Escolar Documentos
Profissional Documentos
Cultura Documentos
ACKNOWLEDGEMENT
This report bears the imprint of many persons, who have
helped me in numerous ways in writing this report. It
gives me great pleasure in presenting this report to the
Mangalayatan University, Beswan, Aligarh. I would
like to take this opportunity to extend my hurtful
gratitude to all those who helped me in presenting this
report. Their contribution no matter big or small has
contributed immensely towards completion of this
report.
I fall short of words to express my gratitude to
TRANSPARENT OVERSEAS for giving me the
opportunity to work in this prestigious organization. I
acknowledge my deep sense of gratitude to Mr.
Satendra Bhardwaj for his generous guidance & advice
before & during the course of this work & also in
analyzing the work.
I have also received valuable guidance and help from
the entire Teaching staff, especially from Mr. Rajeev Sir
and Mr. Adesh Bhatela Sir and others who all are
members of Department of Management,
Mangalayatan University, Aligarh.
My overriding debt is to my parents who provide me
with the moral support & inspiration to prepare this
report.
STUDENT’S DECLARATION
VINAY PRATAP
SINGH
4
5
CONTENTS
1. INTRODUCTION
General introduction
Export Country
Turnover of the Group
Certificates of T.O.
Other Sister Companies
T.O. Process Flow Chart
Wall scone
Vase
Christmas Hanging Ornament
5. INTRODUCTION OF EXPORT IN INDIA & ITS PROCEDURE
Types of Exporters
How to set up an Export Organisation
Choosing appropriate mode of operations
Naming the Business
Structure of an export Organisation
Registration with export Promotion Council
Registration with Sales Tax Authorities
How to Begin to do Export
Finding a Customs
Negotiating Contracts
Export Sales & Contract Terms & Conditions
Nature of International Trade Contracts
Terms of Shipments –Incoterms
Processing an export order
Financial risks involved in Foreign Trade
6. EXPORT DOCUMENTS
Commercial Documents
Auxiliary Document
Pre- Shipment Documents
GENERAL INTRODUCTION
1.TRANSPARENT OVERSEAS:-
We are pleased to introduce ourselves as a Transparent Group
of industries. Transparent Overseas is the parent company of the
group. Established in 1997 & engaged in import, manufacture
& export of its products i.e. glass artware, Brassware, Ironware
& all other handicrafts items worldwide. It has ONE STAR
EXPORT HOUSE status & a ISO 9001, ISO 14001 and OSHAS
18001 certified. It has got several states & national award for
excellence export performance during the past years , these
award was sponsored by Export Promotion Bureau, Lucknow
(State Export Award), Export Promotion Council for
handicrafts, New Delhi (Certificate of Merit Award), Capexil
formerly known as Chemical Allied Products Export Promotion
Council , Kolkata (Certificate of Merit Award) etc. etc..
Registered Office:
Opp. Pradeep Nagar,
Dholpura Crossing,
Agra Road,
Firozabad-283203
CONTACT PERSONS:
MR. AKASH JOSEPH
(MERCHANDISING MANAGER)
Phone nos. (Factory) - 91-9971842590
- 91-9310551366
Fax no. - 91-5612-243800
Factory:-
Agra Road, Firozabad-283203
Showroom:-
B-102, Sector-2,
NOIDA- 201 301
TURNOVER OF THE GROUP
TRANSPARENT OVERSEAS $ 4.15 Million (U.S.D.)
1. FM GLASS WORKS:
In this unit we produce tumblers, Bowls, Cups, Saucer and Empty
wine bottles for wine bottles. FM Glass Works is an ISO 9001
certified company. It covers domestic market, our esteemed
buyers are Shawallace, U.B. Group, Mohan Meikens, Redico
Khetan and other corporate clients for tumbler and bowls are
Hindustan Liver, Nessle India and Heings India Ltd.
This unit was established in 2004 and it’s a high quality color glass
producing unit having a pot furnace & it is engage to export its
products abroad.
CONTACTS
ADDRESS:
EVERA AUTO INDIA PVT. LTD.,
OPP. PRADEEP NAGAR,
AGRA ROAD,
FIROZABAD -283 203 (U.P.) INDIA
15
INSPECTION
ISSUE PURCHASE ORDER AND
FOR RAW MATERIAL TESTING
ISSUE PURCHASE OF RAW
INSPECTION
AND TESTING ISSUE OF
MATERIAL
OF RAW REJECTION FOR
MATERIAL RETURN BACK TO PROCESSING
(i) SUPPLIER
HANDYWORK
COMPANY PROFILE
M/s Transparent Overseas is an ambitious industrial venture
of Firozabad. The company has the manufacturing unit
at Opp. Pradeep Nagar, Agra Road, Firozabad. It is one
of the leading Manufacturer and Supplier of Glassware
and Glass decorative items etc. All the activities are
carried out by well-qualified and experienced
personnel.
We are known for our concern and efforts for optimum uses
of resources, solid waste management & providing safe
workplace for our employees. The Company believes that
continual improvement in the quality management system is
essential to achieve maximum customer satisfaction &
improvement in environment and health & safety
17
EXCLUSIONS:
1. Design and development.
At present Design & Development is not
under scope of the organization. All the
products manufactured at Transparent
Overseas are based on customer’s
specifications only.
4.2.1 General
The Company has documented its Policy, objectives and manual including
procedure, required by the International standards and by the Company for
effective implementation and control of IMS.
4.2.2. Manual
The Company has established and maintained Integrated Management System
(QMS, EMS & OHSAS) manual which includes scope of the QMS, EMS & OHSAS,
details & justification for exclusions under element 7, documented procedures for
QMS and description & interaction of the processes.
a) Documents are reviewed for adequacy and approved by the Mr, prior to
release.
b) Whenever required documents are reviewed, updated and re-approved by
MR. Also record of such authorized changes is maintained by MR.
c) Drawing a vertical line on right hand side of the changed portion to
identifies changes to a document. Current revision status is also identified on
the document.
d) MR issues the authorized/ approved documents, wherever required and
ensures availability of the relevant version of the applicable document.
e) It is ensured that documents remain legible and readily identifiable. IMS
manual is controlled, as defined in section 2.0 of this IMS manual.
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A multifunctional team called IMS Core Group was set up to establish the integrated
management system.
7. Testing of Within one day Untested Tested First week of After production at
Various Product of production material material month each stages product
should be tested within
one day.
8. Review & Within 07 days of Customer Result of First week of Complaints should not
analysis of receipt. Complain review/ Month be repetitive nature
customer ts analysis
complaints
9. Internal audits Once in 06 Requirem International After one year Proposed corrective
months ents of audit reports and preventive actions
ISO given be auditee should
9001:140 be implemented
01 &
OHSAS
18001:19
99 and
reports of
previous
audits
10. Management At planned Data for Decisions After one year Out put of the MRM
review interval (Once in review taken master be implemented
06 months)
23
24
POT FURNACE
TANK FURNACE
25
CUTTING MACHINE
27
MAGNET SAPERATER
AUTOMATIC NEUMATIC
PRESS MACHINE
HEATING FURNACE
ANEALING ROOM
30
MELTING MACHINE
31
MELTED GLASS
DRAWED OUT
BLOWING
33
MOUTH BLOWING
ANNEALING
AFTER ANNEALING
PRODCUT IS READY FOR FURTHUR
PROCESSING
35
36
37
38
39
40
41
42
43
India has a mission to capture 2% of the global share of trade by 2010, up from the
present level of less than 1%. Export is one of the lucrative business activities in India.
The government also provides various promotional schemes to the exporters for
earning valuable foreign exchange for the country and for meeting their requirements
for importing modern technology and essential inputs. Besides, the income from
export business is also exempted to the specified extent under the Income Tax Act,
1961, Refund of Central Excise and Custom Duty on export is also made under the
Duty Drawback Scheme and other export promotion schemes of the Government.
Exports can be of goods or services which can be moved physically from one country
to another or can be rendered.
Physical Exports: If the goods physically go out of the country or services are
rendered outside the country then it is called as physical export. The Foreign Trade
defines exports as taking out of India any goods by land, sea, air. Although the act
does not term them as “Physical Exports”, we have to put phrase to distinguish it from
“Deemed Exports” which is sales in India but considered as exports for limited
purpose.
TYPES OF EXPORTERS:
1. Manufacturer Exporter: As the exporter has the facility to manufacturer the product
he intends to export and hence he exports the products manufactured by him.
2. Merchant Exporter: An exporter who does not have the facility to manufacture an
item. But, he procures the same from other manufacturers or from the market and
exports the same.
An exporter can be both a manufacturer exporter as well as a merchant exporter, he
can export product manufactured by him or he can export items bought from the
market.
1. Merchant Exporter i.e. buying the goods from the market or from the
manufacturer and then selling it to foreign buyers
2. Manufacturer Exporter i.e. manufacturing the goods yourself for export.
3. Sales Agent / Commission Agent / Indenting Agent i.e. acting on behalf of the
seller and charging the Commission.
4. Buying Agent i.e. acting on behalf of the buyer and charging Commission.
5. Service provider i.e. providing service from India to another country
.
