad and distinct approaches to social research cover the
Quantitative and Qualitative methods of enquiry.

The quantitative paradigm on the other hand intends to gain a deeper understanding,
knowledge and insight into a particular situation or phenomenon, by providing answers to
questions of how? rather than what?. Unlike qualitative research which occurs in
natural settings, quantitative research is where hypotheses are established.

The complete research is based on analysis of export procedure of these three countries
and the steps involved where India Exports most of its apparel/garments and China exports
to Japan and also a complete analysis of US export import procedure.

Data collection

The data required for understanding will be collected from various various countries .

The data collection method in this particular research comprises of two forms:

namely primary & secondary data. One needs to be careful while using secondary data as
maybe the collected data may be biased as the collector of that original data might have
highlighted only a partial picture or another aspect may be that data may be quite old and
also the data quality could be unknown.

Primary data

Data collected specifically for the research project undertaken is the definition of
primary research as provided by Saunders et.al (2003: pp. 486).

Primary data is generally originated by any researcher to address any specific problem or
issue at hand, where the only drawback is that it can be expensive and time-consuming.

43
The various ways of gathering primary data is through surveys, focus group and
observations.

In this study, the primary data is collected through well-formed questionnaire with the help
of a digital survey. The questionnaire consists of quantitative and qualitative multiple
choice questions and the respondents are asked to choose the one choice which suits them
the best amongst the multiple choices.

Secondary Data

Prerequisite to the collection of primary data is a careful scrutiny of the existing secondary
data (Malhotra, 2005). The Data that is collected from existing journals, reports and
statistics from private and public institutions are called Secondary data. For this specific
study the collection of secondary data was done primarily from marketing journals already
available on this topic. Secondary data helps the author to comprehend the perception of
Indian consumers on online shopping.

Sample technique

Choosing a study sample is an important step in any research project since it is rarely
efficient, practical, or ethical to study whole populations. In this study the sampling
strategy used is convenient sampling. The sample size is 100. A small part of something
intended as representative of the whole, or a subset of a population. In this research simple
random sampling is being used.

Data collection :The data collection would be:

PRIMARY DATA: Questionnaire

SECONDARY DATA: Journals, Internet, newspaper etc.

Data source

Both Primary and Secondary source of data would be used .The major type of information
is used from primary data.

44
 STUDY

EXPORT DOCUMENT AND PROCEDURE

Exporters should seriously consider having the freight forwarder handle the formidable
amount of documentation that exporting requires; freight forwarders are specialists in this
process. The following documents are commonly used in exporting; which of them are
actually used in each case depends on the requirements of both our government and the
government of the importing country

1. Commercial invoice
2. Bill of lading
3. Consular invoice
4. Certificate of origin
5. Inspection certification
6. Dock receipt and warehouse receipt
7. Destination control statement
8. Insurance certificate
9. Export license
10. Export packing list

45
 STEP 1: Enquiry :

The starting point for any Export Transaction is an enquiry.

An enquiry for product should, inter alia, specify the following details or provide the following data:
Size details - Std. or oversize or undersize
Drawing, if available
Sample, if possible
Quantity required
Delivery schedule
Is the price required on FOB or C& F or CIF basis
Mode of Dispatch - Sea, air or Sea/air
Mode of Packing

Terms of Payment that would be acceptable to the Buyer - If the buyer proposes to open any Letter of
Credit, any specific requirement to be complied with by the Exporter
Is there any requirement of Pre-shipment inspection and if so, by which agency
Any Certificate of Origin required - If so, from what agency.

STEP 2: - Performa generation :

After studying the enquiry in detail, the exporter - be it Manufacturer Exporter or Merchant Exporter -
will provide a Performa Invoice to the Buyer.

STEP 3: Order placement :

If the offer is acceptable to the Buyer in terms of price, delivery and payment terms, the Buyer will then
place an order on the Exporter, giving as much data as possible in terms of specifications, Part No.
Quantity etc. (No standard format is required for such a purchase order)

STEP 4: Order acceptance :

It is advisable that the Exporter immediately acknowledges receipt of the order, giving a schedule for
the delivery committed.

46
STEP 5: Goods readiness & documentation :
Once the goods are ready duly packed in Export worthy cases/cartons (depending upon the mode of
dispatch), the Invoice is prepared by the Exporter.
If the number of packages is more than one, a packing list is a must.

Even If the goods to be exported are excisable, no excise duty need be charged at the time of Export, as
export goods are exempt from Central Excise, but the AR4 procedure is to be followed for claiming
such an exemption.
Similarly, no Sales Tax also is payable for export of goods.

