STUDY ON THE EXPORT AND IMPORT OF TEXTILE

INDUSTRY IN INDIA

THE PROJECT REPORT SUBMITTED TO

AMET
ACADEMY OF MARITIME EDUCATION AND TRAINING
DEEMED TO BE UNIVERSITY

IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE

DEGREE

BACHELOR OF BUSINESS ADMINISTRATION (BBA)

(SHIPPING)

BY

AARATHI S .S
(REG.NO. ABA17001)

UNDER THE GUIDANCE OF

DR.M.VALLIAMMAL

PROFESSOR

AMET BUSINESS SCHOOL May

2020

1
 DECLARATION

I hereby declare that the project work entitled “A STUDY ON THE

EXPORT AND IMPORT OF TEXTILE INDUSTRY IN INDIA”

submitted to AMET Business School, AMET (Deemed to be University),

under the guidance of Dr Valliammal, Professor, in partial fulfillment of the

requirement for the award of the degree of Bachelor of Business

Administration (Shipping) is a record of original project work done by me

during the period of study in AMET Business School from 2017-2020.

Date:

Place: Chennai

Signature of Student

2
 CERTIFICATION OF APPROVAL

This is to certify that the project entitled “A STUDY ON THE EXPORT

AND IMPORT OF TEXTILE INDUSTRY IN INDIA” is a bonafide

research work carried out independently by AARATHI S.S (REG.NO. ABA

17001), student of BBA (Shipping) of AMET Business School, AMET

(Deemed to be University), Kanathur-603112, during 2017-2020 in partial

fulfillment of the requirement for the award of degree of Bachelor of Business

Administration in Shipping.

Signature of Guide

Vice-Voce-examination conducted

Internal Examiner HOD-BBA

Date:

3
 ACKNOWLEDGEMENT

First of all, I am indebted to the GOD ALMIGHTY for giving me an opportunity to excel in
my efforts to complete this project on time.

I would like to express my gratitude to our respected Chairman Dr. J. Ramachandran and our
Vice Chancellor Col.Dr.GThiruvasagam for their kind encouragement.

I am immensely thankful to my respected guide Dr Valliammal,Professor, Department of

Management Studies, AMET University for her guidance support and encouragement rendered
to me throughout the project.

I also wish to address special thanks to Dr.S.Srinivasan, Dean, Management Studies,

Dr.R.Srinivasan, and Head of Department of Management Studies for their support during my
project.

I also acknowledge with a deep sense of reverence, my gratitude towards my parents and
family, who has always supported me to complete the project.

At last but not least gratitude goes to all of department faculties and my friends who directly
or indirectly helped me to complete this project report.

SIGNATURE

TABLE OF CONTENTS

CHAPTER CONTENTS PAGE NO

1 INTRODUCTION
• Topic Introduction 7
• Industry Profile 8-9

4
 • Company Profile 10-16
• Scope of the Study 18
• Limitation of the study. 18
2 REVIEW OF LITERATURE
Literature Review in Reverse Chronological 19-20
Order
3 OBJECTIVES OF THE STUDY 21
4 RESEARCH METHODOLOGY 22-23
5 TOPIC-RELATED CHAPTER 24-62

6 FINDINGS AND CONCLUSION 63-66

7 SUGGESTION 67
8 BIBLIOGRAPHY
Books, Journal Articles, White Papers, 68
Websites

TABLE OF FIGURE

SL.No. FIGURE NO. Page No.

1 FIGURE 1 9

2 FIGURE 2 12

3 FIGURE 3 12

4 FIGURE 4 13

5 FIGURE 5 13

6 FIGURE 6 14

7 FIGURE 7 14

5
8 FIGURE 8 15

9 FIGURE 9 15

10 FIGURE 10 26

11 FIGURE 11 33

12 FIGURE 12 44

TABLE
SL.NO TABLE NO PAGE NO
1 TABLE 1 17
2 TABLE 2 34

TABLE OF CHART
SL.NO CHART NO PAGE NO
1 CHART NO 46

ABSTRACT

The Textile Sector in India ranks next to Agriculture. Textile is one of India’s oldest industries
and has a formidable presence in the national economy in as much as it contributes to about 14
per cent of manufacturing value-addition, accounts for around one-third of our gross export

6
earnings and provides gainful employment to millions of people. The textile industry occupies
a unique place in our country. One of the earliest to come into existence in India, it accounts
for 14% of the total Industrial production, contributes to nearly 30% of the total exports and is
the second largest employment generator after agriculture.

Textile Industry is providing one of the most basic needs of people and the holds importance;
maintaining sustained growth for improving quality of life. It has a unique position as a
selfreliant industry, from the production of raw materials to the delivery of finished products,
with substantial value-addition at each stage of processing; it is a major contribution to the
country's economy. This paper deals with structure, growth and size of the Indian textile
industry, role of textile industry in economy, key advantages of the industry, textile industry
export and global scenario and strength, weakness, opportunities and treats of the Indian Textile
industry.

CHAPTER 1
INTRODUCTION

INTRODUCTION

The Indian textile industry is one of the largest in the world with a massive raw material and
textiles manufacturing base. Our economy is largely dependent on the textile manufacturing
and trade in addition to other major industries. About 27% of the foreign exchange earnings
are on account of export of textiles and clothing alone. The textiles and clothing sector
contributes about 14% to the industrial production and 3% to the gross domestic product of the
country. Around 8% of the total excise revenue collection is contributed by the textile industry.
So much so, the textile industry accounts for as large as 21% of the total employment generated
in the economy. Around 35 million people are directly employed in the textile manufacturing
activities. Indirect employment including the manpower engaged in agricultural based raw-
material production like cotton and related trade and handling could be stated to be around
another 60 million.

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A textile is the largest single industry in India (and amongst the biggest in the world),
accounting for about 20% of the total industrial production. It provides direct employment to
around 20 million people. Textile and clothing exports account for one-third of the total value
of exports from the country. There are 1,227 textile mills with a spinning capacity of about 29
million spindles. While yarn is mostly produced in the mills, fabrics are produced in the power
loom and handloom sectors as well. The Indian textile industry continues to be predominantly
based on cotton, with about 65% of raw materials consumed being cotton. The yearly output
of cotton cloth was about 12.8 billion m (about 42 billion ft). The manufacture of jute products
(1.1 million metric tons) ranks next in importance to cotton weaving. Textile is one of India’s
oldest industries and has a formidable presence in the national economy inasmuch as it
contributes to about 14 per cent of manufacturing value-addition, accounts for around one-third
of our gross export earnings and provides gainful employment to millions of people. They
include cotton and jute growers, artisans and weavers who are engaged in the organized as well
as decentralized and household sectors spread across the entire country.
• In 2018-19, export of manmade staple fibre stood at US$ 572 million; manmade yarn, fabrics
and made-ups exports to US$ 4.9 billion and exports of readymade garments of manmade
fibres reached US$ 3.85 billion in the same period.
• During April-November 2019, export of manmade staple fibre stood at US$ 353.99 million;
manmade yarn, fabrics and made-ups exports to US$ 3.17 billion and exports of readymade
garments of manmade fibres reached US$ 2.32 billion in the same period.
• The textile and apparel exports stood at US$ 36.62 billion in 2018-19.
• India is second largest world producer of polyester and viscose, but India is ranked sixth in
the exports of Man-Made Fibre (MMF) textiles.

GLOBAL TEXTILE INDUSTRY

The global textile industry impacts nearly every human being on the planet. The industry
is currently worth nearly US $3 trillion and includes the production, refinement, and sale
of both synthetic and natural fibers used in thousands of industries. The global textile
market is broken into a number of sectors shown in the chart below.
As you can see, the textile industry encompasses a broad and diverse range of products
with an even wider range of applications. That diversity is one of many factors that makes
the textile industry one of the most vital to the economic well-being of people all over the
world.

8
FIGURE 1

1.1 ABOUT PAS LOGISTICS

The Company had 15 years of experience in this field and it has been 5 years since we started
our company. Founded in 2015 Headquartered in Chennai, India.

Premier Logistics services provider in the region.A holding company for PAS Logistics, and
PAS Transport.

In 2017 PAS Logistics generated US $ 25 million revenue with Sea Clearance volumes at 5.000
TEU’s.

PAS Logistics introduce ourselves as one of the leading Clearing & Forwarding Agent in
Chennai well known for efficiency and economy . We are pleased to develop the business
relationship with our entire Client & we are capable of providing complete logistics solutions.

9
The companies field of activity includes the full range of Customs Clearing and forwarding
services – Import and Export . In order to provide excellent services to all our clients, we
constantly keep enhancing Quality, Innovation and Flexibility .

In this regard, we would like to express our immense interest to do business with your Company
for the business, hoping this will be the beginning of a strong, beneficial and longterm business
relationship between our organizations .

MISSION
To promote teamwork & create a work environment encouraging the workforce to continuously
strive for quality & excellence, providing high-quality service to customers under one roof.

VISION
We aim to emerge as the torchbearer in the logisticsindustry. Our vision is to establish OM
Logistics as the most grounded worldwide logistics & supply chain management company as
a trusted partner to all our clients.

We envision to surpass our success & customer loyalty level year by year.

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VALUES
PAS Logistics has always been values-driven. Our shared values guide our actions that help us
make a difference.

These values continue to direct the growth and business of our company.

Entrepreneurial Soul: We embrace innovations when it comes to technology. We know how to

think creatively as entrepreneurs for operational excellence to create profitable growth and
value for our stakeholders.

Air Freight

When time counts, you can count on PAS Logistics to get your shipment there on time. Our
team of experts can arrange air service anywhere in the world and can offer 24 hour service.

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Figure2

Sea Freight

A global, dedicated network in all major-sea-routes in the world, to optimize cost, ensuring
Whether your shipping needs are FCL or LCL, PAS Global Logistics can move any size load,
anywhere in the world.

Figure3

Providing FCL / LCL

FCL refers to a single container booked by a shipper to transport their cargo (exclusively). This
service is commonly used by shippers who have enough cargo to fill the whole container
making it cost effective to book an FCL shipment.

12
Figure 4

Inland Transportation

It is complete coast-to-coast trucking and freight services provider . We has been keeping
promises to deliver your freight, right on time, right on budget, right to your designated
destination.

Figure5

Local Transportation

Transport is important since it enables trade between people, which in turn establishes
civilizations. We find it an interesting point that transportation is an enabler of civilization, but
this makes sense, as it enables the ability to trade and communicate.

13
Figure 6

Custom Clearance

Importing or Exporting has never been more complex than it is today. At PAS Global Logistics,
our professional Licensed Customs Brokers and staff are dedicated to assisting your company

Figure 7

D G Cargo

14
Dangerous goods are materials or items with hazardous properties which, if not properly
controlled, present a potential hazard to human health and safety, infrastructure and/ or their
means of transport

Figure 8

Ware Housing

An automatic storage warehouse for small parts A warehouse is a commercial building for
storage of goods. Warehouses are used by manufacturers, importers, exporters, wholesalers,
transport businesses, customs, etc. They are usually large plain buildings in industrial parks
on the outskirts of cities, towns or villages

Figure 9

15
1.2 STRUCTURE OF THE INDIAN TEXTILE INDUSTRY
The term industry is normally used to mean a group of enterprises producing products that are
close substitutes of each other. By this definition, however, it is very difficult to identify the
constituents of the textile industry. All units producing yam and fabric cannot be said to
constitute the textile industry for the simple reason that the products of these units are not
homogeneous and therefore cannot be close substitutes of one another. Ideally, the textile
industry should be defined as a group of enterprises producing products falling in relatively
non-overlapping and homogeneous product market segments.

Thus, all the units producing a specified product constitute an industry. Collection of all such
units can then be defined as the textile industry. In order to apply the above concept in practice,
the product market segments are defined as the segments in terms of the fibre used in producing
the product and the possible end use, though not completely specified as implied. For instance,
the yam could be used in weaving cloth, producing knitwear, or as sewing thread in producing
garments.

Thus, the textile industry is defined as units producing: 1. yarn from cotton, jute, silk, wool,
synthetic fibers and synthetic filaments;

2. fabrics from cotton, jute, silk, wool, synthetic fibers and filaments; and,

3. garments from any of the fabrics made from cotton, jute, silk, wool, synthetic fibers,
filaments and leather.

In the present study, the attention is confined to a subclass of these units and the attention is
focused on units producing yam and fabrics from cotton, synthetic fibers and filaments. Such
units, in India, collectively form the Indian cotton textile industry.

The units in cotton textile industry can. be segmented according to the technology and the
degree of integration achieved. The term structure of the industry refers to a number of units in
each geographical segment and the installed capacity in each of the segment.

segment Degree of Segment

number Integration Type of technology referred to as
Ring spinning or rotor
1 only spinning spinning spinning sector
Hand spun without use of
2 only spinning power Khadi
3 only weaving hand weaving by handloom power loom
sector

16
 using a loom driven by Handloom
4 only weaving power sector
only wet
processing of
5 woven fabrics using power process house
only wet
processing of Hand process
6 woven fabrics without using power house
7 spinning, weaving using power in all composite
and processing operations mills

Table 1

The forces that shape the structure of the industry are:

1. Government policies influencing the functioning of this industry.

2. Consumer demand.

3. New entrants in the industry.

4. Suppliers and the influence they exercise over the industry. Suppliers cover various inputs
such as raw materials, technology, labor, finance etc. and

5. Emerging substitutes for the products by an industry. Although, the forces are listed
separately, they are interactive in their character. The government, by adopting suitable
policies, can alter any of the forces listed above and thus alter the industry structure.

1.3 MINISTRY OF TEXTILES.

The Ministry of Textiles is an Indian government national agency responsible for the
formulation of policy, planning, development, export promotion and regulation of the textile
industry in India. This includes all natural, artificial, and cellulosic fibers that go into the
making of textiles, clothing and Handicrafts.
The Textiles Committee has been established under the Textiles Committee Act, 1963, (No. 41
of 1963), of the Indian Parliament. It replaced the erstwhile Cotton Textiles Fund Committee,
constituted under the Cotton Textiles Fund Ordinance, which was promulgated by section 72
of the Government of India Act, 1935. This ordinance provided for the establishment of the
Cotton Textiles Fund from the levy of a cess of three per cent on the exmill prices of cloth and
yarn exported and for the setting up of the Cotton Textiles Fund Committee to administer the
Fund. The Fund was to be used for supervising the export of cloth and yarn, and increasing the
same of cloth and yarn abroad and generally for the development of technical education and
research relating to the cotton textile industry.

1.4 SCOPE OF THE STUDY.

17
Having determined the importance of the textile industry in the Indian industry, we also realize
that exports are essential for the sustenance of this industry. As we shall elaborate on later. It
is in this context that it is extremely important for us to search out new markets where we can
have a competitive edge. Thus, in this report we try to analyze the world- nations as potential
markets where we can find a niche for ourselves. The scope of this project thus includes an in
- depth view of the prevailing conditions in each of the world - nations that India export textile
to. This includes an analysis of current market trends in consumption, consumer preferences
and competitive environment. The attempt has also been the world nations-made to analyze
the opportunities and threats thus afforded by each of these markets for Indian textile exports.

1.5 LIMITATION OF THE STUDY.

Various hindrances occurred while carrying out the research. They have acted as limitation of
the study and a few of them are:

1. Lack of time and other resources as it was not possible to conduct survey at large level. 2.
While collection of the data many officers were unwilling to respond with correct information.
Respondents were having a feeling of wastage of time for them.
3. Data collection was difficult because only secondary was available, was not able to conduct
surveys and questionnaire.
4. Financial data of companies were not available at the time of the study.
5. High cost.
6. Reliability of data and validity of data.

18
 CHAPTER 2

REVIEW OF THE LITERATURE

Chandra (1998) in his article wrote on challenges ahead of Indian textile and
clothing industry in post quota regime. It put special emphasis on production
capabilities and efficiencies as most essential elements to fight global
competition. It suggests various strategic decisions Indian textile manufacturers
have to make to survive the competitiveness in post quota regime.

Simpson and Shetty (2001) did a vast study on India’s textile industry. The
purpose of study is to analyze India’s textile and apparel industry, its structural
• problems, market access barriers, and measurements taken by government of
India to enhance the industry’s competitiveness in the post – Multifiber
Agreement (MFA) era. The study also assesses India’s textile and apparel market
potential and trade and investment opportunities for U.S. firms as India steps into
a more free and transparent trade regime. For the purpose of study exploratory
study is done in which in-depth interviews are done with various government
• officials in Textile Export Promotion Council, Ministry of . 101 textile, Cotton
Council of India, Apparel Export Promotion Council (AEPC), Federation of
Karnataka Chamber of Commerce and Industry, Handloom Export Promotion
Council, Madras Chamber of Commerce and Industry, The South India Textile
and Research Association, and almost all top executives of India’s large textile
mills.

Verma (2002) did a comprehensive study with objective to evaluate the export
competitiveness of Indian textile and clothing sector. Because Indian textile and
clothing sector is predominantly cotton based, the study is focused on cotton
textile and clothing and look at the entire value chain from fiber to garment and
retail distribution. The scope of study covers the products in Indian export basket
which have shown a promising growth in value. The Study concludes that Indian
exports to US and EU are export competitive as a whole. Sector wise analysis of
export performance of Indian textile and clothing sectors to US and EU reveal
•
that so far apparel or clothing and made-up is concerned; quota is the major
constraint in the growth, while it is not true in case of yarn exports. Indian textile
and clothing sector has tremendous potential and only a portion of which is
explored till now and this shortcoming is due to policy constraints.

Meenakshi (2003) did a comprehensive study on the opportunities that would be

provided by WTO to Indian Textile industry. This paper gives a lot emphasis on
new capacity installation to take the benefits to the fullest extent in India has to
be a true gainer in competition to other nations. Since India’s own consumption
per capita is
• 19
•

also on the rise with the rise of income and consumption habits, the profit margins
• available to Indian textile and clothing producers will be more.
But in export market, the prices will be driven by international factors and profits will
be under pressure. So the exporters might have to go for strategy of partial exports and
partial domestic sale.

• Pandey (2003) in his article expected that Indian textile exporter would be benefited with
quota elimination. It discusses on various sectors of textile and clothing. Also he expects
that hosiery industry will be one of the gainer and small scale exporters will be more
competitive due to small size and controlled cost and lower overheads.

• Vivek (2004) in his article had said that JC Penny a leading retail chain of US looks India
for sourcing its garments in woven and hosiery. He is of opinion that India will be
fulfilling its major need of Hosiery and woven garments in cotton while China will be
good for synthetic fabrics and its garments.

Trivedi (2005) in his article concluded that the textile is one sector where India has high
ambitions and can achieve robust growth through moderate human skills. India has
skilled labour and does better in this sector as compared to others. This will also Increase
• the employment and the social structure will be better off.

Thomas (2005) in his article wrote on why in the competitive scenario wholesalers like
Nike are shy from keeping long inventories and stocks. So pressure is on garment . 104
• companies to deliver the goods in time. India has bottleneck in infrastructure, which
hinders the time receipt of raw material and delivery of finished goods. This would cause
rapid airfreight and would squeeze the margins. Government has to invest heavily in
Infrastructure to keep the pace of growth of garment industry intact and take the benefits
to fullest extent.

Chaudhry (2006) did a very comprehensive study on the productivity of Indian Textile
sector and various related sectors. Very technical formulas are used to analyze the
competitiveness of Indian Textile Industry.

Bedi (2009) in his article had prepared detailed report on Indian textile industry covering
various sector of textile industry. This is one of the most comprehensive reports coveting
all aspects of textile industry, performance and hindrances in the growth of it.
20
 CHAPTER 3

OBJECTIVES OF THE STUDY

To identify critical issues in the textile sector of India (production, processing, export,
trade and regulations) from the perspective of sustainable development and poverty
• eradication.

To assess social, economic and ecological conditions under which global textile
production and trade takes place and the impacts of the industry on sustainable
development.
•

To assess the key social, economic and environmental issues throughout the textile value
chain starting from India and up to the consumers both local as well as international.

• To analyze the present roles and responsibility of global textile market players in India,
including identification of key influence points for responsible practices.

To study the export marketing trend of textile product.

•
To study overall growth of India’s textile export of previous years.

• To examine the problems of textile export.

•
To study the export procedure of textile.
•
• To study in detail the history of textile.
•
• To study in detail the statistics of textile production and export.

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 CHAPTER 4

RESEARCH METHODOLOGY

4.1 RESEARCH DESIGN

Research Methodology is the backbone of the project. It includes Research design, Data
collection, sampling design and Data analysis tool and techniques are used for studying the
research problem. Research methodology is actual procedure of doing the project and provides
the platform for solving the research problems.

Research comprises defining and refining problem, formulating hypothesis or suggesting

solution; collection, organizing and evaluating data; making deduction and reaching the
conclusion to determine whether the fit for formulating hypothesis. The purpose to research is
to discover answers to questions through the application of scientific procedures. The aim of
the research is to find out the truth which is hidden and which has not been discovered as yet.

Research is a process of collecting, analyzing and interpreting information to answer the

Questions. Research comprises “creative and systematic word undertaken to increase the stock
of knowledge, including knowledge of humans, culture and society, and the use of this stock
of knowledge to devise new applications.” A research project may also be an expansion on past
work in the field. Research projects can be used to develop further knowledge on a topic, or in
the example of a school research project, they can be used to further a student’s research
process to prepare them for future jobs or reports. The primary purposes of basic research are
documentation, discovery, interpretation or the research and development(R&D) of methods
and systems for the advancement of human knowledge.

COLLECTION OF DATA:

There are several ways of collecting the appropriate data which differ considerably in context
of money, cost, time and other sources at the disposable of the researcher. There are two types
of data:
•Primary data
•Secondary data

26
PRIMARY DATA
Primary data are those which are collected a fresh and for the first time and thus happen to be
original in character.

•Observation

•Direct communication

SECONDARY DATA
Secondary data are those which have already been collected by someone else and have already
been passed through statistical process. In this project report secondary data is use

Sales report
Websites

27
 CHAPTER 5
TOPIC RELATED CHAPTERS

5 TEXTILE INDUSTRY

5.1 HISTORY of TEXTILE INDUSTRY

The archaeological surveys and studies have indicated that the people of Harrapan civilization
were familiar with weaving and the spinning of cotton for as long as four thousand years ago.
Reference to weaving and spinning materials is found in the Vedic Literature. There was textile
trade in India during the early centuries. A block printed and resist-dyed fabric, whose origin
is from Gujarat was found in the tombs of Fostat, Egypt. This proves that Indian export of
cotton textiles to Egypt or the Nile Civilization in medieval times were to a large extent. Large
quantity of north Indian silk were traded through the silk route in China [5] to the western
countries. The Indian silks were often exchanged with the western countries for their spices in
the barter system. During the late 17th and 18th century there were large export of the Indian
cotton to the western countries to meet the need of the European industries during industrial
revolution, apart from the domestic requirement at the Indian Ordnance Factories.

The Textile industry was the major component of economic income in India before the English
colonies. "The hand-loom and the spinning-wheel, producing their regular myriads of spinners
and weavers, were the pivots of the structure of that society," described by Karl Marx Due to
the abolishment of slavery in the Americas, England began to search for another source of
cheap cotton, and saw India as a ripe place for this. They convinced many farmers to switch
from subsistence farming to producing and exporting huge amounts of cotton, after a long
period of protectionism over the English textile industry. Eventually, through colonization, the
traditional method of artisan Textile production was destroyed, and replaced with large scale
factory production.

5.2 TECHNICAL PARAMETERS FOR TEXTILE INDUSTRY

Quality is of prime importance for every industry or business, to get increased sales and better
name amongst Consumers & fellow Companies. Generally Quality control Standards for
export are set strictly, as this business also holds the prestige of the country, whose company
is doing the export. Quality standards like ASTM, AATCC, BS, DIN and JIS & ISO must be
recognized and agreed by all levels of management. However quality expectations for exports
are related to the type of customer segments and the retail outlets. For textile and apparel
industry product quality is calculated in terms of quality and standard of fibres, yarns, fabric
construction, colours fastness, Surface designs and the final finished garments products. The
present paper was aimed at investigating the important testing parameters for the textile
products and the steps to be taken to improve these testing parameters.

28
 Different testing parameters:

a. Tensile Strength

b. Tear Strength

c. Seam Properties

d. Pilling

e. Colourfastness to light

5.2.1Tensile Strength

It is the strength of the fabric which denotes the breaking force required to rupture the fabric.
A tensile tester is used to determine the strength in which central part of the width of the
specimen is gripped in the clamps. It determines the effective strength of the specified width
with the assistance of adjacent yarns. Fabric assistance depends on type of fabric &
construction variables.

5.2.2 Tearing Strength

The tear force required to propagate a single-rip tear of defined length from a cut in the fabric
when a sudden force is applied. This test is performed by measuring the work done in tearing
the fabric through a fixed distance on the tearing strength tester. This test is mainly applicable
for woven fabrics not for knitted fabrics.

5.2.3 Seam Properties

To determine the seam maximum force of sewn seams when the force is applied
perpendicularly to the seam. The test applies to the standard seam applied to fabric samples or
the Production seam as received in finished garments. The major contributors to seam strength
are fabric type and weight, thread type and size, stitch and seam construction, stitches per inch
and stitch balance. Seam Strength in woven and knit is same as fabric breaking and bursting
strength respectively.

29
5.2.4 Pilling Resistance:

Pilling is the serious problem of the textile industry. A finished fabric may have pleasing handle
and smooth surface but when converted into garment and while wearing and as well as washing
pills are formed due to rubbing action. First entanglement of loose fibres which protrude from
the surface takes place; this further appears like a ball anchored to the fabric surface through
unbroken fibre.

5.2.5 Colorfastness to Light:

It is the resistance to degradation of fabric dyes and prints due to light is an important
requirement of a garment because without such resistance, the garment may change colour and
such colour may not be acceptable to a consumer from an aesthetic point of view. The samples
are placed in special holders and exposed to artificial daylight produced by a special light
source which mimics the action of sunlight, but in a more intense manner so as to speed up the
fading effect.

A standard (blue wool reference) is also exposed with the sample and the colourfastness is
being assessed by comparison of the colour change of the exposed portion to the unexposed
portion of the test specimen using scale or blue references used.

30
 FIGURE 10
CHAPTER 6
TEXTILE INDUSTRIES IN INDIA

6.1 TEXTILE INDUSTRIES IN INDIA

6.1.1 Maharashtra
It is the leading producer of cotton textile in India. Mumbai is called as ‘Cottonpolis of
India’. The textile industry has also spread to Sholapur, Kolhapur, Pune, Jalgaon, Akola,
Sangali, Nagpur, Satara, Wardha, Aurangabad and Amravati.

6.1.2. Gujarat
It is the second largest producer of cotton textiles after Maharashtra. Ahmedabad is called
‘Manchester of India & Boston of East’ and it is also second largest centre of cotton textile
industry after Mumbai. The other important centres are- Surat, Vadodara, Bharauch,
Bhavnagar, Nadiad, Porbandar, Rajkot, Navsari, mauri and Viramgam.

6.1.3. Tamil Nadu

Chennai, Tirunelveli, Madurai, Tuticorin, Salem, Virudhnagar and Polachi are the major
cotton textile centres. Coimbatore is called ‘Manchester of South India’ because it is the most
important cotton textile centre.

6.1.4. Uttar Pradesh

Kanpur, Etawah, Modinagar, Moradabad, Bareilly, Hathras, Agra, Meerut and Varanasi are
the major cotton textile producing centres in the state. Kanpur is called ‘Manchester of Uttar
Pradesh’.

6.1.5. Karnataka
Bangalore, Belgaum, Mangalore, Chitradurga, Galbarga and Mysore are the major cotton
textile producing centres in the state.

6.1.6. Madhya Pradesh

Indore, Gwalior, Mandasaur, Dewas, Ujjain, Nagda, Bhopal, Jabalpur and Ratlam are the major
cotton textile producing centres in the state.

6.1.7. Rajasthan
Kota, Jaipur, Sriganganagar, Bhilwara, Bhavanimandi, Udaipur and Kishangunj are the major
cotton textile producing centres in the state.

6.1.8. West Bengal

The major cotton textile producing centres in the state are Kolkata, Howrah, Serampore,
Shyamanagar, Saikia, Murshidabad, Hugli and Panihar.

31
6.2 Top 10 Textile Companies in India 2020

6.2.1. Arvind Ltd

• Revenue: Rs 7,229 Cr
• Employees: 42,000
• Debt: Rs2,700 Cr
• Processing Capacity: 240 MMPA
Arvind Ltd is one of the largest Textile Companies in India. Today, the fabric made by
Arvind can go around the earth 6 times over. 2 pieces of apparel are sold by an Arvind
managed brand, every second in India. The Company is headquartered in Ahmedabad,
Gujarat. It is Largest among the top 10 textile companies in india.

• Market Cap: 1,315 Cr.

• Stock P/E: 5.93
• Dividend Yield: 3.93 %
• ROCE: 8.95 %
• ROE: 7.70 %
• Sales Growth (3Yrs): -3.75 %
Arvind owns 22 global patents for environmental solutions, and is the largest fire protection
fabric producer in the country; Also managing 15 global apparel brands of the likes of
Tommy Hilfiger, US Polo, CK, GAP, Nautica, and Sephora.
42,000 employees across verticals ranging from retail to advanced materials, environmental
and social solutions to real estate, apparel to agriculture. It is No 1 among the top 10 textile
companies in India based on turnover.

6.2.2 Vardhman Textiles Ltd

Vardhaman Textiles is the Second largest Textile Companies in India With more than five
decades of presence, Vardhman is today among the leading textile conglomerates in the
country. Beginning humbly in the year 1965, Vardhman Group has evolved over the years
into a modern-day textile major under the dynamic leadership of its chairman, Mr. S. P.
Oswal. Vardhman Textiles Limited today stands as an epitome of perpetual business growth
and rich industry experience.
• Revenue: Rs 6,706 Cr
• Processing Capacity: 140 MMPA
• Employees: 22939 (Including contractual manpower)
• Debt: Rs 1,975 Cr
Engaged in the business of manufacturing of Yarn, Fabric, Acrylic Fibre, Garments, Sewing
Threads and Alloy Steel, the Group has over the years developed as a business conglomerate
with presence in India and in 75 countries across the globe. Vardhman is one of India’s largest
textile manufacturers, with leading market share and a sustainable business model. It is Second
among the top 10 textile companies in india • Market Cap: 5,160 Cr.
• Stock P/E: 7.50
• Dividend Yield: 1.67 %
• ROCE: 10.90 %

32
• ROE: 10.46 %
• Sales Growth (3Yrs): -2.50 %

33
6.2.3. Welspun India Ltd

Welspun India is the third Largest Textile Companies in India in terms of sales. Part of USD
2.7 billion Welspun Group, Welspun India Ltd. is a global leader in home textiles, supplying
to 17 of the top 30 global retailers. The Companies manufacturing facilities, located in India,
are equipped to deliver high-quality products, benchmarked to international standards.
• Revenue: Rs 6,828 Cr
• Employees: 22,194 permanent employees
• Debt: Rs 3,310 Cr
Presently over 70% of the business for advanced textiles comes from exports. So it Third
among the top 10 textile companies in india based on turnover.
• Market Cap: 5,265 Cr.
• Stock P/E: 10.82
• Dividend Yield: 0.57 %
• ROCE: 11.83 %
• ROE: 14.49 %
• Sales Growth (3Yrs): 3.28 %

6.2,4. Raymond Ltd

Raymond is a diversified group with majority business interests in Textile & Apparel sectors
as well as presence across diverse segments such as FMCG, Engineering, and Prophylactics
in national and international markets. It is the Fourth-largest among top 10 textile companies
in india
• Revenue: Rs 6,767 Cr
• Employees: 7087
• Debt: Rs 2,468 Cr
• Processing Capacity: 110 MMPA
Being a vertically and horizontally integrated manufacturer of Textiles, Raymond produces
‘The finest fabric in the world’. With over 1100 exclusive stores spread across 380+ cities
and an expansive network of over 20,000 points-of-sale in India, Raymond and its brands are
also available in tier IV & V cities.
• Market Cap: 3,443 Cr
• Stock P/E: 22.22
• Dividend Yield: 0.53 %
• ROCE: 11.60 %
• ROE: 9.10 %
• Sales Growth (3Yrs): 8.34 %
Raymond has also been a leading player in Shirting fabrics and is the No.1 brand in the OTC
space. A formidable player in the Denim space, Raymond is also the top producer &
preferred supplier of high-quality Ring Denim to world’s leading Jeanswear brands.
Raymond Group also has an extensive presence in the B2B space, through its garment
business. Raymond’s state of the art & wholly-owned subsidiaries such as Silver Spark
Apparel Ltd, Celebrations Apparel Ltd &Everblue Apparel Ltd by crafts suits, trousers, shirts

34
& Jeans for leading fashion labels across the world and is the only manufacturer of Full
canvas premium Jackets in India.

6.2.5. Trident Ltd

Trident Limited is the flagship company of the US$ 1 billion Indian business conglomerate
and global player, Trident Group, headquartered in Ludhiana. Beginning humbly in the year
1990, Trident has evolved over the years into one of the world’s largest integrated home
textile manufacturer under the visionary leadership of its founder and Group Chairman Mr
Rajinder Gupta.

• Revenue: Rs 5,394 Cr
• Employees: 13,816
• Debt: Rs 2,436 Cr

The Company is engaged in the business of manufacturing wide variety of yarn, bed, bath
linen, paper, chemicals and captive power. Trident’s state-of-the-art manufacturing facilities
are located in Barnala (Punjab) and Budni (Madhya Pradesh). The Company is one of the
largest exporters of home textile products with significant market share.
• Market Cap: 2,979 Cr
• Stock P/E: 6.83
• Dividend Yield: 5.13 %
• ROCE: 12.05 %
• ROE: 12.92 %
• Sales Growth (3Yrs): 12.51 %

6.2.6. K P R Mill Ltd

KPR Mill Limited is one of the largest vertically integrated Apparel manufacturing companies
in India producing Yarn, Knitted Grey & Dyed Fabric and Readymade Garments.
It is Sixth in the list of top 10 textile companies in india
• Revenue: Rs 3,384 Cr
• Employees: 13,424
• Debt: Rs 856 Cr

The Yarn division has 3,53,616 spindles with a production capacity of 90,000 MT (Capacity
Doubling is underway) per annum. With the most modern machinery of International
Standards, KPR produces Combed, Grey Melange , Carded & Compact yarn meant for
apparels of world’s Leading Brands.

• Market Cap: 4,015 Cr

• Stock P/E: 11.61
• Dividend Yield: 0.14 %

35
 • ROCE: 21.13 %
• ROE: 19.78 %
• Sales Growth (3Yrs): 9.18 %
• Promoter holding: 74.99 %
• Debt to equity: 0.48
• Price to book value: 2.24
Fabric division is equipped with high speed automatic circular knitting machines that can knit
27,000 MT per annum of different kinds of fabric. Its Fabric Processing unit has a capacity to
process 18,000 MT per annum with trendsetter ETP.
The Garment manufacturing facility is one of the largest in India with a capacity to produce 95
million garments per annum.

6.2.7. Page Industries Ltd

Page Industries Limited located in Bangalore, India is the exclusive licensee of JOCKEY
International Inc. (USA) for manufacture, distribution, and marketing of the JOCKEY®
brand in India, Sri Lanka, Bangladesh, Nepal, and the UAE. Page Industries is also the
exclusive licensee of Speedo International Ltd. for the manufacture, marketing, and
distribution of the Speedo brand in India.

• Revenue: Rs 2,872 Cr
• Employees: 19419
• Debt: Rs 85 Cr

JOCKEY is the company’s flagship brand and a market leader in the innerwear category.
Page Industries and Brand Jockey have pioneered the innerwear industry on many fronts.As
of September 2017, the brand has 384 Exclusive Brand Outlets across India with 286 stores
on high streets and 98 stores in shopping malls with heavy footfalls. These stores reinforce
the legacy of brand Jockey and allow us to showcase our complete range of products in
Innerwear, Athleisure and Sportswear for men, women and kids.
• Market Cap: 20,243 Cr.
• Stock P/E: 53.25
• Dividend Yield: 1.89 %
• ROCE: 68.73 %
• ROE: 47.53 %
• Sales Growth (3Yrs): 16.68 %
• Promoter holding: 48.32 %
• Debt to equity: 0.11
• Price to book value: 26

Page Industries has also opened four Jockey Exclusive Brand Outlets in the UAE and two in
Sri Lanka.

36
Within just six years of its operations, the brand is present in over 1286 stores in 86 cities and
towns across the country. With 18 Exclusive Brand Stores in Delhi, Gurgaon, Noida,
Mumbai, Bangalore, Chennai, Pune and Ahmedabad, Page Industries is geared to take brand
Speedo to the next level of consumer connect and make it the most sought-after swimwear
brand in the country.

6.2.8. Nitin Spinners Ltd

Nitin Spinners has emerged as a leading manufacturer of 100% cotton yarn and knitted fabrics
in India with over 25 years of experience.
• Revenue: Rs 1,226 Cr
• Employees: 3,130
• Debt: Rs 860 Cr
• Processing Capacity: 240 MMPA

The Company was established in 1992 and headquartered in Bhilwara (Rajasthan). The
Company was formed as a response to the apparent need in the Indian Textile Industry for
high-quality products and services.
Located in Bhilwara – The ‘Textile City of India’, the Company is connected to all the major
cities of the country, with proximity to raw material sources as well as accessibility to
modern shipping ports.
• Market Cap: 287.01 Cr • Stock P/E: 4.8
• Dividend Yield: 2.45 %
• ROCE: 11.45 %
• ROE: 14.29 %
• Sales Growth (3Yrs): 17%
• Promoter holding: 55.82 %
• Debt to equity: 1.78
• Price to book value: 0.59

Nitin Spinners, an ISO 9001:2015 Company and a Government of India Recognized Export
House, has today emerged as one of India’s largest and reputed producers of 100% cotton
yarn and fabrics. The company is also having Environment and Energy Management System
certifications ISO 14000 and ISO 50001, OSHAS for occupational safety and SA 8000 for
Social accountability.

6.2.9. Rupa & Company Ltd

Rupa is today the unquestioned No.1 knitwear brand in India, covering the entire range of
knitted garments from innerwear to casual wear. So it is the Ninth in the list among top 10
textile companies in india.
• Market Cap: 1,472 Cr
• Stock P/E: 15.93
• Dividend Yield: 1.62 %
• ROCE: 23.63 %

37
 • ROE: 17.19 %
• Sales Growth (3Yrs): 3.04 %
• Promoter holding: 73.29 %
• Debt to equity: 0.31
• Price to book value: 2.56
Starting as a dream in the far-sighted mindscape of three men of vision and enterprise, Rupa
has evolved to become the frontrunner in India and a leading player in global markets with
far-reaching footprints and millions of satisfied customers.

