FROM 1st JUNE 2008 TO 31st JULY 2008

SUBMITED BY GUIDED BY SUBMITED TO

AVTAR SINGH YOGESH KHATTAR F.M.S HARIDWAR

MBA (B.E) I.T.L HOSHIARPUR

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ACKNOWLEDMENT

I am overwhelmed in all humbleness and gratefulness to acknowledge my debt to all those

who have helped me to put these ideas, well above the level of simplicity.

I express my sincere gratitude to MR.ANIL DANGWAL our Subject incharge who gave us

the opportunity to make this project. I express my sincere thanks to MR. YOGESH

KHATTAR MANAGER INTERNATIONAL BUSINESS, INTERNATIONAL TRACTOR

LIMITED my project guide for his help as team to my project.

I find no way to express my deep gratitude and profound reverence to Mr.

Kulwinder Singh and Mr. Sandeep Ratan for his able guidance and co-operation during my

work.

I find no words to acknowledge the moral support rendered by my parents, all the members

of International Tractor Limited Hoshiarpur & Seaking Shipping Agency New Delhi in

making this effort to success. This becomes a reality because of their blessings and above

all by the grace of GOD!

AVTAR SINGH

M.B.A. – 3rd SEMESTER

FMS HARIDWAR

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TABLE OF CONTENTS

1. ABOUT THE GROUP2. ABOUT THE COMPANY 3. BASICS BEFORE THE EXPORT4. SWOT ANALYSIS5. WHY INTERNATIONAL TRADES HAPPEN6. REGISTRATION REQUIRED FOR EXPORT7. EXPORT LICENSE8. SUMMARY OF MAIN REQUIREMENT FOR INTERNATIONAL TRADE9. EXPORT MARKETING 10. PRICE AND COSTING11. RISK INVOLVED IN EXPORT12. INTERNATIONAL INCO TERMS 13. EXPORT IMPORT CONTRACT14. PACKING AND LABELING15. CERTIFICATION REQUIRED 16. DOCUMENT CATEGORIES17. APPOINTMENT OF CHA18. ALL CUSTOM CLEARANCESAND SHIPPMENT PROCEDURE19. ORGANISATION SUPPORTING THE EXPORTS20. EXPORT SCHEMES21. SUMMARY OF EXPORT PROCEDURE

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ABOUT THE SONALIKA GROUP

Established in 1969, Sonalika group from the very beginning has tried to understand customer

need so that they get better value for their money, hard earned. Sonalika has state of

manufacturing, spread in acres, located at Hoshiarpur and tax free zone at AMB in Himachal

Pradesh. Sonalika is the one of the top 3 tractor manufacturing companies in India; other

products include Multi utility vehicles, engines and various farm equipments. Today the group

stands tall with an approximate turnover of 3200 Crore INR.

An average growth of 30% makes it one of the fastest growing corporate in India. It is also one

of the few debt free companies. Group has strength of about 2000 employee & technocrats.

History reveals that innovation is the key to continued progress and when applied to technology

that touches human life, it can unfold a whole new economic phenomenon that has the power to

change the world. With unique initiatives like the Thought leadership Forum, Leadership

Forum, they have been able to create a unique platform for learning through success stories of

industry leader. No, doubt that the sonalika products has created a position for themselves not

only in India but also in foreign market. To maintain quality even a micro level is being taken

care of and rectified. The industry has gradually transformed themselves into a world-class

player involved in building state-of-the-art products, solutions and technologies. Sonalika

Foundation intends to become a catalyst, encouraging there members to do more, capturing best

practices for quality and harnessing a greater range of resources, from the industry and beyond,

to make a major impact on the development. It has been their vision to cater to the needful

agriculture and auto industry with quality products through untiring dedication and activities. As

they step in to their fifth decade of existence, they continue to lead the development. Tractor and

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car plants work in 2 to 3 shifts depending upon volume of work for maximum production. They

continue to march ahead on road to success and glory driven by the force of initiative and

determination to have a leading position in the tractor industry in the days to come. They have

ventured in to automobile sector also with the launching of Rhino –MUV- to write another

success story.

VISION

The Dream Project of Sonalika group is to cater the agricultural and auto industry with quality

abrasive products through untiring dedication and leadership.

MISSION

Sonalika pay personal attention to their customers so that, they can build products they need,

and not merely sell the products they build.

CORE VALVES

To accomplish their mission, the ownership, staff, and management go to great lengths to treat

each customer like a member of the family and provide them with the best choice of products

and highest quality of service in the industry.

ETHO STATEMENT OR LOGO RATIONALE

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Red symbolizes the strength, power, determination, and desire of company. Yellow surrounding

the Sonalika produces a warming effect, arouses cheerfulness, stimulates mental activity, and

generates the same. Green Leaf in the center symbolizes growth, harmony, freshness, and

fertility. Black underlining the logo associates with power, elegance, and formality. And Orange

surroundings the complete logo represents enthusiasm, fascination, happiness, creativity,

encouragement, and stimulation. All this permutation of persona represents the Sonalika group

as an asset in the industry.

Company is manned by cream of the industries best of technocrat and service staff. They are

proud of reputation as service & solution provider and innovator in agro industries. In a time

marked by rapidly changing technology, they have developed best of the R & D team and have

also developed the excellent quality control system to deliver high quality results in the industry.

Their actions are guided by their core values of integrity, quality, commitment, and innovation.

