EXPORT AND IMPORT MANAGEMENT
INDIA’S EXPORT PERFORMANCE
DONE BY- S.SASIREKHA (DIB9027)
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TABLE OF CONTENTS TITLE INTERNATIONAL TRADE INTRODUCTION ADVANTAGES OF EXPORTING DISADVANTAGES OF EXPORTING INDIAN ECONOMY OVERVIEW EXPORT POLICIES OF INDIA Objectives of export policy Export promotion schemes Exports as in exim policy INDIA AND EXPORTS Major export industries of India Major destinations of export Major commodities of export INDIA’S CURRENT EXPORT PERFORMANCE Exports by principle commodities Direction of India’s exports
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TREND AND VOLUME OF INDIN EXPORTS India’s rank in the World Merchandise Trade EXPORT INCENTIVES Export credits EXPORT PROMOTION COUNCIL FEDERATION OF INDIAN EXPORTS ORGANISATION All India hip base of FIEO IMPACT OF GLOBAL SLOWDOWN ON INDIAN EXPORTS EXPORT ANALYSIS AND IMPERATIVES Export analysis Export imperatives CONCLUSION BIBLIOGRAPHY
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INTERNATIONAL TRADE International trade is exchange of capital, goods, and services across international borders or territories.[1] In most countries, it represents a significant share of gross domestic product (GDP). While international trade has been present throughout much of history, it’s economic, social, and political importance has been on the rise in recent centuries. Industrialization, advanced transportation, globalization, multinational corporations, and outsourcing are all having a major impact on the international trade system. Increasing international trade is crucial to the continuance of globalization. International trade is a major source of economic revenue for any nation that is considered a world power. Without international trade, nations would be limited to the goods and services produced within their own borders. International trade is in principle not different from domestic trade as the motivation and the behavior of parties involved in a trade does not change fundamentally depending on whether trade is across a border or not. The main difference is that international trade is typically more costly than domestic trade. The reason is that a border typically imposes additional costs such as tariffs, time costs due to border delays and costs associated with country differences such as language, the legal system or a different culture.
International trade uses a variety of currencies, the most important of which are held as foreign reserves by governments and central banks. Here the percentage of global
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cumulative reserves held for each currency between 1995 and 2005 are shown: the US dollar is the most sought-after currency, with the Euro in strong demand as well. Another difference between domestic and international trade is that factors of production such as capital and labor are typically more mobile within a country than across countries. Thus international trade is mostly restricted to trade in goods and services, and only to a lesser extent to trade in capital, labor or other factors of production. Then trade in good and services can serve as a substitute for trade in factors of production. Instead of importing the factor of production a country can import goods that make intensive use of the factor of production and are thus embodying the respective factor.
INTRODUCTION
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In economics, an export is any good or commodity, transported from one country to another country in a legitimate fashion, typically for use in trade. Export goods or services are provided to foreign consumers by domestic producers.[1] Export is an important part of international trade. Export of commercial quantities of goods normally requires involvement of the customs authorities in both the country of export and the country of import. The advent of small trades over the internet such as through Amazon and e-Bay have largely byed the involvement of Customs in many countries due to the low individual values of these trades. Nonetheless, these small exports are still subject to legal restrictions applied by the country of export. An export's counterpart is an import.
