Major Initiatives:-

1. Focus Markets Scheme – 26 new markets added in Latin America and Asia – Oceania region, at present 83 countries in Africa, Central America, C I S and Eastern Europe. Incentive in the form of Duty Free Scripts has been raised from 2.5% to 3%.

2. EPCG scheme at Zero Duty introduced

3. DEPB scheme extended till 31-12-2010.

4. Market Linked Focus Product Scheme introduced for Export of identified products to 13 identified markets and incentive raised from 1.25% to 2%.

Major Initiatives:-

5. EOU’s allowed to sell DTA upto 90%

6. 2% Interest Subvention upto 31-10-2010.

7. Rs. 5000 Crores refinance facility to EXIM Bank.

8. Special refinance facility to Banks.

9. Made in India Show at least in Six Countries.

10.Premier Trading House – Rs. 7500 Crores (Cr.10,000)

11.Grant of 1% Status Holders Incentive Scripts for Import of Capital Goods

103090.54

126262.67

162983.9168704

51545

35432

23.41% 22.48% 29.08% 3.40% 22.30%

-31.20%-20000

0

20000

40000

60000

80000

100000

120000

140000

160000

180000

Exports in ($ Million)

Growth (in %)

Targets:-

1. Annual Growth of 15%, with an annual Export target of $ 200 bn by March, 2011

2. 2011-2014 Export growth 25% Per Annum, Double Exports of Goods and Services by 2014

3. Double India’s share in Global Trade by 2020

1. Business Structure

2. Raising Capital

3. Choosing Partners

4. Realty Issues

5. Sector Approvals

6. Tax Compliance

7. Forex Laws

8. Protecting IPR

9. Labour Laws

10. Product Liability

Buyer Study

Execution of an Export Order

Successful execution of anExport Order at least in thecontext of SME’s in ourCountry it is mostly a verbalor a very sketchy, often evenan e-mail order.

It neither contains fulldetails normallydesirable for anExporter, nor the basison which this order isreceived.

I am referring to an exportOrder conforming to theelements of an Exportcontract. If not it may leadto Trade Disputes in future,which often result in

non-payment \ delay inpayment by the buyer.

So friends in thechanged scenario, i.e.when we have very littleknowledge about thecharacter and creditworthiness of buyer,

It is imperative to haveat least an confirmedorder which should bebased on properlynegotiated terms andconditions under which

We will Export. The least we can do is to know about

1. Product - Full Details, Specification, Size, Number i.e. Quantity

2. Pre-Shipment Inspection

3. INCO-Terms like FCA, FAS, CPT, CIP, FOB, CIF, DDP

4. Taxes, Charges etc.

5. Period of Delivery- Mode of Transport

6. Currency – Rate of exchange – Fluctuations –Mode of Payment

7. Discount, Commissions, Packing, Licences Requirments

EXW - EX WORKS (named place)*

FCA - FREE CARRIER (named place)

FAS - FREE ALONGSIDE SHIP (named port of shipment)*

FOB - FREE ON BOARD (named port of shipment)

CFR - COST AND FREIGHT (namedport of destination)

CIF - COST, INSURANCE AND FREIGHT (named port of destination)*

CPT - CARRIAGE PAID TO (named place of destination)

CIP - CARRIAGE AND INSURANCE PAID TO (named place of destination)*

DAF - DELIVERED AT FRONTIER (named place)*

DES - DELIVERED EX SHIP (named port of destination)

DEQ - DELIVERED EX QUAY (named port of destination)*

DDU - DELIVERED DUTY UNPAID (named place of destination)*

DDP - DELIVERED DUTY PAID (named place of destination)*

ICC recommends that

"Incoterms 2000" be referred tospecifically whenever the terms areused, together with a location. Forexample, the term "Delivered atFrontier" (DAF) should always beaccompanied by a reference to anexact place and the frontier to whichdelivery is to be made.

Here are three examples of correct use of Incoterms:

FCA Kuala Lumpur Incoterms 2000

FOB Liverpool Incoterms 2000

DDU Frankfurt Schmidt GmbH Warehouse 4 Incoterms 2000

1. Advance Payments

2. Documents against Payments

3. Documents against Acceptance

(a) Provision of Credit without Acceptance

4. Letter of Credit

A documentary credit is a signedinstrument embodying anundertaking by the banker of a buyerto pay his seller a certain sum ofmoney on presentation of documentsevidencing shipment of specifiedgoods and subject to compliance withthe stipulated terms and conditions.