NAMING THE BUSINESS
Whatever form of business organization has been finally decided, naming the business
is an essential task for every exporter. The name and style should be soft, attractive,
short and meaningful. Open a current account in the name of the organisation in
whose name you intend to export. It is advisable to open the account with a bank
which is authorised to deal in Foreign Exchange.
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6. A clearing and forwarding agent to handle the documents and the goods in the
customs premises\ in the ports of lading.
Depending upon the size of the business the numbers of personnel under each
category may increase. For example if a company is transacting substantial
volume of business in more than one product. Then it is necessary to have
marketing manager for each product so that the person can concentrate on a
particular trade to enhance the business.
46
The Customs Authorities will now allow the exporter to export or import goods into
or from India unless he holds a valid IEC number. Before applying for IEC number it
is necessary to open a bank account in the name of the company with any commercial
bank authorized to deal in foreign exchange. The duly signed application form should
be supported by the following documents.
• Bank receipt ( in duplicate ) / Demand Draft for payment of the fees of Rs.
1000/-
• Certificate from the banker of the applicant firm as per Annexure1to the
form given.
• One copy of PAN number issued by Income Tax Authorities duty attested
by the applicant.
• One copy of Passport Size photographs of the applicant duly attested by the
banker to the applicant.
Declaration by the applicant that the proprietor/ partners/ directors as the case may be
of the applicant company, are not associated as proprietor/ partners/ directors in any
other firm, which has been caution, listed by the RBI. Where the applicant declares
that they are associated as proprietor/ partners/ directors in any other firm, which has
been caution, listed by the RBI, they will be allotted IEC No. but with an additional
condition that they can export only with RBI’s prior approval and they should
approach RBI for the purpose.
Each importer/exporter shall be required to file importer/ exporter profile once with
the licensing authority shall enter the information furnished in Appendix 2 in their
database so as to dispense with changes in the information given in Appendix-2,
importer/ exporter shall intimate the same to the licensing authority.
For obtaining IEC number apply in the prescribe form along with the documents listed
above to Regional Licensing Authority (Office of the Regional DGFT). The registered
office or the head office may apply for allotment of IEC No. Whenever, there is a
change in the name, address or constitution of the holder of IEC No., such change
should be intimated within 30 days to the concern authorities.
IEC certificate will be issued in the form (copy enclosed). A copy of IEC No. is also
endorsed to the concerned banker.
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VALIDITY:
The IEC No allotted to a individual/firm/company will be valid for all its
branches/divisions units/factories as indicated in the IEC No. Import/Export of any
commodity by that firm/company. There being no date of expiry, the IEC once
allotted is valid till it is revoked. But, if no import or export is affected in the previous
financial year, the same will be made inoperative. However, this can be made
operative by a formal request to the DGFT.
IDENTITY CARD (For conducting transactions with the office of DGFT):
As it is not always possible for the top man or directors, promoters of the company to
visit DGFT frequently. There is a provision of issuance of identity cards to the
proprietors/partners/directors and their authorized representatives. An application of
Issuance of an identity card may be made in the form (Appendix-5) The document/
License/Certificate/Permissions may be delivered to the identity card holder and
officials of the Licensing Authority (DGFT)shall not be responsible for any loss etc.
In case of loss of an identity card a duplicate card may be issued on the basis of an
FIR & affidavit. In addition to obtaining the IEC No. the exporter is also required to
obtain Business Identification No(BIN). For this exporter is required to contact DGFT
online on web site. The licensing authority issues BIN in coordination with customs
authorities. This BIN is required to be mentioned on the shipping bills at the time of
customs clearance of the export cargo.
In order to enable the exporter to obtain benefits/concessions under the Foreign Trade
Policy, the exporter is required to register himself with an appropriate export
promotion agency by obtaining registration-cum-membership certificate. (RCMC). If
the export product is that it is not covered by any EPC, RCMC in respect thereof may
be issued by FIEO. An application for registration should be accompanied by a self
certified copy of the Importer-Exporter Code number issued by the regional licensing
authority concerned and bank certificate in support of the applicants financial
soundness. The RCMC shall be valid for 5 years ending 31st March of the licensing
year.
Goods that are to be shipped out of the country for export are eligible for exemptions
from both Sales Tax and Central Sales Tax. For this purpose, exporter should get
himself registered with the Sale Tax Authority of is state after following the
procedures prescribed under the Sales Tax Act applicable to his state.
48
Before entering into the venture of exports, one must look for the product to be
exported and the market where he intends to export.
In case of a manufacturer, obviously he would like to export the product he
manufactures as is or with possible modification as may be required by the market.
However, in case of a merchant exporter or a trader, one has to identity the product to
export. If the exporter is already in the trade in the domestic market and is familiar
with the product it would be an advantage to export the said product of which he has
reasonable knowledge.
Before selecting a product, one must simultaneously made a study and find out the
prospective market. For finding out the market for the selected product, the following
methods will help.
• Get statistical information as to imports of the product by various countries and their
growth prospects in the respective countries
• Approach the chamber of commerce for their guidance to find out the market.
• Approach the Export Promotion Council dealing in the product of selection to get
more information.
The Preliminary
Once you are ready with the product you wish to export and have found the market for
the same, you are ready to proceed further. Following sequences can be followed:
1. Any one, who wishes to export, must first of all get an Importer Exporter Code
Number (IE Code).This can be obtained by making a formal application to the
office of the Regional Directorate General of Foreign Trade (DGFT).
• Get yourself registered with the related Export Promotion Council and become
a member. Also arrange to obtain Registration-Cum-Membership Certificate
(RCMC) from the council. This has twin objectives:
• Under the Foreign Trade Policy, it is mandatory that an exporter gets him
registered with the Export Promotion Council to avail of various export
facilities.
• Being a member, you will have access to all the information relating to the
product that could be made available by the council
• Many foreign buyers send their enquiries for the imports to the Export
Promotion Council. Hence you will have few customers interested in your
product.
49
2. If you are a manufacturer, find out the provisions under the EXIM Policy of
getting the raw materials duty free.
3. Get familiar with the excise formalities as goods meant for export can be
cleared without payment of C. Excise duty on the finished product subject to
compliance of certain formalities.
4. Understand the local government regulations in relations to the export of the
product.
5. Get information of the government’s regulations of the importing country as to
restrictions on the quantity, product specification, packing regulations, customs
regulations, requirement of specific documents/information etc.
6. Availability of Vessels/Airlines, the transport charges, frequency of operation
etc.,
7. To look for a Custom House Agent (CHA) (also know as freight forwarders or
clearing agents) for handling the documents/cargo in the customs.
8. If the product is covered under any quota regulation, find out the
agency/council who is handling the quota distribution for the product and the
availability of quota for exports.
FINDING A CUSTOMS
Once you have selected the market, the next step is to find a prospective customer.
This you can get
NEGOTIATING CONTRACT:
Once the prospective customer is found, the business deal has to be concluded. The
following aspects may be considered before entering into a final contract with the
buyer.
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Very often exporters do not enter into any formal contract and finalize the trade deal
through the exchange of letters, cable, telex etc. It is, however, expedient that the
parties (exporters & importers) incorporate all important terms & conditions of their
trade deal in a separate document or contract that will avoid disputes arising out of
uncertainty or ambiguity. Export contract may be sent in duplicate along with the
Proforma Invoice to the overseas buyer.
There are certain, peculiar characteristics of international trade contract which are not
present in those for sales of goods in the domestic market
Whereas the parties to a domestic trace contract normally needs only agree on the
elements which are necessary for their particular trade transactions like price,
description, quality and quantity of goods, delivery terms etc the situation will be
quite different when the buyer and the seller to sale/purchase contract belong to
different countries. The parties to all international trade contracts provide all their
relative rights and obligations in several ways
For example, they may agree to adopt either the Law of the country of the buyer or
that of the seller. The traders are normally reluctant to leave the determination of the
rights and obligations by implications under the legal system of either’s country. They
51
prefer to make explicit provisions regarding the rights and obligations by including a
set of detailed and precise terms and conditions in their contract.
EXPORT OF SAMPLES\GIFTS:
Exports of bonafide trade and technical samples of freely exportable items shall be
allowed without any limit. Goods including edible items of value not exceeding Rs.
100000/- in a licensing year, may be exported as a gift. However items mentioned as
restricted for exports in ITC (HS) shall not be exported as a gift without a
licence/certificate/permission, except in the case of edible items.
In order to avoid disputes, it is necessary to enter into an export contract with the
overseas buyer. For this purpose, export contract should be carefully drafted
incorporating comprehensive but in precise terms, all relevant and important
conditions of the trade deal.
There should not be any ambiguity regarding the exact specifications of goods and
terms of sale including export price, mode of payment, storage and distribution
methods, type of packaging, port of shipment, delivery schedule etc. The different
aspects of an export contract are enumerated as under:
• Period of Delivery/Shipment
• Packing, Labeling and Marking
• Terms of Payment-- Amount/Mode & Currency
• Discounts and Commissions
• Licenses and Permits
• Insurance
• Documentary Requirements
• Guarantee
• Force Majeure of Excuse for Non-performance of contract
• Remedies
• Arbitration clause
It will not be out of place to mention here the importance of arbitration clause in an
export contract Court proceedings do not offer a satisfactory method for settlement of
commercial disputes, as they involve inevitable delays, costs and technicalities. On
the other hand, arbitration provides an economic, expeditious and informal remedy for
settlement of commercial disputes. Arbitration proceedings are conducted in privacy
and the awards are kept confidential. The Arbitrator is usually an expert in the subject
matter of the dispute. The dates for arbitration meetings are fixed with the
convenience of all concerned. Thus, arbitration is the most suitable way for
settlements of commercial disputes and it may invariably be used by businessmen in
their commercial dealings.