STEP 6: Goods removal from works :

There are different procedures for removing Export consignments to the Port, following the AR4
procedure, but it would be advisable to get the consignment sealed by the Central Excise authorities at
the factory premises itself, so that open inspection by Customs authorities at the Port can be avoided.
If export consignments are removed from the factory of manufacture, following the AR4 procedure,
claiming exemption of excise duty, there is an obligation cast on the exporter to provide proof of export
to the Central Excise authorities

STEP 7: Documents for C & F agent :

The Exporter is expected to provide the following documents to the Clearing & Forwarding Agents,
who are entrusted with the task of shipping the consignments, either by air or by sea.
Invoice
Packing List
Declaration in Form SDF (to meet the requirements as per FERA) in duplicate.
AR4 - first and the second copy
Any other declarations, as required by Customs
On account of the introduction of Electronic Data Interchange (EDI) system for processing shipping
bills electronically at most of the locations - both for air or sea consignments - the C&F Agents are
required to file with Customs the shipping documents, through a particular format, which will vary
depending on the nature of the shipment. Broad categories of export shipments are:
Under claim of Drawback of duty
Without claim of Drawback
Export by a 100% EOU
Under DEPB Scheme

47
 STEP 8: Customs Clearance :
After assessment of the shipping bill and examination of the cargo by Customs (where required), the
export consignments are permitted by Customs for ultimate Export. This is what the concerned
Customs officials call the LET EXPORT endorsement on the shipping bill.

STEP 9: Document Forwarding :

After completing the shipment formalities, the C & F Agents are expected to forward to the Exporter
the following documents:
Customs signed Export Invoice & Packing List
Duplicate of Form SDF
Exchange control copy of the Shipping Bill, processed electronically
AR4 (original duplicate) duly endorsed by Customs for having effected the Export
Bill of Lading or Airway bill, as the case may be.

STEP 10: Bills negotiation :

With these authenticated shipping documents, the Exporter will have to negotiate the relevant export
bill through authorized dealers of Reserve Bank, viz., Banks.
Under the Generalized System of Preference, imports from developing countries enjoy certain duty
concessions, for which the exporters in the developing countries are expected to furnish the GSP
Certificate of Origin to the Bankers, along with other shipping documents.
Broadly, payment terms can be:
DP Terms
DA Terms
Letter of Credit, payable at sight or payable at... days.

Step11: Bank to bank documents forwarding :

The negotiating Bank will scrutinize the shipping documents and forward them to the Banker of the
importer, to enable him clear the consignment.
It is expected of such authorized dealers of Reserve Bank to ensure receipt of export proceeds, which
factor has to be intimated to the Reserve Bank by means of periodical Returns.

48
STEP 12: Customs obligation discharge :
As indicated above, Exporters are also expected to provide proof of export to the Central Excise
authorities, on the basis of the Customs endorsements made on the reverse of AR4s and get their
obligation, on this score, discharged.

STEP 13: Receipt of Bank certificate :

Authorized dealers will issue Bank Certificates to the exporter, once the payment is received and only
with the issuance of the Bank Certificate, the export transaction becomes complete.
It is mandatory on the part of the Exporters to negotiate the shipping documents only through
authorized dealers of Reserve Bank, as only through such a system Reserve Bank can ensure receipt of
export proceeds for goods shipped out of this country.

Export procedure describes the documents required for exporting from India. Special
documents may be required depending on the type of product or destination. Certain
export products may require a quality control inspection certificate from the Export
Inspection Agency. Usually the Shipping Bill is of four types and the major distinction lies
with regard to the goods being subject to certain conditions which are mentioned below:

Export duty/ cess

Free of duty/ cess

Entitlement of duty drawback

Entitlement of credit of duty under DEPB Scheme

Re-export of imported goods

The following are the export documents required for the processing of the Shipping
Bill:

GR forms (in duplicate) for shipment to all the countries.

49
 4 copies of the packing list mentioning the contents, quantity, gross and net weight

of each package.

4 copies of invoices which contains all relevant particulars like number of

packages, quantity, unit rate, total f.o.b./ c.i.f. value, correct & full description of

goods etc.

Contract, L/ C, Purchase Order of the overseas buyer.

AR4 (both original and duplicate) and invoice.

Inspection/ Examination Certificate.

The formats presented for the Shipping Bill are as given below

White Shipping Bill in triplicate for export of duty free of goods.

Green Shipping Bill in quadruplicate for the export of goods which are under claim

for duty drawback.

Yellow Shipping Bill in triplicate for the export of dutiable goods.