6.2.10. HimatsingkaSeide Ltd

The Himatsingka Group is a vertically integrated Home Textile major with a global footprint.
The Group focuses on the manufacturing, retailing and distribution of Home Textile
products.On the manufacturing front, the Group operates amongst the largest capacities in the
world for producing upholstery fabrics, drapery fabrics and bed linen products.
• Market Cap: 1,403 Cr.
• Stock P/E: 7.10
• Dividend Yield: 3.51 %
• ROCE: 12.16 %
• ROE: 14.55 %
• Sales Growth (3Yrs): 11.48 %
• Promoter holding: 47.57 %
• Debt to equity: 1.96
• Price to book value: 0.99

Spread across Asia, Europe and North America, its retail and wholesale distribution divisions
carry some of the most prestigious brands in the Home Textile space and cater to Private
Label programs of major retailers across these geographies.Founded in 1985, the
Himatsingka Group focuses on design and product development, best-in-class manufacturing
processes and efficient supply chain capabilities to ensure the highest level of customer
service in the industry. With a team of over 5000 people, the Group continues to expand its
reach and build capacities in the Home Textile space.

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FIGURE 11

ECONOMIC IMPACT
It is estimated anywhere between 20 million and 60 million people are employed in the
textile industry worldwide. Employment in the garment industry is particularly important
in developing economies such as India, Pakistan, and Vietnam. The industry accounts for
approximately 2% of global Gross Domestic Product and accounts for an even greater
portion of GDP for the world's leading producers and exporters of textiles and garments.

GLOBAL TEXTILE MARKET

China is the world's leading producer and exporter of both raw textiles and garments. The
United States is the leading producer and exporter of raw cotton, while also taking the
prize for the top importer of raw textiles and garments. The chart below shows the global
import and export market shares of the top 7 countries in each category.

39
Table 2
There are many developing countries ready to crack or climb this list in the near future as
their investment into the textile or garment industry increases. Countries such as Pakistan, Sri
Lanka, Samoa, and a number of South American countries have seen considerable growth in
their textile markets in recent years. As China moves towards a service-based economy, and
labor prices continue to rise, it is logical to assume many garment producers will move away
from China and into developing markets where labor is cheap and readily available.

40
GOVERNMENT INICIATIVES TAKEN FOR TEXTILE INDUSTRY

6.3 EXPORT PROMOTION COUNCILS

6.3.1. Apparel Export Promotion Council

“Incorporated in1978, AEPC is the official body of apparel exporters in India that provides
invaluable assistance to Indian exporters as well as importers/international buyers who choose

India as their preferred sourcing destination for garments. A quick look at how the Apparel Export
Promotion Council (AEPC) has been the moving force behind lot of achievements:
From one office in 1978, it has over 12 offices in just a span of 30 years.
From just being a quota monitoring entity, AEPC is today a powerful body for the promotion and
facilitation of garment manufacturing and their exports. For Indian exporters, AEPC is quite literally
a one-stop shop for information advise technical guidance workforce and market intelligence.
Members have access to updated trade statistics potential markets information on international
fairs and assistance in participating at these fairs. It also plays a large role in identifying new
markets and leading trade delegations to various countries.

6.3.2. The Cotton Textiles Export Promotion Council

TEXPROCIL - The international face of Indian Cotton Textiles.

Since its inception in 1954, as an autonomous, nonprofit body dedicated to promotion of
exports, The, popularly known as TEXPROCIL has been the international face of cotton
textiles from India facilitating exports world wide. Texprocil has a membership of around
3,000 companies spread across major textile clusters in India. Its members are well established
manufacturers and exporters of cotton textile products like Cotton, Yarns, Fabrics and Home
Textiles, showcasing a dazzling array of products across the value chain. The Council connects
international buyers with appropriate suppliers and facilitates interaction that enables them to

41
source their specific needs. It also provides information on India's competitive advantages, its
export environment and updated position in the global market place.
Texprocil provides regular updates on international product trends, trade related issues,
advances in technology and the latest developments in the industry, as well as existing and
emerging markets.

It also undertakes regular market research, organises participation in international trade fairs,
holds its own Buyer Seller Meets and facilitates international trade missions in India and other
countries.
The Council enables better understanding of Indian and International trade policies, emerging
trade issues, social and environmental compliances, quality management and sustainable
business practice.

6.3.3.The Synthetic & Rayon Textiles Export Promotion Council

The Synthetic & Rayon Textiles Export Promotion Council (SRTEPC), set up in 1954, is one
of6 the oldest Export Promotion Councils in India.
The Council has played a transforming role over the years, inculcating export culture and
promoting exports of Indian man-made fibre and textiles. Exports of these items, which were
negligible in the 1960s, have grown substantially to touch US$6.16 billion during 2013-14.
India exports to nearly 140 countries at present.
The Council envisages exports to the tune of Rs. 55,000 crores (US$ 9 billion) by the end of
the 12th Five Year Plan (2016-17). The MMF textiles industry contributes 17% of the total
Indian textile exports and this share is growing. India is the sixth largest exporter of MMF
textiles in the world.
Vibrant Indian MMF textile industry
The Indian MMF industry is modern, vibrant and growing. India is the second leading producer
of cellulosic fibre/yarn and the third largest producer of synthetic fibre/yarn in the world. At
present India produces 1263 million kgs of man-made fibre, 2655 million kgs of yarn and
27889 million sqmeters of fabrics annually.

Products under the purview of Council The products under the purview of the Council are
MMF and blended textile items including fibre, yarn, fabrics, made-ups, accessories, home
textiles, technical textiles etc.

42
6.3.4.Wool and Woolens Export Promotion Council

Introducing foreign businessmen to local manufacturers/exporters and provide them with the
information useful in conducting business.
Inviting leading exporters to visit India and gain first hand information regarding the capability
of the Indian Woollen Industry.
• Assisting foreign buyers in their visits to India and chalk out their tour programmes,
arrangements etc.
• Working with the organisers of leading International Trade Fairs and Exhibitions, in order to
project the quality and variety of Indian Woollen Products abroad.

• Researching foreign markets and and sponsor Study-cum-Sales Team/Delegations abroad.

• Promoting and actively practice overseas public relations.
• Monitoring international fashion forecasts and transmit them to Indian Exporters.
• Helping the Textile Inspection committee of India to ensure that Indian Woollen Products are
made as per International Standards.
• Chalking out and implementing programmes for enlarging and improving the production base
of the Woollen Industry.
• Maintaining close liason with the International Wool Secretariat and Wools of New Zealand.

6.3.5.Wool Industry Export Promotion Council (WOOLTEXPRO)

WOOLTEXPRO is an autonomous, non-profit Export Promotion Council, sponsored by the

Ministry of Textiles and set up by the Ministry of Commerce, Government of India, which has
become the international face of Indian woollen textiles successfully facilitating exports.

Major functions of WOOLTEXPRO

43
• Foreign delegation to India and arrange their tour programmes.
• Arranging Buyer-Seller Meets in India and abroad.
• Maintaining close liason with the International Wool Textile Organisation, Woolmark
Company, Wools of New Zealand, Australian Wool Innovation, etc.
• Arranging trade fairs and exhibitions in order to project the quality and variety of Indian
woollen products. Research foreign markets and arranging delegation/study tour abroad

• Chalking out and implementing programmes for enlarging and improving the production base
of the Woollen Industry.
• Exploration of overseas markets.
• Providing your Company profile to overseas buyers and vice a versa.
• Resolving shipping & transport problems • Advise on export finance, banking and insurance.
• Extensive publicity in India & Abroad.
• Deputation of trade delegations, study teams, sale teams to foreign markets
• Oragnise buyer/sellers meetings in India & Abroad.
• Market study.

6.3.6.Indian Silk Export Promotion Council

The Indian Silk Export Promotion Council (ISEPC) was set up in 1983 as a company not for
profit under Companies Act duly sponsored by the Government of India in the Ministry of
Textiles. The Council as on date has a membership of 655 regular exporters of Silk goods
whereas more than 1800 exporters have registered with the Council. ISEPC works closely with
the Government of India on policy formulation concerning silk sector and provides specialized
services to the entrepreneurs enlarging global business opportunities for the silk industry in
India.

Main Activities of the Council

• Explore markets and identifies items offering export potential by conducting market surveys.
• Establish contacts with the presepective buyers to generate their interest in Indian Silk
products.
• Sponsor trade delegation, study teams and sales teams to various market abroad.
• Organize Buyer Seller Meets for its member exporters.
• Organize Silk fairs and exhibition in India.
• Participate in trade fairs and exhibitions abroad.
• Resolve trade disputes.
• Launch generic promotion of silk products from India.
• Organize Workshops/Seminars on various trade and policy related issues.

44
6.3.7.Carpet Export Promotion Council

CEPC was established by exporters under Companies Act in the year 1982 and is a non-profit
organization, set up with the objective to promote and develop exports of Handmade Carpets,
Rugs and other Floor Coverings. It is an official body of handmade carpet exporters for
promotion of exports from country and projected India's “Make in India” image abroad as a
reliable supplier of high quality handmade carpet products.

CEPC therefore, helps in R & D, quality assurance, timely delivery of finished products across
the globe in addition to skill enhancement of weavers / artisans / entrepreneurs, strengthening
base in existing markets, identifying potential markets, educating about government policies
and its compliances, providing assistance for brand building of Indian hand-made carpets,
through publicity, participating in and organizing world renowned trade fairs, expositions and
road shows etc around the word in established markets. Also exploring potential and upcoming
markets globally for promotion of Indian handmade carpets, rugs, floor coverings etc

6.3.8.Export Promotion Council for Handicrafts (EPCH)

Export Promotion Council for Handicrafts (EPCH) was established under Companies Act in
the year 1986-87 and is a non-profit organisation, with an object to promote, support, protect,
maintain and increase the export of handicrafts. It is an apex body of handicrafts exporters for
promotion of exports of Handicrafts from country and projected India's image abroad as a
reliable supplier of high quality of handicrafts goods & services and ensured various meausres
keeping in view of observance of international standards and specification.
The Council has created necessary infrastructure as well as marketing and information
facilities, which are availed both by the members exporters and importers. The Council is
engaged in promotion of handicrafts from India and project India's image abroad as a reliable
supplier of high quality handicrafts.

45
6.3.9.Powerloom Development & Export Promotion Council

Powerloom Development & Export Promotion Council (PDEXCIL) is set up by the Ministry
of Textiles, Govt. of India in the year 1995. The Council has been registered under Section 25
of The Companies Act, 1956, having its Registered Head Office at Mumbai, Maharashtra &
Regional Office at Erode, Tamil Nadu.
The main objectives of the PDEXCIL is to promote, support, develop, advance and increase
powerlooms and export of Powerloom fabrics and made-ups thereof and to carry out any such
activity in such manner as may be necessary or expedient.

PDEXCIL undertakes many activities such as Capacity Building Programs, Seminars, Fairs,
Buyer Seller Meets, Reverse Buyer Seller Meets, participation in International fairs, Trade
delegation visits etc for development of Powerloom industry in India and increasing exports
of Powerloom fabrics and made-ups.

Our Members can take benefit from the activities of PDEXCIL for improving their facilities,
export performance and development. The success of the powerloom industry today in India,
is in no small measure, due to the support and assistance offered by the PDEXCIL. Spurred
on by the developmental activities initiated by PDEXCIL, Indian power-loom textiles are
equipped to meet the challenges posed by the global supermarket.

6.3.10.Handloom Export Promotion Council

India’s Textile Industry is the country’s second largest industry in terms of employment
potential. Handloom sector plays a very important role in the country’s economy. Handloom
industry is the largest cottage industry in the country with 23.77 lakh looms. The major
handloom export centres are Karur, Panipat, Varanasi & Kannur where handloom

46
products like Bed linen, Table linen, Kitchen linen, Toilet linen, Floor coverings, embroidered
textile materials, curtains etc. are produced for export markets. The Handloom industry mainly
exports fabrics, bed linen, table linen, toilet and kitchen linen, towels, curtains, cushions and
pads, tapestries and upholstery’s, carpets, floor coverings, etc.
The major importing countries of Handloom products from India are USA, UK, Germany, Italy,
France, Japan, Saudi Arabia, Australia, Netherland and UAE.

Handloom Export Promotion Council (HEPC) is a nodal agency constituted under “The
Ministry of Textiles, Government of India” to promote exports of all handloom products like
fabrics, home furnishings, carpets, floor coverings, etc. HEPC was constituted in the year 1965
with 96 members and its present membership is around 1400 spread all over the country.
The prime object of HEPC is to provide all support and guidance to the Indian Handloom
exporters and International buyers for trade promotion and international marketing. HEPC
organizes / participates in International Trade fairs, Buyer Seller Meets in India and abroad &
seminars.

6.3.11.Jute Products Development & Export Promotion Council

All types of jute, jute blended and jute union products made from jute fibre, yarn, twine and
fabric for conventional, technical and new & diversified uses and products.

Figure 12

47
SUBSIDY FOR TEXTILE UNITS
• A subsidy of Rs.3 per unit will be provided to co-operative spinning mills for three
years. In these three years, the units are required to set up non- conventional power
projects to satisfy their power needs. The restriction of 1MW is removed from the net
metering scheme. The subsidy fo Rs.3 per unit will be renewed every year and will be
reduced to maintain the overall annual subsidy of state budget within Rs.150 crores.
• A subsidy amount of Rs.2 per unit will be provided to powerlooms using power above
200 HP. The subsidy is given to powerloom units using less than 27 HP, 27 to 200 HP
and more than 200 HP, will also be applicable to garment, knitting and hosiery units.
• A subsidy amount of Rs.2 per unit will be provided to spinning mills except for
processing units, co-operative spinning mills and all other textile units using more
than 107 HP power.

• The textile industry is one of the oldest in India and is intrinsically linked to a range
of traditions and cultures that is a reflection of the diversity that prevails in our
country. The industry has a range of segments under its umbrella – hand-woven, an
unorganised segment on one end, to capital-intensive on the other. One of India’s
biggest strengths lies in it being the largest producer of jute and cotton and the second
largest producer of silk globally.
• One of the segments of this industry that has received significant attention across the
world is technical textiles. Technical or engineered textiles are defined as products
that are used for functional purposes. These textiles have applications in multiple
areas of economic activity, such as aerospace, shipping, sports, agriculture, defense
and health care.

• The technical textiles industry is import-intensive. In the last few years, the industry
has witnessed a rise in imports - it stood at USD 1.4 Billion in Financial Year (FY)
2014-15 with a Compound Annual Growth Rate (CAGR) of 8% since FY 2007-08.
Though the country currently spends a significant amount on imports, the dependence
can eventually be reduced by further investing in technology-heavy products. This
presents a huge scope for import substitution.
• Among all categories, Packtech forms the largest segment and holds 42% of the
market share. This is followed by Indutech, Mobilitech and Hometech. With regard to
growth, Geotech is predicted to grow the fastest at a CAGR of 30%. Some of the
examples of high-growth potential technical textiles include shade nets, crop covers,
baby diapers, sanitary napkins and surgical disposables, among others.

48
 CHART 1
• Taking into account the scope and opportunity in the sector, the Government launched
the Technology Mission on Technical Textiles (TMTT) along with two mini-missions
for a period of five years (from FY 2010-11 to 2014-15), with a total investment of
USD 31 Million, which was earmarked to overcome the challenges faced by the
technical textiles industry.
• Additionally, to drive further momentum in the sector, the Government also
introduced a scheme for promoting the usage of Agrotextiles in the Northeast region,
with a financial outlay of USD 8.5 Million aimed at tapping the potential of these
textiles for agricultural and horticultural purposes. Furthermore, a scheme for
promoting usage of Geotech textiles in the Northeast was also launched, with a
financial outlay of USD 66 Million. The objective of the scheme is to use geotextiles
to cater to the infrastructural needs of the region.
• The key growth drivers for the Indian technical textile market include a rising
disposable incomes, growing end-user industries including automobiles, healthcare,
sports and infrastructure and the ongoing industrial development. Apart from these
factors, the country has witnessed growing awareness about the superior usage of
these textiles.

GOVERNMENT SUPPORT

• With the Government’s consistent efforts, there has been an unprecedented growth in
the technical textile industry in India. One of the most significant schemes has been
the National Technology Mission for Technical Textiles, which was launched for a
period of five years (2010-11 to 2014-15) and later extended until 2017. Under this,
there are two mini missions – one primarily for standardization, creation of common
testing facilities and establishment of Centers of Excellence, while the other mini
mission takes into account the support for domestic and export market development of
technical textiles by providing assistance to startups and research in the field.

49
 Apart from the four Centres of Excellence that have already been set up, four
additional centres are in the pipeline in various segments, including Non- wovens,
Indutech and Sportech8. These centres will boast of state-of- the-art facilities for
product testing and evaluation, a resource centre with the latest infrastructure, an
incubation centre as well as a provision to regularly train industry professionals. The
second mini mission focuses on Research & Development. Since technical textiles
are linked to high-technology, it is imperative to indigenously produce these
products. In order to facilitate the entry of potential investors in the sector, the
Ministry of Textiles has set up Incubation Centres within the Centres of Excellence.
As of 2016, a total of USD 2.7 Million has been reserved for this scheme.
This Technology Mission is in addition to the inclusion of technical textiles in the
Amended Technology Up gradation Fund Scheme (ATUFS). Under this, the
Government has made a provision of 15% capital subsidy and 5% interest
reimbursement on specified technical textile machinery. So far, 2,036 UIDs have been
issued under ATUFS with expected employment generation of 45,659 against
investments reported of more than USD 770 Million. Additionally, an online tracking
platform ‘i-Tufs’ has also been launched for the ease of the stakeholder.
• The Government has also created Special Economic Zones (SEZs), with the objective
of attracting Foreign Direct Investment (FDI). There are 14 SEZs in the country that
specifically focus on textiles.
India continues to be the preferred destination for textile manufacturing and provides
a whole lot of advantages in the area of technical textiles. With growing awareness
• and consumption of technical textiles, greater innovation in the field and demand
from end-use industries, the country is a promising destination with an increasing
demographic dividend and consumption scenario.

44
51
 CHAPTER 7
EXPORT PROCEDURE AND IMPORT PROCEDURE

EXPORT PROCEDURE
The export of the goods is subject to certain legal and procedural formalities before being
permitted clearance by Customs. These would include the submission of prescribed documents
and adherence to the laid down procedures before an order can be given by the competent
officer to clear the goods for the intended purpose.

52
The following constitutes the export procedure:
1. REGISTRATION:
The exporters have to obtain PAN based Business Identification Number (BIN) from the
Directorate General of Foreign Trade prior to filing of shipping bill for clearance of export
goods. Under the EDI System, PAN based BIN is received by the Customs System from the
DGFT online. The exporters are also required to register authorized foreign exchange dealer
code (through which export proceeds are expected to be realized) and open a current account
in the designated bank for credit of any drawback incentive. Whenever a new Airline, Shipping
Line, Steamer Agent, port or airport comes into operation, they are required to be registered
into the Customs System. Whenever, electronic processing of shipping bill etc. is held up on
account of non-registration of these entities, the same is to be brought to the notice of
Assistant/Deputy Commissioner in-charge of EDI System for registering the new entity.

REGISTRATION IN CASE OF EXPORT UNDER EXPORT PROMOTION

SCHEMES

All the exporters intending to export under the export promotion scheme need to get their
Licenses/DEEC book etc. registered at the Customs Station. For such registration, original
Documents are required.

2. PROCESSING OF SHIPPING BILL – NON-EDI:

In case of Non-EDI, the shipping bills or bills of export are required to be filled in the format
as prescribed in the Shipping Bill and Bill of Export (Form) Regulations, 1991. An exporter
need to apply different forms of shipping bill/ bill of export for export of duty free goods, export
of dutiable goods and export under drawback etc. Shipping Bills are required to be filed along
with all original documents such as invoice, packing list etc. The assessing officer in the Export
Department checks the value of the goods, classification under Drawback schedule in case of
Drawback Shipping Bills, rate of duty where applicable, exportability of goods under EXIM
policy and other laws in force. The DEEC/DEPB Shipping bills are processed in the DEEC
group. If the assessing officer has any doubts regarding value, description of goods, he may call
for samples of the goods from the docks. He may also call for any other information required
by him for processing of hipping bill. He may assess the shipping bill after visual inspection of
the sample or may send it for test and pass the shipping bill provisionally. Once, the shipping
bill is passed by the Export Department, the exporter or his agent presents the goods to the shed
appraiser in docks for examination. If the description and other particulars of the goods are
found to be as declared, the shed appraiser gives a ‘let export’ order, after which the exporter
may contact the preventive superintendent for supervising the loading of goods on to the vessel.

3. EXPORT DOCUMENTATION:

53
 In case, the examining staffs in the docks find some discrepancy in the goods, they may mark
the shipping bill back to export department/DEEC group with their observations as well as
sample of goods, if needed. The export department re-considers the case and decides whether
export can be allowed, or amendment in description, value etc. is required before export and
whether any other action is required to be taken under the Customs Act, 1962 for miss
declaration of description of value etc.

4. PROCESSING OF SHIPPING BILL:

Under EDI System, declarations in prescribed format are to be filed through the Service
Centers of Customs. A checklist is generated for verification of data by the exporter/CHA. After
verification, the data is submitted to the System by the Service Centre operator and the System
generates a Shipping Bill Number, which is endorsed on the printed checklist and returned to
the exporter/CHA. For export items which are subject to export duty, the TR-6 challans for cess
is printed and given by the Service Centre to the exporter/CHA immediately after submission
of shipping bill. The cess can be paid on the strength of the challan at the designated bank. No
copy of shipping bill is made available to exporter/CHA at this stage.

5. OCTROI PROCEDURE, QUOTA ALLOCATION AND OTHER

CERTIFICATION FOR EXPORT GOODS:

The quota allocation label is required to be pasted on the export invoice. The allocation number
of AEPC is to be entered in the system at the time of shipping bill entry. The quota certification
of export invoice needs to be submitted to Customs along-with other original documents at the
time of examination of the export cargo. For determining the validity date of the quota, the
relevant date needs to be the date on which the full consignment is presented to the Customs
for examination and duly recorded in the Computer System. Since the shipping bill is generated
only after the 'let export order' is given by Customs, the exporter may make use of export
invoice or such other document as required by the OCTROI authorities for the purpose of
OCTROI exemption

6. ARRIVAL OF GOODS AT DOCKS:

The goods brought for the purpose of examination and subsequent 'let export' is allowed entry
to the Dock on the strength of the checklist and other declarations filed by the exporter in the
Service Centre. The Port authorities have to endorse the quantity of goods actually received
export documentation on the reverse of the Check List.

7. SYSTEM APPRAISAL OF SHIPPING BILLS:

In many cases the Shipping Bill is processed by the system on the basis of declarations made
by the exporters without any human intervention. In other cases where the Shipping Bill is
processed on screen by the Customs Officer, he may call for the samples, if required for
confirming the declared value or for checking classification under the Drawback Schedule. He
may also give any special instructions for examination of goods, if felt necessary.

54
8. STATUS OF SHIPPING BILL:

The exporter/CHA can check up with the query counter at the Service Centre whether the
Shipping Bill submitted by them in the system has been cleared or not, before the goods are
brought into the Docks for examination and export. In case any query is raised, the same is
required to be replied through the service center or in case of CHAs having EDI connectivity
through their respective terminals. The Customs officer may pass the Shipping Bill after all the
queries have been satisfactorily replied to.

9. CUSTOMS EXAMINATION OF EXPORT CARGO:

After the receipt of the goods in the dock, the exporter/CHA may contact the Customs Officer
designated for the purpose present the check list with the endorsement of Port Authority and
other declarations as aforesaid along with all original documents such as, Invoice and Packing
list, etc. Customs Officer may verify the quantity of the goods actually received and enter into
the system and thereafter mark the Electronic Shipping Bill and also hand over all original
documents to the Dock Appraiser who many assign a Customs Officer for the examination and
intimate the officers’ name and the packages to be examined, if any, on the check list and return
it to the exporter or his agent. The Customs Officer may inspect/examine the shipment along
with the Dock Appraiser. The Customs Officer enters the examination report in the system. He
then marks the Electronic Bill along with all original documents and checklist to the Dock
Appraiser. If the Dock Appraiser is satisfied that the particulars entered in the system conform
to the description given in the original documents and as seen in the physical examination, he
may proceed to allow "let export" for the shipment and inform the exporter or his agent.

10. VARIATION BETWEEN DECLARATION & PHYSICAL EXAMINATION:

The check list and the declaration along with all original documents are retained by the
Appraiser concerned. In case of any variation between the declaration in the Shipping Bill and
physical documents/examination report, the Appraiser may mark the Electronic Shipping

Bill to the Assistant Commissioner/Deputy Commissioner of Customs (Exports). He may also

forward the physical documents to Assistant Commissioner/Deputy Commissioner of Customs
(Exports) and instruct the exporter or his agent to meet the Assistant Commissioner/ Deputy
Commissioner of Customs (Exports) for settlement of dispute. In case the exporter agrees with
the views of the Department, the Shipping Bill needs to be processed accordingly. Where,
however, the exporter disputes the view of the Department principles of natural justice is
required to be followed before finalization of the issue.

11. STUFFING OR LOADING OF THE GOODS IN THE CONTAINER:

55
The exporter or his agent should hand over the exporter copy of the shipping bill duly signed
by the Appraiser permitting "Let Export" to the steamer agent who may then approach the
Preventive Officer for allowing the shipment. In case of container cargo the stuffing of
container at Dock is done under Preventive Supervision. Loading of both containerized and
bulk cargo is done under Preventive Supervision. The Customs Preventive Superintendent
(Docks) may enter the particulars of packages actually stuffed in to the container, the bottle seal
number particulars of loading of cargo container on board into the system and endorse these
details on the exporter copy of the shipping bill presented to him by the steamer agent. If there
is a difference in the quantity/number of packages stuffed in the containers/goods loaded on
vessel the Superintendent (Docks) may put a remark on the shipping bill in the system and that
shipping bill requires amendment or changed quantity. Such shipping bill also may not be taken
up for the purpose of sanction of Drawback/DEEC logging, till the shipping bill is suitably
amended for the changed quantity. The Customs Preventive Officer supervising the loading of
container and general cargo in to the vessel may give "Shipped on Board" endorsement on the
exporter’s copy of the shipping bill.

12. DRAWING OF SAMPLES:

Where the Appraiser Dock (export) orders for samples to be drawn and tested, the Customs
Officer may proceed to draw two samples from the consignment and enter the particulars
thereof along with details of the testing agency in the ICES/E system. There is no separate
register for recording dates of samples drawn. Three copies of the test memo are prepared by
the Customs Officer and are signed by the Customs Officer and Appraising Officer on behalf
of Customs and the exporter or his agent. The disposals of the three copies of the test memo are
as follows: -
• Original – to be sent along with the sample to the test agency.
• Duplicate – Customs copy to be retained with the 2nd sample
• Triplicate – Exporter’s copy.

13. AMENDMENTS:

Any correction/amendments in the checklist generated after filing of declaration can be made
at the service center, provided, the documents have not yet been submitted in the system and
the shipping bill number has not been generated. Where corrections are required to be made
after the generation of the shipping bill No. or after the goods have been brought into the Export
Dock, amendments is carried out in the following manners. • If the goods have not yet been
allowed "let export" amendments may be permitted by the Assistant Commissioner (Exports).
• Where the "Let Export" order has already been given, amendments may be permitted only by
the Additional/Joint Commissioner, Custom House, in charge of export section.

14. EXPORT OF GOODS UNDER CLAIM FOR DRAWBACK:

After actual export of the goods, the Drawback claim is processed through EDI system by the
officers of Drawback Branch on first come first served basis. There is no need for filing separate

56
drawback claims. The status of the shipping bills and sanction of DBK claim can be ascertained
from the query counter set up at the service center. If any query has been raised or deficiency
noticed, the same is shown on the terminal. A print out of the query/ deficiency may be obtained
by the authorized person of the exporter from the service center. The exporters are required to
reply to such queries through the service center. The claim will come in queue of the EDI
system only after reply to queries/deficiencies is entered by the Service Centre. All the claims
sanctioned on a particular day are enumerated in a scroll and transferred to the Bank through
the system. The bank credits the drawback amount in the respective accounts of the exporters.
Bank may send a fortnightly statement to the exporters of such credits made in their accounts.
The Steamer Agent/Shipping Line may transfer electronically the EGM to the Customs EDI
system so that the physical export of the goods is confirmed, to enable the Customs to sanction
the drawback claims

15. GENERATION OF SHIPPING BILL:

After the "let export" order is given on the system by the Appraiser, the Shipping Bill is
generated by the system in two copies i.e., one Customs copy, one exporter’s copy. After
obtaining the print out the appraiser obtains the signatures of the Customs Officer on the
examination report and the representative of the CHA on both copies of the shipping bill and
examination report. The Appraiser thereafter signs & stamps both the copies of the shipping
bill at the specified place. The Appraiser also signs and stamps the original & duplicate copy
of SDF. Customs copy of shipping bill and original copy of the SDF is retained along with the
original declarations by the Appraiser and forwarded to Export Department of the Custom
House. He may return the exporter copy and the second copy of the SDF to the exporter or his
agent

16. EXPORT GENERAL MANIFEST:

All the shipping lines/agents need to furnish the Export General Manifests (EGM), Shipping
Bill wise, to the Customs electronically within 7 days from the date of sailing of the vessel.
Apart from lodging the EGM electronically the shipping lines need to continue to file manual
EGMs along with the exporter copy of the shipping bills as per the present practice in the export
department. The manual EGMs need to be entered in the register at the Export Department and
the Shipping lines may obtain acknowledgements indicating the date and time at which the
EGMs were received by the Export Department. Keeping in view the above guidelines and
procedures, one can successfully export goods from India.

EXPORT DOCUMENTATION

Documentation is a key means of conveying information from one person or company to

another, and also serves as permanent proof of tasks and actions undertaken throughout the

57
export process. Documentation is not only required for your own business purposes and that
of your business partner, but also to satisfy the customs authorities in both countries and to
facility the transportation of and payment for goods sold. One value of documentation is that
copies can be made and shared with the parties involved in the export process. If the
documentation is complete, accurate, agreed upon by the parties involved and signed by each
of these of these parties (or their representatives), the document will represent a legally
binding document.

FUNCTION OF DOCUMENTS

• An attestation of facts, such as a certificate of origin.

• Evidence of the terms and conditions of a contract if carriage, such as in the case of an
air waybill.
• Evidence of ownership or title to goods, such as in the case of a bill of lading
• A promissory note; that is, a promise to pay.
• A demand for payment, as with a bill of exchange.
• A declaration of liability, such as with a customs bill of entry.
• A receipt for goods received.

THE BENEFITS OF DOCUMENTATION

Documentation is a key means of conveying information from one person or company to
another, and also serves as permanent proof of tasks and actions undertaken throughout the
export process. Documentation is not only required for your own business purposes and that of
your business partner, but also to satisfy the customs authorities in both countries and to
facilitate the transportation of and payment for goods sold. One value of documentation is that
copies can be made and shared with the parties involved in the export process (although you
should always ensure that you make identical copies from an agreed-upon master - it is no use
making changes without the other party's agreement and then presenting these as the "latest"
copies). If the documentation is complete, accurate, agreed upon by the parties involved and
signed by each of these of these parties (or their representatives), the document will represent
a legally binding document.

DOCUMENTS REQUIRED FOR EXPORT

58
Figure 13

There are mainly 3 types of Documents

• Commercial Documents
• Financial Documents
• Government Documents

Documents Prepared by Exporter:

Commercial Documents:

Proforma invoice

A proforma invoice is a preliminary bill of sale sent to buyers in advance of a shipment or

delivery of goods. The invoice will typically describe the purchased items and other important
information such as the shipping weight and transport charges proforma, Latin for “as a matter
of form” or “for the sake of form,” invoices often come into play with international transactions,
especially for customs purposes on imports.
• Most pro forma invoices provide the buyer with a precise sale price.
• No guidelines are dictating the exact presentation or format of a pro forma invoice
• A pro forma invoice requires only enough information to allow customs to determine
the duties needed from a general examination of the included goods.

Sales Contract:

An agreement between the buyer and the seller stipulating every details of the transaction. It is
a legally binding document. It is therefore advisable to seek legal advice before signing the
contract. Goods are most often carried by sea as a result of a sales contract (or sale of made
59
between the seller and buyer. UK sales are subject to the provisions of the Sale of Goods Act
1979, as amended. this act sets out an unpaid seller’s right one of which is the right of stoppage
in transit .contracts for the sale of good usually include provisions covering three important
points;
• The time or circumstances of the passing of title of the goods from seller to buyer
• The time when payment becomes due
• The time when the risk passes from seller to buyer.

COMMERCIAL INVOICE
It is a formal demand note for payment issued by the exporter to the importer for goods sold
under a sales contract. It should give details of the goods sold, payment terms and trade terms.
It is also used for the customs clearance of goods and sometimes for foreign exchange purpose
by the importer. The commercial invoice is a legal document between the supplier and the
customer that clearly describes’ the sold goods, and the amount due on the customer. The
commercial invoice is one of the main documents used by customs in determining customs
duties.

INFORMATION IN COMMERCIAL INVOICE

• Invoice Information: Refers to the information regarding the commercial invoice

• Invoice Number: The supplier invoice reference number Invoice
• Date: The issue date of the invoice
• Order Number: The customer order number of the goods
• Shipper Information: Refers to the information about the sender of the Goods
• Name: The name of the sender
• Address: The complete address of the sender, which includes the postal/zip code and
the city name
• Telephone: The telephone number of the sender.
• Fax: The fax number of the sender
• VAT Number: The sender Value Added Tax reference Number, for countries, which
apply the VAT.
• Country: The country the sender is located in.
• Consignee Information: Refers to the information about the receiver of the goods
• Name: The name of the receiver
• Address: The complete address of the receiver Telephone: The telephone number of the
receiver. Fax: The fax number of the receiver
• VAT Number: The receiver Value Added Tax reference Number, for countries that
apply the VAT.
• Country: The country the receiver is located
• Notify Party: The name of the party who affects the delivery of the goods.
• Address: The address of the party to be notified
• Shipping Information: Refers to the information about the shipping of the goods
• Bill Number: The Air Way bill number under which the goods are shipped Forwarding
Agent: The shipping company name
• Date of Export: The date of which the goods are shipped

60
 • Payment Mode: The paying mode of shipping that may be prepaid, collect or free
domicile E/CMI01 Shipment Information Refers to the information about the goods to
be shipped
• Number of Pieces: The number of parts the shipment consists of Specification of
Commodities: The description and nature of the Goods to be shipped. • Wt.: The gross
weight of each piece
• Qty: Number of units of the Goods.

• Unit Price: The value of each item unit

• Amount: The amount of each set of Goods
• Total Weight: The total gross weight of the goods • Currency: The Currency used for
pricing the item
• Total Amount: The total value of the shipment.

PACKING LIST
Packing list is a document that includes details about the contents of a package. The packing
list is intended to let transport agencies, government authorities, and customers know the
contents of the package. These details help each of these parties handle the package
accordingly. Contents of a packing list A packing list expresses the contents of a package, along
with details about the quantity, description, and weight of these contents. Content pricing is not
included. A packing list is created by the seller and sent to where the goods are located in order
to have an accurate tally of the sent goods. Once the goods have been tallied and packed, the
list is sent along with them to their destination.

Importance of packing list

1. It is a count of the product being released and shipped to the buyer's facility.
2. It supports the issuance of the inland bill of lading.
3. It identifies detail required for a certificate of origin.
4. It provides the detail required by the law for the Electronic Export Information filing in the
Automated Export System (AES).
5. It supports issuance of a Material Safety Data Sheet if the goods are deemed hazardous.
6. It is used to create a booking with the international carrier and subsequently the issuance of
the international bill of lading.
7. The importer's customs broker will use it to enter the goods into their country as it contains
required detail.
8. In the event of loss or damage to the goods while in-route, it becomes a document that will
be used to support an insurance claim.
9. It provides the buyer with the ability to accurately tally the product that they receive, and
subsequently reimburse the exporter (seller) of the goods.
10. It may be used in support of reimbursement under a letter of credit.
Insurance Certificate An insurance policy is an insurance document evidencing insurance has
been taken out on the goods shipped, and it gives full details of the insurance coverage. An

61
insurance certificate certifies that the shipment has been insured under a given open policy and
is to cover loss of or damage to the cargo while in transit.

Types of inspection certificate

1. Clean Report of Findings (CRF).

2. Commercial Certificate of Inspection

Benefits of inspection certificate

1. Inspections are important tools to reduce trade risks and avoid fraud.
2. Shipment of low-quality goods prevented.
3. Non-delivery fraud with fake bill of lading or any other transport document prevented.
4. Another fraud risk factor is the possibility of replacement inspected goods with the fraudulent
ones after the inspection: basically, the cargo inspected would not go into the shipment. This
can be prevented by adding a numerical link on the inspection certificate to the transport
document.

Fumigation Certificate:

A pest control certificate issued to certify that the concerned products have been undergone the
guarantee and pre-shipment fumigation by the approved fumigation service providers. It’s a
document that serves as confirmation that any wooden packing materials used in a cargo
shipment have been fumigated. They contain details such as treatment purpose, fumigants used,
and temperature range.

Consular invoice

A document required by some foreign countries, showing shipment information such as

consignor, consignee, and value description, etc. Certified by a consular official of the import
country stationed in the foreign country, it is used by the country's customs officials to verify
the value, quantity and nature of the shipment.
*A consular invoice is a document specifying the contents and details of a shipment certified
by the consul of the country the merchandise is being sent to.
*Customs officials use the invoice to confirm what's in the shipment, the number of goods, and
the cost—and thus determine the import duty.

*The export price is scrutinized relative to the market price in the original country to make sure
an unfair trade practice called "dumping" is not taking place.
*With dumping, an exporter sells goods in a foreign market for less than what they cost at home
to have a competitive advantage over other suppliers.

Financial Documents:

62
Standby Credit :
An arrangement between customer and his bank by which the customer may enjoy the
convenience of cashing cheques, up to a value. Or a credit set up between the exporter and the
importer guaranteeing the exporter will pay the Importer a certain amount of money if the
contract is not fulfilled. It is also known as performance bond. Th1S is usually found in large
transactions, such as crude oil, fertilizers, fishmeal, sugar, urea, etc.

Instruction of Collection:

An instruction given by an exporter to its banker, which empowers the bank to collect the
payment subject to the contract terms on behalf of the exporter.

Bill of exchange:
An unconditional Witten order, in which the importer addressed to and required by the exporter
to pay on demand or at a future date a certain amount of money to the order of a person or
bearer.

Government Documents:

Export Declaration:
A statement made to the Director of Customs at port of entry/exit, declaring full particular of
the shipment, e.g. the nature and the destination/export country of the ship's cargo. Its primary
use is for compiling trade statuses. It provides information about the goods being shipped,
including type, number, and value. This information is used by customs to control exports, in
addition to compiling statistical information about a country's foreign trade.

