MODULE - 7

RECENT TRENDS IN INDIAS FOREIGN TRADE

Institutional infrastructure for exports promotion in India

Institutions engaged in export effort fall in six distinct tier
 First tier : Department of commerce of the ministry of commerce and industry  Second tier : Deliberative and consultancy organizations  Third tier : Commodity specific organizations  Fourth tier : service institutions which facilitate and assist the exporter  Fifth tier : Government trading organizations  Sixth tier : Agencies for export promotion at state level

Export-Import Bank (EXIM Bank)

EXIM bank was established on Jan 1, 1982 for the purpose of financing, facilitating and promoting foreign trade of India. It extends finance to exporters of capital and manufactured goods, exporters of software and consultancy services and to overseas joint ventures and turnkey/construction projects abroad.

Indias trade policy

Trade policy of a country refers to the set of policies which govern the external sector of its economy. The twin objectives of Indias trade policy have been to promote exports and to restrict the level of imports to the level of foreign exchange available to the government.

Export policy - Objectives

To earn adequate foreign exchange to finance the required volume of imports. To supplement domestic demand for increasing employment opportunities. To raise unit value realization by promoting exports of value added items. To impose minimum price regulation where inter se competition is serve To impose controls when domestic availability is less than adequate.

Import policy - Objectives

To use the available foreign exchange according to national priorities. Allocate the foreign exchange that capacity utilization is maximized. To grant protection to domestic industries. To maintain price stability.

Significance of some Export Documents

1. Commercial invoice:
It contains all the information which is required for the preparation of all other documents.
Details of Product category Price charged The terms of shipment Numbers on package Name, address of both buyer and seller Name of shipping vessel The port of debarkation

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2. GR form- This form has been prescribed by the reserve bank of India under FERA to ensure that the foreign exchange receipts in respect of exports are repatriated to India. 3. Letter of Credit Through the instrument of letter of credit, the promise to pay usually made by the overseas importer is submitted by the promise to pay by bank.

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4. Bill of Exchange When a draft is drawn on a foreign bank, it is known as foreign draft or bill of exchange. A bill of exchange means collecting payment from the foreign buyer through the banking channel. 5. Shipping bill This is customs document. The shipping bill must be prepared according to the category of export goods There are 3 forms of shipping bill, namely i) Shipping bill of free goods ii) Dutiable shipping bill iii) Duty drawback shipping bill

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6. Marine Insurance Policy Its principal function is to serve as an evidence of the agreement between the insurer and the assured. 7. Bill of lading It is a document issued by shipping company acknowledging that, the goods mentioned are properly placed in a prescribed order.

EXPORT DOCUMENTS AND PROCEDURE Export documents are presented at the port of exit Include the name and address of the principals involved a full description of the goods & their declared value. It facilitates the smooth flow of goods and payments across national boundaries

Classifications of Export Documents

On the basis of the function
1. Commercial documents : include Commercial invoices Bills of exchange Bills of lading Letters of credit Marine insurance policy and certificates 2. Regulatory documents Which are required for complying with the rules and regulations governing export trade transactions such as foreign exchange regulations, custom formalities, export inspection etc

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3. Export assistance documents

Require for climbing assistance

4. Documentation required by importing countries

Required to satisfy the requirement of his government. Include certificate of origin, consular invoice, quality control etc,.

On the basis of specific requirements

1. Regulatory documents
An exporter has to fallow strictly the regulations of both the exporting country as well as that of importing country

2. Operational document
Shipping bill Commercial invoices Packing list Insurance policy

Processing of an export order

Why is an Export order processed?
An export order has to be processed to meet the requirements of materials required by the importers. Export order must be processed quickly so that the buyer can receive the material on time, as per their delivery schedule

First stage
Scrutinize the export order with reference to the terms and conditions of the contract. Ensure that contract enter according to foreign exchange regulations. Export order must specify the mode of payment.

Second stage
After export order has been confirmed, preparation for the dispatch of goods are started. A delivery note (in duplicate) containing description of the goods along with the copy of the instruction given by the importer is sent to the work manager or the factory manager. Time margin also intimated to the works manager.

Third stage
As soon as the goods have been manufactured or procured, the fallowing procedures are to be followed
1. The clearance of the excise authorities has to be obtained 2. Approach Export Inspection Agency for conducting quality control and pre-shipment inspection . 3. If the goods are dispatched to the port of shipment by railway, Railway Receipt is obtained.

Fourth stage
After goods have been despatched to the port town, the works manager send a despatch advice to the Export department. After, an application is sent to the insurance company for marine insurance cover. All formalities relation to floor price regulations, certificate of origin, consular invoice etc,.. should be completed.

Fifth stage
The clearing and forwarding agent takes delivery of the consignment from the railways and arrange its storage in the warehouse.

Sixth stage
After the shipping bill has been passed by the customs, the clearing and forwarding agent presents the port trust copy of the shipping bill to the Shed Superintendent of the port trust and obtain carting order for bringing the export cargo in the transit shed for physical examination.