International Marketing

“International marketing is the

multinational process of planning and
executing the conception, pricing, promotion
and distribution of ideas, goods and services to
create exchanges that satisfy individual and
organization objectives.”
 Benefits of International marketing

1. Reduce marketing cost.

2. A much bigger area of marketing.
3. Facilitates centralized control of marketing.
4. Promote efficiency in R&D.
5. Results in economies of scale in production.
6. If international marketing is properly handled, the payment is
Guaranteed and quick.
7. International marketing help in developing domestic market.
8. Marketer is much less likely to be affected by business cycle &
political of a particular country.
 Problems in International Marketing

1. Unstable government.

2. Exchange Instability

3. Huge Foreign Indebtedness.

4. Foreign government entry requirements.

5. Tariffs and other treacle barriers.

6. Corruption.

7. Technological pirating.

8. High cost of product & communication.

 Difference between Domestic and
International Marketing

Domestic marketing International marketing

1. One nation, same language and 1. Many nations, many languages & culture.

culture. 2. Transport cost influences only to same

extent.
2. Transport cost is a major marketing
expenses. 3. Different currencies in different
countries.
3. One currency.
4. Different political environments and
4. Political environment and factors are
factors in different countries.
the same.
5. Markets are diverse and highly
5. Market is relatively homogeneous.
heterogeneous.
6. No problems of exchange control and
6. There are problems of exchange controls
tariffs.
and tariffs and they act as obstacles.
 Continued….

7. Data available usually accurate and 7. Data collection a formidable take,

relatively easily collected at less cost. requiring signification higher budgets
and personnel allocation.

8. Relative freedom from govt. 8. Govt. influences business decisions.

interference.

9. Individual company has little effect on 9. “Gravitational” distortion by large

environment. companies.

10. Relatively stable business environment. 10. Multiple environments many of which
are highly unstable.

11. Uniform financial climate.

11. Variety of financial climates ranging from
over conservatives to widely
inflationary.
 Why should go to International Market

1. To achieve the higher rate of profit.

2. Expensing the production capacities beyond the demand

of the domestic country.

3. Severe completion in the home country.

4. Limited home market.

5. Political stability vs. political Instability.

6. Availability of Technology & managerial competence.

 Continued….

7. High court of transportation court.

8. Neared to Raw materials.

9. Availability of Quality human rescores at Len court.

10. Liberalization & globalization.

11. To increase market share.

12. To avail tariffs and import Quotas.

Stages of Internationalization

Stages - I: Domestic Company

Stages- II: International Company

Stage -III: Multinational Company

Stage -IV: Global Company

Stage - V: Transnational Company

 Stages-I: Domestic Company

“Domestic companies’ limits in operations,

mission & vision to the national political
boundaries.”
 Stages-II: International company

“These companies believe that the practices adopted in

domestic market, the people and products of domestic market
are superior to those of other countries. These companies
extend the domestic product, domestic price, promotion &
other marketing practices to the foreign market. These
companies adopt ethnocentric approach.”
 Stage-III: Multinational Company

“The international companies turn into multinational

companies when they start responding to the specific needs
of different country markets regarding product, price &
promotion, multinational company formulate different
strategies for different markets, the orientation shift from
ethnocentric to polycentric.”
 Stage-IV: Global Company

“Global company is the one which either

global marketing strategy or a global
strategy.”
 Stage-V: Transnational Company

“ Transnational company produces, markets,

invests and operates alum the world of is an
integrated global enterprise which links global
resources with global markets at profit. There is no
pure transnational corporation.”
International marketing approach

1. Ethnocentric approach.
2. Polycentric approach.
3. Regiocentric approach.
4. Geocentric approach.
 1. Ethnocentric approach

“The domestic company normally formulates their

strategies, their product design and their operations to words
the national markets, Customers and competitions. But, the
excessive production more than demand for the product, either
due to competition or due to change in customer preferences
push the company to export the excessive production to
foreign countries.”
 2. Polycentric approach

“The company establishes a foreign subsidiary

company and decentralizes all the operations and
delegate decision-marking and policy making authority
to it executives. Company appoints the key personnel
from the home country and all other vacancies are
filled by the people of the host country.”
 3. Regiocentric approach

“ The company after operating successfully in

a foreign country thinks of exporting to the
neighboring countries of the host country, At this
stage, the foreign subsidiary considers the regional
environment (ex. Asia) for formulating policies &
strategies.”
 4. Geocentric approach

“The entire world is just like a single country for the

company. The select the employees from the entire globe and
operate with a number of subsidiaries. The hard quarter co-
ordinates the activities of the subsidiaries. Each subsidiary
functions like an independent and autonomous company in for
making policies, strategies, product design, human resource
policies, operations etc.”
 Difference between International
Trade, International Mktg. &
International Business
 International trade

“ The producers used to export

their products to the nearby countries and gradually
extended the exports to for off countries. India used
to export raw cotton; raw jute and iron are during
the early 1900s.”
 International Marketing

“India, during 1980 could great

markets for its products, in addition to mere exporting. The
export marketing efforts include creation of demand for Indian
products like textiles, electronics, leather products, tea, coffee,
etc. arranging for appropriate distribution channels, attractive
package, product development, pricing etc.”
 International Business

“ The multinational companies which were

producing the products in their home countries and
marketing them in various foreign countries before
1980 started locating their plants and other
manufacturing facilities in foreign/host countries.
Later, they started producing in one foreign country
& marketing in other foreign countries exhale.”
 Economic Environment

“ International marketing is mostly and directly influenced

by the economic environment of various countries. The
economics environment change is revolutionary after 1990. The
results of these are emergence of global markets,
establishment of world trade organization, emergence of global
business houses and global competitors rather than local
competitors.”
 The major changes include

1. Capital flour rather than trade or product flour

across the global.

2. Establishment of production facilities in various

countries.

3. Technological revolution delinked the relation bet`n

the size of production & level of employment.
 Continued….

4. Primary products are delinked from the industrial

economies.

5. The macro economics factors of individual nation

independently do not significantly control the global economic
out comes.

6. The contest between ‘capitalism’ & communism is

over. Capitalism succeeded over communism/ socialism.
 Before going to international marketing we should
understand several economic factors such as.

A. Economy System

B. Size of the Economy

C. Pattern of Personal Consumption

D. Growth and Stability Pattern

E. Inflationary Trends

F. External Financial Position

G. Exchange Rate Trends

 A. Economy System

Economic system is on organization of

institutions established to satisfy human needs/wants. There
are three types of economics system:

1. Capitalism,

2. Communism &

3. Mixed.
 1. Capitalistic Economic System

“ Under this system, customers’ choice for

product/ services decides what will be produced by
whom. This economic system provides for
economic democracy. Ex. USA, UK etc.”
 2. Mixed Economic System

“ Under this system, major factors of production and

distribution are owned, managed & controlled by the state.
The purpose is to provide the benefits to the public more or
less on equity basis. The other factors of mixed economic
system are development of strong public sector, agrarian
reforms, control over private wealth, regulation of private
investment & national self reliance. Ex. India.”
 3. Communistic Economic System

“ Under this system, private property and property

rights to income are abolished. The stat owns all the factors
of production & distribution. The resource allocation
decisions are made by the government planner. The no. of
automobiles, shoes, shirts, television sets- heir size, color,
quality, features etc. are determined by government
planners. Under this system consumers are free to spend
their income on what is available. Ex. China, Russia etc.”
 B. Size of the Economy

“ Countries are segments based on GNP per

capita. World countries are divided into four
categories, viz. Low-income countries, Lower-middle-
income countries, upper-middle income countries &
High-income countries.”
 I-Low Income Countries

“ These countries are also known as third

world countries or pre-industrial countries. They
are also those with 1992 incomes of Len than U.S.
$ 400 per capita.”
 Characteristics of these countries includes

1. Limited industrialization, and excessive

dependency of population on agriculture.

2. High birth rates.

3. Low literacy rates.

4. Heavy reliance on foreign aid.

 Continued….

5. Political Instability & unrest.

6. Exercise unemployment & underemployment.

7. Technological backwardness.

8. Under utilization of natural resource.

9. Excessive dependency on imports etc.

 II-Lower-Middle- Income Countries

“ These countries are also known as less

developed countries. These countries are with a GNP
per capita of U.S. $ between 400 & 2000,
characteristics of these countries includes.”
 Characteristics of these countries includes

1. Expansion of consumer markets.

2. Availability of cheap& motivated human

resources.

3. Domestic markets are dominated with the

products like clothing, batteries, tries, building
material, packaged food etc.
 Continued….

4. Early stage of industrialization.

5. Locations for production standardized / mature

products like clothing for exports.

6. Pose threat to the rest of world in labour -

intensive products due to cheap labour.
 III-Upper-Middle-Income Countries

“ These countries are also known as

industrializing countries GNP per capita of these
countries ranges between U.S.$ 2,000 and 12,000.”
 Characteristics of these countries include

1. Less dependency on agriculture.

2. Occupational mobility of the people from agriculture to industry.

3. People migrate from rural to urban areas which results in increased

urbanization.