Blue Shipping Bill in 7 copies for exports under the DEPB scheme

Note :- For the goods which are cleared by Land Customs, Bill of Export (also of 4 types -
white, green, yellow & pink) is required instead of Shipping Bill.

Documents Required for Post Parcel Customs Clearance

50
In case of Post Parcel, no Shipping Bill is required. The relevant documents are mentioned
below:

Customs Declaration Form - It is prescribed by the Universal Postal Union (UPU) and
international apex body coordinating activities of national postal administration. It is
known by the code number CP2/ CP3 and to be prepared in quadruplicate, signed by the
sender.

Dispatch Note, also known as CP2. It is filled by the sender to specify the action to be
taken by the postal department at the destination in case the address is non-traceable or the
parcel is refused to be accepted.

Prescriptions regarding the minimum and maximum sizes of the parcel with its
maximum weight : Minimum size: Total surface area not less than 140 mm X 90
mm.
Maximum size: Lengthwise not over 1.05 m. Measurement of any other side of
circumference 0.9 m./ 2.00 m.
Maximum weight: 10 kg usually, 20 kg for some destinations.

Commercial invoice - Issued by the seller for the full realisable amount of goods
as per trade term.

Consular Invoice - Mainly needed for the countries like Kenya, Uganda, Tanzania,
Mauritius, New Zealand, Burma, Iraq, Ausatralia, Fiji, Cyprus, Nigeria, Ghana,
Zanzibar etc. It is prepared in the prescribed format and is signed/ certified by the
counsel of the importing country located in the country of export.

Customs Invoice - Mainly needed for the countries like USA, Canada, etc. It is
prepared on a special form being presented by the Customs authorities of the
importing country. It facilitates entry of goods in the importing country at
preferential tariff rate.

Legalised/Visaed Invoice - This shows the seller's genuineness before the

appropriate consulate/ chamber of commerce/ embassy. It do not have any
prescribed form.

Certified Invoice - It is required when the exporter needs to certify on the invoice
that the goods are of a particular origin or manufactured/ packed at a particular
place and in accordance with specific contract. Sight Draft and Usance Draft are
available for this. Sight Draft is required when the exporter expects immediate
payment and Usance Draft is required for credit delivery.

Packing List - It shows the details of goods contained in each parcel/ shipment.

51
 Certificate of Inspection - It shows that goods have been inspected before
shipment.

Black List Certificate - It is required for countries which have strained political
relation. It certifies that the ship or the aircraft carrying the goods has not touched
those country(s).

Weight Note - Required to confirm the packets or bales or other form are of a
stipulated weight.

Manufacturer's/ Supplier's Quality/ Inspection Certificate.

Manufacturer's Certificate - It is required in addition to the Certificate of Origin

for few countries to show that the goods shipped have actually been manufactured
and are available.

Certificate of Chemical Analysis - It is required to ensure the quality and grade of

certain items such as metallic ores, pigments, etc.

Certificate of Shipment - It signifies that a certain lot of goods have been shipped.

Health/ Veterinary/ Sanitary Certification - Required for export of foodstuffs,

marine products, hides, livestock etc.

Certificate of Conditioning - It is issued by the competent office to certify

compliance of humidity factor, dry weight, etc.

Antiquity Measurement - Issued by Archaeological Survey of India in case of

antiques.

Transshipment Bill - It is used for goods imported into a customs port/ airport
intended for transshipment.

Shipping Order - Issued by the Shipping (Conference) Line which intimates the
exporter about the reservation of space of shipment of cargo through the specific
vessel from a specified port and on a specified date.

Cart/ Lorry Ticket - It is prepared for admittance of the cargo through the port
gate and includes the shipper's name, cart/ lorry No., marks on packages, quantity,
etc.

52
 Shut Out Advice - It is a statement of packages which are shut out by a ship and is
prepared by the concerned shed and is sent to the exporter.

Short Shipment Form - It is an application to the customs authorities at port

which advises short shipment of goods and required for claiming the return.

Shipping Advice - It is prepared in aligned document to be used to inform the

overseas customer about the shipment of goods.

EXPORT PROCEDURES AND DOCUMENTATION FOR TEXTILES AND

APPAREL PRODUCTS

1. Consult with a Quota Allocation Officer at the Trade Board Ltd. as to the
products that have an available quota for exportation under the US/Jamaica
Bilateral Textile Agreement.

2. If there is an available quota for the product that you wish to export, or if you
are planning to export to a non-US market, then visit www.jexporter.com or the
JAMPRO offices and register to become an exporter. The registration process
usually takes three to five days.