They are committed to living their values doing so, building a business as great as their

products. Throughout their history, company has earned a reputation for high quality and

integrity, and this has been an asset of incalculable value. They strive to live up to these

expectations, not just because it is for good business, but also because it is the right thing to do.

Their core values are never to be compromise for immediate success.

Over the years they have completed transaction in over 30 countries around the globe and are

well experienced in the international market for wide variety of machinery and tractor in

comfortable price and range. Sonalika is a team that has carved in itself successful

entrepreneurship over the years. The Sonalika group is among the India’s leading agricultural

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conglomerates in the high growth sector of agro machinery, and material handling equipments

and components having pioneered from mechanization in the country Sonalika has played a

fundamental role in the agricultural growth of India for over five decades. When they decided to

take up manufacturing of Tractors, it was a decision to tread a path fraught with difficulties,

problems and obstacles. But they carried on with a clear vision, always seeing light at the end of

the tunnel. Everything they did was with lot of innovation and creativity. They always kept in

mind that it is TIME which is wealth not money. So their effort was to do everything in much

less time than competition. This became their competitive advantage and helped them in

touching great heights in the shortest possible time. The same scenario was repeated while

developing MUV RHINO. This has been a great experience involving their ICML team,

vendors, suppliers and dealers which is a fairly large family now. They wish that it should be a

matter of great happiness for their associates to deal with them. With their help and good

wishes, they wish to accomplish all the great promises hidden in the future, off course at the

speed of light.

INTERNATIONAL CARS & MOTORS LIMITED

(ICML), is a Group Company of the Rs 1200 Crores SONALIKA Group. The Company is

promoted by Mr. L.D.Mittal, Chairman, Mr. A.S.Mittal, Vice Chairman & Mr. Deepak Mittal,

Managing Director, who are having vast experience in manufacturing of tractors, Farm

machines & Automobiles.

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ICML is a project of its kind and is the ‘Pride of Himachal Pradesh’. The Company is having its

state-of-the-art production facility, with centrally air-conditioned, dust & pollution free

environment, to manufacture multi-utility vehicles / sports – utility vehicles, in Amb, Himachal

Pradesh.

The Company is a ‘Mother Unit’ as its establishment shall attract many other ancillary & small

units for meeting the raw material requirements yielding manifold employment avenues,

revenue & industrialization in the state.

The Company has entered into Technical Collaboration Agreement with MG Rover of UK, with

the technical know – how from MG Rover, UK. The Company has manufactured MUV with the

name of RHINO RX & the same MUV boasts of Rover engines. The company is in-process of

developing its own Common Rail Direct injection (CRDI) engines.

The company has the installed capacity to manufacture 2000 MUVs in a month i.e., 24000

MUVs in a year. In the first full year of production in 2006-2007, ICML is aiming to churn out

about 5000 MUVs & expects to achieve a turnover of 250 Crores. The Company, besides

catering to the domestic market, also has an eye on exports & exports to Malaysia, Nepal,

Bangladesh & Indonesia are also in an advanced stage. It will also offload the product in African

continent soon.

The Company is eligible for the Central & State Govt. Tax sops, exemption from the excise duty

& income tax for 10 years, which shall add to its viability & future expansion.

Sonalika Group intends to inject Rs. 1000 Crores in Himachal Pradesh over the next 2 -3 years

in the upcoming ICML plant & ICML has an ambitious plan to play a major role in the Indian

Automobile Industry.

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SONALIKA AGRO

Sonalika Agro was established in 1971 to support the Indian farmers with mechanization

technology to facilitate persistence of green revolution. Sonalika Agro Industries Corporation,

the group’s maiden venture is one of the foremost Farm equipments and implements

manufacturing companies in India with 80% share in threshers alone. Its product line includes

Combine Harvesters, Tractor/Self Driven straw reapers, Potato Planters, Maize seller –cum-

Dehuskers, Seed –Cum- Fertilisers Drills, various kinds of threshers, etc.; Sonalika Agro is a

pioneer in manufacturing tractors mounted combine harvester, which is not popular in India, but

also in various others countries across the globe. Today, the company is supporting the farmers

with world class farming equipment to ease the process of making the Green Revolution II, a

dream come true. In the light of the company's mission, highly qualified and experienced staff is

working as a family in the manufacturing facility at Hoshiarpur (Pb).

This plant is equipped with advanced technology to develop, manufacture and test the modern

products for the modern farmer. The company has a wide range of farm equipments and

implements to facilitate the farmers in all kinds of farming activities. It has a large dealer

network spread all over country and have approximately 80% share in Indian market of farm

machinery. Its products are also exported to Asian & African countries through various export

promotion counsels.

INTERNATIONAL AUTO TRAC FINANCE LIMITED

is a non banking finance company approved by RBI. IAFL provide finance to customers of

International cars & motors limited in rural & semi urban areas across India through customer

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friendly schemes. Its parent company Sonalika Group ranks among the largest tractor & farm

equipment manufacturer in India

BUSINESS PLANS OF IAFL

First Phase: In the first phase, the area of operations will be in the state of Punjab,

Haryana, Jammu, H.P (Done).

Second Phase: In the second phase, the area of operations will be extended to other parts

of Northern India.

Third Phase: In the third phase, the area of operations will be extended to whole India.