4. Increase in literacy, formal education & increased wage rate.

5. Low wage cost compared to advanced countries.

6. High exports and rapid economic development.

 IV-High-Income Countries

“ These countries are known as advanced

countries, industrialized, post industrial or first world
countries. The GNP per capita of these countries is
more than us $ 12,000.”
 Characteristics of these countries include

1. Oil rich countries are excluded from this category.

2. Service Sector contributes more than 50% to GNP.

3. Development of information sector.

4. Development of intellectual technology over machine technology.

5. Emphasis on the future plans.

6. High income countries mostly aim at building the information

society.
 C. Pattern of Personal Consumption

“ Study of personal consumption information

provides adequate idea about the buying habits to
the people- what they buy, in what quantities, in
which part of a country and so on.”
 D. Growth and Stability Pattern

“Countries that intend to accelerate pace of

industrialization through formation of new industrial projects
and, modernization of existing projects and that adopt policy
of integrating their economics to world economy, encouraging
multinational firms to make heavy investments in the desired
industrial fields, offer great potentiality for investment by
multinationals.”
 E. Inflationary Trends

“Inflationary trends in different countries should

also be scanned because of their implications on the
operations of multinational firms. Existence of high
inflation erodes the purchasing power of consumers
and reduces their potentiality as a market segment.”
 F. External Financial Position

“ Countries with strong balance of balance

(BOP) position are ideally suited for investment by
international firm because these countries in view of
their high capacity to pay for imports are likely to
have stiffer import controls.”
 G. Exchange Rate Trends

“ The management should monitor carefully the

direction of the future movement of exchange rates
of the investee countries.”
 (A) GATT (GENERAL AGREEMENT ON TARIFFS
AND TRADE)

GATT is a multilateral treaty between governments that lays down

rules for international trade. Its basic objective is to liberalize world trade.
The most fundamental principal of GATT is non-discrimination between the
contracting parties. GATT contains rules relating to

* Tariffs

* Quantitative restrictions

* Trade measures for balance of payment purposes

 Continue…..

* Export subsidies

* Anti-dumping and counter - vailing duties

* Customs valuations

* State trading etc.

Special provisions have been made for few developing countries. GATT
also provides a forum for dispute settlement among member countries.
 Continue…..

Tokyo round, ended on April 12, 1979 dealt with the non-tariff barriers for the
first time in a major way. This resulted in a number of agreements such as:

(i) Agreement on Anti-dumping practices;

(ii) Agreement on Subsidies and Countervailing Duties;

(iii) Agreement on Import Licensing procedures;

(iv) Agreement on Technical Barriers to trade;

(v) Agreement on customs Valuation; and

(vi) Agreement on Government procurement. India has accepted the first five
agreements.
 (B) UNCTAD (UNITED NATIONS CONFERENCE ON
TRADE AND DEVELOPMENT)

The United Nations conference on trade and development (UNCTAD)

was established by the U.N. General Assembly in 1964. The main function of
the UNCTAD is to promote international trade with a view to accelerating
economic development and to formulate principles and policies on
international trade and related problems of economic development. UNCTAD
is the principal instrument of the General Assembly for deliberations and
negotiations in the field of international trade and development and related
issues of international economic cooperation.
 Continued…..

The activities of UNCTAD cover a wide area which includes:

* Trade in commodities,

* Trade in manufactures,

* Invisibles and financing related to trade,

* Transfer of technology,

* Shipping and economic cooperation among developing countries.

 Continued…..

A United Nations conference on trade and development (UNCTAD) met

in Geneva in the early months of 1964, chiefly to consider the trade needs of the
developing countries, and came to the following decisions:

* A continual united nations conference on trade and development to

promote international trade, especially with a view to accelerate economic
development;

* A trade and development board, composed of 55 members to be elected

by the conference;

* A permanent and full- time secretariat, and a secretary- general to be

appointed by the UN secretary- General with the confirmation of the General
Assembly.
 Main purposes of UNCTAD are:

 To promote economic development through

international trade.
 To formulate new principles and policies in international
trade and related economic fields; and
 To negotiate multilateral trade agreements.
 The major activities of UNCTAD include:

 Research and support in connection with the negotiation of

commodity agreements;
 Technical elaboration of new trade schemes, such as a new
import preference system; and
 Various promotional activities designed to assist developing
countries in the area of trade capital flows.
 (C) Economic Co-operation among
developing countries(ECDC)

The developing countries are becoming increasingly aware that

trade and economic co-operation among themselves could be a powerful
mechanism to promote their economic development and collective self-
reliance. The importance of such co-operation is enhanced of account
of the current environment of protectionism which has been seriously
impeding their export efforts. Trade preference agreements have been on
e of the major instruments for expanding trade an d economic links
among developing countries.
 Continued….

The agreements of which India is a member are:

(i) The trade expansion and economic co-operation agreement
between India, Egypt and Yugoslavia (popularly known as the tripartite
agreement),

(ii) The Bangkok agreement; and

(iii) GATT protocol relating to preferential arrangement among

developing countries.
 (D) INTERNATIONAL TRADE CENTRE (ITC)

The ITC is of particular interest to developing countries,

for it has been set up to help these countries to promote
their exports. To achieve this objective, the ITC engages in
two major activities:

1. It collects and disseminates information on

potential markets and on marketing techniques that will be
successful in these markets; and
 Continued…..

2. It trains export promotion personnel, and assists

governments in developing adequate export promotion
services. To carry out this activity, the ITC create a special
section in mid-1966, known as TPAS (Trade promotion
advisory services).

TPAS suggests to the developing countries how to

use successfully such promotion methods as export credit
and insurance, trade fairs and exhibitions abroad.
 (E) WORLD BANK

International bank for reconstruction and

development (IBRD)

This is popularly known as the world bank. It has its origin in

wartime preparations for post-war international financial and economic
cooperation that culminated in the United Nations Monetary and Financial
conference which was held in July, 1944, at Bretton Woods, New
Hampshire, and attended by 44 nations.
 The principal purposes of the world bank, set
forth in its articles of agreement are:

* To assist in the reconstruction and development of its member

countries by facilitating the investment of capital for productive purposes,
thereby promoting the long-rang growth of international trade and
improvements in standards of living;

* To promote private foreign investment by guarantees of, and

participations in, loan and other investments ma de by private investors;
and

* When private capital is not available on reasonable terms, to make

loans for productive purpose out of its own resources of the funds
borrowed by it.
 Continued….

The world Bank came in to existence on December 27, 1945, when

its articles of agreement were signed by 29 government in Washington,
D.C. by 1972, the Bank had 119 members. The largest of these, in terms
of capital subscribed, were the USA, the UK, West Germany, France, India,
Canada and Japan. Among the bank member are many other countries,
su8ch as Iceland, Israel, Lebanon, Sri Lanka, Indonesia, Afghanistan,
Libya, Lesotho, Somalia, Ghana, Yugoslavia, all the Latin-American
republics, except Cuba.
 Continued….

The world bank`s charter authorizes it to engage in the

following types of financing:

* It may lend funds directly, either from its capital funds or from the
funds that it borrows from private investment markets;

* It may guarantee loans made by other; or it may participate in such

loans; and

* Loans may be made to member countries directly or to any of their

political subdivisions or to private business or agricultural enterprises in
the territories of members.
 (F) THE INTERNATIONAL MONETARY FUND
(IMF)

The IMF was designed to stabilize international monetary rates. It

came into existence in march, 1946, after the ratification and
appropriation of funds by national governments had been completed; but
the Fund was not actually opened until march 1947, and the first
transactions were made in may of that year. The funds of the IMF are
subscribed to by member governments. Each member has a quota, of
which an amount equal either to 25 per cent of the quota or 10 per cent
of the member`s holding of gold and US dollars. Whichever is smaller, is
subscribed in gold and the remainder in national currency.
 Main purposes of the IMF are:

As already indicated the IMF was formed for the purpose of

promoting international monetary co-operation and a balanced growth or
world trade. Its articles of agreement came into force in December, 1945,

* To promote international co-operation;

* To facilitate the expansion and balanced growth of

international trade and to contribute there by to the
promotion of organizations, and maintenance of high levels of
employment and real incomes;
 Continued…..

* To promote exchange stability, to maintain orderly

exchange arrangements among members;

* To give confidence to members by making funds

available to them; and

* To shorten the duration and lessen the degree of

disequilibrium in the balance of payments position of
members.
 Department of Commerce (Ministry of
Commerce) Government of India

The Department of Commerce in the Ministry of Commerce in headed

by a Secretary. The Department is responsible for the country`s external
trade and all matters connected with it such as commercial relations with
other countries, state trading export promotional measures, and the
promotion, development or regulation of certain export oriented industries
and commodities. The Department of Commerce formulates policies in the
sphere of foreign trade particularly the import and export policy of the
country.
 Director General of international Trade*

(CCI&E-Chief Controller of Imports & exports)

CCI & E is responsible for the execution of the export and

import policies of the government. Now the role of DGIT
would be to promote exports and to remove controls. Now
needs promoter of exports and not the controller of exports.
 Continued…..

CCI & E`s supporting offices are located at important

port towns and commercial centre of the country. They include:

Agartala, Ahmadabad, Amritsar, Bangalore, Bombay,

Calcutta, Cuttack, Chandigarh, Ernakulum, Guwahati,
Hyderabad, Jaipur, Kandla, Kanpur, Madras, New Delhi, Panjim,
Patna, Pondicherry, Rajkot, Shillong, Srinagar, and
Visakhapatnam.
 Advisory and policy-making Organizations

These have been set up to ensure that the

collective advice of the commercial interests in available to
the Government of India.

