Converting Dreams Into Reality: Introducing The

Programme And Business (PART-II)

Dr. Vijaya Katti

Dean Administration (Academics)
Indian Institute of Foreign Trade
New Delhi

For Niryat Bandhu (Batch#28) (Session on 19th November 2018)

Important Steps to Export
• Step 1: Point to remember
• Step 2: Find item for export
• Step 3: Find HS Code
• Step 4: Find your item Type
• Step 5: Analyse Export Import Data
• Step 6: Find Buyer
 Step 1: Points to Remember
1. Export-Import is totally free with very limited
restriction (96% items are free items).
2. To find buyer-seller is your decision.
3. To decide product and its price-qty are your
decision
4. Products should be exported not taxes.
• Step 2: Find Item for Export :
• Step 3: Find HS Code :
• Step 4: Find your item Type :
• Step 5: Analyse Export-Import Data :

Step 2,3,4 & 5 will be explained with hands-on

database surfing with Internet.
• Step 6: Find Buyer
1. Experience
2. Business Promotion: website
3. Distributors, Dealers, Commission Agents
4. Reference
5. Visits, Exhibition, Event Participation
6. Advertise and Marketing
7. Surfing
• Step 6 (Contd..)
1. Take order
2. Find CHA (Custom House Agent)
3. Find mode of export (sea/air)
4. Find Carrier
5. Fill Shipping Bill
6. Take payment
7. Request for Bank Realization Certificate
8. Register for Export Scheme
 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
 HOW TO EXPORT
Export Selling
• Basically, there are two methods of export
selling-direct and indirect. For direct exporting,
the firm makes its own arrangements either
within the existing selling apparatus or by setting
up a separate and different department/company
to handle export transactions. In case of indirect
exporting, the firm sells through an intermediary
like merchant-exporters, Export Houses, Export
Consortia/Marketing Groups, and Trading
Corporations-Central and State.
 Contd…
Indirect Exporting
• Because of the complexities of export operations and till
such time you are well equipped, it might be worthwhile to
operate through one and/or the following different types of
intermediaries operating in India.
Merchant-Exporters
• There are several merchandising houses as distinct from
Registered Export Houses (separately discussed below)
specialising in export of groups of products to a number of
countries, and mostly operating in metropolitan cities like
Delhi, Mumbai, Calcutta and Chennai.
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
Where to Export
 How to Pick A Market

• After the compilation of national and international

data one on exports of a product(s), the exporter
should pick his market(s). He must devote his attention
to the most promising area and avoid concentration on
many markets. There are several national and
international impediments to selling or enlarging
export to certain areas. Besides, governmental
assistance might not always be available on exports to
all countries. It is always better to concentrate on a few
markets.
• A few primary considerations for picking a market are
given below.
 Political Embargo

• The countries to which there is a

political embargo on exports should
be straight away excluded from the
list of potential markets.
Non-Availability of Export Assistance

Against exports for which payment is not

received in foreign exchange, no export
assistance is permissible. Such countries which
include Bhutan should, therefore, also be
normally dropped from the list of potential
markets.
 Special Requirements

• Every market (and a country/region) has

a special requirement in terms of
product specifications, quality and a
different price edge.
• There are major opportunities for the
small to medium sized firms with
something special to offer. What is
required is a proper market assessment
in terms of special requirements.
 Product Specification

• Requirements of some markets are different in

terms of product specifications. For example,
many countries require electrical goods which
can be operated on 110 voltage current as
against 220 voltage in India.
• There are also markets where the pattern of
trade in a product is quite different.
 Distant Location

• Markets which are comparatively at a longer

distance and for which regular shipping
services are not available, not only make
adherence to delivery schedules more
difficult, but also render the goods
uncompetitive on account of higher incidence
of freight.
 Market Accessibility

• Certain markets are comparatively less accessible

in terms of import regulations such as licensing
and quota restrictions. Similarly, goods from
particular sources might be preferred under
bilateral trade or barter trade agreements as
against products from India.
• There might then be restrictions on remittances
and convertibility of currency in some countries.
These should also be normally excluded from the
list of potential areas for export.
 Preferential Treatment