Whom to Finance

Salaried

Agriculturist

Self Employed

Partnership

Pvt. co. ,others

INTERNATIONAL TRACTORS LTD

International Tractors Limited was incorporate on October 17, 1995 for the manufacture of

Tractors and has since then built a distinct position for itself in the Tractor industry. ITL is

manufacturing various Tractors of Sonalika brand between 30 H.P to 90 H.P, and CLASS brand

between 70 hp to 90hp. The tractors manufactured by company have secured a reputation of

performance, quality and reliability in the market because of their maximum pulling power,

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minimum fuel consumption and low emission. All this makes ITL one of the top five tractor

selling companies in India. These tractors are also exported to various countries including South

Africa, Australia, Zimbabwe, Sri Lanka, Canada, Bangladesh, Algeria, Zambia, Senegal, Ghana

etc.

ITL has entered into strategic alliance with YANMAR of Japan for joint manufacturing tractors

in India. ITL has a marketing arrangement with TATA International for development of selected

South American and African market. The company’s marketing efforts are promoted by dealer

network of 600, and 450 sub dealers. Such a networking has enabled the company to grow like a

well-knit family whose roots lie in its customers, who have providing constant feedback and

support to allow the company to turn their dreams into products.

Their Manufacturing Process, Quality Control systems and Research & Development facilities

are ISO-2000 certified, by the joint Accreditation system Of Australia and New Zealand. They

are the first Tractor manufacturing company in the country to be accredited with ISO-14001. It

bears testimony to fact that company is having world-class R&D facilities, maintaining controls

and systems of international Standard and Environment norms.

They are also manufacturing tractors, meeting norms of Smoke & Mass Emission, Tested and

certified by ARAI, Pune. United States Environmental Norms Agency, Washington DC has also

certified our Engines. These certifications enabled SONALIKA Tractors to enter into world

Market. All the Models of Tractors and Combines Harvesters manufactured by us are tested &

approved by central Farm Machinery and Tractors Training & Testing Institute, Bundi (MP)

India, (the Government of India Institute authorized for issuing test reports).

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Tractors from ITL offer the perfect combination of power and economy in the agriculture utility

segment. For fast efficient operation in the rows and a minimum width, which is typical to small

land holdings, the performance of ITL tractors is unparallel. Sonalika tractors are easy to handle,

with outstanding maneuverability, low center of gravity and a tight turning radius, that combine

to give fast and efficient operation in the field or yard.

They also manufacture tractors whose specifications are approved and tested

dimensionally and structurally, according to EEC and other international standard and

homologations. Some of their tractor models offer the most technically advanced

features available on the market today, including hydrostatic transmission, power

steering, differential lock and advanced safety devices

Production

ITL has fully integrated and state of the art assembly facilitation for producing world class

tractors.Several productivity improvements in assembly line over the years have made it

possible to manufacture nearly 37000 tractors per Year.Atomization of assembly line not only

increased production capacity, but also provided a quantum jump to the quality of assembled

tractors. ITL assembly line producing tractors in broad range from 30HP to 90HP with effective

planning of resources.

Quality, Assembly & Testing Tools:

Hydraulic Test Rig Up to 1600Kg Lifting Capacity

Millipore Testing Equipment. Torque calibrator

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Hydraulic presses

A unique 3-Stage oil filtration system having modern facility of centrifuge filtration

Batch type Special purpose machines (SPM) at various locations for washing of heavy

castings, components & subassemblies

Pipe flushing machine for proper cleaning of hoses & pipes

Induction Heaters for controlled heating of bearings

Standard testing procedures for final product

Roller testing

Road testing

Field Testing

Brief of R & D :

ITL R & D center is recognized by government of INDIA

ITL R&D is a complete dep’t in itself starting from designing up to development,

implementation

Capabilities :

Highly qualified team of engineers for designing of transmission & vehicle areas

Vendor development is capable for the development of new projects components of

R&D through vendors & commercial settlement

Vendor quality control is capable for ensuring quality requirements of components

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through verification at vendor end

High skilled workers are capable for making any types of prototypes

Facilities :

High configuration workstations are used for design activities

Team center is used for PLM concepts

I-Deas, Solid-Edge & AutoCad is used for 3D & 2D design activities

Two transmission test rigs

Circular test track (mgr) & Roll over protection test rig

Hydraulic system test rig

Endurance test rig for operator seat & fenders

Pto test bed & Endurance test rig for MUV gearbox under commissioning

Proto machine shop with HMC, radial drilling & turning centre

Sonalika have In House Design Engine R&D department with up-to-date technology. Having a

team of exceedingly competent & remarkable squad of engineer’s proficient of designing most

excellent Engines in technology.

Engines developed so far available in rating of 28-90 HP. Sonalika has started spreading roots in

MUV manufacturing with own R&D team and designed two exclusive engines with latest

technology.

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In-house R&D capabilities :

TRACTOR INDUSTRY IN INDIA

Higher productivity and greater output are the two major contributions in farm mechanization.

Tractors form an integral part of farm mechanization and have a crucial role to play in

increasing agricultural productivity. Tractor is a highly versatile piece of machinery having a

multitude of uses, used in agriculture both for land reclamation and for carrying out various crop

cultivation and also employed for carrying out various operations connected with raising the

crops by attaching suitable implements and to provide the necessary energy for performing

various crop production operations involved in the production of agricultural crops. Tractors are

capital intensive, labor displaying used as a mode of transport, in electricity generation, in

construction industry and for haulage operation. It has now become an integral part of farm

structure .The application of tractor for agricultural activities which swept India during the last

twenty years have erased the problem of farmers. Farm mechanization program in India aims to

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integrate the use of available human and animal farm power with mechanical sources of power

for increasing the productivity.

