UNIT 1

Starting Exports / Steps in setting up an Export House / Getting ready for exports
In order to start export business, following steps may be followed: -
1. Establishing an organization: -
• The first step in getting ready for export is to establish a formal business structure, such as a sole
proprietorship, partnership, or company.
• However apart from the type of the firm, the important activity in this is to assign a name, sign,
symbol or a logo etc.
2. Opening a bank account: -
• The next step in getting ready for export is to open a current bank account specifically for your
business transactions.
• And a certificate from the Bank is needed for application with Director General Foreign Trade
(DGFT) to get the Importer Exporter Code (I.E. Code).
3. Getting Permanent Account Number (PAN):-
• The next step in getting ready for export is to get a PAN number for their business organization.
• It is necessary for every importer and exporter to obtain a PAN from the Income Tax Department.
4. Application for Import-Export Code (I.E. Code):-
• The IEC is a alpha numeric unique code required for exporting or importing goods and services.
• Director General Foreign Trade (DGFT) is the authority which assigns the I.E. Code to an Export
House, this can be done by applying on a prescribed format or online along with the required fee,
necessary documents required are- PAN, Certificate from Bank, address proof and bank details.
5. RCMC (Registration cum Membership Certificate):-
• In order to avail permission to import, export, or other benefits under the Foreign Trade Policy,
an export organization are required to obtain RCMC with the relevant Export Promotion
Council, Commodity Board, or Authority.
6. Selection of product:- The next step in getting ready for export is to select a particular product for
export. Exporters can sell almost anything they want, except for items that are banned, illegal or
restricted.
However, choosing the right product is very important for the ultimate success of the organisation.
7. Selection of Markets:- The next step in getting ready for export is to select a country for export. In
simple words the entire world is open for an exporter to export their product. Identify the countries
where your product is in demand.
8. Targeting Buyers:- The most important and challenging part of getting ready for export is the hunting
of the buyers/targeting buyers.
Participation in trade fairs, buyer seller meetings, exhibitions, B2B portals, web browsing are an
effective tool to find buyers.
9. Sampling:- There are various schemes by the promotional authorities with which sampling can be
done freely, however in case if an exporter is not willing to send the samples for free then they may
charge the buyer for the samples provided.
10. Export Pricing:- Export pricing is the second most important part of getting ready for exports which
helps in overall success of a business organisation in international markets.
The term Pricing is the process of sum of all associated cost for producing and making a product or
a service ready for sale.

1
11. Negotiation (If Required):- A buyer in international business may be treated as a buyer for life time.
Hence terms and conditions of a consignment for sale can be taken as matter where both parties
should have a win-win situation for both the parties and should not exceed beyond the limits of the
buyers.
12. Risk Coverage:- The another most important and challenging part of getting ready for export is risk.
International trade involves payment risks due to buyer/ Country insolvency. These risks can be
covered by an appropriate Policy i.e., Export Credit Guarantee Corporation of India (ECGC).

Processing of an Export Order:

Processing of an Export Order consists of following:-
1. Confirmation of Order: When an export order is received, it should be examined carefully for
details like the items, specifications, payment conditions, packaging, delivery schedule, etc. After
ensuring everything is ok in the order, the exporter can confirm the order and sign a formal
agreement with the buyer.
2. Procurement of Goods: After confirmation of the export order. The next step may be taken for the
procurement/manufacture of the goods for export. This involves purchasing raw materials,
manufacturing products, or finding items from suppliers.
3. Quality Control: The exporter ensures that the goods meet the required quality standards set by
the buyer or international countries. This may include inspections, testing, or certifications to
avoid any issues upon delivery.
4. Export Financing (If needed): Various pre-shipment and post-shipment financing options can be
used by an Exporter, buy sometimes Exporter may not need Export Financing at all.
The exporter arranges funds to cover costs like manufacturing, transportation, and
documentation. This could include loans or financial support from banks.
5. Labelling, Packaging, Packing and Marking:
Labelling refers to informative part of packaging. Through label important information is given to
customer.
Packaging refers to designing of packets, wrappers, cartons, etc. which are used to pack the
product.
Marking provides identification and information of goods packed. Such as address, package
number, port and place of destination, weight, handling instructions, etc.
6. Insurance Formalities and Coverage: The exporter must insure the goods to cover the risks like
damage, theft, or loss of goods during transit.
Some common types of insurance are marine, air cargo, or transit insurance, depending on the
transportation mode.
7. Arrangement of Local and Overseas Transportation: The exporter arranges transportation for
moving goods from their location to the buyer. This includes local transportation to the port or
airport and overseas transportation to the destination country. This may involve trucks, ships, or
planes.
8. Delivery: The goods are delivered to the buyer or their representative at the agreed location within
the specified time.
It is the important feature of export and in this the exporter must follow the delivery schedule.
Planning should be there to makes sure nothing slows down or gets in the way of fast and efficient
delivery.
9. Customs Procedures: The exporter must follow government rules to get the approval for exporting
goods.
This includes submitting necessary documents, paying duties or taxes and getting clearance for
exporting goods out of the country

2
10. Customs House Agents: Customs House Agents helps exporters to handle complex customs
formalities, such as- preparing documents, paying duties and taxes, and coordinating with
customs officials to ensure smooth clearance.
Exporters may avail services of Customs House Agents which is licensed by the Commissioner of
Customs.
11. Documentation: Foreign Trade Policy 2015-2020 describes the following documents are
mandatory to import and export.
• Bill of Lading/ Airway bill
• Commercial invoice cum packing list
• Shipping bill/ bill of export/ bill of entry (for imports)
(Other documents like certificate of origin, inspection certificate etc. may be required as per the
case.)
12. Submission of documents to Bank: The next step is to submit all the necessary documents to
the bank for processing payments. This may include: -
• Letter of Credit
• Bill of Exchange
• Invoice
• Airway Bill/Bill of Lading
• Inspection Certificate
• Packing List
• Shipping documents
Any other documents required by the buyer.

Export Contract
• An export contract is a formal agreement between the exporter (seller) and the importer
(buyer) to trade goods or services internationally.
• It contains the terms and conditions of the trade to ensure that both the parties understand
their rights and obligations.
• In simple words, Export Contract is a legal document/agreement between the exporter and
the importer to trade goods outside the country.
• An export contract is prepared according to the rules of the following Act:-
➢ Foreign Trade Development and Regulation act, 1992.
➢ Foreign Exchange Management Act, 1999.
➢ Pre-shipment Inspection and Quality Control Act, 1963.
➢ International Trade and Commercial Practice.
Key Elements of an Export Contract
1. Parties description: The most important element of an export contract is that it must clearly
identify the exporter (seller) and importer (buyer) with full details like names, addresses, and
contact information.
2. Description of Goods/Services: Export contract must provide a detailed description of the
goods or services that are being traded, including specifications, quality standards, quantity,
and packaging details, etc.
3. Quality: Quality means the parametric definition about the weight, volume and colour etc., that
should be clearly mentioned in export contract.
4. Price per unit: The price per unit of goods/services must be clearly mentioned in export
contract.