WHY WE NEED TO EXPORTS: There are many good reasons for exporting: The first and the primary reason for export are to earn foreign exchange. The foreign exchange not only brings profit for the exporter but also improves the economic condition of the country. Secondly, companies that export their goods are believed to be more reliable than their counterpart domestic companies assuming that exporting company has survive the test in meeting international standards. Thirdly, free exchange of ideas and cultural knowledge opens up immense business and trade opportunities for a company. Fourthly, as one starts visiting customers to sell one’s goods, he has an opportunity to start exploring for newer customers, state-of-the-art machines and vendors in foreign lands. Fifthly, by exporting goods, an exporter also becomes safe from offset lack of demand for seasonal products. Lastly, international trade keeps an exporter more competitive and less vulnerable to the market as the exporter may have a business boom in one sector while simultaneously witnessing a bust in a different sector. 6
No doubt that in the age of globalization and liberalizations, Export has became of the most lucrative business in India. Government of India is also ing exporters through various incentives and schemes to promote Indian export for meeting the much needed requirements for importing modern technology and adopting new technology from MNCs through t ventures and collaboration. ADVANTAGES OF EXPORTING Increased market size. Market suitability. Currency benefits Protection against a downturn in the domestic market. Economies of scale from manufacturing in larger batches. DISADVANTAGES OF EXPORTING Sometimes higher costs of traveling abroad to obtain orders. High management fees, shipping charges, agent's fees, etc., can sometimes increase the exporter's prices to a level which makes goods and services uncompetitive in overseas markets. Market unsuitability. Different cultures, customs and languages can all present problems to the exporter and can mean that a product and service suitable in the UK has virtually no market abroad. Import rules and regulations vary between countries, sometimes rules change rapidly and dramatically. Shipping rules and regulations can prove complicated Collecting long-standing payments and debts can prove a very serious problem
INDIAN ECONOMY OVERVIEW
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1. The economy of India is the fourth largest in the world, with a GDP of $3.63 trillion at PPP, and is the tenth largest in the world with a $691.9 billion at 2004 USD exchange rates and has a real GDP growth rate of 6.2% at PPP. 2. Growth in the Indian economy has steadily increased since 1979, averaging 5.7% per year in the 23-year growth record. 3. Indian economy has posted an excellent average GDP growth of 6.8% since 1994 India, the fastest growing free-market democracy in the world, ed a growth rate of 8.2 percent in FY 2004. 4. India has emerged the global leader in software and business process outsourcing services, raking in revenues of US$12.5 billion in the year that ended March 2004. 5. Agriculture has fall to a drop because of a bad monsoon in 2005. There is a paramount need to bring more area under irrigation. 6. Export revenues from the sector are expected to grow from $8 billion in 2003 to $46 billion in 2007. 7. India’s foreign exchange reserves are over US$ 102 billion and exceed the forex
reserves of USA, , Russia and . This has strengthened the
Rupee and boosted investor confidence greatly. 8. A strong BOP position in recent years has resulted in a steady accumulation of foreign exchange reserves. The level of foreign exchange reserves crossed the US $100 billion mark on Dec 19, 2003 and was $142.13 billion on March 18, 2005. 9. Reserve money growth had doubled to 18.3% in 2003-04 from 9.2 in 2002-03, driven entirely by the increase in the net foreign exchange assets of the RBI.
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10. Reserve money growth declined to 6.4% in the current year to January 28, 2005. 11. During the current financial year 2004-05, broad money stock (M3) (up to December 10, 2004) increased by 7.4 per cent (exclusive of conversion of nonbanking entity into banking entity, 7.3 per cent) 12. Economics experts and various studies conducted across the globe envisage India and China to rule the world in the 21st century.
EXPORT PROCEDURE OPEN A CURRENT WHICH DEALS WITH FOREIGN EXCHANGE • Obtain an importer-exporter code number from regional licencing authority •
Get ed wit EPC or FIEO
•
Obtain RCMC
THE PROCEDURE TO BE FOLLOWED BY THE EXPORTER Examine the export contract or L/C Instructions to factory/supplier Preshipment inspection and excise clearance Dispatch of consignment to the port of shipment Dispatch of documents by the factory to port department Arrange insurance coverage Instructions to clearing and forwarding agent Port shipment and customs formalities Loading on board Dispatch of documents to C&F agent
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Certificate of origin to be obtained by the exporter from authorities like export inspection agency Shipment advise to importer Presentation of documents to the bank for negotiation Dispatch of documents by the exporters bank to the importers bank after scrutiny Receipt of payment by the exporter against the documents submitted Rebate of central excise duty, duty drawback and export benefits
Documents Required Certain documentation takes place while exporting from India. Special documents may be required depending on the type of product or destination. Certain export products may require a quality control inspection certificate from the Export Inspection Agency. Some food and pharmaceutical product may require a health or sanitary certificate for export. Shipping Bill/ Bill of Export is the main document required by the Customs Authority for allowing shipment. Usually the Shipping Bill is of four types and the major distinction lies with regard to the goods being subject to certain conditions which are mentioned below: •
Export duty/ cess
•
Free of duty/ cess
•
Entitlement of duty drawback
•
Entitlement of credit of duty under DEPB Scheme
•
Re-export of imported goods
The following are the documents required for the processing of the Shipping Bill: •
GR forms (in duplicate) for shipment to all the countries.