(a) For framing and formulating export promotion and import

policies; and

(b) For successful implementation of these policies.

 Cabinet committee on Exports

The cabinet committee under the chairmanship of

the prime-minister expedites decisions on important policy
matters relating to exports.
 Board of trade

* The Board consists of 28 members including

representative from different organizations and individuals
with business standing and expertise in the field of
commerce;

* The Board has powers to co-opt. additional members;

* The members of the Board hold office for two years;

and
 Continued…..

* The Board ordinarily meets twice a year and advice the

Government on matters relating to:

(a) Export and import policy and programmes:

(b) The operation of export and imports controls

(c) Organization and development of commercial services

(d) Organization and expansion of export production

 Continued…..

* The Board advises the Government on policy measures for

preparation and implementation of both short and long term
plans for increasing exports in the light of national and
international economic scenario.
 Continued…..

* The board also reviews exports performance of

various sectors, indentifies constraints and suggest measures
to be taken by the government and industry and trade
consistent with the need to maximize export earning and
restrict imports.
 Continued…..

* In addition Board also examines existing institutional

framework for exports and suggest practical measures for
reorganization or streamlining it with a view to ensure
coordinated and timely decision making.
 Continued…..

* The Board will review policy instruments, package of

incentives and procedures for exports and suggest steps to
rationalize and channelize incentives to areas where these are
most needed.
 Zonal Export and import Advisory
committee

In order to make a detailed study of the export

possibilities of the commodities exported from different
regions and to advice the government on specific problems of
exports from there regions, Regional Export promotion
advisory committees have been set up:
 Continued…..

These committees were set-up in July 1968 to consider:

* Difficulties faced in the operation of prevailing import and

export policies and procedures and to suggest measure for
improvement in disbursement of various assistance,
 Continued….

* Difficult in the matter of:

- Customs clearance;

- Shipping;

- Credit;

- Insurance; and

- Export inspection and to suggest measures for

improvement therein.
 Continued…..

* Suggest improvements in the method of working

and public relations of the DGIT organization and other
government departments, concerned with trade and industry;
and

* Representative of state Governments and the

Customs and central Excise Department are included in these
committees.
 (A) State Government

State Government Liaison Officers

State governments have appointed Liaison officers in charge of export

promotion, whose main function is to develop the exports trade in the
goods produced in their states, in consonance with the policies of the
Central government. The machinery provided by the State Liaison Officers,
on the one hand, and on the other, the Honorary Export promotion
Advisors and the Regional Export Promotion Officers are particularly useful
in the solution of the problems affecting the export from these state.
 (B) Commodity Organizations

Export Promotion Councils

EPCS are supported by financial assistance from the central
government. Under the administrative control of ministry of commerce,
EPCS are registered as nonprofit organizations under the companies Act or
Societies Registration Act, as the case may be. The EPCS perform both
advisory and executive functions, the councils are also the registering
authorities under the import policy for registered exporters. On being
admitted to membership the applicant is granted a Registration-cum-
membership Certificate.
 Continued…..

With a view to secure the active association of

growers, producers and exporter in the drive for export
promotion, a number of export problems of specific
commodities. The functions of these councils are broadly to
advise the government, the local authorities and public bodies
on the policies to be pursued and the step to be taken to
expand the exports of the commodities grown and/or
manufactured in their states.
 Continued…..

The councils also performs some other promotional functions,

such as

* Study of foreign markets through periodical market surveys and market

research,

* Sending of trade delegations abroad,

* Participation in exhibitions,

* Conducting publicity,

* Disseminating information,

* Administering export promotion schemes,

* Taking measures to ensure quality control, etc.

 Continued…..

There are 19 export promotion councils covering such

items as engineering, leather exports, shellac, sports goods,
basic chemicals, pharmaceutical and cosmetics, cashew,
chemicals and allied products, plastics and linoleums,
overseas construction, electronics and computer software,
apparel handicraft, handloom, silk, rayon textiles, wool and
woolens etc.
 Functions of Export promotion Councils
(EPC)

EPC`s main function is to project India`s image abroad

as a reliable suppliers of high quality goods and services.

* Advise the government of current export problems and

measures necessary for the growth of exports. Promote
interaction between the exporting community and the
government both at the central and state levels.
 Continued…..

* Assist individual exporters on specific problems

confronting them and help them to overcome these problems.
Provide commercially useful information and assistance to
their members in developing and increasing their exports.

* Offer services for the development of overseas

markets.

* The council deregisters any defaulting exporter.

 Continued…..

* Disseminate amongst registered exporters the trade

enquiries received from aboard, giving information on overseas
markets, market leads, export-import procedures, customs
tariff, GSP facilities. To build statistical base and provide data
on the exports and imports of the country, exports and imports
of their members as well as other relevant international trade
data.
 Continued…..

* To offer professional advice to their members in

areas such as technology up gradation, quality and design
improvement, standards and specifications, product
development, innovation etc.

* To organize visits of delegations of its members

aboard to explore overseas market opportunities.
 Continued…..

* Resolving trade disputes between exporters and

importers.

* Help exporters in shipping and transport problems.

* Help exporters in obtaining licenses, duty-drawback

etc.

* To organize participation in trade fairs, exhibitions and

buyers and sellers meet in India and aboard.
 Advantage for Units Registered with
Exporter Promotion Councils

* Trade enquiries received by the councils from

commercial representatives aboard are circulated among
members, much in advance of their publication in the usual
course;

* The bulletins and publications issued by the councils

contain useful information on trade conditions in different
markets;
 Continued…..

* Exporters may ask for inclusion in trade delegations

and study teams sponsored by the councils. They organize
commercial publicity aboard;

* Exporters may have their products displayed or

advertised in any particular country under the council`s
plans for publicity aboard, including participation in
exhibitions, hold exhibitions with in India for the benefit of
foreign visitors;
 Continued…..

* In case of a survey in foreign country arising from a

dispute, the exporter may ask for the overseas officer or
correspondent of the council to witness the survey in order
that his interests may be safeguarded; and

* Encourage individual exporters to develop new product

for export
 Continued…..

* The exporter may take any difficulty of a general

nature to the council which, in appropriate cases, will make
recommendations to the government suggesting measures to
remove such difficulties.
 (ii) Commodity Boards

Commodity Boards have been set up to help in the

development of certain commodities. The Commodity
Boards deal with the entire range of problems of production,
development and marketing etc. Tea Board has opened an
office in London to promote consumption of tea. They, too,
have taken measures to promote the export to commodities
with which they are concerned.
 They advise the government on policy matters, such
as fixing the quotas for exports, the signing of trade
agreements with foreign countries, etc. They also undertake
promotional activities, such as:

- Participation in exhibitions and trade fairs,

- Sponsoring delegations,

- Quality inspection etc.

 Continue…..

Commodity Boards, which deal with the commodities that are important
from the point of view of exports, are:
* Tea Board;

* Coffee Board;

* Coir Board;

* Central Silk Board;

* All India Handicrafts and Handloom Board;

* Tobacco Board;

* Rubber Board: and

* Spices Board.
 Marine Products Exports Development
Authority (MPEDA)

This authority came into being September 1972. It is

concerned with the organization, co-ordination, regulation and
growth of the export of marine products with special
reference to the quality of the material, processing,
packaging, storage, transport shipment, marketing and
attendant investigation.

 Continue…..

The authority serves the sea food industry from to

processing down to marketing all over the world. Importers
and exporters both could obtain information relating to the
markets and marine products from MPEDA. It has regional
office at Tokyo. The authority is entrusted with the task of
ensuring a healthy growth of the industry through judicious
regulations, conservation and control.
 Agricultural and Processed food Products
Export development Authority (APEDA)

APEDA came into being on 12th August, 1986.

It serves as the focal point for agricultural exports, particularly
the marketing of processed foods in value added forms with a
view to increase the exports of a agricultural and processed
food products. Government of India has established this
authority.
 Indian Institute of Foreign Trade (IIFT),
New Delhi

The Indian Institute of Foreign Trade, set up by

the Government of India in 1964, is acting as a nucleus for
human resource development in the fields of foreign trade,
international business and marketing through specialized
training programmes.
 Continue…..

The main activities of the IIFT include training i.e.

training of personnel in modern techniques of the
international trade and research into problems of foreign
trade, commodity studies, and overseas market surveys in
India. It provides consultancy to export enterprises. It
distributes market information though “Foreign Trade
Review” and “Foreign Trade Bulletin”.
 Continue…..

Over the past twenty-six years of its existence, the

Institute has organized nearly 640 programmes with the
participation of about 22,300 personnel including 780 foreign
nationals, and completed over 500 research studies.
 Trade Development Authority, New Delhi

The TDA, set up as a Registered society, induces and

organizes entrepreneurs, largely in the medium and small
scale sectors to develop their individual export capabilities. It
provides assistance in a personalized from to individual
exporters from the stage of intention of export through
collection of information, product development, market
research and analysis. It also advises them on export finance
and assists them in securing and implementing export orders.
 Continue…..

* TDA strives to concentrate on specific products, specific

exporters, specific markets and specific buyers.

