IMPORT AND EXPORT PROCEDURES IN RELATION TO INDIA

A PROJECT ON INTERNATIONAL MARKETING

Submitted to:
MULUND COLLEGE OF COMMERCE

FOR THE PARTIAL FULFILLMENT OF THE DEGREE OF

MASTERS OF COMMERCE

SESSION 2013-2014

Under the guidance of: MS. ROOPALI KOTEKAR

Submitted by: RAVEENA UDASI
Roll: MUMBAI UNIVERSITY

DECLARATION

I, Raveena Udasi, student of MCom here by declared that the research

report entitled IMPORT AND EXPORT PROCEDURES IN INDIA is
completed and is m y original work.
The findings of this report is based on the data collected by me. I have
not submitted this project report to any other Universit y for the purpose of
compliance of any requirement of any examination or degree.

DATE: Raveena Udasi

M.Com Sem I
ROLL NO. 15051

CERTIFICATE
I, Prof., hereby certify that Miss Raveena Manoj Udasi ROLL. No 15051 of
Mulund College of Commerce, S. N. Road, Mulund (West), Mumbai -400080 of
M.com Part I (Business Management) has completed her project on Disaster
Management, Corporate Governance and Corporate Social Responsibilit y
during the academic year 2013 -14. The information submitted is true and
original to the best of m y knowledge.

____________________
Project Guide

_____________________
Co-coordinator

___________________
Principal

___________________
External guide

ACKNOWLEDGEMENTS
A research project is a golden
opportunit y for learning and self-development. I consider m yself very lucky and
honored to have so many wonderful people lead me through in completion of
this project.
My grateful thanks to m y Prof. Ms.
Roopali Kotekar, the Principal Dr. Mrs. Parvathy Venkatesh , the Vice-Principal
Ms. A.P. Kulkarni & m y course co-ordinator Mr. Pawar who in spite of being
extraordinaril y busy with her/his duties, took time out to hear, guide and keep
me on the correct path. I do not know where I would have been without
her/him. A humble Thank you .
I would also like to thank everyone who took active involvement in helping me
with m y project report without whom, it would not have been possible.

RAVEENA UDASI

CONTENTS
Serial

Particulars

Page No.

No.

RESEARCH METHODOLOGY AND PROBLEM

A. RESEARCH METHODOLOGY:
Research methodology is a systematic way to solve a problem. It is a science of studying
how research is to be carried out. Essentially, the procedures by which researchers go about their
work of describing, explaining and predicting phenomena are called research methodology. It is
also defined as the study of methods by which knowledge is gained. Its aim is to give the work
plan of research. The research methodology is the process where data is collected, analyzed and
interpreted in a systematically for the resolution of a problem. It has distinct characters originates
with a question or problem which requires express an idea or feeling clearly for which you need
to follow a specific plan and procedure. Research usually divided the principal problem into
more manageable sub-problems.
SOURCES OF DATA:
Primary Data: Most of the data on the case study of Wipro was collected via a friend of mine
(Mr. Sandeep Shetty) who works for the company.
Secondary Data: The data for disaster management was collected through internet.

B. RESEARCH PROBLEMS: Since collecting data from the primary sources and
research was a bit difficult, the research was focused on secondary sources like various search
engines and websites. The authenticity of the data hence thus cannot be validated. It is assumed
that the data obtained from the above mentioned sources is correct and dependable and the
analysis thus made.
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OBJECTIVE OF STUDY

The basic objective of this project was to understand the core of Disaster Management
both as a topic and as a problem across the world.

Through this project we were able to understand the different types of disaster, the phases
of a disaster, a few case studies of disasters and the major role played by the disaster
management teams.

The second objective of the project was to understand the meaning of Corporate
Governance and Corporate Social Responsibility and to dissect it with the help of a case
study of a company. For which, Wipro was chosen. The data collected was a combination
of both primary & secondary data.

CHAPTER I: INTERNATIONAL MARKETING

International Marketing can be defined as exchange of goods and services between different
national markets involving buyers and sellers.
According to the American Marketing Association, International Marketing is the multinational process of planning and executing the conception, prices, promotion and distribution of
ideal goods and services to create exchanges that satisfy the individual and organizational
objectives.