ARBITRATION:
Arbitration clause recommended by the Indian Council of Arbitration:”All disputes or
differences whatsoever arising between the parties out of / relating to the meaning,
construction and operation or effect of this contract or the breach thereof shall be
settled by arbitration in accordance with the rules of Arbitration of the Indian Council
of Arbitration and the award made in pursuance thereof shall be binding on the
parties” (or any other arbitration clause that may be agreed upon between the parties).
The INCOTERMS was first published in 1936 --- INCOTERMS 1936 --- and it is
revised periodically to keep with changes in the international trade needs. The
complete definition of each term is available from the current publication ---
INCOTERMS 2000. Under INCOTERMS 2000, the international commercial terms
are grouped into E, F, C and D, designated by the first letter of the term, relating to the
final letter of the term. E.g. EXW—exworks comes under grouped ‘E’.
Similarly, it would be best for importers not to deal in EXW (Ex Works) which would
hold the buyer responsible for the export customs clearance, payment of export
customs charges and taxes, and other costs and risks at the seller’s end
MORE CLARIFICATION ON INCOTERMSEXW {The named place}Ex Works: Ex
means from. Works means factory, mill or warehouse, which are the seller’s premises.
EXW applies to goods available only at the seller’s premises. Buyer is responsible for
loading the goods on truck or container at the sellers premises and for the subsequent
costs and risks. In practice, it is not uncommon that the seller loads sthe goods on
truck or container at the sellers pre4mises without charging loading fee. N the
quotation, indicate the named place (sellers premises) after the acronym EXW for
example EXW Kobe and EXW San Antonio.
The term EXW is commonly used between the manufacturer (seller) and export-
trader(buyer), and the export-trader resells on other trade terms to the foreign buyers.
Some manufacturers may use the term Ex Factory, which means the same as Ex
Works.
FCA {The named point of departure} Free Carrier: The delivery of goods on truck,
rail car or container at the specified point(depot) of departure, which is usually the
sellers premises, or a named railroad station or a named cargo terminal or into the
custody of the carrier, at sellers expense. The point(depot) at origin may or may not be
54
a customs clearance centre. Buyer is responsible for the main carriage/freight, cargo
insurance and other costs and risks.
In the air shipment, technically speaking, goods placed in the custody of an air carrier
are considered as delivery on board the plane. In practice, many importers and
exporters still use the term FOB in the air shipment. The term FCA is also used in the
RO/RO (roll on/roll off) services
In the export quotation, indicate the point of departure (loading) after the acronym
FCA, for example FCA Hong Kong and FCA Seattle. Some manufacturers may use
the former terms
Free Alongside Ship: Goods are placed in the dock shed or at the side of the ship, on
the dock or lighter, within reach of its loading equipment so that they can be loaded
aboard the ship, at seller’s expense. Buyer is responsible for the loading fee, main
carriage/freight, cargo insurance, and other costs and risks In the export quotation,
indicate the port of origin(loading)after the acronym FAS, for example FAS New
York and FAS Bremen. The FAS term is popular in the break-bulk shipments and
with the importing countries using their own vessels.
Free on Board: The delivery of goods on the board the vessel at the named port of
origin (Loading) at seller’s expense. Buyer is responsible for the main carriage/freight,
cargo insurance and other costs and risks. In the export quotation, indicate the port of
origin (loading) after the acronym FOB, for example FOB Vancouver and FOB
Shanghai.
Under the rules of the INCOTERMS 1990, the term FOB is used for ocean freight
only. However, in practice, many importers and exporters still use the term FOB in the
air freight. In North America, the term FOB has other applications. Many buyers and
sellers in Canada and the USA dealing on the open account and consignment basis are
accustomed to using the shipping terms FOB Origin and FOB destination.
FOB Origin means the buyer is responsible for the freight and other costs and risks.
FOB Destination means the seller is responsible for the freight and other costs and
risks until the goods are delivered to the buyer’s premises which may include the
import custom clearance and payment of import customs duties and taxes at the
buyer’s country, depending on the agreement between the buyer and seller. In
international trade, avoid using the shipping terms FOB Origin and FOB Destination,
which are not part of the
55
Cost and Freight: The delivery of goods to the named port of destination (discharge)
at the sellers expenses. Buyer is responsible for the cargo insurance and other costs
and risks. The term CFR was formerly written as C&F. Many importers and exporters
worldwide still use the term C&F.
In the export quotation, indicate the port of destination (discharge) after the acronym
CFR, for example CFR Karachi and CFR Alexandria. Under the rules of the
INCOTERMS 1990, the term Cost and Freight is used for ocean freight only.
However, in practice, the term Cost and Freight (C&F) is still commonly used in the
air freight.
Cost, Insurance and Freight: The cargo insurance and delivery of goods to the named
port of destination (discharge) at the seller’s expense. Buyer is responsible for the
import customs clearance and other costs and risks.
In the export quotation, indicate the port of destination (discharge) after the acronym
CIF, for example CIF Pusan and CIF
Singapore. Under the rules of the INCOTERMS 1990, the term CIFI is used for ocean
freight only. However, in practice, many importers and exporters still use the term
CIF in the air freight.
Carriage Paid To: The delivery of goods to the named port of destination (discharge)
at the sellers expenses. Buyer assumes the cargo insurance, import custom clearance,
payment of custom duties and taxes, and other costs and risks. In the export quotation,
indicate the port of destination (discharge) after the acronym CPT, for example CPT
Los Angeles and CPT Osaka.
Carriage and Insurance Paid To: The delivery of goods and the cargo insurance to the
named place of destination (discharge) at seller’s expense. Buyer assumes the
importer customs clearance, payment of customs duties and texes, and other costs and
risks.
In the export quotation, indicate the place of destination (discharge) after the acronym
CIP, for example CIP Paris and CIP Athens.
56
Delivered At Frontier: The delivery of goods to the specified point at the frontier at
sellers expense. Buyer is responsible for the import custom clearance, payment of
custom duties and taxes, and other costs and risks.
In the export quotation, indicate the point at frontier (discharge) after the acronym
DAF, for example DAF Buffalo and DAF Welland.
Delivered Ex Ship: The delivery of goods on board the vessel at the named port of
destination (discharge) at sellers expense. Buyer assumes the unloading free, import
customs clearance, payment of customs duties and taxes, cargo insurance, and other
costs and risks.
In the export quotation, indicate the Port of destination (discharge) after the acronym
DES, for example DES Helsinki and DES Stockholm.
The delivery of goods to the Quay (the port) at the destination at buyers expense.
Seller is responsible for the importer customs clearance, payment of customs duties
and taxes, at the buyers end. Buyer assumes the cargo insurance and other costs and
risks. In the export quotation, indicate the Port of destination (discharge) after the
acronym DEQ, for example DEQ Libreville and DEQ Maputo.
Delivered Duty Unpaid: The delivery of goods and the cargo insurance to the final
point at destination, which are often the project site or buyers premises at seller’s
expense. Buyer assumes the import customs clearance, payment of customs duties and
taxes. The seller may opt not to insure the goods at his/her own risks.
In the export quotation, indicate the point of destination (discharge) after the acronym
DDU for example DDU La Paz and DDU N’djamena.
The seller is responsible for most of the expenses which include the cargo insurance,
import custom clearance, and payment of custom duties, and taxes at the buyers end,
and the delivery of goods to the final point of destination, which is often the project
site or buyers premise. The seller may opt not to insure the goods at his/her own risk.
In the export quotation, indicate the point of destination (discharge) after the acronym
DDP, for example DDP Bujumbura and DDP Mbabane.“E”-term,”F”-term, “C”-term
57
&”D”-term: Incoterms 2000, like its immediate predecessor, groups the term in four
categories denoted by the first letter in the three-letter abbreviation.
1. Under the “E”-TERM (EXW), the seller only makes the goods available to
the buyer at the seller’s own premises. It is the only one of that category.
2. Under the “F”-TERM (FCA, FAS, &FOB), the seller is called upon to
deliver the goods to a carrier appointed by the buyer.
3. Under the “C”-TERM (CFR, CIF, CPT, & CIP), the seller has to contract for
carriage, but without assuming the risk of loss or damage to the goods or
additional cost due to events occurring after shipment or discharge.
4. Under the “D”-TERM (DAF, DEQ, DES, DDU & DDP), the seller has to
bear all costs and risks needed to bring the goods to the place of destination.
All terms list the seller’s and buyer’s obligations. The respective obligations of both
parties have been grouped under up to 10 headings where each heading on the seller’s
side “mirrors” the equivalent position of the buyer. Examples are Delivery, Transfer
of risks, and Division of costs. This layout helps the user to compare the parties
respective obligations under each Incoterms.
