SIKKIM MANIPAL UNIVERSITY, DE

Student Name: ASHISH BAJPAI

Registration No: 1408024642
Subject Name: EIM

Course: MBA
LC Code: 00918
Subject Code: IB0013

Q1. What do you mean by export? How many types of exports are there?
Discuss.
Ans: Meaning: The term export means shipping in the goods and services out of the
jurisdiction of a country. The seller of such goods and services is referred to as an
"exporter" and is based in the country of export whereas the overseas based buyer is
referred to as an "importer". In international trade, "exports" refers to selling goods and
services produced in the home country to other markets
Export of commercial quantities of goods normally requires involvement of the customs
authorities in both the country of export and the country of import. The advent of small
trades over the internet such as through Amazon and eBay have largely bypassed the
involvement of Customs in many countries because of the low individual values of these
trades. Nonetheless, these small exports are still subject to legal restrictions applied by
the country of export. An export's counterpart is an import.
Methods of export include a product or good or information being mailed, handdelivered, shipped by air, shipped by vessel, uploaded to an internet site, or
downloaded from an internet site. Exports also include the distribution of information
that can be sent in the form of an email, an email attachment, a fax or can be shared
during a telephone conversation.
Types:
The company can decide to export directly or indirectly to a foreign country.
Direct selling in export strategy
Direct selling involves sales representatives, distributors, or retailers who are located
outside the exporter's home country. Direct exports are goods and services that are sold
to an independent party outside of the exporters home country. Mainly the companies
are pushed by core competencies and improving their performance of value chain.
Direct selling through distributors
It is considered to be the most popular option to companies, to develop their own
international marketing capability. This is achieved by charging personnel from the
company to give them greater control over their operations. Direct selling also give the
company greater control over the marketing function and the opportunity to earn more
profits. In other cases where network of sales representative, the company can transfer
them exclusive rights to sell in a particular geographic region.
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A distributor in a foreign country is a merchant who purchases the product from the
manufacturer and sells them at profit. Distributors usually carry stock inventory and
service the product, and in most cases distributes deals with retailers rather than end
users.
Evaluating Distributors

The size and capabilities of its sales force.

An analysis of its territory.

Its current product mix.

Its facilities and equipment.

Its marketing polices.

Its customer profit.

Its promotional strategy.

Its policy against the abstract data protocols.

Direct selling through foreign retailers and end users

Exporters can also sell directly to foreign retailers. Usually, products are limited to
consumer lines; it can also sell to direct end users. A good way to generate such sales
is by printing catalogs or attending trade shows.
Direct selling over the Internet
Electronic commerce is an important mean to small and big companies all over the
world, to trade internationally. We already can see how important E-commerce is for
marketing growth among exporters companies in emerging economies, in order to
overcome capital and infrastructure barriers.
E-commerce eased engagements, provided faster and cheaper delivery of information,
generates quick feedback on new products, improves customer service, accesses a
global audience, levels the field of companies, and support electronics data interchange
with suppliers and customers.
Indirect selling

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Indirect exports, is simply selling goods to or through an independent domestic
intermediary in their own home county. Then intermediaries export the products to
customers foreign markets.
Making the export decision
Once a company determines it has exportable products, it must still consider other
factors, such as the following:

What does the company want to gain from exporting?

Is exporting consistent with other company goals?

What demands will exporting place on the company's key resources management and personnel, production capacity, and finance - and how will
these demands be met?

Are the expected benefits worth the costs, or would company resources be better
used for developing new domestic business?

Q2. What is RCMC? What is its purpose? How is it obtained?