CONCEPTS OF INTERNATIONAL MARKETING

Domestic Marketing: Domestic Marketing is concerned with marketing practices within the
marketers home country.
II. Foreign Marketing: It refers to domestic marketing within the foreign country.
III. Comparative Marketing: when two or more marketing systems are studied, the subject of
study is known as comparative marketing. In such a study, both similarities and dis-similarities
are identified. It involves an analytical comparison of marketing methods practiced in different
countries.
IV. International Marketing: It is concerned with the micro aspects of a market and takes the
company as a unit of analysis. The purpose is to find out as to why and how a product succeeds
or fails in a foreign country and how marketing efforts influence the results of international
marketing.
V. International Trade: International Trade is concerned with flow of goods and services between
the countries. The purpose is to study how monetary and commercial conditions influence

balance of payments and resource transfer of countries involved. It provides a macro view of the
market, national and international.
VI. Global Marketing: Global Marketing consider the world as a whole as the theatre of
operation. The purpose of global marketing is to learn to recognize the extent to which marketing
plans and programmes can be extended world wide and the extent to which they must be
adopted.

DIFFERENCE BETWEEN DOMESTIC MARKETING AND INTERNATIONAL

MARKETING

Marketing is the process of focusing the resources and objectives of an organisation on

environmental opportunities and needs. It is a universal discipline. However, markets and
customers are different and hence the practice of marketing should be fine tuned and adjusted to
the local conditions of a given country. The marketing man must understand that each person is
different and so also each country which means that both experience and techniques obtained and
successful in one country or countries. Every country has a different set of customers and even
within a country there are different sub-sets of customers, distribution channels and media are
different. If that is so, for each country there must be a unique marketing plan. For instance,
nestle tried to transfer its successful four flavour coffee from Europe to the united states lost a
1% market share in the us. It is important in international marketing to recognize the extent to
which marketing plans and programmes can be extended to the world and the extent to which
marketing plans must be adapted. Prof.Theodore Levitt thought that the global village or the
world as a whole was a homogeneous entity from the marketing point of view. He advocated

organisation to develop standardized high quality word products and market them around the
world using standardized advertising, pricing and distribution. The companies who followed
Prof. Levitts prescription had to fail and a notable failure amongst them was Parker pen. Carl
Spiel Vogel, Chairman and CEO of the Backer Spiel Vogel Bates worldwide advertising agency
expressed his view that Levitts idea of a homogeneous world is non sensible and the global
success of Coca Cola proved that Prof. Levitt was wrong. The success of Coca Cola was not
based on total standardization of marketing mix. According to Kenichi Ohmae, Coke succeeded
in Japan because the company spent a huge amount of time and money in Japan to become an
insider. Coca Cola build a complete local infrastructure with its sales force and vending machine
operations. According to Ohmae, Cokes success in Japan was due to the ability of the company
to achieve global localisation or Glocalisation i.e. the ability to be an insider or a local
company and still reap the benefits of global operations. Think global and act local is the
meaning of Glocalisation and to be successful in international marketing, companies must have
the ability to think global and act local. International marketing requires managers to behave
both globally and locally simultaneously by responding to similarities and dissimilarities in
international markets. Glocalisation can be a source of competitive advantage. By adapting sales
promotion, distribution and customer service to local needs, Coke capture 78% of soft drink
market share in Japan. Apart from the flagship brand Coca Cola, the company produces 200
other non- alcoholic beverages to suit local beverages. There are other companies who have
created strong international brands through international marketing. For instance, Philip Morris
has made Marlboro the number one cigarette brand in the world. In automobiles, Daimler
Chrysler gained global recognition for its Mercedes brand like his competitor Bayerische. Mc
Donalds has designed a restaurant system that can be set up anywhere in the world. Mc

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Donalds customizes its menu in accordance with local eating habits.