• While accessibility to certain markets is

difficult, there are a few countries which
accord preferential treatment to products
from developing countries like India.
 Business Community

• In several countries the business community

comprises of Indians or Pakistanis, Sri Lankans,
Bangla Deshis, etc. who are more receptive to
our goods, they being aware of our trading
practices. There might also be no language
problem. It is, therefore, better if such
countries are selected for initial exploration of
markets.
Prepare to manage finance, payment
and risk

Set up a letter of credit, to ensure that you get

paid for your exports. Learn how to manage
foreign financial transactions and research
trade taxation; adjust your product/service
pricing to consider these. A balanced
evaluation is important, so underpin your
performance objectives and asses your
partner’s capability.
 Choose your distribution, shipping
and delivery methods
Don’t just choose the shipping method best for
your budget, but for your product. Consider
using distribution and commission agents to
help you navigate the various methods of
delivery. It is important to understand the role
of customs and export payments too in order
to export successfully
 Market Information Sources
• Export Promotion Councils/Commodity Boards (Visits,
Exhibition, Trade Fair Participation)
• Federation of Indian Export Organization (FIEO)
• Ministry of commerce: Trade Data
• Directorate General of Commercial Intelligence and Statistics
(DGCIS): Trade Data
• Indian Trade Promotion Organization (ITPO), Visits, Exhibition,
Trade Fair Participation
• Indian Institute of Foreign Trade (IIFT)
 Contd..
• Indian Embassies and High Commissions Abroad
• Chamber of Commerce and Industries
• Various International Trade Directories, Journals, Market
Survey Reports
• Business Promotion: website
• Friends/Relative/acquaintances
• Participating International Trade Fairs/Exhibitions
• International yellow Pages
• Advertise and Marketing
• Popular Websites/Export Surfing
 Relation Management
• Employee
• Agent
• CA
• CE
• Advocate
• Custom House Agent
• Logistics
• Consultant
 Strengthening Business: Availing
Government Scheme
• DGFT (Incentives: MEIS, SEIM, Advance
Authorization, DFIA, EPCG, Deemed Export
Benefits, Status Certificate)
• CBEC: Drawback, Service Tax Refund
• Ministry of MSME/Industry/Concerned
Ministry
• State Government
 Getting Export Business

• Mode of Operation
• Naming the Business
• Business Correspondence
• Arranging Start Up Documents viz. PAN, Bank Account,
IEC, RCMC etc.
• Selection of Product
• Selecting Market and Finding Prospective Buyer
• Pricing and Costing
• Sampling
• Negotiation with prospective Buyer
• Processing Export Order
 Pricing and Costing
• Manufacturing Cost
• Cost of Packaging
• Transportation Charge
• Warehousing Charges
• Cost of Inspection, Measurements
• Expenses in Custom & Central Excise
• Loading Charges
• Freight & Insurance Charges
 Contd..
• After Self Service
• Product differentiation, Uniqueness and brand image
• Frequency of Purchase
• Credit offered
• Aggressive marketing and sales promotion
• Incoterm agreed
• Risk Coverage
Negotiation with Prospective Buyer
• Knowledge, Attitude & Skill
• Avoid 3 Cs: Conflict, Controversy, Criticism
• Price: Know the Buyer’s real interest in the product
• Willingness of moderate modification/Flexibility
• Specification of delivery modality: Incoterms
• Delivery Schedule
• Port of Shipment
• Documentation
• Mode of Payment/Payment term & Condition
• Special packaging, leveling
• Pre Shipping Inspection
• Export Pricing….
 Procurement of Goods

Paying Finding

Invoicing Locating

Distributing Pricing

Receiving Ordering
Quality Control

Plan
Identify
Requirements Implement

Lessons Quality Assess

Learned Management

Continuous
improvement Measure
Monitor
Labelling, Packaging and Marking
Risk Management

Credit Currency
Risk Risk

Carriage Country
Risk Risk
(ECGC) (ECGC)
 Digital India (E-Governance)

• Electronic Importer Exporter Code (e-IEC)

• Electronic Bank Realization Certificate –17 Aug. 2012
• Mobile Application of FTP
• Online filling Application
• Digitally Signed Certificate
• Online inter-ministerial consultation
• Electronic Data Interchange (EDI)
Electronic Data Interchange (EDI)
 Ease of Doing Business
DGFT

