Introduction to the Programme:

Part-1 :
Overall Coverage and Assessing
Export Readiness

Dr. Vijaya Katti

Chairperson (MDPs)
Indian Institute of Foreign Trade
New Delhi
For Niryat Bandhu Scheme (Session on 25.7.2016)
 Coverage
• What is meant by exports?
• Legal definition
• Why to export? Who can export?
• International trade scenario and India’s position
in global trade
• Product specific specialties
• Demand of pattern of specific export market
specific products
• Global market and possibilities of exports
• How to assess your export readiness?
What is meant by export?
- Legal definition
 Concept of Export
• The term export derives from the conceptual meaning as to
ship the goods and services out of the port of a country.
• The seller of such goods and services is referred to as an
“exporter” who is based in the country of export whereas
the overseas based buyer is referred to as an “importer”.
• In International Trade, “export” refers to selling goods and
services produced in the home country to other markets.
• In very simple terms, export may be defined as the selling of
goods to a foreign country. However, As per Secion2(e) of
the India Foreign Trade (Development & Regulations) Act
(1992), the term export may be defined as ‘an act of taking
out of India any goods by land, sea or air and with proper
transaction of money”.
 Why Export
- Reasons for Export
• There are many good reasons for exporting. Some of the motives of export
are given below:
• The first and the primary reason for export is to earn foreign exchange. The
foreign exchange not only brings profit for the exporter but also improves
the economic condition of the country.
• Secondly, companies that export their goods are believed to be more
reliable than their counterpart domestic companies assuming that exporting
company has survived the test in meeting international standards.
• Thirdly, free exchange of ideas and cultural knowledge opens up immense
business and trade opportunities for a company.
• Fourthly, as one starts visiting customers to sell one’s goods, he has an
opportunity to start exploring for newer customers, state-of-the-art
machines and vendors in foreign lands.
• Fifthly, by exporting goods, an exporter also becomes safe from offset lack of
demand for seasonal products.
• Lastly, international trade keeps an exporter more competitive and less
vulnerable to the market as the exporter may have a business boom in one
area while simultaneously witnessing a bust in a different area.
 Who can export?
• Any one who wants to do something different
• Anyone who wants to enter in a profit zone
• Anyone who has assessed his readiness to
enter in new field & try his luck
• Anyone who is willing to take risk
• Anyone who is constantly updating himself on
global business environment
 Planning for Export
• The organization should plan well before
exporting as to what product to be exported,
where to be exported etc. The organization
should also evaluate the export potential of a
company. The main objective of a typical export
plan should be to identify:
– The objectives of exporting
– Lists of activities to undertake to achieve those
objectives
– Mechanism for review and
– Activities to help focus on goals
 Contd..
• Successful exporters agree that your ability to become an accomplished
international traders depends largely on how you

Target new business Adopt appropriate Make every penny

areas export development count
strategy
Have some idea of
Identify and focus impact of the FTAs, Dig out every
on markets, which WTO standards, penny due to you
consume products SPS Measures, from the system,
having the same Intellectual by making best use
competitive profile Property Rights, of available
as the products you domestic opportunities,
can supply regulations on the policies and
products of interest schemes
 Contd..
• Information on the above subject is spread across
numerous websites and documents produced by
the Trade Ministries of various countries (For FTA,
GSP, Customs duty), DGFT, Customs, RBI, Central
Excise, Banks, WTO, Other international bodies.
• You do not need to understand everything
available, but how do you know what to miss.
Information Overload makes impossible demand
on your resources and time.
 Contd..
• The course you have enrolled provides straight
answers to innumerable questions asked by
the exporters as they launched, developed
and grew their business. It is a one stop access
to information scattered across 100s of
websites, manuals, and schemes : and covers
basic essentials for starting your business
endeavor.
The course on “Export & Import
Business” has 7 segments
Basic steps for Exporting

Marketing related issues (Identification of Product and Market)

WTO Related Issues

FTP related issues

Finance/Risk Management issues

Customs and Excise interface/Sales contract

Preparation & Execution of Export Business Plan
Contents of the
Program
 Session 1: Introduction to the
Programme: Overall Coverage and
Assessing Export Readiness
Coverage • What is meant by exports?
• Legal definition
• Why to export?
• Who can export?
• Seven Segments involved in course
 Contd..