Indian tractor industry, comparatively young by world standards have expanded at a spectacular

pace during last four decades. Consequently it now occupies a place of pride in India's

automobile industry. U.S.A., U.S.S.R. and only a few Western European countries exceed the

current production of tractors in India, but in terms of growth India's growth is unmatched even

with countries of long history of tractor manufacturing. The spectacular achievement reflects the

maturity and dynamism of tractor manufacturers and also the policies adopted by the

government to enable it to effectively meet the demand. The tractor industry in India has made a

significant progress in terms of production and capacity as well as indigenization of technology.

It is a typical sector where both imported technology and indigenous developed technology have

developed towards meeting the overall national requirements. The global spotlight on tractors

manufacturers certainly in terms of volume seems to be swinging away from the USA, UK and

Western and Eastern Europe towards India where growth in the number of producers and the

total volume in recent years have been impressive. In India tractor industry has played a vital

role in the development.

India's gross cropped area is next only to United States of America and Russia and along with

fragmented land holdings has helped India to become the largest tractor market in the world. But

it drops to eight position in terms of total tractor in use in the country when compared to

international figures, only 3% of total tractors used all over the world . It is to be noted that

while the overall automobile industry is facing recession the tractor industry is growing at

9%.About 20% of world tractor production is carried out in our country only. The arable land in

India is high as 12% of the total arable land in the world. Tractor market in India is about Rs.

6000 crores. On an average around 400000 tractors are produced and their sale is 260000.Uttar

Pradesh is the largest tractor market in our country. One out of every four tractor is being

purchased here. Indian tractor market has to be viewed considering its position in the world with

respect to key parameters as given below:

INDIAN TRACTOR MARKET

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DESCRIPTION UNITSWORLD

TOTAL/AVGINDIA INDIA RANK

Arable Land Mn Hectare 1444 170 2

Irrigated Area Mn Hectare 249.6 45.8 2

Tractors In Use Tractors/000 Hectares 28 10.5 8

The Tractors available in developed countries have advanced features and accessories that is not

found in Indian tractors .Tractor industry has made a steady and satisfactory progress even in

drought areas. Four factors have contributed to the steady progress:

* Government laid stress on the mechanization of agriculture with a view to boost food grain

production. Therefore agriculture sector started receiving financial assistance.

* There is an increase in awareness among the farmers for the need of farm mechanization and

are keen to acquire tractor with the help of credit facilities from financial institutions.

* Agronomists believe that there is need for more tilling due to depletion of moisture and

repeated cultivation of land .It is precisely for this reason that the demand for tractors was well

maintained even during a draught period.

* Animal power available is too inadequate to meet power demand of our farmers. Mechanized

operations are preferred to eliminate drudgery and delay, also labour shortage during harvesting

increased the use of tractor.

At the end of the day there are enough reasons to believe that the industry will grow because:

* More farmers are opting for multiple cropping over last decade. Country's net cropped area

had remained virtually stagnant while gross cropped area increased by about 4.7%. This

indicates the increased popularity of multiple cropping.

* 95% of tractor sales are on credit. Credit is extended by commercial banks, state land

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development banks and regional rural banks.

* Irrigation facilities reduce reliance on the monsoon and allow for quick yielding varieties of

food -grain .This reduces the cropping cycle to 3-4 months from the traditional 5-6 months.

Reduced cropping cycle require deep tilling which translates into higher demand for tractors.

* Cost of tractors in India is the cheapest in world .The cost of a finished tractor here is as much

as the cost of gear box in developed countries. Hence there exists tremendous scope for exports.

* According to a study conducted by PHD Chamber of Commerce and Industry , Since purchase

of tractor involves a big investment its demand in affected by the availability and easiness of

credit. A higher availability of credit will lead to a higher demand for tractors.

* The tractors between the 31-40 horse power and 31-40 hp range dominate the market .The

reason for medium horse power tractors being more popular are that the major tractor

demanding states like Punjab Haryana and Uttar Pradesh have plenty of alluvial soil which does

not require deep tilling. Lately it is visualised that higher hp segment has the maximum growth

potential Higher horse powered tractors will be the future requirement with the government

intention to encourage contract farming through the leasing in and leasing out of farm lands.

* Regarding exports India of latter has been exporting tractors to a number of countries, but

predominantly to Sri Lanka, Nepal and U.S.A .However the study reveals that exports from

India are going down in the recent years .The major reason for the decline in exports of tractors

of tractor from India is being the failure to find an extensive market overseas ,deteriorating

foreign exchange situation in African countries and their poor buying capacity, comparatively

cheaper imports of second hand tractors by South East Asian countries from developed countries

and the disintegration of erstwhile U.S.S.R. but also  the potential export markets  can be

explored by Indian in the future. Since Indian tractors confirm to the international standard by

virtue of their foreign collaboration it is possible for India to export to more tractors to the rice

and wheat growing countries like Canada, Philippines and Bangladesh.

* FOREIGN COLLABORATION

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Tractor industry along with others benefited from this policy which allowed free inflow of

foreign technology .The manufacture of tractors started in India mainly with the help of foreign

collaboration secured from internationally reputed companies from the USA ,UK, USSR ,WEST

GERMANY, POLAND ,CZECH SLOVAKIA . Most of the models which were taken up for

manufacture in India were developed overseas. Soon after the decision for the manufacture of

tractors was made during second plan, government approved number of foreign collaboration

agreements. The establishment and present status of tractor industry owes a great deal to the

support received by the Indian entrepreneurs from foreign collaboration during the initial phase

of manufacture.