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4 copies of the packing list mentioning the contents, quantity, gross and net weight of each package.
•
4 copies of invoices which contains all relevant particulars like number of packages, quantity, unit rate, total f.o.b./ c.i.f. value, correct & full description of goods etc.
•
Contract, L/C, Purchase Order of the overseas buyer.
•
AR4 (both original and duplicate) and invoice.
•
Inspection/ Examination Certificate.
The formats presented for the Shipping Bill are as given below: White Shipping Bill in triplicate for export of duty free of goods. Green Shipping Bill in quadruplicate for the export of goods which are under claim for duty drawback. Yellow Shipping Bill in triplicate for the export of dutiable goods. Blue Shipping Bill in 7 copies for exports under the DEPB scheme. Note: - For the goods which are cleared by Land Customs, Bill of Export (also of 4 types - white, green, yellow & pink) is required instead of Shipping Bill. Documents Required for Post Parcel Customs Clearance In case of Post Parcel, no Shipping Bill is required. The relevant documents are mentioned below: •
Customs Declaration Form - It is prescribed by the Universal Postal Union (UPU) and international apex body coordinating activities of national postal istration. It is known by the code number 2/ 3 and to be prepared in quadruplicate, signed by the sender.
•
Dispatch Note, also known as 2. It is filled by the sender to specify the action to be taken by the postal department at the destination in case the address is nontraceable or the parcel is refused to be accepted.
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Prescriptions regarding the minimum and maximum sizes of the parcel with its maximum weight : Minimum size: Total surface area not less than 140 mm X 90 mm. Maximum size: Lengthwise not over 1.05 m. Measurement of any other side of circumference 0.9 m./ 2.00 m. Maximum weight: 10 kg usually, 20 kg for some destinations.
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Commercial invoice - Issued by the seller for the full realisable amount of goods as per trade term.
•
Consular Invoice - Mainly needed for the countries like Kenya, Uganda, Tanzania, Mauritius, New Zealand, Burma, Iraq, Ausatralia, Fiji, Cyprus, Nigeria, Ghana, Zanzibar etc. It is prepared in the prescribed format and is signed/ certified by the counsel of the importing country located in the country of export.
•
Customs Invoice - Mainly needed for the countries like USA, Canada, etc. It is prepared on a special form being presented by the Customs authorities of the importing country. It facilitates entry of goods in the importing country at preferential tariff rate.
•
Legalised/ Visaed Invoice - This shows the seller's genuineness before the appropriate consulate/ chamber of commerce/ embassy. It do not have any prescribed form.
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Certified Invoice - It is required when the exporter needs to certify on the invoice that the goods are of a particular origin or manufactured/ packed at a particular place and in accordance with specific contract. Sight Draft and Usance Draft are available for this. Sight Draft is required when the exporter expects immediate payment and Usance Draft is required for credit delivery.
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Packing List - It shows the details of goods contained in each parcel/ shipment.
•
Certificate of Inspection - It shows that goods have been inspected before shipment.
•
Black List Certificate - It is required for countries which have strained political relation. It certifies that the ship or the aircraft carrying the goods has not touched those country(s).
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Weight Note - Required to confirm the packets or bales or other form are of a stipulated weight.
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Manufacturers/ Supplier's Quality/ Inspection Certificate.
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Manufacturer's Certificate - It is required in addition to the Certificate of Origin for few countries to show that the goods shipped have actually been manufactured and is available.
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Certificate of Chemical Analysis - It is required to ensure the quality and grade of certain items such as metallic ores, pigments, etc.
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Certificate of Shipment - It signifies that a certain lot of goods have been shipped.
•
Health/ Veterinary/ Sanitary Certification - Required for export of foodstuffs, marine products, hides, livestock etc.