SCOPE OF INTERNATIONAL MARKETING

International Marketing constitutes the following areas of business:Exports and Imports: International trade can be a good beginning to venture into international
marketing. By developing international markets for domestically produced goods and services a
company can reduce the risk of operating internationally, gain adequate experience and then go
on to set up manufacturing and marketing facilities abroad.
Contractual Agreements: Patent licensing, turn key operations, co production, technical and
managerial know how and licensing agreements are all a part of international marketing.
Licensing includes a number of contractual agreements whereby intangible assets such as
patents, trade secrets, know how, trade marks and brand names are made available to foreign
firms in return for a fee.
Joint Ventures: A form of collaborative association for a considerable period is known as joint
venture. A joint venture comes into existence when a foreign investor acquires interest in a local
company and vice versa or when overseas and local firms jointly form a new firm. In countries
where fully owned firms are not allowed to operate, joint venture is the alternative.
Wholly owned manufacturing: A company with long term interest in a foreign market may
establish fully owned manufacturing facilities. Factors like trade barriers, cost differences,
government policies etc. encourage the setting up of production facilities in foreign markets.
Manufacturing abroad provides the firm with total control over quality and production.
Contract manufacturing: When a firm enters into a contract with other firm in foreign country to

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manufacture assembles the products and retains product marketing with itself, it is known as
contract manufacturing. Contract manufacturing has important advantages such as low risk, low
cost and easy exit.
Management contracting: Under a management contract the supplier brings a package of skills
that will provide an integrated service to the client without incurring the risk and benefit of
ownership.
Third country location: When there is no commercial transactions between two countries due to
various reasons, firm which wants to enter into the market of another nation, will have to operate
from a third country base. For instance, Taiwans entry into china through bases in Hong Kong.
Mergers and Acquisitions: Mergers and Acquisitions provide access to markets, distribution
network, new technology and patent rights. It also reduces the level of competition for firms
which either merge or acquires.

Strategic alliances:
A firm is able to improve the long term competitive advantage by forming a strategic alliance
with its competitors. The objective of a strategic alliance is to leverage critical capabilities,
increase the flow of innovation and increase flexibility in responding to market and technological
changes. Strategic alliance differs according to purpose and structure. On the basis of purpose,
strategic alliance can be classified as follows:
i. Technology developed alliances like research consortia, simultaneous engineering agreements,
licensing or joint development agreements.
ii. Marketing, sales and services alliances in which a company makes use of the marketing
infrastructure of another company in the foreign market for its products.

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iii. Multiple activity alliance involves the combining of two or more types of alliances. For
instance technology development and operations alliances are generally multi- country alliances.

On the basis of structure, strategic alliance can be equity based or non equity based. Technology
transfer agreements, licensing agreements, marketing agreements are non equity based strategic
alliances.
Counter trade: Counter trade is a form of international trade in which export and import
transactions are directly interlinked i.e. import of goods are paid by export of goods. It is
therefore a form of barter between countries. Counter trade strategy is generally used by UDCs
to increase their exports. However, it is also used by MNCs to enter foreign markets. For
instance, PepsiCos entry in the former USSR. There are different forms of counter trade such as
barter, buy back, compensation deal and counter purchase. In case of barter, goods of equal value
are directly exchanged without the involvement of monetary exchange. Under a buy back
agreement, the supplier of a plant, equipment or technology. Payments may be partly made in
kind and partly in cash. In a compensation deal the seller receives a part of the payment in cash
and the rest in kind. In case of a counter purchase agreement the seller receives the full payment
in cash but agrees to spend an equal amount of money in that country in a given period.

GOVERNMENT POLICY AND PROCEDURES:

Government policy and procedures in India are extremely complex and confusing. Swift and
efficient action is a pre-requisite for globalization- which sadly missing. The procedures and
practice continue to be bureaucratic and hence a speed breaker in the globalization effort.

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HIGH COST OF INPUTS AND INFRASRUCTURAL FACILITIES:

The cost of raw materials, intermediate goods, power, finance, infrastructural facilities etc. in
India is high which reduces the global competitiveness of Indian business. The quality and
adequacy of infrastructural facilities in India is far from satisfactory. Further the technology
employed by Indian industries and the style of operation is generally out dated.