Export License:
A document issued by a relevant government department authorizing the imports and exports
of certain controlled goods. An export license is a document issued by the appropriate licensing
agency after which an exporter is allowed to transport his product in a foreign market. The
license is only issued after a careful review of the facts surrounding the given export transaction.
Export license depends on the nature of goods to be transported as well as the destination port.
So, being an exporter, it is necessary to determine whether the product or good to be exported
requires an export license or not. While making the determination one must consider the
following necessary points:

What are you exporting? Where are you exporting?

Who will receive your item?
What will your items will be used?

Custom invoice:
A document specified by the customs authorities of the importing countries stating the selling
price, costs for freight, insurance, packing and payment terms, etc., for the purpose of

63
determining the customs value. The customs invoice must have the purchase price or value of
all goods in the currency of the sale. The invoice must include and itemize additional charges
such as insurance, freight, packing costs and commissions as well as any discounts from
rebates, drawbacks and production assists.

Certificate of origin

A certificate of origin (CO) is a document declaring in which country a commodity or good

was manufactured. The certificate of origin contains information regarding the product, its
destination, and the country of export. Required by many treaty agreements for cross-border
trade, the CO is an important form because it can help determine whether certain goods are
eligible for import, or whether goods are subject to duties.

Customs officials expect the CO to be a separate document from the commercial invoice or
packing list. Customs in these countries also expect it to be signed by the exporter, the signature
notarized, and the document subsequently signed and stamped by a chamber of commerce. In
some cases, the destination customs authority may request proof of review from a specific
chamber of commerce. The proof of review usually amounts to the chamber’s official
embossing stamp and a signature of an authorized chamber representative. Some countries are
accepting electronically issued certificates of origin that have been electronically signed by a
chamber of commerce.

A certificate of origin may also be required by the buyer in the documentary requirements stated
within a letter of credit. The letter of credit may specify additional certifications or language
within that must be noted in order for the certificate of origin to comply with the stated
requirements

Bill of lading:

An evidence of contract between the shipper of the goods and carrier. The customer usually
needs the original as proof of ownership to take possession of the goods. There are two types:
a STRAIGHT bill of lading is non-negotiable and a negotiable or shipper's order bill of lading
(also a title document) which can be bought, sold or traded while goods are in transit and is
used for many types of financing transactions.
A bill of lading is a legal document issued by a carrier to a shipper that details the type,
quantity, and destination of the goods being carried.
A bill of lading is a document of title, a receipt for shipped goods, and a contract
between a carrier and shipper. Representative from the carrier, shipper, and receiver.

This document must accompany the shipped goods and must be signed by an authorized
representative from the carrier, shipper, and receiver.

If managed and reviewed properly, a bill of lading can help prevent asset theft.

Dock Receipts :

64
The purpose of this receipt is to provide the exporter with proof that the delivery of goods to
the
international carrier was successful and in good condition

Packing Note:

A list providing information needed for transportation purpose, such as details of invoice, buyer,
consignee, country of origin, vessel/flight date, port/airport of loading, port/airport of discharge,
place of delivery, shipping marks /container number, weight / volume of merchandise and the
fullest details of the goods, including packing information.

Shipping Bill:

Shipping bill is the main customs document, required by the customs authorities for granting
permission for the shipment of goods. The cargo is moved inside the dock area only after the
shipping bill is duly stamped, i.e. certified by the customs.

Shipping bill is normally prepared in five copies:

• Customs copy.
• Drawback copy
• Export promotion copy.
• Port trust copy.
• Exporter's copy.
• Name and address of the exporter.

Contents of Shipping Bill :

• Name and address of the importer.
• Name of the vessel, master or agents and flag.
• Name of the port at which goods are to be discharged.
• Country of final destination.
• Details about packages, description of goods, marks and numbers, quantity and details of
each case.
• FOB price and real value of goods as defined in the Sea Customs Act.
• Whether Indian or foreign merchandise to be re-exported
• Total number of packages with total weight and value

Significance of shipping bill

65
• Shipping bill is the main customs document, required by the customs authorities for
granting permission for the shipment of goods.

• The cargo is moved inside the dock area only after the shipping bill is duly stamped, i.e.
certified by the customs.

• Duly endorsed shipping bill is also necessary for the collection of export incentives offered
by the government.

• It is useful to the Customs Appraiser while determining the actual value of goods exported.

A.R.E. 1 form (Central excise)

This form ARE-I is prescribed under Central Excise rules for export of goods. In case goods
meant for export are cleared directly from the premises of a manufacturer, the exporter can
avail the facility of exemption from payment of terminal excise duty. The goods may be cleared
for export either under claim for rebate of duty paid or under bond without payment of duty.
In both the events the goods are to be cleared under form A R E-l which will show the details
of the goods being exported, the relevant duty involved and if the duty is paid or goods being
cleared under bond, details of goods being sealed either by the exporter or Central Excise
officials etc.

Exchange Control declaration Form (GWPP/SOFTEX)

Under the exchange control regulations all exporter must declare the details of shipment for
monitoring by the Reserve Bank of India. For this purpose, RBI has prescribed different forms
for different types of shipments like GRI, PP forms etc. These declaration forms must be
presented to the customs officials at the time of passing of export documentation. Under the
EDI processing of shipping bill in the customs, these forms have been dispensed with and a
new form SDF has to be submitted to the customs in the place of above forms.

Export Application

This is the application to be made to the customs officials before shipment of goods. The
prescribed form of the application is the Shipping Bill/Bill of Export. Different types are
required for shipment like ex-bond, duty free goods, and dutiable goods and for export under
different export promotion schemes such as claims for duty drawback.

66
 IMPORT PROCEDURE

Import procedures

Typically, the procedure for import and export activities involves ensuring licensing and
compliance before the shipping of goods, arranging for transport and warehousing after the
unloading of goods, and getting customs clearance as well as paying taxes before the release of
goods.

1. Obtain IEC

Prior to importing from India, every business must first obtain an Import Export Code (IEC)
number from the regional joint DGFT. The IEC is a pan-based registration of traders with
lifetime validity and is required for clearing customs, sending shipments, as well as for sending
or receiving money in foreign currency.

The process to obtain the IEC registration takes about 10-15 days.

2. Ensure legal compliance under different trade laws

Once an IEC is allotted, businesses may import goods that are compliant with Section 11 of the
Customs Act (1962), Foreign Trade (Development & Regulation) Act (1992), and the Foreign
Trade Policy, 2015-20.

However, certain items – restricted, canalized, or prohibited, as declared and notified by the
government – require additional permission and licenses from the DGFT and the federal
government.

3. Procure import licenses

To determine whether a license is needed to import a particular commercial product or service,

an importer must first classify the item by identifying its Indian Trading Clarification based on
a Harmonized System of Coding or ITC (HS) classification.

ITC (HS) is India’s chief method of classifying items for trade and import-export operations.
The ITC-HS code, issued by the DGFT, is an 8-digit alphanumeric code representing a certain
class or category of goods, which allows the importer to follow regulations concerned with
those goods.

67
An import license may be either a general license or specific license. Under a general license,
goods can be imported from any country, whereas a specific or individual license authorizes
import only from specific countries.

Import licenses are used in import clearance, renewable, and typically valid for 24 months for
capital goods or 18 months for raw materials components, consumables, and spare parts.

4. File Bill of Entry and other documents to complete customs clearing formalities

After obtaining import licenses, importers are required to furnish import declaration in the
prescribed Bill of Entry along with permanent account number (PAN) based Business
Identification Number (BIN), as per Section 46 of the Customs Act (1962).

A Bill of Entry gives information on the exact nature, precise quantity, and value of goods that
have landed or entered inwards in the country.

If the goods are cleared through the Electronic Data Interchange (EDI) system, no formal Bill
of Entry is filed as it is generated in the computer system. However, the importer must file a
cargo declaration after prescribing particulars required for processing of the entry for customs
clearance.

If the Bill of Entry is filed without using the EDI system, the importer is required to submit
supporting documents that include certificate of origin, certificate of inspection, bill of
exchange, commercial invoice cum packing list, among others.

Once the goods are shipped, the customs officials examine and assess the information furnished
in the bill of entry and match it with the imported items. If there are no irregularities, the
officials issue a ‘pass out order’ that allows the imported goods to be replaced from the customs.

5. Determine import duty rate for clearance of goods

India levies basic customs duty on imported goods, as specified in the first schedule of the
Customs tariff Act, 1975, along with goods-specific duties such as anti-dumping duty,
safeguard duty, and social welfare surcharge.

In addition to these, the government levies an integrated goods and services tax (IGST) under
the new GST system. The IGST rates depend on the classification of imported goods as
specified in Schedules notified under Section 5 of the IGST Act (2017).

68
 CHAPTER 8

FINDINGS AND CONCLUSION

8.1 SWOT ANALYSIS

1. STRENGTH
I. Raw material base

69
India has high self-sufficiency for raw material particularly natural fibres. India’s cotton crop
is the third largest in the world. Indian textile Industry produces and handles all types of
fibres.
II. Labour
Cheap labour and strong entrepreneurial skills have always been the backbone of the Indian
Apparel and textile Industry.
III. Flexibility
The small size of manufacturing which is predominant in the apparel industry allows for greater
flexibility to service smaller and specialized orders.
IV. Rich Heritage
The cultural diversity and rich heritage of the country offers good inspiration base for designers.
V. Domestic market
Natural demand drivers including rising income levels, increasing urbanisation and growth of
the purchasing population drive domestic demand.
2. WEAKNESS
I. More dependence on cotton
Due to over specialization in cotton, the bulk of the international market is missed out,
synthetic products in India are expensive and fabric required for items like swimsuit, skywear
and industrial apparel is relatively unavailable.
II. Spinning Sector
Spinning sector lacks modernization and there is a need of introducing new technology.
III. Weaving Sector
India has relatively less number of shuttle-less loom.
IV. Fabric Processing
Processing is the weakest link in the Indian textile value chain, adversely affecting its ability to
compete in exports.

V. Poor Infrastructure

High power costs and long export lead times are eroding India’s export competitiveness across
the textile chain.

VI. Low Labour Productivity

Productivity levels for manufacturing various apparel items are far lower in India in comparison
with its competitors.

70
OTHER WEAKNESSSES
VII. Less attention on man power training
VIII. Poor quality standards
IX. Distance of the potential market
X. Lower average consumption in domestic market
XI. Lack of professionalism and integration of supply chain
XII. Dependence on quota system
XIII. Very low investment on R&D
XIV. Limited exploitation of economies of scale

3. OPPORTUNITIES
I. Growing Industry
World textile trade would continue to grow at a rate of 3-4% to reach $200-210 billon by 2010.
II. Market access through bilateral negotiation
The trade is growing between regional trade blocs due to bilateral agreements between
participating countries.
III. Integration of Information technology

‘Supply Chain Management’ and ‘Information Technology’ has a crucial role in apparel
manufacturing. Availability of EDI (Electronic Data Interchange), makes communication fast,
easy, transparent and reduces duplication.
IV. Opportunity in High Value Items
India has the opportunity to increase its UVR’s (Unit Value Realization) through moving up
the value chain by producing value added products and by producing more and more
technologically superior products.

4. THREATS
I. Decreasing Fashion Cycle
There has been an increase in seasons per year which has resulted in shortening of the fashion
cycle.

II. Formation of Trading Blocks

71
Formation of trading blocks like NAFTA, SAPTA, etc; has resulted in a change in the world
trade scenario. Existence of bilateral agreements would result in significant disadvantage for
Indian exports.

III. Phasing out of Quotas

India will have to open its protected domestic market for foreign players thus domestic market
will suffer.

8.2TOP TEXTILE PRODUCT EXPORTERS FROM INDIA

• Raymond Ltd
• Arvind Mill
• The Ruby Mills
• Loyal Textile Mills Limited
• Nahar Spinning Mills Ltd
• Sel Group
• Mandhana Industries

72
•

The profitability and cotton textile industry as compared to other industries as profit
aster tax as percentage of net world is lower because of high depreciation cost which
is due to old and obsolescence technology technological obsolesce is more prominent
in weaving and processing sectors which results in reducing fabrics productivity level
poor quality.
While analyzing the problems in logistics support systems provided for the
readymade garment exporters, it was found that the problem of high cost of
distribution and physical transportation of goods were the first and second major
issues.

While analyzing the benefits enjoyed by the readymade garment exporters it is found
that they take pride in being and entrepreneur and the same gives them an unique
social status.

73
While analyzing the benefits enjoyed in financial dealing it is identified that the
entrepreneurs are much happy with the free flow of money circulation and
simultaneously increase the personal and organizational assets from their profits.

66
 CHAPTER 9

SUGGESTIONS

• The producers in developing country like India face volume restrictions on their exports.
They can enlarge the value of their sales by moving up the market segment into highest
quality lines in their product category.
• The various departments should be supplied with more specialized work force so the
efficiency can be increased.
• The industry should consider exporting its products by collaborating with foreign companies
in technology and marketing in order to keep up with the competition.
• The pricing policy and marketing strategies must be reviewed.
• The top management should monitor the productivity of its employees.

75
 CHAPTER 10

BIBLOGRAPHY

Websites:

http://texmin.nic.in/

http://textilescommittee.nic.in/

http://ministryoftextiles.gov.in/sector-industry/cotton http://www.texmin.gov.in/
 68

77
 THE ORGANIZATION STUDY AT OCEAN CARE FREIGHT
FORWARDERS PRIVATE LIMITED

THE PROJECT REPORT SUBMITTED TO

AMET
ACADEMY OF MARITIME EDUCATION AND TRAINING
DEEMED TO BE UNIVERSITY

IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE

DEGREE

BACHELOR OF BUSINESS ADMINISTRATION (BBA)

(SHIPPING)

BY

ATHULYA R S NAIR
(REG.NO. ABA 17019)

UNDER THE GUIDANCE OF

DR.M.VALLIAMAL

AMET BUSINESS SCHOOL

May 2020

Organization study at Ocean care freight forwarding Page 1

 DECLARATION

I hereby declare that the project work entitled “THE ORGANIZATION

STUDY AT OCEAN CARE FREIGHT FORWARDING” submitted to

AMET Business School, AMET (Deemed to be University), under the guidance

of DR.M.VALLIAMAL, in partial fulfillment of the requirement for the award

of the degree of Bachelor of Business Administration (Shipping) is a record of

original project work done by me during the period of study in AMET Business

School from 2017-2020.

Date:

Place: Chennai

Organization study at Ocean care freight forwarding Page 2

 CERTIFICATION OF APPROVAL

This is to certify that the project entitled “THE ORGANIZATION

STUDY AT OCEAN CARE FREIGHT FORWARDING” is a bonafide

research work carried out independently by ATHULYA R S NAIR (REG.NO.

ABA17019), student of BBA (Shipping) of AMET Business School, AMET

(Deemed to be University), Kanathur-603112, during 2017-2020 in partial

fulfilment of the requirement for the award of degree of Bachelor of Business

Administration in Shipping.

Signature of Guide

Vice-Voce-examination conducted

Internal Examiner HOD-BBA

Date:

Acknowledgement

Organization study at Ocean care freight forwarding Page 3

The success and final outcome of this project required a lot of guidance and assistance from
many people and I am extremely privileged to have got this all along the completion of my
project. All that I have done is only due to such supervision and assistance and I would not
forget to thank them.

I respect and thank Mr. P C SURESH Managing Director, MS. HEMA GENERAL
MANAGER, for providing me an opportunity to do the project work in OCEAN CARE
FREIGHT FORWARDER PRIVCATE LIMITED and giving us all support and guidance
which made me complete the project duly. I am extremely thankful to MS. PREMA, for
providing such a nice support and guidance, although he had busy schedule managing the
corporate affairs.

I owe my deep gratitude to our project guide DR.M.VALLIAMAL who took keen interest on
our project work and guided us all along, till the completion of our project work by providing
all the necessary information for developing a good system and suggestions during this
project work.

I would not forget to remember MS.NEETHA (ACCOUNTS HEAD) & ARIF (STAFF), of
OCEAN CARE FREIGHT FORWARDER PRIVCATE LIMITED for their encouragement
and more over for their timely support and guidance till the completion of our project work.

I am thankful to and fortunate enough to get constant encouragement, support and guidance
from all Teaching staffs of AMET BUSINESS SCHOOL helped us in successfully
completing our project work.

ATHULYA R S NAIR

Organization study at Ocean care freight forwarding Page 4

 CONTENT

CHAPTER-1……………………………………………….1-
1.1 INTRODUCTION…………………………………

1.2 NEED AND IMPORTANCE…………………….

1.3 OBJECTIVE OF THE STUDY………………….

1.4 COMPANY PROFILE…………………………...

1.5 SCOPE OF THE STUDY………………………..

1.6 LIMITATION OF THE STUDY…………….....

CHAPTER-2…………………………………………………
REVIEW OF LITERATURE………………………….

CHAPTER-3…………………………………………………
RESEARCH METHODOLOGY……………………….

CHAPTER-4…………………………………………………
DATA ANALYSIS AND INTERPRETATION…………

CHAPTER-5…………………………………………………
FINDINGS AND CONCLUSION……………………….

CHAPTER-6…………………………………………………

SUGGESTION…………………………………………..

BIBILIOGRAPHY

1.1 INTRODUCTION

Organization study at Ocean care freight forwarding Page 5

The Service industry has been growing consistency and it is because there will always
be a demand for human intelligence

The word “Logistic” originated from the combination of logic (logic) and static (Latin)
in the Latin language.

Introduction to logistics

Logistics as a discipline started with the European Armed Forces. During times of war
maintaining ones supply lines while disrupting those of the enemy is a crucial
element of military strategy.

Soldiers moved from their base to a forward position & along with them Arms,
Ammunition, Food, Equipment, had to be moved quickly without any Errors or
Omission.

Wars were won or lost depending upon the strength of a country’s Logistics
capability or the lack of it.

In today’s Globalized competition and Business Warfare, companies either survive or

perish depending upon the strength of their logistics capabilities.

The term Logistics is extensively used in Business today & many companies attach
great importance to logistics. Companies are increasingly focusing on process to
improve their quality cost and delivery to fulfill the requirement of their customers
and capture a larger share of the market. Perform or perish equally applies to
companies and employees. Logistics Management is concerned with getting the right
product, in the Right quantity, in the Right condition, to the Right place, at the Right
time , to the Right customer and at a Right cost

 The organization study at Ocean care freight forwarding. This Study is familiar with
the organizational structure of a company It will help into understand that how a
system will work in the Organization

Organization study at Ocean care freight forwarding Page 6

  Logistics is basically ensuring that all the material and personnel are in the right
place at the right time to make sure that a project or a business objective is
accomplished. In the military, it is the science of planning and carrying troops
and equipment, plus the movement and maintenance of forces.

1.2 NEED AND IMPORTANCE

The organization study is aimed at seeking information from the company and its various
departments, about its history, nature of business, vision, mission, policies and procedures,
objectives and strategies, products, market share, etc.

The main purpose of the study is to know the organization as whole, to obtain detailed
information about the organization from different aspects, different departments and their
functions in detail. Further it provided an insight into the practical aspects of the working of
the organization.

The importance of the study is that it allows students to test out their interests and develop
their long range career plans, and provide a basis to select elective course work which
integrates their studies and career goals. Internship programs develop students' overall
maturity by strengthening resourcefulness, problem-solving skills, self-confidence, self-
discipline and sense of responsibility.

The report traces the strengths, weaknesses, opportunities and challenges of the company
and to suggest necessary actions for improvement and betterment. It also explains values
and technologies adopted by the company.

Organization study at Ocean care freight forwarding Page 7

 1.4 COMPANY PROFILE

1.4 INTRODUCTION TO OCEAN CARE FREIGHT FORWARDING

OCEAN CARE FREIGHT FORWARDING is 3 rd Party logistics in Logistics sector. A moving

firm, OCF in Hebbal, Bangalore is one of the well-known firms for transporting
household goods. Setup in the year 2005, this venture is a professionally managed
firm for packaging, unpacking, local shifting, transportation, storages of automobiles,
and household goods. In the course of time, it has become one of the preferred and
reliable services for moving goods. This packing and moving firm consistently
dedicates its effort towards providing its customer with superior services. This
venture services all the area in Bengaluru and is looking to expand operation in near
future.

OCEAN CARE FREIGHT FORWARDING is a leading and premier online search portal for
finding professional and reliable Logistics companies. It was founded by M.R P C Suresh with
an objective to help people get connected with best logistics companies, offering quality
services. They help you to find right relocation service provider for your home, office,
commercial and industrial relocation needs. Staffed with young, passionate people, they
work tirelessly to make a difference in the lives of people by catering to relocation needs.
They were formed with the sole aim of providing better services at an affordable price. With
this vision, our company had a humble beginning of providing services in just few cities.
Also, as a part of our expansion, we have never lacked behind to update ourselves
technologically and providing proficient services to our customers.

Logistic Segment includes:

 Packers and Movers Services

 Cargo Services
 Transportation Services

Organization study at Ocean care freight forwarding Page 8

  Hire Truck/tempo Services
 Customs Clearance
 Relocation Services
 Import and Export
 Warehouse Services

They provide quality door to door courier services to all over the world. They offer good
discounts and provide combined courier solutions like packaging, doorstep pickup, helping
customers to prepare KYC norms documents preparation etc., Specializing in residential
and commercial moving, OCF is committed in ensuring that all the transported goods
reach their target destination. Under the residential moving services, this firm also
handles sensitive assignments such as Electronic and Fragile items with ease.
Company is register under the Companies act 2013, and also fulfills the requirement
of GST.

3.2 VISION AND MISSION OF AXIS LOGISTICS AND PACKERS COMPANY.

OCEAN CARE FREIGHT FORWARDING Was formed with the sole aim of providing better
services at an affordable price.

Axis Logistics packers and movers is dedicated to successfully providing premier logistics
services by utilizing the best people, best methods, and best technology. We shall
accomplish these high standards of quality performance through the active participation of
the organization's most important resource, our employee team members and partner-
suppliers.

3.3 COMPANY VALUES:

Axis Logistics and Packers in Hebbal, Bangalore is a top player in the category
International Cargo Agents in the Bangalore. This well-known establishment acts as a

Organization study at Ocean care freight forwarding Page 9

one-stop destination servicing customers both local and from other parts of
Bangalore. Over the course of its journey, this business has established a firm
foothold in its industry. ALP is Belief that customer satisfaction is as important as
their products and services, have helped this establishment garner a vast base of
customers, which continues to grow by the day. This business employs individuals
that are dedicated towards their respective roles and put in a lot of effort to achieve
the common vision and larger goals of the company. In the near future, this business
aims to expand its line of products and services and cater to a larger client base. It is
an effortless task in commuting to this establishment as there are various modes of
transport readily available. Axis Logistics and Packers have a wide range of products
and services to cater to the varied requirements of their customers. The staff at this
establishment is courteous and prompt at providing any assistance.

3.4 OPERATIONAL PARTNER:

 FedEx
 DHL
 Aramex
 Maearsk
3.5 ENVIRONMENTAL FACILITIES:

 Medical Facilities
 Crèche
 Day care
 Kitchen Area

Organization study at Ocean care freight forwarding Page 10

3.6 WORK FLOW:

Fig: Showing the work flow of Logistics

3.7 STRUCTURE OF COMPANY:

CEO

MARKETING ACCOUNTS IEC

& FINANCE
HUMAN REGISTRATION
PACKI
DOCUMEN RESOURCE
NG
TION
DEPAR
TMENT

Organization study at Ocean care freight forwarding Page 11

WHY TO CHOOSE AXIS LOGISTICS AND PACKERS

SMS and Alert

They provide the client get regular emails & updates regarding the services, new offers
including all status change of your consignment and every stage of a shipment to client so
that client will export / import any item without hassle free.

24*7 Supports

OCF are best to support you 24*7 for all relocation service & customer care. Let find the
relocating solution anytime

Fleet of Own vehicle

WE will use their own vehicle for relocation instead of depending on third party so that a
client will also be benefited for providing a lesser amount when compare to hire other
vehicle.

Safe & Secure Delivery

OCF have a team of experts who performed packing in an elegance way which cause
damage free, safe & secure, because packing will play a major role in the Import / Export.
A item is identified based on the packing number so it is important first to pack the items
safely and ensure correct packing number is placed

Organization study at Ocean care freight forwarding Page 12

Budgeted Package

Axis Logistics and Packers offer their all services including packing & moving,
transportation, and courier in budgeted and competitive price.

1.4 SCOPE OF STUDY

 The Organization is located in Hebbal, Bengaluru. The present study is on the

organization Structure.
 The organization is having a various department, the following are the department
Concentrated on this study: Documentation, Import, Export, Marketing, Accounts.

Organization study at Ocean care freight forwarding Page 13

 REVIEW OF LITERATURE

Data is one of the most vital aspects of any research study. There are two sources of data
collection techniques:

Primary & secondary data collection techniques, Primary data collects using observation and
information collected by the employee of a company

Secondary data collections have conducted by collecting information from Journal,

magazine, company website.

Growth of a Logistics sector in a worldwide scenario:

E-commerce Logistics market worldwide is projected to grow by US$524.1 Billion, guided by

a compounded growth of 20.7%.

Staying on top of trends is essential for decision makers to leverage this emerging
opportunity. The report addresses this very need and provides the latest scoop on all major
market segments.

Transportation Services, one of the segments analyzed and sized in this study, displays the
potential to grow at over 21.3%. The shifting dynamics supporting this growth makes it
critical for businesses in this space to keep abreast of the changing pulse of the market.
Poised to reach over US$464.2 Billion by the year 2025, Transportation Services will bring in
healthy gains adding significant momentum to global growth.

While global megatrends sweeping through the market influence the primary direction of
growth, regional markets are swayed by more granular locally unique business drivers.
Representing the developed world, the United States will maintain a 25.2% growth
momentum.

Within Europe, which continues to remain an important element in the world economy,
Germany will add over US$41 Billion to the region's size and clout in the next 5 to 6 years.

Organization study at Ocean care freight forwarding Page 14

Over US$32.6 Billion worth of projected demand in the region will come from other
emerging Eastern European markets.

In Japan, Transportation Services will reach a market size of US$30.3 Billion by the close of
the analysis period. As the world's second largest economy and the new game changer in
global markets, China exhibits the potential to grow at 19.1% over the next couple of years
and add approximately US$82.8 Billion in terms of addressable opportunity for the picking
by aspiring businesses and their astute leaders.

2.3 The Growth of the Logistics Industry in India:

Increase in trade post liberalization, from 250 million tons to 3000 million tons in
2011-12. Indian Economy growing at about 8 percentages every 5 year with service
contributing about 55 percent to GDP, Manufacturing 30 percent and agriculture 15
percent. India with its large market size and other advantages emerging as a
manufacturing hub. On Globalization companies can manufacture and sell in any part
of the world. India was emerging as the world’s retail entering India.

Economic growth in rural India has raised income levels in our rural population with
increased consumption of goods and services. Increasing flow of Foreign Investment
in Infrastructure, Automobiles, retail, Telecommunication and other industries

India companies today outsourced about 52 percent of their logistics requirement to

3PL companies. The 3PL industry has achieved a massive growth in the last decade
and a growing at about 20 Percent .Number of employees in logistics sector in India
is estimated at 4.5 million and the number is growing.

The Logistics Management is therefore a fast growing Global Industry offering

tremendous scope for career development and leadership roles.

Organization study at Ocean care freight forwarding Page 15

2.4 Types of Logistics Parties

 1st Party Logistics (1PL)

A 1st party logistics provider sends their own products from one location to another,
acting as both the sender and receiver of the materials. There are many different
types of businesses that are classified as 1st party logistics providers. They are,
importers and exporters, manufacturers, retailers, traders and wholesalers. Even
families and individuals that move from one place to another, and government
departments can be found in this category.

 2nd Party Logistics (2PL)

A 2nd party logistics provider owns the means of transportation they use to
distribute their products. Transportation-based businesses that fall into this category
include trucking companies that lease or own their trucks, airlines that lease or own
their planes and shipping lines that lease or charter their ships. If a transportation
service moves materials along a specific section of the supply chain, say from a
distribution center to a port terminal, it could be categorized as a 2nd party logistics
provider.

 3rd Party Logistics (3PL)

3rd parties logistics provider can help manage your supply chain and distribution
needs by offering their unique services to your business. These companies offer
many different logistics services, including contract management, freight forwarding,
logistics optimization, management consulting, order fulfillment, transportation,
warehousing and much more. Whether you only need a few services or a complete
solution to your distribution and warehousing needs, a 3rd party logistics provider
will be there to help.

 4th Party Logistics (4PL)

A 4th party logistics provider is an independent business that offers a full-service,
supply-chain solution to their clients. Along with offering this service to their clients,
these providers also use the service in-house.

Organization study at Ocean care freight forwarding Page 16

 Fig : Showing the types of Parties in logistics

2.5 Types of Shipment Mode:

Transport modes are designed to either carry passengers or freight, but most modes can
carry a combination of both. For instance, an automobile has a capacity to carry some
freight while a passenger plane has a belly hold that is used for luggage and cargo. Each
mode is characterized by a set of technical, operational and commercial
characteristics. Technical characteristics relate to attributes such as speed, capacity and
motive technology while operational characteristics involve the context in which modes
operated, including speed limits, safety conditions or operating hours. The demand for
transport and the ownership of modes are dominant commercial characteristics.

a. Road transportation

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Road infrastructures are large consumers of space with the lowest level of physical
constraints among transportation modes. However, physiographical constraints are
significant in road construction with substantial additional costs to overcome features such
as rivers or rugged terrain. While historically road transportation was developed to support
non-motorized forms of transportation (walking, domestic animals and cycling at the end of
the 19th century), it is motorization that has shaped the most its development since the
beginning of the 20th century.

Road transportation has an average operational flexibility as vehicles can serve several
purposes but are rarely able to operate outside roads. Road transport systems have high
maintenance costs, both for the vehicles and infrastructures. They are mainly linked to light
industries and freight distribution where rapid movements of freight in small batches are
the norm. Yet, with containerization, road transportation has become a crucial link in freight
distribution.

b. Rail transportation

Railways are composed of a traced path on which wheeled vehicles are bound. In light of
recent technological developments, rail transportation also include monorails and maglev.
They have an average level of physical constrains and a low gradient is required, particularly
for freight. Heavy industries are traditionally linked with rail transport systems, although
containerization has improved the flexibility of rail transportation by linking it with road and
maritime modes. Rail is by far the land transportation mode offering the highest capacity
with a 23,000 tons fully loaded coal unit train being the heaviest load ever carried. Gauges,
however, vary around the world, often challenging the integration of rail systems

Organization study at Ocean care freight forwarding Page 18

 Pipeline

Pipeline routes are practically unlimited as they can be laid on land or under water. Their
purpose is to move liquids such as petroleum products over long distances in a cost effective
fashion. The longest gas pipeline links Alberta to Sarnia (Canada), which is 2,911 km in
length. The longest oil pipeline is the Tran Siberian, extending over 9,344 km from the
Russian arctic oilfields in eastern Siberia to Western Europe. Physical constraints are low
and include the landscape and pergelisol in arctic environments. Pipeline construction costs
vary according to the diameter and increase proportionally with the distance and with the
viscosity of fluids (from low viscosity gas to high viscosity oil). The Trans Alaskan pipeline,
which is 1,300 km long, was built under difficult conditions and has to be above ground for
most of its path. Pipeline terminals are very important since they correspond to refineries
and harbors.

 Air transportation

Air routes are practically unlimited, but they are denser over the North Atlantic, inside North
America and Europe and over the North Pacific. Air transport constraints are
multidimensional and include the site (a commercial plane needs about 3,300 meters of
runway for landing and takeoff), the climate, fog and aerial currents. Air activities are linked
to the tertiary and quaternary sectors, notably finance and tourism, which lean on the long

Organization study at Ocean care freight forwarding Page 19

distance mobility of people. More recently, air transportation has been accommodating
growing quantities of high value freight and is playing a growing role in global logistics.

 Maritime transportation

Main maritime routes are composed of oceans, coasts, seas, lakes, rivers and channels.
However, due to the location of economic activities maritime circulation takes place on
specific parts of the maritime space, particularly over the North Atlantic and the North
Pacific. The construction of channels, locks and dredging are attempts to facilitate maritime
circulation by reducing its discontinuity, but such endeavors are highly expensive. Maritime
transportation has high terminal costs, since port infrastructures are among the most
expensive to build, maintain and operate. These high costs also relate to maritime shipping
where the construction, operation and maintenance of ships is capital intensive. More than
any other mode, maritime transportation is linked to heavy industries, such as steel and
petrochemical facilities adjacent to port sites. Yet, with containerization, maritime shipping
has become the linchpin of globalization, allowing trading a wide range of goods and
commodities.

 Intermodal transportation

Concerns a variety of modes used in combination so that the respective advantages of each
mode are advantaged. Although intermodal transportation applies for passenger
movements, such as the usage of the different, but interconnected modes of a public transit
system, it is over freight transportation that the most significant impacts of intermodals

Organization study at Ocean care freight forwarding Page 20

have been observed. Containerization has been a powerful vector of intermodal integration,
enabling maritime and land transportation systems to interconnect.

Types of Container

1. Dry storage container

The most commonly used shipping containers; they come in various dimensions
standardized by ISO. They are used for shipping of dry materials and come in size of 20ft, 40
ft. Dry storage containers are some of the most common containers used in the shipping
industry. They come in lengths of 10, 20, and 40 feet, and they are designed to transport dry
goods. These containers do not allow for temperature controls, so they are not suited for
moving food or chemicals that require refrigeration.

Fig : Showing the Dry storage container

2. Flat rack container

With collapsible sides, these are like simple storage shipping containers where the sides can
be folded so as to make a flat rack for shipping of wide variety of goods.

Fig: Showing the Flat Rack Container

Organization study at Ocean care freight forwarding Page 21

3. Open top container

With a convertible top that can be completely removed to make an open top so that
materials of any height can be shipped easily.

Fig: Showing the Open Top Container

4. Tunnel container

Container storage units provided with doors on both ends of the container, they are
extremely helpful in quick loading and unloading of materials.

Fig: Showing Tunnel Container

5. Open side storage container

These storage units are provided with doors that can change into completely open sides
providing a much wider room for loading of materials.

Organization study at Ocean care freight forwarding Page 22

6. Double doors container

They are kind of storage units that are provided with double doors, making a wider room for
loading and unloading of materials. Construction materials include steel, iron etc in
standardized sizes of 20ft and 40ft.

Fig : Showing Double doors Container

7. Refrigerated ISO containers

These are temperature regulated shipping containers that always have a carefully controlled
low temperature. They are exclusively used for shipment of perishable substances like fruits
and vegetables over long distances.

Fig : Showing Refrigerated ISO Container

8. Tanks

Container storage units used mostly for transportation of liquid materials, they are used by
a huge proportion of entire shipping industry. They are mostly made of strong steel or other
anti-corrosive materials providing them with long life and protection to the materials.

Organization study at Ocean care freight forwarding Page 23

 Fig: Showing Tanks used for transportation of liquid material

11. Half height containers

Another kind of shipping containers includes half height containers. Made mostly of steel,
these containers are half the height of full sized containers. Used especially for good like
coal, stones etc which need easy loading and unloading.

Fig : Showing the Half Height Container

12. Car carriers

Car carriers are container storage units made especially for shipment of cars over long
distances. They come with collapsible sides that help a car fit snugly inside the containers
without the risk of being damaged or moving from the spot.

Fig : Showing the Car Carrier

Organization study at Ocean care freight forwarding Page 24

 CALCULATIONS AND INTERPRETATIONS

CONVERTIONS
CONVERTION M

1 CM 0.01
1MM 0.001
1 INCH 0.0254
1FEET 0.305

CONVERTION CM

1M 100
1MM 0.1
1 INCH 2.54
1FEET 30.48

CONVERTION FEET

1M 3.28085
1MM 0.00328084
1 INCH 0.0833
1CM 0.0328084

CUBIC METER SQUARE CALCULATION

AIR SHIPPMENT CBM CALCULATION

(LENGTH*BREATH*HEIGHT) CONVERT INTO CM /THE RATE

SEA SHIPPMENT CBM CALCULATION

(LENGTH*BREATH*HEIGHT) CONVERT INTO M /THE RATE

Organization study at Ocean care freight forwarding Page 25

 SHIPMENT PROCEDURES

DOCUMENT REQUIRED FOR EXPORT

*CUSTOMER KYC (KNOW YOUR CUSTOMER)

ADHARE CARD/PASSPORT COPY /VOTER ID

*INVOICE PACKING LIST

*SHIPPER LETTER OF INSTRACTION

*EXPORT VALUE DECLARATION

*SHIPPER DELARATION FORM

*FEMA

*PURCHASE ORDER

*INSURANCE

DOCUMENT REQUIRED FOR IMPORT

*COMMERICAL INVOICE AND PACKING LIST

*TECHINICAL WRITEUP

*CATALOG SET UP

*BIS (IF REQUIRED)

*GATT& DGFT

*IEC CODE &GST COPY

*AUTHERISATION GENERAL

*AUTHERISATION LETTER

Organization study at Ocean care freight forwarding Page 26

 SUGGESTION

 According to the observation the largest logistics sectors of the company has
commenced on it business starting off in the year 2010 even though it just started
of which is functioning it faces stiff competition from companies like Aramex
developing the basic infrastructure for the strong foundation would be start.
 In the current scenario the company uses the manual labor extensively and
mechanical system to support its labors this leads to an increase increases
consignment damages due to the human errors. Developing an automated system
would be would be bear high initial cost but in the future run, it can reduce
possible losses for the business form, since mechanical errors are comparatively
lower.
 Staff related learning programs should be given more importance since human
errors are most prominent problem causing factor in the unloading, loading and
transportation of consignments to its customers hence steps should be taken so
as to improve the knowledge of staff regarding basic precautions regarding
consignment handling and verifications this steps can improve the staffs
knowledge does, reduce the risk coming under the human errors.
 It has been noted that as the number of transit increase the risk of consignment
damages is high when consignments are loaded and unloaded more number of
times in different transits, it can lead to consignment damage, either permanent
or temporary. Reducing the number of transits can avoid material damage.

Organization study at Ocean care freight forwarding Page 27

 BIBLIOGRAPHY

Most of the information I acquired from my company staffs its self

 https://www.oceancare.org
 https://www.zaubacorp.com
 http://www.crunchbase

Organization study at Ocean care freight forwarding Page 28

A STUDY ON REVERSE LOGISTICS IN SVARAD LOGISTICS

PROJECT REPORT SUBMITTED TO

ACADEMY OF MARITIME EDUCATION AND TRAINING (AMET)

(Declared as Deemed to be University)

IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE DEGREE OF

BACHELOR OF BUSINESS ADMINISTRATION
(SHIPPING)

BY

A.DINESH KUMAR
(REG. NO: ABA17027)

UNDER THE GUIDANCE OF

Mrs.DIVYA RANJANI

ASSISTANT PROFESSAR

AMET BUSINESS SCHOOL

ACADEMY OF MARITIME EDUCATION AND TRAINING (AMET)
(Declared as Deemed to be University)
June 2020

1
 DECLARATION

I hereby declare that the project work entitled “REVERSE LOGISTICS” submitted to

AMET Business School under the guidance of Mrs.DIVYA RANJANI,assistant professor, in

partial fulfillment of the requirement for the award of the degree of Bachelor of Business

Administration (Shipping) is a record of original project work done by me during the period

of study in AMET (2017-20).