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Certificate of Conditioning - It is issued by the competent office to certify compliance of humidity factor, dry weight, etc.
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Antiquity Measurement - Issued by Archaeological Survey of India in case of antiques.
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Transhipment Bill - It is used for goods imported into a customs port/ airport intended for transhipment.
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Shipping Order - Issued by the Shipping (Conference) Line wh about the reservation of space of shipment of cargo through the specific vessel from a specified port and on a specified date.
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Cart/ Lorry Ticket - It is prepared for ittance of the cargo through the port gate and includes the shipper's name, cart/ lorry No., marks on packages, quantity, etc.
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Shut Out Advice - It is a statement of packages which are shut out by a ship and is prepared by the concerned shed and is sent to the exporter.
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Short Shipment Form - It is an application to the customs authorities at port which advises short shipment of goods and required for claiming the return.
•
Shipping Advice - It is prepared in aligned document to be used to inform the overseas customer about the shipment of goods.
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EXPORT POLICIES OF INDIA The foreign trade of India is guided by the Export Import (EXIM) Policy of The Government of India and is regulated by the Foreign Trade (Development and Regulation) Act, 1992. OBJECTIVES OF EXPORT POLICY To establish the framework for globalization. To promote the productivity competitiveness of Indian Industry. To encourage the attainment of high and internationally accepted standards of quality. To augment export by facilitating access to raw material, intermediate, components, consumables and capital goods from the international market. To promote internationally competitive export substitution and self-reliance. There is an Export Promotion Capital Goods (EPCG) Scheme under which exporters are allowed to import capital goods (including computer systems) at concessionary customs duty, subject to fulfillment of specified export obligations. Service industries enjoy the facility of zero import duty under the EPCG Scheme. Likewise, hospitals, air cargo, hotels and other tourism-related industries. Software units can use data communication network to export their products. Export Promotion Schemes Assistance to States for Infrastructure Development of Exports [ASIDE]
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Market Access Initiative [MAI] Marketing Development Assistance [MDA] Towns of Export Excellence Target plus Scheme. Served from India Scheme Service Export Promotion Council
EXPORTS AS IN, EXIM POLICY FALL UNDER THE FOUR CATEGORIES 1. Prohibited Items: Which items completely banned from the exports. All forms of wild animals including their parts and products. Special Chemicals as notified by the DGFT. Exotic birds as notified by the DGFT. Beef. Sea Shells, as specified Human Skeleton. Peacock Tail Red sanders wood in any form. 2. Restricted Items: Items allowed for exports under special license issued by the DGFT. Dress materials, ready-made garments, fabrics or textile items with Imprints of excerpts or verses of the Holy Quran. Horses – Kathiawadi, Marwari, and Manipuri breeds. Fresh and frozen silver prom frets of weight less than 300gm. Paddy (Rice in husk). Seaweeds of all types. Chemical Fertilizer all types 3. Canalized Items : can be exported without an export license through designated State Trading Enterprise Onions (except Bangalore rose onion and krishanapuram onion) 15
Niger seeds Gum karaya Iron ore, manganese ore and chrome ore Crude oil 4. Freely Exportable Items: can be exported without an export license from DGFT. Military stones as notified by DGFT Exotic birds such as, bangali, finches, white finches and zebra Bones and bones product Basmati rice