3. Consult with the Bureau of Standards for information regarding proper labelling
requirements.

4. Purchase and complete Form JN2/JN3 for export to non-US and US markets
respectively, as well as the Certificate of Jamaican Origin/Certificate of
Exemption (where applicable), all of which are available from the Trade Board
Ltd. Furthermore, for 807 products a commitment letter is required.

5. Purchase and complete Export Entry Form C82, which is available from the
Trade Board or the Jamaica Exporters Association. Complete all relevant
commercial and export forms.

6. You may consult with the Trade Boards Certification Unit to determine whether
the product you wish to export qualifies for preferential treatment in any
overseas market. If so, purchase the relevant form and obtain the required
Certificate of Origin.

53
 7. Check shipping/air cargo rates and schedules as well as provisions for insurance
coverage. Complete Tally Sheet (by air) or Wharf/Dock Receipt and Cargo
Integrity Form (by sea).

This is the complete process followed by INDIA to export and also covers the documents
necessary required. Now further we would analyze the export procedure followed by
China and US.

As studied export procedure followed by all countries is uniform but all depends on the
schemes and initiatives taken by countries government. The steps followed goes similar
but the time involved in each step depends upon departmental working and how effective
they are in their working

54
 EXPORT PROCEDURE FOLLOWED BY CHINA

Recent research by various international organizations indicates that customs and

administrative procedures have substantial effects on trade flows between countries. These
procedures and practices can act as significant barriers to international trade and it is not
surprising that these have become the focus of attention, now that tariff and other
quantitative barriers have been reduced.

Since becoming a fully fledged member of the World Trade Organization, recognizing
trade facilitation as necessary to increase trade, China has made significant progress in the
trade liberalization process. In particular, China has made improvements to procedures
behind-the-border.

The objective of this study was to evaluate in detail the procedures involved in the export
and import of goods. The study used the Business Process Analysis method to trace all the
steps and procedures involved in the export and import processes and consider the time
and cost involved in each of these steps.

The World Bank (WB) Doing Business Report 2010 ranks China at number 47 out of 183
countries with regard to Trading Across Borders. According to the Doing Business Report,
it takes between 21 and 24 days to export/import from/to China, involving between six and
seven documents at a cost of between 500 and 545 United States Dollars. While days to
trade and the number of documents are close to the East Asia average, the cost in China is
about 55 per cent of the average East Asia cost.

The objective of the current study was to examine, in detail, the processes involved in the
export and import of goods. By employing the Business Process Analysis (BPA)
methodology, this study was able to trace all the steps and procedures involved in the
export and import processes and consider the time and cost involved in each step. A BPA is
carried out using a case study approach, which allows for an in-depth analysis of the
process and challenges faced by firms behind the border. In this way, the researcher is able

55
to follow goods and documents from one stakeholder to another, i.e. from the warehouse
of the exporter to the warehouse of the exporter. On completion of the mapping of the
trade process, one is then able to identify areas where bottlenecks and duplication occur
and propose possible solutions.

For export procedures, the study focused on garment exports from China to Japan. Japan is
a leading export destination for Chinas garments, along with the United States of America
(USA), as shown in Table 6. In 2009, Japan was the destination of nearly 17 per cent of
total garment exports of China. Being a developed market, Japan is an attractive
destination for both small and large Chinese enterprises.

Business process analysis of trade processes in China

1. Export process analysis

Export of garments to Japan

This study examined the process of exporting garments to Japan by a medium sized
company, Company X. The study found that the process involves 11 distinct steps:

1. Buy:
This step involves the activities between Company X and the Japanese client required to
buy the product. The procedures involve providing samples of the product and negotiation
of price and payment terms e.g. Cost, Insurance and Freight (CIF) or Free on Board
(FOB). Upon acceptance by both parties, the sample garment is confirmed and a contract
is signed. The entire process can be done electronically. Due to the long-term relationship
that Company X has with its Japanese client, the process generally takes no more than a
day. From the time the contract is signed to the preparation of the shipment of goods, it
may take one to six months, depending on the volume of the shipment and complexity of
the product.

2. Arrange transport:
When the order is close to completion, shipping arrangements need to be confirmed. The
company uses a customs broker to liaise with the shipping company. The company
provides the broker with some basic information, including the destination, quantity and
date of shipment. When a suitable vessel has been found, the broker makes a booking
request and confirms the shipping details and shipping cost. Finally, a shipping order is
issued. The fee charged by the broker, including arranging transport, inland transport,
customs documentation fee is between RMB 2,000 and RMB 3,000. A higher fee may be
charged during peak periods or if the shipment is subject to extensive inspections. The
entire process takes between two and three days, depending on the availability of the
vessel. Communications are electronic.