3
5. Total value/price: The combined value of the cargo/consignment means the total value. The
total price of goods/services must be clearly mentioned in export contract.
In simple words, total value means the total quantity of goods multiplied by the total price.
6. Currency: The currency in which the payment will be made (e.g., USD, Euro, INR). must be
clearly mentioned in the export contract.
7. Packaging: Packaging refers to designing of packets, wrappers, cartons, etc. which are used to
pack the product. Good packaging protects goods from damage.
8. Marking and Labelling: Labelling refers to informative part of packaging. Through label
important information is given to customer.
Marking provides identification and information of goods packed. Such as address, package
number, port and place of destination, weight, handling instructions, etc. must be clearly
mentioned in the export contract.
9. Mode of Transportation: From the place of production to the place of consumption the mode
of transportation should be clearly mentioned in the export contract. (e.g., seaways, airways,
roadways, or railways).
10. Delivery: Delivery defines
• The delivery timeline (e.g., delivery within 30 days),
• Place of delivery (e.g., port of loading and unloading),
• Conditions of delivery (partial shipments, delays, etc.).
Clear delivery terms should be mentioned clearly in the export contract.
11. Insurance: This element specifies who is responsible for insuring the goods during the transit.
It may include:
• Type of insurance (marine, air cargo, etc.).
• Coverage details (e.g., covering damage, theft, or loss).
12. Mode of Payment: This section specifies how the payment will be made, including:
• Methods like Letter of Credit (L/C), bank transfer, or open account.
• Payment terms (e.g., advance payment, on delivery, or credit terms).
• Payment milestones for large contracts.
13. Inspection: This section specifies the pre-shipment or post-shipment inspection to ensure
goods meet quality and quantity standards which should be mentioned in the export contract.
14. Warranty: This defines warranty of the product and services in case of defective goods or
services which should be mentioned in the export contract.
It includes:
• The duration of the warranty.
• What is covered under warranty (repair, replacement, refund).
• Conditions under which the warranty applies.
15. Settlement of Disputes: This section outlines the mechanism for resolving disputes which
should be mentioned in the export contract.
It includes:
• The governing law (e.g., Indian law, international law).
• Dispute resolution methods (arbitration, mediation, court).
• Location of dispute resolution (e.g., a neutral country).

4
 Export Marketing
DEFINITIONS OF EXPORT MARKETING:
According to B. S. Rathor “Export marketing includes the management of marketing activities for
products across the national boundaries of a country”.
“Export marketing means marketing of goods and services beyond the national boundaries of a
country”.
MEANING OF EXPORT MARKETING:

• Export Marketing means exporting goods to the other countries of the world.
• In Export Marketing, goods are sent to abroad as per the procedures framed by the exporting country
as well as by the importing country.
• Export Marketing is a practice of selling goods & services produced or distributed by the companies
in foreign market.
FEATURES OF EXPORT MARKETING:
1. It is a lengthy process: Export marketing is not a quick activity, it takes a lot of time.
(The business firm have to undergo through a lot procedures and formalities to meet the needs of
the government and custom authorities of the importing and exporting countries.)
First, the business has to find foreign buyers who are interested in their products. Then, there are
steps like negotiating prices, preparing the products, and arranging shipping.
On top of this, businesses need to handle legal formalities like getting export licenses, completing
paperwork, and following rules in both the home and destination countries.
2. Large-Scale Operations: The marketer must utilize the full capacity of the firm and focus on bulk
production for the purpose of exports. Large-scale production reduces the cost of production
because of economies of scale, making products more competitive in international markets.
3. Trade Barriers and Restrictions: Every country has rules and regulations to control the export and
import of goods. These include tariffs (taxes on imports and exports), quotas (limits on the quantity
of goods), and non-tariff barriers (like strict quality standards or certifications).
Such barriers can make exporting more expensive and complicated.
4. Production in Home Country: Export marketing starts with the production of goods in the home
country. Then, the products are sent to international markets for sale. This means that businesses
must focus on creating high-quality goods that meet the expectations of foreign customers.
5. Intense Competition: The global market is very competitive. Intense competition is one of the
most important features of export marketing this is so because on one hand the exporters have to
deal with the local businesses in the foreign market and on another hand they have to deal with
other international players.
Need / Importance / Advantages of Export Marketing:
1. Earning foreign exchange – Exports help a country earn foreign money, which is needed to buy
things like machinery, raw materials, spare parts, and advanced technology from other countries.
2. International Relations - Most countries around the world want to grow and succeed in a
peaceful environment. One way to build good political and cultural connections with other
countries is through international trade.
3. Balance of payment - Large scale exports solve the balance of payments problem by improving
a country's financial position. The deficit in the balance of trade and balance of payments can be
removed through large-scale export.

5
 4. Employment Opportunities - Export trade calls for more production. More production opens the
doors for more employment. Opportunities, not only in export sector but also in allied sector like
banking, insurance etc.
5. Employment Opportunities – Exporting more goods leads to increased production, which
creates more job opportunities. Opportunities, not only in export sector but also in other sector
like banking, insurance etc.
6. Optimum Utilization of Resources – The resources can be used efficiently. For example, Gulf
countries produce more oil and petroleum products than they need. So, they export the extra
production, making the best use of their resources.

Challenges of Export Marketing

1. Huge setup cost requirements
2. Getting genuine market data is difficult and time consuming
3. Cultural differences
4. Existence of exchange rate risk and credit risk
5. Difficult to enter new markets
6. Improper selection of product for export
7. High tariff and non-tariff charges
8. Too much paperwork & legal formalities

Export Planning
→ It is the process of deciding:
• What to export: Identifying the product or service that will be sold abroad.
• Where to export: Choosing the right country or market for your product.
• How to export: Selecting the best method of transporting goods to other countries.
→ Export planning is one of the most important & crucial step in the export-import process. It ensures
that goods are exported smoothly, legally, and profitably.
→ Export planning refers to the preparation and strategy-making process that a company undertakes
before exporting goods to another country.
→ It includes –
• Scanning the world market,
• identifying the market,
• planning for the product,
• product standardization,
• packing,
• business communication and,
• advertising and promotion.
Process of Export Planning
1. Scanning the World Market:
→ The first step in export planning starts with understanding the global market. This involves
researching different countries and their economic, political, and cultural environments to
identify potential opportunities.
→ Companies analyse - trends, demand for products, competition, trade regulations, and
consumer preferences. This helps them to decide where their products or services might be
successful.