INDIA AND EXPORTS Major Export Industries of India Indian exporting industries are growing rapidly. The sectors mentioned are improving day by day and they are more focused towards the export part. Agriculture Leather & leather products Paper & paper products Handicrafts Apparels and textiles Plastics & plastic products Chemicals Engineering goods Gems & jewelry
Major Destinations of Export Export (Value US$ Million) Countries
2000-01
2001-02
2002-03
2003-04
USA
9251.55
8542.34
10924.05
11490.30
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UAE
2586.26
2500.28
3336.12
5093.42
Hong Kong
2635.60
2374.42
2620.11
3258.92
UK
2275.73
2168.23
2502.89
3041.27
830.03
955.19
1980.61
2967.05
1887.42
1794.45
2112.15
2529.07
Singapore
862.41
975.62
1425.27
2122.14
Belgium
1456.00
1395.36
1666.15
1810.62
Japan
1782.20
1515.58
1868.86
1718.88
Italy
1299.51
1210.64
1360.60
17.08.33
Bangladesh
874.41
1005.59
1179.05
1650.43
Sri Lanka
630.48
633.04
923.37
1323.88
1016.88
948.22
1076.88
1293.22
Netherlands
875.80
866.82
1050.63
1281.11
Indonesia
394.87
535.53
828.20
1126.19
Saudi Arabia
809.61
829.25
943.19
1122.93
Spain
663.03
679.51
812.59
994.10
Iran
221.96
253.89
656.43
920.02
Malaysia
601.10
776.33
751.32
891.32
Thailand
528.69
635.29
713.04
829.62
44147.44
43976.01
52856.28
63622.50
China
Total (incl. others)
Major Commodities of Export PRODUCTS
US$ MILLION
% CHANGE
2007-08 2008-09
% SHARE IN TOTAL 2008-09
All Commodities
52856.2 63622.5 8 0
20.37
100
Gems & Jewellery
9053.38
10537.6 1
16.39
16.56
Textiles
5942.47 6469.28
8.87
10.17
Readymade garments
5704.68 6104.53
7.01
9.59
Drugs, Pharma & fine chemicals
2567.16 3124.83
17.60
4.91
17
Machinery & Instruments
2013.65 2778.88
38.00
4.37
Manufacturer of Metals
1852.42 2414.37
30.34
3.79
Ores & minerals
2001.23 2346.88
17.27
3.69
Prim. & semi fin iron & steel
1625.69 2146.13
32.01
3.37
Leather & leather manufactures
1853.12 2030.69
9.58
3.19
Transport equipment
1337.36 1897.49
41.88
2.98
Plastic & linoleum products
1224.84 1743.74
42.36
2.74
Electronic goods
1255.99 1690.88
34.63
2.66
Marine Products
1435.27 1323.99
-7.75
2.08
Dyes & Intermediates
712.69 1024.89
43.81
1.61
Rubber manufactured products
485.08
21.07
0.92
587.30
INDIA’S CURRENT EXPORT PERFORMANCE
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During the last five year period i.e. 2004-2008, Indian exports have done very well in comparison to the performance recorded by some of the major exporting nations both developed as well as emerging markets. In fact, India’s average annual growth rate of merchandise exports at 25.0 percent was the third fastest after Russia (28.5 percent) and China (26.8 percent). In the face of global slowdown and financial crisis, Indian exports have shown a good measure of resilience during 2008 as the deceleration in the exports growth was less marked in case of India as compared to a sharp decline in exports growth recorded by other leading exporting countries like USA, , Japan, China etc. In fact, India recorded a marginally higher growth rate of 21.8 percent during 2008 as compared to 21.5 percent during 2007. As compared to this, export growth of China, the fastest growing economy in the world, in 2008 dropped sharply to 17.2 percent as compared to 25.8 percent in 2007 reflecting a greater effect of the global slowdown on its exports.
EXPORTS BY PRINCIPLE COMMODITIES
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DIRECTION OF INDIA’S EXPORTS
During the
period
2008-09 (April-February), the share of Asia and ASEAN region comprising South Asia, East Asia, Mid-Eastern and Gulf countries ed for 51.4 per cent of India’s total exports. The share of Europe and America in India’s exports stood at 23.8 per cent and 16.5 per cent respectively of which EU countries (27) comprises 22.3 per cent. During the period, USA (12.0 per cent), has been the most important country of export destination followed by United Arab Emirates (10.8 per cent), China (5.1 per cent), Singapore (4.7 per cent), Netherland (3.7 per cent), Hong Kong (3.7 per cent), U.K. (3.6 per cent), (3.4 per cent), Saudi Arabia (3.0 per cent), Belgium (2.6 per cent) and Italy (2.2 per cent).