RESISTANCE TO CHANGE:
The pre-reform era (1951- 1991) breeded lethargy, created rigid structures, systems, practices
and procedures and generally instilled a laid back attitude. These factors are a hindrance to the
processes of modernization, rationalization and efficiency improvement. Technological change is
generally perceived to be employment reducing and hence resisted to the extent possible. For
instance, information technology was introduced in India in the early eighties. However,
computerization process of nationalized banks began only in the mid nineties. Excess labour is
particularly employed in the public sectors in areas such as banking, insurance, and the railways
and Indian industry in general. As a result, labour productivity is low and cheap labour in many a
cases turns out to be dear.

SMALL SIZE AND POOR IMAGE:

Grant Indian firms are known to be global pygmies. A look at the fortune 500 list would reveal
all to you. On a global scale, Indian firms are found to be small in size with low availability of
resources. Indian firms there for cannot compete successfully in the international market. Indian
products suffer from a poor image in the international market for both reasons valid and
otherwise. Indian firms continue to miss consumer focus both domestically and internationally.
The value-money equilibrium is missing in Indian products. Further, Indian firms are do not have
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the where- withal to keep up to the delivery schedule, accepts large orders and match up to
international specifications.

GROWING COMPETITION AND POOR SPEND:

Indian firms are not only up and against competition from developed countries but also emerging
Asian powerhouses such as South Korea and China. Continuous improvement in quality and
usefulness and competitive costs with competitive pricing can only keep you afloat and in order
to remain afloat, one has to spend quite a lot on R & D. both public and private sector outlays on
research in India is deliberately low when compared to the developed countries.
NON TARIFF BARRIERS (NTBs)
Member nations of the World Trade Organizations are bound to progressively reduce tariff rates
across the board over a definite period of time so that level playing field is created in global
trade. Tariff barriers are therefore not of much concern. What concerns developing nations in
particular, are non- tariff barriers imposed by the developed countries. Issues such as child labor
content in some of the products exported by India to the developed nations had cropped up and
remain unresolved.

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Imports and Exports

'Imports' means, bringing into India, of goods from a place outside India. In other words, it refers
to the goods which are produced abroad by foreign producers and are used in the domestic
economy in order to cater to the needs of the domestic consumers. India includes the territorial
waters of India which extend upto 12 nautical miles into the sea to the coast of India. Similarly,
'exports' of goods means, taking goods out of India to a place outside India. It refers to the goods
which are produced domestically and are used to cater to the needs of the consumers in other
countries. The country which is purchasing the goods is known as the importing country and the
country which is selling the goods is known as the exporting country. The traders involved in
such transactions are importers and exporters respectively.

In India, exports and imports are regulated by the Foreign Trade (Development and Regulation)
Act, 1992, which replaced the Imports and Exports(Control) Act,1947, and gave the Government
of India enormous powers to control it. The salient features of the Act are as follows:

It has empowered the Central Government to make provisions for development and
regulation of foreign trade by facilitating imports into, and augmenting exports from
India and for all matters connected therewith or incidental thereto.

The Central Government can prohibit, restrict and regulate exports and imports, in all or
specified cases as well as subject them to exemptions.

It authorizes the Central Government to formulate and announce an Export and Import
(EXIM) Policy and also amend the same from time to time, by notification in the Official
Gazette.

16

It provides for the appointment of a Director General of Foreign Trade by the Central
Government for the purpose of the Act. He shall advise Central Government in
formulating export and import policy and implementing the policy.

Under the Act, every importer and exporter must obtain a 'Importer Exporter Code
Number' (IEC) from Director General of Foreign Trade or from the officer so authorised.

The Director General or any other officer so authorised can suspend or cancel a licence
issued for export or import of goods in accordance with the Act. But he does it after
giving the licence holder a reasonable opportunity of being heard.