6
2. Identifying the Market:
→ After scanning the world market, the next step in export planning is to find out which countries
or regions will be suited best for your product.
→ This involves researching factors like demand for your product, local preferences, competition,
and economic conditions, etc.
→ For example, if you are exporting spices food, you would focus on countries with a high demand
for such products. Moreover, it is important to know the trade policies, tariffs, and restrictions in
potential markets.
→ This step ensures you to focus on markets where your product is most likely to get succeed.
3. Planning for the Product:
→ After identifying the market, the export will go for the product planning,
→ This means planning things like design of the product, size, packaging, and evaluating customer
preferences and cultural factors.
→ For example, if you are exporting cloths, the styles and sizes should match the preferences of
the target audience. You should also ensure that your product meets the legal and quality
standards of the destination country.
→ Proper planning ensures that your product is not just available but also desirable in the chosen
market.
4. Product Standardization:
→ Product standardization ensures that the exported goods meet the required quality and safety
standards in the target market.
→ Under standardization, factors such as the product's size, specifications, taste, quality, and
other features are standardized to ensure consistency.
→ Standardization enhances the product's credibility and acceptance in the global market.
5. Packing:
→ Packaging is an important part of exporting, as it protects the product during shipping and
makes it attractive to consumers.
→ Exporters must design packaging that can handle the challenges of international transport, like
long distances, handling, and different weather conditions.
→ It may also need to include specific labels, instructions, or language translations.
→ Good packaging not only keeps the product safe but also improves the brand's image and
makes it easier to sell.
6. Business Communication:
→ Effective business communication is the key to build strong relationships with the international
buyers, suppliers, and partners.
→ Miscommunication can lead to misunderstandings and loss of trust, so businesses should
make sure their messages are clear and respectful in terms of cultural differences.
→ Good communication builds a strong base for long-term partnerships.
7. Advertising and Promotion:
→ To survive in a new market, businesses need to create awareness and generate demand for
their products through advertising and promotion.
→ This means using different marketing strategies like online ads, sales promotion, personal
selling, social media posts, print ads, or joining trade fairs etc.
→ Effective promotion techniques creates awareness and establishes the product’s presence in
the new market.

7
 INCO Terms

→ INCO Terms, stands for International Commercial Terms, are a set of standardized rules created by
the International Chamber of Commerce (ICC). These terms are a set of rules that define roles &
responsibilities between buyers and sellers in international trade.
→ They simplify global transactions by clarifying who is responsible for various tasks, costs, risks, and
responsibilities involved in delivering goods from seller to buyer.
Why Are Inco terms Important?
International trade involves multiple parties across different countries, each with their own laws,
languages, and business practices. This can cause confusion, disagreements and disputes. Incoterms
help by:
1. Clarifying Responsibilities: This clearly states that who is responsible for various tasks like
shipping, insurance, and customs clearance.
2. Clarifies Costs: Determines who will bear costs like shipping fees, insurance, and tariffs.
3. Minimizes Risks: This shows when the risk of loss or damage to goods shifts from the seller to
the buyer.
4. Simplifying Contracts: Using Inco terms in contracts ensures that both parties have a clear
understanding of their obligations without detailed explanations.
Structure of INCOTERMS
INCOTERMS are divided into two categories based on the mode of transport:
1. For Any Mode of Transport: e.g.,
• EXW (Ex Works),
• FCA (Free Carrier),
• CPT (Carriage Paid To),
• CIP (Carriage and Insurance Paid To),
• DAP (Delivered at Place),
• DPU (Delivered at Place Unloaded),
• DDP (Delivered Duty Paid).
2. For Sea and Inland Waterway Transport Only: e.g.,
• FAS (Free Alongside Ship),
• FOB (Free on Board),
• CFR (Cost and Freight),
• CIF (Cost, Insurance, and Freight).
Categories of Incoterms
Incoterms are divided into two main groups based on the mode of transportation:
1. Rules for Any Mode of Transport: These can be used anyway of how goods are shipped (by air,
sea, road, rail, or a combination).
2. Rules for Sea and Inland Waterway Transport: These are specific to marine and inland
waterway shipping.

8
 Grouping INCOTERMS: C, D, E, and F Terms
INCO TERMS are categorized into different groups based on the roles and responsibilities of buyers and
sellers.
A. Group C: Main Transport Paid by Seller:
In this group, the seller pays for the transportation, and the buyer handles the risk of loss or
damage after the shipment.
1. CFR (Cost and Freight):
• Seller’s Responsibility: Pays for shipping to the destination port.
• Buyer’s Role: the buyer takes responsibility for risk and cost once goods are loaded on
the ship.
2. CIF (Cost, Insurance, and Freight):
• Seller’s Responsibility: Similar to CFR, but the seller also covers insurance to the
destination port.
• Buyer’s Role: The buyer handles unloading and customs clearance.
3. CPT (Carriage Paid To):
• Seller's Responsibility: The seller pays for transportation to a specified destination.
• Buyer's Responsibility: the buyer handles risk as soon as the goods are handed to the first
carrier.
4. CIP (Carriage and Insurance Paid To):
• Seller’s Responsibility: Like CPT, but the seller also provides insurance up to the
destination.
• Buyer’s Responsibility: the buyer covers risk from the first carrier onward.

B. Group D: Maximum Seller Responsibility:

The seller bears the maximum responsibility by delivering goods to the destination.
1. DAP (Delivered at Place):
• Seller’s Responsibility: The seller covers all transportation costs and risks until the goods
reach the buyer's place.
• Buyer’s Role: The buyer manages unloading and customs clearance.
2. DPU (Delivered at Place Unloaded):
• Seller's Responsibility: Delivers and unloads goods at the buyer’s location.
• Buyer's Responsibility: Handles import clearance and final delivery.
3. DDP (Delivered Duty Paid):
• Seller’s Responsibility: the seller handles all the costs, risks, and duties until goods reach
the buyer’s location.
• Buyer’s Role: the buyer only has to receive the goods.

C. Group E: Minimum Seller Responsibility:

This group includes only one term, EXW (Ex Works), where the seller’s role is minimal.
• Seller's Responsibility: The seller’s responsibility is to make the goods available at their
location (or another agreed spot)
• Buyer's Responsibility: the buyer’s responsibility is to handle all the further transportation,
costs, and risks from pick-up to final destination.
• Example: The seller prepares goods at their warehouse, and the buyer arranges everything
else from pick-up to delivery.

9
D. Group F: Main Transport Paid by the buyer:
In these group, the seller delivers the goods to a specific point, and the buyer arranges and pays for the
main transportation:
• FCA (Free Carrier):
• Seller’s Responsibility: The seller delivers the goods to a location chosen by the buyer.
• Buyer’s Role: the buyer is responsible for handling costs and risks.
• FAS (Free Alongside Ship):
• Seller’s Responsibility: the seller places the goods along the side of the ship at the port.
• Buyer’s Role: The buyer is responsible for loading, shipping, and insurance.
• FOB (Free on Board):
• Seller’s Responsibility: the seller loads goods onto the ship.
• Buyer’s Role: the buyer’s responsibility is to handle the overall costs and risks once goods
are on board.