56
3. Arrange for inspection:
Company X now requests an inspection of its garments by the local Entry-Exit Inspection
and Quarantine Bureau (or Commercial Inspection Bureau). This step may take up to 2
days, although the inspection itself is done within half a day. The inspection focuses on
issues such as quality, safety and toxicity of goods. Eight documents need to be provided,
following which an inspection schedule is confirmed. Among the documents is a customs
declaration form, which is downloaded online. This must be completed by Company X or
by the customs broker based on the information provided by the company. The approval of
the customs declaration form is also done online. This form must then be printed for the
inspection. The export registry book (referred to as the blue book) records all inputs that
have been imported and utilized for the manufacture of the export shipment. Since the
import of inputs for export purposes is duty free, the company needs to show that all
imported inputs have been utilized to produce final goods for export. Any surplus in
imported inputs would either be charged the prevailing duty or confiscated by the customs
department at the end of a specified period. The components card comprises a sample of
all inputs (fabric, buttons, zippers etc) that have been used in the manufacture of the exported
shipment. A copy of the Letter of Credit (LC) is also provided if the payment is through an LC.
For orders from long term clients, telegraphic transfers can also be used. The inspection is
done randomly (but there are times when approval is given without inspection) and a fee
of 0.15 per cent of the total value of the goods is charged. A certificate of commodity
inspection is issued and the customs declaration form is stamped by the local inspection
bureau.

4. Obtain cargo insurance:

Information regarding the market value of goods and shipping information is provided so
that insurance cover can be secured. The premium ranges between 0.3 and 0.5 per cent of
the sum insured. This process is completed within a day. Company X has a long term
relationship with the insurance agent, so insurance covers all shipments over one year,
rather than per shipment.

5. Collect empty container from yard:

On the day that the goods are to be loaded into the container, the customs broker will
instruct the internal transportation company to pick the container from the yard. The
shipping company is informed and the assigned container is made available to the internal
transportation company.

6. Stuff the container:

Goods are loaded on to the container within one day.

7. Transportation to port of departure:

The sealed container is transported to the port, and is checked by the shipping company at
the entrance to the port. Company X uses the Shanghai Port, which is about one and a half
hours away from the warehouse. The container is docked at the required site for
inspection.

8. Customs inspection and clearance:

57
The container undergoes scanning and, upon the request of the customs officers, the
container is opened for examination. Having cleared this process, the relevant documents
are verified. In addition to the documents mentioned earlier, Company X must provide a
letter authorising the customs broker to act on its behalf. If the inspection and documents
are approved, a green light note is issued. This process takes no longer than one day.

9. Container handling:
The green light note is then passed to the shipping company or its agent, who will then
make a plan on where the container will be stowed. The port authority will then stow the
container according to this plan.

10. Prepare documents for the importer:

Upon the receipt of the Bill of Lading, together with the Commercial Invoice and
Finished Goods Inspection Certificate (by third Party, or sometimes by Company X), the
documents are mailed to the Japanese client.

11. Pay:
All documents required for the LC (Invoice, Packing List, Bill of Lading etc.) are
submitted to the bank. The bank charges the company 0.1 per cent of the LC amount.
Collecting all necessary documents for the payment application takes less than a day but it
may take up to 15 days to receive payment.

The processes, actors and documents involved are shown in Table 1

Table 1. Process of exporting garments to Japan Company X

Major Steps Documents Actors Days

Buy Sales contract Importer and Exporter 1
Arrange transport Shipping Order Exporter 3
Shipping Company
Customs Broker
Arrange inspection Transfer to port of departure
Clear goods through customs

Obtain cargo insurance Handle containers and stow on vessel

Collect empty containers

from yard Prepare documents for importer

Stuff containers

58
Commercial Invoice Transportation company 1
Customs declaration Shipping Company
Export Register Book Commercial Invoice Customs Broker
Components card Exporter Register Book Shipping Company
Packing List Customs declaration Customs Department
Letter of Credit Certificate of commodity
Wash label inspection
Sales Contract Packing List
Commercial Invoice Declaration Certificate of
Entrustment
Shipping Order Dock Receipt Customs Department
Bill of Lading Customs Broker
Shipping company
Port Authority
Packing List Commercial Invoice Exporter 1
Bill of Lading
Goods Inspection Result

59
 Prepare documents for Commercial Invoice Exporter 1
payment Bill of Lading Importer
Packing List Exporter's bank
Letter of Credit Importer's bank

The study found that a total of 15 documents are required and a cost between RMB 2,000 and
3,000 is incurred (not including shipping costs). Company X requires a total of 10.5 days to
complete the export process, plus one day for finalizing the contract and about 15 days for
payment to be received. Figure 1 summarizes the number of days each procedure takes.