DSIR has introduced a scheme, "National Register of Foreign Collaborations", which envisages

review and analysis of imported technologies in the country and suggested measures for

appropriate choices acquisition and implementation of foreign know-how. Major objective of

scheme is:

* To undertake financial, economic and legal analysis of set of data on foreign collaboration.

* Carry out a technological analysis of the imported technology and provide a stage of art

technology in the country and status of implementation of collaboration.

* Co-ordinate with Ministry of Industry, Commerce and Finance by providing technology data

input.

* Selective support to strength measures in Research and Development for technology

absorption.

List of tractor manufacturers, their collaborators and the year of commencement of production:

MANUFACTURERS AND COLLABORATORS

MANUFACTURER COLLABORATOR YEAR

Eicher Tractors Ltd Gebr, Eicher Tractor. West Germany 1961

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Gujarat Tractors Ltd Motokov –Praha. Czechoslovakia 1963

TAFE Messey Ferguson. UK 1961

Escorts Ltd Moloimport Arazawa Zaklady

Mechaniczne .Ursus Poland

1964

Mahindra And Mahindra International Harvestor. UK 1965

+Escorts Tractor Ltd Ford .U.K. 1971

Hindustan Machine Tools Motokov -Praha. Czechoslovakia 1971

*Kirloskar Tractors Limited Klochner-Humboldt Deutz. Germany 1974

Punjab Tractor Limited CMERI.INDIA 1974

*Pittie Tractor Limited Own know-how 1974

*Harsha Tractor Ltd Moto Import. Russia 1975

*Auto Tractor Ltd British Leyland. U.K. 1981

*Pratap Steel Rolling Mill Own know-how 1983

Vst Tillers Mitsubishi. Japan 1983

*United Auto Tractor Ltd Uzina Tractorul. Romania 1986

*Asian Tractor Ltd Own know-how 1989

Bajaj Tempo Ltd Own know-how 1987

International Tractors  Own know-how 1998

Larsen And Tourbo Ltd John Deere. USA 1999

New Holland Tractor New Holland Tractors .Italy 1999

Greaves Ltd Same Deutz- Fahr. Italy 1999

Summary

Agriculture accounts for about 22% of country's GDP and engage around 70% of the

population. With good spell of monsoon across the country this year the agricultural sector

would experience a good yield for both kharif and Rabi crops. Further government efforts to

implement irrigation projects and increase the gross cropped area (GCA) will drive surplus

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incomes of farmers, and given the strong correlation of the agricultural growth with tractor

demand, it will be positive for the tractor industry.

With the increasing awareness of mechanized farming, the penetration levels of tractors in India

are expected to increase. Despite being the largest tractor market in the world tractor penetration

levels in India is low at 11 tractors per 1,000 hectare of Gross Cropped Area (GCA) as

compared to world average of an estimated 19 tractors per 1,000 hectare of GCA. Also India has

the largest irrigated area in the world and second largest arable land in the world; hence there is

a larger domestic market that remains untapped.

The steps taken by manufacturers on inventory and new product fronts may put the sector on a

profitable growth path in the next couple of years. New product launches are also expected to

drive the growth. The new products are ergonomically designed and are of higher power.

Further, better monsoon, easy credit availability, perky export market and marked improvement

in the economy contribute to this optimism.

However players are likely to face pressure on margins despite higher turnover growth prospects

in light of stiff competition and rising input costs. It has to be remembered that the industry

currently is operating at less than 50% capacity utilisation. With such a large demand-supply

gap, pricing power is likely to be on the lower end of the spectrum.

Further given the large dependence of the sector on monsoon, the span out of the monsoon in

the current year will have an impact on industry's fortune. The dependence could reduce over

the long-term only if measures like irrigation projects, yield improvement and infrastructure

development gains momentum.

Tractors: Sales at a glance

Manufacturer 0403(12) MS (%) 0303(12) MS (%) Var (%)

Bajaj Tempo 3906 2.1 3595 2.1 8.7

Eicher 16775 8.8 15814 9.2 6.1

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Escorts 25550 13.4 21013 12.2 21.6

MGTL 2009 1.1 1251 0.7 60.6

HMT 5563 2.9 6802 4.0 -18.2

M&M 49562 26.0 47033 27.4 5.4

PTL 25602 13.5 24200 14.1 5.8

TAFE 24895 13.1 24465 14.3 1.8

VST 527 0.3 367 0.2 43.6

LT-JD 8216 4.3 4337 2.5 89.4

NHI 7723 4.1 6316 3.7 22.3

Sonalika 20020 10.5 16464 9.6 21.6

Total Industry 190348 100.0 171657 100.0 10.9

Tractors: Categories-wise sales at a glance

Category 0403(12) MS (%) 0303(12) MS (%) Var. (%)

< 20 HP 527 0.3 367 0.2 43.6

21 - 30 HP 42841 22.5 36619 21.3 17.0

31 - 40 HP 95346 50.1 92843 54.1 2.7

41 - 50 HP 39235 20.6 33594 19.6 16.8

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> 51 HP 12399 6.5 8234 4.8 50.6

Total 190348 100.0 171657 100.0 10.9

CONTRIBUTION OF INDIAN TRACTOR INDUSTRY IN GLOBAL TRADE

India manufactures about 38,00,000 2-wheelers, 5,70,000 passenger cars, 1,25,000 Multi Utility

Vehicles, 1,70,000 Commercial Vehicles and 2,60,000 tractors annually. India ranks second in

the production of two wheelers and fifth in commercial vehicles.