UNIT 2
Export Costing & Pricing, Export Documentation
→ Export costing and pricing, as well as export documentation, are essential aspects of
international trade and play a crucial role in the success of exporting goods or services to foreign
markets.
→ Let's break down each of these components
Export Costing and Pricing:
1. Costing:
• Determining the cost of your product of service in the line step.
• This includes not only the production or service delivery costs but also other expenses such
as packaging, shipping, insurance, customs duties, and taxes.
• Accurate costing is essential to ensure that you don’t sell at a loss.
2. Market Research:
• Understand your target market and its demand. analyse competitor’s pricing strategies and
the overall market conditions in the target country.
• This will help you choose a price that stands out and stays competitive.

3. Pricing Strategy: There different pricing strategies you can adopt:

→ Cost-Plus Pricing: Add a percentage to your production cost to decide the price.
→ Market-Based Pricing: Set the price based on what customers are ready to pay.
→ Penetration Pricing: Start with lower prices to quickly attract customers and gain market
share.
→ Skimming Pricing: Begin with high prices for a unique product, then reduce them over
time.
1. Currency Exchange:
• Consider how currency exchange rates can affect your pricing.
• You might need to change your prices from time to time to keep up with changes in exchange
rates.
2. Export Incentives and Subsidies:
• Find out if your government provides any benefits or support, like export incentives or
subsidies, to help lower your export expenses.

10
Export Documentation:
Export documentation refers to the process and principals involved in preparing the necessary
documents for exporting goods from one country to another. These documents ensure smooth
functioning of international trade by complying with legal, regulatory, and logistical requirements.
In simple terms, it's like the paperwork required for sending goods from one country to another but on
a much larger scale.
For example, you may need:
1. Invoices – to show the value of the goods.
2. Shipping Documents – like a bill of lading (transport receipt).
3. Customs Forms – to declare what's being sent.
4. Certificates – to prove quality, origin, or safety (like FDA approvals for food).
Classification of Export Documents
A. REGULATORY DOCUMENTS
1. Commercial Invoice:
→ This document contains the details of goods supplied by the exporter. The common contents
of this document are - names of buyers and sellers, quantity and price of product, date of
selling, etc.
→ This document is necessary for taking clearance from the Excise Commissioner, Custom
Authority, Export Inspection Agency, etc.
2. Packing List: This list contains date of packing, order number, corresponding invoice number, bill
of lading number, details of shipping, date of selling, details of goods in each pack, etc.
3. Bill of Lading: It is a very important transport document. It is issued by the shipping company when
the exporter submits Mate's Receipt.
The Bill of Lading is considered an important document due to the following reasons: -
• A Receipt of Goods: It is an acknowledgement given by the shipping company, whereby the
shipping company takes responsibility of giving delivery of goods in the importer's country.
• A Document of Title of Goods: The Bill of Lading is a document that proves who owns the goods.
The captain of the ship gives delivery to the importer in the importer's country only when he
receives a cору of the Bill of Lading because it acts as a proof of the title or ownership of goods.
4. Airway Bill: This document is the same as Bill of Lading with only difference that it is issued by
airway company and not by Shipping company. When goods are transported through airways then
instead of Bill of Lading the exporter gets Airway Bill.
5. Certificate of Inspection: This certificate is issued by the export inspection agency. This certifies
that export consignment has been inspected as per the Specification of Quality Control &
Inspection Act.
6. Bill Of Exchange: This is a document relating to the payment for the goods supplied. The exporter
draws a bill of exchange on the importer asking him to make payments to the specified bank.

B. AUXILIARY DOCUMENTS
3. Proforma Invoice: It is an offer made by the exporter to importer. In this, he specifies the details of
goods which he will be able to supply to importer. This document contains details like quantity,
price, quality of goods, etc.
4. Intimation of Inspection: This document is given by the exporter to Export Inspection Agency. This
is to inform that the agency has to send an inspector for inspection of goods to be exported.
5. Shipping Instructions: This document is prepared by the exporter for instructing the shipping
company about the goods to be exported in their ship.
11
6. Insurance Declaration: This document is prepared by the exporter who wants to take insurance
policy. In this document, he makes a declaration relating to insurance policy.
7. Shipping Order: This document is issued by the shipping company. It gives confirmation to the
exporter about the booking of space on the ship.

Terms of Payment
When exporting goods or services, choosing the right methods and terms of payment is essential to
ensure that you get paid for your products or services while also meeting the needs and expectations
of your international customers.
Following are the modes/terms of payment in international trade:
1. Cash Payment/Advance Payment
2. Open Account
3. Shipment of Consignment
4. Documentary Collection
5. Documentary Credit
1. Cash Payment/Advance Payment:
• It is a mode of payment in which the buyer makes the full payment before the goods are delivered.
This is usually requested by the sellers to reduce the risk of non-payment.
• The buyer pays the seller in advance, and once the payment is received, the seller delivers the
goods.
• It is a safer option for sellers but not for buyers, as they have to pay without seeing the goods.
2) Open Account:
• It is a mode of payment where the goods are shipped and delivered to the buyer before payment is
made. The buyer has an agreed period (e.g., 30, 60, or 90 days) to pay after receiving the goods.
• This is more favourable for buyers but unfavourable for sellers, as they deliver the goods without
receiving payment in advance.
3) Shipment of Consignment:
• This refers to the process of sending goods from the seller to the buyer, usually through a shipping
company.
• This method is more risky than an open account as another clause is added to the payment, which
is that the payment will be made only when the goods (consignment) is sold in the country of
import.
• In the export-import process, the seller arranges for the consignment (goods) to be delivered,
providing necessary documents (like invoices, packing lists, and shipping receipts) to confirm the
shipment.
5) Documentary Collection:
• In this method, the seller delivers the goods and then hands over the shipping documents to a bank.
The bank then forwards these documents to the buyer’s bank. The buyer can only receive the
documents, which are necessary to claim the goods, after making the payment.
• Documentary collection ensures that the buyer can only take possession of the goods only when
the payment is made by the buyer or the buyer accepts the consignment and promise to pay by a
certain date.
There are two types of documentary collections:
1) Documents against Payment
2) Documents against Acceptance

12
Documents against payment:
• In Documents Against Payment (D/P), the buyer must pay immediately to the bank in order to
receive the shipping documents (such as the bill of lading, invoice, and packing list) that allow
them to claim the goods.
• The bank then forwards these documents to the importer's bank, with instructions that the buyer
can only receive the documents if they pay the required amount.
• In this option, buyers don’t have a choice to promise to pay at a later day, in this process, the
bank ensures that the buyer has paid according to the invoice and bill of exchange, only then the
title of ownership will be transferred to the buyer for custom clearance.
• Since the payment is made in advance, this method offers more security to the seller, ensuring
they are paid before the buyer can access the goods.
Document against acceptance:
• D/A allows the buyer to receive the shipping documents before making the full payment.
• When the exporter sends the goods, they give the shipping documents to their bank, which then
forwards them to the buyer’s bank. In this situation, the buyer can agree to pay later by signing a
document like a promissory note or bill of exchange.
• Then, the buyer is allowed to clear the goods and take the possession of them.
• This method is more riskier for the seller because they have to trust that the buyer will pay by the
specified due date. If the buyer fails to make the payment, the seller may face challenges in
recovering the money.