Figure 1: Time-procedure chart for the export of garments from China to Japan

1 Buy 7 Transfer to port of departure

2 Arrange transport
3 Arrange inspection
4 Obtain cargo insurance
5 Collect empty container from yard
6 Stuff the container
8 Clear goods through customs
9 Handle containers and stow on vessel
10 Prepare documents required by importer
11 Prepare documents for payment

Conclusion:

A detailed analysis of the steps involved in the processes of importing and exporting the
selected goods enabled the measurement of the length of time, costs (to a certain extent) and
number of documents required.
Table 2 indicates the days and cost involved in exporting

Table 2. Days, cost and documents required for exporting

Export
Company X (textile Company M
and
WBDB2010 (electronics
garments)
appliances)
No. of days
Documents Preparation 14 2.5 7
.. Obtain export permit n.a. 5.5
.. Prepare docs for customs clearance 0.5 1
.. Prepare docs for importer 1 0.5
.. Preparation for payment 1 n.a.

Customs Clearance 2 2.3 1.2

.. Clear goods through customs 0.3 0.2
.. Commodity Inspection 2 1

Ports and terminal handling 2 0.3 0.2

.. Handle cargo and stowage 0.3 0.2

Inland transportation and handling 3 5.4 5.6

.. Arrange for inland transportation 3 4.5
.. Obtain Cargo Insurance 1 0.5
..Collect and stuff container 1 0.4
.. Inland transportation 0.4 0.2

Total No. of Days 21 10.5 14

Costs (USD per container) 500 293-440 293-440

No. of documents (Electronic) 7 15(3) 17(7)

The differences in the figures of this study and the WB report could be due to the
following:
a. The respondent companies in this study have long term relationships with
buyers/sellers and due to the nature of long term contracts, import/export permits
are obtained on a contract rather than a consignment basis, thus reducing the time
and cost of the procedures. These companies have also been in the business for a
long time and, as such, they are familiar with the process and may be able to clear
the obstacles involved in the process in a shorter period of time.

b. The WB study may have only considered the number of documents handled by
the freight forwarder. This study also included those documents that are handled
by the buyer/seller.
c. All of the respondent companies in this study use freight forwarders/customs
brokers. These entities are able to speed up the process of customs clearance
because of the close connections and experience with the government agencies.
The findings of the study indicate that the trade processes in China are comparatively efficient.
The number of documents involved is large, but given the widespread use of information
technology and the frequency of these procedures, the documentation requirements do not seem
to be of concern to firms. The number of documents increases the probability of errors, however,
and therefore increases the likelihood of the rejection of an application. Reducing the number of
documents would therefore be beneficial for companies. Furthermore, this would encourage
firms to handle inspection and customs clearance on their own, without the need for the services
of brokers.

The findings of this study are subject to several limitations. First, the findings are based
on only a handful of case studies so these findings cannot be generalized to reflect all import and
export procedures in China. The types of importers and exporters vary based on factors such as
size, ownership and trading partners, and the challenges faced by these traders differ.
Furthermore, the companies in this study use Shanghai and Shenzhen as their main ports. The
procedures at the other major ports (e.g. Tianjin) in China may be different. In addition, this BPA
analysis relies on the input provided by staff and executives who are involved in the relevant
trade procedures. It is likely that both the researchers and the respondents might have overlooked
some documents or costs involved in the process due to the repetitive nature of these procedures.
Nevertheless, it is hoped that the findings of this study contribute in a small way towards
facilitation of trade for businesses in China.
 EXPORT PROCEDURE FOLLOWED BY US
The procedure followed by US government is far more rigid in comparison to China & India.
US majorly export machinery and electronics to other countries.

1-Export Planning (Why Export?)

The first stage in export planning is to investigate the market and the various reasons to consider
exporting to customers. This article details the value in trillions of dollars that U.S. total exports
hold and explains some of the reasons why small-to-medium sized businesses are in a good
position to leverage selling to overseas markets.

World Is Open for BusinessYour Business

Today, its easier than ever for companies to sell goods and services across the globe. Small and
medium-sized companies in the United States are exporting more than ever before. In 2013,
more than 300,000 small and medium-sized U.S. companies exported to at least one international
marketnearly 28 percent more than in 2005. In 2013, the value of goods and services exports
was an impressive $2.28 trillion, nearly a 25 percent increase since 2010. And 2014 topped the
previous year, with exports valued at $2.34 trillion.

Do You Want More Sales Channels?