• Contents of the programme :

– Different issues related with identification of
products and markets, Exports and Imports,
International Sales Contracts, Risk Management
and Finance related issues
• Foreign Trade Policy related issues
• How to assess your export readiness
(questionnaire…)
 Session 2 : Basic Steps involved and
Export Potential of States

Coverage • Basic steps involved in Exports

• Preparing the export plan.
• Applying for IEC Code – Online or Offline
• Understanding the purpose and procedure of various
Incoterms for an international trade transaction and
for decreasing the responsibilities and obligations of
exporter.
• Choosing the right shipping term keeping in mind the
mode of payment affecting the responsibilities and
obligations of exporter.
Session 2 contd… : Knowledge
about State’s export potential
Coverage • Understanding requirements of state
government.
• Rich heritage of various state – Natural
endowment
• Product specific specialties
• Demand of pattern of specific export
market in specific products.
• Tariff and non tariff barriers in
international market
Session 3: How to Access Markets

Coverage • Using trade data to identify the products with export

potential
• Adapting your product to meet government
regulations, country conditions, or preferences
• Modifying your product labeling and packaging
• Planning for installation of your product overseas
 Session 3 contd.: How to find
buyers?

Coverage • Marketing Strategy, Channel partners, Finding the

Buyers & KYC
• What is negotiation? Role of negotiation in business.
How to convert buyers " No" to 'Yes"
• How to price the product? Case study about the
pricing.
• How to draft a contract in International trade.
• Dispute Resolution in contract
 Session 4 : Sources of International
market data (Online & Offline)

Coverage • Step by step process flow and business decision

indicators
• Sources of trade data collation followed by hands on
experience of downloading the trade data
• Analyzing the data to apply it in real life business
through mock case situations
 Session 5 : INCOTERMS 2010
Coverage • INCOTERMS 2010 - Choosing the right delivery term
Session 6 : Introduction to ITC(HS) Codes.
How to get IEC Code

Coverage • What is an IEC?

• How to get an IEC online?
• How to make changes in IEC?
 Session 6 contd…
Coverage • What is the basis of classification of policy
• What is ITC (H S) CODE
• What is product grouping
• How to identify the product
• Case Study pertaining to the above
Session 7 : Free Trade Agreements

Coverage • India’s emergence into FTA league;

• Subtle variation in focus of India’s FTAs with ASEAN vis-a-vis the
Korea and Japan (CECAs);
• Actual trade Impact on India from the FTA and non-FTA
Partners;
• How this difference can be explained?
• How to analyse an FTA effectively- using a product-Specific
approach.
• Conclude
 Session 8 : Foreign Trade Policy
(2015:2020): Major highlights

Coverage 1. Foreign Trade Policy (2015-2020) – Major highlights

2. DGFT and export promotion --- Role of RA, EPCs and
RCMC
3. Interface with Airports, Ports, ICDs, SEZs, ICE GATE
Session 8 contd.. : Export: Import
Incentives

Coverage • Objectives of Export Promotion Schemes

• MEIS
• SEIS
• Duty Exemption and Remission Scheme
• EPCG
 Session 9 : SPS, TBT, NTB

Coverage • Understanding types of Non tariff barriers

• Quantitative Restrictions
• Discussing dispute settlement cases on trade
compliance
• Quality compliance
• Environmental compliance
• Social compliance
• Technology compliance
 Session : 10
Coverage • Incorporating Sales Contract term
 Session 11 : Export Documentation
Coverage • Understanding the role of trade documentation &
procedure in international trade transactions.
• Knowing what are the documentation practices &
procedure in India for making export/import from the
country.
• Understanding the commercial and regulatory
documentation practices in order to avoid any kind of
non-compliance in international documents which may
result in penalty or loss of incentives or benefits such
as duty drawback.
 Session 12 : Duty Draw Back and
claims procedures

Coverage • Excise & Customs Interface.