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COTTON INDUSTRY IN INDIA

Introduction

Cotton plays an important role in the Indian economy as the country's textile industry is
predominantly cotton based. India is one of the largest producers as well as exporters of cotton
yarn and the Indian textile industry contributes about 11 percent to industrial production, 14 per
cent to the manufacturing sector, 4 percent to the GDP and 12 per cent to the country's total
export earnings. The cotton cultivation in India in 2013-14 was estimated at 37 million bales
(170 kg each) of cotton, making it the second largest producer of cotton worldwide.
During 2013-14 in India, cotton yarn production increased by two per cent and cloth production
by mill and power loom sector increased by five per cent and six per cent respectively.
The states of Gujarat, Maharashtra, Andhra Pradesh (AP), Haryana, Punjab, Madhya Pradesh
(MP), Rajasthan, Karnataka and Tamil Nadu (TN) are the major cotton producers in India.
Key Markets and Export Destinations
India accounted for about 4.72 per cent of global textiles and clothing trade in 2011.

The total value of textile products exported from India was estimated at US$ 40 billion in
FY 2013.

India has overtaken Italy and Germany, and is now the second largest textile exporter in
the world.

India was the third-largest supplier of textiles and clothing to the US in 2013,
contributing about 6.01 per cent of its total imports.

China is the biggest importer of raw cotton from India. The other major cotton importing
countries from India are Bangladesh, Egypt, Taiwan, Hong Kong among others.
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Various reputed foreign retailers and brands such as Carrefour, Gap, H&M, JC Penney, Levi
Strauss, Macy's, Marks & Spencer, Metro Group, Nike, Reebok, Tommy Hilfiger and WaI-Mart
import Indian textile products.
Cotton Textile Export Promotion Council
The Cotton Textile Export Promotion Council (TEXPROCIL) takes part in national and
international events to enhance the visibility of Indian products, advertises and promotes Indian
products in various media vehicles such as fashion magazines, event-related pull-outs, India
reports and leading trade magazines, and organises buyer-seller meets (BSM) and trade
delegation visits.

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Cotton - World Supply and Demand Summary

China
During the course of an average year, China produces 4,370 TMT of cotton, the most of any
country in the world. In addition, China is the world's largest consumer of cotton, with an
average consumption of 4,501 TMT. China does not produce enough cotton to be self-sufficient,
so imports are needed. On average, China will import 418 TMT of cotton, making it the second
largest importer of cotton in the world. China also exports some cotton, averaging 96 TMT,
making it the tenth largest exporter in the world.
Minor cotton growing areas are spread throughout China, but the major growing areas are
concentrated in the eastern region of the nation. The province of Xinjiang accounts for the
greatest amount of cotton production, producing 21.5 percent of Chinas total cotton. Henan is the
next largest cotton-producing province in China, producing 16.6 percent of the nations total.
Cotton in China is planted from the first of April through mid-May. Cotton harvest will then
begin around the first of September and should be completed around the end of October.

United States
With average production of 3,837 TMT, the United States is the second largest cotton-producing
nation in the world. The United States is ranked third in the world for consumption of cotton,
with average consumption of 2,307 TMT. The United States is almost totally self-sufficient in
terms of cotton supply and demand; so, on average, imports are only 44 TMT, while exports are
1,522 TMT, the most of any country in the world.

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Cotton production in the United States is intermittently scattered throughout the states that make
up the southern border of the United States. U.S. cotton is planted from around mid-March
through the end of May. Harvest will then begin around the end of September and should be
completed by mid-December.

India
India is the world's third largest cotton producer, with average production of 2,707 TMT. India is
also the world's second largest consumer of cotton, with consumption averaging 2,627 TMT.
Average imports and exports of cotton in India are 124 TMT and 77 TMT respectively.
In India, cotton is grown primarily in the western half of the nation, with the state of Punjab
leading production at 18 percent. The state of Andhra Pradesh comes in second, accounting for
14 percent of the nations total cotton production. The crop calendar can be split in to two
separate regions. In the northern regions of India, which contains mainly irrigated cotton, the
crop is planted from mid-March through the end of June. The harvest will then begin around the
end of September and will continue through the end of December. In the central and southern
regions, which obtain their moisture primarily through rain, the planting season will begin near
the end of May and will run through the end of July. Cotton harvest occupies the time frame
from the first of November through the end of February.