Online B2B and B2C marketplaces offer virtual storefronts and a ready-made global army of
shoppers. They also offer payment solutions, and you can choose a shipper that will take care of
the required documentation for you. The shippers want to help make things easier too, and many
offer international business advice, freight forwarding and customs brokerage services, cost
calculators, and in some cases, financing. Plus, theyll pick up goods and documents from your
back door and deliver them to almost any address in the world. And you can track everything on
their website. Some e-commerce platforms will arrange to ship your goods to one or more of
their fulfilment warehouses located in major commercial centers around the world.

Want even more sales channels? If web-based marketing and sales are insufficient to meet your
sales growth appetite, you can attend trade shows in the United States where buyers from around
the world come to purchase U.S. goods and services. Show organizers will facilitate
introductions to the buyers, working with agencies of the U.S. government to provide
matchmaking services on the show floor. These same government agencies can arrange for you
to attend shows in other countries, where the connections and influence of your embassy
network can save you time and money generating new business. Government agencies can find
buyers for you and arrange introductions in more than 100 countries. Call this service
customized business matchmaking.

Channels can include:

Direct to end-user

Distributors in country

Supplier to the U.S. government in a foreign country

Your e-commerce website

A third-party e-commerce platform where you handle fulfillment

A third-party e-commerce where they handle fulfillment

Supplier to a large U.S. company with international sales

2-Identifying a Market

Choosing a market for your product or service requires careful research. Here are some pointers
to take into consideration.

To succeed in exporting, you must first identify the most profitable international markets for
your products or services. Without proper guidance and assistance, however, this process can be
time consuming and costly particularly for a small business.

Begin with:

Classifying your product

Finding countries with the largest and fastest growing markets for your product

Determining which foreign markets will be the most penetrable

Defining and narrow those export markets you intend to pursue

Researching export efforts of U.S. competitors

Determining which countries might be profitable markets for your product/service

Tools & Resources:

Find your HS (Harmonized System)/Schedule B number

Find Market Research Access to more than 100,000 industry and country-specific market
reports, web sites, events, and trade directory listings.

Get Customized Market Research

Leverage a Free Trade Agreements in your target markets

3-Market Entry

Specific considerations to address for your target market.

Once you have chosen your target market(s), your plan needs to address specific
considerations for that market.

Do you need to tailor your product or service to specific consumer preferences, industry
standards, or regulatory environment of that market, for instance?

What steps do you need to take to actually export from the United States?

Are there certain risks/challenges associated with doing business in your target markets for
which you can prepare?

This article will help you think through what it takes to actually make a sale to your target
market and to prepare accordingly.

You will need to:

Create an action plan to address the pros and cons of exporting.

Determine product modifications based on consumer preferences, market environment, trade

barriers, etc.

Understand regulations and licenses that apply to your products

Tools & Resources:

Consider how you might have to adapt your products/services for the target market. Leverage
market research to learn about the target markets industry standards, consumer preferences, etc.
Familiarize yourself with the regulations and licenses that may apply to your product(s). Most
export transactions do not require specific approval in the form of licenses from the U.S.
Government. Regulations regarding all exports must be followed.

Understand Tariff and Import Fees. It is very important to consider the effects of tariffs, port
handling fees and other miscellaneous customs charges when determining your product's final
cost.

Determine your Tariffs and Import Fees. These are duties (or taxes) applied to goods transported
from one country to another, or on imported products. Tariffs raise the prices of imported goods,
thus making them less competitive within the market of the importing country. Before you
export to any country you need to determine what the tariff rate is on your product(s).

Think about Non-tariff Trade Barriers. These are laws or regulations that a country enacts to
protect domestic industries against foreign competition. Such non-tariff barriers may include
subsidies for domestic goods, import quotas, regulations on import quality, and other Foreign
Standards and Certification Information.

Consider whether or not intellectual property rights violations are a likely risk in your target
market(s).

4-Plan Development

Creating an international export plan is important for defining your company's present status and
internal goals and commitment. It is also required if you plan to seek export financing assistance.
Prepare a plan prior to requesting bank loans. This can save both time and money. Completing an
international business plan helps you to anticipate future goals, assemble facts, identify
constraints and create an action statement. It should also set forth specific objectives and an
implementation timetable and milestones.

Developing an Export Plan

Conduct an "audit" of your company to determine how exporting will impact your operations.
Understand the key components of an effective, actionable export plan.
Have a clear idea of the information you need to collect and sources where you might find that
information.
Begin developing your export plan.
Tools & Resources

Preliminary considerations: before writing your international sales plan, you should understand
exactly what exporting will mean for your company. More specifically, you should consider the
management issues for exporting, approaches to exporting, distribution channels and other
important considerations that will impact your business. Just as no two companies are alike,
there is no one-size-fits-all export plan. However, your export plan should be an extension of
your overall business plan, if not infused completely into your business plan. Many of the same
questions for your international sales strategies will apply to your domestic sales plan.