FOREIGN DIRECT INVESTMENT

Automatic approval for foreign equity investment unto 100% of manufacture of automobiles

and component is permitted.

INCENTIVE FOR RESEARCH AND DEVELOPMENT

The Government shall promote Research & Development in automotive industry by

strengthening the efforts of industry in this direction by providing suitable fiscal and financial

incentives.

The current policy allows Weighted Tax Deduction under I.T. Act, 1961 for sponsored research

and in-house R&D expenditure. This will be improved further for research and development

activities of vehicle and component manufacturers from the current level of 125%.

In addition, Vehicle manufacturers will also be considered for a rebate on the applicable excise

duty for every 1% of the gross turnover of the company expended during the year on Research

and Development carried either in-house under a distinct dedicated entity, faculty or division

within the company assessed as competent and qualified for the purpose or in any other R&D

institution in the country. This would include R & D leading to adoption of low emission

technologies and energy saving devices. Government will encourage setting up of independent

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auto design firms by providing them tax breaks, confessional duty on plant/equipment imports

and granting automatic approval. Allocations to automotive Cess fund created for R&D of

automotive industry shall be increased and the scope of activities covered under it enlarged.

Budget Impact

Continued focus on agriculture positive for tractor industry

A. The hike in the excise duty on steel is likely to result in an increase in tractor prices, as

cenvat credit cannot be availed on inputs since agricultural tractors are exempt from excise

duty.

B. The extension of the 150 per cent deduction on R&D expenditure up to March 31, 2007, will

benefit the industry in terms of new product development.

C. The cut in the peak customs duty on components as well as the cut in the excise duty on

tractor front tyres is not expected to have a significant impact, given the high levels of

indigenization and the low value of tractor front tyres.

D. The budget has announced various agriculture-friendly measures:

- Greater thrust on agricultural credit through 30 per cent increased flow of credit

in 2005-06 and an increase in the number of borrowers by 5,000,000.

- Increase in the area under irrigation under the Bharat Nirman Project and the

micro irrigation scheme.

- Road connection for all villages.

- Schemes for agricultural diversification.

- Continuation of farm insurance scheme.

- The commission of National Horticulture Mission to cover research, production,

- Post harvest management, processing and marketing in an integrated manner.

- Scheme for strengthening agricultural marketing infrastructure.

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- National project for repair, renovation and restoration of water bodies.

In the long run, these measures are likely to boost farm incomes and thereby boost tractor demand

Major Tractors Exporters

Company Name Impact Impact factors

Eicher Motors Ltd. Positive A, B, C, D

Escorts Ltd. Positive A, B, C, D

Mahindra & Mahindra Ltd. Positive A, B, C, D

International Tractors Limited Positive A, B, C, D

Punjab Tractors Ltd. Positive A, B, C, D

TAFE Ltd. Positive A, B, C, D

Notwithstanding the recent announcement to sell its tractor division to TAFE that will take time

to come into effect.

Foreign forays

Indian auto companies are moving aggressively into foreign markets. Some cases in point:

Tractor and utility vehicle maker Mahindra & Mahindra (M&M) has emerged as the

fourth-largest tractor brand in the US in the 15-90 horse power (HP) segment. During

2004, Mahindra US clocked sales of US$128m. Sales are expected to cross US$250m by

December 2008. It has created a market for itself in the Latin American and South

African markets too. It has opened an assembly line for its Bolero range pick-up vehicles

in Uruguay. The firm also launched its sports utility vehicle, the Scorpio, in Kuwait in

July 2004. The Scorpio model in Kuwait comes equipped with a Renault petrol engine.

Tata Motors Ltd, the country's leading truck maker, acquired a Daewoo truck

manufacturing unit in South Korea in 2004. The firm plans to introduce its heavy duty

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trucks in India in the next 12 months. These 200-400 horse power trucks with 49-tonne

freight capacity will be launched in India and select countries as part of Tata's strategy to

enter the global transportation market.

The Ambassador is back in demand in Wales. Merlin Garages of Carmarthenshire, the UK's only

importer of the Ambassador, is now planning a new, soft top version of the Ambassador for the British

market

BASICS BEFORE THE EXPORT

Before starting an export, an individual should evaluate his company’s “export readiness”.

Further planning for export should be done only, if the company’s assets are good enough for

export.

There are several methods to evaluate the export potential of a company. The most common

method is to examine the success of a product in domestic market. It is believed that if the

products has survived in the domestic market, there is a good chance that it will also be

successful in international market, at least those where similar needs and conditions exist.

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SWOT analysis is a useful method of summaries all the information generated during the export

planning. SWOT stands for strengths, weakness, opportunities and threats, which helps to

isolate the strong and week areas within an export strategy. SWOT also indicates the future

opportunities or threats that may exist in the chosen markets and is instrumental in strategy

formulation and selection.

 To apply your own SWOT analysis, start by creating a heading for each category – ‘Strengths’,

‘Weaknesses’, ‘Opportunities’, and ‘Threats’. Under each of these, write a list of five relevant

aspects of your business and external market environment. Strengths and weaknesses apply to

internal aspects of your business; opportunities and threats relate to external research.