* Being a non-trading institution, TDA does not enter into

direct commercial transactions but confines itself to a
catalyst`s role. As such, TDA does not charge any commission
from its members for specific business secured by them for its
help.
 Export Inspection Council of India,
Calcutta

* The EIC, a statutory body, is responsible for the

information of quality control and compulsory pre-shipment
inspection of various export-able commodities.

* This Council organizes through inspection all over the

country, pre- shipment inspection of the products and
commodities notified for compulsory inspection. 850 items are
subjected to compulsory inspection. It establishes labs and
test-houses throughout the country.
 Export Credit of Guarantee Corporation of
India Ltd. Bombay (ECGC)

The ECGC was incorporated in 1957. It is a company

wholly owned by the government of India, functioning under
the administrative control of the ministry of commerce and
managed by a Board of Directors representing the
Government, Banking, Insurance, trade and Industrial
Sectors.
 Continue…..

* The primary goals of ECGC is to support and

strengthen the export promotion drive in India, by providing a
range of credit risk insurance covers against loss in export of
goods and services and also by offering guarantees to banks
and financial institutions to enable exporters obtain better
facilities from them.
 Continue…..

ECGC helps exporters to cover both the commercial

and political risks involved in the export trade and also
possible losses in the development of new export market.
Facilities for export credit though such schemes as packing
credit guarantee, post-shipment export credit guarantee,
export finance guarantee, export production finance
guarantee, export performance guarantee and export finance
guarantee (overseas lending) are also provided.
 India Institute of Packaging, Bombay

The IIP is registered under the Societies Registration

Act. It undertakes research no raw materials for the packing
industry. this organization effects improvement in packing
standers, providing consultancy services, organizing training
activities and rendering testing facilities in respect of
packages. the main objective of IIP is to stimulate
consciousness of the need for good packing amongst Indian
exporters.
 Indian Council of Arbitration, New Delhi

The Indian Council of Arbitration, set-up under

the societies Registration Act, promotes arbitration as a
means of settling commercial disputes and popularizes
arbitration among the trades particularly those engaged
international trade.

This council provides facilities of effecting arbitration in

cases of commercial disputes in relation to foreign trade.
 Directorate-General of Commercial
Intelligence and Statistics, Calcutta

DGCI & S is the primary government agency for

the collection, compilation and publication of the foreign,
inland and ancillary trade statistics and dissemination of
various types of commercial information. The Directorates
bring out a number of publications, particularly on trade
statistics, which are utilized in framing economic policies,
formulating trade agreement foreign countries and
monitoring these agreements.
 Continue…..

The Directorate conducts studies on various topics

relating to promotion of trade. It helps in the settlement of
commercial disputes and provides Indian businessmen going
aboard with letters of introduction to Indian commercial
representatives concerned. It also maintains a commercial
library which is widely used by the exporters, importers,
research scholars and others.
 Trade Fair Authority of India (TFAI)

It was set up in 1977, Its main functions include

organizing, promoting and participation in industrial trade fairs
and other exhibitions, setting up showrooms in India and
aboard, to undertake trading activities in items related with
such fair, to promote exports of new items and diversify
India`s exports.
 Continue…..

The journals in brings out include:

(a) Journal of Industry and trade

(b) Udyog Vyapar Patrika

(c) India Export Service Bulletin, and

(d) Economic and Commercial News.

 Continue…..

These periodicals brought out by TFAI provide

information on the country`s economy, business possibilities
offered by foreign markets, government`s trade policies,
facilities available for exports and imports tenders floated by
other countries. They also provide material to Indian mission
for their publicity effort.
 Federation of Indian Export Organization
(FIEO)

It is an apex body of various export promotion

organizations. It was set up in 1965. This Federation is a
common coordinating platform for the various export
organizations, including the commodity councils and boards,
and service institutions and organizations.
 Continue…..

It is the primary servicing agency to provide

integrated assistance to government and organized export
houses. FIEO is the central coordinating agency in respect of
export promotional efforts in the field of consultancy
services. It serves generally as a common forum for the
national export promotion effort.
 Export-Import Bank (EXIM Bank)

The Export-Import Bank of India is a public sector

financial institution, established on January 1, 1982. It was
established by an Act of parliament, for the purpose of
financing and promoting foreign trade of India. It is the
principal financial institution for coordinating the working of
institutions engaged in financing exports and imports.
 Continue…..

The EXIM Bank Act also empowers the Bank to

finance export of consultancy and related services, assist
Indian joint ventures in third world countries, conduct
export market studies, finance export oriented industries
and provide international merchant banking services.
Export Corporations
 The state Trading Corporation of India
Ltd, (STC)

The corporation was set up as a private Limited company

in 1956 and later converted into a public Ltd. Company in 1959. The
corporation helps the development and promotion of exports of
commodities on a long term basis, exploring new markets, canalizing
import of bulk commodities to bridge temporary gaps between supply
and demand in commodities essential for the economic and industrial
development of the country, internal distribution of any commodity in
short supply with a view to stabilize prices and rationalize distribution.
The Corporation has five subsidiaries:
 Continue…..

* The Handicrafts and Handlooms Export Corporation Of India Ltd.

* Projects and Equipment Corporation Of India Ltd.

* Cashew Corporation Of India Ltd.

* Central cottage Industries Corporation Of India Ltd., a subsidiary of

HHEC.

* Tea Trading Corporation of India Ltd.

* The Handicrafts and Handlooms Export Corporation of India Limited

(HHEC)
 Projects and Equipment Corporation of India
Limited (PEC)

The main objective of PEC is to give a fillip to

export of engineering equipment and project. It identified the
technological competence of manufacturers of goods and of
other agencies for services and ensures through organized
monitoring, planning and control, fulfillment of contractual
obligations in respect of quality and delivery schedules.
 Cashew Corporation of India Ltd.

The Cashew Corporation of India is the

canalizing agency for import of raw cashew nuts to
the export oriented sector of the cashew industry.
 Central Cottage Industries Corporation of India
Ltd.

Central Cottage Industries Corporation of

India Ltd. Provides marketing support for products
from cottage of small scale sector.
 Tea Trading Corporation of India Ltd.

The Tea Trading Corporation of India was established

in 1971 to create a stable export market for Indian tea,
particularly in their value added forms, namely, packed tea,
tea bags, instant tea. Other activities of this Corporation
include marketing of tea for domestic consumption,
management to tea gardens, warehousing of tea and
establishment of other facilities beneficial to the tea industry.
 Minerals and Metals Trading Corporation
(MMTC)

The Minerals and metals trading corporation deals with

export and import of canalized items like iron ore, manganese
ore, coal, chrome ore, bauxite and non-canalized items like
barites, diamonds and import of non-ferrous metals, industrial
raw materials, steels, raw materials for fertilizer and finished
fertilizers, sulphur and rock phosphate. In addition, the MMTC
is providing valuable market support to the manufactures and
exporters of various products from the country.
 Indian Government Trade Representatives
Aboard

The Government of India`s Trade Representatives (Trade

Commissioners, Commercial Counselors and Commercial) function in
almost all the important trading centre of the world as the government`s
“eyes and ears” and help in furthering trading relations between India
and the countries falling with in their jurisdiction. They report periodically
on the economic, financial and commercial conditions of the country in
which they are stationed; attend to trade enquiries from this country;
acquaint importers in those countries with the kinds of goods available
for export from India, and assist visiting Indian businessmen with suitable
introductions. They also help in the settlement of trade disputes.
 Other Committees and Agencies

Drawback Committee
Problems relating to rebate of excise duty on export or
drawback of customs and excise duty on the export of manufactured
products, and procedural difficulties in exports, are looked after by a
Drawback Committee in the Ministry of Finance (Department of Revenue),
with a Deputy Secretary of that Ministry Chairman and with
representatives of the Department of Commerce, the Directorate-General
of Technical Development and others as members.
 Freight Investigation Bureau

A Freight Investigation Bureau has been set up in

the office of the Director-General of shipping, Bombay, to look
into the problems of high of discriminatory ocean foreign
rates, the non-availability of shipping space or shipping
service and other allied problems. The Freight Investigation
Bureau has a branch in Calcutta. The Director (Transport) in
the Department of Commerce under the Ministry of commerce
may also be approached in regard to shipping problems.
 Railway Freight Committee

A committee in the Ministry of railways, with

representatives of other Ministries, considers requests from
exporters for reduction in railway freight for the export of
goods. Requests for railway freight concessions as well as for
priority in the movement of export cargo may be made to
the Director (transport) in the Department of commerce.
 Customs and Central Excise Department

All the Exports from the country have to pass through the
Customs. There are Customs Houses at Bombay, Madras, Calcutta and
Cochin and at a number of smaller centers, land customs offices at border
stations and foreign post offices at Bombay, Madras, Calcutta and New
Delhi. The procedures for the examination of export cargo are constantly
reviewed and simplified. Rebates of Central Excise Duty on the exported
products subject to Central Excise duty is allowed by the Central Excise
Department.
 Reserve Bank of India (RBI)

The Reserve Bank of India is concerned with the administration

of the foreign Exchange Regulation Act. Exporters have to satisfy it (under
the G.R., etc., from procedure) about the receipt of foreign exchange on
exports, such payment being collected through banks authorized to deal in
foreign exchange. Applications for the sanction of foreign exchange for
business visits and for opening foreign offices have to be made to the
reserve Bank, which has its major offices at Bombay, Madras, Calcutta and
New Delhi.
 Central Warehousing Corporation