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TREND AND VOLUME OF INDIAN EXPORTS (Value in Rs. Crore) Year
Exports
Growth Rate (%) Trade Deficit
2003-04 2004-05 2005-06 2006-07 2006-07(Apr –Dec.) 2007-08 (Apr – Dec.) -P
293367 375340 456418 571779 416176
15.0 27.9 21.6 25.3 -
-65741 -125725 -203991 -268727 -195346
448377
7.7
-233711
India’s Rank in the World Merchandise Trade YEAR 2004 2005 2006 2007 2008
EXPORT 30 29 28 26 26
IMPORT 23 17 17 18 17
Source: International Trade Statistics (WTO) An export target of US $ 200 billion was set for the year 2008-09. As against this, exports reached a level of US $ 168.7 billion during the year ing a growth of 3.5 percent. The set back was primarily on of global recession which resulted, as per WTO, in shrinkage of world trade, in volume , to 2 percent in 2008 from a growth of 6 percent in 2007. five years during
the
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Despite the recent setback faced by India’s export sector, our merchandise exports recorded a Compound Annual Growth Rate (CAGR) of 21.5 percent during the five year period from 2004-05 to 2008-09. Performance of export during these five year Policy period clearly reflects a significantly higher trend of growth of exports as compared to the preceding five years when the exports increased by a lower CAGR of 14.0 percent.
EXPORT INCENTIVES The Government of India has framed several schemes to promote exports and to obtain foreign exchange. These schemes grants incentive and other benefits. The few important export incentives, from the point of view of indirect taxes are briefed below: Free trade zones Electronic hardware technology park/software technology park Advanced license/duty exemption entitlement scheme Export promotion capital goods scheme Deemed exports Manufacture under bond Duty drawback EXPORT CREDITS Export credit is providing pre-shipment and post-shipment credit either in Indian rupees or in foreign currency to an exporter. The credit is given for short term i.e. up to 6 months, medium/ long term which extends more than 6 months according to the eligibility of the products and projects. Usually medium/ long term export credit is given after inspecting the supplier's credits. To promote the export promotion drive, the Government of India established Export Credit Guarantee Corporation of India Limited (ECGC) in 1957 to cover the risk of
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exporting on credit. This organization offers a range of services to exporters. They are as mentioned below: •
It provides credit risk insurance covers to the exporters against there loss in export of goods and services.
•
It offers guarantees to the banks and financial institutions in order to enable the exporters to obtain better facilities from them.
•
It provides Overseas Investment Insurance to the Indian companies investing in t ventures abroad as equity of loan. .
EXPORT PROMOTION COUNCIL The Export Promotion Councils are non-profit organizations ed under the Indian Companies Act or the Societies Registration Act, as the case may be. They are ed by financial assistance from the Government of India. ROLE : The main role of the EPCs is to project India's image abroad as a reliable supplier of high quality goods and services. In particular, the EPCs encourage and monitor the observance of international standards and specifications by exporters. The EPCs keep abreast of the trends and opportunities in international markets for goods and services and assist their in taking advantage of such opportunities in order to expand and diversify exports. FUNCTIONS: The major functions of the EPCs are as follows: 1. To provide commercially useful information and assistance to their in developing and increasing their exports 2. To offer professional advice to their in areas such as technology up gradation, quality and design improvement, standards and specifications, product development and innovation etc. 3. To organize visits of delegations of its abroad to explore overseas market opportunities.
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4. To organize participation in trade fairs, exhibitions and buyer-seller meets in India and abroad. 5. To promote interaction between the exporting community and the Government both at the Central and State levels 6. To build a statistical base and provide data on the exports and imports of the country, exports and imports of their , as well as other relevant international trade data.