Your final analysis should help you develop short and long term business goals and action plans,

and help guide your market selection process.

 Environmental factors internal to the company can be classified as strengths or weaknesses, and

those external to the company can be classified as opportunities or threats.

Strengths

Business strengths are its resources and capabilities that can be used as a basis for developing a

competitive-advantage. Examples of such strengths include:

Patents

Strong brand names.

Good reputation among customers.

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Cost advantages from proprietary know-how.

Exclusive access to high grade natural resources.

Favorable access to distribution networks.

Weaknesses

The absence of certain strengths may be viewed as a weakness. For example, each of the

following may be considered weaknesses:

Lack of patent protection.

A weak brand name.

Poor reputation among customers.

High cost structure.

Lack of access to the best natural resources.

Lack of access to key distribution channels.

Opportunities

The external environmental analysis may reveal certain new opportunities for profit and growth.

Some examples of such opportunities include:

An unfulfilled customer need.

Arrival of new technologies.

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Loosening of regulations.

Removal of international trade barriers.

  Threats

Changes in the external environmental also may present threats to the firm. Some examples of

such threats include:

Shifts in consumer tastes away from the firm's products

Emergence of substitute products.

New regulations.

Increased trade barriers

Successful SWOT Analysis

Simple rules for successful SWOT analysis:

Be realistic about the strengths and weaknesses of the organization.

Analysis should distinguish between where the organization is today, and where it could be in

the future.

Be specific.

Always analyze in relation to your competition i.e. better than or worse than your competition.

Keep your SWOT short and simple.

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A SWOT analysis can be very subjective, and is an excellent tool for indicating the negative

factors first in order to turn them into positive factors.

WHY TRADES HAPPEN 

International trades happen in the world due to the law of demand and supply. There is an importer

and an exporter. Supplier is an exporter and purchaser is an importer. Second major important reason

for trade is the concept of absolute advantage and comparative advantage or plainly speaking making

money or earning profit. Both the parties either exporter or importer should have any one of the above

advantages.

Now the question arises in the mind that what is the absolute advantage and comparative advantage.

The ability of a country individual, company or region to produce a good or service at a lower cost

per unit than the cost at which any other entity produces that good or service.

A country has a comparative advantage in the production of a good if it can produce that good at a

lower opportunity cost relative to another country.

International trade does not just happen.  It is the result of developing relationships and processes to

ease the flow of goods and services.

According to ELI Heckcher & Berlin Ohlin International trade happens

due to.

Capital abundant country will try to export capital intensive goods whereas labour abundant country

will try to export labour intensive goods.

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WHY COMPANIES ENGAGE IN THE INTERNATIONAL BUSINESS

There are four main objectives that influence the companies for foreign trade are

To expand their sales.

To acquire resources.

To diversify their sources of sales and supplies.

To minimize competitive risk.

Expand sales Companies

Sales are dependent on two factors

1. The consumers.

2. Willingness and ability to buy them.

For there higher sales and higher profits companies influence for international business.

Acquire resources

Manufacturers and distributors influence for the international business for foreign capital

technologies and information which they can use at their home. Some times they do this for their

costs

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DIVERSIFY SOURCES OF SALES AND SUPPLIES

To avoid the wild changes in the sales and profits the company uses the international business. Many

companies take the advantage of the fact that the timing of business cycles. Fulfill the shortage of one

country sales or profit with the sale or profit of the other country.

Minimize the competitive risk

The companies move for the international trade so that other companies don’t get the major benefits

from the international business.

Reasons for recent international business growth

1. Rapid increase in and expansion of technology

2. Liberalization of government policies

3. Development of the institution needed to support and facilitate

4. Increased global competition

Registration require for the Export.

  Registration with Director General of Foreign Trade (DGFT)

  Registration with Export Promotion Council

  Registration with Commodity Boards

  Registration with Excise Income Tax Authorities

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Once all the research and analysis is done its time to get registered with the various government

authorities.

Registration with Director General of Foreign Trade (DGFT)

For every first time exporter, it is necessary to get registered with the DGFT (Director General

of Foreign Trade), Ministry of Commerce, Government of India.

DGFT provide exporter a unique IEC Number. IEC Number is a ten digits code required for the

purpose of export as well as import. No exporter is allowed to export his good abroad without

IEC number.

However, if the goods are exported to Nepal, or to Myanmar through Indo-Myanmar boarder or

to China through Gunji, Namgaya, Shipkila or Nathula ports then it is not necessary to obtain

IEC number provided the CIF value of a single consignment does not exceed Indian amount of

Rs. 25, 000 /-.

Application for IEC number can be submitted to the nearest regional authority of DGFT.

Application form which is known as "Aayaat Niryaat Form - ANF2A" can also be submitted

online at the DGFT web-site: http://dgft.gov.in.

While submitting an application form for IEC number, an applicant is required to submit his

PAN account number. Only one IEC is issued against a single PAN number. Apart from PAN

number, an applicant is also required to submit his Current Bank Account number and Bankers

Certificate.

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A amount of Rs 1000/- is required to submit with the application fee. This amount can be

submitted in the form of a Demand Draft or payment through EFT (Electronic Fund Transfer by

Nominated Bank by DGFT.

Registration with Export Promotion Council

Registered under the Indian Company Act, Export Promotion Councils or EPC is a non-profit

organization for the promotion of various goods exported from India in international market.

EPC works in close association with the Ministry of Commerce and Industry, Government of

India and act as a platform for interaction between the exporting community and the

government.