This government Corporation maintains a chain of

warehouses run along scientific lines at important centers,
including port towns. Warehousing is particularly important
for exports in cases where the availability of shipping and rail
transport to a port cannot be exactly coordinated. The
Corporation considers requests from the trade for putting up
or increasing warehousing facilities at any centre.
 Typing the Master Document

Most typewriters can be used to complete the master

document satisfactorily. Ten to twelve characters per inch is
common to most manual typewriters available in the country.
For better results, the electric/ electronic typewriter may be
used, as it offers the benefit of clearer print and speed.
 Duplicating Methods

After the master document has been typed, the other

documents can be reproduced conveniently by using
different reproduction techniques. As these vary considerably
in cost and benefits, the choice of the technique by an
individual firm will obviously depend on the volume and the
frequency of export business.
 Standardized Document

The Standard Documents included in the aligned series

which this chapter presents are the Invoice, Packing List,
Certificate of Origin, Bill of landing, Shipping Order, Mate`s
Receipt, Shipping Bill, port trust Document, Marine Insurance
Declaration from and Marine Insurance Certificate. Each of
these documents can be reproduced from the same master by
using the relevant mask.
 Principal Documents

Export Invoice
Invoice is a document of contents. It is the exporter's bill
for goods and forth the terms of sale. The invoice is a basic document. As a
document of contents it must fully identify the overseas shipment and serve as a
basis for the preparation of all other documents which in greater or lesser detail
reproduce information from it. The exporter should strictly follow the requirements
of the importer in regard to invoicing. The standard document in respect of the
invoice is based on the United Nations Key Layout which has been accepted as the
basis of this document in many countries.
 Packing List

This may be shown on invoice, or separately, and should

contain item by item, the contents of cases or containers or of
a shipment with its weight and description set forth in such a
manner as to permit checks of the contents by the customs
on arrival at the port of destination as well as by the recipient.
 Certificate Origin

This certificate certifies the place of origin of the merchandise.

Besides the Federation of Indian Chambers of commerce and
Industry, EPCs and various other trade associations have been
authorized by government of India to issue certificate of origin.
These certificates are important in the case of shipments to
countries which have preferential rates of tariff for Indian
goods.
 Bills of Lading