Ans:
RCMC and its purpose:
Procedure:
Q3. Discuss the stages in processing of an export order.
Ans:
1. Having an Export Order:
Processing of an export order starts with the receipt of an export order. An export order,
simply stated, means that there should be an agreement in the form of a document,
between the exporter and importer before the exporter actually starts producing or
procuring goods for shipment. Generally an export order may take the form of proforma
invoice or purchase order or letter of credit. You have already learnt these just in the
preceding section.
2. Examination and Confirmation of Order:
Having received an export order, the exporter should examine it with reference to the
terms and conditions of the contract. In fact, this is the most crucial stage as all
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subsequent actions and reactions depend on the terms and conditions of the export
order.
The examination of an export order, therefore, includes items like product description,
terms of payment, terms of shipment, inspection and insurance requirement, documents
realising payment and the last date of negotiation of documents with the bank. Having
being satisfied with these, the export order is confirmed by the exporter.
3. Manufacturing or Procuring Goods:
The Reserve Bank of India (RBI), under the export credit (interest subsidy) scheme,
extends pre-shipment credit to exporter to finance working capital needs for purchase of
raw materials, processing them and converting them into finished goods for the purpose
of exports. The exporter approaches the bank on the basis of laid down procedures for
the pre-shipment credit. Having received credit, the exporter starts to manufacture /
procure and pack the goods for shipment overseas.
4. Clearance from Central Excise:
As soon as goods have been manufactured/ procured, the process for obtaining
clearance from central excise duty starts. The Central Excise and Sale Act of India and
the related rules provide the refund of excise duty paid. There are two alternative
schemes whereby 100 per cent rebate on duty is given to export products on the
submission of the proof of shipment.
5. Pre-Shipment Inspection:
There are number of-goods whose export requires quality certification as per the
Government of Indias notification. Consequently, the Indian custom authorities will
require the submission of an inspection certificate issued by the competent and
designated authority before permitting the shipment of goods takes place.
Inspection of export goods may be conducted under:
(i) Consignment-wise Inspection
(ii) In-process Quality Control, and
(iii) Self-Certification.
The Inspection Certificate is issued in triplicate. The original copy is for the customs
verification. The second copy of the certificate is sent to the importer and the third copy
remains with the exporter for his reference purpose.
6. Appointment of Clearing and Forwarding Agents:
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On completion of the process of obtaining the Inspection Certificate from the custom
agencies, the exporter appoints clearing and forwarding agents who perform a number
of functions on behalf of the exporter.
The main functions performed by these agents include packing, marking and labeling of
consignment, arrangement for transport to the port arrangement for shipment overseas,
customs clearance of cargo, procurement of transport and other documents.
In order to facilitate the exporter in discharging his duties, the following
documents are submitted to the agent:
(i) Commercial invoice in 8-10 copies
(ii) Customs Declaration Form in triplicate
(iii) Packing list
(iv) Letter of Credit (original)
(v) Inspection Certificate (original)
(vi) G.R. Form (in original and duplicate)
(vii) AR4/ AR4A (in original and duplicate)
(viii) GP-l/GP-2 (original)
(ix) Railway Receipt/Lorry Way Bill, as the case may be
7. Goods to Port of Shipment:
After the excise clearance and pre-shipment inspection formalities are completed, the
goods to be exported are packed, marked and labeled. Proper marking, labeling and
packing help quick and safe transportation of goods. The export department takes steps
to reserve space on the ship through which goods are to be sent to the importer.
If goods are sent through a road carrier to the port, no specific formality is involved. In
case, the goods are sent by rail to the port of shipment, allotment of wagon needs to be
obtained from the Railway Board.
The following documents are submitted to the booking railway yard/station:
(i) Forwarding Note (A Railway Document)
(ii) Shipping Order
(iii) Wagon Registration Fee Receipt
Once wagons have been allotted, goods are loaded, for which railways will issue
Railway Receipt (RR). Then, this receipt and other documents are sent to the clearing
and forwarding agent at the port town. At the same time, the production/export
department takes insurance policy in duplicate for risk coverage (internal as well as
overseas) for the goods to be exported.
8. Port Formalities and Customs Clearance:
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Having received the documents from the export department, the clearing and forwarding
agent takes delivery of the cargo from the railway station or the road transport company
and stores it in the warehouse. He also obtains customs clearance and permission from
the port authorities to bring the cargo into the shipment shed.
The custom department grants permission for export at the office of the customs and
physical verification of goods in the shipment shed. The clearance for export is given on
the Shipping Bill.
The clearing and forwarding agent is required to submit the following documents
with the Customs House for obtaining customs clearance and permission:
(i) Shipping Bill
(ii) Contract Form
(iii) Letter of Credit, if applicable
(iv) Commercial Invoice
(v) GR Form
(vi) Inspection Certificate
(vii) AR4/AR4A Form
(viii) Packing List, if needed
After receiving documents from the export department, the clearing and forwarding
agent presents the Port Trust Document to the Shed Superintendent of the port. He
obtains carting order bringing the cargo to the transit shed for physical examination by
the Dock Appraiser.
The Dock Appraiser is presented the following documents to facilitate him in
physical examination of export goods:
(i) Shipping Bill
(ii) Commercial Invoice
(iii) Packing List
(iv) AR4/ AR4A Form and Gate Pass
(v) GR Form (duplicate)
(vi) Inspection Certificate (original)
The Dock Appraiser, after making examination, makes Let Export endorsement on the
duplicate copy of the Shipping Bill and hands over it to the Forwarding Agent. All these
documents are presented to the Preventive Officer who puts an endorsement Let Ship
on the duplicate copy of the Shipping Bill. The preventive officer supervises the loading
of cargo on board the vessel.
9. Dispatch of Documents by Forwarding Agent to the Exporter:

SIKKIM MANIPAL UNIVERSITY, DE

After obtaining the Bill of Lading from the Shipping Company, the clearing and
forwarding agent dispatches all the documents to his / her exporter.
These documents include:
(i) Commercial Invoice (attested by the customs)
(ii) Export Promotion Copy
(iii) Drawback Copy
(iv) Clean on Board Bill of Lading
(v) Letter of Credit
(vi) AR4/ AR4A and Gate Pass
(vii) GR Form (in duplicate)
10. Certificate of Origin:
On receipt of above documents from the forwarding agent, the exporter now applies to
the Chamber of Commerce for a Certificate of Origin and obtains it. If the goods are
exported to countries offering GSP concessions, the exporter needs to procure the GSP
Certificate of Origin from the concerned authority like Export Inspection Agency.
11. Dispatch of Shipment Advice to the Importer:
At last, the exporter sends Shipment Advice to the importer intimating the date of
shipment of the consignment by a named vessel and its expected time of arrival at the
destination port of the importer.
The following documents are also sent to the importer to facilitate him for taking
delivery of the consignment:
(i) Bill of Lading (non-negotiable copy)
(ii) Commercial Invoice
(iii) Packing List
(iv) Customs Invoice
12. Submission of Documents to Bank:
At the end of the process, the exporter presents the following documents to his
bank for realisation of his amount due to the importer:
(i) Commercial Invoice
(ii) Certificate of Origin
(iii) Packing List
(iv) Letter of Credit
(v) Marine Insurance Policy
(vi) GR Form
(vii) Bill of Lading
(viii) Bill of Exchange
(ix) Bank Certification
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(x) Commercial Invoice
Q4. Write short notes on:
(a) Transport risk
(b) Credit risk
Ans: Meaning and effect of transport risk:
Risk management means to analyse and react to all potentially occurring risks. Control
systems are as important as training of employees and a clearly defined crisis
management.
Companies that openly and systematically address these issues, diminish the risk of
becoming a victim of fraud. We can check the steps you have already taken against
fraud and what have been done in the past with incidents of fraud, should they have
occurred. Lets examine together the surrounding of your company, and if your finance
and control systems are up-to-date. We can also offer:

Enterprise-wide risk management

Management of financial and commodity risks
Risk management for financial service companies
Support in meeting legal and regulatory requirements
Analysis and optimisation of corporate management/internal control
systems
Disclosure and prevention of corporate crime
Advice and expert evidence in disputes
Meaning and effect of credit risk: A credit risk is the risk of default on a debt that
may arise from a borrower failing to make required payments. In the first resort, the risk
is that of the lender and includes lost principal and interest, disruption to cash flows, and
increased collection costs.
Credit risk is the risk of loss of principal or loss of a financial reward stemming from a
borrower's failure to repay a loan or otherwise meet a contractual obligation. Credit risk
arises whenever a borrower is expecting to use future cash flows to pay a current debt.
Investors are compensated for assuming credit risk by way of interest payments from
the borrower or issuer of a debt obligation.
Credit risk is closely tied to the potential return of an investment, the most notable being
that the yields on bonds correlate strongly to their perceived credit risk.
A credit risk is the risk of default on a debt that may arise from a borrower failing to
make required payments.[1] In the first resort, the risk is that of the lender and includes
lost principal and interest, disruption to cash flows, and increased collection costs. The
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loss may be complete or partial and can arise in a number of circumstances, [2] for
example:

A consumer may fail to make a payment due on a mortgage loan, credit card, line
of credit, or other loan.

A company is unable to repay asset-secured fixed or floating charge debt.

A business or consumer does not pay a trade invoice when due.

A business does not pay an employee's earned wages when due.

A business or government bond issuer does not make a payment on a coupon or

principal payment when due.

An insolvent insurance company does not pay a policy obligation.

An insolvent bank won't return funds to a depositor.

A government grants bankruptcy protection to an insolvent consumer or

business.