• DGFT as a facilitation of Exports/Imports

• Citizen’s Charter (Time Schedule for Service)
• Online Complaint Registration & Monitoring
System
• Exporter Importer Profile
• E Governance Initiatives (EDI)
 Ease of Doing Business
24*7 Custom clearance

18 sea ports

17 air cargo complexes

 Ease of Doing Business
Facilitation @ Custom

• For Export • For Import

– Bill of Lading/Airway Bill – Bill of Lading/Airway Bill
– Commercial Invoice cum – Commercial Invoice cum
packaging list packaging list
– Shipping Bill/ Bill of – Bill of Entry
Export
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’.
WTO Related Issues
 Founding Members of the GATT

1. Australia 13 Lebanon
2. Belgium 14 Luxembourg
3. Brazil 15 The Netherlands
4. Burma (now Myanmar) 16 New Zealand
5. Canada 17 Norway
6. Ceylon (now Sri Lanka) 18 Pakistan
7. Chile 19 Southern Rhodesia
8. China (now Zimbabwe)
9. Cuba 20 Syria
10. Czechoslovakia 21 South Africa
11. France 22 United Kingdom
12. India 23 United States
 Emergence & Agreement establishing
of WTO

• Emergence of WTO on 1st

January 1995
The agreement
establishing WTO calls for
a single institutional
framework
Ensures a single
undertaking approach
 Basic principles of GATT/WTO

Market access
Reduction and binding of tariffs
General elimination of quantitative restrictions on imports and
exports

Non-discrimination
MFN
National treatment
 Annex 1

Annex 1A  Multilateral agreement

on trade in goods

Annex 1B  General agreement on

trade in services and
annexes

Annex 1C  Agreement on trade-

related aspects of
intellectual property
rights
Annex 1A: Multilateral agreement on
trade in goods

GATT 1994
Agreement on agriculture
Agreement on application of SPS measures
Agreement on TBT
Agreement on textiles & clothing
Agreement on TRIMS
Annex 1A: Multilateral agreement on trade in
goods (Cont’d…)

Agreement on the implementation of article VI of

GATT 1994
Agreement on pre-shipment inspection
Agreement on rules of origin
Agreement on import licensing procedures
Agreement on subsidies and countervailing
measures
Agreement on safeguards
 Annexes 1B and Annexes 1C

Annex 1B – General agreement on Trade in

Services

Annex 1C – Intellectual property and its rights -

What they imply?
 Four Modes of Supply of Services
Annexure – 1B

The services trade can be any one or a combination of:

Cross-border supply Supply from the territory of one Member

into the territory of any other Member

Consumption abroad Cross-border movement of consumers to

purchase a service abroad

Commercial presence Supply of a service via establishment of

a territorial presence

Presence of natural Entry and temporary stay of foreign

persons residents to supply a service
 Universal Coverage
Annexure – 1B (contd..)

All Services (except those provided in the exercise of

governmental authority)

Business and professional Finance and insurance

Communications Health and social

Construction Tourism

Distribution Recreation, culture, sports

Education Transport

Environment Other
 Annex 1C - TRIPS…Annexure – 1C

Sets out minimum protection to be given to each category of

intellectual property in the national laws of each WTO member.
Lays down procedures and remedies to be provided by each country
for intellectual rights enforcement.
Is a minimum standard agreement encouraging countries to provide
higher level of intellectual property protection and explicitly permits
them to do so.

Objective

To give adequate and effective protection to the intellectual property

rights to reward creative and inventiveness.

 The seven IPRs

• Copyright and related rights;

• Trademarks;
• Geographical indications, including appellation of origin
• Industrial designs;
• Patents;
• Layout-designs of integrated circuits;
• Undisclosed information, including trade secrets.
 WTO- TRADE DEFENCE MEASURES

• Anti-dumping Duties
• Countervailing Duties
• Safeguard Measures

57
 Annexes

Annex 2 - Understanding the rules and

procedures governing the settlement of dispute

Annex 3 - Trade policy review mechanism

Annex 4 – Plurilateral trade agreement

Agreement on trade in civil aircraft
Agreement on government procurement