A bill of lading is a document issued and signed by a shipping company or its agents
acknowledging that the goods mentioned in the bill of lading have been duly
received for shipment, or shipped on board a vessel, and undertaking to deliver the
goods in the like order and condition as received, to the consignee, or his order or
assignee, provided that freight and other charges specified in the bill of lading have
been duly paid.
 Bill of lading serves the following purposes:
 (i) It is receipt for goods received by the shipment company;
 (ii) A contract with the Carrier. It contains the terms of the contract between the
shipper and the shipping company, between stated points at a specific charge; and
 (iii) Evidence of title. It is a certificate of ownership or title of the goods.
 For the bill of lading to be negotiable, in face, three requirements must be fulfilled:
 It must be made out to the order to the shipper.
 It must be signed by the steamship company.
 It must be endorsed in bank by the shipper.
 Endorsement on Bill of Lading
 By practice and customs the bill of lading has been transferable. If, however,
the bill requires the goods to be delivered to a particular named person and does
not include a reference to his assignees, the bill of landing is not transferable. It is
rarely that a bill of lading would be drawn this way.
 Sending of Bill of Lading to Importer
 B/L are made out in sets and any number of copies may constitute the set
according to the requirements of the particular transaction and the importer. The
number of copies to be made out will be indicated by the importer before the
shipment takes place. In case there is no such indication, normally two copies of
the B/L are prepared together with a number of the non-negotiable copies. One
set of documents is sent by the first class airmail and the second by the following
mail, so that if one is lost, delivery of goods can be taken by the importer on the
basis of the second set.
 TYPE OF BILLS OF LADING
 Stale B/L
 A B/L that has been held too long before it is passed on to banks or
consignees is termed as “Stable B/L”. therefore a B/L should be presented to the
negotiating or collecting bank soon after it is issued by the shipping company, so
that it is made available to the overseas importer before the ship carrying the
books arrives, to avoid fines and other inconveniences. If this cannot be done, the
bank will consider the bill of lading as stale.
 Clean Vs Claused B/L
 As an acceptable receipt, the B/L must be a clean one. This means no
adverse notation of any kind must appear on the B/L in regard to apparent order
and conditions of goods or packing, etc.
 Shipping Order and Mate`s Receipt: When the cargo is loaded on the ship, the
commanding officer of the ship will issue a receipt called the “mate receipt” for
goods. The mate receipt is first handed over to the port trust authorities so that all
port dues are paid by the exporter to the port trust. After making payment of all port
dues, the merchant or the agent will collect the mate receipt from the port-trust. The
bill of lading is prepared by the shipping agent only after the mate receipt has been
obtained.
 Hipping Bill
 Shipping bill is required by the customs. It is only after the shipping bill is
stamped by the customs that cargo is allowed to be carted to the docks. The
aligned shipping bill has been prepared after taking into consideration the
requirement of the custom`s public Notice No. 39 which suggests a uniform
shipping bill for different categories of exports, viz. Free goods, Dutiable goods and
goods under Claim for Drawback. As the standard A4 size paper defies
accommodation of all the informational requirements as per this Public Notice,
some columns for duty/cess and drawback particulars have been printed on the
back of the standard shipping bill. It is also not possible to accommodate all the
declarations as per the Public Notice.
 Marine Insurance Declaration From
 And Marine Insurance Certificate/policy
 The Standard Marine Insurance Declaration and the Insurance Certificate
included in this chapter are based on the format approved by Lloyd`s and the
Institute of London Underwriters. It is suggested that open cover/policy holders
may be supplied with blank forms of these documents. These can be reproduced
from the master and then sent to the appropriate office of the General Insurance
Corporation. The Insurance Certificates can be issued after completion of
necessary entries and certification by the Corporation.
 Annexures needed under FERA
 GR-1 From. In pursuance of the provisions of FERA and the rules farmed there
under, every exporter has to satisfy the Reserve Bank of India about receipt of the
foreign exchange in respect of exports. The Act makes it obligatory on every
exporter to complete GR-I in respect of the shipment and submit its copies at the
port of shipment and to the authorized dealers in foreign exchanges through whom
the bills or documents covering the shipment are negotiated.
 GR-3 form. Those are used when exporters have obtained permission from the RBI
to retain the proceeds of their exports with agents aboard and to utilize those
proceeds for financing their imports into India.
 PP form. Exports to all countries by parcel post, export when made on “value
payable” or “cash on delivery” basis should be declared on PP Forms.
 EP form. Shipments to Afghanistan and Pakistan other than by post should be
declared on EP forms.
 EP-I From. Exporters who have been permitted to relation the proceeds of their
exports to Afghanistan with their agents or branches in that country and to utilize
those funds to finance their import from that country or to make other approved
types of payments, may declare their exports to Afghanistan than by post, on EP-I
forms.
 VO/COD form. Exports to all countries by parcel post under arrangements to relies
the proceeds through postal channels on “Value payable” or “Cash on delivery” is
required to be completed on VO/COD Form and it should be submitted to the postal
authorities along with the parcel at the time of dispatch thereof.
 B. AUXILIARY DOCUMENTS
 (1) Letter of Credit
 It is a written instrument issued by the buyer`s bank, authorizing
the seller to draw in accordance with certain terms and stipulating in a legal form
that all such bills (drafts) will be honoured.
 The letter of credit is a means of payment that provides the exporter with more
security than open accounts bills of exchange. A commercial letter of is issued by a
bank at the request of a buyer of merchandise whereby the bank itself undertakes
to honour drafts drawn upon it by the seller of the merchandise concerned. Thus,
the letter of credit substitutes the bank`s promise to pay for that of the importer.
Before the seller can receive payment, however, all the requirements specified in
the letter of credit must be met, including the furnishing of documents, delivery
dates, product specification, etc.
 There are three essential to a commercial letter of credit:
 The opener or importer – the buyer who opens the credit.
 The issuer – the bank that issues the letter of credit.
 The beneficiary – the seller in whose favour the credit is opened.
 Types of letters of Credit
 Letters of credit may be either revocable or irrevocable. The privilege of
revocability refers to the right of the issuing bank to revoke its promise to honour
drafts drawn upon it. When the letter is revocable, the issuer can cancel or change
an obligation at any time prior to payment. Revocable payments are not legally
binding undertakings between banks and beneficiaries. When the letter is
irrevocable, the issuer agrees not to cancel or modify the credit without the
permission of the beneficiary.
 In addition, the letter of credit may be either confirmed or unconfirmed. If the
letter of credit is confirmed, the irrevocable obligation of the issuer is guaranteed
by a confirming bank in the beneficiary`s country. Thus, in a confirmed letter of
credit, payment is guaranteed by both the issuing and the confirming bank. An
exporter may seek confirmation because of dissatisfaction with the security offered
by the issuing foreign bank.
 With recourse and without recourse. In the case of the recourse letter of credit, if
the buyer fails to pay the bank after a specified period, the bank can have recourse
of the exporter. There is no such provision in the letter of credit without recourse.
 Checking Export Letters of credit and Documents
 Exporters are encouraged to check letters of credit carefully to be
sure so that there is no later misunderstanding. The beneficiary should check for the
followed:
 Has the correct title been used in addressing you as beneficiary?
 Has the correct title of the buyer been used?
 Is the amount sufficient? Take into consideration the terms of the sale and possible
addition addition of any charges.
 Is the tenor of the drafts the same as your quotation to the buyer?
 Is the credit available at the banking institution or in the locality requested by you?
 Are the documents required in the credit in accordance with your arrangement with
the buyer, and can such document be furnished?
 Is the description of the merchandise correct? (Check unit price, trade definition,
point of shipment, and destination).
 Do you agree with any special instructions which may appear in the credit?
 Is the expiration date and place of expiration satisfactory?
 Is the credit confirmed by a domestic bank, or is an unconfirmed credit satisfactory?
 Does the letter of credit permit partial shipments or transshipments?
 C. DOCUMENTS FOR CLAIMING EXPORT ASSISTANCE
 1. Application From for Registration
 Exports, whether manufacturer-exporter or merchant-exporter,
desirous of availing themselves of the benefits of the import policy for registered
exporters are required to register themselves with the appropriate registering
authority such as Export Promotion Councils, Commodity Board and chief Controller
of Imports and Exports, New Delhi or subordinate Licensing offices. The application
for registration should be accompanied by a certificate from the exporter`s bankers
in regard to his financial soundness. In case of a firm having branches, the
application for registration should be made only by the Head Office. The registering
authority shall, if satisfied, issue a certificate of registration to the exporter.
 2. Import Licence for Raw Materials, Intermediates Including Components
and Spares
 Application for import licence should be made only by the registered-
exports, whether merchant-exporter or manufacturer-exporter, in the prescribed
from to the licensing authority under whose jurisdiction the head office of the
registered exporter is situated.
 According to the procedure laid down, application for import licence
will be made in respect of the exports made during the preceding period. The
application should reach the licensing authority within one month after the period to
which the exports relate and should be accompanied by the following documents:
 Treasury challan showing the payment of application fee.
 The documents of export in the name of the registered exporter as detailed below:
 (i) Shipping bill duly authenticated by customs;
 (ii) Bill of lading; and
 (iii) Invoices duly attested by the negotiating bank.
 Original with a certified copy of the valid actual user licence (including the list of
goods attached to the licence) on which the items applied for are based. If the
applicant is unable to produce the original licence and the list of goods, a Photostat
copy thereof will also be accepted. The Photostat copy should be of such a size and
magnitude as may easily be readable.
 3. Allotment of Indigenous Raw Materials on Priority Basis
 Manufacturer-exporters as well as manufacturers, who sell to registered
merchant-exporters for export, may apply to the Director of Export Promotion,
Ministry of Commerce, for replenishment of the indigenous materials used in the
manufacture of goods for export.
 4. Drawback of import and Excise Duties
 The scheme of drawback of export and excise duties has been formulated by
government with the object of relieving the Indian exporter of the burden of import
and excise duties on the product exported, so as to put him on par, in the matter of
competitive position, with foreign competitors.
 5. General Security/General Surety for Executing Bond (Form B-I)
 The excisable goods can be exported outside India either under claim for
rebate of excise duty or under bond. The difference between these two procedures
is that in the case of former the duty is first paid and its refund claimed after
exportation, and in the latter case the goods are allowed to be exported without
payment of duty provided a bound in executed in form B-I (General Security).
 6. AR-4 Form
 Before excisable goods are removed from the factory for export, each
consignment is required to be presented to the Central Excise Officer having
jurisdiction over the factory together with an application in form AR-4 for claiming
rebate of excise duty. When the goods have been removed from the factory, a copy
of this application together with the goods is then presented by the exporter to the
Customs Collector or other duty authorized officer at the port who will certify that
the goods have been actually exported. On the basis of this endorsement the
exporter will claim the rebate of excise duty if he has already paid, or discharged his
obligation to that extent in case he has executed the bound.
 7. Drawback shipping Bill
 In order to take advantage of the drawback of import duty on the products
exported, shippers are required to give the details of the goods intended to be
exported under claim of drawback in a shipping bill which should clearly be marked
“Under claim for drawback”. Normally four copies of the drawback shipping bill are
prepared. Exporters should furnish the information under the various columns in the
drawback shipping bill so that the drawback is allowed expeditiously.
 8. Drawback Bill
 When the goods have been exported “Under claim for drawback”, a drawback
bill is prepared in order to claim the amount. This bill is in addition to the shipping
bill and requires information about the date of presentation of original bill of entry,
number and date of the drawback shipping bill, marks and number on the packages,
description of goods, weigh and quantity of the goods, amount of drawback, etc. It
has to be certified by the Collector of Customs that the amount of the bill does not
exceed the amount of import duty paid on the goods specified therein and drawback
has not been allowed on the same article in any previous bill.
 Export Procedure
 Having sent out letters and leaflets, it is necessary to be prepared to answer
in a proper manner the enquiries which will be received as a result of these first
efforts. No price lists would have been sent in the first instance, and interested
parties aboard will ask for these and also for payment terms, and possibly for
agency conditions, there will also be requests for samples.
 SEVENTEEN STEPS OF EXPORT PROCEDURE
 Step I: Receipt of an Enquiry
 The best way to do ask the enquirers themselves to supply information about
their business, stating
 (i) Whether or not they already handle any competing products;
 (ii) How long they have been in that business;
 (iii) What area of their countries they cover for sales purpose;
 (iv)Whether they intend to purchase goods on their own account or whether they
intend to act only as commission agents;
 (v) What other products they already sell; and
 (vi) The names and addresses of at least two firms which they already represent or
have represented in the past.
 When the aforesaid information has been supplied, it is advisable to write to the
firms whose names are given as references and ask for the following information,
giving the full name and address of the party about whom the enquiry is made:
 (i) How long they have dealt with the party about whom the enquiry is made?
 (ii) Has the party been their sole agent for the concerned territory?
 (iii) Does he order goods for himself or does he merely act as a commission agent?
 (iv) If he orders for himself, does he pay through a letter of credit, through a
sight draft or by 30 days or 60 days term draft, or in any other way?
 (v) If he is allowed to pay through a sight or term draft, it has to be seen
whether the party honours draft drawn on him according to the condition
specified therein?
 (vi) Has the party in the past done good work in promoting sales?
 Step II: Check on Restrictions on Foreign Exchange and Import in
Importer`s Country
 When an order is received, the first decision as to whether it will be filled is
based upon the approval of credit. The approval of the order for shipment should
also be contingent upon the ability of the customs to secure foreign exchange in
those countries where there are exchange restrictions. A list of such countries
should be kept, and whenever an order comes in from one of these countries, a
special approval on the exchange should be required. This is a matter which
naturally does not concern the credit standing of the individual customs but does
bear specifically upon the customer`s ability to secure the necessary foreign
exchange with which to pay for the order when the merchandise is received by
him.
 Step- III Scrutinise the Order
 The exporter should carefully scrutinize and cheek the contents of an export
order before its confirmation. It should broadly be in accordance with the
‘elements of contract’ which might have been conveyed to the overseas buyer, and
received along with the duplicate copy duly signed, of the export contract, in case
contract was sent by the exporter. In particular, the export order should be
scrutinized on the following aspects.
 Terms of payment. The buyer should have agreed to the terms of payment
conveyed to him. Where a letter of credit (LC) has been received, it should provide
that:
 Payment will be available in India. It implies that L/C issued by a foreign bank
must be confirmed by Indian bank;
 Documents stipulated in L/C will be submitted to an Indian Bank in India.
 Draft to be draw under L/C are to be Usance or sight drafts, and to be drawn on
the bank or the buyer.
 Credit validity period is sufficient for the collection of relevant documents.
 Payment is permissible according to exchange control regulations.
 Documents: What are the documents required by the buyer along with the bill of
exchange (draft) to be drawn on him? These documents could be either Master
document or:
 Commercial and/or consular invoice and customs invoice.
 Clean on board bill of lading.
 Certificate of foreign in general, or for availing GSP concessions.
 Packing list.
 Ermine insurance policy.
 Delivery Schedule. It should be in conformity with the exporter`s
manufacturing/procurement programme.
 Inspection of Goods. The pre-shipment inspection stipulated by the buyer is
to be effected by the Export Inspection Agency (EIA) and/or any other agency.
 It has to be seen whether labeling/packing requirements are usual or some special
type of packing is to be effected.
 Step IV: Acknowledgement of the Order
 Another step in filling the order is to acknowledge it. It may seen pointless to
acknowledge an order before the manufacturer or exporter is able to state
definitely when or, in fact, whether he will be able to fill it.
 The acknowledgement of the order should contain the following specific facts:
 (i) A courteous acknowledgement of the receipt of the order and “thank you
letter”.
 (ii) The exported date of shipment from the factory and from the seaboard.
 (iii) The price which should, of course, correspond to the original quotation
or established price list, and if there is any variation, a sound explanation for the
same.
 (iv) Credit terms under which the merchandise will be shipped. This, too,
should correspond with the original quotation.
 ) The method of shipment, that is, whether it is by ship, railway, air, parcel-post
or any other mode.
 (vi) Method of packing.
 (vii) Marks, which will be placed on the package, should be shown in the
acknowledgement.
 (viii) If the shipper must apply for an export licence, a statement to that
effect should be made and shipment should be contingent upon the shipper`s
ability to secure the export licence.
 (ix) The name of the Bank, which will be used for the purpose of collecting
the drafts; or it some special bank is preferred for a letter of credit, this fact
should be mentioned.
 Step V: Arranging the Goods – Export Production/Procurement
 As soon as the export order has been confirmed or finalized, preparations are
made for the production or procurement of the goods to be exported. The
manufacturer-exporter has to raise an internal indent on the production
department/division, which may also be sent either to the work Manager or the
Factory Manager.
 Step VII: Central Excise Clearance
 The excisable goods can be exported outside India either under claim for
rebate of excise duty or order bond. The difference between these two procedures
is that in the case of former the duty is first paid and it refund claimed after
exportation, and in the letter case the goods are allowed to be exported without
payment of duty provided is executed in from B-I (General Security) or from B-I
(General Surety).
 Step VI: Export Licence
 If the item being exported requires an export licence, the same should be
procured by the exporter from the licensing authority, i.e., Chief controller of Imports
and Exports.
 Step VIII: Apply to Export Inspection Council for Inspection
 Exporter should apply to EIC for preshipment Inspection. Under the Export
(Quality Control and Inspection) Act, 1963, the EIC will depute an inspector for
carrying out quality control and inspection of exportable products. After carrying
out the inspection, if the consignment is found to conform to the prescribed
specification, each package in the consignment is sealed by the inspecting officers.
 Step XI: Apply for Marine Insurance policy, if it is a C.I.F. Quotation
 As soon as the goods are ready for export, the exporter has to apply to
insurance company for an insurance cover/policy as the case may be. Where an
insurance policy is insisted upon by the importer, an insurance cover will not do.
The policy would be C.I.F. value plus 10 per cent to cover expenses. The insurance
policy should be obtained in duplicate by the exporter.
 Step X: Issue Instructions to the Clearing and Forwarding Agent
 A detailed note is prepared for the clearing and forwarding agent, giving
instructions regarding the shipment of the consignment (e.g., the shipment may be
made under claim for drawback). Along with this note, a master document and
from of bank guarantee should be forwarded to the forwarding agent.
 Step XI: Clearing and Forwarding Agent`s role for shipping and Customs
at the port
 On receipt of the above documents, the clearing and forwarding agent takes
delivery of the consignment from the railway/road authorities and arranges for its
storage in a warehouse.
 Step XII: Documents Returned by the Forwarding Agent
 The master document is returned by the clearing and Forwarding agent to
the exporter at this along with:
 Shipping bill;
 Original L/C (contract) Order;
 AR-4/AR-4A form in duplicate;
 Full set of clean-on-board bill of lading together with the required number of non-
negotiable copies.
 Step XIV: presentation of Documents by the Exporter to Bank
 The following documents are now presented by the exporter for
negotiation/collection:
 Master Document;
 GR-I form (duplicate and triplicate);
 Full set of clean-on-board bill of lading (all negotiable copies plus one non-
negotiable)
 Original L/C
 Bank certificate in prescribed form (in duplicate);
 Marine Insurance policy (in duplicate);
 Export contract/order; and
 Bill of exchange.
 Step XV: Processing of Documents by the Bank
 Bank examines the documents with reference to the terms and conditions of
the original order and also of the letter of credit. The exporter`s bank screens the
above documents and sends a set of the following documents to the importer`s
bank:
 Master Document (Original copy);
 Marine Insurance policy;
 Negotiable Bill of Lading (Original copy);
 Bill of exchange (Original copy).
 The banker sends GR-I form (duplicate copy) to the exchange control department
of the Reserve Bank of India. The triplicate copy of the form is sent to the Reserve
Bank of India of India on receipt of payment from aboard.
 The banker returns the following documents to the exporter:
 Original copy of the bank certificate; and
 (ii) Attested copies of the Master Document
 The exporter receives payment against the above documents.
 Step XVI: Central Excise Rebate
 A claim is filed by the exporter with the concerned maritime collector of
Central Excise for rebate on the central excise duty or for getting credit in his
bond account, as the case may be.
 Step XVII: Advance Licence/special Licence
 The exporter should file an application to the licensing authority for an
advance licence/special licence in accordance with the export-import policy of the
country at that point of time.
 INTERNATIONAL MARKETING MIX/4 PS
OF MARKETING