• Online filing of custom documents.
• Ease for doing exports.
• Factory Stuffing / Excise Sealing / Self Sealing
Permission for container stuffing.
• Various Checkpoints to avoid hassles.
 Session : 13
Coverage • Understanding Logistics Value Chain in
Export operations
 Session 14 : Letter of Credit and
implication of UCP: 600 rules
Coverage • Management of international payments to ensure full
and on-time payments
• Letter of Credit
• Implication of UCP-600 rules.
 Session 15 : Financial schemes
Coverage • Export transaction schemes of import finance.
• How to do more export business with less money
• Case study
 Session 16 : Understanding RBI guidelines

Coverage Export and Import regulations by Reserve Bank of India

 Session 17 : Currency Management
Coverage • Understanding change in value of Foreign Currencies
(USD, STG, YEN and EURO)
• Basics of Currency Risk Managements to protect
profit margin – Export-Import transactions.
 Session 18 : Risk Management

Coverage • What is Risk?

Various types of Risks in trade- specially International
trade
• Risk Management viz. Identification , quantification,
analysis, & transfer of risk
• What is credit & sovereignty risk
• Role of ECGC & Credit risk agencies in the promotion
of Export Trade
• Procedures & settlement of claims
 Session 19 : Preparation &
Execution of Export Business Plan

Coverage • How to write export business plan

• Contents of this plan
• Role of DGFT and RAs in export facilitation
• Financial & Product considerations
• Market identification
• Challenges and opportunities in selected markets
• Negotiating skill for marketing
• Economic diplomacy and role of Embassies
Session 20 : PANEL DISCUSSION
• Interaction of IIFT PROFESSORS & DGFT
OFFICIALS with all participants to sort out
various issues regarding export and import
business.
 Export Preliminaries
• Export-Import is totally free with very limited
restriction (96% items are free items)
• To find Buyers-Seller is your decision
• To decide Product and its Price-Qty are your
decision
• You must prepare Export Business Plan
 Export
• Take Order
• Find CHA (Custom House Agent)
• Find mode of export (Sea/Air)
• Find Carrier
• Fill Shipping Bill
• Take payment
• Request for Bank Realisation Certificate
• Register for Export Scheme
Marketing related issues
 Marketing – The Concept
• Marketing, in the simplest of terms, can be
defined as the process which profitably meets
the need for products.
• The more formal definition of marketing" is
that it is an organizational function and a set
of processes for creating, communicating, and
delivering value to customers and for
managing customer relationships in ways that
benefit the organization and its stakeholders.
 Contd..
• Marketing activities have been traditionally
depicted in terms of a marketing mix, which can
be defined as the set of marketing tools needed
to pursue marketing objectives. The marketing
mix consists of four broad groups, popularly
referred to as the four Ps of marketing. These are:
• Product
• Price
• Place
• Promotion
 INTERNATIONAL MARKETING
• Marketing as a concept is universal, but the markets
and behaviour of consumers vary across countries
and can be quite different. This makes it essential for
any student of international marketing to gain
knowledge in three critical areas:
• Cross-cultural knowledge
• Country/regional knowledge
• Cross-border transactions knowledge
EXPORT MARKETING-GOING GLOBAL

This section addresses the all-important question: Why

should a firm enter the international market? Some of the
more obvious reasons for firms to enter overseas markets
are:
• Profitability
• Growth
• Achieving economies of scale
• Risk spread
• Access to imported inputs
• Uniqueness of products and services
• Marketing opportunities due to life cycle
• Spreading R&D costs
 Find Buyer
• Experience
• Business Promotion: Website
• Distributor, Dealers, Commission Agents
• Reference
• Visits, Exhibition, Event Participation
• Advertise and Marketing
• Surfing
 Deciding on Pricing
• Price and Pricing Strategies
• Profit-Oriented Pricing Objectives
• Sales-Oriented Pricing Objectives
Product Specific Issues
 Find Item for Export