6) Documentary Credit (Letter of Credit):

• In this method, the bank acts as a mediator between the buyer and the seller. The buyer's bank
issues a letter of credit (LC) that guarantees the seller to make the payment only if the seller fulfils
the conditions specified in the contract (like shipping the goods and submitting certain
documents).
• The LC provides security to both the parties. The buyer is assured that they will only pay when the
terms are met, while the seller is assured that they will receive the payment only when the required
documents are presented.

Types of LCs:
• Revocable LC: Can be amended or cancelled without notice to the seller.
• Irrevocable LC: Cannot be amended or cancelled without the agreement of both parties.
• Confirmed LC: Includes an additional confirmation from a second bank, typically located in the
seller's country, providing extra security to the seller.

Export Financing (Pre-Shipment and Post-Shipment Financing)

→ Export finance is a method to ensure that exporters have enough money to meet the working
capital requirements and other international transaction needs.
→ When businesses send goods to another country, they need export finance to cover the cost of
shipping the products from one country to another within a set budget.
Pre-Shipment financing:
→ Pre-shipment finance or packing credit means any loan or advance provided by the bank to the
exporter for financing the purchase, processing, manufacturing, packing of goods before the
shipment.
→ Pre-shipment finance is also referred to as "Packing Credit". It is provided by commercial
banks to the exporter before the shipment of goods. The main purpose of pre-shipment finance
is to meet the working capitals requirements of exporter.

13
Importance/ purpose / objective of pre-shipment finance:
• Pre-shipment finance provides financial support to exporters to cover costs like purchasing raw
materials, processing, and packaging goods for export.
• To purchase the raw materials and other inputs.
• To carry out manufacturing process for converting raw materials into finished goods.
• For storing goods and raw materials in warehouses.
• For processing, packing, marking, and labelling of goods.
• To shipping the products from one country to another.
• To meets the other financial costs of the business.
Types of pre-shipment finance
1. Packing Credit:
• This is a short-term loan provided by banks to exporters to meet their working capital needs before
the shipment of goods.
• The money can be used for purchasing raw materials, paying wages, and covering processing and
packaging costs.
• The loan is typically given against confirmed export orders or a letter of credit.
2. Advance Against Export Orders/Letters of Credit:
• This type of finance is provided when an exporter has a confirmed export order or a letter of credit
from the buyer.
• This type of financing ensures that they have enough funds to complete the order before receiving
payment from the buyer.
FEATURES:
2) Eligibility: Pre-shipment finance can be granted only to those exporters who produce a confirmed
export order and/or a letter of credit received against the export contract.
Indirect exporters which export through export houses and others can also obtain packing credit
provided.
3) Purpose: The pre-shipment finance is required by the exporter to meet the capital working
requirements before shipment of goods such as:
• Payment for raw materials,
• Payment of wages, etc.
4) Documentary Required: The pre-shipment finance can be granted against the following:
• Export order or contract.
• Letter of credit (if applicable).
• Projected cash flow statements.
• Shipping and customs documentation.
5) Amount of Packing Credit: The amount of pre-shipment finance depends on the amount of export
order and credit rating of the exporter by the bank. The bank may also consider the export incentives
receivable such as drawback (DBK).
6) Period of Packing Credit: It is normally granted for a period of 180 days. Further extension of 90
days can be provided. This means, a commercial bank can provide pre-shipment finance for a
period of maximum 270 days.
6. Rate of Interest: Packing credit is provided at a lower rate of interest as compared to other
borrowers. With effect from 1st July 2010, commercial banks must charge interest on packing credit
at the base rate or above the base rate and not below the base rate.
7. Loan Agreement: Before disbursement of loan, the bank requires the exporter to sign a formal loan
agreement. The loan agreement contains the terms and conditions relating to the loan.

14
Post-Shipment Financing:
→ Post shipment finance is provided to meet working capital requirements after the actual
shipment of goods. It bridges the financial gap between the date of shipment and actual receipt
of payment from international buyer.
→ Post shipment finance can be defined as funding or advance provided by a financer to an
exporter after goods are shipped and before the export earnings are received.
Importance/ purpose / objective of pre-shipment finance:
• Post-shipment finance helps exporters get funds after they ship goods but before they receive
payment from the buyer.
• It bridges the gap between shipping goods and receiving money, ensuring smooth cash flow for
the exporter.
• This finance allows exporters to cover costs like raw materials, labour, and transportation
without waiting for the buyer’s payment.
• It reduces financial pressure on exporters and helps them focus on fulfilling new orders.
• Post-shipment finance supports exporters in maintaining their creditworthiness and good
relationships with stakeholders.

Types of post-shipment finance

1. Export Bills Purchase/Discounting: When an exporter sends an (export bills) invoice to the buyer,
the bank can give them money immediately by purchasing or discounting the invoice, even before
the buyer pays.
2. Advance Against Goods on Consignment: If the exporter sends goods to a buyer without
immediate payment (like selling on approval), banks provide funds in advance to cover their costs.
3. Bill of Exchange Financing: Exporters can receive funds by drawing a bill of exchange (a written
order for payment) to the bank, even before the buyer makes the payment. The bank advances
money based on the value of the bill.
FEATURES:
1) Eligibility: This is available to exporters who have export documents in their name, verified by
customs.
2) Purpose: Post shipment finance provides working capital to the exporter from the date of
shipment of goods to the date of payment received. For example, post shipment credit can be
used to pay dues to Custom House Agent or other expenses after shipment of goods.
3) Documentary Evidence: This finance is provided against the evidence of shipping documents
that shows the actual shipment of goods, or other necessary evidence in case of deemed exports.
4) Forms of Post-shipment Finance: Post shipment finance can be provided in one of the following
forms:
(a) Export bills under a Letter of Credit (LC).
(b) Advance against Duty Drawback (DBK).
(c) Advance against bills under collection, etc.
5) Amount of Post-shipment Credit: The amount of post-shipment finance depends upon the
working capital requirements of the exporter after shipment of goods.
6) Period of Post-Shipment Finance: Typically, the loan is given for a short period of time i.e.,
generally 90 days, but commercial banks may offer an additional 90 days if needed.
7) Rate of Interest: : Post-shipment finance has a lower rate of interest, as compared to the rate of
interest charged for domestic or local parties.
With effect from 1st July 2010, commercial banks charge interest rate on post shipment credit at base
rate or above base rate of the bank.
15
8) Loan Agreement: Before disbursement of loan, the bank requires the exporter to sign a formal loan
agreement.