The international marketing mix consists

of 4 Ps.

1. Product
2. Price
3. Place
4. Promotion
 1. PRODUCT

“ A product is something both tangible and intangible. The

tangible products can be described in terms of physical attributes like
shape, dimension, components, form, color etc. The intangible products
include various services like merchant banking, mutual funds, insurance,
consultancy, air travel etc. However, sometimes both tangible and
intangible are combined to give a total product. For example, a German
company exports turn key projects (Technology, Machinery, expertise
and service) to USA and developing countries. The global markets must
see the total products which includes tangible and intangible.”
The study of product in the international
market includes

1. Product development

2. Product life-cycle

3. Branding decisions

4. Packaging decisions
 1. PRODUCT DEVELOPMENT

There are six stage of the product development :

I. Generating of a product idea: The development of Salt-

Cum-Sweet Biscuits concepts in one biscuit company is developed by

an accident of removing the divider by an employee.

II. Second stage involves the screening of ideas regarding

their feasibility.
 Continued….

III. Third stage involves business analysis to estimate the

product features, cost, demand and profit.

IV. Fourth stage involves development of the product by

laboratory, technical, production personnel.

V. The fifth stage involves test marketing.

VI. The sixth step is realizing the product as full scale.

 Market Segmentation

“ American markets give least importance to market

segmentation in this global business. The main purpose of the
market segmentation is to satisfy the customer needs more
precisely. Market segmentation helps to enter the foreign
markets in a phased manner. The success of Japanese in
entering U.S. market is attributed to this principle.”
 Product positioning

“ Product positioning attempts to occupy an appealing

space in a consumer’s mind in relation to the space occupied
by other competitive products. For example Bisleri Mineral
water in India, Mercedes-Benz for wealthy, Maruti for the
middle income, Xerox photocopy rather than Canon
photocopy, Mc. Donald’s etc. have positioned effectively.”
 Product Adoption

Product to be adopted in a foreign market must

demonstrate six factors. They are:

1. Relative advantage over existing alternatives.

2. Products cleanliness and sanitation are accepted in

rich countries.
 Compatible with local customs and habits

Refrigerators find less market in Asia where people prefer

fresh food. Japanese development the technology to their life styles but
they don’t change their life style towards technology. The electrical
kotatsu (foot warmer) is a traditional form of heater in Japan. New
kotatsu are equipped with a temperature sensor and microcomputer to
keep the interior temperature at a comfortable level. Japanese
automobiles have these factors whereas U.S. automobiles lacks this
facility.
 Observism

“If the product is used publicly the others can observe

the product. Blue jeans, watches, woolen coats etc. have this
character. Similarly refrigerators and TVs are placed in
drawing rooms in Asian countries to enhance the
observables.”
 Complexity

If the product’s qualities are difficult to understand

then other product has slow market acceptance

 PRODUCT LIFE CYCLE

The concept of life cycle of a human being, a product

or a business firm either domestic or global is well
established. The product life cycle concept generally indicates
that, a product starts with a beginning or introduction stage
and passes through the stages of growth, maturity and
eventually disappears from the market in its declining stage.
 The stages of product life cycle include

Introduction stage:

In this stage, the product is initially

introduced in the market. The product normally has low
sales, other features of this stage include high cost (per
unit) of sales, low competition and low profits or losses.
 Growth stage

During this stage, the product gains awareness

and acceptance by the customers. The features of this
stage include: fast growth in sales, profits and competition.
Market segmentation and introduction of other models or
sizes are the other features of this stage.
 Maturity

Product acceptance, sales and profits are

at the peak stage and are stabilized at this stage. The
competition is intensified at this stage profits starts declining
due to severe competition.
 Extension stages

The progressive companies at this stage introduce new

models new sizes, designs etc., in order to extend the
maturity stage and/or to get another growth stage. The
extension stages are characterized by slow growth of sales
and profits.
 Decline stage

Development of new product, change in the existing

product design, improving the quality etc., by the competitors make the
customers to shift from his product to the competitor’s products. In
addition, the new technology brings substitute product with more value.
For example, typewriters are replaced by computer. MS Office software
replaced gold star and other languages. The stage is characterized by
poor sales, losses etc., which force the company to with draw the
product from the market.
 International product life cycle model explains

1. High-income, mass-consumption countries initially export, and later

import the product as they lose their export markets.

2. Later, the other advanced countries shift from an importing country

to an exporting country.

3. After some time, even the less development countries shift from the
statue of importing country.

4. New Product are initially introduced in high-income countries/markets

as the latter offer high potential.
 5. Initially products are produced where they are sold.

6. Mostly product inventions take place in high-income countries.

7. Entrepreneurs in middle-income countries take the advantage of

low cost of lab our and other factors of production in the production of the
new products.

8. Market stabilizes when the product reaches maturity, the design,

technology and markets stabilize.
 9. Production from low income countries displaces the production of
the high income countries due to the cost advantage.

10. Companies of high-in come countries shift to low –in come to take
the advantage of low cost factors of production.

11. These companies gain the ownership and control over the
production of low- in come countries
 12. The producers of low-income countries produce and sell higher
volumes due to the low cost of production and price further these
producers also export in higher volumes due to heavy demand,
consequent upon low cost of factors.