Date:
Place: Chennai

2
 CERTIFICATION OF APPROVAL

This is to certify that this project entitled “REVERSE LOGISTICS” is bonafide research

work carried out independently by Mr.DINESH KUMAR (REG. NO: ABA17027), student

of BBA (Shipping) of AMET Business School, AMET, Kanathur 603112, during 2016-19 in

partial fulfillment of the requirement for the award of degree of Bachelor of Business

Administration (Shipping).

Signature of Guide

Vice-Voce-examination conducted

Internal Examiner HOD

Date:

3
 ACKNOWLEDGMENT

I am immensely indebted to Capt DR.SRINIVASAN Dean AMET BUSINESS

SCHOOL for providing the required arrangements to carry out this project work.

I extend my gratitude to Dr. SRINIVASAN Director of AMET BUSINESS SCHOOL

for his constant encouragement and his variable support throughout the course of the project.

I find no words to express my heartfelt feeling to thank my Project Guide Dr.

R.DIVYA RANJANI AMET BUSINESS SCHOOL in AMET University for the valuable
guidance and support given to me throughout the course of study.

I would like to extend my thanks to Mr. V. Mugunthan Managing Director of

SVARAD logistics pvt ltd – Chennai for providing me this project opportunity and guiding
me throughout this project, I would also thank all the employees in SVARAD logistics pvt
ltd – Chennai.

4
 TABLE OF CONTENTS

CHAPTER CONTENTS PAGENO

Abstract

1 Introduction
2 Company Profile

3 Review of Literature

4 Research Methodology

5 Data analysis and Interpretation

6 Findings
7 Conclusion

8 Suggestions

Bibliography

Questionnaire

5
6
 ABSTRACT

I carried out my internship at SVARAD LOGISTICS, customs clearance, freight

forwarding, logistics and it also offers internship opportunities to the students who need
education about, shipping, logistics, and customs clearance.

Internship is an opportunity where we can find what’s going on in the industry and
try to relate with the subjects taken in the class. The purpose of internship is to fulfill the
core requirement for the award of Bachelor of Business Administration in shipping and
logistics management to get practical knowledge in our field. It also helps us to find what’s
going on in the business sector and what’s needed in the present day market and this
enables students to gain experience in different tasks. During my internship period several
approaches and exposure methods were used which includes hands on training through
reading relevant materials.

I was assigned to reverse logistics department. This helped me to interact with different
people, clients and this helped me to acquire information and gain the benefits of customer
care.

1
 CHAPTER 1

INTRODUCTION

This section of the paper will give the reader an idea of the fundamentals of the
thesis project. The reader will be able to get a fair idea of what this paper is all
about. In the following subsections one can understand the objectives and
obstacles for this project.

Reverse logistics, what is it? It sounds interesting, doesn’t it? In simplest words it
is the management of the path of the products from its end users back to the back
manufacturers. Below are a few ways of defining the concept of reverse logistics:

In the paper “Going Backwards: Reverse Logistics Trends and Practices”, August
1998, Dale S. Rogers and Ronald S. Tibben-Lemke use the definition for Logistics
given by The Council of Logistics Management to define Reverse Logistics. The
definition for Logistics given by The Council of Logistics Management is:

“the process of planning, implementing, and controlling the efficient, cost effective
flow of raw materials, in-process inventory, finished goods and related information
from the point of origin to the point of consumption for the purpose of conforming
to customer requirements.”

Therefore, reverse logistics according to Rogers and Tibben-Lembke is:

“the process of planning, implementing, and controlling the efficient, cost effective
flow of raw materials, in-process inventory, finished goods and related information
from the point of consumption to the point of origin for the purpose of recapturing
value or proper disposal.”

2
 Rogers and Tibben-Lembke go on to say that remanufacturing and refurbishing also
may be included in the definition of reverse logistics.
In his paper “Development and Implementation of Reverse Logistics Programs”, 1998,
James R. Stock defines reverse logistics as,

“the term most often used to refer to the role of logistics in product returns, source
reduction, recycling, materials substitution, reuse of materials, waste disposal, and
refurbishing, repair and remanufacturing.”

Stock (1998) says product returns, product recalls, end-of-lease equipment,

old/obsolete items being replaced, packaging materials are among the many items
that come back and which require reverse logistics processing.

The European Working Group on Reverse Logistics, REVLOG (1998), defines reverse
logistics as,

“the process of planning, implementing and controlling backward flows of raw

materials, in process inventory, packaging and finished goods, from a
manufacturing, distribution or use point, to a point of recovery or point of proper
disposal.”

Ronald Kopicki in his book “Reuse and recycling: reverse logistics opportunities”,
1993, gives the definition of reverse logistics based upon the direction of flow as
“Reverse Logistics is a broad term referring to the logistics management and
disposing of hazardous or non-hazardous waste from packaging and products. It
includes reverse distribution...which causes goods and information to flow in the
opposite direction of normal logistics activities.”

Pohlen and Farris (1992) define Reverse Logistics in their article “Reverse
Logistics in Plastics Recycling” as “the movement of goods from a consumer
towards a producer in a channel of distribution.”

3
DHL, a renowned third party logistics company uses the following definition for
reverse logistics taken from the book “Logistic system: Betriebswirtschaftliche
Grundlagen”, by Hans-Chritian Pfohl, 2004: “Reverse logistics can be defined as
the application of logistics concepts to residues in order to create an economically
and environmentally efficient residue stream by using all activities of
spatiotemporal transformation, including changes in amounts and types.”

4
 COMPANY PROFILE

SVARAD LOGISTICS (INDIA) PVT., LTD., is a custom broker and

freight forwarding agents at Chennai. Our expertise covers the full spectrum
of transportation and logistics services by SEA, AIR, RAIL and by TRUCK
to any country in the world. As part our customer satisfaction, we offer
personalized services to accommodate the special needs for our clients

WE have been incorporated 2015 and formally it was, MARIANE

INTERNATIONAL SERVICES and we have been in this business since
1983 and employs over 10 people. The export department brings many years
of the combined experience in the trade and it is responsible for the
preparation of documents and the forwarding of out bound shipments. We
also handle the movement of the proprietary equipment of the of shore
assembly factories, as well as, with the transportation of your raw materials ,
finding, trimmings and finished textile products., etc.

Background

Competition can be seen in every field these days, and the manufacturing
world is no different. Companies are always looking for newer and newer
opportunities and defects in the system so they can be tackled. Logistics plays
an important role in any manufacturing firm, as it involves the optimal use of
man, machine and material. Reverse logistics is a small part of the total
logistics of a company. Reverse logistics deals with the handling of the goods

5
 that are being returned to the manufacturer by the customer. It covers all the
activities that determine the fate of these returned goods.

This thesis tries to understand the basic concepts of reverse logistics. It tries
to give an idea of how various researchers and logistics experts have defined
reverse logistics. It also covers some basic reverse logistics activities and how
these activities affect the decisions that managers have to make on a regular
basis in their company.

The ever growing manufacturing world and the advent of automation has resulted
in mass production and increased the number of products released
into the market. This exponential growth has resulted in the overuse of the
natural resources thus increasing the amount of industrial waste. This thesis
also sheds some light on what activities in the reverse logistics help companies
to work towards green production and green logistics.

Thesis Specifications:

This thesis is a result of the numerous hours of lectures, course seminars, variety of
courses, group and individual tasks in the field of production and logistics over the
past two years at the Innovation, Design and Engineering Department at
Mälardalens Högskola. This thesis gives me the opportunity to put together a study
on the concept of Reverse Logistics. It also gives me the opportunity to show my
skills as a Masters student, and showcase the skills I have learnt over the past two
years. This project mainly focuses on the concept of Reverse Logistics and what
role it plays in the manufacturing world today.

Aim

The aim of this project is to understand the concept of Reverse Logistics and its
role in the manufacturing industry. It also focuses on learning different aspects of
the reverse logistics and how these aspects affect the decisions made by

6
 manufacturing firms. The study also tries to look at the environmental aspects of
reverse logistics.

Problem Definition

Reverse logistics is a fairly new concept and not until recently have researchers
and logistics companies tried to focus on its effects on the managerial decisions.
Also in recent years customer satisfaction has been considered a very important
aspect in the growth of any company and the focus on improving customer
satisfaction has increased greatly. Recently researchers have found that reverse
logistics can play an important role in improving customer satisfaction.

The main focus of this thesis would be to answer the following questions:

What is the definition of reverse logistics?

What are the principal steps involved in reverse logistics?

What do companies do with the returned products?

How do the returns affect the decisions made in manufacturing firms?

How do environmental issues affect the reverse logistics decisions?

And so on...

The literature review in this paper gives a clear picture about the concept of reverse
logistics. The thesis makes an attempt to cover the works of various leading
researchers and logistics experts as much as possible. Further the questionnaire
also has been formulated so as to get clear and well defined answers. Through the
literature study, interview and survey conducted with logistics and supply chain

7
 personnel at a few companies, this thesis tries to understand and analyze the
concept of reverse logistics.

Problem Delimitation

Reverse logistics has been found to play an important role in almost any
manufacturing firm, regardless of size, product and geographical reach of the firm.
The focus initially was to conduct the survey and/interviews in manufacturing
firms within Sweden focusing on firms that manufacture FMCG and electronic
goods. The reason for choosing FMCG and electronic goods was because FMCGs
are consumed more frequently which increases the importance of logistics
decisions to deliver them to consumers. And the reason for choosing electronic
goods is because of the growth of electronic products in the market over past two
decades, and the frequency with which newer products reach the market these
days.

Unfortunately after waiting for almost 45 days for the replies to the conducted
survey there was no response by even one of the 30 different manufacturing firms
in Sweden. After which a quick decision was made to change the target group to
the manufacturing firms in India. And by the time this decision was made there
was very little time for choosing the companies and conducting survey and/or
interviews. Somehow I managed to get 6 people from 5 different companies to
respond to the questionnaire. Also some sort of an interview was conducted
through telephone calls and chatting over the internet to get a better understanding
of the responses given by them.

As mentioned in the problem definition this thesis will focus on understanding the
knowledge of the participants with respect to reverse logistics, and to what extent
they have implemented reverse logistics concepts within their companies.

8
THEORETICAL BACKGROUND

This section will try to summarize the various definitions of the concept of reverse
logistics as given by various companies, logistics experts and researchers. The
primary steps involved in the reverse logistics process will be defined in this
section. This section will also cover the role of reverse logistics and how
developing a reverse logistics model for a specific product or group of products
will affect the decisions taken by the companies. Also how different reverse
logistics models affect the environmental liability of these companies has been
explained in this part of this thesis. Finally an idea of the financial benefits and/or
drawbacks involved in the reverse logistics process will be explained.

DEFINING REVERSE LOGISTICS

Reverse logistics, what is it? It sounds interesting, doesn’t it? In simplest words it
is the management of the path of the products from its end users back to the back
manufacturers. Below are a few ways of defining the concept of reverse logistics:

In the paper “Going Backwards: Reverse Logistics Trends and Practices”, August
1998, Dale S. Rogers and Ronald S. Tibben-Lemke use the definition for Logistics
given by The Council of Logistics Management to define Reverse Logistics. The
definition for Logistics given by The Council of Logistics Management is:

“the process of planning, implementing, and controlling the efficient, cost effective
flow of raw materials, in-process inventory, finished goods and related information
from the point of origin to the point of consumption for the purpose of conforming
to customer requirements.”

Therefore, reverse logistics according to Rogers and Tibben-Lembke is:

“the process of planning, implementing, and controlling the efficient, cost effective
flow of raw materials, in-process inventory, finished goods and related information
from the point of consumption to the point of origin for the purpose of recapturing
value or proper disposal.”
9
 Rogers and Tibben-Lembke go on to say that remanufacturing and refurbishing also
may be included in the definition of reverse logistics.
In his paper “Development and Implementation of Reverse Logistics Programs”, 1998,
James R. Stock defines reverse logistics as,

“the term most often used to refer to the role of logistics in product returns, source
reduction, recycling, materials substitution, reuse of materials, waste disposal, and
refurbishing, repair and remanufacturing.”

Stock (1998) says product returns, product recalls, end-of-lease equipment,

old/obsolete items being replaced, packaging materials are among the many items
that come back and which require reverse logistics processing.

The European Working Group on Reverse Logistics, REVLOG (1998), defines reverse
logistics as,

“the process of planning, implementing and controlling backward flows of raw

materials, in process inventory, packaging and finished goods, from a
manufacturing, distribution or use point, to a point of recovery or point of proper
disposal.”

Ronald Kopicki in his book “Reuse and recycling: reverse logistics opportunities”,
1993, gives the definition of reverse logistics based upon the direction of flow as
“Reverse Logistics is a broad term referring to the logistics management and
disposing of hazardous or non-hazardous waste from packaging and products. It
includes reverse distribution...which causes goods and information to flow in the
opposite direction of normal logistics activities.”

Pohlen and Farris (1992) define Reverse Logistics in their article “Reverse
Logistics in Plastics Recycling” as “the movement of goods from a consumer
towards a producer in a channel of distribution.”

10
 DHL, a renowned third party logistics company uses the following definition for
reverse logistics taken from the book “Logistiksysteme: Betriebswirtschaftliche
Grundlagen”, by Hans-Chritian Pfohl, 2004: “Reverse logistics can be defined as
the application of logistics concepts to residues in order to create an economically
and environmentally efficient residue stream by using all activities of
spatiotemporal transformation, including changes in amounts and types.”

FUNDAMENTALS OF REVERSE LOGISTICS

Fleischmann and Dekker (2004) give the fundamentals of Reverse Logistics by analyzing
the topic from four viewpoints:

• Why are things returned? and why do companies get involved in reverse
logistics?

• How Reverse Logistics works in practice?

• What is being returned?

• Who is executing reverse logistics activities?

Why do companies get involved in reverse logistics activities?

In general companies get involved in reverse logistics 1) because they can profit
from it; or/and 2) because they have to; or/and 3) because they “feel” socially
motivated to do it. Furthermore Fleischmann and Dekker categorize these three
driving forces as:

Economics ( direct and indirect)

Legislation

Corporate citizenship

Economics

1
 Reverse logistics programs bring both direct and indirect gains.

Direct gains can be:

• In the form of raw materials for new products.

• Some parts of the returned product maybe recycled to manufacture new

products, thus reducing the manufacturing cost.

• Value added recovery.

• Indirect gains can be:

• Anticipating/impeding legislation

• Market protection

• Green image

• Improved customer/ supplier relations

Legislation

In many countries customers are legally entitled to return the product and legislation
states that the companies are responsible for recovery as well. And sometimes
companies themselves participate in recovery programs to keep or create a clean and
green image.

Corporate citizenship

2
Many companies take responsibility for the safe disposal or recycling of their products
to maintain the environment safe. Often companies get involved in recovery and
recycling programs and turn create awareness among their customers as well.

Why are things returned?

Customers return the products for several reasons. Products once bought may be
returned due to physical damage, some of them are returned because the customers are
unhappy with the functionality of the product (expectations not met), sometimes
customers return products because they discover an alternative product with better
functionality after they have made the purchase, sometimes customers misuse the return
policy and return it without any reason. These are only some of the major reasons for
the return of a purchased product by majority of the customers.

How Reverse Logistics process works in practice?

The how viewpoint deals with how is value recovered from the products that are returned
back to the manufacturer.

Recovery is actually only one of the activities involved in the whole reverse
logistics process. First there is collection, next there is the combined inspection/
selection/ sorting process, thirdly there is recovery, and finally there is
redistribution. Collection refers to bringing the products from the customer to the
point of recovery. At this point the products are inspected, i.e. their quality is
assessed and a decision is made on the type of recovery. Products can then be
sorted and routed according to the recovery that follows. If the quality is (close to)
“as good as new”, products can be fed in the market almost immediately through
re-use, re-sale and re-distribution. If not, another type of recovery may be involved
but now demanding more action, i.e. a form of re-processing.

3
The Fig. 1 below gives the reverse logistics processes.

Collection Inspection/Selecting/Sorting Direct Recovery

Re-use Re-sale
Re-distribution

Repair
Refurbishing
Remanufacturin
g
Retrieval
Recycling
Incineration

Market

Fig. 1

Re-processing can occur at different levels: product level (repair), module level
(refurbishing), component level (remanufacturing), selective part level (retrieval),
material level (recycling), energy level (incineration).

What is being returned?

The third viewpoint on reverse logistics is obtained by looking at what is actually

being returned. The three product characteristics that are relevant in this regard are:

• Composition

• Deterioration

4
• Use-pattern

Composition

Design engineers need to keep in mind the material composition of the products
they design, which is called design for recovery. Not all parts of a product can be
easily recycled or disposed, so design experts need to keep in mind not to use
unrecyclable material as much as possible. How these parts are assembled or
attached to each other also plays a factor in this regard, and so does the size of the
product itself. The cost for recovery increases as the size of the product increases,
because most of the times the recovery value is less than the cost for recovery.

Deterioration

Next there are the deterioration characteristics, which eventually cause a

nonfunctioning of the product, but also determine whether there is enough
functionality left to make a further use of the product, either as a whole or as parts.
Often manufacturers have to deal with questions like whether the product will age
during use. Will all parts age equally? Will the value of the products decline fast?
Etc...

Use-pattern

Use-pattern of the product also plays an important role when thinking about
recovery. Use-pattern depends on who the user is and how the user has used the
product. Products like computers for e.g. could have been used by an individual or
many individuals, like in an office or school or library, so this affects the reusability
of the parts or whole product in various degrees. Books are another example for
varied usage. Use-pattern is not just affected by number of users but also the
duration of usage. In sum the following product categories can be given:

5
 Consumer goods (apparel, furniture, and a vast variety of goods)

Industrial goods (military and professional equipment)

Spare parts

Packaging and distribution items

Civil objects (building, dikes, bridges, roads etc...)

Ores, oils and chemicals

Other materials (like pulp, glass, scraps)

Who is executing reverse logistics activities?

The three main participants in the reverse logistics activities can be given as:

• Forward supply chain actors (supplier, manufacturer, wholesaler and retailer)

• Specialized reverse chain players (jobbers, recycling specialists etc...)

• Opportunistic players (such as charity organizations)

In any reverse logistics chain two or more of these players are always involved.
Often, one or two of these participants play the major role while others act merely
as intermediate junctions.

2.3 Overview of the reverse logistics flow

Once a product enters the reverse logistics flow, the logistics manager has to
decide where the product has to be sent: either return to vendor, to the landfill,
or to the secondary market.

6
There are several reasons why a product enters the reverse logistics flow. The
Table.1 below as given by Rogers and Tibben-Lembke (1998) shows some of
them. There are, of course more reasons why a product will enter the reverse
logistics system, but these are the most common.

Source Reasons

Customer 1. Product did not meet customer’s needs.

2. Customer did not understand how to properly use the

product.
3. Product was defective.
4. Customer abuse of liberal return policy.

Retailer 1. Product packaging outdated.

2. Seasonal product.

3. Product replaced by new version.

4. Product discontinued.

5. Retailer inventory too high (overstock, marketing

returns,
or slow-moving).
6. Retailer going out of business.

Table.1

Often, two identical products will follow different routes to different

destinations, depending on where in the distribution channel they enter the
reverse logistics flow. One such example as mentioned by Rogers and
TibbenLembke (1998), a book that is returned to a store by a customer may not
end up at the same place as a book returned by the store to its supplier due to
overstocking. Neither of these books may end up in the same place as the books
returned by the distributor.

7
 When a product has been replaced by a new version, a retailer may continue to sell
the old version until it is gone, perhaps at a discount.

Enter the secondary market. If the product does enter the reverse logistics flow, the
firm may sell it to a liquidator for a relatively high price. This may be especially
true when the new product represents only a minor, incremental improvement over
an already popular product. On the other hand if the changes are significant, then
the manufacturer may offer an incentive to sell of the remaining products. Often
when this happens the retailer may take down the old

product and sell it off to the secondary market.

When the product has not met the expected sales, manufacturers often find it
difficult to sell them to the secondary market even at a greatly reduced price.

Returned Product Types

Rogers and Tibben-Lembke (1998) classify the retail products in a reverse logistics flow
as follows:

1. Close-outs: first quality products that the retailer has decided to no longer carry;

2. Buy-outs or “lifts”: where one manufacturer buys out retailers’ supply of

competitor’s product;

3. Job-outs: first quality seasonal, holiday merchandise;

4. Surplus: first quality overstock, overrun, marketing returns, slow-moving

merchandise;

5. Defective: products discovered to be defective;

6. Non-Defective Defectives: products thought incorrectly to be defective;

7. Salvage: damaged items, and

8. Returns: products returned by customers.

2.4 Returns Management

8
Return management is the process of returning product as well as the transformation of the
product back to reusable condition. Returns Management

uses tools and systems to maximize profits in the process.

Rogers and Tibben-Lembke (1998) mention seven channels for disposing the products that
have been returned to the manufacturer. They are:

1. Return to Vendor
2. Sell as new
3. Sell Via Outlet or Discount
4. Sell to Secondary Market
5. To Donate Charity
6. Remanufacture/Refurbish

7. Materials Reclamation/Recycling/Landfill

Based on the condition of the returned product, contractual obligations with the vendor,
and the demand for the product, the manufacturer has one or more of the

above options to dispose the returned product.

Return to vendor

Often the vendor offers incentives for large orders, and retailers buy products in
bulk. If the product doesn’t do well in the market the retailer returns the products
to the vendor. Similarly if a customer returns a product because of a defect or
claiming that it has a defect, the manufacturer would like to take it back so as to
avoid such defects in the future, and also this way they can avoid non-defective
defectives. Another reason the manufacturer would like to take back the product
could be to avoid cannibalization of the parts and keep the brand name clean.
Because often what happens is the product is sent to a secondary market where
cheap parts are installed on the product and sold at a reduced price at a flea market

or dollar store.

Sell as New

Some of the returned products are either unused or unopened; in such cases the
manufacturer can repackage and sell it as new to the retailers or an outlet store,

9
depending on the demand of the product. On the other hand some products like
circuit breakers are not legally allowed to be sold once it has been returned even if

it has been installed for a short period or never been installed at all.

Sell Via Outlet or Discount

If the product has been returned, or if the retailer has too large an inventory, it can
be sold via an outlet store. Selling through outlet stores has a number of advantages
like maintaining control over the products, and the knowledge of where the
products are being sold. This helps firms in maintaining their brand name. Often
outlet stores offer a large margin than the retailers, because the ultimate goal here
is to clear out inventory.

Sell to Secondary Market

When a firm has been unable to sell a product, cannot return it to the vendor, and
is unable to sell it at an outlet store, one of its final options is to sell it via the
secondary market. The secondary market consists of firms that specialize in buying
close-outs, surplus, and salvage items, at prices as low as ten cents on the

dollar.

Donate to Charity

The products that cannot be sold to the retailers or vendors, because they need
slight repair or cosmetic changes, manufacturers may choose to donate them to a
charity. In this case the manufacturer does not receive any money, but the image

of the company will have a positive effect as a good corporate citizen.

Remanufacture/Refurbish

Before a product is sent to recycling the manufacturer has the option to see if it can
be repaired or reconditioned by either replacing parts of the item or by making
cosmetic changes, so that it can be sold to the secondary market where they will
be sold as reconditioned goods or remanufactured goods. But it is also necessary
to make sure the product has never been used by the returning customer, because
no matter how well the refurbishing or reconditioning process is it cannot be sold
10
in some markets.

Materials Reclamation/Recycling/Landfill

There are several reasons for sending an item to the landfill for example some
goods cannot be resold in any form due to safety regulations. Another reason is
when the manufacturer has found that there is no way to get any value from the
returned item. The final option is to send it to material reclamation to take out the
parts which can be recycled for material or the part itself. The other option is to
recycle the material, like parts made out of plastic, metal etc...The last option is of
course to send it to landfill. The items generally sent to landfill are considered as
waste material, and which has no use to anybody. The manufacturer of course has
to make sure to take necessary safety precautions

before sending it to the landfill like refining, cleaning, and separating hazardous
and non-hazardous material.

Making the right choice

Any of the choices described above can be successfully applied individually or in

combinations by the manufacturer. The alternatives range from high cost and high
management maintenance to profitable and low management maintenance.
Making the right choice requires the ability to define the expected outcome, use
the correct technique or combinations of the techniques and tools for each

situation, and then deliver the results as planned using the resources.

Often companies use software and web based tools that help locating, tracking, and
managing products as they are returned. However these solutions only help to get
the product returned efficiently. Product quality still needs to be ensured to

prepare it for the resale options.

Outsourcing often generates more value provided a partner who has strategic value
and can implement processes that fit the business need for the parent company is
selected. The questions that need to be asked by the parent company can be along
the lines of “How can you create a comprehensive returns management plan for
our products that:

11
 • helps to reduce the number of returns that must be dealt with from our customers,

• transforms inherently negative customer experiences into a valuable strategic

asset, and

• generates profits from returns that were previously a loss?

In summary the critical points for returns management are:

• Prevent returns from occurring in the first place.

• Look beyond the immediate challenge: The questions you need to answer are
“How do we create a comprehensive returns management plan that transforms
inherently negative customer experiences into a valuable strategic asset?” “How
do we reduce the number of returns that must be dealt with from our customers?”

• Develop a holistic solution that will address returns from multiple angles and will
likely provide benefits that extend far beyond the area of reverse logistics.

• Returns management solutions must account for a variety of factors, such as

business models, product type, and market geography. These should minimize or
eliminate costs, or generate a profit. The most productive solutions are developed
from a grounded approach that is based on business needs that are comprehensive
and forward looking.

• Reach for profits from product returns; the options for getting real value are
available for many product returns. These options should be evaluated by

internal and external expertise to rethink the “as-is” process.

• Below is a list of key reverse logistics management elements as given by Rogers

and Tibben-Lembke (1998):

• Gatekeeping

• Compacting Disposition Cycle Time

• Reverse Logistics Information Systems

12
 • Centralized Return Centers

• Zero Returns

• Remanufacture and Refurbishment

• Asset Recovery

• Negotiation

• Financial Management

• Outsourcing

Gatekeeping

Gatekeeping is the screening of defective and unwarranted returned merchandise

at the entry point into the reverse logistics process. Good gatekeeping is the first
critical factor in making the entire reverse flow manageable and profitable. Often
in companies where the return policies are lenient consumers tend to abuse their
privileges. Also customers sometimes do not read the instructions of the return
policies correctly, which leads unnecessary trouble for the retailers and in turn the

manufacturer.

Gatekeeping process can help the manufacturer in keeping this to as low as

possible.

Compacting Disposition Cycle Time

Just like gatekeeping shorter disposition cycle time is an important factor in

managing returns. Often it is difficult for companies to determine which reverse
logistics channel the returned product should be placed in. The sooner this is
determined action can be taken that quickly. Companies are always thinking about
shortening their production cycle times, but it is just as important for them to

compact the reverse cycle time as well to gain money from the returned product.

Reverse Logistics Information Systems

13
The information surrounding the reverse logistics needs to be automated in order
to have a better reverse logistics process. Not many companies have good
information systems in place for doing so. At the same time putting the information
together to be accessible is a difficult job.

Returns Transaction Processing

In general very few companies have mastered the technology of tracking their
products in forward supply chain, and virtually none have achieved just below
average technology in the reverse process. In this regard both the retailer and
manufacturer have integrated their information systems to achieve some sort of a

working tracking process.

Centralized Return Centers

Returns centers have existed for many years, but only recently the full use of
centralized return centers has been achieved by manufacturing companies. In a
centralized system all products for the reverse logistics pipeline are brought to a
central facility, where they are sorted, processes, and then shipped to their next
destinations. This system has the benefit of the reverse logistics flow customers,
which often leads to higher revenues for the returned items. Also this process can
help in determining the right reverse channel for the returned item.

Zero Returns

In zero return programs, the manufacturer or distributor does not permit products
to come back through the return channel. Instead, they give the retailer or other
downstream entity a return allowance, and develop rules and guidelines for
acceptable disposition of the product. The zero return policy often tends to have a

negative effect in customer satisfaction and in turn the brand image.

Remanufacture and Refurbishment

14
 Thierry, et al. (1995) defined five categories of remanufacture and refurbishment.
These five categories, shown in Table.2, are repair, refurbishing, remanufacturing,
cannibalization, and recycling.

1. Repair
2. Refurbishing
3. Remanufacturing
4. Cannibalization
5. Recycling

Table.2
The first three categories: repair, refurbishing, and remanufacturing, involve
product recondition and upgrade. Cannibalization is simply the recovery of a
restricted set of reusable parts from used products. Recycling is the reuse of

materials that were part of another product or subassembly.

Asset Recovery

Asset recovery is the classification and disposition of returned goods, surplus,

obsolete, scrap, waste and excess material products, other assets, in a way tha
maximizes returns to the owner, while minimizing costs and liabilities associated
with the dispositions. Asset recovery is a major operation in any company, and this
one of the major ways of reducing waste, recovering revenue, and holding a

green image in the society.

Negotiation

The price of a product is determined by the cost for the company to produce it and
the brand value, and several other factors like marketing, etc...Similarly the value
of the products that have been returned is also affected by several factors

like age, degree of use, which used it, etc...No matter what the condition of the returned
good is the price is always negotiable, this may not be the same when

products are moving in the forward supply chain.

Financial Management
15
The key to a successful reverse logistics process is good financial management.
Most firms invest too much money in unnecessary and unwanted processes,
without actually analyzing the requirements of their business. Firms need to
research the right strategy for their business instead of following what everybody
else is doing blindly. Because what works for one firm may or may not work
another firm. Only after conducting analysis should they actually invest.

2.5 Reverse Logistics Activities

All the activities that a company carries out to collect the used, damaged,
unwanted, or outdated products, as well as packaging and shipping materials from
the end-user or reseller can be considered as reverse logistics activities. Once a
product has been returned to the company, the firm has many disposal options from
which to choose. Rogers and Tibben-Lembke (1998) classify some of these
activities as in Table.3.

Among the many options firms have to do with the products returned, the first
choice would be to return it to the supplier for a full refund. Often products that
haven’t been used can be sold to a different customer, or maybe sold through a
different outlet store. And if the products are not of sufficient quality they may be
sent to a salvage company which will export it to a foreign market. And if the
product cannot be sold “as is” or if the firm can significantly increase the selling
price by reconditioning, refurbishing or remanufacturing the product, the firm may
perform these activities before selling the product. These operations may also be
performed by a third party firm that specializes in the field of
reconditioning/remanufacturing/refurbishing. Finally if none of these operations
can be performed, then the manufacturer can try to find which components of the
product can be reused to manufacture new products, and the rest can be sent to
recycle or landfill.

Reverse Logistics
Material Activities

16
 1 Products Return to supplier
Resell
Recycle

2 Packaging Refurbish
Reuse
Recycle

Table.3

Packaging materials on the other hand can often be recycled. Often manufacturers use
reusable totes and pallets.

2.6 Classification of reverse logistics activities

Rogers and Tibben-Lembke (1998) classify reverse logistics activities based on

whether the goods in the reverse flow are coming from the end user or from another
member of the distribution channel such as a retailer or distribution center; and
whether the material in the flow is a product or a packaging material as given in
Table.4.

Supply Chain Partners End Users

Stock Balancing Returns Defective/Unwanted

PRODUCTS Marketing Returns products
Transit Damage Warranty Returns

Reusable Totes Reuse

PACKING Multi-Trip Packaging Recycling
Disposal Requirements Disposal Restrictions

Rogers and Tibben-Lembke (1998) also indicate that where products are inserted
into the reverse flow, is a prime determinant in the resulting reverse logistics
system. For instance, if a product enters the reverse logistics flow from a consumer,
it may be a defective product, or, the consumer may have claimed it was defective
17
in order to be able to return it. The consumer may believe it to be defective although
it is in perfect order in reality. This category of returns is called “non-defective
defectives”.

Depending on whether the product has reached the end of its useful life, the
consumer may have returned the product for service or due to a manufacturer
recall, or in some cases, so that the manufacturer can dispose of the product
properly, or reclaim materials.

In the case of supply chain partners, the products may have been returned due to
an over-ordered marketing promotion or because the product failed to sell as well
as desired. Further, the product may have come to an end of its life, or to the end
of its regular selling season, or in some cases the product may have been damaged
during transit.

Since their research was based primarily in the US region, Rogers and
TibbenLembke(1998) mention that packaging material does not play a big part in
the reverse logistics activities as opposed to the actual products themselves. They
also mention that this may differ in the case of European firms as they are keener on
green logistics and are often known to use reusable plastic totes and knockdown
cages.

18
Challenges in Reverse Logistics

Most challenges in managing reverse logistics can be traced to two broad categories-Process
and Investment (Two Steps Forward, One Step Back...,

Saty Chawla, May 2007).

Ill-defined processes

• Too many touch points-A high number of touch points significantly increases the
chance that the condition of the product will deteriorate.

• Long cycle time-A high number of touch points in turn increases the cycle time
which in turn increases the waiting time for the customer’s return order.

It also provides little time to recondition, repackage and resell the product.

• Missing feedback mechanism-Incompetent business intelligence leads to

incompetent reverse logistics, and not being able to track the issues that affect the
reverse logistics.

Neglect

• Out of focus-Previously management executives believed that making returns

easier for the consumer increases the behavior of returning until it was found out
to be profitable for the companies recently by researchers.

• Dispersed view-The existence of multi-channel returns leads to price differences,

missing item-data or simply a lack of cross-channel visibility of purchases.

• Limited visibility-Often there is little or no information given to retailers by the

firms about the inventory in their returns pipeline which leads to bad planning.

19
Retailer-Manufacturer conflict

Rogers and Tibben-Lembke (1998) mention another one of the difficulties in

managing returns as the difference between manufacturers and retailers. According
to them the retailer and manufacturer may disagree on any one of the following:

• Condition of the item

• Value of the item

• Timeliness of response

Usually when retailers send back products to the manufacturer, they believe the
products to be in pristine condition, and that any damages must have occurred
during transit or must be manufacturing defects. On the other hand the
manufacturer may suspect the retailer of abusing return privileges because of poor
planning, or of returning product damaged by the retailer. Further, the
manufacturer and retailer must agree upon the value of the returned item. While
the retailer may expect a full credit for the return, the manufacturer may think
otherwise.

Both retailers and manufacturers want to get rid of the excess inventory because
each one has an issue with it. While the retailers would like to return it at the end
of a quarter to reduce inventories, the manufacturers can be slow to recognize
returns as a subtraction from sales.

Sometimes the retailer simply deducts the cost of the items from an invoice.

Often, that invoice is not the same one for the goods being returned. These conflicts
have to be resolved by mutual understanding to develop a better partnership, as one
cannot survive without the other.

20
Problem Return Symptoms

Dr. Richard Dawe of the Fritz Institute of International Logistics identified six symptoms of
problem returns. The Table.5 below gives those six problem return

symptoms:

Symptoms

Returns arriving faster than processing or disposal

Large amount of returns inventory held in the warehouse

Unidentified or unauthorized returns

Lengthy processing cycle times

Unknown total cost of the returns process

Customers have lost confidence in the repair activity

Table.5

Factors considered for the RL networks categorization

Marco Serrato gives the categorization of reverse logistics network in his paper
based on two factors that determine the structure and characteristics of every RL
system which are the length of the product’s life cycle and the variability in the
rate of returns in any particular period.

The length of the product life cycle varies across products and industries (Rogers
and Tibben-Lembke, 1999). Often it is difficult to identify where a real product is
in its life cycle once it moves past the introductory and growth stages, which means
firms have to look for demand turning points. This can be done when the company
tracks the history and marketplace, and forecast.

21
 The stage of the product in its life cycle also affects the rate of return, which makes
it difficult to forecast the returns.

2.9 Effects of product life cycle and rate of returns on the RL network

Marco Serrato gives the relationship of the product life cycle and rate of returns
with reverse logistics network in his paper “Characterization of reverse logistics
networks for outsourcing decisions”. This section will summarize his thoughts.

Most products either fail in the early stages of the product life cycle or fail to
maintain a stable growth. The rate of returns depends inversely on the length of
the products life. For example, in the computer market the introduction of new
components accelerates the demise of computer models previously introduced, as
the manufacturer must introduce new models (just as its competitors are doing)
that will reduce the sales of the existing models (Tibben-Lembke, 2002).

Serrato refers to the six phases of the product life cycle to understand the reverse
logistics flow. The six phases of the life cycle as given by Tibben-Lembke (2002)
in his paper “Life after death: reverse logistics and the product life cycle” are:
development, introduction, growth, maturity, decline and cancellation. Fig. 2

shows the expected sales volume during these stages.

CANCELATION INTRODUCTION GROWTH MATUNITY DECLINE

. Fig. 2

22
The major issues that define the volume of the units returned through the RL system for
a product model (such as a specific model number of a particular product) during these
six phases are:

Development phase
It can be expected that there will be no returns at this stage, because the new product will
have very minor changes from the current product, and clients who like the current
product will obviously like a revised version.

Introduction phase

Firms can expect to begin making plans for dealing with the products that will
eventually be returned at this stage. With the revised version of a current product,
firms can forecast the returns based on the trends for the current product.

During the introduction stage, the company must also begin dealing with the flow
of the returned products. Because a new model is often a minor modification of the
existing product, production difficulties in adapting to the new mode should be
minimal. The minor modification also means demand for the new model would be
expected to be very similar to demand for the previous model. In the case of a new
model of a popular product, sales may be high from the beginning or start small
and grow quickly, as customer demand for an established, known product is
transferred to the new product. In these cases, Tibben-Lembke (2002) suggests that
the product will skip the introduction phase.

Growth phase

Growth phase means the sales increase exponentially and so does the returns. This
however may not always be true. As more customers are attracted to the product,
these new customers may be less knowledgeable about the product, and the rate of
“non-defective defectives” may increase. This in turn will also increase the
variability of the rate of returns.
23
 Maturity phase

As the sales of the product reaches maturity the rate of returns can also be expected
to reach a stable phase. In retrospect, the volume of returns in any period is related
not with the volume of sales in the same period, but actually with the historical
sales in the previous periods. Although the sales volume may have reached a stable
phase, the rate of returns may actually increase in the consecutive periods.

Decline phase

Often it is difficult to determine the end of this stage of the cycle, and the reverse
logistics has to work till the end of this phase. As the sales begin to decline the
price of the product in the secondary market also start to decline, and hence these
secondary market firms will be interested in purchasing the product.

Cancellation phase

The volume of returns will continue to decrease before stopping altogether at this
stage of the life cycle. Even if the product has sold well, at the end of its life,
retailers may send any unsold product back.

Variability in return rates affects the reverse flow greatly. Variable return rates
means the supply in the reverse flow varies, and it is difficult for any firm to keep
up with. Inventories have to be maintained all the time, and inventory is bad for
any company.