FEDERATION OF INDIAN EXPORTS ORGANIZATION FIEO-India's Premier Institution for International Trade
The Federation of Indian Export Organizations (FIEO), non profit organizations set up by the Ministry of Commerce, Govt. of India in 1965 to co-ordinate and focus the efforts of all organizations in the country engaged in export promotion. The Federation has evolved into a key player in the promotion of trade, investment and collaboration. FIEO provides the content, direction and thrust to India’s expanding international trade. FIEO represents the interest of professional government recognized exporting firms, consultancy firms, service exporters, banks, export management training institutes etc. FIEO representing large, medium & small scale exporting units contribute more around 70% global exports of our country. Its hip comprises of exporting firms with strong credentials, called Government-recognized Export House, Star Export House, Trading House, Star Trading House and Premier Trading House besides Consultancy firms. Representation from wide spectrum of industry:
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FIEO provides a unique platform to the businessmen dealing in Multi Products. FIEO hip is offered to exporters dealing in various goods and services and nearly all the products fall under its gamut. It is the only body authorized in India to exporters not covered under any other Export Promotion Council of India. With customer oriented approach, the confidence and satisfaction of the business community on FIEO has
grown
which
has
reflect
in
the
25
continuous
rise
in
hip.
The scope of the Federation reaches out throughout India. It has a well established network throughout India and has offices at all major business centers of India. All India hip Base of FIEO
FIEO works as a partner of the Government of India in providing inputs on various trade policy issues and also acts a strong linkage between the Government and the Industry. It takes up problems /issues of its , organizes capacity building courses to provide a conducive domestic atmosphere and to increase their competitive edge on one hand and organizes international activities to give its a global reach. FIEO is the one stop organization for any foreign investor, buyer or seller looking for a trade partner in India.
IMPACT OF GLOBAL SLOWDOWN ON INDIAN EXPORTS
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The global slowdown has affected India’s exports by way of default in payment or delayed realization for exports resulting in cash flow
•
difficulties for the exporters; •
difficulty in executing orders in hand owing to lack of additional credit limit;
•
difficulty in providing covers for high risk countries/ buyers by Export Credit Guarantee Corporation (ECGC);
•
reluctance of exporters to execute orders for fear of defaults; and
•
Tougher ‘due diligence’ by Banks in extending Pre and Post-shipment credit and insurance cover by ECGC
EXPORT ANALYSIS AND IMPERATIVES Export analysis: Strengths Cost competitiveness in of labor and raw material. Established manufacturing base. Economics of scale due to domestic market. Potential to harness global brand image of the parent company. Global hub policy for small cars
• • • •
Weakness • •
Perception about quality. Infrastructure bottlenecks.
Opportunities •
Huge export markets such as Europe, America, Africa, and others for Indian cars
Threats • •
China, Malaysia, Thailand, etc. Many other countries also have strategies for export promotion
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Export Imperatives: Internal Factors: • • • •
Attaining high quality for global standards. Continuous cost reduction for global competitiveness. Supply chain management (logistics). Attaining economies of scale & scope.
External Factors: • •
Improve infrastructure (ports, roads, etc). Improve EXIM regulations.
CONCLUSION If there is any sector in India’s economy that has suffered the most in the current global economic downturn it is the export sector. It has been recording consistent fall for the last 10 months now. In July, it ed a 28% fall. The overall growth in exports in 200809 has been just 3.4 % against over 20 % in the preceding 4 years. In volume it was $168 billion in 2008-09. The persistent fall in exports is due to contraction of world demand in countries which import goods and services from India. Protectionist measures adopted by the western countries have complicated the situation. MEASURES ADOPTED BY THE GOVERNMENT TO TACKLE THE ISSUES THAT CONFRONT OUR EXPORTS Increasing the level of exports by providing as many incentives as possible to the exporters. Extension of Income Tax holiday for exporters for one more year and continuance of duty refund scheme till December 2010. The incentives available under the Focus Market Scheme have been raised from 2.5 to 3 % and their validity periods have also been extended
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The exporters will now be able to import machinery and technology that they need to improve their competitiveness in the manufacturing sector, in certain cases duty free. Exporters will also be provided with adequate finances in dollars for this purpose by cutting down transaction costs With these measures the Government hopes to achieve the annual export growth rate of 15% in 2010 and 2011 against just 3.4 % recorded in 2008. In volume it will be raised from last years $ 168.7 billion to $ 200 billion by March 2011. In the next three years this growth is targeted to rise to about 25 percent per annum. By 2014 India’s exports of goods and services is expected to be doubled.
BIBLOGRAPHY Indiamart.com Indianindustry.com Surfindia.com Commerce.nic.in
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