5-Selling to Your Market

Evaluate the most profitable way to distribute, price, and promote your products and services to
the customers in your target market.

Once you have chosen a target market and addressed how to prepare for that market, its now
time to evaluate the most profitable way to distribute, price, and promote your products and
services to the customers in your target market.

Steps:

Determine the distribution method for your product or service

Calculate the optimal pricing for your product or service

Create a sales and promotion action plan

Tools & Resources:

Leverage customized market research from the US Commercial Service to determine how to
optimize your promotion efforts based on the consumer preferences of your target market.

Promote your products and services to the target market. There are a variety of ways to do this
without leaving the United States or even by travelling to the target market.

Search for trade leads in your target market.

EXPORT COMPLIANCE
Documents Required for Vessel Registration:

1. Foreign investment approval certificate (from Foreign Trade Committee)

2. Manufacturing capability certificate (from Foreign Trade Committee)

3. Customs House registration certificate

4. Financial report

5. Financial audit report

6. Business License

7. Manufacturing flow chart

8. Sales contract

9. Equipment list

10. Land use certificate Import Documents Required

11. Vessel registration certificate

12. Automatic electronic machinery permission (for machinery import)

13. 3C certificate (if required)

14. Commercial Invoice

15. Packing List

16. POA

17. Bill of Lading Export Documents Required: Commercial Invoice Packing List POA

18. Vessel re-export import customs

CONCLUSION

Tax Regime:

China:
India:

Corporate Income Tax: 24% Indias tax system is being reformed as we write
this. Following is the tax system for Indias
Tax-Incentives for high-tech industries: 15% Special Economic Zones:

Tax Holidays for manufacturing industries: Corporate Income Tax: 15%

Initial two years of profitability: 0 percent tax First five years of profitability: 0% tax

Next three years of profitability: 50% of tax Second five years of profitability: 50% tax
rate (This is assumed to be 12%) (This is assumed to be 7.5%.)

Third five years of profitability: 50% of tax rate

for any invested dividends that are invested
back into India

As can be seen, India has introduced a tax regime that is vastly more advantageous in the Special
Economic Zones than China. Another benefit of India over China with respect to locating in the
Special Economic Zones is that India does not discriminate between manufacturing and services
and either can offer the above incentives, which is not the case in China

COMPANY DEVELOPMENT

Tax incentives are not the only area that India is ahead of China in. Generally, Indian capital
markets far exceed their Chinese counterparts in terms of transparency and predictability. Indian
companies can list domestically on the Bombay Stock Exchange, Asias oldest exchange. China
has both the Shanghai and Shenzhen stock exchanges. Shanghai is larger than Bombay in terms
of capitalization (Bombay has US$1 trillion with 4,833 companies and Shanghai has US$1.7
trillion with 849 companies) but what differs the two exchanges is not just their size but that
Bombay is run to international standards and has tremendous stability in the quality of its
companies. On the other hand, Chinas Securities Commission has no powers to impose
punishments, which must be imposed by the courts. Further as the government is the major
stockholder of its State-owned enterprises all these firms are not subject to independent policing
and true financial analysis meaning that the value of many of these firms is suspect. This means
that generally India has the more transparent economy.
The study of the subject marketing is an old concept. Within a span of less than a year, dynamic
changes have taken place in international textiles scene. If all these changes are analyzed
collectively, it points out to the need for a planned and concerted effort by the industry to fight
the tough competition lurking ahead. As the world moves speedily towards quota-free markets
and the country opens up to foreign competition, the key success factors for garment makers in
India would be providing efficient services which include responsiveness, consistency,
flexibility, communication abilities and understanding the perspectives of foreign buyers. The
history of textiles and garments in India dates back to the use of cynical dyes and printing blocks
around 3000 BC. The diversity of fibres found in India, complex weaving on its state-of-art
manual looms and its organic dyes attracted buyers from all over the world for centuries. The
British colonization of India and its industrial policies destroyed the innovative eco-system and
left it technologically destitute. Independent India saw the building up of textile capabilities,
diversification of its product base, and its emergence, once again, as an important global player.
Textile economy is worth US $37 bn and its share of the global market is about 5.90 per cent.
The sector aspires to grow its revenue to US $85bn, its export value to US $50bn and
employment to 12 million by the year 2010 (Texmin 2005).
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