2.10 Effects of environment on reverse logistics

Now that we have a basic idea of Reverse logistics, in this section of the paper we
will see what role reverse logistics has in the manufacturing world, how the reverse

24
 logistics activities affect various decisions in a company, and what impact these
activities and decisions have on the environment. As mentioned in the early parts
of this section many manufacturing firms often get involved in improving their
reverse logistics either they are forced by law to keep track of their returned goods
and dispose them safely or they are self- motivated to maintain s green image among
their customers. Whatever may be their motivating factor, in future their logistics
decisions will be greatly impacted by environmental effects. Rogers and

Tibben-Lembke (1998) list out a few reasons why this is true:

• Increase in landfill costs over the years.

• Many products can no longer be landfilled because of environmental regulations.

• Economics and environmental considerations are forcing firms to use more

reusable packaging, totes and other materials.

• Environmentally motivated restrictions are forcing firms to take back their

packaging materials

• Many producers are required by law to take back their products at the end of their
useful lifetime.

Disposing of unwanted products is becoming a more closely monitored activity. To a

great extent this is true for most nations in the world. It can be seen that often
companies based in the US and European nations that have facilities or have outsourced
manufacturing jobs to countries like India, China and Thailand where the labor is
cheaper still monitor how these offshore sites deal the waste material that is generated
at these sites. Also they propose a certain standard for the outsourcing firm which has
to be met. The exponential growth in the landfill costs in the US and Europe can be
attributed to the regulations affecting landfills say Rogers and Tibben-Lembke (1998).
The restrictions focus on the protection of human health and the environment as a result
of which many facilities have closed.

Another area of increasing regulation is the determination of what items can be

placed into a landfill. There is an increased regulation on what can be

25
 placed in landfills throughout the Europe and US. Often in the regions where
the manufacturer is not forced by law to take back their products when they
reach the end of life, they are also not allowed to place them in landfills. This
forces the manufacturers to collect their products.

All these reasons have contributed to the increase in reusable material for
packaging and transportation. This has contributed to the increase in the field
of design for reusability. Often companies think about reusable material and
components for their products in the development and design stage of the
product.
RESEARCH METHODOLOGY

The methodology followed to achieve the set objectives of this thesis is in two parts:
survey and interview.

3.1 Research survey

A thorough literature study on the topic of this paper: Reverse Logistics was
conducted for a short period. Several articles were found on the topic over the
internet. After getting somewhat of a fair idea about reverse logistics, a preliminary
set of questions were formulated for the survey. Most of the questions were either
taken directly or inspired by the questionnaire developed by Rogers and Tibben-
Lembke (1998), for their paper “Going Backwards: Reverse Logistics Trends and
Practices”. And one might even say that to a great extent this thesis has been
inspired by the above mentioned paper.

The questionnaire was formulated to achieve the following objectives of the thesis:

• Understanding the level of knowledge of the respondents about the concept of reverse
logistics

• The economical and customer satisfaction impact of returns in the past

year.

26
 • Return policies, if any.

• Decisions made to maintain the company environmental friendly.

As mentioned in the problem delimitation section it was difficult to choose the

target group for the survey for this thesis. Initially the survey was targeted at the
manufacturing firms in Sweden. But since even after waiting for almost a month
and a half there were no response from any of the 30 companies. This led to
choosing firms in India as the target group.

The questions were formulated in such a way that it would be easy to understand by
the respondents and also it would not take much time to answer.

Almost all the questions in the survey are objective type, and all the respondents
have to do was choose from the options. Since the target group had to be changed
very late in the thesis, this led to a short period for collecting responses from the
companies. But fortunately, the responses were collected quickly with the help of
a few friends in India. In about one week since the decision to change the target
group about 18 companies were contacted by me and my friends over the telephone
and through email. And in about 10 days 6 responses were collected from 5
companies. Most of the respondents had filled the survey questions completely.

As a research topic, reverse logistics (RL) has attracted the attention of not only
companies and professionals but also academia, which has been tackling this issue
over the last 15–20 years. This growing interest in RL in the business community is
evidenced by an increase in the level of related activities in leading sectors such as
transport, consumer electronics, textiles, and the press and media to name but a few
. In the academic field, most research conducted to date has been focused on tactical
and operational aspects rather than on strategic issues

3.2 Research process

As has been previously reported, there are numerous reasons for implementing or operating
an RL system. The most important of these are the following:

27
• Economic: direct reasons (decreasing the use of raw materials, reduction of disposal
costs, creation of added value for end-of-use products) and indirect reasons
(demonstration of environmentally responsible behaviour, improved customer relations).

• Legal: in many countries (within the European Union, for example) companies are held
accountable for the recovery or correct disposal of waste generated by products they
produce or distribute.

• Social: the increased social awareness of the need to protect the environment has led to
increasing demands for environmentally responsible behaviour by companies,
particularly in terms of carbon emissions and waste generation.

In this paper, an introduction to the concept of RL will be presented in order to describe

its implications for SCM and challenges for the future regarding the recovery of products
once they are no longer desired (end-of-use products, EoU) or can no longer be used
(end-of-life products) in order to recover their economic value through activities of
reusing, recycling and remanufacturing. In the context of this research, we consider EoU
and end-of-life to be synonymous.
To this aim, an overview of the concept of RL is provided as well as a brief review of
the main contributions in this field. Secondly, a description of the implications that RL
can generate for SCM in aspects related to the design of the SC network, the processes
of planning and coordination, and inventory management will be examined. Finally, we
focus on one of the main research challenges in this context: the marketing issues of the
recovered products.

The sources of information employed in the present study consisted of a group of papers
in the RL area published in top journals within the last 20 years. The papers were
identified through a searching procedure carried out by using keywords such as
‘closedloop supply chain’, ‘reverse supply chain’, ‘reverse logistics’, ‘product recovery
management’, ‘remanufacturing’, and ‘marketing’. In a second step, a more detailed
analysis was conducted in order to detect papers unrelated to these topics. Furthermore,
the references of the selected articles were examined with the purpose of identifying
other interesting papers not identified previously

After receiving the responses to the survey for this thesis, interviews were
conducted with the respondents to better understand their responses and also to get
28
 a better idea of their understanding of the concept of reverse logistics. The
interviews more like discussions were conducted with the respondents over the
phone and through online chats. These discussions were mainly along the lines of
the survey questions, since some of them had failed to answer the survey
completely. Further the purpose of this thesis was explained to the respondents in
brief, so as to give them an idea of the objectives and goals of the thesis. This led
to open up the discussion, and give the respondents an opportunity to throw light
on their thoughts on supply chain and reverse logistics. Thus the results and
analysis sections are based on both the survey and interviews or discussions
conducted with the six respondents.

Outsource vs. In-house Reverse Logistics Management

4.1Reverse Logistics Management: Outsource or In-House?

Reverse logistics on a global scale is often best done through a third part to save time, money, and
resources (Tony Coletto, 2000).

Some companies are outsourcing certain activities of the reverse supply chain while others are
carrying out all the activities themselves. On what basis should companies decide whether
they should outsource the activities or carry out themselves?

• Companies should first evaluate whether handling return in-house will hinder or
enhance their core competency

• Do company sell soft goods or hard goods?

Soft goods sold through traditional channels and are economical to bring returns, eg:
clothing, when they are returned they can be refolded and repacked to put them back on the
shelf immediately.

• Is your company prepared to dispose off the inventory through other than
traditional sales channel? eg. Auctioning on eBay or Amazon.com, emarketplace,
selling it through discount stores, outlets. This question was asked to 3PSP
industry experts at a Roundtable Discussion on Reverse Supply Chain, ICFAI
29
 Press - Effective Executive, held in January 2003. The excerpts from the
discussion are summarized below.

• Companies should determine which items are core competencies of the company
and NOT outsource these items to a 3PSP. On other items, determining factors
would include cost to serve and available skills (Karen Paterson, Gartner). Many
factors will determine the optimal mix of in-house versus outsource activities. The
primary deciding factor is based on the overall strategic direction of the enterprise
and what core competencies are considered critical to support that strategy. Other
factors that come into play include: Space utilization, labor savings opportunities,
transportation costs, information system capabilities and resources, asset
recovery/value recapture potential (C Glenn Mauney, Genco Distribution
Systems).

• Unless companies are able to commit to technology, conveyors and sorting and
time resources, they should look to outsource returns. Companies such as catalog
centered usually have sophisticated reverse Logistics handling processes because
of the high return rates and lenient return policies (Mike Nardella, ReturnBuy
Inc.). The same as any other outsourced activity: The parameters for evaluation
are in-house cost vs. outsource, whether the company treats this as a core
competence and strategically important area to be retained in-house and whether
the company has the specific skill and infrastructure required or whether a
specialized service provider would be better equipped to handle it ( Devangshu
Dutta, Creatnet Services Ltd.)

Why To Outsource Product Return Management

Currently most retailers and manufacturers struggle with handling and processing returns
internally. Many manufacturers will conclude that handling product returns is not a strategic
core competency and will look for an outsourced provider, as they have done with Forward
Logistics. Most retailers and manufacturers struggle with returns for many reasons such as:

• it is a small part of their business processes

• their focus is getting new products to customers
• they have difficulty understanding and controlling costs

30
 • there is poor or no systems for managing the Returns processes
• a lack of systems results in slow processing of the returns and the returned
inventory
• inability to track or monitor inventory levels of Returned stock
• few good channels exist to get value from their returned and processed units
• Returns can be a significant problem if not managed well. Without good systems
in place significant individual attention is often required to manage a single return
to competition.

When to Manage Product Return In-house

• When business strategies and rules are clearly defined and the efforts are focused
• When forward logistics system is capable of handling reverse flow of
products/material

• When a firm has all the resources and expertise required to perform the task

internally such as infrastructure, labor, technology and time

• When the return quantity is large and the margins on which the products are sold

are high.

• When a company can afford to assign dedicated staff to handle the process and

put someone in charge of the entire process

The project highlights the factors that companies consider while deciding between in-house

vs. outsource. A question was asked to respondent companies to rank the importance of each

factor and the statistics is shown in chapter 6.

When to Work With 3PSP

31
 • When you are not sure about your organization has what it takes to handle the

reverse logistics channel

• When you don’t have a strong geographic presence or a strong distribution

network in a particular area/region

• When you don’t want to lock in a huge capital expenditure in facilities required

for logistics services

• When you want to concentrate on design/manufacturing or any other core

competency while logistics network remains seamless

• When you want to reap advantages of advanced software packages and order

tracking systems available with a third part provider (Source: D. A. Mollenkopf,

Logistics Quarterly, 2003)

Product life cycle and the uncertainty of return are the two critical factors needs to be

considered while designing the RL network. These factors will differ according to the scenario

where the RL system can be classified. The relative importance of these elements varies

between companies, depending on its size, characteristics, products manufactured, manager’s

strategies and goals, etc. The respondents have been asked to rank the factors while making

the decision between in-house vs. outsourcing RL. The table 4 below shows the ranks assigned

by respondents while evaluating each factor.

4.2Third Party Service Providers Evaluation

Following are the factors evaluated by companies while making this decision in order of their

importance to the respondent companies.

32
 # Factors Rank in
importance
1 Cost of reverse logistics (includes cost of facility, 1
people, infrastructure, processing)

2 Focus on core business activities 2

3 Returns volume (number of products returned) 3

4 Return processing time/customer service cycle 3

time
5 Forward logistics system designed to handle 4
reverse logistics/return process

6 Sophisticated IT software to process and make 5

rapid decisions on returned products

7 Criticality of collaboration between parties 6

involved in reverse supply chain

8 Risk and control over the reverse logistics chain 7

9 Characteristics of these products (Sales volume, 8

Product life cycle)
10 Difficulty in handling returns 9

11 Return Policy 10

12 Company wants to own forward and reverse supply 11

chain for better control over processes

13 Number of products offered by the company to 12

customers

Table 1: Factors Considered to Decide Between In-house vs. Outsourcing RL

33
The respondents were also asked to rank factors used for evaluating 3PSP.

# Factors Average Rank Rank in

importance
1 Expertise of Third Party Service Provider 2.29 1

2 Quotation/charges for services 2.44 2

3 Type of services offered 2.58 3

4 Business processes, supply chain, logistics 3.00 4

5 Facility capacity/capability 3.87 5

6 Global presence for support 4.35 6

7 Type of repair technology practiced 4.45 7

8 Packaging and storage 5.18 8

9 Type of IT software implemented/used 5.60 9

10 Employee training schedule 5.71 10

11 Number of employees at facility 6.00 11

Table 2: Evaluation of a Third Party Service Provider

Professor David Wyld (2004) suggests three major services that you should look for in a service

provider.Sales and marketing:

• Look for a provider with a dedicated sales and merchandising team that

• Develops effective sales plan

34
 • Optimizes sales for maximum return by determining the most effective lot size,

optimal mix of product, and market timing

• Professionally manages the inventory at auction

• Tracks the availability of competitive product and other marketplace conditions

• Qualify buyers, handle invoicing, payment collection, dispute mediation, and fund

disbursement

• Should provide online transaction tracking for buyers and sellers

• Should take control of logistics and shipping and should be able to handle customer

processing, duties, or international logistics issues

• Should handle reporting, and should be able to provide information about what

exactly has sold where your items stand in sales and payment cycle.

3. Value-added services:

• Freeing resources for revenue producing uses

• Providing asset inspection, de-install, description, verification, valuation, and
appraisal services

• Designing a custom marketing plan to acquire buyers for assets outside the core
buyer market.

• Assisting in merchandising your assets by breaking up pallets to mix and match

new lots that better meet buyers’ needs.

• Providing comprehensive centralized reporting tools to track returns activity across

multiple divisions, product lines, and location.
35
The benefits of having a third party service providers to handle returns are:
• A dedicated focus on the process
• Additional capabilities added to the process
• Use of additional manpower and technology
• Potential cost savings (MDF Systems, Inc., 2004)
• One stop Solution: All services are provided by a single service provider
• Regulatory compliance
• Eliminate the need to dedicate personnel to the non-core tasks of returns
management

• The monitory benefits include Increased return on assets by marketing returns to a

broad competitive online buyer

• Faster time to cash: Select a provider who can offer merchandising and lot
management services to convert non-performing inventory and idle asset to cash
quickly
• Liquidity: Exposing assets to a marketplace where bulk surplus buyers offer higher
price than alternative channels

In today’s competitive marketplace original design manufacturers (ODM) are seeing

increasing demand to provide global support for repair services and thus are
outsourcing the repair services to a 3PSP to support the product worldwide. When
working with 3PSP collaboration between the parties plays a major role in
successful implementation of partnership, which is explained, in next chapter.

Information sharing and IT is key as the returns information is critical.

Following are some examples of successful reverse logistics outsource partnerships.

Sears choose to outsource returns because Clay Valstad, director of central return center
operation for Sears say, “Reverse logistics isn’t a core competency of us” Sears
partnered with Genco Distribution Systems. Genco helped Sears set up central
return centers to handle returned products and to maximize the value of this
inventory.

36
 Kmart partnered with Genco Distribution Systems to outsource the reverse logistics
function. This approach allows Kmart’s store employees and management to
concentrate on rinning their business.

4.3 Expertise of Third Party Service Providers

Area of expertise in reverse logistics process.

Third party service providers are categorized into following major types:
1. Repair Companies:
Many companies provide aftermarket or reverse logistics services.
2. Contract Manufacturers:
For them repair services is a natural extension of their business plan. They provide
remanufacturing, repair, and refurbish services

3. Logistics Service Providers:

Transportation, warehousing, distribution are the services provided by them.
4. Consulting Service
CHAPTER 3

REVIEW OF LITERATURE

Dr. D.S Rogers and Dr. R. S. Tibben-Lembke, Professors from University of

NevadaReno, studied “Reverse logistics trends and practices” by conducting survey and

interviews of reverse logistics managers in 1997. The statistics show that nearly 40% of

companies said that the reverse logistics didn’t seem as important as other issues and 35%

said that company policies did not allow them to manage reverse logistics successfully and

they did not have proper system in place to manage returns. This is because no company

wants to see its products returned and so nobody wants to deal with returns.

37
With today’s competitive business environment companies are forced to take back the

product and thus they are sitting in their warehouse and they have to deal with it. The cost

associated with return is substantial and include cost of manufacturing, handling, processing

and transportation. The survey result shows that the cost of forward logistics to the

companies for the year 2003 was over 11% whereas the cost of reverse logistics was nearly

9%. If companies don’t pay attention to reverse logistics, they are passing by a chance to

reclaim substantial lost income stream, address quality issue and perhaps keep control of

their relationship with customers. Return management costs are often the dog that didn’t

bark, a quiet, cash-burning force that doesn’t get seen, Dr. D.S. Rogers suggests. Thus it is

necessary to give priority to the returns sitting in the backyard. The items that are returned

can be processed to redistribute in the market to generate revenue from it to cover the return

handling cost and still be profitable. Such practices have been more profitable for many

companies with proper RL management process. But in some cases, however turning returns

into revenue is a critical part of the business. In fact, in industries where returns represent a

substantial volume of business, managing of returns becomes important to overall company

profitability. Those companies tend to have better reverse logistics system in place to

recover value from the entire reverse management process.

The percentage of return per industry is given in a table 2 in chapter one where the book

publishing, catalog firms and consumer electronics market shows maximum returns

compared with other industries. The study conducted by University of Nevada-Reno in 1997

shows that the reverse logistics practices vary based on industry and channel position. For

example electronics and clothing industries have different reverse logistics networks to

handle returns as the nature, quantity, quality and timing of their return is different. The

reverse logistics management should be tailored to meet the company specific requirements
38
to handle returns. Chapter two explains the generic reverse logistics activities performed

under each stage in the process.

5.1Reverse Logistics Network design

Moritz Fleischmann of Erasmus University Rotterdam, The Netherlands, addresses different

structures and designs of reverse logistics networks. Numerous examples are given from

various industries to highlight the impact of reverse logistics networks on the overall

profitability of closed loop supply chain. Three main issues have been highlighted that appear

to be specific to reverse logistics networks.

First, it involves a tradeoff between centralization and decentralization for the testing and

grading activities when it comes to network structure. Testing and grading close to the

source may reduce transportation cost and on the other hand, investment costs for test

equipment may call for a more centralized operation.

Secondly, uncertainty of the returns on the supply side of the reverse logistics networks. Used

products entering the reverse chain are much more variable and difficult to control than

conventional forward supply chain resource with respect to volume, timing, and quality.

Reverse logistics network needs to be robust with respect to variations in flow volumes and
composition. Supply variation has a significant impact on overall cost level and on the profitability
of the closed-loop supply chain.

Third, integration and coordination of different inbound and outbound flows. The discussion

on this have made clear that reverse logistics network should not have been isolated from the

overall supply chain or logistics structure of a company. Both forward and reverse logistics

39
should be linked with each other to exploit shared resources such as transportation, facility.

Also not all forward logistics networks are designed to linked with reverse logistics network

and often, reverse logistics networks are not designed from scratch but are added to existing

logistics structure.

In short there are many issues with reverse logistics still needs to be addressed and explored

and it is true for the network design. There are some issues, which stimulate further research in

this field, and they are, the inventory management in reverse logistics network, reverse logistics

issues related to global supply chain.

One of the key issues of the reverse logistics network design is how to cost-effectively dispose

of returns while maximizing profits? Many companies have found that there are basically four

options available.

1. Traditional liquidators: These are quick path to cash but they rarely are a method through

which firms can achieve the best possible price on their returns.

2. Traditional auctioneers: They focus on one-time sales of surplus, rather than providing

an ongoing solution to companies’ surplus needs. They bring together limited number

of buyers and produces limited recoveries on firm’s return

3. Business-to-consumer (B2C) auctions: Selling goods on eBay and in other B2C

emarketplace. They actually provide lower net returns after all the cost of
remanufacturing, warranty, handling is considered.
4.Internal liquidators: These are internal liquidation methods, such as discounting to existing
customers or selling to retail outlet stores.

40
So rather than viewing return management as a time-consuming, low-return, and hassle-filled
process more and more organizations are choosing to outsource their reverse logistics
operation to a full-service solution provider (David C. Wyld, Feb 2004). By outsourcing
reverse logistics to a third party service provider, companies can minimize the product
handling, transportation, maximize financial returns, decrease time to cash can focus on core
competency and eliminate distraction. Benefits of outsourcing to a 3PSP are listed in chapter
two.

5.2Information Technology to Manage Reverse Logistics

Information technology plays a major role in managing reverse logistics chain. Many
companies have successfully implemented collaborated forward supply chain with their
partners by sharing real-time information. There are traditional supply chain software systems
available in market but none of them support reverse logistics process as it is an exception-
driven process and requires heavy customization. They lack in functionality required to track
reverse logistics specific information and decision-making tools.

The data for the items entering the recovery chain often incomplete and is of poor quality. In
order to process returns efficiently, product specific information should be entered in the
system which will help to take quick decisions on returns for minimum turn around time.
Three prominent e-commerce models for the support of reverse logistics activities are
identified by an exploratory study conducted at Erasmus University Rottersdam 1999.

1. Data collection on items entering reverse logistics chain: It is important to know

product which will be returned at what point in time at which place and in what

condition and under what grounds. Products entering reverse chain should be checked

for warranty

Traditionally, the entire product related information has always been available on

paper and cannot be retrieved easily and updated frequently. The solution to this is

electronic product catalogue or the information should be embedded in the product

barcode.

41
• One-dimensional barcode system has been in practice since long and provides

limited information about the product for example UPC is a 12-digit symbology

that is used in retail applications. UPC- A is what we normally see. This

numericonly barcode is basically broken up into 3 parts. The first character is what

is referred to as the System Digit and is a way of identifying the industry to which

the product might be associated. The next 5 digits identify the manufacturer. The

manufacturer must acquire this number from the Uniform Code Council. The next

5 digits are the manufacturer's way of identifying the product. The last digit, known

as the "check digit," is the result of a mathematical calculation using the previous

11 digits. UPC-E, a compressed version of an UPC-A, would be typically seen on

products, where there is not much available space. UPC-E will not have a system

digit, and the zeros from the UPC-A will be "suppressed." Therefore, UPC-E can

be expanded back into a valid UPC-A code. Limitation of this number or code is

that it must be translated by the computer and matched with the information already

in the machine.

• Two-dimensional barcode system allows user to embed code registration and also

a description and other textual data of significant capacity that will be useful for

reverse logistics operations.

• Radio Frequency Identification (RFID) is a new technology and is more active

form of identification. RFID uses vary small and very low powered radio

transmitters installed in each product. RFID tag can have memory capacity for data

storage and contains a battery that can send out signal for years. The signal is strong

enough, that receivers in a warehouse can pick it up. Each product can send a

different signal. Placing a RFID tag on the machine at time of manufacturing

would take away the errors in the paper chain and assist in the life cycle
42
 management of products. RFID is beneficial to keep track of products in warehouse

and in gatekeeping. RF tags may be used in recording the ID of products when they

are sold, and this information can be useful in determining which product to accept

for return

Most commonly used repair and service codes are listed in the table below.

Factory repair - Return to vendor for repair Damaged / Defective

Service / Maintenance Damaged – Cosmetic

Agent Order Error - Sales agent ordering error Dead on Arrival - Did not work

Customer Order Error - Ordered wrong material Defective - Not working correctly
Entry Error - System processing error Expired date code

Shipping Error - Shipped wrong material Contractual Agreements

Incomplete Shipment - Ordered items missing Stock Excess - Too much stock on hand

Wrong Quantity Stock Adjustment - Rotation of stock

Duplicate Shipment Obsolete – Outdated (the model being

discontinued or replaced)

Duplicate Customer Order Other

Not Ordered Freight Claim - Damaged during shipment

Missing Part Miscellaneous

Seasonality Retailer going out of business

Table 3: Repair and Service Codes (Source: D.S. Rogers, R.S. Tibben-Lembke, 1998)

2. When there is more than one party involved in supply chain coordination becomes

important. Why is it required in reverse logistics chain?

• The total cost of return is high. The costs are cross-functional and hit numerous

expense lines. These include handling cost, customer service cost, warehousing and

storage cost, labor cost as each returns needs to manually checked and tested, third
43
 party costs, packaging, disposition, other costs are customer satisfaction and retention

but are difficult to measure.

• Intensive labor involvement and thus require collaboration between different

departments as the return product is touched by each department in an organization by

customer support, shipping, warehousing, testing, manufacturing, marketing and sales.

All the activities involved in the process should be communicated and shared.
• Value recovery from returns is low

o Retailers send returned products back to vendor/OEM/distributor for credit but

this may result in increase in price for the retailers when they buy the next item.

Many manufacturers are forcing retailers for zero returns and many retailers are

negotiating the no return price with vendors.

o Legacy EDI systems and Value-Added networks (VANs) have been supporting

business processes, electronics transactions between forward supply chain

partners. An EDI system is expensive in terms of initial investment on

infrastructure, software, and training and the information exchange can only

happen with the known trading partners. EDI has its own advantages and

disadvantages. The new emerging XML/EDI technology provides a means for

integrating EDI applications with the web. Benefits of this system include lower

costs, easier introduction of new trading partners, and increasing commercial

activity. This tool can be the interacting tool between reverse logistics specific IT

systems and legacy EDI systems still used in forward supply chain.

44
3. The most popular e-commerce model for reverse logistics is electronic marketplace,

which are used for old and new products. The difference them is that the first is

customer driven, where potential customer places a search for the item of interest and

a supplier performs search and provides procurement details. Whereas the second is

supplier driven.

What features a Reverse Logistics Management System should provide?

• Integration with forward supply chain

• Modules to handle RMAs, track inventories and manage test and repair

activities.

• Flexible, scalable, web-based architecture to handle many users at many

locations

• Each level in the reverse chain has a security limit to protect critical data

• Extensive management reporting for real time analysis of returns to assess

products, vendors and customers

• Real time visibility to return data

Andlor Logistics Systems, eBoomerang, Inc. and Genco Distribution Systems have developed

software solutions exclusively to manage reverse logistics. There are many more applications

available, which are not mentioned here. Analysis of such systems to best match the reverse

logistics requirement is a separate area of research. Another area of research can be of

integration of reverse logistics systems with legacy EDI or supply chain management systems.

45
Reverse Logistics Channel Models

What is a reverse logistics channel?

A set of interdependent organizations involved in the process of recapturing value or proposal

disposal of a return product. Organizations include OEM/ODM/Branded companies,

wholesales, contract manufacturer, retailers, and third party service providers.

Here we briefly describe the different RL channels commonly observed in the industry:
Indicates reverse material flow (RSC)

Indicates information flow

Indicates forward material flow (FSC)

Return period (t) = 30 to 90 days, every company has its own return policy and the return period

is decided looking at several factors like competition, product life cycle, cost of the product,

volume of sales.

They function like the traditional supply chain. New product flows in forward direction and the

used/return product is either returned to the retailer or sends back to the manufacturer directly.

46
The different RL channel practices are explained below with specific examples.

Customer/
OEM Retailer End-user

Figure 1: Returns Flow in Traditional Way- Type 1 RL Channel

1. Type 1 RL Channel: Retailers sell products from different manufacturers. Customer

returns the product to retailer and retailer will accept returns before the return expiration

period t from the date of purchase. In this case retailer gives refund/credit/replacement

to the customer at the time customer returns the product. Retailer may accept product

only under manufacturer’s warranty. Customers are asked to send back products

received after period t and products with no warranty directly to manufacturer as

explained in RL channel type 2. The products with long life cycle and low priced may

be accepted by retailers. Here manufacturer/vendor takes the responsibility of processing

returns for replacement/repair/value recovery, disposition after receiving it from retailer.

Retailer is only responsible for collection. It should request RMAs for returned goods

and is allowed scheduled consolidations. In this channel retailer has

fewer responsibilities as all the returns are sent back to the manufacturers. This process

can be expensive for retailers as manufacturers may increase the price to the retailer to

compensate for the return cost as all the returned products are sent back to them. Retailer

as to be careful while accepting the returns and should have product specific information

available while scanning the product for return. Retailer has to bear the cost if the

product warranty has expired and is responsible for the disposition. So that is why the

availability of product specific information is important in such cases. This is the most

commonly observed practice for consumer goods such as electronics, home appliances

47
 sold through retailers in departmental stores. But now the trend is changing, as

manufacturers are negotiating the zero return terms with the retailers as this release from

dealing with the returns physically but then it is certainly a burden for downstream

channel partners.

2. Type 2 RL Channel: Customer returns the under warranty products directly to the OEM

for repair/replacement/refund. OEM manages all the RL activities in-house. Retailer is

not responsible to take back products it only serves as a marketplace for the OEM. The

return form is given to the user with the purchase of product. Manufacturer gives all the

necessary information required to return the product. This type of practice is observed

with online marketplace where the website facilitates the service to sell the product to

the user but is not responsible either to deliver the product or to accept any returns from

the user. We observe such practices with specialty products or high volume, short life

cycle, and fast moving products. For example when a cell phone is purchased from a store

the user should return it to the OEM for any desired return services.

Customer/
OEM Retailer End-user

Figure 3: Returns Are Returned to Retailers – Type 3 RL Channel

48
3. Type 3 RL Channel: Retailers have the sole responsibility of managing returns. They

take advantage of lot size ordering for a competitive price from vendor. Today many

manufacturers are negotiating zero returns contract with retailers. With zero returns

terms retailers are getting very competitive pricing from OEMs. This practice is

beneficial for lower end products, which are sold in volumes, the price is less, and their

turnover is fast. Retailers often buy such products from OEM in lots and on zero return

terms for good price. The return rate for such products is comparatively low. Retailers

should have proper returns management systems in place to handle returns or return cost

will eat up the margins. Many big retailers are choosing to deal with returns because

they get good discount if they accept the zero term from manufacturer. Also they have

started developing their own returns management system or are choosing to work with

a service provider as the 3PSP have expertise in returns management can give fast

turnover for selling the used product in secondary market and is saving money from fast

cash flow. Here retailers are offering a yearly service plan or retailer extended warranty

plan on any purchase from the store to cover for the return repair cost.

Customer/
OEM End-user

Figure 4: Product Flow in Both Direction to OEM – Type 4 RL Channel

4. Type 4 RL Channel: Customer returns it direct purchases back to OEM for any returns

services. Typical examples of such practices purchases can be observed in OEM

outlet/OEM store/on-line ordering/phone ordering/Catalogue (mail) ordering. Dell

49
 Figure 5: Outsourcing RL to 3PSP by OEM – Type 5 RL Channel

5. Type 5 RL Channel: The return process is same as in type 1 RL channel but instead of

handling and processing returns in-house OEM outsource RL activities to a 3PSP.

Customer returns products to retailer and retailer returns with RMA to OEM or customer

may also return products directly to OEM. OEM may perform some of the RL activities

in-house and may outsource few depending on their strategy. In this case retailer may or

may not refund customer. OEM communicates with customer on replacement/repair

services and in some cases may be responsible for refund to the customer. This practice

is observed with big item, high priced and high-tech products.

50
6. Type 6 RL Channel: Customer return products directly to 3PSP. OEM and 3PSP

communicates to track the return processing. OEM and 3PSP take

Replacement/refund/repair decision mutually. Currently it is the most commonly

observed channel practice as many companies are relying on 3PSP to manage returns

for them. This helps OEMs and retailers focus on their core business and do not have to

worry about returns as it has been taken care by a service provider. But this criticality

of success is real-time information sharing and status reporting. A 3PSP can provide

services such as call center facility, collection, transportation, warehousing, and storage.

A manufacturer may or may not decide to own remanufacturing and redistribution

process and prefer to outsource it as well. Based on the survey result commonly

outsourced RL activities are transportation and distribution, warehousing/storage, and

recycling/disposition. The products which are purchased from the manufacturers

website are returned to 3PSP.

51
52
7. Type 7 RL Channel: Customers return product to retailer or to 3PSP directly depending
on the understanding and contract between retailer and 3PSP. Retailers may outsource
entire return management process or may decide to outsource few activities to 3PSP.
The outsourced activates may include: Call center, refund/repair/redistribution to
secondary market/disposal. Either Retailer or 3PSP will communicate with customer.
This can be observed with big retailers, they have their own returns management policy
and are big enough to dictate manufacturer. Big electronics retailers are practicing this
model as they do volume business and turnaround time is fast. They promote retailers
extended warranty on top of manufacturer warranty to promote the product. The terms
are as follows; the retailer takes the responsibility for any failures, repairs, and
replacements from the date of purchase of product until the warranty. There are also
warranty extensions for the entire life cycle of the product and at the end of product life

upgrade. The price of such offers is designed to cover the repair warranty
services/replacements/failures. Now many retailers are selling the store products
through their website, so for returns they accepts the return from customer at the store
and also send by customer by courier or post. Sears sells the products from other
manufacturers and as well as its own products in departmental stores and also sells them
from the website and accepts returns at the store even though the product is purchased
online by customers. Today many retailers are offering such services to customers.

e-Tailer Outsourcing to 3PSP – Type 8 RL Channel

53
8. Type 8 RL Channel: In the case the e-Tailer (electronic retailer) is an e-marketplace
(eTailer) like amazon.com, ebay.com. Manufacturers sell their products on-line through
e-Tailers website. e-Tailers stock the products in their own warehouse. In this case they
own the RL management or may outsource it to a 3PSP.

Channel

9. Type 9 RL Channel: e-Tailers pull products from branded companies warehouse to

fulfill on-line order. In this case e-Tailers will not stock the items. The returns accepted

and managed by manufacturer or they may choose to hire a 3PSP to take care of returns. For

example: ebay.com selling new and used electronics products on their website. Some of the

displayed products are stocked in their warehouse and some are ordered from OEM for an online

customer order. OEM handles RL in-house. Some OEMs prefer to outsource RL management

to a third party specialized in managing returns and focus their resources on its core competency

of developing new products and marketing them. The decision of managing RL in-house vs.

outsourcing is purely based company strategy. Survey list provides factor affecting such

decision.

54
IMPORTANCE OF REVERSE LOGISTICS

Any logistics involved after the point of sale to recapture value and ensure proper disposal of
the returned product, is called reverse logistics. This aftermarket activity involves activities like
Refurbishment, Replacement, Remanufacturing, Scrap and even Excess inventory, etc. It
includes recycling programs, hazardous programs, proper equipment disposition and asset
recovery.

Earlier companies did not pay much attention to reverse logistics. However, now due to
consumer awareness, law enforcement on disposal of certain goods makes it very important
for companies to manage an efficient reverse logistics. Now-a-days, companies are even
getting ISO certification for their returns process.

6.1 STRATEGIC WEAPON

Strategic variable not only places emphasis on business functions such as finance, marketing
but also logistics. Many firms now take the material back through the supply chain as an
important capability in logistics. The 1982 Johnson & Johnson Tylenol poisoning case is a
classic example of how important reverse logistics can be for a company. Tylenol was laced
with cyanide because of which 7 people died. The company market value fell by USD 1 billion
during that time. The same case happened again in 1986, but this time the company was ready
with an efficient reverse logistics system. It recalled the product from every possible store and
not just the places where it had happened

6.2 COMPETITIVE REASON

Customer satisfaction is an important objective of companies to remain competitive. Firms

have started to believe that satisfied customers are important assets and hence have liberalised
their returns policy. Best example to explain this would be online shopping websites like
Myntra, Firstcry, etc. Customers who are not satisfied with the products they have purchased,
55
regardless of whether the product has any fault or not, can return them along with pre-printed
returns forms supplied to them by the company along with the product. Louis Philipe replaces
their defective products immediately and do not even ask for an invoice proof.
Nike takes back worn-out shoes and grinds them to make a new material called Nike Grind
which is used to make high quality basketball courts, turfs, tracks and more. The customers
do not get anything in return, however the environmental benefit associated with it
incentivizes people to buy the shoes.

6.3 Reverse Logistics – the restrictive forces

Despite the growing concern about the environment and volume of production, no much is
known about reverse logistics. Organizations understand reverse logistics activities as recycling
and waste treatment. The lack of knowledge about this relatively new area, affect its deployment
in the organizations, aggravated by the lack of synchronization between the processes of
distribution and reverse logistics . Therefore, the implementation of reverse logistics in
organizations has been delayed by a series of barriers, which are presented below. According
to Pires; Dantas (2010), the life cycle of a product does not end when it is discarded. The lack
of involvement and commitment of the entire supply chain caused by the mismatch of
objectives, in addition to the lack of complete studies to ensure and prove the efficiency of
reverse logistics processes along with the absence of clear legislation, induce the companies to
not worry about the final destination of their products. Aita; Ruppenthal (2008) inform that
reverse logistics is still seen by some companies as an area of little relevance, in view of the
few companies that have specific managers dedicated to the subject. Shibao et al. (2010) state
that even with the recent concerns in reducing pollution and wastes, the difficulty of
implementing reverse logistics is a result of the absence of indicators that measure the
costbenefit of implementing and operating it. The lack of these indexes is related to the
nonexistence of knowledge of the costs of the operation. For Lacerda (2009), critical factors are
considered to assue the efficiency of the logistics process: the input control products - the correct
identification of the status of returned materials; and process mapping, as companies view the
return of the products as something not part of their normal routine. The companies have no
standard process and there are few information systems capable of controlling the reverse flow
of materials. This is also reinforced by the lack of a logistics network planning. Companies
should develop infrastructure for the reverse flow of materials, which includes centralized
operations for receiving and separating materials. Likewise, the collaborative relationship

56
between customers and their suppliers constitutes one of the barriers to the implementation of
reverse logistics, as there are conflicts related to the responsibility of each member of the chain.

Risk reducer – reverse logistics

A successful reverse logistics strategy must contain the processes to ensure protection of data.
Data breaches may not sound as though they have a particular relation to sustainability, but a
company’s sustainability is measured by its ability to maintain happy customers while
reducing impact on the Earth. When a data breach occurs, it has the potential to decimate a
company’s customer base. Unfortunately, a failing company is more likely to forget about
recycling as part of IT Asset Disposal, and the business’s level of sustainability falters.
Furthermore, recycling as part of reverse logistics strategy helps ensure the company’s
existing data on their equipment is removed in its entirety, which further reduces the risk to
the business. Ultimately, proper return management, recycling, and reuse encourage the
protection of consumer data and foster business success and sustainability.

Throughout the course of business, business owners will need to create a sustainable plan for
dealing with end-of-life equipment, recalls, remanufacturing, or equipment failures. The
processes of recycling items from this equipment help to strengthen businesses by providing
an additional source of income from the sale of the items during recycling, improving the
public perception of the company, and reducing the risks of data breaches. Sustainable reverse
logistics strategies offer so many additional, smaller benefits that they cannot possibly be
listed, such as eliminating fines from government organization from improper disposal, but
the overwhelming monetary benefits of employing a reverse logistics strategy far outweigh
the costs of simply tossing old equipment into a landfill.

FINDINGS AND SUGGESTIONS

In this section the responses given by the participants to the survey have been
analyzed in a detailed manner. The analysis is also based on the conversations with

57
the participants that were conducted after the survey was done. Also an attempt to
correlate the participants’ responses to the theoretical background has been made
to understand the thoughts of the respondents on the topic.