You should not be happy merely on receiving an export order. You should first
acknowledge the export order, and then proceed to examine carefully in respect of
1. Items
2. Specification
3. Pre-shipment inspection
4. Payment conditions
5. Special packaging
6. Labeling and marketing requirements
7. Shipment and delivery date
8. Marine insurance
9. Documentation requirement etc.
If you are satisfied on these aspects, a formal confirmation should be sent to the buyer,
otherwise clarification should be sought from the buyer before confirming the order.
After confirmation of the export order immediate steps should be taken for
procurement/manufacture of the export goods. In the meanwhile, you should proceed
to enter into a formal export contract with the overseas buyer.
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Before accepting any order necessary homework should have been done as to
availability of the production capacity, raw material e.t.c. It would be in the interest of
the exporter to look into entering into forward contract to safeguard against exchange
rate fluctuations. Ensure that the mode of payment is also agreed upon. In case of
shipment against letter of credit, the buyer should be advised to open the credit well in
advance before effecting the shipment.
As an exporter while selling goods abroad, you encounter various types of risks. The
major risks which you have to undergo are as follows:
1. Credit Risk
2. Currency Risk
3. Carriage Risk
4. Country Risk
You can protect yourself against the above risks by initiating appropriate steps.
Credit Risks:
You can cover your credit risk against the foreign buyer by insisting upon opening a
letter of credit in your favour. Alternatively one can avail of the facility offered by
various credit risk agencies. A specific insurance cover can also be obtained from
ECGC (Exports Credit & Guarantee Corporation) to cover your country risk besides
covering credit risk.
Currency Risks:
As regards covering the currency risk, due to the exchange rate fluctuations, you can
request your banker to book a forward contract.
Carriage Risk:
The carriage risk can be covered by taking an appropriate general insurance policy.
Country Risk:
ECGC provides cover to protect the exporter from country risks. A detailed procedure
how an exporter can get himself protected against the above risks are given in separate
chapters later.
EXPORT DOCUMENTS
Any export shipment involved various documents required by various authorities such
as customs, excise, RBI, Inspection and according depending upon the requirements,
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there are categorized into 2 categories, namely commercial documents and regulatory
documents.
A. Commercial Documents. : -
Commercial documents are required for effecting physical transfer of goods and their
title from the exporter to the importer and the realisation of export sale proceeds. Out
of the 16 commercial documents in the export documentation framework as many as
14 have been standardised and aligned to one another. These are performa invoice,
commercial invoice, packing list, shipping instructions, intimation for inspection,
certificate, of inspection of quality control, insurance declaration, certificate' of
insurance, mate's receipt, bill of lading or combined transport document, application
for certificate origin, certificate of origin, shipment advice and letter to the bank for
collection or negotiation of documents. However, shipping order and bill of exchange
could not be brought within the fold of the Aligned Documentation System,
14.Description of goods giving details of quantity, rate and total amount in terms
of internationally accepted price quotation.
15.Signature of the exporter with date.
Significance of Commercial Invoice
The certificate is issued by the inspection authority such as the export inspection
agency. This certificate states that the goods have been inspected before shipment, and
that they confirm to accepted quality standards.
Goods in transit are subject to risk of loss of goods arising due to fire on ship,
perils of sea, theft etc. marine insurance protects losses incidental to voyages and in
land transportation. Marine insurance policy is one of the most important document
used as collateral security because it protects the interest of all those who have
insurable interest at the time of loss. The exporter is bound to insure the goods in case
of CIF quotation, but he can also insure the goods in case of FOB contract, at the
request of the importer, but the premium payment will be made by the exporter. There
are different types of policies such as
SPECIFIC POLICY:
This policy is taken to cover different risks for a single shipment. For a regular
exporter, this policy is not advisable as he will have to take a separate policy every
time a shipment is made, so this policy is taken when exports are in frequent.
• Floating Policy: This is taken to cover all shipments for some months. There is no
time limit, but there is a limit on the value of goods and once this value is crossed by
several shipments, then it has to be renewed.
• Open Policy: This policy remains in force until cancelled by either party i.e.
insurance company or the exporter.
•Open Cover Policy: This policy is generally issued for 12 months period, for all
shipments to one or more destinations. The open cover may specify the maximum
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value of consignment that may be sent per ship and if the value exceeded, the
insurance company must be informed by the exporter.
• Insurance Premium: Differs upon product to product and a number of such other
factors, such as, distance of voyage, type and condition of packing, etc. Premium for
air consignments are lowered as compared to consignments by sea.
1. It facilitates quick clearance of goods from the customs at the port destination and
therefore, the importer gets quick delivery of goods.
2. The importer is assured that the goods imported are not banned for imported in his
country.
Significance of Consular Invoice for the Customs Office
1. The goods produced in a particular country are subject to’ preferential tariff rates
in the foreign market at the time importation.
2.The goods produced in a particular country are banned for import in the foreign
market.
Types of the Certificate of Origin
• Sometimes, in order to ensures that goods bought from some other country have
not been reshipped by a seller, a certificate of origin IS required.
Bill of Lading: The bill of lading is a document issued by the shipping company or its
agent acknowledging the receipt of goods on board the vessel, and undertaking to
deliver the goods in the like order and condition as received, to the consignee or his
order, provided the freight and other charges as specified in the bill have been duly
paid. It is also a document of title to the goods and as such, is freely transferable by
endorsement and delivery.
4.Stale Bill of Lading: - A bill of lading that has been held too long before it is
passed on to a bank for negotiation or to the consignee is called a stale bill of
lading.
5.Freight Paid Bill of Lading: - When freight is paid at the time of shipment or
in advance, the bill of landing is marked, freight paid. Such bill of lading is
known as freight bill of lading.
6.Freight Collect Bill of lading :- When the freight is not paid and is to be
collected from the consignee on the arrival of the goods, the bill of lading is
marked, freight collect and is known as freight collect bill of lading
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1. It is a contract between the shipper and the shipping company for carriage of
the goods to the port of destination.
3. A clean bill of lading certifies that the goods received on board the ship are in
order and good condition.
5.The exporter can claim damages from the shipping company if the goods are
lost or damaged after the issue of a clean bill of lading.
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It is useful to the shipping company for collection of transport charges from the
importer, if not collected from the exporter.
Airway Bill: An airway bill, also called an air consignment note, is a receipt issued by
an airline for the carriage of goods. As each shipping company has its own bill of
lading, so each airline has its own airway bill. Airway Bill or Air Consignment Note is
not treated as a document of title and is not issued in negotiable form.
Importance of Airway Bill: It is a contract between the airlines or his agent to carry
goods to the destination. It is the document of instructions for the airline handling
staff. It acts as a customs declaration form. Since, it contains details about freight it
also represents freight bill.
Shipment Advice to Importer:- After the shipment of goods, the exporter intimates
the importer about the shipment of goods giving him details about the date of
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shipment, the name of the vessel, the destination, etc. He should also send one copy of
non-negotiable bill of lading to the importer.
Packing List: The exporter prepares the packing list to facilitate the buyer to check
the shipment. It contains the detailed description of the goods packed in each case,
their gross and net weight, etc. The difference between a packing note and a packing
list is that the packing note contains the particulars of the contents of an individual
pack, while the packing list is a consolidated statement of the contents of a number of
cases or packs.
Bill of Exchange: The instrument is used in receiving payment from the importer.
The importer may prefer bill of exchange to LC as it does not involve blocking of
funds. A bill of exchange is drawn by the exporter on the importer, to make payment
on demand at sight or after a certain period of time.
• B/E is a means to collect payment.
• B/E is a means to demand payment.
• B/E is a means to extent the credit.
• B/E is a means to promise the payment.
• B/E is an official acknowledgement of receipt of payment.
• Financial documents perform the function of obtaining the finance collection of
payment etc.
• 2 sets. Each one bearing the exclusion clause making the other part of the draft
invalid.
• Sight B/E.
• Usance B/E.
• It is known as draft.
• Immediate payment – Sight draft.
• There are two copies of draft. Each one bears reference to the other part A&B. when
any one of the draft is paid, the second draft becomes null and void.
B Auxiliary Documents: These documents generally form the basic documents based
on which the commercial and or regulatory documents are prepared. These documents
also do not have any fixed formats and the number of such documents will wary
according to individual requirements.
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1. Proforma Invoice: The starting point of the export contract is in the form of offer
made by the exporter to the foreign customer. The offer made by the exporter is in the
form of a proforma invoice. It is a quotation given as a reply to an inquiry. It normally
forms the basis of all trade transactions.
3. Declaration of Insurance: Where the contract terms require that the insurance to
be covered by the exporter, the shipper has to give details of the shipment to the
insurance company for necessary insurance cover. The detailed declaration will cover:
• Clean Mate's Receipt: - The Commanding Officer of the ship issues a clean mate's
receipt, if he is satisfied that the goods are packed properly and there is no defect in
the packing of the cargo or package.
• Qualified Mate's Receipt: - The Commanding Officer of the ship issues qualified
mate's receipt, when the goods are not packed properly and the shipping company
does not take any responsibility of damage. to the goods during transit.
Bill of lading, which is the title of goods, is prepared on the basis of the mate's receipt.
It enables the exporter to clear port trust dues to the Port Trust Authorities.
Obtaining Mate's Receipt The goods are then loaded on board the ship for which the
Mate or the Captain of the ship issues Mate's Receipt to the Port Superintendent.