Issuance

Buyer Seller

Advising BankIssuing Bank

Utilization

Buyer Seller

Advising BankIssuing Bank

Bill of Exchange1. Date 2. Signature

3. Endorsement

4. Letter of Credit Number

5. Term-Sight or Usance Dates

6. Amount and Currency

7. Words and Figures tally

8. Drawn on correct Party

Invoice1. Invoice heading in your company’s name,

expressed and spelled as in Letter of Credit.2. Made out in name of buyer, expressed and

spelled exactly as in the Letter of Credit.3. Description of goods – including import licence

or proforma details price and terms of delivery –worded and spelled exactly as set out in the Letter of Credit.

4. Value not more then the Letter of Credit and the Bills of Exchange

5. Authenticated as required under the credit.

Transport Document1. Type of transport Documents

2. Consignor – can be different from beneficiary

3. Consignee’s name and spelling

4. Places and Ports

5. Clauses

6. On-Deck shipment

Insurance Documents1. Type e.g. a Certificate2. Correct amount e.g. CIF or CIP plus per cent3. Same currency as the Letter of Credit unless otherwise

stipulated in the Letter of Credit4. Risks covered5. Date – not later then date of issue of the transport

document.6. Endorsed if necessary7. The insurance document must indicate the risks are

covered at least between the place of taking in charge or shipment and the place of discharge or final destination as stated in credit.

Once the discrepant documents aretendered to the negotiating bank. Theelement of delay is introduced in thetransaction and if the discrepancies arebeyond correction, the security affordedby the documentary credit is lost and theseller is solely at the mercy of the buyer.

The buyer has the following options available to him

The buyer take up the documents despite discrepancies

The buyer may use discrepant document as a means to delay the payments

One of the virtues of L\C is “insurance against renegotiation”

The buyer might like to wriggle out or transaction

Following penalties on the exporter-beneficiary of L\C

Interest loss on account of delays at various stages

Cost of indemnity

Demurrage and warehousing charges at destination

Cost of Funds

Cost of discount

either offered or foregone

Discount % / (100-discount%) X 365 / (final date – discount period)

For example if terms are 3/10 net 30 (i.e. 3% discount if paid within 10 days, otherwise full amount paid within 30 days)

3/97 X 365/20 = 0.309 X 18.25 = 56%

Working Capital

Management

Management of

Receivables

Inventory Management

ECGCThe corporation has classifiedalmost 220 countries into its seven-fold classification for country riskassessment purposes and fordetermining its premium ratesunder the short, medium and longterm insurance covers issued by it.

A1 Insignificant

A2 Low

B1 Moderately Low

B2 Moderate

C1 Moderately High

C2 High

D Very High

Apply for the credit limit on the buyer well in time At the time of making shipment check that the ECGC Policy is in

force Send your monthly declarations of shipment regularly along with

premium amount Make sure that the outstanding bills against the buyer\policy at

any time do not exceed the maximum liability Obtain special endorsement for covering export under L\C Your overseas buyer should have no knowledge of your insurance

policy Inform defaults at the earliest to the ECGC Do not pay premium after default by the buyer Do not make compromise with your buyer without the prior

approval of the ECGC Do not extend tenure of the bills without approval of ECGC For calling back the goods take prior approval of the ECGC

Covering the Foreign Exchangerisk is termed as hedging therisk. If the company dose notwant to hedge, it means it istaking a view that the futuremovements of exchange rate willmove in its favour.

Banks offer forward exchange contracts both for sale and purchase transactions to customers with a maturity date for a fixed amount at a determined rate of exchange at the outset. Normally contracts are entered in India for a period where the maturity period of the hedge dose not exceed the maturity of the underlying transaction. The customer has the option to choose the currency of hedge and tenor.

An Exporter may need finance for execution of anExport Order from the date of receipt of an Export-Order till the date of realization of the Exportproceeds at any stage. Financial assistanceextended to the Exporter from the date of receiptof Export Order till the date of shipment is knownas pre-shipment credit. This finance is extended toan exporter for the purpose of procuring rawmaterials processing, packing transporting,warehousing of goods meant for exports. Creditfacility extended to an Exporter from the date ofshipment of goods till the realization of the Exportproceeds is known as post-shipment credit.

Export

Financing

by Banks

Pre-Shipment

Packing Credit

Import Letters of

Credit

Post-Shipment

Export Bill Finance