To reduce the lender's credit risk, the lender may perform a credit check on the
prospective borrower, may require the borrower to take out appropriate insurance, such
as mortgage insurance, or seek security over some assets of the borrower or a
guarantee from a third party. The lender can also take out insurance against the risk or
on-sell the debt to another company. In general, the higher the risk, the higher will be
the interest rate that the debtor will be asked to pay on the debt. Credit risk mainly
arises when borrowers unable to pay due willingly or unwilingly.
Q5. What is the significance of bill of lading for exporter and importer? Explain
any 2 types.
Ans:
Bill of lading: A bill of lading (sometimes abbreviated as B/L or BoL) is a document
issued by a carrier which details a shipment of merchandise and gives title of that
shipment to a specified party. Bills of lading are one of three important documents used
in international trade to help guarantee that exporters receive payment and importers
receive merchandise. A straight bill of lading is used when payment has been made in
advance of shipment and requires a carrier to deliver the merchandise to the
appropriate party. An order bill of lading is used when shipping merchandise prior to
payment, requiring a carrier to deliver the merchandise to the importer, and at the
endorsement of the exporter the carrier may transfer title to the importer. Endorsed
order bills of lading can be traded as a security or serve as collateral against debt
obligations.
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As cargo receipt
The principal use of the bill of lading is as a receipt issued by the carrier once the goods
have been loaded onto the vessel. This receipt can be used as proof of shipment for
customs and insurance purposes, and also as commercial proof of completing a
contractual obligation,[8] especially under Incoterms such as CFR (cost and freight) and
FOB (free on board).
As evidence of the contract of carriage
The bill of lading will rarely be the contract itself, since the cargo space will have been
booked previously, perhaps by telephone, email or letter. The preliminary contract will
be acknowledged by both the shipper and carrier to incorporate the carrier's standard
terms of business. If the Hague-Visby Rules apply, then all of the Rules will be
automatically annexed to the bill of lading, thus forming a statutory contract.
As title
The bill of lading confers prima facie title over the goods to the named consignee or
lawful holder. Under the "nemo dat quod non habet" rule ("no one gives what he doesn't
have"), a seller cannot pass better title than he himself has; so if the goods are subject
to an encumbrance (such as a mortgage, charge or hypothec), or even stolen, the bill of
lading will not grant full title to the holder.

2 types of B/L: Bills of lading have a number of additional attributes, such as on board,
and received-for-shipment. An on-board bill of lading denotes that merchandise has
been physically loaded onto a shipping vessel, such as a freighter or cargo plane. A
received-for-shipment bill of lading denotes that merchandise has been received, but is
not guaranteed to have already been loaded onto a shipping vessel. Such bills can be
converted upon being loaded.

Direct Bill of Lading: Direct Bill of Lading is used when you know the same
vessel that picked up the cargo will deliver it to its final destination.
Inland Bill of Lading: Inland Bill of Lading is the bill of lading which allows the
shipping carrier to ship cargo, by road or rail, across domestic land, but not over
seas.

Q6. What are the different types of custom duties levied on imported goods?
Ans: Main types of custom duties :
1. Basic custom duty:Basic custom duty is the main type of custom duty. It is payable u/s 2 of custom
tariff act 1975.It has three sub parts
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i) Standard rate
ii) Effective rate
iii) Preferential Rate
Govt. of India can declare its rates and goods on which it levied u/s 4 of C.T.A.
Govt. fixed the preferential area for following countries for applying preferential rate
i) China
i) Pakistan
iii) Bangladesh
iv) Butan
v) Nepal
vi) Shri lanka
vii) Mauritius
viii) Seychelles
ix) Tonga
x) U.A.E.
2. Auxiliary custom duty:This is also part and type of custom duty .Basically this is 10% surcharge on all
goods except following goods
i) crude oil and petroleum
ii) Gold and silver
iii) Certain GATT ( bound items)
This is started under the finance act , 1999 it is upto 31st march 2000.
3. Additional duty of custom or countervailing duty:This is the main type of custom duty. If any manufacturer imports goods he will
responsible for paying additional duty of custom equal to excise duty as same
as he manufactured in India.This duty safeguards the interest of Indian
manufacturer who purchased raw material from India.

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Example:- Now since finance bill 2006 , CVD of 4% on all imports
4. Special additional duty of customs :Value of SAD= rate of SAD x ( Assessable value + basic duty + surcharge
+CVD)
SAD first was abolished w.e.f. 9-1-2004, Now it starts again from 1-3-2006
5. Protective duties:Protective duties are duties which safeguarding domestic industries. If central
govt. thinks that if a manufacturer imports indigenous goods .It will harmful for
following reason
i) it may cheaper
ii) it may attract Indian people
So govt. can imposed protective duty for safeguarding domestic industry .
6. Countervailing duty on subsidized articles u/s 9
CVD
on
subsidized
articles
i) Govt. gives subsidy for production

with

following

conditions

ii) Govt gives subsidy for export

CVD must not more than subsidy.
7. Anti dumping duty:If any country export to India less than normal price and India people imports
this goods then central govt. can impose anti dumping duty.
Value
of
anti
dumping
duty=
Margin of dumping = normal price export price

margin

of

dumping

8. Safeguarding duty section 8b

If any body want to injury to domestic industry .For this he imported goods with
high quantity . The govt . can imposed safeguard duty on such goods
Condition
I) imports from developing country must exceed 3% share of total production
9. Export duty :-

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At present
i) 15% export duty is levied on hides , skins and leather .
ii) 10% on snake skin , hides , skin and leather
iii) No duty on any other export of product

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