Shipping Instructions: at the pre-shipment stage, when the documents are to sent to
the CHA for customs clearance, necessary instructions are to be give with relevance to
Bank letter for negotiation of documents: at the post shipment stage, the exporter
has to submit the documents to a bank for negotiation or discounting or collection for
forwarding the same to the customer and also for realization of export proceeds. The
bank letter is the set of instruction for the bank as to how to handle the documents by
them and by the bank at the buyer’s country which may include
1. Shipping Bill: Shipping bill is the main customs document, required by the
customs authorities for granting permission for the shipment of goods. The cargo is
moved inside the dock area only after the shipping bill is duly stamped, i.e. certified
by the customs. Shipping bill is normally prepared in five copies :-
1. Customs copy.
2. Drawback copy.
3. Export promotion copy.
4. Port trust copy.
5.Exporter's copy.
1. Drawback Shipping Bill: - Drawback shipping bill is useful for claiming the
customs drawback against goods exported.
2. Dutiable Shipping Bill: - Dutiable shipping bill is required for goods which are
subject to export duty.
3. Duty-free Shipping Bill: - Duty-free shipping bill is useful for exporting goods on
which there is no export duty.
In order to facilitate easy recognition and quick processing, following colours have
been provided to different kinds of shipping bills :
Types of goods By Sea By Air
a) Shipping bill is the main customs document, required by the customs authorities for
granting permission for the shipment of goods.
b) The cargo is moved inside the dock area only after the shipping bill is duly
stamped, i.e. certified by the customs.
c) Duly endorsed shipping bill is also necessary for the collection of export incentives
offered by the government.
d) It is useful to the Customs Appraiser while determining the actual value of goods
exported.
2. A.R.E. 1 form (Central excise): this form ARE-1 is prescribed under Central
Excise rules for export of goods. In case goods meant for export are cleared directly
from the premises of a manufacturer, the exporter can avail the facility of exemption
from payment of terminal excise duty. The goods may be cleared for export either
under claim for rebate of duty paid or under bond without payment of duty. In both
the events the goods are to be cleared under form A.R.E-1 which will show the details
of the goods being exported, the relevant duty involved and if the duty is paid or
goods being cleared under bond, details of goods being sealed either by the exporter
or Central Excise officials etc.
above forms.
5. Vehicle Ticket/Cart Ticket/Gate Pass etc.: before the goods are being taken
inside the port for loading, necessary permission has to be obtained for moving the
vehicle into the customs area. This permission is granted by the Port Trust Authority.
This document will contain the detail of the export cargo, name and address of the
shippers, lorry number, marks and number of the packages, driver’s license details etc.
6. Bank Certificate of Realisation: this is the form prescribed under the Foreign
Trade Policy, wherein the negotiating bank declares the fob value of exports and for
the date of realization of the export proceeds. This certificate is required fore
obtaining the benefit under various schemes and this value of fob is reckoned as fob
value of exports.
D. Other Document:
1 Black List Certificate: it certifies that the ship/aircraft carrying the cargo has not
touched the particular country on its journey or that the goods are not from the
particular country. This is required by certain nations who have strained political and
economical relations with the so called “Black Listed Countries”.
3 Freight Payment Certificate: in most of the cases, the B/L or AWB will mention
the transportation and other related charges. However if the exporter does not want
these details to be disclosed to the buyer, the shipping company may issue a separate
certificate for payment of the freight charges instead of declaring on the main
transport documents. This document showing the freight payment is called the freight
certificate.
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Customs Invoice: this is required by the countries like Canada, USA for imposing
preferential tariff rates.
Legalized Invoice: this is required by the certain Latin American Countries like
Mexico. It is just like consular invoice, which requires certification from Consulate or
authorised mission, stationed in the exporter’s country.
Special Provision under Uniform Customs and practice for Documentary Credit UCP-
500, for Commercial Invoice:
1 Article-37: Commercial Invoice
2 Must appear on their face to be issued by the beneficiary named in the credit.
3 Must be made out in the name of the applicant.
4 Need not be signed
5 Banks may refuse Commercial Invoice issued for amounts in excess of the amount
permitted by the credit except otherwise stated.
6 The description of the goods in the commercial invoice must correspond with the
description of the credit. In all other documents the goods may be described in the
General in general terms not inconsistent with description in the credit. In all
documents goods may be described in general terms not inconsistent with the
Description of the goods in the credit.
Pre-Shipment Documents:
1 Shipping bill.
2 Export order/Sales contract/Purchase order.
3 Letter of Credit
4 Commercial invoice.
5 Packing list.
6 Certificate of origin.
7 Guaranteed Remittance (G.R/SDF/PP/SOFTEX),or SDF.
8 Certificate of Inspection.
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2 SDF FORM: to be completed in duplicate and appended to the Shipping Bill for
export declare to the customs offices notified by the Central Government which have
introduced EDI system for processing Shipping Bill.
1 Name and address of the authorised dealer through whom proceeds of exports have
been or will be realized should be specified in the relevant column of the form.
3 It should be clearly indicated in the form whether the export is on ‘outright sale
basis’ or ‘on consignment basis’ and irrelevant clauses must be stuck out
4 Under the term ‘analysis of full export value’ a break up of full export value of
goods under F.O.B value, freight and insurance should be furnished in all cases,
irrespective of the terms of contract.
5 All documents relating to the export of goods from India must pass through the
medium of an authorised dealer in foreign exchange in India within 21 days of
shipment.
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6 The amount representing the full export value of goods must be realized within six
months from date of shipment.
(a) PP forms are to be first presented to an authorised dealer for countersignature. The
form will be countersigned by the authorised dealer only if the post parcel is
addressed to his branch or correspondent bank in the country or import. The
concerned overseas branch or correspondent is to be instructed to deliver the post
parcel against payment or acceptance of relevant bill, as the case may be.
(b) For post parcel addressed directly to the consignee, the authorised dealer will
countersign the form, provided —
(i) an irrevocable letter of credit for the full value of export has been opened in favour
of exporter and has been advised through authorised dealer concerned; or
(ii) the full value of shipment has been received in advance by the exporter through an
authorised dealer; or
(iii) On receipt of full value of shipment declared on this form the authorised dealer
will forward to RBI the duplicate copy along with the certified copy of shipper’s
invoice.
(iv) The authorised is satisfied on the basis of standing and track record of the
exporter and arrangements made for realisation of the export proceed that he cold do
so. If the authorised dealer is not satisfied about standing etc. of the exporter, the
application is rejected. No reference is entertained by the Reserve Bank in such cases.
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(c) The original PP form countersignature will be returned to the exporter by the
authorised dealer and the duplicate will be retained by him. Original PP form
should then be submitted to the post office along with the parcel. The post office
through the goods have been dispatched will forward the original to RBI.
The export of computer software may be undertaken in physical form i.e.
software prepared on magnetic tape and paper media as well as in non-physical
form by direct data transmission through dedicated earth stations/satellite links.
The export of computer software in physical form is subject to normal
declaration on GR/PP form and regulations applicable there to will also be
applicable to such exports. However, export of non-physical form should be
declared on SOFTEX Form. Besides computer software, export of video / T.V.
Software and all other types of software products / packages should also be
declared on the SOFTEX forms. Since export of software is fraught with many
risks and special guidelines have been framed for handling such exports.
OCTROI
Octroi is the local tax levied by the civic body on goods entering into the city.
There are three procedures for clearing goods which are meant for export.
Marine Insurance Policy is one of the most important document used as collateral
security because it protects the interest of all those who have insurable interest at the
time of loss. The exporter is bound to insure the goods in case of CIF quotation, but he
can also insure the goods in case of FOB contract, at the request of the importer, but
the premium payment will be made by the exporter.
Specific Policy: This policy is taken to cover different risks for a single shipment. For
a regular exporter, this policy is not advisable as he will have to take a separate policy
every time the shipment is made, so this policy is taken when exports are infrequent.
Floating Policy: This policy is taken to cover all shipments for same months. There is
no time limit, but there is a limit on the value of goods and once this value is crossed
by several shipments, then it has to be renewed.
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Open Policy: This policy remains in force until cancelled by either party, i.e.
insurance company or the exporter.
Open Cover Policy: This policy is generally issued for 12 months period, for all
shipments to one or all destinations. The open cover may specify the maximum value
of consignment that may be sent pre ship and if the value exceeded, the insurance
company must be informed by the exporter.
Insurance Premium: Differs upon from product to product and a number of other
such factors, such as, distance of voyage, type and condition of packing etc. Premium
for air consignments are lower as compared to consignments by sea.
The Insurance Policy Normally Contains:
For monitoring pre-shipment inspection, Govt. of India has set up Export Inspection
Council (EIO) The EIC has set up 5 Export Inspection Agencies (EIA). The EIAs are
located one each at Mumbai, Calcutta, Cochin, Delhi and Chennai. The EIAs has a
network of nearly 60 offices throughout India. Each EIA is given certain jurisdiction
for inspection purpose. For instance, EIA of Mumbai has jurisdiction over
Maharashtra, Gujarat and Goa.