• Your background : Education, Job Experience,

Family Business
• Understand Export/Import Database
• Supply/Demand
• Price
• Profitability
• Example: Embroidery Machine, Pressing
Machine, spinning machine
 Find HS Code

• HS Code – Harmonised System Code

• Type in google : Find (item) HS Code
• Example : Vitrified Tiles (69071010)
• See Chapters, sub heading
• Match with your item
• Match with 8 digit HS Code
 Find your Item Type
• Three type of items : Free, Prohibitive, Restrictive
• Free : Without any restriction, no license, no
certificate
• Prohibitive: Total ban
– Example: All wild animal, animal articles including their
products and Derivatives
• Restrictive : Under specific condition
– Example : Live Horses – Kathiawari, Marwari and Manipuri
breeds
96% items are free items
ITEM Free Prohibited Restrictive Total
Total 10915 55 443 11413
Foreign Trade Policy related issues
INDIA’S FTP 2015 - 2020
• India’s new five year FTP 2015 – 2020 provides a stable
and sustainable policy environment ; overarching
framework and architecture to catalyse exports and
facilitate nay rationalise imports; generate
employment and increase value addition in the
country.
• India’s FTP – Domestic Trade Policy is anchored in the
Domestic Policy framework (symbiotic relationship and
synergy) Export Promotion Mission to be created that
would be synergised with the National Missions of
‘Make in India’; ‘Digital India’ – e Governance -
Improve the ‘ease of doing business’ index; ‘Skill India’.
INDIA’S FTP 2015 – 2020 – SUPER ORDINATE
GOAL (bHAG)
• India’s FTP Statement explains the Vision ,Mission.
Objectives and Goals ; Market and Product strategy;
Structure and Architecture to achieve the goals.
• VISION - Super Ordinate Goal – big Hairy Audacious Goal (b
HAG ) of doubling India’s exports of merchandise and
services from about USD 450 Billion in FY 2013 -14 to USD
900 Billion in FY 2019 – 2020 and to raise India’s share in
world exports from 2% to 3.5%.
• Every thing hangs together in International Trade – so
‘Whole of Government’ approach - State Governments ;
Other Central Government Ministries to be also involved
rather than just the role of Department of Commerce in the
export value chain (both up stream and down stream
activities in terms of Michael Porter’s value chain)
INDIA’S FOREIGN TRADE POLICY (FTP) 2015 –
2020
• FTP 2015 – 2020 IS THE MICRO TRADE POLICY
AND THE MACRO TRADE POLICY – INTERFACE
WITH WORLD TRADE ORGANISATION (WTO);
PTAs AND FTAs WITH VARIOUS COUNTRIES
AND TRADE BLOCKS IS THE DOMAIN OF
DEPARTMENT OF COMMERCE.
MARKET STRATEGY

• Market Strategy – Market Penetration and

Market Development (Diversification). India has
signed 5 limited PTAs ; 11 FTAs and is negotiating
17 FTAs. Some of the issues being addressed are
Rules of Origin; Inversion in Duty Structure;
Capturing preferential export data; FTA outreach
and information dissemination and setting up a
Trade Portal. Under MEIS (Chapter – 3 – Export
Reward Scrips), countries have been grouped into
three categories – A – Traditional Markets ; B –
Emerging & Focus Markets; C – Other Markets.
Contd..
• NAFTA Countries – USA , Canada and Mexico – negotiating
a FTA with Canada.
• European Union (EU) – negotiating a BTIA.
• Australia and New Zealand – negotiating a CECA/CEPA
• South Asia – Sri Lanka FTA and discussions with Pakistan.
• Focus on Iran.
• SE Asia under the Look/ Act East Policy – ASEAN – India
Trade in Goods/Services/ Investment Agreement.
• Future Focus on CLMV (Cambodia; Lao PDR; Myanmar;
Vietnam) and India – Myanmar – Thailand Trilateral
Highway.
Contd..