Since this thesis is based upon a survey and discussions, the number of responses
collected plays a very important role and so, as many companies as possible were
contacted to collect a decent amount of data to analyze and generalize some of the
concepts. Unfortunately only six responses were collected and I have tried to
analyze them as effectively as possible.

As explained in the results section the participants had never heard of the term
reverse logistics, which led them to search it over the internet to find out what
exactly the term meant. The responses to the survey given by the participants were
based upon what they learnt through the internet. During the discussion the
participants explained that although they had never heard of the term, once they
understood the concept they found that they had performed at least some of the

reverse logistics activities in their company.

Fig.5

The Fig.5 above gives the distribution of participants who had a fair knowledge about
reverse logistics as opposed to those who had very little or no knowledge whatsoever.

58
From the Fig.5 it can be seen that the share is pretty even Steven. Since the number
of participants involved in this survey is very small, it cannot be fairly judged
whether this would stand true for the whole of the manufacturing world. But since
all the participants admitted during the discussion that they had performed some
or most of the reverse logistics activities in their company, it can be said that
reverse logistics activities happen on a daily basis in every manufacturing
company, and it does play an important role.

One of the objectives of this thesis was to find out how far has reverse logistics
reached as a strategy and to find out whether reverse logistics plays an important
role all through the manufacturing world or does it have an impact only on a
company of a certain size, type of product etc... This led to the decision of
contacting companies of all sizes and different primary products. It can be seen
from Table.7 and Table.8 that 4 out of the 5 firms are manufacturing firms out of
which 3 of them belong to automotive industry and one of them is among the
leading computer manufacturers in the world. Only one of the responding firms
belongs to the service industry and they also are involved in the supply chain
consulting. This variety gave us the opportunity of taking perspectives from a
multifaceted group of individuals. During the discussion it was found though that
although all these companies have performed reverse logistics activities, they
believe that reverse logistics plays an important role where products are consumed
more frequently, and where interaction between producers and consumers is more
frequent. I also had the same opinion after conducting the theoretical study, but
since the last minute change in the target group didn’t give much time to contact
more FMCG and electronics companies where the above mentioned frequency can
be seen, whatever little information was collected has been used efficiently to
complete this thesis project.

Returns for any manufacturer are inevitable, so the only option for them is to device
a return policy strict enough to reduce returns. Formulating return policies can be
a tricky task, because a return policy very strict will make the customers to think

59
twice before choosing them as the supplier, on the other hand a very lenient return
policy will lead to too many returns. The Fig.6 below shows the leniency of

return policies of the participant companies.

Fig.6

It can be clearly seen that the values vary very close to the midpoint in the scale
given in the survey, through which it can be said that manufacturers have to give a
trade off when formulating return policies, or else they will lose their customers to
the competitors.

The returns according to the respondents, in their respective companies, vary

between 5 to 10% of their total sales. The amount of returns depends on many
factors like defects, quality, features, competition, return policies and the product
itself according to the participants.

The Fig.7 below shows the overall scores of the factors considered by the
customers when choosing suppliers according to the participants. It can be seen
that cost reduction and quality of service are the two most important factors which
customers consider while choosing suppliers. Speed of delivery is the third

most important factor according to the responses given by the participants. A good reverse
logistics process will increase the speed of delivery which in turn will
60
improve the quality of service.

Fig.7

This shows that a good reverse logistics process can help in improving the quality
of service to the customers. It can also be seen that return policies do not play a big
role in choosing suppliers as long as the service is on par.

The returns processing cycle time plays an important role in the customer-supplier
relation, because both the parties would like the returns processing cycle time to
be as short as possible. The customer for the obvious reason of getting the product
as quickly as possible back to the manufacturer, either to get a refund, replacement,
or repair. Whereas the supplier would like to keep the returns processing cycle time
short because the supplier would like to get value out of the returned product as
quickly as possible to reduce the inventory costs, and balance their records. As for
our respondents the returns processing cycle time varies between 2 and 6 weeks
depending on the products. It is pretty obvious that the processing cycle time varies
from product to product and company to company, because each company follows
a different reverse logistics strategy and there is no standard strategy that works
for all.

61
As mentioned earlier the objective of a short reverse processing cycle time from a
manufacturer’s perspective is to get value from the returned product as quickly as
possible. And once the product has been received at the collection center, the
manufacturer has several options to choose from to obtain value from the returned
goods. Some of the most common options for obtaining value out of the returned
goods have been mentioned in the theoretical background. The bar graph in Fig.3
shows the distribution of the returned goods between each of the listed reverse
logistics activities for the participating companies. It should be noted that the
values in the Table.11 as given by the respondents is only an estimate. From the
table it can be seen that a big chunk of the returned goods go through
remanufacturing and refurbishing. And the rest of the returned goods go through
the other lines in the reverse logistics process in varied percentages. P5 in the table
and bar graph represents the consulting firm and hence has no values filled in.
Depending on the type of product and reusability of its components, and also many
other factors like composition of the material used in the product these number
may change, and hence these results don’t hold true for the whole manufacturing
world. But it can be said that the options mentioned in the survey are the most
common ones chosen by most of the manufacturing firms to obtain value from the
returned goods.

Although the participants have never heard of the term reverse logistics, once they
learnt about it they believe that their firms have good reverse logistics processes
prevalent in their companies. As seen in the pie chart in Fig.4 50% of the
participants believe that their reverse logistics process can be considered as
developed which means there is a growing focus on warranty recovery, increasing
efforts to implement newer techniques are being made in their company and that
they meet local and global environmental legislature. 16.67% believe that their
reverse logistics process is excellent, which means that they have a world class
reverse logistics process, they have minimized the warranty cost, they fully comply
with the environmental legislature and that they have been able to recover revenue
from waste materials. And another 16.67% believe their reverse logistics process
is competent which means they have a strong

reverse logistics process and they are striving towards making it better on a regular basis.

62
 From the responses to the question 10 in the survey it can be seen that all the
respondents feel responsible to keep the environment clean, and all of them are
striving to have a green image. And with the depleting resources and the rising cost
is driving these companies to develop new strategies to improve their
competitiveness in the manufacturing world and reverse logistics will play an
important role in this regard.

The question that whether reverse logistics can be used as a strategy to stay
competitive can be answered by looking at the opportunity of reducing cost to the
company in the logistics department. Although according to the respondents
reverse logistics cost make up only about 5 to 10% of their total logistics costs, it
can still be considered an area of opportunity to reduce the overall cost for the
company.

As a good corporate citizen it is necessary for the manufacturers to take

responsibility in the safe disposal of their wastes and reuse as much of the waste
material as efficiently as possible. It can be seen from our participants’ responses
that they are making efforts in this regard; by ensuring they clean and refine their
waste before disposing it, and making it a mandate for their business partners too.

SUGGESSTIONS

This project has tried to put together the basics concepts of reverse logistics and the benefits of
having a good reverse logistics process.

It was a tedious job to gather the information necessary to complete this project starting
from collecting the data for the theoretical background, going through numerous articles
to find the right kind of information, understanding the concepts, formulating the survey,
getting the right people to respond on time, and finally analyzing the gathered data. After
all this drama it can be seen that a majority of the manufacturing firms have no idea of
what reverse logistics means.

63
However, digging deeper it can be seen that reverse logistics processes and activities
happen on a daily basis in the manufacturing world with or without the knowledge of the
participants.

During the discussions with the participants of the survey it was found that many of the
reverse logistics strategies are in place in these firms, it’s just that they are not aware that
the activities that they perform on a regular basis is collectively known as reverse
logistics.

It can be seen that reverse logistics does play an important role for the manufacturing firms
to stay competitive.

Also that having a good reverse logistics process in place leads to reduction in cost,
optimal use of resources, better customer satisfaction and improved customer loyalty,
reduction in returns process time, and creating a green image.

It is further recommended for these companies that they pay more attention to the reverse
logistics processes as the cost for reverse logistics is around 5 to 10% of the total costs
for logistics which is a small percentage but nevertheless an opportunity for improvement.

And it is important for any company to try to continue improving their process if it has to
survive for a long period in the market.

RESULTS

As mentioned earlier the questions for the survey were designed to get an
understanding of the concept of reverse logistics as understood by the manufacturers
and the logistics experts working in the companies. In this section of the paper an
64
attempt has been made to present the answers given by the respondents in a tangible
form, to give an idea of their perception of the concept of reverse logistics. In the next
section i.e., Analysis, analysis of the responses and correlating them with concepts in
the theoretical background section is shown. Also, it should be noted that in this section
only the responses as given by the participants through survey alone will be discussed.
A more detailed analysis of those responses along with the discussions carried out with
the participants is given the Analysis section of this report.

The survey targets at answering 6 basic questions:

• Which companies are affected by reverse logistics?

• What do they know about reverse logistics?

• How do customers choose their suppliers?

• How do returns affect the manufacturers?

• What happens to the returned goods?

How well have the reverse logistics concepts penetrated the manufacturing industry?

In the following parts of this section these questions have been explained based on the
responses to the survey.

What do they know about Reverse Logistics?

The very first question of the survey gives the respondents an opportunity to define reverse
logistics in their own words. Most of the respondents seem to have a fair idea of what reverse
logistics means. To summarize their response to this question, reverse logistics can be defined
as all the activities that help the manufacturers to get the products from the end users back to
65
 the company smoothly to remanufacture, reuse or dispose safely. Further when the
respondents were contacted for discussions through the phone and online chat, it was seen
that they had a little bit of experience in this field, but never really realized until now that their
company and manufacturers in general are involved in the reverse logistics business. Also it
was found that their response to this question was given by searching for the definition on the
internet, since they had never actually heard the term. The respondents further explained that
although they had never heard about the term reverse logistics, they and their company with
or without the knowledge of the term still had performed some or all the reverse logistics
activities.

How do customers select their suppliers?

It is a difficult task for customers when they have to decide which supplier to choose.
Customers look for different characteristics in their supplier. A list of some of the
common factors that customers consider when choosing their supplier were given, and
the respondents were asked to rate the importance of each of these factors to their
customers according to them on a scale of 1 through 7. The Table.9 below gives the

overall scores for each of these factors.

Participant Overall score

Factor P1 P2 P3 P4 P5 P6
Cost reduction 6 7 5 5 6 6 35
Price 5 6 5 3 4 6 29
Quality of Service 6 6 7 7 6 4 36
Return Policies 4 3 2 5 4 4 22
Speed of Delivery 5 4 5 5 5 5 29

Variety of products 3 3 2 3 3 4 18

Table.9

66
Often customers choose products that have liberal return policies, because customers
prefer the option of returning the product in case they don’t like it after they have used
it for a short while. Manufacturers on the other hand do not like the idea of returns and
hence have to device return policies lenient enough to attract customers but strict enough
to avoid goods being returned for no apparent reason. The respondents were asked to
score between 1 for very strict and 7 for very liberal return policy in their company. The
Table.10 below gives the scoring as given by the 7 respondents.

67
 Participant Strict Liberal

1 2 3 4 5 6 7

P1 3

P2 4

P3 3

P4 3

P5 4

P6 5

Table.10

• How do returns affect the manufacturers?

It is necessary to understand the effect of returns on the cost, so the respondents were
asked to mention the percentage of returns based on their sales for the past year. The
percentage of returns ranges to between 5 and 10% for the respondents.

Similarly it is also necessary to understand whether the customers are satisfied after
they have returned the product for a replacement, and also to understand how quickly
the returned goods can be converted to cash. According to the responses that were
received the average returns processing cycling times for the primary product of the
respondent companies, ranges between 2 weeks and 6 weeks.

• What happens to the returned goods?

• Once the product has been returned and brought to the collection center, the manufacturer has
several options to choose to get value out of the returned product. In the survey a few of those

68
 options were picked out and the respondents were asked to estimate the percentage of goods
represented by each of the options mentioned in the survey.

BIBILOGRAPHY

LINKS
1 https://en.wikipedia.org/wiki/Reverse_logistics
2 https://searcherp.techtarget.com/reverse-logistics
3 www.businessdictionary.com/definition/reverse-logistics.html

BOOKS
4 Supply Chain Finance and Blockchain Technology: The Case of Reverse Securitisation
(SpringerBriefs in Finance) Paperback – Import, 11 Aug 2017
by Erik Hofmann (Author), Urs Magnus Strewe (Author), Nicola Bosia (Author)
5 Interaction with Closed-Loop Supply Chains Paperback – Import, 9 Nov 2014 by Yiannis
Nikolaidis

69
 ANNEXURE

1. A logistics network can be described as

70
 A)
LTL shipping
B)
71
 Double-stacking
C)
Intermodal transport
D)

72
73
74
A STUDY ON CHALLENGES & OPPORTUNITIES FOR FREIGHT
FORWARDERS IN INDIA

THE PROJECT REPORT SUBMITTED TO

AMET
ACADEMY OF MARITIME EDUCATION AND TRAINING
DEEMED TO BE UNIVERSITY

IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE DEGREE

BACHELOR OF BUSINESS ADMINISTRATION (BBA)

(SHIPPING)

BY

PRASANNA PRABHAVATHI.A
(REG.NO. ABA 17070)

UNDER THE GUIDANCE OF

Mr. S. Arun Kumar

ASSISTANT PROFESSOR

AMET BUSINESS SCHOOL May

2020

1
 DECLARATION

I hereby declare that the project work entitled “A STUDY ON CHALLENGES &

OPPORTUNITIES FOR FREIGHT FORWARDERS IN INDIA” submitted to

AMET

Business School, AMET (Deemed to be University), under the guidance of Mr. S. Arun

Kumar, Assistant Professor, in partial fulfillment of the requirement for the award of the

degree of Bachelor of Business Administration (Shipping) is a record of original project

work done by me during the period of study in AMET Business School from 2017-2020.

Date:

Place: Chennai

2
 CERTIFICATION OF APPROVAL

This is to certify that the project entitled “A STUDY ON CHALLENGES &

OPPORTUNITIES FOR FREIGHT FORWARDERS IN INDIA” is a bonafide

research work carried out independently by PRASANNA PRABHAVATHI .

A(REG.NO. ABA 17070), student of BBA (Shipping) of AMET Business School, AMET

(Deemed to be University), Kanathur-603112, during 2017-2020 in partial fulfilment of

the requirement for the award of degree of Bachelor of Business Administration in

Shipping.

Signature of Guide

Vice-Voce-examination conducted

Internal Examiner HOD-BBA

Date:

3
 TABLE OF CONTENTS

CHAPTER TITLE PAGE NO

1 INTRODUCTION 1-24

2 COMPANY PROFILE 25-36

3 REVIEW OF LITREATURE 37-38

4 RESEARCH METHODOLOGY 39-41

5 DATA ANALYSIS AND 42-49

INTERPRETATION

6 CONCLUSIONS AND 50-51

SUGGESTIONS

7 BIBILOGRAPHY 52

4
 Chapter-1

INTRODUCTION

To move large quantities of goods across the country and around the world, Nations depend on their
freight transportation system—a vast network of roads, bridges, rail tracks, airports, seaports, navigable
waterways, pipelines, and equipment.

A freight forwarder is an individual or company that dispatches shipments via asset-based carriers and
books or otherwise arranges space for those shipments. Common carrier types could include waterborne
vessels, airplanes, trucks or railroads. The movement of international freight among nations relies on a
complex array of long-distance transportation services. The process involves many participants,
including shippers, commercial for-hire carriers, third-party logistics providers, and consignees.

Moreover, global trade depends on seaport and airport services to move large volumes of merchandise
over long distances via a variety of transportation modes. The interaction of these services and
participants is vital to successful global trade. Freight forwarders typically arrange cargo movement to
an international destination. Also referred to as International Freight Forwarders, they have the expertise
that allows them to prepare and process the documentation and also perform related activities pertaining
to international shipments.

Some of the typical information reviewed by a freight forwarder is the commercial invoice, shipper's
export declaration, bill of lading and other documents required by the carrier or country of export, import,
or transhipment. Much of this information is now processed in a paperless environment.

As an analogy, freight forwarders have been called travel agents for freight.

Typical work activities of Freight Forwarders:

Typical activities include:

• Researching and planning the most appropriate route for a shipment (taking account of the perishable
or hazardous nature of the goods, cost, transit time and security);

5
• Arranging appropriate packing (taking account of climate, terrain, weight, nature of goods and cost)
and delivery or warehousing of goods at their final destination;

• Obtaining, checking and preparing documentation to meet customs and insurance requirements,
packing specifications, and compliance with overseas countries' regulations and fiscal regimes.

• Offering consolidation services by air, sea and road - ensuring cost effective and secure solutions to
small shippers with insufficient cargo to utilize their own dedicated units; Liaising with third parties
to move goods (by road, rail, air or sea) in accordance with customer requirements;

• Arranging insurance and assisting the client in the event of a claim;

• Offering tailored IT solutions and EDI (Electronic Data Interchange) connections.

• Arranging payment of freight and other charges, or collection of payment on behalf of the client;

• Transmitting data by internet and satellite systems, enabling real-time tracking and tracing of goods;

• Arranging air transport for urgent and high-value freight and managing the risk door to door;

• Arranging charters for large volume, out-of-gauge or project movements by air and sea;

•Acting as broker in customs negotiations worldwide to guide the freight efficiently through complex
procedures;

• Arranging courier and specialist hand-carry services;

• Working closely with customers, colleagues and third parties to ensure smooth operations to deadlines

• Maintaining visibility and control through all phases of the journey, including the production of
management reports and statistical and unit cost analysis

• Acting as consultant in customs matters.

6
• Maintaining current knowledge of relevant legislation, political situations and other factors that could
affect the movement of freight.

Functions of Freight Forwarders:

• Best Routing

• Packing

• Customs Clearance

• Transport & Distribution

• Grouping & Consolidation

FEDERATION OF FREIGHT FORWARDERS ASSOCIATIONS IN INDIA

(FFFAI)

International Transport is one of the most dynamic and fastest - changing industries in the world. It needs
a responsive, forward-looking and national trade association, operating to the highest professional
standards. FFFAI is that association. They have redefined their Mission and goals.

History of Association:

On 5th November 1963, the Federation was registered under the Societies Registration Act, 1860 at
Bombay. Mr Karsandas Tulsidas Khimji of M/s Tulsidas Khimji Pvt. Ltd. was chosen to be the founder
President of the Federation. Federation was enrolled as National Member of FIATA - The International
Federation of Freight Forwarders Associations, at the World Congress at Copenhagen on 9th
September 1965.

Mission & Vision :

♦ To bring in the feeling of togetherness among each and every one of the Custom House Agents
operating at different Custom Houses, ICDs, CFSs & Airports.

♦ To encourage, support and organize Training Programmes at local, regional and national level.

7
♦ To work closely with Revenue Department i.e. Customs Organization to create confidence and
establish integrity & respectability for its members.

♦ To establish and publicize the code of conduct applicable to its members and suitably modify the
constitution to provide strict adherence.
♦ To promote and educate the Trade & Industry to understand the necessity to engage only licensed and
regulated Custom House Agents.

♦ To focus attention and educate the members on the advantages of computer system over manual
systems and move them ahead towards total automation.

♦ Create councils and invite participation of all arms of transportation industry and evolve a uniform and
comprehensive policy.

♦ Establish a forum to interact with trade and industry and exchange ideas and views to develop and
direct forwarding community to meet their requirements.

♦ Establish relation, participation and contribute to policy makers and suggest regulation conducive for
us to perform to the expectations of the trade.

♦ To move towards a full-fledged Electronic Data Interchange regime and become a part of seamless
cargo movement.

Freight Forwarders Roles and Responsibilities :

Activities vary depending on the type and size of employer but typically include:

The perishable or hazardous nature of the goods, cost, transit time and security; arranging appropriate

packing, taking account of climate terrain weight nature of goods and cost, and the delivery and

warehousing of goods at their final destination; obtaining, checking and preparing documentation to

meet customs and insurance requirements, packing specifications, and compliance with other countries

regulations and fiscal regimes; effective and secure solutions to small shippers who have insufficient

cargo to require their own dedicated units; arranging insurance and assisting the client in the event of

8
claim. offering tailored IT solutions and electronic data interchange(EDI) conditions, arranging payment

of freight and other charges or collection of payment on behalf of the client;

• Utilising E-commerce, internet technology and satellite systems to enable real-time tracking of
goods;
• Arranging air transport for urgent and high-value freight and managing the risk door to door
• Acting as broker in customs negotiations worldwide to guide the freight efficiently through
complex procedures

• Dealing with special arrangements for transporting delicate cargoes such as livestock food and

medical supplies

• Arranging courier and specialist hand carry services

• Maintaining communication and control through all phases of the journey, including the
production of management reports and statistical and unit cost analysis

• Maintaining current knowledge of elegant legislation, political situations and others factors that
could affect the movement of freight.

• At more senior levels, the role may also involve managing staff and overseeing activities within
a department or specializing in a particular area, such as sea freight or air freight.

The Freight Forwarder Is The Party Whose Role Ensures That The Following Big Problems Will Never

Be Faced By The Exporter Or Importer:- •

Missed Flights or Sailings of the Shipments

• Failure to Negotiate Competitive Air or Sea Freight Rates

• Mis-delivered or Misrouted Cargo

• Mis-calculation of Air or Sea Freight Rates

9
 • Over billing On Inland, Air or Sea Freight Costs

• Failure to Ensure Cargo or Arrange Adequate Coverage

• Late Presentation of Documents on Letters Of Credit

• Failure to Properly Legalize Documents.

Also, It Is The Party To Ensure That Internationally Traded Goods Move From Point Of Origin To Point
Of Destination To Arrive:

- At The Right Place, At The Right Time.- In Good Order and Condition, At the Most Economic Cost.

FREIGHT FORWARDING IN INDIA :

Freight Forwarding Agents:

Business Dictionary (2012) defines a freight forwarder as a ‘firm specializing in arranging storage and
shipping of merchandise on behalf of shippers. It usually provides a full range of services including
tracking inland transportation, preparation of shipping and export documents, warehousing, booking
cargo space, negotiating freight charges, freight consolidation, cargo insurance and filling of insurance
claims.’

Supply chain:

Supply chain is a network of organizations that are involved in the upstream &downstream linkages
in the different processes & activities that produce value in the form of products & services in the
hands of the ultimate customer or consumer (Lysons & Farrington 2006). Upstream means against
the current & relates to the relationships between an enterprise & its suppliers & supplier’s suppliers.
Downstream is with the current & relates to the relationship between an enterprise & its customers.
Nichols & Handfield (1999), point out that the supply chain encompasses all activities associated
with the flow & transformation of goods from the raw material stage (extraction), through to the
user, as well as the associated information flows. Supply Chain Management (SCM) is the
systematic, strategic coordination of the traditional business functions and the tactics across these
functions within a particular company and across business within the supply chain, for the purposes

10
of improving the long-term performance of the individual companies and the supply chain as a
whole. Hines (2004) defines SCM as supply chain strategies requiring total systems views of the
linkages in the chain that work together efficiently to create customer satisfaction. Costs must be
lowered across the chain by driving out unnecessary costs and focusing attention on adding value.
International freight forwarders can esteem SCM to address problems in distribution network
configurations, distribution strategies, trade-offs in logistics activities, information and in cash flows
and payments transactions. SCM entails supply chain execution, with managing and coordinating
movement of materials, information and funds across the supply chain. The purpose of SCM is to
improve trust and collaboration among supply chain partners, thus improving velocity of inventory
movement, responsiveness and adaptability. Due to globalization and the proliferation of
multinational companies and business partnerships, organizations increasingly find that they must
rely on effective supply chains or networks to complete as a global and networked economy and
therefore strong demand for freight forwarding services.

Logistics:

Logistics is defined by Fearson (2006), as the total management of the key operational functions in
the supply chain. It is the process of managing both the movement &storage of goods & materials
from the source to the point of ultimate consumption & the associated information flow. It is part of
the supply chain process that plans, implements & controls the efficient & effective flow & storage
of goods, services &related information from the point of origin to the point of consumption in order
to meet the customers’ requirements. Some of the logistical functions are transportation,
warehousing, information technology, & inventory management. Efficient logistics will ensure the
least cost in the supply chain while meeting or exceeding customer requirements.

11
12
FREIGHT FORWARDER AS A CRUCIAL LINK IN (EXIM) OPERATIONS IN INDIA

Government Agencies :

13
The term government agencies cover the government bodies that regulate the provision of freight
transport and freight corridor access services. It is recognized that all levels of government are
involved in the regulation process. There are several agencies that plays prominent roles in the
shipping. These agencies basically deal with the activities which are involved in a countries import
and export procedures and however fulfilling all regulations. Freight forwarders serves as a crucial
link between their customers and the agencies. The agencies include; Inspection service,
registration and certification service, port security service, custom service etc.

Responsibilities of Government Regulators :

• Collection of taxes associated with: costs of provision of some corridor access infrastructure (i.e.
roads via fuel tax and vehicle registration), regulation and in some environments broader costs
associated with ameliorating the impacts of freight transport;

• Regulating freight transport service provision for reasons of safety, efficiency and amenity;

• Planning for future land use and transport infrastructure provision (via integrated transport plans
and corridor plans) and implementing its provision; and

• Ensuring freight transport is delivered according to governments’ social, environmental and

economic objectives, which are developed in context of community expectations.

Custom Broker

Customs brokerage is a profession that involves the "clearing" of goods through customs barriers
for importers and exporters (usually businesses). This involves the preparation of documents
and/or electronic submissions, the calculation and payment of taxes, duties and excises, and
facilitating communication between government authorities and importers and exporters. Custom
brokers may be employed by or affiliated with freight forwarders, independent businesses, or
shipping lines, importers, exporters, trade authorities, and customs brokerage firms.

14
CHALLENGES FOR FREIGHT FORWARDERS IN INDIA:

Basic Issues :

Cultural and political differences are the main reasons for the seemingly weird customs laws of
some countries. In most cases, however, certain customs laws are perfectly rational. For instance,
quarantine laws may apply to certain food products. These may also apply to live animals, plants
and even people. The main purpose of quarantine is to prevent the spread of infectious diseases.

Aside from the logistical and legal challenges, cargo forwarding operations face potential losses
due to civil unrest, bad weather and other natural disasters. The risks involved in the business are
usually covered by insurance. The insurance coverage varies depending on the value and quantity
of the items. The cost of insurance will also vary depending on the specific risks such as volatile
political situation in a particular destination.

The varying and sometimes conflicting jurisdictional and international regulations are problematic
issues for freight forwarders and their respective clients. As the saying goes, “the devil is in the
details.” Some countries may ban certain items that are typically legal in other countries.

Spite of free trade agreements and globalization, there are still many countries that have
protectionist laws. These laws may prevent the importation or exportation of certain items at a
commercialized or large-scale level. However, these items might be perfectly legal at small scale
or personal levels. Other custom laws are either outdated or plainly weird.

The legal aspect of cargo forwarding includes both domestic and international regulations. Some
regulations are highly specific to a particular country. Other regulatory provisions, however, are
international in scope. These pose problems for freight forwarders in several ways.

Factors Which Hinders the Success of the Freight Forwarding Industry in India

Factors that influence a shipper’s mode of transport are based on the Total Product Concept (TPC)
which affects the efficiency in distribution of goods. This also include reliability, frequency, transit
time, capital tied up in stock, quality of service, packaging, warehouse charges, permits and
licenses, import duty and insurance.

15
Customer loyalty is lost due to inefficiency in distribution of goods. Customers expect to benefit
through consumption of goods imported, thus creating a value chain. Goods have to reach the
point of consumption within the shortest possible time.

• Use of unqualified and inexperienced clearing agents contributes to delays in clearing of

goods.

• Mistakes done by inexperienced staff are costly in terms of demurrage charges, damage to
customer goodwill and relations in upstream and downstream linkages in the supply chain.

Having unqualified personnel is the most dangerous gamble and liability which should never be
experimented with since customers reject delayed cargo and the clearing agent end up facing legal
penalties thus increasing costs in the supply chain.

• Poor infrastructure has a negative impact on the efficiency and effectiveness in distribution
of cargo. Poor transportation and communication network influence the bad performance
of freight forwarders.

• Poor management of roads, railways, airports, waterways and bonded warehouses

negatively impact the efficiency of the supply chain hence there is a need for the
government to invest heavily in infrastructural development.

• Strict Regulatory Environments

• Cumbersome Clearing Procedures at the Border Posts

• Cost Reduction Strategies within the Supply Chain

The sea freight is faced by adverse weather conditions which are normally unpredictable. Very
strong tides and waves make it almost impossible to conduct sea transport as one would be running
the risk of a sinking ship. During such instances, the sea transport has no activity while awaiting
calmness to resume. Furthermore, sea transport has also been hit by the threat of pirates who hijack
cargo ship and demand for ransoms before such a ship can be released. This has caused severe
losses in the freight forwarding industry which has driven most operators out of business.
16
Moreover, the credit crunch has had a negative impact on the freight forwarding industry.

This has led to reduced activity in terms of trade hence a low season for freight companies. During
the economic crunch, the level of trade significantly reduced across national borders meaning that
there was little that could be transported from one country to another.

This was worsened by the weakening of the dollar meaning that the freight forwarding industry
had to receive less in terms of payments advanced to them by their customers. If the price for a
certain consignment was fixed at a certain price, the weakening dollar impacted negatively on the
exchange rate to those who conducted business internationally.

Key Issues:

Road Freight :
• Poor quality of roads and network connectivity

• Stoppage of vehicles at State border check posts are a major cause of delays.

• It is estimated that 40% of the time lost are due to these stoppages.

• No stringent requirement or regulations for starting a trucking business

• Large number of small and unorganised players, with no industry consolidation and intense
competition.

Rail Freight :

• Freight tariffs in India are among the highest in the world.

• Rail freight lacks reliability and track ability

17
 • It is deficient in terms of quality of operations, speed, and customer orientation.

Air Freight :
• There is absence of integrated cargo infrastructure;

• There are inadequacies in gateway and hinterland connectivity through rail and road;

• There is a need for streamlining of Customs procedures in air cargo; There is a need of
technological up-gradation of cargo handling processes;

Port Freight :
• There are inefficiencies in berthing, and delays in loading and unloading. i.e. high
turnaround time of vessels

• There are delays in co-ordination between ports and the Customs authorities

• There is poor hinterland connectivity and poor port- and land-side infrastructure and
outdated equipment

• Navigation channel restrictions do not allow bigger vessels to be berthed

Vital Issues :

The sea freight is faced by adverse weather conditions which are normally
unpredictable. Very strong tides and waves make it almost impossible to conduct sea
transport as one would be running the risk of a sinking ship. During such instances, the
sea transport has no activity while awaiting calmness to resume. Furthermore, sea
transport has also been hit by the threat of pirates who hijack cargo ship and demand
for ransoms before such a ship can be released. This has caused severe losses in the
freight forwarding industry which has driven most operators out of business.

Moreover, the credit crunch has had a negative impact on the freight forwarding
industry. This has led to reduced activity in terms of trade hence a low season for freight
companies. During the economic crunch, the level of trade significantly reduced across
national borders meaning that there was little that could be transported from one
country to another.
18
 This was worsened by the weakening of the dollar meaning that the freight forwarding
industry had to receive less in terms of payments advanced to them by their customers.
If the price for a certain consignment was fixed at a certain price, the weakening dollar
impacted negatively on the exchange rate to those who conducted business
internationally.
OPPORTUNITIES FOR FREIGHT FORWARDERS IN INDIA

New Opportunities Unveiled in Shipping Sector:

The Ministry of Shipping has taken many proactive and progressive interventions in the areas of

shipbuilding, port development, inland waterways and coastal shipping this year for the

development of the maritime sector in the country. These initiatives can be summarized under the

following heads:

KEY INITIATIVES

Sagarmala Project

Sagarmala- Concept and Implementation was approved by the Union Cabinet on 25.03.2015.

The Project Development Consultants were appointed on 15.05.2015 to develop a National

Perspective Plan (NPP) for the Sagarmala Programme. NPP is currently under preparation and
would be finalized by 31.01.2016. As part of the NPP development)

• The draft report on Origin-Destination (OD) Study, for POL & LNG, Iron Ore & Steel,
Coal, Container, Food Grains and Fertilizer is under review and the final report is being
prepared based on the inputs received from the relevant stakeholders. On the Coal OD
front, the Ministry of Shipping is currently monitoring key railway connectivity projects
from Talcher-Paradip and discussing with Ministry of Railways to fast track the same.

• The draft Master Plan for Ennore has been submitted in November, 2015. The draft
Master Plans for Paradip, JNPT, Kolkata, Vizag, Kandla, Haldia and Ennore will be
submitted by 31.12.15. Draft Master Plan is currently under preparation for Tuticorin,
Mumbai, Kochi, Mormugao and Mangalore.

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 • Finalized Techno Economic Feasibility Report (TEFR) for Sagar Port and the draft
TEFR for Vadhavan Port submitted on 30.11.2015. TEFR for Paradip Outer Harbour is
under preparation.

• Coastal Economic Zone (CEZ) Perspective Plans are also under development.

While the NPP is under development, 12 projects have been considered for part funding by
Sagarmala Development Company (SDC) for implementation, DPR is under preparation for 10
projects, 55 road projects and 28 rail projects have been shared with MORTH and Ministry of
Railways respectively for their consideration. The institutional mechanism to implement the
initiative includes the National Sagarmala Apex Committee (NSAC),

Sagarmala Coordination & Steering Committee (SCSC), and State Sagarmala Committees (SSC)
and the Project SPVs. The SCSC and NSAC have been constituted and their first meetings were
held on 01.10.2015 and 05.10.2015 respectively. West Bengal, Odisha and Puducherry have
constituted their SSCs and other Maritime States have been requested to do the same. The
Ministry of Shipping has also taken up development of 31 island lighthouses.

Special Purpose Vehicle to provide efficient last mile rail connectivity to Major Ports Based on
the Cabinet decision dated 25.03.2015, an SPV, to provide efficient last mile rail connectivity to
Major Ports, with equity from 11 Major Ports and Rail Vikas Nigam Ltd. was incorporated under
the Companies Act. This SPV ‘The Indian Port Rail Corporation Limited’ started functioning from
July 2015 and since then has taken up 23 projects which are critical for last mile rail connectivity
to the Major Ports. The registered office of the company is at New Delhi and corporate office is at
Mumbai. The SPV would undertake the following Projects: -

• Last mile connectivity to Major Ports;

• Modernization of evacuation infrastructure in Ports;

• To operate and manage internal Port Railway system;

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 • To raise financial resources for funding Port related Railway Projects

Incentive for Shipbuilding and ship-repair Industry

Government has recently approved incentives to promote domestic shipbuilding industry. These
include (i) financial assistance to domestic shipyards for any vessel built by them subsequent to
its delivery and (ii) relaxation of eligibility criteria for procurements or repair of vessels done by
Government departments or agencies including PSUs for government purpose or for their own
purpose to grant Right of First Refusal to domestic shipyards. The Government has addressed the
problem of inverted duty structure in ship manufacturing.

Inputs used in ship manufacturing and repair have been exempted from Customs and Central

Excise Duties with effect from the 24th of November, 2015. Prior to this exemption, while ships
could be imported at almost negligible rates of Basic Customs Duty (BCD) and nil rates of Counter
Veiling Duty (CVD), the inputs used in ship manufacturing and repair attracted normal rates of
BCD and CVD. This put the Indian shipyards, who build ships for the domestic market, at a cost
disadvantage. Correction of this inverted duty structure was therefore necessary.

Jal Marg Vikas Project:

In the Budget Speech for 2014-15, it was announced that a project on the river Ganga called ‘Jal
Marg Vikas’ (National Waterways-I) would be developed between Allahabad and Haldia to cover
a distance of 1,620 kms, which would enable commercial navigation of at least 1,500 tonne vessels
and that the project would be completed over a period of six years at an estimated cost of Rs.4,200
crore. The Project’s objective is to provide an environment friendly, fuel efficient and cost-
effective alternative mode of transportation, especially for bulk goods, hazardous goods, captive
cargo and over dimensional cargo. Government has commissioned three expert studies to assess
the interventions required to achieve greater clarity on the entire project and its impacts. These
studies are (i) Detailed Feasibility Study on NW-1 and Detailed Engineering for its Ancillary
Works; (ii) Environmental and Social
Impact Assessment (ESIA), Environmental Mitigation Plan (EMP) and Resettlement Action Plan
(RAP); and (iii) IWT Sector Development Strategy and Market Development Study. In addition,
Inland Waterways Authority of India, which is the implementing agency of the project, has
conducted comprehensive stakeholder meetings at Kolkata, Varanasi, Patna, Delhi and Farakka,

21
wherein valuable feedback of environmentalists, industry, academics and the wider society was
obtained. The projects include construction of terminals, jetties, river training and conservancy
works, modern automated information system, navigation aids, etc. The construction of the
projects is expected to commence from March, 2016 and the last projects to be taken up may
extend up to five years. Customs and Excise Duty Exempted on the Use of Bunker Fuels for coastal
transportation of EXIM and empty container and for domestic containers transported along with
EXIM and empty containers. This tax incentive for transportation along the coast will go a long
way in enhancing Indian tonnage as well as in promoting development of transportation hubs in
India.

Cabotage Relaxed for Special Vessels:

The Government has relaxed cabotage for special vessels such as Roll-On Roll-Off (Ro-Ro),

Hybrid Roll-On Roll-Off (Hybrid Ro-Ro), Roll-On Roll-Off cum Passenger (Ro-Pax), Pure

Car Carriers, Pure Car and Truck Carriers, LNG vessels and Over-Dimensional cargo or Project
Cargo Carriers for a period of five years w.e.f 02- 09-2015. With this relaxation, vessel operators
will be allowed to bring foreign flagged vessels of this category to ply on the coastal routes. Such
special vessels are in short supply in the country but since they cater to specific class of cargo,
their availability will make it possible to shift cargo movement for these commodities from road
and rail to coastal shipping.

Developing 78 lighthouses as tourism centers

The Ministry of Shipping, along with the Directorate General of Lighthouses and Lightships
(DGLL) has drawn up an ambitious programme to develop 78 lighthouses in the country as centres
of tourism in the first phase under Public Private Partnership (PPP). The identified lighthouses are
in Gujarat, Maharashtra, Goa, Karnataka, Kerala, Lakshadweep, Tamil Nadu, Puducherry, Andhra
Pradesh, Odisha, West Bengal and Andaman and Nicobar Islands.

22
PROMOTING EASE OF DOING BUSINESS
This has been at the core of the efforts of the Ministry during the year. Focus has been on
simplifying procedures by removing irritants that make it cumbersome to carry on business
smoothly. The major highlights in this regard are:

Obsolete Rules under the Merchant Shipping Act, 1958 weeded out
The Ministry of Shipping has decided to rescind 13 Rules under the Merchant Shipping Act,

1958 (as amended), having found them to be obsolete and unnecessary. Out of the 13 Rules,

6 has been rescinded and 7 have been pre-published before rescindments

Ship Repair Units no longer required to register with DG Shipping

The Ministry simplified the procedure and eliminated the requirement of registration of Ship
Repair Units (SRUs) with Directorate General (Shipping). Ministry of Finance and Ministry of
Commerce & Industry have been informed to extend concessions and facilities to SRUs without
insisting on the requirement of registration with DG (Shipping).