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EXPORT PROCEDURES OF INDIA

Export Licence
Majority of goods are allowed to be exported without obtaining a licence. Export licenses are
only required for items listed in the Schedule 2 of ITC (HS) Classifications of Export and Import
items. An application for grant of Export Licence for such items must be submitted to the
Director General of Foreign Trade (DGFT). The Export Licensing Committee under the
Chairmanship of Export Commissioner considers such applications on merits for issue of export
licenses.
Export of Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET)
items are also permitted under a licence or prohibited altogether. Guidelines for Export of
SCOMET items can be viewed here..
Export of Samples
Export of samples upto specified limits are allowed free. The exporter is required to be registered
with the appropriate Export Promotion Council to avail of this benefit. Samples with permanent
marking as "sample not for sale" are allowed freely for export without any limit.
Processing of Shipping Bill
In case of export by sea or air, the exporter must submit the 'Shipping Bill', and in case of export
by road he must submit 'Bill of Export' in the prescribed form containing the prescribed details
such as the name of the exporter, consignee, invoice number, details of packing, description of
goods, quantity, FOB value, etc. Along with the Shipping Bill, other documents such as copy of

22

packing list, invoices, export contract, letter of credit, etc. are also to be submitted. There are 5
types of shipping bills:Shipping Bill for export of duty free goods. This shipping bill is white coloured.
Shipping bill for export of goods under claim for duty drawback. This shipping bill is
green coloured.
Shipping bill for export of duty free goods ex-bond i.e. from bonded warehouse. This
shipping bill is pink coloured.
Shipping Bill for export of dutiable goods. This shipping bill is yellow coloured.
Shipping bill for export under DEPB scheme. This shipping bill is blue in colour.
The Bills of Export are:Bill of export for goods under claim for duty drawback
Bill of export for dutiable goods
Bill of export for duty free goods
Bill of export for duty free goods ex-bond
Exporters can check and track the status of Shipping Bills online.
Let Export Order
After the receipt of the goods in the dock, the exporter may contact the Customs Officer
designated for the purpose and present the checklist with the endorsement of Port Authority and
other declarations along with all original documents. Customs Officer may verify the quantity of
23

the goods actually received and thereafter mark the Electronic Shipping Bill and also hand over
all original documents to the Dock Appraiser, who may assign a customs officer for the
examination of the goods. If the Dock Appraiser is satisfied that the particulars entered in the
system conform to the description given in the original documents, he may proceed to allow "let
export" for the shipment.
IMPORT REGULATIONS IN CHINA
Introduction
As with most countries, regulations governing the import of goods and their subsequent sale on
China's domestic market are complex. In China's case, they are also changing rapidly. This
overview of import regulations aims to provide some insight into the complexities of exporting
to China.
Importers
In the past, only a very restrictive number of Chinese companies with foreign trading rights were
approved to import products into China. Further to Chinas accession to the WTO, companies
seeking to engage in import trade only need to register with the Ministry of Commerce
(MOFCOM) or its authorized local offices according to the Foreign Trade Law and the Measures
on Filing and Registration of Foreign Trade Operators in 2004.

All companies (Chinese and foreign) have the right to import most products but a limited number
of goods are reserved for importation through state trading enterprises.

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What to Import
China classifies imports into three categories - prohibited, restricted and permitted categories.
Certain goods (e.g. wastes, toxics) are banned from being imported, while select products in the
restricted category are subject to strict restrictions by requiring quotas or licenses.
Most goods fall into the permitted category. Importers are free to decide how much and when to
purchase. MOFCOM implements an Automatic Licensing system to monitor the import of part
of these goods (e.g. machinery, electrical products). A detailed list of merchandise categories can
be obtained from MOFCOM or through the one of Canadas missions in China.
Import Tariffs
China charges tariffs on most imports, primarily ad valorem. These tariffs are assessed on the
transaction value of the goods, including packing charges, freight, insurance premiums and other
service charges incurred prior to the unloading of the goods at the place of destination. Many
tariffs have been lowered since Chinas accession to the WTO. The average tariff dropped from
15.3% in 2000 to 9.8% in 2009.
Value added tax (on almost all products) and consumption tax (on some products) are also
assessed at the point of importation. The normal VAT rate ranges from 17% to 13% for certain
items. Importers of certain consumer goods (e.g. tobacco, liquor and cosmetics) must pay
consumption tax at a rate varying between 1% and 40%.