13. Low-income countries export to high-income countries and

compete with the industries of high –income countries who enjoyed
monopoly at the initial stage of the cycle.
 14. With this stage cycle completes its turn. Textile is an example
of this cycle. This product has gone through the complete cycle for the
investing country (U.K.) other developed countries and finally the
developing countries .12 similarly, electronics industry passed through all
the stages. This product shifted from USA to Japan to Korea to India.
 Stages of International Product Life Cycle

Stages Zero: Local Innovation

The product in this stage

is a familiar product in the local market. Product innovations
take place mostly due to the changing wants of the local
people.
 Stage 1: Overseas Innovation

After a product is successful in the domestic market,

the product desires exporting it to the foreign markets due to
excess production compared to its demand in the domestic
company.
 Stage 2: Maturity

The development of the product reaches the peak

stage even in foreign market. The product modifies it and
develops it based on tests and preference of the customers in
foreign markets. The product exports the product even to less
developed countries in this stage.
 Stage 3: Worldwide Imitation

The local manufacturers in various foreign

countries start to imitate the popular foreign products. They
modify those products slightly based on the local needs and
product the at less cost and sell them at cheaper prices.
 Stage 4: Reversal

Competitive advantage of innovative or original

manufacturer disappears at this stage as producers in many
foreign countries imitate the product, develop it further and
product it at less cost. This stage also results in product
standardization and competitive disadvantage.
 (C) PRICING

There is no product without price and there is no

price without product. Thus, price is an integral part of
product. Price may be high from a cost stand point of view
and low from demand point of view. Fair price reflects the
perceived value of the product in question.
The study of international pricing includes

1. Pricing decisions

2. Pricing policies

3. Factors Affecting international pricing

4. Price Quotations

5. Dumping

6. Counter Trade
 PRCING DECISIONS

Thought the pricing is significant among the 4ps, it receives the last
attention in the international marketing. Prices decisions can be studied from the
following approaches:

1. Supply and Demand

2. Cost

3. Elasticity or Cross Elasticity of Demand

4. Exchange Rates

5. Market Share

6. Tariffs and Distribution Costs

7. Culture

8. Purchasing Power
 PRICING POLICIES

The Pricing polices of international companies

include:

1. Standard price policy

2. Two-tiered pricing

3. Market pricing
 Standard price policy:

Under the started price policy, the international

company sells the product at the same price for the
customers of any country or nationality. Crude oil producers
like Kuwait oil, Aram co and premix sell their products to all
customers at price determined by supply of and demand for
crude oil in the world crude oil market.
 Two-tiered pricing policy

International Company under this policy sells its

product at two prices, Viz., one price for the foreign sales.
This policy is adopted due to the insolvent of shipping costs,
tariffs and foreign distribution costs.
 Marketing pricing policy

International companies following this policy customer

their pricing on a market-by-market basis in order to
maximize their profits in each market. Japanese automobiles
follow this policy in pricing their cars.
 Alternative pricing strategies

There are a number of alternative pricing strategies in

addition to the above-mentioned strategies. These include:

1. Discounts (cash, quantity, functional etc.)

2. Financing or credit terms.

3. Bundle or unbundled.
 FACTORS AFFECTING INTERNATIONAL
PRICING

Pricing factors of international business vary

from those domestic business .A numbers of factors
affect the international pricing. The important among
them are:
 (a) Cost

Cost is the prime factor that affects the pricing in

international business. The costs include both
manufacturing cost and marketing cost. The exporters may
fix the price below the cost in a short-run period and
recover the losses incurred in the long-run. But in the long-
run, they fix the price above the cost of production and cost
of marketing.
 (b) Competition

The Global Company fix the price not only based on

cost but also on the price of the comparable competitors.
The exporter fixes the price in the short-run mostly based
on the competitor’s price in order to gain the market share.
 (c) Product Differentiation

The Product Differentiation provides wider choice to

the customer, who in turn pay higher price for it. Global
company uses the Product Differentiation in order to fix
varying prices.
 (d) Exchange Rate

The exchange rate provides opportunities in fixing

the products manufactured in developing countries and
marketed in advanced countries. In other words, such
product can be priced high due to the advantage of foreign
exchange. The vice versa is true in case of product
produced in advanced countries and marketed in developing
countries.
 (e) Economic conditions of the Importing
country

Many Global companies take the GDP, per capita income,

disposed income, spending pattern, ability to spend and such other
factors of the importing countries into while fixing the price for the
products to be marketed in that country. For example, Japanese
automobile companies, South Korea’s Kenyan civil Construction
Company, Sony, and Aiwa take these factors into consideration in fixing
the price.
 (f) Government Factors

The Government of the exporting company and the

importing country also affect the pricing policies and
practices. These factors include:

1. Margin regulation (profit rates) formulated and

implemented by the governments.

2. Price floors (lowest level of prices) and price ceiling

(highest level of price) determined by the governments.
 3. Subsidies provides by the governments in order to
encourage the domestic industry or to protect the domestic
customers.

4. Tax concessions provided by the governments in

order to encourage the export.

5. Other incentives like supply of finance, inputs etc. at

lower prices in order to encourage the domestic exports.
 ELEMENTS OF EXPORT PRICE STRUCTURE

The normal ex-price structure is as follows:

(i) Cost of production

(ii) Producer’s profit

(i)+ (ii) = Ex-factory gate price

(iii) Packing and Making

(iv) Loading charges at the factory

(v) Transportation charge to docks, railway station or airport

(vi) Handing charges and fee at port, railway station, airport

(vii) Cost of documents (like cost of lading and airway bill)

(viii) Consular invoice, certificate of origin

(ix) Export duty (if any)

(i)+ (ix) = c and f price

(x) Cost of insurance

(xi) Sea or air freight charges

(i)+ (xii) =CIF price
(xii) Unloading charges at destination

(xiii) Import duties and taxes

 (xiv) Fee paid to the clearing Agent
(i)+ (xv) = Landed prices
(xv) Transportation charge to Importer’s Warehouse

(xvi) Importer’s Margin/mark-up

(xvii) Mark-up/Margin of all other market intermediaries in the importing

country

(i)+ (xvii) =price of the consumer.

 PRICE QUOTATIONS

Quotation describes several aspects of the product to be

to be sold. The Important among them are: product
specification, price, delivery time, delivery location, time of
shipment, payment terms, terms of sales etc. Sales terms in
international business include variety of conditions. We shall
now, discuss various price quotations:
 Reworks (EXW) or Ex-Named point of
origin

In this, price is quoted from the point of origin of

the product. There are variation in the origins like ex-factory,
ex-warehouse, ex-mill, ex-mine, ex-plantation etc. the seller,
under this quotation, quotes the place, time of delivery. The
buyer takes the delivery of the product at that origin and
bears all expenses and risks from that point to the point of his
place.
 Free Alongside ship (FAS) – Named part of
shipment

Under this, the seller quotes the price including

delivery of goods alongside the vessel or any other mode of
transportation. The buyer bears all the expenses and ricks
from that point. This includes port of export as a point of
origin. The buyer’s legal responsibility starts when the seller
receivers a clear wharf age receipt.
 Free on Rail (FOR)/Free on Truck (FOT)

When the goods are to be sent by rail, the term

free of rail (FOR) is used. Similarly, when the goods are to be
sent by truck, the term free on truck (KOT) is used. The
obligation of the exporter is fulfilled, when then goods are
delivered to the carrier.
 Freight or carriage paid (FCP)

The exporter is responsible for the carriage of goods to

the agreed destination and has to pay freight up to the first
carrier/agreed point. The FCP term is used when the goods
are transported by road; rail or inland water.
 Free on Board (FOB)- Named Point

Under this, the seller quotes the point where price is

applicable. There are a number of points like the named
inland carrier at a particular inland point of departure, the
moved inland carrier at the named point of exportation, the
named port of shipment, the named inland point in the
importing country. Under this, seller clears the goods for
export.
 Free Carrier -Named Point

Under this mode, the exporter’s responsibility is fulfilled

when he delivers the goods into the custody of the carrier at
the Named point. This mode is used in case of multimodal
transport. The seller’s responsibilities include local delivery,
loading, issuing bill of loading. The buyer bears all risks and
expenses from the time the goods are placed on board.
 Cost and Freight (C & F) – to Named
Point of destination

Under this, the point of delivery is normally the

port of importing country. The price, therefore, includes the
cost of transportation to the named point of debarkation. The
buyer pays insurance charge. The buyer bears the rick and
cost when the goods pass the ship’s rail.
 Cost, Insurance and freight (CIF) - to
Named Point of destination

Under this, the used for quotation is any

location. But, the international chamber of commerce
recommends that the point should be the
destination. Thus the price includes cost of products,
insurance and transportation cost up to the point of
destination (debarkation).
 Ex-ship (EXS)

Under this mode , the exporter makes the

goods available to the importer on the ship, at the
named port of destination at this cost.
 Delivery Duty paid (DDP)

Under this the seller pays all the duties and

undertaken the delivery of goods to the named place in the
importing country. The seller obtains import license also, if
necessary, arranges for customs clearance through a broker
and arranges for the delivery of the final destination named
by the importer.