Re Rolled Steel from Ship Breaking allowed for Shipbuilding

To meet the growing demand for steel by ship and barge builders, the Ministry decided that rerolled
steel obtained from re-cycling yards/ship breaking units would be certified for use in construction
of inland barges, river sea vessels (RSV Types 1 & 2) and port and harbour crafts, after ascertaining
its sourcing and processing. This will help in bringing down the cost of constructions of barges,
river sea vessels and port and harbour crafts.

E-governance initiatives of Directorate General of Shipping

The following services have now been made online - · Registration of ships.

• Application and seat booking for written and oral examinations.

• Application and processing of Continuous Discharge Certificates (CDCs), renewal and

Replacement/duplicate CDCs.

• Application processing and issuance of Certificate of Competencies (CoCs), dangerous

cargo, GMDSS, Cookery certificates.

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 • Application, processing and issuance of chartering permission.

• Issue of registration certificate to transport operators.

• Master checker for seafarers.

• Initiative of Directorate General of Lighthouses and Lightships

(DGLL) · Online Collection of Light Dues
MAKE IN INDIA INITIATIVES
Many initiatives have been taken up in the area of ship building and manufacture of dredgers,
promoting the objectives of Make in India

INITIATIVES IN PORT SECTOR

Performance of ports improves

After a fall in their performance during 2008-14, the performance of major ports showed
improvement in 2015. The focus of the present government is on modernization of Major Ports
and increasing their operational efficiency. With new initiatives, Major Ports have shown an
improvement in their performance with the volume of cargo handled increasing by 4.6% and
revenue increasing by 8.7% in 2015.

Benchmarking performance of Indian Ports to International Standards

A study to benchmark performance of major Indian Ports to comparable international ports has
been completed and the recommendations of the study are being implemented. Mechanization of
East Quay (EQ) Berths-1, 2 and 3 at Paradip Port

The Cabinet Committee on Economic Affairs (CCEA), approved the project of

Mechanization of East Quay (EQ) Berths-1, 2 and 3 at Paradip Port on Build, Operate and Transfer
(BOT) basis, under Public Private Partnership (PPP) mode' for handling thermal coal exports. The
estimated cost of the project is Rs.1437.76 crore of which Rs. 1412.76 crore will be spent by the
concessionaire. The remaining Rs.25 crore will be spent by the Paradip Port Trust on dredging.
24
The project envisages mechanization of EQ 1, 2 and 3 Berths to increase their Capacity from the
existing 7.85 million tonnes to 30 million tonnes. The project is scheduled to be completed within
three years from the date of award of concession. After completion of the project, the total thermal
coal export handling capacity at Paradip Port will reach 50 million tonnes.

Deepening Draft to Handle Large Vessels

Major ports are undertaking studies to deepen the draft to 18 meters to handle large and modern
vessels. Projects for deepening have been started at Mormugao Port and New Mangalore Port.
Establishment of Dry Ports

The purpose of dry ports is to reduce congestion at ports by processing and completing bulk of the
formalities relating to cargo here so that ships can set sail without delay at the sea ports. Dry ports
are proposed to be set up at Jalna and Wardha to service

JNPT (Jawaharlal Nehru Port Trust)

Financial Assistance to Ports for Pollution Response Equipment

The Government has formulated a new central sector scheme for providing financial assistance to
all Major Ports and 26 oil handling non-major ports under State Maritime Boards/State
Governments. The scheme would help them procure Pollution Response (PR) equipment/materials
necessary for combating Tier-I oil spills in their waters. Under the scheme, the ports have been put
into categories A, B and C based on the risk of oil spill, in consultation with Indian Coast Guard.
Financial assistance up to 50% of the cost of the equipment/materials, necessary to mitigate
pollution due to oil spills, is provided to the ports.

Financial support to Major/ Non-Major Ports to promote movement of cargo/ passengers by

sea/maritime waters

A new central sector scheme has been formulated to provide financial support by way of grant to
Major Ports/ Non-Major Ports for construction/ up-gradation of exclusive coastal berths for coastal
cargo, berths/jetties for passenger ferries and construction of platforms/ jetties for hovercrafts/
seaplanes in port waters.

Dredging at Major Port - Guidelines

25
Comprehensive guidelines on dredging at Major Port have been finalised and issued for
implementation in October, 2015.

INLAND WATERWAYS SECTOR

Bill to Declare 106 Additional Inland Waterways as National Waterways

Lok Sabha has passed the National Waterways Bill, 2015, for declaration of 106 inland waterways
as National Waterways. After the inclusion of 106 additional inland waterways to the existing five
national waterways, the total number of national waterways will go up to 111. The aim is to create
cost-effective and eco-friendly waterways to ease the burden on roads and railways.

MoU Signed For Logistic Hubs with Rail Connectivity

A Memorandum of Understanding (MoU) has been signed between the Inland Waterways

Authority of India (IWAI) and the Dedicated Freight Corridor Corporation of India

(DFCCIL) for creation of logistic hubs with rail connectivity at Varanasi and other places on
National Waterways. This is expected to lead to convergence of inland waterways with rail and
road connectivity and provide a seamless, efficient and cost-effective cargo transportation
solution.

INTERNATIONAL CONVENTIONS

India accedes to the Anti-Fouling Systems (AFS) Convention 2001 of International

Maritime Organization (IMO)
The Indian instrument of accession was deposited with the IMO on 24.4.2015 and the convention
entered into force in India on 24.7.2015

India ratifies Maritime Labour Convention (MLC) 2006 of International Labour

Organization (ILO)

26
This Convention is considered as the 'Bill of Rights' for the seafarers across the world. India has
the second largest number of seafarers after the Philippines and by ratifying the MLC, has ensured
improvement in the working and living conditions, and employment rights of Indian national
seafarers. The Indian Instrument of Ratification was deposited with ILO on 09.10.2015 and the
Convention will enter into force in India on 09.10.2016.

The Merchant Shipping (Amendment) Bill 2015 to incorporate the provisions of the three IMO
Conventions, namely, Bunker Convention, Nairobi Convention and Salvage Convention
introduced in Parliament.

SPECIAL INITIATIVES

Development of Chahbahar Port in Iran India signed a MoU with Iran for developing Chahbahar
Port. An SPV, Indian Ports Global Ltd has been formed with equity participation from Jawaharlal
Nehru Port and Kandla Port to execute the project. Vision for coastal shipping, tourism and
regional development Ministry of Shipping has prepared a vision for coastal shipping, tourism and
regional development to increase the share of coastal/IWT mode from 7% to 10% by 2019-20. An
action plan to achieve the objective has also been prepared and is being implemented. The key
elements of the initiative include development of coastal shipping as an end-to-end supply chain,
integration of IWT and coastal route, development of regional centres to Generate cargo for coastal
traffic, development of domestic cruise industry and promotion of lighthouse tourism. MoU with
Republic of Korea on Maritime Transport MoU was signed with Republic of Korea to promote
bilateral cooperation in maritime transport.

Coastal Shipping Agreement with Bangladesh

India signed an agreement on coastal shipping with Bangladesh. This agreement would allow River
Sea Vessels (RSV) to carry cargo between the two neighbours. In terms of berthing charges and
light dues, both the countries would extend national treatment to one another. The commencement
of coastal shipping between the two countries would give a boost to Exim trade between India and
Bangladesh. The two countries also signed the

Standard Operating Procedure (SOP) to operationalize the “Agreement on Coastal Shipping.

27
India and Bangladesh Initial a Draft MoU on Passenger and Cruise Services on Coastal and
Protocol Route. India and Bangladesh Agree on Extension of Protocol on Inland Water Transit
and Trade
India and Bangladesh have agreed on the extension of Protocol on Inland Water Transit and Trade
(PIWTT) with the provision of automatic renewal in line with the proposed amendment to the
Bangladesh-India trade agreement during a Secretary-level talk between the two countries.
MoU between India and Spain on cooperation in Port matters
The Union Cabinet has given its approval for signing a Memorandum of Understanding (MoU)
between India and Spain on cooperation in Port matters.

Agreement between India and Jordan on maritime transport

The Union Cabinet has approved signing of a shipping agreement between India and Jordan.
Recognizing the significant mutual benefit that can be derived from cooperation in the area of
shipping between the two countries, it has been decided to sign the agreement with a view to
strengthening cooperation and to provide sustained mutual assistance and advice on merchant
shipping and other related maritime matters.
Agreement between India and Egypt on Maritime Transport
The Union Cabinet has given its approval for signing of an agreement between India and Egypt on
Maritime Transport. Recognizing the significant mutual benefit that can be derived from
cooperation in the area of shipping between the two countries, it has been decided to sign the
Agreement with a view to strengthening cooperation and to render sustained mutual assistance and
advice on merchant shipping and other related maritime matters.

SECURITY
Ratification of International Labour Organisation Convention No. 185 on the Seafarers Identity
Document

The Union Cabinet has approved the Ratification of the International Labour Organization (ILO)
Convention No. 185 on the Seafarers Identity Document (SID). A biometric based seafarer's
identity document will be developed, mainly, to ensure a fool proof security system to ward off
the potential risk of breach of security and possible terrorist attacks. India's ratification of this
Convention will benefit Indian seafarers, who may otherwise find a threat to their job
opportunities, in the near future, in the global maritime sector if India doesn't ratify the Convention.

28
 Re-Drawal of the High-Risk Area in the Indian Ocean

International bodies have agreed to India’s efforts to push back the High-Risk Area (HRA) from
78 degrees East longitude to the 65 degrees East longitude. This will result in huge savings for
India’s EXIM trade and consumers on account of reduced insurance premium and consequently
freight costs. This will be a major gain for India on global maritime stage, resulting in a saving of
about Rs. 1500 crore per annum for merchant ships.

Logistic Efficiency Enhancement Programme

A proposal to initiate a ‘Logistics Efficiency Enhancement Program (LEEP) and Vehicle Fleet
Modernization Program (VMP)’ to improve India’s logistics efficiency is already under
consideration in Ministry of Road Transport and Highways, Government of India
(MoRTH).LEEP and VMP are expected to support the ‘Make in India’ initiative and significantly
raise India’s Logistics Performance Index (LPI) score in the World Bank’s ranking.

29
 Chapter-2

COMPANY PROFILE

Act Forwarders, is well-known and trustworthy Service Provider in the domain of Shipping, and

allied services. Since 1996, we have been catering to the needs of varied industries by rendering

excellent services like Warehousing, Chartering, Cargo Loading, Distribution, Stevedoring, etc.

We provide these services with the help of experienced and expert personnel, who work with

clients’ specified requirements and in compliance with the core industrial norms. Also, our

professionals make use of ultra-modern technologies in terms of packaging material is well-know

and trustworthy Service Provider in the domain of Shipping, and allied services. Since 1996, we

have been catering to the needs of varied industries by rendering Also, our professionals make use

of ultra-modern technologies in terms of packaging material is well-know and trustworthy

Service…It was located in Kakinada, Andhra Pradesh.

SERVICES
Custom House Agents:

We are highly recognized by clients as reliable Custom House Agent, offering high quality and

world class custom clearing services. Our main function is to maintain detailed and up to date

accounts of business transactions that include entry or departure of conveyances or the import or
30
export of goods as per the set custom station. Our organization is backed by highly qualified and

experienced team of staff, who are well versed with the customs acts and regulations and able to

complete the assigned task efficiently within a said period of time. Our clients can avail these

services from us at nominal charges.

Clearing And Forwarding:

By availing our services, you save yourself the trouble of having to constantly check on a number

of customs service providers. We share professional relationships with a number of customs

clearance and freight forwarding agents worldwide; ensuring the prompt and safe delivery of your

goods.

Stevedoring:

Owing to our rich industry experience and awareness of quality service, we are vastly engaged in

offering Stevedoring Services which are loading and unloading ships. These services are offered

by our trained workers to ensure best in class safety and reliability. These services are broadly

demanded in the market for their reliability and professionals’ approach. Our precious clients may

avail these services customized as per their specifications and desired budget range.

Logistics:

We are one of the leading complete logistics solution provider with end to end solutions which

covers ex-work booking, custom brokerage, sea / air freight, road transportation and door delivery

etc.

Ship Repairing:

31
We are reckoned as one of the eminent names in the market, highly involved in presenting a huge

collection of Ship Repairing Service. These services are highly appreciated in the market for their

durability, reliability and flexibility. Apart from this, these services are available at very affordable

prices within stipulated time frame.

Ware Housing:
We are known for our superior inventory management and provide the Warehousing. It is an

integral part of transportation, as it is crucial for the logistics. Our team of professionals will

monitor and manage incoming cargo in our storage facilities and are able to make allowances for

special goods. Our logistics team is experienced and capable to supply end-to-end services in this

field for very low prices.

MODE OF SERVICES

SEA:

ACT forwarders is a leading provider of ocean freight solutions to provide our customers with

services of the highest possible quality. ACT FORWARDERS offers import and export

containerized services for both full (FCL) and part load (LCL) cargo worldwide. We pride

ourselves at being able to tailor make service solutions to fit our customers’ demands for speed of

transit, ocean freight cost, containerized equipment availability and vessel space.

AIR :
ACT FORWARDERS is an IATA Cargo Agent, and a leading provider of air freight solutions.

32
Excellent relationships with many of the world’s premium airlines ensure that our customers
receive the highest possible service standards. We offer a complete range of air freight services
including Consolidation services

• Air Freight
• Express
• Door to Door
• Courier
• Insurance
• Full and partial charters
• Letter of credit compliance
• Relocation Services
• Customs Clearance & Forwarding
• Sea Freight
• Ship Handling
• Ship Stores Suppliers
• Packing

ACT FORWARDERS has a dedicated team of airfreight professionals covering all the India’s

airports, and can provide our customers with 24/7 operational support and customer service.

Whatever your airfreight needs, you can be sure that ACT FORWARDERS has the right solution

to ensure your goods are safely transported and delivered on time to their destination through a

choice of reliable, cost effective services. Our office is fully automated and all staff members are

periodically trained to ensure smooth and trouble-free handling of shipments. State-of-the-art

communication and IT support are in place to ensure the best service is rendered to our customers.

ROAD :

33
ACT FORWARDERS provides a full range of road services throughout the India. Our services

include express, groupage and full loads.

EXIM PROCEDURES IN ACT FORWARDERS :

INQUIRY FOR EXPORTS:

Exporter sends enquiry for exports to freight forwarding company.

Inquiry includes: Port of lading, Port of destination, Gross weight, Incoterms, and
description of goods....etc.

QUOTATION TO EXPORTER:
Freight forwarders takes the rates of importers country and send it to the exporter Here
freight forwarders prepare the quotation and send it to exporter

APPROVAL OF QUOTATION:

After getting quotation and rates of export, the exporter approves the quotation and role
of the freight forwarders start. Now the freight forwarders and exporters work for exports
process. And business process starts.

DOCUMENTATTON:

For export, exporter requires the documentation like ARE Form, N Form, Invoice, and
Packing List. GSP Certificate FOR European Nations, Shippers Declaration Form,
Certificate OF Origin.

34
 EXPORTS UNDER EXPORT PROMOTION SCHEME:

If the exports are under export promotion scheme, exporter will get benefit or reward
from government, if export is not under any such scheme then export will be pre shipping
export where exporter will not get benefit from the government

PREPAREATION OF CHECKLIST:

After documentation procedure the CHA (CUSTOM HOUSE AGENT) prepares

checklist for exports Checklist is the draft copy of shipping bill.

Checklist for exports includes: IEC Code, AD Code (Authorised Dealer Code) details of
invoice, packing list etc.

APPROVAL OF THE CHECKLIST BY EXPORTER :

After the preparation of checklist, it is sent to exporter for the approval. Here exporter
check and verify checklist and make the approval for the custom filing of checklist.

FILING OF CHECKLIST IN CUSTOM:

After the approval from exporter CHA files the checklist in custom

SHIPPING BILL AND SHIPPING NUMBER IS GENERATED IN THE EDI

SYSTEM:

35
 After filing of checklist in custom EDI system generates the shipping number.

Without shipping number cargo cannot move for CFS (CONTAINER FREIGHT
STATION)

CUSTOM CLEARENCE OF EXPORT GOODS:

In the container freight station, the custom clearance process is done by CHA Custom
clearance must be done with in the stuffing date.

ASSESMENT AND EXMAINATION OF GOODS:

After the custom clearance of export goods, the custom appraisal officer makes
Assessment and examine the goods ready for exports.

BOARDING ON VESSEL:

After the custom clearance and examination of goods, Goods or consignment is boarded on
vessel on the sealing date. And in this entire process goods are exported.

IMPORT PROCEDURE IN ACT FORWARDERS:

INQUIRY FROM IMPORTER:

36
 Importer will send inquiry for import to the freight forwarding company

Inquiry will include: Port of lading, Port of destination, gross weight, Inco-terms
suppliers address and details.

QUOTATION FOR IMPORTER:

Freight forwarder take the rates for import from their nominated agents in respective
count

APPROVAL OF QUOTATION :
After getting the rates of import, the importer will approve the quotation.

And business process of importer and freight forwarder starts.

PICK UP AND TRANSPORTATION

Freight forwarding company with its nominated agent has to make the pick-up
arrangement from the exporter’s factory premises, and transportation facility till the port
of origin

ARRANGEMENT OF VESSEL :

37
 Nominated agent of freight forwarding company will have to make the arrangement
for the earliest vessel.
Nominated agent will issue or provide house bill of lading.

BOOKING OF THE VESSELS BY CO LOADER:

Co loader will book the earliest vessel for the import and agent will follow up with

the co loader. Co loader will give provide the master bill of lading.

CUSTOM CLEARENCE OF EXPORT GOODS :

Nominated agent of freight forwarding company will make the custom clearance of

export goods at the container freight station at the port of origin in exporter country

GOODS AT CARTING POINT OF VESSAL:

After custom clearance process goods are moved at the carting point on

stuffing date, and on sealing date goods are boarded on vessel.

PRE-ALERT SET FROM IMPORTER:

Exporter will send pre alert set. (Invoice, Packing List, Master Bill of Lading,

House Bill of Lading, Debit Note, and other supporting documentation

APPROVAL OF THE CHECKLIST BY THE IMPORTER :

Checklist will be sent to importer for the approval to check the items of imports by

CHA.

38
 BILL OF ENTRY READY:

After filing of checklist and IGM in custom BILL OF ENTRY is ready.

PAYMENT OF THE IMPORT DUTY:

After Bill of Entry is ready importer is liable to pay the import duty.

After the payment of duty importer will give payment receipt to CHA and will

make the Custom clearance process in container freight station.

OUT OF CHARGE:

After the custom clearance process the custom appraisal officer will

physically examine the goods and Details of check list and IGM and check it with Bill

of Entry, if everything is in as per requirement, then Custom appraisal officer will give

out of charge to cargo arrived Custom house agent or freight forwarding company will

make the arrangement for the transportation till the importer final destination.

FOLLOW UP :

Freight forwarders has to take follow up from CHA, Transporter, agent, and

coleader and preparation of final invoice for importer

39
REMITTENCE:

Remittance is the process that mainly deals in the foreign exchange. In remittance process the
amount of abroad agent is paid. Remittance is done on the basis of debit note of the agent with
the supporting {MAWB} Master Air Way Bill or (MBL) Master Bill of Lading. The
remittance process is mainly done through the commercial banks that like Kotak, IDBI, and
ICICI etc. that deals in foreign exchange.

The remittance process is done to make the payment of the nominated agent which works on
behalf of freight forwarder in the foreign country. Through the remittance process the
payment of agent for the work like : pick up arrangement, inland transportation till the
port of the respective country, booking of the vessel through co loader, custom clearance
on the CFS of the respective country is done in the agreed currency in the quotation.

The remittance process requires the following documents:

A2 form: this form includes the name of both the agent and freight forwarder ;it also includes
the details of the agent’s banks account along with the currency and its exchange rates in
which transaction has to be done .

REQUEST LETTER FOR THE OUTWARD REMITTANCE:

This request letter for the outward remittance is to be mandatorily provided to the bank for the
remittance.
The request for the outward remittance is to be provided on the companies’ letter head , so that
the letter head of the company remains as a proof with the bank for remittance for the respective
amount.

FEMA DECLEARATION AND UNDERTAKING:

FEMA is the foreign exchange management act. FEMA is the act accepted globally for the
international financial transaction in the monetary terms. FEMA DECLEARATION AND
40
UNDERTAKING include all the norms terms and condition in and under which the
monetary transaction has to be done . It also provides the guidelines to the central bank or
National bank of countries as to avoid the fraud, grievances, and for the smooth balance of
payment. FEMA DECLEARATION AND UNDERTAKING in the international trade

provides or works as a guide line to global logistics in monetary terms or say remittance

FCL: (Full Container Load):

The container which may be of 20 feet or 40 feet may be booked by the one sole shipper for its
own commodity or goods .such booking of the one type goods by the one shipper only is called
the Full Container Load (FCL)

The FCL is mainly booked by the one shipper or importer which has to export or import the
goods in the bulk quantity.

The Full Container Load mainly requires the 3 to 4 days for the custom clearance on the
port of origin and port of destination in the CFS container freight station .FCL may be in the
open top container ,flat rack container ,high cube container.

LCL (less than container load) :

The LCL container may be of 20 feet, 40 feet. The less then container load is the container
having the goods or cargo of the different shipper and the different consignee. This type of
container contains different goods of one country of different consignee.
For the booking in the LCL container mode the cargo of the shipper is charged on the cubic meter
area of the container or the weight which is higher.

The place for the cargo in LCL mode is booked by the co-loader of the nominated agent. LCL
may also be in the open top container, flat rack container, high cube container as per the
dimension and requirement of the cargo.

CFS (Container freight station):

41
Container freight station is the place where the cargo arrives and departs as on the stuffing date
and sailing date. The main work of custom clearance of export and import of goods are done in
container freight station and payment of the import duty is also paid to the custom authority is
also in the container freight station premises. In the container freight station, the custom
assistance officer and custom housing agent makes the process of custom clearance of both
import and exports of goods.

On the stuffing date cargo is arrived for the export and till the cut-off date the cargo is accepted
in CFS. On the sealing date the cargo the is depart from the CFS to board on the vessel The
container freight station is the location nearest to the sea port so as reduce the transport cost and
to complete the custom work as it cannot be done on the port itself due to limited space. In the
container freight station, the both containers of the import and export are places as per the vessel
schedule.

Chapter-3

REVIEW OF LITREATURE

Murphy et al., and Daley et al., (1992)5 explained in their article that the freight forwarders are
referred to as international trade specialists offering a variety of services to facilitate the
movement of international shipments. They also have studied the determinant factors of
international freight forwarders selection and concludes that forwarder’s expertise and

42
reliability of service are the most important selection criteria while forwarder size emerged as
the least important one.

Shmeera (2003) in this study, the researcher has framed the following objectives:

1) To know about the role of clearing and forwarding agents in international business

2) To study about the export procedures followed by clear ship forwarders and 3) To know
the services rendered by the Clear ship Forwarders.

Sreenath (2005)21 in this study the researcher has concluded that airlines have considered
cargo as a by-product of passenger transport. But the advantage of freighters and combi craft
has sowed a new status in the air transport industry. Besides that, the new schemes and policies
such as e-freight has become a strong base for the growth of cargo transmission through Air.
The effect of modernization has also made new advancement in the air cargo handling by way
of e-business revolution. In air cargo as early specified freights system has made a surprising
change and in passenger traffic the e-ticketing, system, bar-coding boarding system etc. To
conclude, IATA is emerging with new schemes and policies to increase the share of air cargo
in the new business world and till this day the growth of air cargo is increasing beyond
expectation.

Jean Francois Arvis et al., (2007)27 in their article, they remarked that the increase in global
production sharing the shortening of product life cycles, and the intensification of global
competition all highlight logistics as a strategic source of competitive advantage. Since the
advent of modern trade several centuries ago, the international movement of goods has been
primarily organized by CHAs & freight forwarders. Typically, large networks of companies
with worldwide coverage, capable of handling and coordinating the diverse actions are required
to move goods across long distances and international borders. More recently, the rise of

43
 intermediaries (CHAs, express carriers and third-party logistics providers) has expanded the
scope of services available to traders.

Vaidyanathan (2008)as regards the logistics service providers, quality infrastructure support is
not always available on time, due to the high pace of economic development. This includes
airport infrastructure, seaports, highways and express ways. Cumbersome procedures lead to a
lack of focus on the part of policy makers. The logistic costs in the Indian economy is higher
than in other countries, due to infrastructure bottlenecks. The price of fuel forces the users to
shift from road transport to alternative transport modes. Only a very small and limited number
of logistics service providers are providing end to-end logistics chain in a true sense. A large
number of fragmented service providers aspire to cover all services However, an integrated
approach is lacking

.Lei Wang (2011)43 in his article he pointed out that today's international market competition
is in full range competition. Enterprise has profoundly realized individual efforts are less
preferable for the increasingly fierce competition in the market. Enterprises need to use their
core strengths to seek and attract multilateral cooperation with other enterprises in order to
realize win-win. The bold use of the partners' advantageous resource to seek their own
economic interests represents that supply chain management is going through a transformation
from traditional transaction management to the relationship management. (Mengyan Zhang,
Aimin Shi; 2008) With the development of logistics economy, logistics demand will become
more inclined to the direction of "one-stop" and "globalization". This ever-increasing customer
requirements make any logistics enterprises find it difficult to adapt to it, of course, the port is
no exception.

Chapter-4

RESEARCH METHODOLOGY

44
 Primary data: Observation in the working process. And analysed the sector

Secondary data: Exim magazine, interaction with people of freight forwarding industry,
interaction with the Exim manager of manufacturing companies, previous projects internet
etc.

PRIMARY DATA:

The most and major of the data of the project is based on the observation that was done during
the Summer Internship Programme (SIP) in the (ACT FORWARDERS). The primary data is
being collected on the basis of the observation on the working process of the freight forwarding
industry, interaction among the members of the company and questionnaire was developed
focusing various aspect.

SECONDARY DATA:

The secondary data is mostly collected from the export import weekly magazine , from this
export- import magazine, the knowledge regarding the different ports of the country and different
vessels and containers for the different countries . With the interaction of the export –importer
manager of the different manufacturing industry the knowledge regarding the rates for the different
countries.

With the interaction, with the people of freight forwarding industry, the knowledge regarding the
work of co – loader, custom housing agent got with the clear vision. To get the clear vision for the
ideas, the sources like previous projects from the college library and the internet was also being
used as sources to get the secondary data.

LIMITATIONS OF THE STUDY:

• The researcher has done the study only on Freight forwarders.

45
 • The researcher has not considered the financial aspects of Freight forwarders

• Lack of time available for the research.

• Terms and conditions are a 'cut and paste' of those used by competitors

SCOPE AND OBSERVATIONS OF THE STUDY

SCOPE OF THE STUDY

• While working in the ACT Forwarders, I got to know the work of the shipping services
• Working in the shipping or freight forwarding sector is of good scope as number of
opportunities is waiting in future

• The work of the freight forwarding teaches us how the international market works as per the
currency rates.

• Here we can understand the relations and work of the freight forwarders with the co loaders,
Custom housing Agents of clearing agencies and local vendors for the pickup and
transportation

• While working in the freight forwarding industry, we can understand the impact of
government policy on the international market

OBSERVATIONS OF THE STUDY

• In this period of time I came to know that international market is not that hard to make career
in that, likewise getting your routs isn’t that easy.

46
• With proper sufficient knowledge anyone can dive in this field but only those who will
survive and thrive who are flexible in any condition.

• While working in the ACT FORWARDERS the following observation was done and noted.
• The details mentioned in the Documentation.

• Various works like container planning, providing quotation.

• Activities like remittance, customer service, customer marketing and working on the pre
alert set.

47
 Chapter-5

DATA ANALYSIS AND INTERPRETATION

The data collected through the questionnaire are analysed to know about the respondent’s opinions
about various particulars asked in the questionnaire. The data collected from the questionnaire was
entered into spread sheet and the data has been interpreted. The questionnaire comprises of
fourteen questions with subparts for each.

The topics covered are with decisions of each operational area, employee numbers of each firm,
profitable area in operation, catering location, service offering, organizational effectiveness,
Inventory, Location, Product availability and customer satisfaction

STATISTICAL TOOLS

Percentage analysis
Bar Diagrams
Pie Chart

1.Which are the logistics services organizations offers?

Table -1 Service Offer

48
2.Operating with other logistical providers and reasons for decisions.

Table -2 Operate With Logistical Providers

Chart-2 Operate With Logistical Providers

49
 The pie chart above shows the operational decisions and reasons for operations with other
logistical providers. The chart shows that 96% of the respondents operate with other service
providers for different reasons like coordination, clearance, bulk operations etc.

Almost 36% have operations with other providers as per customer needs. Only 11% and 10 %
were providing service along with other providers for the purpose of operational stability and
cost effectiveness respectively. It is stated that 96% of organizations operate with other
logistical providers and remaining 4% as standalone.

3. What is the mode of decisions regarding the operations? Table-3 Mode of Decision

Chart-3 Mode of Decision

50
The pie chart above shows the mode of decisions regarding the operations. The pie chart shows
88% of organizations take tactical decisions followed by 63% with operational decisions and 37%
strategic decisions. Most of the organizations have a mixture of all the decisions in their day to
day as well as in long- and short-term plans.

4. Which is the area of the activity, that organizations feel best in their service? Table-4 Best

Activity

51
The pie chart above shows the best activity which organization feels in their

operations. The pie chart shows 98% of organizations have freight in the predominant

area, followed by 86% of SEZ Registration. Another significant area is Online Softex

Filling with 87% as best activity. There is only a minor activity based on steamer

handling with 4% and 97% in custom clearance. Chart-5i Employees

52
 The line charts above show the comparison of employees in each functional division of
organization with ACT Forwarders. The line chart shows around 14 percentages of people belong
to top management and industry standards has 11 percent, followed by 18% for operations and
industry standards has 11%. Human Resource has to be enhanced and need to be further improved
or need to start in the organization. Documentation also needs to be further strengthened.
Marketing comprises of 14% working in the said area. Most of the organizations have a mixture
of top management with marketing in their activities and functional area. Human Resource
comprises of 371 people and other main area is documentation and workers in the areas of loading,
operational area. This comprises of only 36% and industry standards are of 45%.

6.What are the locations to which the company caters to? Table-

6i Catering Locations

Table – 6ii Catering Locations

Industries Asia Europe USA Australia Africa Russia ME Others

ACT 100 0 100 100 0 100 100 100

FORWARDERS

53
 Others 100 6 89 86 71 98 98 90

Chart- 6i Catering Locations

ACT 3 4 4 2 3

FORWARDERS

Industry Average 3.84 3.76 3.82 3.29 3.83

The pie chart above shows each organizations catering location in the world. The chart shows
100% of organizations cater to Asian region followed by 6% to Europe and 89 % to USA.

Each organization has tremendous catering locations with 86% to Australia, 71% to Africa, 98%
to Russia, 98% to Middle East, and 90 % to other locations. Locations mentioned as other is
company catering frequently with repeat orders of customers

7.Comparison of service offered by ACT FORWARDERS and rating of other organization in

the industry on a scale of 0- 4.

54
 Chart-7 Service Comparison

The chart shows Ease of Service is not up to the mark, it shows only 3 for ACT FORWARDERS

and the industry standards is 3.84. So, organization can increase their Ease of Service. Client

handling is satisfactory compared with industry standards. Customer service also has remarkable

value compared with industry. Major area to look into is Website easiness, Employee Efficiency.

It can be brought up with a considerable effort by proper handling of human activity by human

resource Department.

55
 Chapter-6

CONCLUSION AND SUGGESTIONS

After working for my summer internship project of Bachelor Of Business Administration

(SHIPPING). I came to know the working of the freight forwarding industry. And got the exposure
of the international market and knowledge about the different countries. The freight forwarding
industry is the vital link in the international market. In simple words it is the best place to get and
develop in the international business.

The individuals can also build up their future in the freight forwarding industry and have the share
in the development of the economy of the nation.

Freight forwarding is the industry where many of the things are under the one roof, like working
out with the shipping line industry, working out with manufacturer, NVOCC and Custom Housing
Agents etc.

According to me and my conclusion the freight forwarding industry is the fruitful place for the
students of Bachelor Of Business Administration(SHIPPING).

Freight forwarding industry also has the vital role in the development of Nations Economy. The

market challenges faced by freight forwarders are quite daunting. In order to become the best

freight forwarding service provider, it is best to think and perform outside the box.

Convenience and honest service are the key points to make the logistics business a success.

56
It is also essential to establish a customer support or a means of contact between the forwarder

and customer at all times. A toll-free number or live chat can be of great help in resolving issues

or disputes quickly.

The relationship with shippers is also undergoing change and switching costs that are no longer
relevant. In order to address this issue and ensure long time survival, forwarders need to
understand the dynamics and adopt strategies accordingly.

57
 Chapter-7

BIBILOGRAPHY

BOOKS:

1.The Box: How the Shipping Container Made the World Smaller and the World Economy
Bigger by Marc Levinson

2.Freight Forwarder Business Start-up: How to Start, Run & Grow a Successful Freight
Forwarding Business by Allen McCarthy
3.Dedicated Freight Corridor Corporation of India Limited (DFCCIL) Executive / Operating
Station Master & Controller Exam Books by V.V.K SUBBURAJ.
4. Export Import Documentation- Himalaya Publication WEBSITES:

http://www.wikipedia.com http://www.google.com http://www.scribd.com www.assilp.in

www.wikipedia.com www.eximguru.com pib.nic.in/new

site/PrintRelease.aspx

http://www.businesswire.com/news/home/20160503005863/en/Government-

Initiatives Infrastructure-Development-Boost-Logistics-Market

58
 A STUDY OF ICEGATE SYSTEM FROM THE USER PERSPECTIVE

THE PROJECT REPORT SUBMITTED TO

AMET
ACADEMY OF MARITIME EDUCATION AND TRAINING
DEEMED TO BE UNIVERSITY

IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE DEGREE

BACHELOR OF BUSINESS ADMINISTRATION (BBA)

(SHIPPING)

BY

PRAVEEN S
(REG.NO. ABA17072)

UNDER THE GUIDANCE OF

Mrs.R.DIVYA RANJANI
(ASSISTANT PROFESSOR)

AMET BUSINESS SCHOOL

May 2020

Page 1 of 4
 DECLARATION

I hereby declare that the project work entitled “A STUDY OF ICEGATE SYSTEM FROM USER

PERSPECTIVE” submitted to AMET Business School, AMET (Deemed to be University), under the

guidance of Mrs.R.DIVYA RANJANI, ASSISTANT PROFESSOR, in partial fulfillment of the

requirement for the award of the degree of Bachelor of Business Administration (Shipping) is a record

of original project work done by me during the period of study in AMET Business School from 2017-

2020.

Date:
Place: Chennai

Page 2 of 4
 CERTIFICATION OF APPROVAL

This is to certify that the project entitled “A STUDY OF ICEGATE SYSTEM

FROM THE USER PERSPECTIVE” is a bonafide research work carried out

independently by PRAVEEN S (REG.NO. ABA 17072), student of BBA (Shipping) of

AMET Business School, AMET (Deemed to be University), Kanathur-603112, during

2017-2020 in partial fulfilment of the requirement for the award of degree of Bachelor of

Business Administration in Shipping.

Signature of Guide

Vice-Voce-examination conducted

Internal Examiner HOD-BBA

Page 3 of 4
Date:

ACKNOWLEDGEMENT

I take this opportunity to acknowledge son noble hearts for lending hands in the successful completion of
my project.

I would like to express my gratitude to our honorable Chancellor DR. J RAMACHANDRAN and our vice
chancellor COL. Dr. G. THIRUVASAGAM for their kind encouragement.

I am immensely thankful to my respected guide (Mrs.R.DIVYA RANJANI), Associate Professor,

AMET Business School, AMET University for his guidance support and encouragement rendered to me
throughout the project Dr.SRINIVASAN, Head Of Department of AMET Business School.

I would be failing in my duty if I don't extend my gratitude to my Institutional faculties, without their help
the project would not have finalized and for the help rendered in completing the project.

I am deeply thankful to my parents and my fellow friends for their support and suggestion extended for the
improvement of the project report.

(PRAVEEN S)

Page 4 of 4
 CONTENTS

 INTRODUCTION

 REVIEW OF LITERATURE

 OBJECTIVES OF THE STUDY

 RESEARCH METHODOLOGY

 DATA ANALYSIS AND INTERPRETATION

 FINDING AND CONCLUSION

 SUGGESTIONS

Page 5 of 4
  BIBLIOGRAPHY

INTRODUCTION

ICEGATE

Indian Customs Electronic Gateway (ICEGATE) is the national portal of Indian Customs of Central Board

of Indirect Taxes and Customs (CBIC) that provides e-filing services to the Trade, Cargo Carriers and

other Trading Partners electronically.

At present, about 43542 users are registered with ICEGATE who are serving about more than 12.5 lacs

importer/exporter. Through this facility Indian Customs offers a host of services, including electronic

filing of the Bill of Entry (import goods declaration), Shipping Bills (export goods declaration), e-Payment

of Customs Duty, a free of cost web-based Common Signer utility for signing all the Customs Documents,

facility to file online supporting documents through e Sanchit, end to end electronic IGST Refund and etc.

ICEGATE is internally linked with multiple partner agencies including RBI, Banks, DGFT, DGCIS,

Ministry of Steel, Directorate of Valuation and other various Partner Government Agencies involved in

Page 6 of 4
EXIM trade enabling faster Customs clearance. All electronic documents/ messages being handled by the

ICEGATE are processed at the Customs' end by the Indian Customs EDI System (ICES), which is running

at 245 Customs Locations.

In addition to e-filing, ICEGATE also provides host of other services like 24X7 helpdesk facility for its

trading partners, e payment of Central Excise and Service Tax, on-line registration for IPR, Document

Tracking status at Customs EDI, online verification of DEPB/DES/EPCG licenses, IE code status, PAN
based CHA data, IGST Refund Status and links to various other important websites/information related to
EXIM Trade.

COMPANY PROFILE: Uniqe Line-Chennai

Uniqe Line is a well-known Shipping, Clearing Freight Forwarding and Logistics Company with head office

in Chennai, branches/associates all over India and strong partner agents worldwide. We are licensed Customs

Broker and Multimodal Transport Operators (MTO) offering host of services to exporters and importers

from various different industries.

We offer competitive Custom Clearance, Ocean Freight rates and Air Freight rates to and from worldwide

locations, , Road transportation, Rail transportation, Warehousing, Ship chartering and Ship broking service

for break bulk cargoes, Project cargo logistics, Door to Door service, FCL / LCL Consolidation, Buyers

Consolidation, Coastal shipping service and host of value added services.