Type of risks
→ In the context of international trade and business, various types of risks can affect companies and
individuals engaged in cross-border transactions.
→ These risks can impact financial performance, operations, and overall business outcomes.
→ The most common types of risks associated with international trade and business are:
1. Market Risk:
• Currency Exchange Risk: Fluctuations in exchange rates can affect the value of international
transactions. A strengthening or weakening of a foreign currency can impact the cost of
imports and the revenue from exports.
• Market Volatility: Changes in foreign financial markets, stock exchanges, and commodity
prices can influence the profitability of international trade.
2. Credit Risk:
• Counterparty Risk: The risk that a foreign customer or partner may default on payments of
contractual obligations.
• Country Risk: The risk associated with the economic, political, and legal stability of the
foreign country where business is conducted. Factors such as political instability, changes in
government policies and legal disputes can contribute to country risk.
3. Operational Risk:
• Supply Chain Risk: Delays in the supply chain due to factors like transportation delays,
natural disasters, or geopolitical events can impact production and delivery schedules.
• Quality Control Risk: Ensuring consistent product quality when dealing with international
suppliers or manufacturers can be challenging, which might cause quality issues and harm
the company's reputation.
4. Compliance and Regulatory Risk:
• Trade Compliance: Not following import and export rules, such as paying customs duties or
obeying trade sanctions, can lead to legal trouble and financial fines.

• Foreign Regulations: Following foreign laws and rules, like product standards, labelling
requirements, and environmental regulations, is important to avoid problems like business
delays or fines.
5. Political Risk:
• Expropriation: The danger that a foreign government might take over your property or
investments, which can lead to significant financial losses.
• Political Instability: Unexpected political events, protests, or conflicts in another country can
interfere with your business and put safety at risk.
6. Legal Risk:
• Contractual Disputes: Differences in legal systems and interpretations can result in
disagreements or conflicts, which can be costly and time-consuming.
• Intellectual Property Risk: Protecting intellectual property rights, such as patents, trademarks,
and copyrights, is essential to prevent misuse and theft.
7. Financial Risk:
• Credit Risk: The risk of losing money if customers or business partners fail to pay what they owe.
16
 • Interest Rate Risk: Changes in interest rates can affect the cost of borrowing and financing for
international transactions.
8. Logistical Risk:
• Transportation Risk: Problems with international shipping, like delays, damage, or lost goods,
can impact delivery schedules and customer satisfaction.
• Customs and Import/Export Procedures: Delays or issues with customs checks and
import/export rules can slow down the movement of goods.
9. Cultural and Communication Risk:
• Language and Cultural Barriers: Misunderstandings or miscommunications due to language
differences and cultural norms can lead to problems in business and relationships.
10. Market Entry Risk:
• Entry Mode Risk: Deciding how to enter a foreign market (e.g., through exports, joint ventures,
or setting up your own business) carries its own set of risks and challenges.

Managing risks is very important for international businesses. To reduce these risks, businesses can
use strategies like assessing potential risks, using financial tools like hedging, getting insurance,
diversifying their investments, seeking legal advice, planning for unexpected situations, and carefully
checking potential partners and markets.
Cargo insurance: Contract, procedures and documentation for cargo loss claims

→ Cargo insurance helps protect goods and products from loss or damage while they are being
transported.
→ If something happens to the cargo during shipping, the person who is insured can file a claim to get
money back for the lost or damaged items.
→ The key elements to consider regarding cargo insurance contracts, procedures, and documentation
for cargo loss claims:
Cargo Insurance Contract:
1. Policy Terms and Conditions: Review the cargo insurance policy carefully to understand the terms
and conditions, including coverage limits, deductibles, and exceptions. Different policies can cover
different things, so it's important to know what is covered and what is not.
2. Premiums and Payment: Make sure to pay the insurance premiums on time, as stated in the policy.
Missing a payment could cancel your coverage.
3. Coverage Details: Find out exactly what the insurance covers. Check if it covers all possible risks
or only specific ones. Also, make sure to know where and for how long you’re covered.
4. Valuation of Goods: Agree on the value of the items being shipped. Usually, this is the cost of the
goods plus any shipping and other fees.
Cargo Loss Claim Procedures:
1. Immediate Notification: If cargo is lost or damaged, quickly inform the insurer or insurance broker to start
the claims process. There may be a deadline for reporting the claim.
2. Claim Documentation: Gather and prepare all necessary documentation, which may include:
• A formal claim form provided by the insurance company.
• The bill of lading or other shipping documents.
• The commercial invoice for the goods.
• Packing lists and photographs of the damaged goods.
• Any inspection reports conducted by relevant authorities.

17
 • Communication related to the loss (e.g., communication with carriers or third parties
involved in the shipment).
3. Evidence of Loss: Provide proof to support the claim. This can include written statements from
experts, such as affidavits, reports from inspectors, or surveyors, who can confirm the cause and
extent of the damage or loss.
4. Mitigation of Loss: Take reasonable actions to reduce the loss, like saving damaged items or
stopping further damage from happening.
5. Loss Estimation: Calculate the damage or loss, including the value of the goods, any extra costs,
and any deductibles that apply.
6. Submission of Claim: Submit the completed claim documentation to the insurance company as
per their specific instructions and within the required timeframe.
Insurance Claim Documentation:
1. Claim Form: Complete the claim form provided by the insurance company. Provide accurate and
detailed information about the loss or damage.
2. Supporting Documents: Include all supporting documents, as mentioned above, to support the
claim.
3. Correspondence: Keep copies of all correspondence related to the claim, including emails, letters,
and communication with carriers, forwarders, or other relevant parties.
4. Adjuster's Report: If an insurance adjuster is involved, give them any needed information and work
with them during their investigation.
5. Proof of Loss: If needed, provide a written statement explaining the details of the claim, including
how much you are claiming.
6. Claim Settlement: After the claim is reviewed, the insurance company will pay you if the claim is
approved, according to the policy.

UNIT-3
Central Excise and custom clearance regulations
Procedures and Documentation (from above)
Containerization: Practice, Advantages & Disadvantages

→ Containerization is a method used in logistics and transportation where goods are packed into
standard-sized containers, usually made of steel.
→ These containers are then moved using different types of transportation, like ships, trains, and
trucks.
→ This method has changed the way global trade and transportation work.
Practice of Containerization:

1. Standardized Containers: Cargo is packed into standardized containers of different sizes, usually
20-foot and 40-foot containers. These containers have set measurements and are made to fit safely
on different types of transport.
2. Intermodal Transport: Containerization makes transportation easier by allowing containers to be
moved smoothly between ships, trucks, and trains without having to unpack and repack the goods.
This helps simplify the whole logistics process.

18
3. Secure and Efficient: Containers are locked, keeping items safe from being stolen or tampered
with. They also protect the goods from weather damage during transportation, helping to prevent
spoilage.
4. Economies of Scale: Containers are easy to load and unload, which reduces handling costs. Big
container ships can carry thousands of containers, making shipping cheaper because of their size.