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Free Trade Zones

In China, there are 15 free trade zones (FTZ); these special zones provide exceptions to the usual
customs procedures and allow for preferential tariff and tax treatment. All forms of trade
conducted between companies in FTZs and areas in China outside the zones are subject to the
usual rules that would apply to imports into China.
Export Processing
Special provisions (e.g. refunds of VAT and duty) apply to goods imported under export
processing trade arrangements involving manufacturing contracts where all of the manufactured
goods are exported. All such arrangements must be approved by MOFCOM or its local offices.
Import Licences
The importation of certain goods requires an import licence. Generally speaking, applications for
import licences are submitted to MOFCOM or its authorized local offices. For some goods (e.g.
machinery, electrical products), the licence is issued automatically to all applicants and is only
used to track imports more accurately. In other cases, approval is not automatic. Such nonautomatic import licences are used to control the importation of dangerous goods and to
implement tariff rate quotas (i.e. two-stage tariffs, where the right to pay a lower tariff is granted
to importers up to a certain total quantity of goods).

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Tariff Rate Quotas (TRQs)

TRQs (i.e. two-stage tariffs, where the right to pay a lower tariff is granted to importers up to a
certain total quantity of goods) are in place for wheat, corn, rice, sugar, wool, cotton, certain
fertilizers, and wool tops. Chinese companies seeking to import at the lower TRQ tariff rate must
apply to MOFCOM for an allocation between October 15 and 30 each year (or for re-allocations
of unused TRQ, between September 1 and 15 each year).
Import Inspection/Certification
Complex inspection and certification requirements are in place, requiring certain goods to be
inspected on arrival and/or to be accompanied by formal certification recognized by the Chinese
government (e.g. CCC and RoHS for electrical goods or pest-free certification for certain
agricultural products). Goods that fail to pass the required inspections and/or that are not
accompanied by the required certification may be confiscated. Certification requirements may
include factory inspections in Canada.
In some cases, China recognizes certification provided in Canada (e.g. by the Canadian
Standards Association or the Canadian Food Inspection Agency). In other cases, testing needs to
be conducted in China to obtain the necessary certification. For some goods (primarily
agricultural goods and electrical/electronic products), it may also necessary to have the Canadian
factory or processing facility certified by the Chinese government (which may require site visits
by Chinese inspectors paid for by the Canadian company).
Labelling/Packaging Requirements

27

China has a range of labelling and packaging requirements in place that are particularly
important for consumer goods. In some cases, goods that do not meet these requirements will be
refused entry to China.
Currency Controls
Chinese importers may freely convert renminbi [yuan] to foreign currencies for the purpose of
purchasing goods for import, but must complete the necessary formalities with the State
Administration of Foreign Exchange to demonstrate that all of the foreign currency is being used
to fund imports and is not being transferred abroad for other purposes.
Tariffs and Market Access Information
Clients of the Trade Commissioner Service with questions about tariffs and market access
information should refer to the Trade Commissioner Service and contact the Trade
Commissioner in China responsible for their sector. In terms of tariff requests, please provide the
appropriate Harmonized System (HS) code for the product concerned. If the HS code is
unavailable, please refer to the Canadian Export Classification site (Online Catalogue - 65-209)
to identify the code.