Systems of Quality Control:
For the purpose of pre-shipment inspection, EIC has recognized three systems of
inspection namely:
1.Self-Certification
2.In-Process Quality Control
3.Consignment Wise Inspection
Self-Certification:
Under this system, complete authority is given to the manufacturing units to certify
their own products and issue certificates for export. The manufacturing units which
have been recognized under this scheme have to pay a nominal yearly fee at the rate
of 0.1% of FOB price subject to minimum of Rs.2,500/- and maximum of Rs.1 lakh in
a year to the concerned EIA
Fumigation: For ensuring that no insects or bacteria are carried with the export certain
types of export products are fumigated before shipment. The fumigation is carried out
in the port of shipment.
The shipment of export cargo has to be made with prior permission of, and under the
close supervision of the custom authorities. The goods cannot be loaded on board the
ship unless a formal permission is obtained from the custom authorities. The custom
authorities grant this permission only when it is being satisfied that the goods being
exported are of the same type and value as have been declared by the exporter or his
C&F agent, and that the duty has been properly determined and paid, if any.
Storing the Goods in the Sheds: After securing the carting order, the goods are
moved inside the docks. The goods are then stored in the sheds at the docks.
Examination of Goods: The exporter’s agent then approaches the customs examiner
to examine the goods. The customs examiner examines the cargo and records his
report on the duplicate copy of the shipping bill. The customs examiner then sings the
“Let Export Order”
Let Export Order: The Let Export Order is then shown to the Customs Preventive
Officer, along with other documents. The CPO is in charge of supervision of loading
operations on the vessel. If CPO finds everything in order, he endorses the duplicate
copy of shipping bill with the “Let Ship Order” This order helps the exporter/shipper
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Loading Goods: The goods are then loaded on the ship. The CPO supervises the
loading operations. After loading is completed, the Chief Mate (Cargo Officer) of the
ship issues the “Mate’s Receipt”. The Mate’s Receipt is sent to the Port Trust Office.
The C&F agent pays the port trust dues and collects the mate’s receipt. The C&F
agent then approaches the CPO and gets the certification of shipment of goods on AR
Forms and other documents
Obtaining Bill of Lading: The Mate’s Receipt is then handed over to the shipping
company (on whose vessel the goods are loaded). The shipping company issues bill of
lading. The Bill of Lading is issued in:
Preparing of Invoice: The export goods have to be cleared from the factory under
invoice. The invoice contains details like name of the exporter, value of goods, excise
duty chargeable, etc. The invoice is to be prepared in triplicate. In case of export
under Bond, the invoice should be marked as “For Export without payment of duty”.
In addition to the invoice, a prescribed for ARE 1 has to be filed in by exporter.
Filling up of ARE-1 form (Annexure-20): The ARE-1 form needs to be filled in four
copies. A fifth (Optional) may be filled in by the exporter, which can be used at the
time of claiming other export incentives. The ARE-1 copies have distinct color for the
purpose of verification and processing.
• The inspector returns the original and duplicate copies to the exporter
• The triplicate copy is sent to officer (ACCE or Maritime Commissioner
(MCCE) to whom bond was executed or letter of undertaking (LUT) was given.
This copy can also be handed over to the exporter in a tamper proof sealed
cover to be submitted to ACCE/MCCE.
• The 4th copy will be retained by the excise inspector.
• The 5th copy is also handed over to the exporter.
• At the time of export, original, duplicate and the 5th copy (optional) will be
submitted to customs officer. The customs officer will examine these copies
and then export will be allowed.
• The customs officer will then make endorsement of export on all copies of
ARE-1. He will cite shipping bill number and date and other particulars of
export on ARE-1.
• The original copy and quintuplicate (optional) will be returned to the exporter.
The duplicate copy will be sent directly to the ACCE\MCCE i.e. excise officer
with whom bond was executed will get 2 copies, one from RSCE (or excise
inspector) when goods are cleared from factory and other Custom Officer after
export. This will enable him to keep track to ensure that all goods cleared from
factory or warehouse without payment of duty are actually exported. In case of
export after payment of duty, under claim of rebate, the basic procedure is same
as above, except that the triplicate copy (by excise inspector) and duplicate
copy(by customs officer)will be sent to the officer to whom rebate claim is
filed. If claim of rebate is by electronic submission, these copies well be sent to
excise rebate audit section at the place of export.
7 Refund or Release of Bond: The exporter should make an application to the excise
officer for refund or release of bond. The application must be supported by original
copy of ARE-1 form. The excise officer crosschecks the original copy of ARE-1 form
and the duplicate and triplicate copies of ARE-1 form, which he had received earlier.
If the copies match, then refund is given or the bond is released.
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Clearance of goods to docks: If the goods meant for export is of a small quantity
which may not be sufficient to make one full container, the cargo is said to be less
than container load (LCL) cargo. Such cargo has to be taken to the docks where the
goods will be consolidated (combining the cargo of other exporters to make up
quantity for a full container) by the agent and loaded into a container. Here the
examination of the cargo is done at the docks.(There are also inland container depots
approved by the customs where the goods can be consolidated and stuffed into the
container by the agent under the supervision of the customs officer)
If the goods meant for export is of sufficient quantity to make up a full container, the
exporter has the option to take the goods to the docks and get them examined and
stuffed into a separate container. An exporter gets the benefit on the freight amount
for a full container. (Generally called box rate)
Alternatively, he can have a container allotted to him and get the same to his Mills
Premises. The goods meant for exports can be stuffed into the container under the
supervision of the regional Central Excise Authority. Here the exporter has to
1. Obtain permission from the Customs for getting the container to his mills premises
for stuffing (House Stuffing)
2. Inform the C.Excise Authorities at least 24 hours before bringing the container for
loading.
The C.Excise Authority will supervise the loading, seal the container and certify the
invoice as directed in the permission given by the custom authorities. A special Lock
is used to lock the doors of the container. Samples from the goods will be drawn, if
necessary, as required under the customs permission. Such samples will be sealed and
forwarded along with the container. The examiner in the docks may arrange to send
the sample for testing. Then the container is moved to the dock for loading. Generally,
such containerized goods are not subject to further examination in the customs. They
will be directly taken for loading.
Export good are exempted from the payment of sales tax. The exporter can claim
exemption from sales tax (on purchases or sales for export purpose), provide the
exporter is registered with the Sales-Tax Department. If the exporter is not registered
with the sales tax department, he cannot utilize the facility of sales tax exemption.
Therefore, it is necessary for the exporter to get his organization registered with sales
tax department.
I Registration Procedure
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1. Application: The exporter must apply to the Sales Tax Officer (STO) under whose
jurisdiction the head/ registered office of the exporter is located.
2. Deputation of Inspector: The STO may depute an inspector to visit the office of
the exporter and inspect:
4 Report by Inspector: The Sales Tax Inspector makes a report to the STO for
registration or otherwise. The STO verifies the inspector report. The STO, before
granting the ST Reg. Number may cal the exporter for necessary clarifications, if
required.
5 Security Bond: The STO normally requires the exporter to provide a security bond
from another firm which is registered with the Sales Tax Department.
6 Granting of Sales Tax Reg. Number: After completing necessary formalities, the
STO grants Sales Tax Reg. Number to the exporter.
II. Exemption Procedure
1.Obtaining Form ‘H’: the registered exporters need to apply to the concerned STO
for obtaining Form ’H’. the exporter should submit:
The exporter has to affix the prescribed court fee stamp on each of the Form ‘H’
issued. The STO then affixes the exporter’s company stamp on the Form ’H’.
Filling the details in Form ‘H’: After export of goods, the exporter fills the relevant
details in ‘Form H’. The Form ‘H’ needs to be prepared in triplicate.
The exporter retains one copy, and other two copies are sent to the seller from whom
the exporter purchased the goods for export purpose. The seller than sends on copy of
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Form ‘H’ to STO along with the Return of Sales Tax. The other copy is retained by
seller. The STO may issue refund order to the exporter.
METHODS OF PAYMENT
There are three methods of payment depending upon the terms of payment, and each
method of payment involves varying degrees of risks for the exporter. The methods
are:
1. Payment in advance
2. Documentary Bills
3. Letter of Credit
4. Open Account
5. Counter Trade
PAYMENT IN ADVANCE
This method does not involve any risk of bad debts, provided entire amount has been
received in advance. At times, a certain per cent is paid in advance, say 50% and the
rest on delivery. This method of payment is desirable when:
1.The financial position of the buyer is weak or credit worthiness of the buyer is not
known.
3. The seller is not willing to assume credit risk, as un the case of open account
method.
However, this is the most unpopular methods as a foreign buyer would not be willing
to pay advance of shipment unless:
DOCUMENTARY BILLS:
Under this method, the exporter agrees to submit the documents to his bank along
with the bill of exchange. The minimum documents required are
87
This method of payment has become the most popular form in recent times, it is more
secured as company to other methods of payment (other than advance payment).
A letter of credit can be defined as “ an undertaking by importer’s bank stating that
payment will be made to the exporter if the required documents are presented to the
88
The cycle of a business transaction can be said to be complete prima facie when the
buyer has received the product he desires to buy and the seller gets his payment in due
consideration of the product supplied.
While the seller is keen to receive the payment for his supplies, the buyer is equally
keen that he gets what he wants by the paying for the same.