Advantages of Containerization:

1. Efficiency: Containerization makes it quicker and easier to load and unload cargo, which helps
improve the efficiency of the overall logistics process.
2. Lower Costs: The standard design of containers makes handling easier and helps track and manage
them better, which lowers storage and administrative costs.
3. Security: Containers are locked and can only be opened by authorized, which improves security
and helps prevent theft and damage.
4. Intermodal Compatibility: Containers are made to work with different types of transport, so it's
easy to move goods between ships, trains, and trucks.
5. Reduced Damage: Goods are less likely to get damaged from handling, weather, or other
environmental factors when they are packed in containers.
6. Globalization: Containerization has made it cheaper to move goods over long distances, helping
businesses reach new markets and increasing trade around the world.
7. Environmental Benefits: Containerization can be more environmentally friendly by reducing fuel
consumption and emissions compared to traditional methods of transporting loose cargo.

Disadvantages of Containerization:
1. High Costs: Building and maintaining container terminals and transportation systems can be
very expensive, and smaller ports may not be able to afford it.
2. Limited Compatibility: Not all cargo is suitable for containerization. Oversized or irregularly
shaped cargo may require specialized handling.
3. Port Congestion: Major ports can experience congestion due to the large volume of containers
being processed, leading to delays.
4. Environmental Impact: Containerization can contribute to environmental issues, such as air
pollution and disrupting natural habitats, especially in crowded port areas.
5. Dependence on Containers: Relying too much on containers can create problems, as any
issues in the container process can affect the entire supply chain.
6. Limited Access: Smaller businesses or areas without nearby container ports may have trouble
using containerization.

CONCOR: Inland Container Depot (ICD)

→ CONCOR was incorporated in March 1988 as a government-owned company under the Ministry of
Railways.
→ The prime objective of CONCOR is to develop modern transport systems and infrastructure to help
India’s growing international trade.
→ CONCOR, short for Container Corporation of India Ltd., is a key player in containerized cargo
transport and manages various logistics services.
→ One of its important jobs is setting up and running Inland Container Depots (ICDs) across India.

19
Container Corporation of India (CONCOR):
→ CONCOR is a public sector undertaking under the Indian Ministry of Railways.
→ It was incorporated in 1988 and is headquartered in New Delhi, India.
→ CONCOR plays an important role in improving container transportation and logistics in the
country.
→ The company is responsible for managing and operating container freight stations, inland
container depots, and terminals, among other logistics-related activities.
Inland Container Depot (ICD):
→ An Inland Container Depot (ICD) is a facility that works like an extension of a seaport.
→ It offers services like customs clearance, storage, and handling for cargo that is transported by
road or rail from the seaport.
→ The main goal of ICDs is to make it easier to move cargo between seaports and inland areas,
helping to reduce overcrowding at ports and improve logistics.
→ CONCOR runs several ICDs across India to ensure smooth transportation of cargo from ports to
different parts of the country.
→ These ICDs are located near to major industrial and consumer areas to minimize on
transportation costs and delivery times.
→ Some services offered at CONCOR’s ICDs include customs clearance, cargo handling,
warehousing, and coordinating transportation.

Key Features of CONCOR's Inland Container Depots:

1. Multimodal Connectivity: CONCOR's ICDs (Inland Container Depots) are connected to different
transportation options like trains, roads, and sometimes even waterways.
2. Customs Clearance: They provide customs clearance to make sure goods meet legal rules for
import and export.
3. Storage and Warehousing: These depots also have storage and warehouse spaces to temporarily
hold or combine goods.
4. Security: They have security measures to protect the cargo from theft or damage.
5. Container Repair and Maintenance: Additionally, some ICDs offer container repair and
maintenance services to keep the containers in good condition for transport.
Benefits of ICDs:
1. Efficient Movement: ICDs make it easier to move goods between ports and other places, cutting
down on delays and travel time.
2. Cost Savings: They help businesses save money by avoiding crowded seaports and allowing
goods to be directly transported by rail or road.
3. Regional Development: ICDs also help boost the economy in local areas by encouraging trade
and business growth.
Container Freight Station (CFS)

→ A Container Freight Station (CFS) is a place where goods in containers are stored and managed
temporarily.
→ It plays a key role in shipping and logistics, helping move goods from ports to their final
destinations.
→ CFSs are important for the global supply chain, as they handle the movement of containerized
cargo.
20
Functions of a Container Freight Station (CFS):
1. Cargo Consolidation and Deconsolidation:
• CFSs are important for combining smaller shipments into larger ones (called full container
loads or FCL) or breaking down large containers into smaller shipments (called less than
container loads or LCL).
• This process helps optimize container space and reduce transportation costs.
2. Customs Clearance:
• CFSs usually have customs clearance services, which allow importers and exporters to handle
all customs procedures, inspections, and paperwork in one place.
• This makes the clearance process faster and helps avoid delays.
3. Cargo Inspection and Sorting:
• Cargo inspection and sorting involve checking and organizing goods to make sure they meet
safety and legal rules.
• This includes looking for damaged or dangerous items and making sure they are labelled
correctly.
4. Temporary Storage:
• CFSs provide temporary storage for containerized cargo.
• This storage helps with flexibility in handling cargo, especially when there’s a delay between the
arrival of goods at the port and their transportation to the final destination.
5. Cargo Handling and Repackaging:
• CFSs have the tools and equipment needed to load and unload containers, like cranes, forklifts,
and conveyor belts.
• They may also provide services such as repackaging and labelling to meet specific needs.
6. Documentation and Record-Keeping:
• CFSs keep a detailed records of cargo movements and transactions to make sure the
paperwork for customs, shippers, and receivers is correct.
7. Security and Surveillance:
• CFSs use security measures like guards, controlled access, and observation systems to protect
cargo from theft and damage.
8. Container Maintenance:
• Some (CFSs) provide services to maintain containers, such as cleaning, fixing, and checking
them to make sure they are in good condition for reuse.
Key Points to Note about CFSs:

• CFSs are usually located close to major ports, making it easier to move goods between ports and
inland areas.
• Importers, exporters, shipping companies, and freight forwarders often use CFSs to improve their
logistics processes.
• Some CFSs focus on handling specific types of goods, like hazardous materials, perishable
goods, or large equipment.
• Using CFSs helps reduce overcrowding at port terminals, boosts cargo security, and makes
international trade and transportation more efficient.
• Rules for operating CFSs can differ by country and region, so it’s important to follow local
customs and trade laws when using these facilities.