• NE Asia – Focus on China , Japan and South Korea.

• Focus on Africa ; West Asia & North Africa (WANA)
particularly UAE; Latin American and Caribbean region
- India – Chile/ Peru PTA being negotiated ; India –
MERCOSUR (Argentina , Brazil , Paraguay, Venezuela
and Uruguay) PTA already in place.
• Focus on 12 countries of Commonwealth of
Independent States (CIS) – negotiating a RTA with the
Customs Union of Russian Federation, Kazakistan and
Belarus. Connecting India with the CIS – the
International North South Transport Corridor.
PRODUCT STRATEGY

• PRODUCT STRATEGY – Focus on moving up the value

chain – Value added products (more domestic value in
sync with Make in India) – Engineering Products ;
Electronics and Drugs and Pharmaceuticals.
• Focus on labour intensive products (create
employment opportunities so that our demographic
dividend does not become a demographic disaster) –
handicrafts , leather, textiles, gems and jewellery; agro
and plantation products; marine products.
• Focus on new , innovative and high tech products and
Project Exports.
Contd..
• Move towards ‘World Class Products’- transforming
India into a manufacturing and exporting hub. Build
‘Brand India’.
• Facilitating and encouraging export of Dual use
items – Special Chemicals , Organisms, Materials ,
Equipment and Technologies (SCOMET) items –
validity of SCOMET authorisation has been extended
from 12 to 24 months to help industry to plan their
activity in an orderly manner and obviate the need to
seek re validation or relaxation from DGFT.
Contd..

• Facilitating and encouraging export of defence

items – normal export obligation period under
Advance Authorisation is 18 months which has
been extended to 24 months. A list of military
stores requiring NOC of Department of
Defence Production has been notified by
DGFT recently. A committee has been formed
to create ITC (HS) codes for defence and
security items for which industrial licenses are
issued by DIPP.
Contd..

• E – COMMERCE EXPORTS
• Goods falling in the category of handloom
products, books/periodicals, leather footwear,
toys and customised fashion garments, having
FOB value up to Rs 25,000 per consignment
(finalised using e – commerce platform) shall
be eligible for benefits under FTP. Such goods
can be exported in manual mode through
Foreign Post Offices at New Delhi, Mumbai
and Chennai.
PRODUCT STRATEGY – BOOST TO MAKE IN INDIA

• Reduced Export Obligation (EO) for domestic procurement

under EPCG scheme – specific EO under EPCG scheme in
case capital goods are procured from indigenous
manufacturers which is currently 90% of the normal EO (6
times the duty saved amount) has been reduced to 75% in
order to boost ‘Make in India’.
• Higher level of reward DCSs under MEIS for export items
with high domestic content and value addition.
• In order to encourage manufacturing of indigenous capital
goods, imports under EPCG authorisation shall not be
eligible for exemption from payment of Anti Dumping Duty,
Safeguard Duty and Transitional Product Specific Safeguard
Duty.
SYSTEMS

• Online filing of documents/applications and paperless

trade in 24 x 7 environment -:
• 70% of applications filed in DGFT relate to Chapter 3
and Chapter 4. Henceforth hard copies of applications
and specified documents under these chapters would
not be required to be submitted to the Regional
Authorities (RAs) under DGFT. Applications under
Chapter – 5 would be taken in the next phase.
• Certificates issued by C A s / Cost A s/ C S s to be
enabled to be digitally signed and uploaded in the new
system.
Contd..

• Landing documents of export consignments as proofs

for notified markets to be enabled to be digitally up
loaded by any exporter / Three , Four , Five Star
Export Houses.
• SIMPLIFICATION OF PROCEDURES /PROCESSES -:
• Under Para 2.06 of FTP only 3 mandatory documents
are required for - :
• Export of goods from India - : Bill of Lading/ Airway
Bill ; Commercial Invoice cum Packing List ; Shipping
Bill /Bill of Export.
Contd..