Tough there are many merit and demerits in each of the different mode of payments
we have discussed earlier, in relation either to the buyer or to the seller, we shall now
deal in detail about the mode of payment under the Documentary Credit.
Generally, though exporters are complacent once they get the letter of Credit on hand
feeling that their payment is secured, let me say it is as much a dubious instrument as
is a safe instrument.
If one does not understand the implications of the terms and condition of a letter of
credit, the provisions under UCP 500, how co-operative are the exporter’s bank and
how good are the L/C opening bank and the reimbursement bank, he is sure to land in
trouble at once stage or another.
There are ample cases of frauds under the Letter of Credit. More and more ingenious
methods are adopted to circumvent the provisions of UPC 500 by fair or foul means.
Hence, even the safety and security under the Letters of Credit may prove to be no
better than a mirage for a man in the desert.
Hence, sufficient care is to be taken by the exporter to ensure that instrument is
received in order and the conditions of the L/C can be well complied with, and there
are no clauses of ambiguity.
The following are the step in the process of opening a letter of credit:
1 Exporter’s Request: The exporter requests the importer to issue LC in his favor. LC
is the most secured form of payment in foreign trade.
2 Importer’s Request to his Bank: The importer requests his bank to open a L/C. He
May either pay the amount of credit in his current account with the bank.
3 Issue of LC: The issuing bank issues the L/C and forwards it to its correspondent
bank with also request to inform the beneficiary that the L/C has been opened. The
issuing bank may also request the advising bank to add its confirmation to the L/C, if
so required by the beneficiary.
4 Receipt of LC: the exporter takes in his possession the L/C. He should see it that the
L/C is confirmed.
5 Shipment of Goods: Then exporter supplies the goods and presents the full set of
documents along with the draft to the negotiating bank.
6 Scrutiny of Documents: The negotiating bank then scrutinizes the documents and if
they are in order makes the payment to the exporter.
7 Negotiation: The exporter’s bank negotiates the document against the letter of credit
and forwards the export documents to the L/C opening bank or as per their
instructions.
8 Realization of payment: The issuing bank will reimburse the amount (which is paid
to the exporter) to the negotiating bank.
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9 Document to Importer: the issuing in turn presents the documents to the importer
and debits his account for the corresponding amount.
In order to have uniformity and to avoid disputes, the ICC Paris has evolved uniform
customs and practices of documentary credit (UCPDC), in short known as UCP 500
effective from 1-1-96. These are rules have been adopted by more than 150 countries.
They provide the comprehensive and practical working aid to banker, lawyer,
importers, exporters, Exporters, transporters, executives involved in international
trade.
Note: as soon as an L/C is received ensure that the same is authenticated. Meaning
that the genuineness of the L/C is certified by the Advising Bank by an endorsement
with the marking ‘AUTHENTICATED’ OR ELSE THE L/C IS OF NO USE.
There are various types of Documentary Credit opened by a bank in favour of it’s
customer depending upon the requirement. Let us talk about few types of
Documentary Credit which are in common use.
making the final payment to the beneficiary upon negotiation of the document in strict
compliance with the terms and conditions of the Letter of Credit. By this process the
final payment will be made in the beneficiary’s country by the bank which confirms
the L/C immediately upon negotiation of the documents. The beneficiary do not stand
the risk of waiting for the document to reach the opening bank who will have the final
say so to the compliance under the L/C before making the payment. Further, the
payment is also made immediately after negotiation and without recourse to the
beneficiary i.e. the payment once made by the confirmed bank cannot be revoked.
Moreover, if the importing country’s regulation changes and the money is not allowed
to be repatriated, this will eliminate the risk. On the contrary, in an unconfirmed L/C,
the negotiating bank only accepts the documents and pays for the same with recourse
i.e. if as and when the documents reach the opening bank, and the opening find some
discrepancy in the documents it may refuse to make the payment or seek clarification
for the applicant before reimbursement. The beneficiary is fully at the mercy of the
opening bank for payment. It is suggested to ask for a Confirmed L/C.
4.With Resource and Without (Sans) Resource Letter of Credit: The revocable or
irrevocable LC can further be classified as with resource and without resource LC.
With resource LC: In this type the exporter is held liable to the paying/ negotiating
bank, if the draft drawn against LC is not honored by the importer/issuing bank. The
negotiating bank can make the exporter to pay the amount along with the interest,
which it has already paid to the beneficiary.
Without (Sans) Resource LC: In the case of sans (without) resource letter of credit, the
negotiating bank has no recourse to the exporter, but only to the issuing bank or to the
confirming bank.
Normally, the negotiating bank makes advance payment to the exporter in resource of
letter of credit either by discounting bills against letter of credit or by purchasing the
bills of exchange. In such an instance, if the issuing bank fails to make payment or
dishonor the letter of credit, then the negotiating bank cannot get the money back from
the exporter or hold him liable to pay the amount. However, in the case of with
resource letter of credit, the negotiating bank can ask the exporter to pay back the
money along with certain other expenses. For the exporter, sans Resource letter of
credit is more safe as compared to With Resource letter of credit.
For e.g. an exporter enters into a contract for supply of 5000 pairs of Trousers valued
approx.US.$.75,000/- to be shipped every month. The buyer can open an L/C for a
value of US.$.75000/- with validity for 12 months stipulating shipment every month
for a value of US$. 75000/-and by adding a clause to make 12 shipment of like value
the L/C stands replenished for the full value of the L/C after each shipment is made
the documents are negotiated for which payment are also made immediately for the
value of the shipment. The main benefit in this L/C is that the buyer, the bank and the
exporter are saved from the routine of opening one L/C every month, the anxiety of
non-receipt of the L/C on time, the amendments that may be warranted every time, the
bank charges for opening number of L/Cs etc.,. A revolving Documentary Credit may
have cumulative effect i.e. if a particular shipment is not made, then the value is added
to the value for future utilization. In an automatic Revolving Credit, the bank is liable
for the total amount covering the entire shipment and where it is non-automatic its
responsibility is restricted to the value of one shipment. In automatic Revolving Credit
the value of the credit is automatically replenished by an amendment.
Where there are continuous shipments like the one stated above one can call for a
Revolving Letter of Credit.
8.Red Clause LC: The red clause LC is the usual irrevocable LC with further
authorities the negotiating bank to make advance to the beneficiary for the purpose of
processing the export goods. Thus, the red LC enables the exporter to obtain packing
credit facility for the purpose of processing the goods. It is called a red-cause LC
because it is generally printed/ typed in red ink.
9.Green Clause LC: The Green LC in addition to permitting packing credit advance
also provides for the storing facilities at the port of shipment. Green LCs is
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Documentary LC: Most of the L\C is documentary L\C. Payment is being made by
the bank against delivery of the full set of documents as laid down by the terms of
credit. The important documents required to be submitted by the exporter under
documentary LC includes the following:
A letter of credit may call for some or most of the above documents and may also call
for some other documents specific to the shipment.
1 the name of the Bank issuing the Documentary Credit.(The L/C OpeningBank)
2 the name and address of the buyer on whose behalf the credit is Issued.(The
Applicant)
3 the name and address of a bank in the country of the seller the credit through Whom
the L/C is to be advised to the seller.
4 The name and address of the Seller (Beneficiary)
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5 The Maximum Value the opening bank undertakes to pay to the Beneficiary.
6 The date of issue of the credit.
7 The Expiry Date of the L/C
8 The Validity Date for shipment.
9 The Details of the product to be shipped.(Description)
10 Details of document required for claiming the payment from the Opening bank.
11 The name and address of the bank authorized to negotiate the documents.
12 The Reimbursement Clause.
Cover Credit Risk by Transparent Overseas and register this export
unit in ECGC- There is more than 40 organizations covering the credit risk, all the
world over. In India, we have Export Credit Guarantee Corporation of India Limited
to cover export credit risks. This is a government of India enterprise, with its Head
office located in Mumbai, under the administrative control of the Ministry of
Commerce. Board of Directors representing Government, Banking, Insurance, Trade
and Industry manages this organization Transparent Overseas registered in the ECGC
(Export Credit Guarantee Corporation of India Limited).
Types of Cover issued by ECGC: They are broadly divided into four groups:
1. Standard Policies: They are ideally suitable to exporters to
cover payment risks involved in exports exports on short-term
credit basis.
Special Policies, beside the risks covered under Standard policies, are issued by
ECGC to meet the specific requirements of export transactions.
There will be no foreign exchange risk in case invoice is made in Indian rupees. In
such a case, the importer will be subjected to foreign exchange fluctuation risk.
Commercial Risks
Political Risks
1 Imposition of restrictions by the Govt. of the buyer’s country or any government
action which may block or delay the transfer of payment made by the buyer.
2 War, civil war, revolution or civil disturbances in the buyer’s country
3 New import restrictions or cancellation of a valid import licence
4 Interruption or diversion of voyage outside India resulting in payment of additional
freight or insurance charges which cannot be recovered from the buyer.
5 Any other cause of loss neither occurring outside India nor normally insured by
general insurers and beyond the control of both the e porters and the buyer.