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INDIA CHINA TRADE RELATIONS

India China trade relations are the most important part of bilateral relations between India and
China. From a temporary decline in the the influx of Chinese imports in the Indian markets, the
scenario seems to have changed - India is enjoying a positive balance of trade with China. The
India China trade relations are regulated by the India China JBC, which ensures a free exchange
of products and services between the two nations.
India China Trade Relations: Overview
India & China signed a Trade Agreement in 1984 which provided for Most Favored Nation
Treatment and later in 1994, the two countries signed an agreement to avoid double taxation. The
bilateral trade crossed US$13.6 billion in 2004 from US$ 4.8 billion in 2002, reaching $18.7
billion in 2005. The India China trade relations have been further developed from 2006, with the
initiation of the border trade between Tibet, an autonomous region of China, and India through
Nathu La Pass, reopened after more than 40 years. The leaders of both the countries have
decided to enhance the bilateral trade to US$ 20 billion by 2008 and further to US$ 30 billion by
2010. According to the Indian Commerce Minister, Kamal Nath, China would soon become
India's largest trade partner within the next 2-3 years, after the US and Singapore.
Indian Exports to China under the India China Trade Relations
The principal items of Indian exports to China are ores, slag and ash, iron and steel, plastics,
organic chemicals, and cotton. In order to increase the extent of exporting Indian goods to China,
however, there should be a special emphasis on investments and trade in services and
knowledge-based sectors. The other potential items of trade between India and China are marine
products, oil seeds, salt, inorganic chemicals, plastic, rubber, optical and medical equipment, and
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dairy products. Great potential also exists in areas like biotechnology, IT and ITES, health,
education, tourism, and financial sector.
Chinese Exports to India under the India China Trade Relations
The main items that comprise Chinese exports to India are electrical machinery and equipment,
cement, organic chemicals, nuclear reactors, boilers, machinery, silk, mineral fuels, and oils.
Value added items like electrical machinery dominates Chinese exports to India. This exhibits
that Chinese exports to India are fairly diversified and includes resource-based products,
manufactured items, and low and medium technology products. It is said that if India is to
capture the markets of China and enjoy profits, then it would have to discover new merchandise
and branch out its exports to China.

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INDIA - SECOND LARGEST EXPORTER OF COTTON

Indian Exports to China is an integral part of the bilateral trade relations between the two Asian
countries, India and china. Indian Exports to China focus on mainly primary products. In 1984,
India and China signed a trade agreement, providing for Most Favored Nation treatment, to
foster greater cooperation between each other. Moreover, the year 2006 was celebrated as
Friendship Year between India and China.
Items of Indian Exports to China
The principal items of Indian exports to China comprise of ores, slag and ash, iron and steel,
plastics, organic chemicals, and cotton. In order to increase the extent of exporting Indian goods
to China, however, there should be a special emphasis on investments and trade in services and
knowledge-based sectors.
At present, iron ore constitutes about 53% of the total Indian exports to China. The other items
that have potentials are marine products, oil seeds, salt, inorganic chemicals, plastic, rubber,
optical and medical equipment, and dairy products. Not only this, great potential exists in areas
like biotechnology, IT and ITES, health, education, tourism, and the financial sector - all of
which will contribute to the services and knowledge based sectors.
The need is to shift the focus from primary exports to the export of diverse range of high value
added products, including -

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Auto engine components and automobiles

Organic and inorganic products
Pharmaceuticals
Metal and metal based products like alloy steel bars and rods
Agricultural products like grains, tobacco and oilseeds
Engineering goods like diesel engines and compressors
Marine foods
Fresh and processed fruits and vegetables
Medical and optical diagnostic equipment and laboratory equipment
Consumer durables
Textile yarns

Such diversification of Indian exports to China clearly indicates that there exists a steady demand
for these products in the Chinese market.
Impediments for Indian exports to China
There are certain obstacles faced by Indian exporters in their attempts to capture the markets of
China. Lack of information on customs procedures, imposition of excessive customs and other
levies with frequent rate changes, complex customs valuation procedure, absence of a specified
nodal agency, lack of transparency regarding technical standards, differentiated testing norms for
imported and domestic products, unfamiliarity with regard to provincial rules and regulations,
and frequent change in policies without any advance information on those changes are just some
of those problems.

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Potential for Indian exports to China

In order to increase the level of Indian exports to China, there should be a continuous interaction
through exchange of delegations, enhancing participation in each other's trade fairs and seminars
and facilitating trade through positive initiatives.

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