• Import of goods into India – Bill of Lading/ Airway Bill ;

Commercial Invoice cum Packing List ; Bill of Entry.
• Exporter Importer Profile (EIP) has been created to
upload documents and there would be no need to
submit copies of permanent records/ documents like
IEC, PAN , RCMC, Manufacturing Licence etc with each
application once uploaded.
• Online Inter Ministerial Consultations for approval of
export of SCOMET items , Norms fixation, Import and
Export Authorisations in a phased manner.
Contd..

• FORTHCOMING E – GOVERNANCE INITIATIVES -:

• Message exchange for transmission of chapter 3 export
reward Duty Credit Scrips from DGFT to Customs.
• Message exchange for transmission of Bills Of Entry
(Import details) from Customs to DGFT.
• Online issuance of Export Obligation Discharge
Certificate (EODC).
• Message exchange with CBDT for PAN.
• Message exchange with Ministry of Corporate Affairs
for CIN & DIN.
Contd..

• Facility to pay application fee using Debit/

Credit Card.
• Open API (Application Programme Interface)
for submission of IEC application.
• Mobile applications for FTP.
SKILLS
• Capacity building of the relevant stakeholders and
institutions is of utmost importance in order to fully
realise the potential of various Trade Agreements and
FTP measures. The focus areas would be as follows -:
• Training of Officers of the Export Promotion Councils
(EPCs) and Export Development Authorities.
• Establishment of a trade research/Analysis cell in these
institutions.
• Creation of an internal team for soliciting value added
inputs from stakeholders.
• Development and regular up dation of the web portals
of institutions.
Contd..

• BOOST TO ‘SKILL INDIA’ -:

• Under Para 1.08 of FTP , DGFT is implementing
Niryat Bandhu Scheme (NBS) for mentoring new
and potential exporters on the intricacies of
foreign trade through counselling , training and
outreach programmes.
• Considering the strategic significance of Small
and Medium Enterprises (SMEs) in the
manufacturing sector and employment
generation, SME Clusters have been identified for
focused interventions to boost exports.
STYLE AND SHARED VALUES

• Under para 1.07 of the FTP , DGFT Officers

have to work not as Controllers but as
Facilitators of exports / imports (Niryat
Bandhus). Focus would be on good
governance ; efficient, transparent and
accountable delivery systems.
 EASE OF DOING BUSINESS

Recent initiatives of the Govt. of India for speedy disposal of work of SEZs :-

 Work Disposal Timelines have been implemented in the SEZs across the country
w.e.f. 14.08.2014.
 Online modules have been implemented w.e.f. 01.11.2014 for more effective
digitization and online processing of applications.
 Harmonization of procedures, simplification of practices & standardization of
Forms in all SEZs has been implemented w.e.f. 28.10.2014.
 Govt. of India vide GSR(5) dated 2nd January, 2015 has issued notification allowing
dual-use of infrastructure in NPA in SEZs by both SEZ and DTA entities, by
amending Rule 11(10) of SEZ Rules, 2006.

Department of Commerce, Govt. of India 71

 International Trade Issues and Commitments
Adopt your business to benefit from the impact of WTO, Free Trade
Agreement, New trade issues. Following aspects will be covered :

III IV
How new Issues How you can
like Non Tariff use available
II
How your
Measures of Trade Policy
Various Instruments for
product can
I enter US and
Countries,
Sanitary and
Handling
How to European Imports Surge
Phyto-sanitary
benefit market at less through the use
Standards,
from the than normal of Anti
Intellectual
Indian Free duty using the
Trade schemes like
Property Rights Dumping,
and Safeguard and
Agreement GSP, or how
Geographical Countervailing
s and WTO your imports can
Indications may
Rules? benefit from Measures?
impact your
Duty Free Tariff
profitability?
Preference
Scheme?
 Incoterm
International Commerce Term
• A formalized international Term of Trade regulated by the International
Chamber of Commerce
• Specifies the responsibilities of the exporter and the responsibilities of
the importer in an international transaction
– Which tasks will be performed by the exporter
– Which tasks will be performed by the importer
– Which activities will be paid by the exporter
– Which activities will be paid by the importer
– When the transfer of responsibility for the goods will take place
• First codified by the International Chamber of Commerce in 1953. The
latest revision is dated 2000
Finance/ Risk Management
 Nuts & Bolts of Finance