Shipments Covered
The Standard Policy is meant to cover all the shipments that may be made by an
exporter during a period of 24 months ahead. The policy cannot be issued for selected
shipments, selected buyer or selected markets. For specific requirements an exporter
can opt for different policy from the various services offered by the corporation
Exclusions:
Shipments made against advance payments received or shipments against confirmed
letters of credit which has the confirmation from the bank in India may be excluded.
However, shipments against confirmed L/C may be covered for political risks only.
The premium for cover under political risks will be less than that under the
comprehensive policy. ECGC may also agree to exclude certain items if the exporter
is dealing in different distinct products.
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(4) Licence for jobbing, repairing etc. for re- export. (5) Licence under export
production programme. (6) Advance Release Order. (7) Back to Back Inland Letter
of Credit.
Export Incentives
• Duty Exemption
• Duty Drawback Scheme
• DFRC (Duty free replenishment certificate)
• DEPB( Duty entitlement pass book)
• Deemed Exports
Export Production Units
• Export Oriented Unit (EOU)
• Special Economic Zones (SEZ)
• Software Technology Parks (STP)
• Electronic Hardware Technology Parks (EHTP)
Cash subsidies
• Marketing development assistance
• Air freight subsidy
• Spices export promotion scheme
• Jute externel marketing assistance
• Financial assistance scheme agriculture &meat exports
• Financial assistance to marine products exports
Fiscal incentives
• Exemption from payment of central excise duty & simplified procedure for
clearance.
• Exemption from sales tax
• Exemptions & deductions under income tax act,1961.
• Duty draw back Scheme (DDS)
• Cash Compensatory Support ( CCS )
• International Price Reimbursement Scheme (IPRS)
Import control regime
• 1956-57, restrictions on imports started as lot of imports were there as such gov even
had to import food grains for self fulfillment
• Imports were classified into
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since independence. But several international factors pushed up the price of petroleum
product, steel, fertilizers etc. results low magnitude of trade balance.
Year Import Export Trade (Cr.) (Cr.) Bal.(Cr.) Significant increase in export during
1974-79 5540 4730 -810 every year of this period.Export of coffee,tea,cotton fabrics
etc.recorded substantial increase in this period. But,Janta Government followed policy
of haphazard import liberalization results decline trade balance from 1977-78. Decline
in POL imports was more than 1980-85 14,986 9051 -5935 by a big hike in non-POL
imports as a consequence of import liberalization. Consequently, huge trade balance.
Year Import Export Trade (Cr.) (Cr.) Bal.(Cr.) Huge trade balance compelled the
1985-90 28,874 18,033 -10,841 government to approach the World Bank/IMF for
loan. The government was also forced to apply brakes on the licensing policy of
imports. In 1990-91,push was given to 1990-92 45,522 38,300 -7222 export,but as a
consequence of Gulf war government failed to curb imports. In1991-92, government
introduced number of measures in trade policy allowing exim scripts,abolishing cash
compensatory support(CCS) schemes as also a two-step devaluation of the rupee,but
fail to boost up export.
Year Import Export Trade (Cr.) (Cr.) Bal.(Cr.) In 1992-01,slow down in exports due
to- 1992-01 140740 118252 -22,488
•Depressed nature of world markets.
•Saturation of developed countries market for electronic goods which are dynamic
export sectors.
•Increased protectionism by industrialised countries in area of textile and clothing.
•Increasing competition from China & Taiwan.
•India underestimated the impact South- East Asian crisis
•Non-Tarrif barriers have been created by developed counties to slow down Indian
exports.
•In 2000-01 export was largely due to rupee depreciation along with further trade
liberalization,more openness to foreign investment in EOU sectors ike IT.
Year Import Export Trade (US (US Bal.(US $million) $million) $million) Rise in
imports in 2002-03 was broadly 2002 –03 65422 52512 -12910 based on oil
imports,food &allied products(edible oil),capital goods. Exim policy 2003-04gave
massive thrust to exports by 2003-04 80177 64723 -15454
•Duty free import facility for service sector upto earning 10lakh foreign exchange.
•Liberalization of Duty Exemption scheme. Besides, all
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It is said, “Nothing is perfect” and if the quite is true, I am sure that there
would be few shortcoming in this project also. Sincere efforts have been
made to eliminate discrepancies as far as possible but few would have
reminded due to limitation of the study. These are:
1. Limited scope
The survey was conducted in Firozabad thus the respondents belonged
to only region of the country. This could have brought bias into the
study.
3. Ambiguous replies
Some of the respondents gave ambiguous replies for certain questions or
omitted the responses to some of them. The interpretation of such
responses becomes difficult and could generate wrong results.
Research Methodology
The Research and Methodology adopted for the present study has been
systematic and was done in accordance to the objectives set which has been detailed
as below.
Research Definition
Research is a process in which the researcher wishers to find out the end result
for a given problem and thus the solution helps in future course of action.
According to Redman & Mory research is defined as a “Systemized effort to
gain new knowledge”.
Research Design:
According to “Claire Seltiz”, a research design is the arrangement of
condition and analysis of data in manner that aims to combine relevance to the
research purpose with economy in procedure.
Nature of Research:
Research is basically of two types.
1. Descriptive research
2. Explorative research
Secondary Data: It consists of information that already exists somewhere and has
been collected for some specific purpose in the study. The secondary data for this
study is collected from various Japanese Management books.
Questionnaire Development:
Questionnaire is the most common instrument in collecting primary
data. In order to gather primary data from viewers.
Open ended questions: It has no fixed alternatives to which the answer must
conform. Thus, respondent answer in his/her own words at any length they choose.
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Closed ended questions: Closed ended questions have no other options other than the
selecting the one that close matches the respondent’s opinion or attitude.
Multiple Questions: A multiple choice question refers to one, which provides several
sets of alternatives for the respondents’ choice.
Ranking questions: These questions are given when there are many points to be
considered and to be ranked in priority.
106
CONCLUSION
After analyzing all the aspects of the data available and giving some important
recommendations a suitable conclusion which should be derived for this study.
However, before starting the conclusion part, the objective of the research must be
kept in mind so that we can arrive at a befitting conclusion for the research problem.
The primary objective of this research was to develop a complete understanding of the
overall functioning of Transparent Overseas including the sales and distribution
network and marketing.
The data collected provided a sound base for understanding the overall organizational
set up of Transparent Overseas. By analyzing the data and the literature review,
following conclusion was inferred:
• The Sales and Distribution Network of Transparent Overseas is very strong and
almost flawless.
• Transparent Overseas had the first mover advantage when it entered the market
and it capitalized on that advantage to grab the market.
• Good Quality based operations combined with the Company’s operations add
strength to the overall presence of the Company in the International market.
• Promotional activities within every territory are under the territory office and
the officials of that office are responsible for the effectiveness and successful
implementation of these campaigns.
• Transparent Overseas has good brand image and recall in the buyer’s mind but
the most surprising thing is that when compared with other company,
Transparent Overseas lags behind in terms of brand image.
DATA ANALYSIS
AND INTERPRETATION
Particulars % Percentage
VERY GOOD
65%
GOOD
15%
AVERAGE
10%
POOR
5%
VERY POOR
5%
Transparent Overseas Performance
Very Good
Good
Average
Poor
Very Poor
Interpretation:
From the above graph it is clear that majority (65%) of the respondents said that
the performance is very good while the (15 %) of the respondents said that the
performance is good and (10%) it is average while the 5% said that it is poor &
5% said that it is very poor.
110
Q2) HOW ARE THE SALES FIGURES IN THE PRESENT PEAK SEASON
AS COMPARED TO POOJA GLASS, TIGER GLASS and GOPAL GLASS
INDUSTRY?
Particulars % Percentage
TRANSPARENT OVERSEAS
50%
POOJA GLASS
30%
TIGER GLASS
20%
GOPAL GLASS Ind.
25%
SALES FIGURE
Transparent
Overseas
Pooja Glass
Tiger Glass
Particulars % Percentage
HANDICRAFT INDUSTRIES
25%
LEATHER INDUSTRIES
10%
CHEMICAL INDUSTRIES
15%
AGRICULTURE INDUSTRIES
35%
GEMS & JEWELLARY INDUSTRIES
15%
LEATHER
INDUSTRIES
CHEMICAL
INDUSTRIES
AGRICULTURE
INDUSTRIES
GEMS &
JEWELLARY
INDUSTRIES
Interpretation:
From the above graph it is clear that majority (65%) of the respondents said that
the performance is very good while the (15 %) of the respondents said that the
performance is good and (10%) it is average while the 5% said that it is poor &
5% said that it is very poor.
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Response % Percentage
YES
95%
NO
5%
YES
NO
Particulars % Percentage
VERY GOOD
70%
GOOD
20%
AVERAGE
8%
POOR
2%
ITEMS QUALITY
VERY GOOD
GOOD
AVERAGE
POOR
Response % Percentage
YES
95%
NO
5%
YES
NO
115
116
BIBLIOGRAPHY
APPENDICES
117
Q2) HOW ARE THE SALES FIGURES IN THE PRESENT PEAK SEASON
AS COMPARED TO POOJA GLASS, TIGER GLASS and GOPAL GLASS?
o TRANSAPRENT OVERSEAS
o POOJA GLASS
o TIGER GLASS
o GOPAL GLASS INDUSTRIES
o AGRICULTURE INDUSTRIES
o GEMS & JEWELLARY INDUSTRIES