21
 UNIT-4
Procedures and documentation for new / second hand capital goods
→ Importing new or second-hand capital goods into a country usually involves a few
steps and paperwork to follow the rules of customs and trade.
→ The exact steps and documents needed can be different depending on the country,
but here's a simple overview of the common process and documents required:
Procedures for Importing Capital Goods:
1. Obtain Importer Exporter Code (IEC):
Before importing any goods, including capital goods, the importer needs to obtain
an IEC from the relevant government authority.
In India, for example, the Directorate General of Foreign Trade (DGFT) issues IEC
numbers.
2. Classify Goods:
Find the correct Harmonized System (HS) code for the capital goods you want to
import. This code helps the customs department identify your goods and decide
the duties and taxes.
3. Check Import Rules: Make sure there are no restrictions on importing the goods.
Some items may need special permits or licenses to be imported.
4. Select a Customs Port: Choose the customs port through which the goods will
enter the country. The choice of port can impact customs clearance procedures
and logistics.
5. Choose a Customs Agent: You might need to hire a licensed customs agent to
help with the paperwork and clear your goods through customs.
6. Import Declaration: Submit an import declaration to the customs authorities.
This form gives details about the goods, their value, and what they will be used for.
7. Pay customs Duties and Taxes: Pay the necessary customs duties, taxes, and
fees for the imported goods. Some countries may have special rules or exemptions
for certain types of equipment.
8. Customs Inspection: Customs authorities may inspect the imported capital
goods Pay the necessary customs duties, taxes, and fees for the imported goods.
Some countries may have special rules or exemptions for certain types of
equipment.
9. Release of Goods: Once everything is cleared, the goods will be released and
delivered to the importer’s address.
Documentation for Importing Capital Goods:
1. Commercial Invoice:
2. Bill of Lading or Airway Bill:
3. Packing List:

22
 4. IEC Certificate: The Importer Exporter Code (IEC) is a number given by the
government to businesses involved in importing or exporting goods.
5. Import License or Permit: If needed for certain capital goods, you must get and
submit an import license or permit.
6. Customs Declaration Form: A Customs Declaration Form is a document that
provides details about the imported capital goods, such as their code, value, and
country of origin.
7. Certificate of Origin: A document that shows which country the capital goods
come from. It may be needed for customs or to get lower taxes under trade deals.
8. Insurance Certificate: If required, show proof that the goods are insured during
shipping.
9. Payment Proof: A document showing payment for the capital goods, like a bank
payment receipt or a letter of credit.
10. Technical Specifications and Manuals: Provide the technical details, user
guides, and any other important documents related to the equipment.
11. Test Certificates: Some countries may need certificates or documents that
confirm the imported goods meet safety and quality standards.
12. Customs Bond: In some countries, you may need a customs bond to cover
any possible customs fees or taxes based on the value of the goods.
Policy for EOU / FTZ/ EPZ units
→ Export Oriented Units (EOUs), Free Trade Zones (FTZs), and Export Processing Zones
(EPZs) are special areas created by many countries to encourage exports, attract
foreign investment, and help the economy grow.
→ Each zone has its own rules and policies.
→ Here's a simple overview of the main goals and policies for these zones:
❖ Export Oriented Units (EOUs):
Objective:
• Boost exports by creating a business-friendly environment.
• Attract foreign investment and share new technologies.
• Create more job opportunities.
• Help reduce trade imbalances.
Policies and Incentives:
1. Duty-Free Imports: EOUs can import raw materials, machinery, and equipment
without paying customs duties, or at lower rates, to help with export production.
2. Tax Benefits: They may receive tax breaks for a certain period, which helps
businesses use their profits for growth.
3. Simplified Procedures: The export and import processes are made easier to
reduce red tape and delays.

23
 4. Foreign Exchange Earnings: EOUs must earn foreign currency by exporting goods
to keep their special status.
5. Bonded Warehouses: EOUs can store goods in warehouses without paying
customs duties until the goods are ready to be exported.
❖ Free Trade Zones (FTZs):
Objective:
• Make it easier for countries to trade with each other and encourage investment
from abroad.
• Support the growth of different industries.
• Improve transportation and logistics systems.
Policies and Incentives:
1. Duty Exemptions: Goods brought into Free Trade Zones (FTZs) usually don't have
to pay import duties or taxes until they enter the local market.
2. Liberalized Regulatory Environment: There are fewer rules to make it easier for
foreign businesses to invest.
3. Customs Facilities: Special customs procedures are in place to speed up trade.
4. Infrastructure Development: Investment in roads, ports, and warehouses to
improve logistics.
5. Tax Benefits: Tax breaks, like lower corporate taxes or exemptions, are offered to
attract businesses.
❖ Export Processing Zones (EPZs):
Objective:
• Attract foreign investment for manufacturing goods meant for export.
• Create jobs and encourage the sharing of technology.
• Increase exports and support the growth of industries.
Policies and Incentives:
1. Duty-Free Imports: Like Export Oriented Units (EOUs), Export Processing Zones
(EPZs) usually allow businesses to import raw materials and equipment without
paying duties.
2. Tax Benefits: EPZs offer tax breaks, lower corporate taxes, and exemptions from
some local taxes.
3. Infrastructure Development: EPZs have good infrastructure, including utilities
and transportation, to help with manufacturing.
4. Simplified Regulations: The rules are simpler and easier to follow, making it
easier to attract foreign investment.
5. Customs Facilities: EPZs have special customs processes to make importing and
exporting faster and more efficient.

24
 International Logistics
International logistics refers to the process of planning, implementing and managing the
movement and storage of goods, services, and information across countries.
It plays an important role in global supply chain management and includes many tasks
to make sure products are delivered quickly, safely, and at the best cost worldwide.
Objectives of International Logistics:
1. Efficiency: Ensure the smooth and efficient movement of goods across
international boundaries while minimizing delays and costs.
2. Reliability: Keep the supply chain reliable to meet customer needs and market
demands on time.
3. Cost Reduction: Optimize transportation, storage, and inventory management to
reduce overall logistics costs.
4. Risk Management: Reduce risks in international trade, like problems with
customs, political issues, and changes in currency value.
5. Compliance: Follow international trade laws and make sure all required
documents are in order.
6. Customer Satisfaction: Make sure the customer gets their product on time and
that it's of good quality.
Criteria for Effective International Logistics:
1. Supply Chain Visibility: Being able to track and see where goods are at all times as
they move through the supply chain.
2. Transportation Efficiency: Choosing the best way to transport goods (by sea, air,
road, or rail) based on cost, speed, and the type of product.
3. Inventory Management: Keeping the right amount of stock to avoid running out or
having too much, while also reducing storage costs.
4. Customs Compliance: Making sure all paperwork is in order and following customs
rules to avoid delays or fines.
5. Supplier and Partner Relationships: Building good relationships with suppliers and
partners to improve teamwork and communication.
6. Technology Integration: Using technology, like management systems for transport
and warehouses, to automate and improve processes.
Benefits of Effective International Logistics:
1. Cost Savings: Efficient logistics can help cut down on transportation, storage, and
inventory costs, making the business more profitable.
2. Global Expansion: Helps businesses expand into new countries, allowing them to
reach more customers.
3. Customer Satisfaction: Makes sure deliveries are on time and dependable,
improving customer happiness and trust.
25
4. Competitive Advantage: Companies with efficient international logistics have an
edge over competitors in the global market.
5. Risk Mitigation: Logistics planning helps reduce risks from supply chain problems
and legal issues.
6. Market Responsiveness: It also allows businesses to quickly adjust to changes in
demand or the market.
7. Environmental Sustainability: Efficient logistics help reduce carbon emissions and
support environmental sustainability.
8. Regulatory Compliance: Following regulations ensures there are no customs
delays or fines, protecting the business.

26