I. Management of international payments, Understanding change

in value of Foreign Currencies

II. Risk management in exports – Commercial and Political Risk ,

How to do more export business with less money

III. Export Finance including Pre-Shipment & Post-Shipment

Finance, Line of Credit, RBI Guidelines, Foreign Exchange for
Individuals/Firms
IV. Export Insurance including Export Credit cum Guarantee
Corporation (ECGC) Schemes For Product Insurance, Marine
Insurance

International Trade is an endurance game of a hyper competitive nature

where every penny counts and rewards could be high for smart
entrepreneurs
 PRE-SHIPMENT FINANCE
• Financial assistance extended to the exporter prior to
the shipment of goods is termed pre-shipment
finance.
• An exporter can avail pre-shipment finance either in
the form of:
• packing credit in local currency (e.g., packing credit
in rupees), or
• pre-shipment credit for foreign currency (PCFC).
 POST-SHIPMENT EXPORT ADVANCE
• Banks give short-term finance to exporters against
the exports receivable up to 120 days. The following
are the primary types of advances:
• Exports Bills Negotiation
• Exports Bills Purchase
• Exports against Bills Sent for Collection
• Post-shipment finance is available at concessional
rate to the exporters.
 Risk Management in Export-
import Business
Commercial Risks: The risks arising from
suitability of the product for the market or
otherwise change in supply and demand
conditions and changes in price. Commercial
risks arise due to:
• (i) Lack of Knowledge
• (ii) Inability to adapt to the environment
• (iii) Different kinds of situations to be dealt with
• (iv) Greater transit time involved
 Risk Management in Export-import
Business
Cargo Risk:
• Transit disasters are an ever present hazard for
those engaged in Export-Import business.
• Every shipment runs the risk of a long list of
hazards such as storm, collision, theft, leakage,
explosion, spoilage etc. It is possible to transfer the
financial losses resulting from perils of and in transit
to professional risk bearers known as underwriters.
• As most goods are transported by marine transport,
every exporter should have an elementary
knowledge of marine insurance to get the
protection at the minimum cost.
 Sales Contract
• The major advantage of incorporation for a seller is that,
where the rules are incorporated, he will know in advance the
criteria against which the banks will examine the shipping
documents in deciding whether or not to pay under the
credit. The major advantage of incorporation for a buyer is
that he will know in advance the criteria against which the
price for the goods will be paid against tender of documents.
However, for the buyer to be under an obligation to open a
letter of credit governed by the UCP 600, the sale contract
needs to include an express condition imposing such an
obligation on the buyer. Only with such a condition in place
can the seller object if the buyer were to open a letter of
credit that is not governed by the UCP, e.g. 'Payment by
irrevocable letter of credit, incorporating UCP 600'.
 Contd..
• However, buyers may still stipulate in the
credit that certain aspects of the UCP rules are
excluded, provided of course this was laid
down in the sales contract.
Exporter’s Questionnaire
 For a proper export planning following
questions need to answered :
• Which products are selected for export development?
• What modifications, if any, must be made to adapt them for overseas markets?
• Which countries are targeted sales development?
• In each country, what is the basic customer profile ?
• What marketing and distribution channels should be used to reach customers?
• What special challenges pertain to each market (competition, cultural
differences, import controls, etc.), and what strategy will be used to address
them?
• How will the product’s export sale price be determined?
• What specific operational steps must be taken and when?
• What will be the time frame for implementing each element of the plan?
• What personnel and company resources will be dedicated to exporting?
• What will be the cost in time and money for each element?
• How will results be evaluated and used to modify the plan?
Export Readiness Assessment (ERA)
Questionnaire
For filling up this questionnaire, please register and Login at http://indiabr.com/
Contd..
Contd….
Contd..
Thank You..