Page 7 of 4
We have a team of experienced and skilled professionals that renders efficient and reliable services to our

customers for handling their valuable cargo. We cater to customers from diverse industries and we believe

in maintaining a long term and continuous business relation with our customers by offering them quality

services and guaranteed reliability.

We offer complete door to door logistics services under one roof so that you don’t need to deal with many

parties usually involved in movement of cargo thus enabling you to concentrate on your core business

activity.

Page 8 of 4
We have a network of our own offices at all the major ports and ICD’s in India and a strong global

network of associates and agents representing us at worldwide destinations to meet the door to door

requirements of our valued customers.

Our company’s motto is ‘A to Z Global Logistics with perfection’ which signifies that we thrive for

perfection in our service offerings and thus achieve our prime goal i.e. Customer Satisfaction. Our vision is

to become one of the topmost global Shipping, Freight forwarding and Logistic Company Our Services

Ocean Freight

We offer competitive export / import Ocean Freight for worldwide destinations as we have secured service

contracts & preferential customer status with all the major ocean carriers also our strong global agency

network enables us to offer competitive FCL & LCL rates.

Air Freight

In air cargo transportation, we understand that timeliness and punctuality are essential for customers. At

Uniqe Line, we fulfill our responsibility of transporting your cargo to the desired destinations safely. In order

to offer clients the most responsive service possible, our Air Cargo specialists maintain close relationships

with all airlines operating in India and offers competitive Air Freight rates.

Clearing and Forwarding Agents in India

Page 9 of 4
We are an in house Licensed Custom Broker (Custom House Agents), we also provide Custom clearance

service of export and import shipments, with an experience of more than 25 years in custom clearance and

allied services. Our expertise in custom regulations and our relations ensures that cargo is cleared on time

without causing any delays and thus there is no unnecessary additional cost to the customer.

Transportation

Apart from Air and Sea transportation services, we also offer Road / Rail transportation services to our

customers. Our transportation arm has fleet of owned & leased trucks & trailers to meet our customers

haulage needs.

Warehousing and CFS

We have a network of strategically located warehouses for consolidating and safe storage of goods in transit

under the care of our logistics control and inventory management team. They are well equipped with latest

warehouse management systems and cargo moving & handling equipments.

Logistics and Multimodal Transport

Our reliable Door to Door integrated logistic services takes care of the entire international Logistic for our

valued customers whereby we collect the cargo from the exporter’s factory or warehouse and carry out the

entire transportation process right up till the delivery to warehouse or factory of the buyer. The entire process

Page 10 of
involves Multimodal Transport operations that may involve some or all of the services like stuffing of cargo

in containers, road haulage & custom clearance at both ends, sea transportation on mother vessel and feeder

vessel, rail transportation and warehousing.

Global Networks

Uniqe Line has a strong global network of agents and associates who are experts in all aspects of Shipping

and International logistics. We are proactively growing our global networks & partnering with more reliable

agents and associates

Contact Us - Corporate Office

M/s UNIQE LINE

NEW NO-14 OLD No-10,

Jaffer Syrang Street, (Behind Collector Office)

Chennai-60001. South India

Tel 044=43567946,Mob 9445661842 Ph:- 8015092925

Email:- uniqelinemkt@gmail.com

Page 11 of 4
Website:- www.uniqeline.com

Branch / Associate Office in India

Delhi, Mumbai, Krishnapatnam, Tuticorin, Gujarat, Bangalore, Pondicherry, Hyderabad.

We have our Associates Agents Worldwide.

Page 12 of
SCOPE OF STUDY

ICEGATE offers some unparalleled benefits to exporters, such as: ICEGATE registration is essential for

filing any export/import-related document online. Through ICEGATE, exporters/importers can view the

status of their online document and follow its trail through the document tracking system.

Page 13 of
 REVIEW OF LITERATURE

During this challenging time of Coronavirus (COVID-19) outbreak, we at ICEGATE are closely

monitoring the recent developments. ICEGATE commits to provide 24*7 seamless support to trade and

has advanced business continuity plans to minimize disruptions to our business operations during this

crisis. While our comprehensive service continuity plan is designed to keep our services running smoothly

during this outbreak, we apologise for the inconvenience this may cause.It is also encouraged to seek email

support for any issues instead of calling Helpdesk number.

ICEGATE stands for Indian Customs and Indirect Taxes Electronic Commerce Gateway. ICEGATE is a

portal that provides e-filing services to cargo and trade carrier, and other departments. Currently, there are

around 24,000 registered users with ICEGATEs. As of today, ICEGATE is serving more than 6 Lakhs

importers and exporters. Moreover, ICEGATE also helps in transferring the electronic commerce and data

communication requirements of the customs department. ICEGATE facilitates EXIM trade providing

faster customs clearance as it links fifteen broad type partners with Customs Electronic Data Interchange

through message.

Services Provided by CBIC using ICEGATE

Here is the list of services that CBIC provides through ICEGATE:

1. E-filing of Bill of Entry

2. E-payment of shipping bill

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 3. Exchange of Electronic Data between CBIC and trade/cargo partners via FTP, e-mail and web

upload

4. Document tracking status of customs EDI (Electronic Data Interchange) 5. PAN-based data search

The Project

ICEGATE is an infrastructure project that fulfils the department's EC/EDI and data communication

requirements. Through this facility the department offers a host of services, including electronic filing of

Bill of Entry( import goods declaration) and Shipping Bills (export goods declaration) and related electronic

messages between Customs and the trading partners using communication facilities (E-mail, Web-upload &

FTP) including the communication protocols commonly used on the internet. The airlines and shipping

agents can file manifests on the internet filed using this facility. Besides, data is exchanged between Customs

and the various regulatory and licensing agencies such as DGFT, RBI, Ministry of Steel and DGCIS. The

National Import database (NIDB) and Export Commodity Database (ECDB) for Directorate of valuation are

also being serviced through ICEGATE. All electronic documents/ messages being handled by the ICEGATE

are processed at the Customs' end by the Indian Customs EDI System (ICES), which is running at 40 customs

locations. Department has embarked upon Centralization of its infrastructure and in due course all customs

locations will be shifted to centralized infrastructure hosted at Data Centre. 5 Custom locations at Dadri have

already been moved to the Data Centre.

Facilities

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 The ICEGATE also provides for 24X7 helpdesk facility for its trading partners. To ensure secure filing,

it is proposed to use digital signatures on Bill of Entry and other documents/ messages to be handled on the

gateway.

Project Expansion

ICEGATE is working through a MPLS based Wide Area Network (under implementation), linking 582

departments buildings all over the country.

Other Facilities

In addition to e-filing, ICEGATE also provides host of other services like E-payment, on-line registration

for IPR, Document Tracking status at ICEGATE and ICES, online verification of DEPB/DES/EPCG

licences, IE code status, PAN based CHA data and links to various other important websites/information

pertaining to Customs business.

Source: www.icegate.gov.in

FROM: http://www.referencer.in/General_Information/ICEGATE.aspx

OBJECTIVES OF STUDY

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 Digital Signature for the usages in ICEGATE (Indian Customs EDI Gateway). ICEGATE is the gateway

for the users of Indian Customs EDI system where all the Individuals, trade partners and Govt. Agencies

can use digital signature certificate for document filing and data sharing, under the Customs Business

Process for administrative or analytical purposes, through SFTP in an automated environment.

It does provide Remote EDI Services (RES) to the trade and industry for filing documents, data exchange,

e-payment, status inquiry, document tracking, query-reply, etc. Also, to overcome the challenges such as

impersonation of Identity of the registered user, alteration of credentials, tracing the identity of users, or

sometimes the misuses of credibility, there was an urgent need to implement digital signature for the

documents.

However, to avoid any such above mentioned frauds and risks, it is recommended to get the Class 3

Digital signature certificate ICEGATE. This certificate will help your business to get the digital

recognition as well.

Advantages of Using Digital Signature in ICEGATE

• Authentication - Apply through online These signatures are basically accustomed authenticate the source

of messages. The ownership of a digital signature key's sure to a selected user and thus a legitimate

signature shows that the message was sent by that user.

• Integrity – With Digital certificates it are often ascertained that the message has not been altered during

transmission. Digital Signatures provide this feature by using cryptographic message digest functions

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• Non-Repudiation – Digital signatures make sure that the sender who has signed the knowledge cannot at a

later time deny having signed it. just in case of legal issues user are often held responsible for documents

received from him.

• Tracking –A digitally signed document can easily be tracked and located during a short amount of your

time.

• Environment friendless – By implementing a Digital signature for ICEGATE, lot of paper are often saved,

which successively may reduce the amount of trees which are cut for creating the paper.

These certificates are quite easy to purchase, all you need to browse our website pages or simply give us a

call at the dedicated support number. Our experts would be happy to help you.

How to Apply Digital Signature for ICEGATE

• Apply through online (Class 3 Digital Signature Certificate)

• Application Form to apply through Traditional Mode.

Capricorn DSC

A Digital Signature Certificate by Capricorn equips you with the digital investment required to conduct

transactions in a highly secure manner, ensuring absolute privacy for the information you wish to exchange

which is necessarily for ICEGATE applications. Capricorn DSC will validate your identity, making you a

trustworthy entity in the digital world and encrypt your valuable information such that only the chosen

recipients can read it.

We offer to buy digital signature certificate using paperless mode by choosing Aadhar based e-KYC

verification DSC and Pan-based e-KYC verification DSC..Aadhar-based DSC saves users investment in

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terms of time, money and effort.It is a simple and convenient way to authenticate identity and make digital

information safe and secure.Paperless pan-based KYC brings down costs considerably. Physical distances

pose no challenge, when you opt for paperless Pan-based DSC.

RESEARCH METHODOLOGY

The Indian Customs EDI System (ICES) is now operational at 245 major customs locations handling

nearly 98% of India's International trade in terms of import and export consignments. ICES has two

aspects:

Internal Automation of the Custom House for a comprehensive, paperless, fully automated customs

clearance system that makes the functioning of Customs clearance transparent and efficient.

Online, real-time electronic interface with the trade, transport,Banks and regulatory agencies concerned

with customs clearance of import and export cargo through ICEGATE.

ICES is designed to exchange/transact customs clearance related information electronically using

Electronic Data Interchange (EDI). A large number of documents that trade, transport and regulatory
agencies (collectively called Trading Partners) are required to submit/ receive in the process of live
customs clearance are now being processed online. Customs EDI Trading Partners: Summary

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No EDI trading partner Nature of information exchanged through EDI No. of messages

(approx.)

1 Importers/ Exporters/ CHA Bills of Entry/ Shipping Bills and related 13

messages

2 Airlines / Shipping Agents / Manifests and cargo logistics messages 26

Shipping Line

3 Air Custodians Cargo logistics messages 9

4 Sea Custodians Cargo logistics messages 18

5 ICDs Cargo logistics messages 6

6 Banks Financial messages – duty drawbac disbursal 9

and customs duty payment

7 DGFT License, shipping bills and IE Code data 13

8 RBI Forex. Remmittance data 1

9 DGCIS Trade statistics 2

10 Directorate of Valuation Valuation data 2

Three Systems are major Components of Indian Custom automation

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The ICES running at 134 locations. ICES has to automatically receive and process all incoming messages.

ICES generate all outgoing messages automatically at the appropriate stage of the clearance process.

ICEGATE is the interface of ICES with the external world for customs clearance related messages and

sharing of trade Statistics/Customs clearance data with licencing and regulatory agencies such as DGFT,

DGCI&S, Ministry of Steel,RBI etc.

RMS(Risk Management System) is the 3rd component which facilitates the compliant trade segregating

the transactions requiring deeper scrutiny by customs officers.

Indian Customs Electronic Gateway (ICEGATE) is the national portal of Indian Customs of Central Board

of Indirect Taxes and Customs (CBIC) that provides e-filing services to the Trade, Cargo Carriers and other

Trading Partners electronically.

At present, about 43542 users are registered with ICEGATE who are serving about more than 12.5 lacs

importer/exporter. Through this facility Indian Customs offers a host of services, including electronic filing

of the Bill of Entry (import goods declaration), Shipping Bills (export goods declaration), e-Payment of

Customs Duty, a free of cost web-based Common Signer utility for signing all the Customs Documents,

facility to file online supporting documents through e Sanchit, end to end electronic IGST Refund and etc.

ICEGATE is internally linked with multiple partner agencies including RBI, Banks, DGFT, DGCIS,

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Ministry of Steel, Directorate of Valuation and other various Partner Government Agencies involved in

EXIM trade enabling faster Customs clearance. All electronic documents/ messages being handled by the

ICEGATE are processed at the Customs' end by the Indian Customs EDI System (ICES), which is running

at 245 Customs Locations.

In addition to e-filing, ICEGATE also provides host of other services like 24X7 helpdesk facility for its

trading partners, e payment of Central Excise and Service Tax, on-line registration for IPR, Document

Tracking status at Customs EDI, online verification of DEPB/DES/EPCG licenses, IE code status, PAN
based CHA data, IGST Refund Status and links to various other important websites/information related to
EXIM Trade.

CHA

In India, a customs house agent (CHA) is licensed to act as an agent for transaction of any business relating

to the entry or departure of conveyances or the import or export of goods at a customs station. CHAs

maintain detailed, itemized and up-to-date accounts. A CHA license may be temporary or permanent.

CHA licensing regulations, 1984

No ceiling on the number of CHAs who may be appointed in a customs house A

regular licence is preceded by a temporary licence.

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Criteria of experience and financial soundness must be met.

A regular licence is subject to passing an examination, A minimum volume of business and compliance

with Regulation No. 14.

Changes in the constitution of a partnership or firm do not affect the operations of a CHA.

Prescribed fees prevent overbilling by CHAs.

Qualifications

An applicant should:
Holds a master's degree in LLB/MBA OR CA.

Hold a pass in Form 'G' as an employee of the firm or company.

Should have three years of experience in customs - clearance work.

Should have bank-certified assets of Rs.5 lakhs.

If there are more applicants than licenses, the Commissioner selects by seniority of holding a G pass. If

two people have equal seniority, the older person will be preferred.

An applicant needs to possess a pass in Form G for only one year with written authorization from the

Commissioner.

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Clarifications

A diploma in Customs clearance and freight forwarding offered by the University of Mumbai is not

considered as "graduation" for the purpose of eligibility.

An employee, partner or director of a CHA licensee authorized for examination under Regulation 9 may

take three examinations in two years from the date of application by the licensee for examination.

The level of knowledge of the local language must be determined by the Commissioners; the Regulations

have no requirement. Knowledge of the local language by an authorized representative is considered

sufficient. Proficiency in Hindi is desirable.

A person passing an examination under Regulation 9(5) may apply for a CHA license when applications

are requested, subject to other qualifications.

Persons granted CHA licenses before the 1997 amendment requiring graduation would continue to qualify

for renewal.

Multimodal transport operators as CHAs

Multimodal transport operators (MTOs) are appointed under the Multimodal Goods Transportation Act,

1993 by the Ministry of Surface Transport. Their work involves carrying goods by more than one mode of

transport between India and abroad. This does not confer a right on them to obtain an appointment as

steamer agents or CHAs unless they are otherwise qualified for the appointment.

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Licence types Temporary

After accepting an application, a one-year temporary licence is granted under Regulation 8 in Form B.

Before receiving a temporary (or regular) licence, the applicant must execute a bond on Forms D and E.

For major ports, the surety amount is Rs.25000/; for other ports, Rs.10000/. Surety may also be given in

the form of National Savings Certificates or postal security, which should be pledged in the name of the

Commissioner. Since a regular licence-holder is allowed to work in more than one Customs station,

separate bond and surety must be posted for each customs station.

Regular

An application for regular licence may be made on Form C by a person who has passed the examinations.

Forms A and C are nearly identical, except that while the former is issued under Regulation 5, the latter
form is issued under Regulation 10. A regular licence is requested on Form D. The applicant must satisfy
the following conditions:

Quantity or value norms of cargo cleared from the customs house (as determined by the Commissioner)

Applicant conduct during the temporary-licence period; no complaints of non-compliance with Regulation

14

A regular licence is nontransferable, and its term is ten years.

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Disqualifications

Regulation 10 specifies that only a person who qualifies in the examination can apply for a regular licence.

Sub-regulation 3 provides that the Commissioner may reject the application of a person who fails the

examination. If performance criteria are not satisfied regarding quantity and value of clearances or

conduct, the application may be rejected. An appeal may be made of an order of rejection within 30 days

to the Chief Commissioner, who is also empowered to review regular licence grants within one

year.16915032

These Customs House Agents act on behalf of you with customs officials to undergo necessary export and

import clearance procedures and formalities. In an export, a customs broker delivers documents to exporter

after completing necessary export formalities with customs. In an import trade, goods are delivered to

importer by customs broker after completing necessary import customs clearance procedures and

formalities with custom department.

Record-keeping

Accounts should reflect all financial transactions entered into as a CHA. A copy of all documents filed

(such as shipping bills, bills of entry and transshipment applications) must be maintained for at least five

years and should be available for inspection by departmental officers.

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Duties

Authorised clearances only against authorization'''': A CHA is required to clear goods for import or export

with specific authorization from the principal, which must be produced whenever required by the Deputy

or Assistant Commissioner.

Personal clearance'''': The CHA must personally clear the goods or clear them through an employee

designated by the Commissioner. All documents should list the CHA's name at the top. The CHA should

not attempt to influence the conduct of customs officers in matters pending before him or his subordinates;

there should be no threats, false accusations or duress against such officers, and no promise of advantage,

benefit or gift should be made or bestowed on such officers. The CHA's duties should be discharged

expeditiously, and he cannot charge more than the rates approved by the Commissioner.

Conflicts of interest: If the CHA is a former officer of a department, he cannot represent any matter before

a customs officer which he had considered as an officer. He cannot use facts which came to his knowledge

as an officer.

Correct advice: The CHA must advise the client to comply with the provisions of the Act and the

regulations, diligently ensuring the imparting of correct, relevant information to the client for clearance of

cargo or baggage. If there is non-compliance by a client, the CHA must bring it to the attention of the

deputy or assistant commissioner. This regulation requires the CHA to provide information to the

department.

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Fiscal accountability: The CHA must promptly pay the government all monies received from the client for

duties and taxes. Any money received from the client or from the government should be promptly and

fully accounted to the client.

Record-keeping: A CHA should not attempt to gather information from government records if they are not

provided by the appropriate officer. Access to records should not be denied, removed or concealed when

sought by the Commissioner. Records and accounts must be maintained as directed by the Deputy or

Assistant Commissioner, and available for inspection. All documents must be prepared in accordance with

rules and orders.

If the licence granted to a CHA is lost, the loss should be promptly reported to the Commissioner. If there

is failure in compliance with obligations under Regulation 14, the Commissioner may prohibit a person

from acting as a CHA.

Handling changes
Any change in partners or directors should be referred to the Commissioner. If there is a change in the

constitution of the firm or company, an application for temporary and regular licences should be made

within 30 days of the change. If there are no adverse findings against the firm or company, the

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Commissioner will grant a licence in the previous category held by the firm or company. In the meantime,

the firm may continue as a CHA with application to the Commissioner.

If the CHA is not a firm or company, the Commissioner will grant permission to continue as a CHA if

there is any change in the constitution of the concern. If the change is due to the death of a licensed CHA,

his legal heir (assisting him in his work as CHA under Regulation 20) may be granted a licence subject to

no adverse findings and passage of the examination. Changes in the qualified person acting on behalf of

the firm or company should be immediately provided to the Deputy or Assistant Commissioner.

Information technology

The National Informatics Centre (NIC) has developed basic software to create and file shipping bills

(Customs documents) on the Indian Customs website. The software is free to download with IceGate

(Indian Customs) registration

DATA ANALYSIS AND INTERPRETATION

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A Users can check the status of their submitted documents via logging on the ICEGATE website with

their registered ICEGATE ID and clicking on the link Document Tracking System. ... A- Users can send a

mail on icegatehelpdesk@icegate.gov.in for any support on filling of his documents on ICEGATE

USERS OF ICEGATE

• CUSTOMS HOUSE AGENTS (CHA)

• IEC holder / IEC Authorized Person

• Shipping Agent / Shipping Line / Airlines / Console Agent / Custodian

Importer & Exporter can avail facilities of self E-Filing of documentations, E-Payments and Real Time

Tracking and Query Status.

Advisory to all users for registering at ICEGATE

The User Registration module registers users on ICEGATE website – including Custom Brokers (License

Holder / F-card and G-card holders), IEC holders (and IEC authorized persons), Shipping Lines, Shipping

agents, Airlines, Air Agents, Console Agents etc.

Please note the following details about registering on ICEGATE, basis your user category:

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Custom House Agent (CHA) / Custom Broker

Every CHA can have two kinds of users – a Principal (F card holder) and their employees (G card holders).

Principal user is required to approve the registration of each of their employees, as child users. These

employee (child) users also need to be disabled by the principal user, as soon as the employee quits.

As an employee of a CHA, only the G card holder would be permitted to get registered since registrant

would be required to sign documents digitally.

After completing the registration process successfully, the users are advised to wait for the registration

request to get approved by the Department.

For License Holder / F-card holders:

In case of approval, an acknowledgement e-mail with their login credentials (User ID and Password) will

be sent to the registered email id

In case of rejection, reason for rejection will be sent to the registered email id

For G-card holders:

In case of approval, an acknowledgement e-mail with the login credentials (User ID and Password) will be

sent to the registered email id

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In case of rejection, reason for rejection will be sent to the registered email id

IEC holder / IEC Authorized Person

Two types of users can be created for every IEC holder on ICEGATE – a parent user (IEC holder / IEC

authorized person) and child users for their employees can be created.

After completing the registration process successfully, the users are advised to wait for the registration

request to get approved by the Department.

For IEC holder / IEC authorized person:

In case of approval, an acknowledgement e-mail with their login credentials (User ID and Password) will

be sent to the registered email id. In case of rejection, reason for rejection will be sent to the registered

email id.

For child users:

In case of approval, an acknowledgement e-mail with the login credentials (User ID and Password) will be

sent to the registered email id

In case of rejection, reason for rejection will be send to the registered email id

If the child user no longer works with the IEC holder, the parent user needs to disable the child user.

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ICEGATE will not be responsible for any consequences or legal action.

In case the IEC holder is also an Authorized Economic Operator (AEO), then the Deferred Payment of

Customs Duty scheme would be operational only through the parent ICEGATE ID.

Shipping Agent / Shipping Line / Airlines / Console Agent / Custodian

Every shipping agent can have two kinds of users – a parent user (shipping agent / shipping agent

authorized person) and child users (employees). The parent user is required to approve the registration of

each their employees, as child users.

After completing the registration process successfully, the users are advised to wait for the registration

request to get approved by the Department.

For shipping agent / shipping agent authorized person:

In case of approval, an acknowledgement e-mail with their login credentials (User ID and Password) will

be sent to the registered email id.

In case of rejection, reason for rejection will be send to the registered email id.
For child users:

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In case of approval, an acknowledgement e-mail with the login credentials (User ID and Password) will be

sent to the registered email id. In case of rejection, reason for rejection will be sent to the registered email

id.

These employee (child) users need to be disabled, by the Principal user, as soon as the employee quits.

Custodian

Custodians are allowed to have only one user on ICEGATE

After completing the registration process successfully, the users are advised to wait for the registration

request to get approved by the Department

In case of approval / rejection of the new user, an e-mail notification is sent to the email address used at the

time of registration

In case of approval, the email contains the user’s login credentials (User ID and Password)

In case of rejection, reason for rejection is shared in the sent email

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While registering on ICEGATE for any user role / type, please be mindful of the following:

Any entity registering on ICEGATE website can register with only one F-card holder / parent user even

though the entity may have more than one F card holder / parent user whose name is endorsed on the

Custom Broker license. All other users need to be registered as child users for the same F-card user /

parent user

The registration process keeps a check on impersonation and repudiation etc. The principal / parent user is

given access at the application level with proper role mapping, enabling them to approve or to disable their

child user(s)

In case the email ID is already registered on ICEGATE, please check the user ID created against the same,

within your organization

At the time of registration, particulars of the registrant and a soft copy of the PAN card are necessary. The

particulars are verified online from PAN database of the Income Tax department

Please ensure that the name used while registering on ICEGATE is the same as the name mentioned on the

PAN. The user is also required to upload a copy of PAN.

Same PAN can be used by the user to register under different user roles (Shipping Agent / Shipping Line /

Custom Broker / Custodian / Console / Airline)

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The ICES registration number entered while registering, fetches data from the ICES directories and is

displayed for verification. Once the registrant affirms their data, further process of data capturing is

initiated.

In case any rectification is required in the existing ICES data, the registrant needs to approach the

respective Directory Manager or Policy branch, as the case may be

All the users are required to use their Digital Signature token (Class III Individual Type), plugged into their

systems before starting the registration process. It is mandatory for all the users to upload their

Digital Signature Certificate (DSC) at the time of registration

While uploading the DSC certificate, if ‘PKI applet error’ is received, please verify the java setup on your

local machines. The local machine requires to have Java version 1.8 or higher to support this activity. For

further details, please refer to the detailed guide ‘Java Setup for DSC’ in Downloads on ICEGATE website

(https://www.icegate.gov.in/Download/JavaSetupForDSC.pdf)

In case DSC upload is unsuccessful and the ‘Class not found’ error is received, please contact your

respective DSC vendor

Documentation requirements for different users is different. The following table lists the type of

documents necessary for each user at the time of registration. Please note that all documents uploaded need

to be self attested:

Page 36 of
Page 37 of
 Scanned Copy Scanned Copy Scanned Copy of Authorizatio

of of License / Driving license, n Letter /

Scanned Copy
Authorization Permit (.pdf) Passport, Aadhaar
of Order of
Users / Documents
Letter (.pdf) Card,
Authorization Commissione

Voter ID card (.pdf) to F Card / G r

Card

F-card Custom Broker/ √ √ √

CHA (Firm)

F-card Custom Broker/ √ √

CHA (Individual)

F-card/G-card Custom √ √ √

Broker/ CHA

(Employee)

IEC Holder √ √

IEC Authorized √ √

Person

Shipping Lines √ √ √

Shipping agents √ √ √

Airlines √ √ √
Custodian √ √ √
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Console Agents √ √

Others √ √ √

Only the following ID proofs will be considered valid:

• Aadhaar card (preferably)

• Driving license

• Passport

• Voter ID card

The users are therefore advised to share any one the above mentioned ID proofs. It is advised to prefer Aadhaar

Card so as to keep possibility of e-sign in alive in future.

Once registered, ICES data cannot be changed in the system. To facilitate any update, please deactivate the

current user and re-register on ICEGATE with the updated details ICEGATE will not be responsible if

users are unable to file documents, in case the user license has been suspended or revoked.

eSANCHIT – Step-by-Step Procedure for electronic document upload

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The following steps are the step by step procedures involved in uploading of the supporting documents: Step

1: Prepare Supporting Documents in digital format

Before uploading the document, the importer, exporter, Customs broker (referred to hereinafter as ‘submitter’)

may ensure that the document is rendered into a PDF/A format (ISO 19005-2). The submitter may choose from

among the following courses of action:

The submitter may obtain the document in a PDF/A format (ISO 19005-2) directly from the document issuer.

For example, the submitter may ask the document issuer (seller, exporter, airlines, shipping lines, regulatory

authority etc) to render their documents in the PDF at source and deliver them to the submitter electronically,

instead of sending a facsimile or a scanned image of the document. This should be possible if the document

issuer uses computers to generate documents.

In case the document issuer does not use automated systems/computers or for some other reason, it is not

possible to generate PDF copies at source, and the submitter receives the documents in hardcopy or as a

facsimile, the submitter may scan the document into a PDF format. In scanning the document, the following

qualitative aspects may be kept in mind:

The resolution should not be less than 200 dpi in black and white

The file size should not be more than 75 kb/ A4 size page.

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Ideally, one document (e.g. and invoice or a packing list) shall be rendered into one pdf file regardless of the

number of pages in the document. Given that the maximum permissible file-size is 1 MB, this would allow the

submitter to upload a supporting document which is up to 13 pages long. If a supporting document is more than

1MB in volume, then it should be split and uploaded as two or more documents.
No stapler marks or punch-hole marks on the document should be visible. If stapler marks or punch-hole marks

are unavoidable, the submitter shall ensure that these marks are on the margins and are at a clear distance away

from the content in the document.

While scanning the document, it must be ensured that the document was not placed in the scanner with a fold. For

scanners with a roller feed, it should be ensured that there are no folds in the image as result of the action of the

rollers.

The content in the document should not be skewed in any direction.

There should be no dark patches either in the source document or in the image.

The letters should not be elongated or compressed (as it happens during facsimile transmission).

If a document is stapled or bound in some way, before scanning, the individual pages should be being taken

apart and then fed into the scanner sequentially in pages.

Whether the submitter renders supporting documents into pdf using either using ii. (a) or ii(b) above, he/she

must preview the document in order to ensure that the document is clear and legible. In order to ensure that the

document is legible and of proper quality, the submitter may also use automatic image quality assessment tools.

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The submitter should digitally sign the PDF document using the digital signature certificate registered on

ICEGATE. In doing so, the submitter acknowledges that the document is legible and authentic. Taking note of

the content and the context of the supporting document, the submitter should save the file with a distinct name

and save the file in a location that is readily accessed. It is advisable for the submitter to link this information to

his own electronic system of records (RES package), which used to prepare the electronic files for submission

to

ICEGATE.
Step 2: ICEGATE Login

Only those who are registered on ICEGATE along with a digital signature certificate can upload supporting

documents in electronic format.

Step 3: Click on eSANCHIT

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Thereafter, the submitter should click on the link e-SANCHIT (https://icegate.gov.in/dms) on ICEGATE. This

link will take the submitter to a web page where the documents can be uploaded. Kindly note that without

logging in, a user will not be allowed to access e- Sanchit.

Step 4: Click on the Upload Document Button.

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At a time, the user can upload a batch of 5 documents.

If the document fails to meet the restriction on document size and type, the system will display appropriate

comments instantly against each file indicating the exact error.

Step 5: Click Validate Document button to validate the digital signature against each document.

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The user must verify the file in respect of digital signature affixed on it by pressing the ‘validate’ button on the

screen. Without completing the validation, the document will not be ready for the next action i.e., “Submit

Document”

Step 6: Using the dropdown, select the document type you wish to upload. Make sure that the document is in

pdf and should be digitally signed by the same user who has logged in.

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Once the documents are uploaded, the system will prompt the user to select the document type from a dropdown

list. This list is also published on ICEGATE as part of the ‘Single Window Code-map Directory’.

Step 7: Click “submit document” button to submit up to 5 documents

The submitter should click the submit document button.

If the document fails to meet the restriction on document size and type, the system will display appropriate

comments instantly against each file indicating the exact error. The submitter should rectify the error and

upload the file again.

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If the file upload is successful, the system will generate a unique number called IRN, which will be displayed on

the web-page and also transmitted to the user as a structured message from ICEGATE. The submitter may

incorporate the data including the filename and the unique number in his system of records (eg RES package).

ICEGATE users can also view the documents uploaded by them.

Step 8: Press OK to acknowledge the disclaimer

Response by eSANCHIT

Result 1: System will generate the IRN and DRN, which can be viewed online.

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Result 2: System will also generate a structured flat file containing IRN and DRN, which can be integrated into

RES package

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Step 9: Using uploaded documents in Bills of Entry / Shipping Bills

The submitter should upload all the required supporting documents as per procedure described above in relation

to a transaction e.g. a Bill of Entry or a Shipping Bill. The list of mandatory documents for export/ import of

th
goods from/ into India have already been notified by DGFT notification No. 08/2015-2020 dated 4 June 2015

i.e.

Bill of Lading / Airway Bill

Commercial Invoice

Packing List / OR as per CBEC Circular No. 01/15-Customs dated 12/01/2015. Commercial Invoice cum

Packing List would also be accepted.

Other than above, supporting documents to be uploaded will depend on the commodity imported, notification

claimed and Participating Government Agency (PGA) requirement. The Compulsory Compliance Requirements

provide information on the Supporting documents required for different items in the Bill of Entry, which may

be viewed online.

These uploaded documents may be linked to the corresponding Bill of Entry or the Shipping Bill by filling out

the mandatory details in the appropriate section in the electronic format in the Bill of Entry or Shipping Bill in

the separate section titled <Table> Supporting Docs. The following fields are required to be filed in the

<Table> Supporting Docs of the Integrated Declaration:

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Invoice serial number and Item sr. no: If the supporting document pertains to all items in an invoice, then the

invoice and item no. will both be indicated as “0”. But if an invoice and item pertains to a particular item, then

the invoice serial number and item serial number may be indicated.

Unique Number – For this use the IRN (Image Reference Number): The Customs Broker/Importer receives this

unique number when he digitally signs a digital copy of a document in pdf format (scanned from hardcopy or

otherwise rendered into pdf) and submits the supporting document to ICEGATE. This will be auto-generated by

when ICEGATE completes the upload process.

Document type code: All supporting documents which are submitted by Customs Broker / importer have a

document type. Use the appropriate code for the document type code for the document referenced by the unique

number. Directory is already provided on ICEGATE website under Single Window tab.

Document issuing party code: Optional field. Presently, this field is not validated.

Document issuing party name and address: Name and address of the party that has issued the document.

Document reference number: This is the actual number of the document use by the document issuer.

If the supporting document is a license, then the Document Referene Number would be the License Number.

If the supporting document is a Permit, then please enter the Permit Number in this field.

If the supporting document is a Certificate – eg Certificate of Analysis or Certificate of Origin, please enter the

Certificate Number.

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If it the supporting document is the invoice or Bill of Lading, this number, please use the same number that was

quoted elsewhere in the Bill of Entry.

This Number is not to be confused with the DRN, which is received from ICEGATE in response to the

uploading of a document.

Place of issue: Name of the city/town where the Document was issued.

Document issue date. This is the document date – for example, if the document is a Certificate, please mention

the date of issue of the Certificate

Document expiry date. - In case, the document has a validity date, please mention that date. In case there is no

validity or expiry mentioned in the document, you may leave this field blank.

Document beneficiary party name and address: Name and address of the party in whose name document is

issued. Usually the document is issued in the name of importer. However, if the document is issued in the name

of a party other than importer, name and address of that party needs to be mentioned.

Document beneficiary party code: If the document type is a registration, license, certificate or a permit, indicate

the IE Code of the party which is shown as the beneficiary of this document.

Once the Bill of Entry is submitted into the system, Customs Officers or officers of Participating Government

Agencies who wish to view the Bill of entry or Shipping Bill along with the supporting documents, can do so

using appropriate screens in the Indian Customs EDI System.

Please note that the above data fields, some of which are optional, are crucial for the PGAs. If the

importer/Broker keeps these data fields blank, they may be asked by the PGAs to provide this data into the

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Table through an amendment. In particular, please take note of the requirements specified in the following table

where data from application forms of PGAs will be obtained in the <Table>Supporting Document of the

Integrated Declaration in the following manner:

S.No. PGA Form Name Filed Name in the Agency Form Field Name in

<Table>Supporting Document

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1. “ADC Sheet for Import License No. & Valid Date,

import of Drugs”
(Form-10/ Form-11/
by
Adv.Lic.No/ 100% EOU) Number,

Drug Controller Any Permission/ Endorsement

letter,
No. & 14, 15 & 22
Import
License

Date,
in case of

RC no.

Cosmetics,

Label

2. “ADC Sheet for Validity of Import

Permission
import of Drugs” by 25

Drug Controller

3. “Application for Sanitary Import Permit,

import of Import Export License,

Health Certificate, 14, 15 & 22

Livestock and
Fumigation Certificate/ Test
Livestock
products” Report,

& by
Laboratory Letter Report,
AQCS
Plant Registration Copy

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4. “Application for Health Certificate,

import of Pet
Ticket (if any),

Animals, Aquatic/ SIP/ DGFT License No. (if any), 14, 15 & 22
Other Animals,
Laboratory Letter Report
Birds & Poultry

(Chicks)” by

AQCS
5. “Application for CITES Exemption/ Export/

ReExport permit/ LPC Number &

Pre/ Post

Shipment Date 14, 15 & 22

Examination” by

WCCB

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6. “Form PQ 15 – Import Permit,

Application
Phytosanitary Certificate,

for Fumigation Certificate (if any),

quarantine
Certificate of Origin (if 14, 15 & 22
inspection and
any)
clearance of

Imported Plants/

Plant Products

and (Others)
50

Cargo” by PQIS

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7. “Form PQ 15 – Date of Permit,
Import Phytosanitary
Application
Date of
for
Certificate
quarantine
24
inspection and

clearance of

Imported Plants/

Plant Products

and (Others)

Cargo” by PQIS
8. “Import NOC Certificate of Analysis
form
application” by Country of Origin,

FSSAI Country of
Origin 14, 15 & 22
Certificate,

Specimen copy of label.

FSSAI License No.

51

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 FINDING AND CONCLUSION

• ICEGATE portal facilitates e-filing of both the import or export declarations.

• This also allows the Customs to respond to exporters and importers after assessing

shipping bills and bills of entry.

• The portal provides a sort of guarantee that the declarations filed through the digital

signatures allocated by Customs, acting as a Certification Authority under the IT Act,

2000 will be not be made invalid.

The introduction of ICEGATE (Indian Customs and Central Excise Electronic Commerce

Gateway) has helped Customs department in becoming more accountable and has helped the

department in minimizing the complaints on delay in delivery of consignments from both, the

exporters and importers.

Customs duites levied by central government import of goods into and export of goods from

India

Customs house agents have become an extended or of customs departments

It made the export and import clearance more easier than before

Procedure neutrally varies depending on mode of import or export

To promote and protect the interest of exporters and importers

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Coastal logistics have to be improved in a country like India who is having a huge coastal area

connecting various world

52

SUGGESTIONS

Most Frequent Errors in the file formats for ICEGATE Users

a) Tags Not in Order.

Please refer Message format guidelines for correct order

b) Wrong Separators

Please refer Message format guidelines for correct Separators

c) Mandatory Field Missing.

Please refer Message format guidelines for Mandatory Fields

d) Filing in ICES 1.0 Format.

Need to follow ICES 1.5 message format.

e) Space in End of Record in File

Please refer Message format guidelines for Mandatory Fields

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f) Header Format not up to the mark.

Please refer Message format guidelines for correct format

g) Registration not done for location.

Need to send request from User registered mail ID with Location code and message type on

registration@icegate.gov.in

h) Missing Sender Id
53 Need to mention in sender id in jobs as per guidelines

i) Extra Field in Record.

Need to fill required Fields only in job as per guidelines

j) Date Format Mismatch

Date format should be as per message guidelines

k) Conditional Valid Values from the List

The only accepted values are as per the list of values contained in the message guidelines

acceptable to the ICES 1.5 software and the file should be modified to contain values as

per message guidelines

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 54

BIBILIOGRAPHY

BOOK CONSULTED

Customs Act 1962

WEBSITE CONSLUTED

Icegate website: https://www.icegate.gov.in/

Central board of indirect taxes & customs: https://www.cbic.gov.in/

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