So, it becomes important for an exporter to obtain a registration cum membership certificate

(RCMC) from the EPC. An application for registration should be accompanied by a self

certified copy of the IEC number. Membership fee should be paid in the form of cheque or draft

after ascertaining the amount from the concerned EPC.

The RCMC certificate is valid from 1st April of the licensing year in which it was issued and

shall be valid for five years ending 31st March of the licensing year, unless otherwise specified.

Registration with Commodity Boards

Commodity Board is registered agency designated by the Ministry of Commerce, Government

of India for purposes of export-promotion and has offices in India and abroad. At present, there

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are five statutory Commodity Boards under the Department of Commerce. These Boards are

responsible for production, development and export of tea, coffee, rubber, spices and tobacco.

Registration with Excise and Income Tax Authorities

Goods exported out of the country are eligible for exemption from both Value Added Tax and

Central Sales Tax. So, to get the benefit of tax exemption it is important for an exporter to get

registered with the Tax Authorities.

Export license

An export license is a document issued by the appropriate licensing agency after which an

exporter is allowed to transport his product in a foreign market. The license is only issued after a

careful review of the facts surrounding the given export transaction. Export license depends on

the nature of goods to be transported as well as the destination port. So, being an exporter it is

necessary to determine whether the product or good to be exported requires an export license or

not. While making the determination one must consider the following necessary points:

 What are you exporting?

Where are you exporting?

Who will receive your item?

What will your items will be used?

Canalization

(In veiw of Globalization “Canalization” are restricted to very few items)

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Canalization is an important feature of Export License under which certain goods can be

imported only by designated agencies. For an example, an item like gold, in bulk, can be

imported only by specified banks like SBI and some foreign banks or designated agencies.

Application for an Export License

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

an exporter must first classify the item by identifying what is called ITC (HS) Classifications.

Export license are only issued for the goods mentioned in the Schedule 2 of ITC (HS)

Classifications of Export and Import items. A proper application can be submitted to the

Director General of Foreign Trade (DGFT). The Export Licensing Committee under the

Chairmanship of Export Commissioner considers such applications on merits for issue of export

licenses.

Exports Free unless regulated

The Director General of Foreign Trade (DGFT) from time to time specifies through a public

notice according to which any goods, not included in the ITC (HS) Classifications of Export and

Import items may be exported without a license. Such terms and conditions may include

Minimum Export Price (MEP), registration with specified authorities, quantitative ceilings and

compliance with other laws, rules, regulations.

Summary of Main requirement for international trade

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1. I.E. CODE i.e. Importer Exporter code number.

2. A.D CODE i.e. Authorized Dealer code.

3. Forex Bank Account Number

4. If filling the paper is under drawback scheme of incentives an account is reputed to be opened

at port (seaport or dry port/ISD/CFS) bank

Procedure of getting an I.E CODE

DGFT (DIRECTOR GENERAL OF FOREIGN TRADE) whose work is to control and facilitate

trade have a power to issue a code that is known as I.E.CODE.

Requirement for an I.E.CODE

1. Two passport size form

2. DGFT form ( if not online)

3. Demand draft of Rs :- 1000

4. N.O.C from the parent bank ( Dealing 2 year)

5. Pan card copy

6. Address proof

7. Birth proof

8. Partnership deed (if partnership firm)

9. Memorandum of Association and Article of Association ( IF COMPANY)

The whole document are sent to the DGFT and the I.E CODE is delivered from DGFT after 15

days of apply.

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Need of I.E CODE

This code is required for the exporter to supply goods from the parent country to the rest of the

world. DGFT issue checks that the exporter should not export any illegal product & any anti social

element out of the world.

Procedure for the AUTHORISED DEALER CODE

The A.D code can be taken from the parent bank which is dealing in the foreign exchange.

Export marketing

It is a technique by which the exporter is able to convey the knowledge of his products to the

various parts of the world. Export Market catcher’s catches the attention of the importer by their

marketing strategies. They use to tell them about the various advantages of their products along

with their suitable price.

How to develop the export marketing

Perhaps the manufacturer is to busy in the domestic market or too busy in manufacture the

exports perhaps he/she don’t want to take on a new set of activities.

Direct export marketing

1. Direct to final buyer abroad - manufacturer sells directly to buyer abroad. no middlemen

is involved .high degree of marketing skills is required

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2. Foreign distributor - The foreign distributor buys the products from the exporter and sells

it in the market at own account. in this the foreign distributor makes all the marketing

decisions

3. Foreign agent – sells products on the sales commission.

4. Foreign broker- handles primarily commodities and deals in large volume. Buying and

selling for a fee

5. Foreign trade organization – specialized import agencies of socialist and some non

socialist countries

6. Licensing agreement – exporter may seeks royally in exchanging for licensing a foreign

firm to manufacture his product abroad use his brand name, technology ,etc

7. Joint venture – exporter may enter into the partnership arrangement with a foreign firm

to produce and market jointly in the foreign country.

Pricing and costing

Pricing and costing are two different things and an exporter should not confuse between the two.

Price is what an exporter offer to a customer on particular products while cost is what an

exporter pay for manufacturing the same product.

Export pricing is the most important factor in for promoting export and facing international

trade competition. It is important for the exporter to keep the prices down keeping in mind all

export benefits and expenses. However, there is no fixed formula for successful export pricing

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and is differ from exporter to exporter depending upon whether the exporter is a merchant

exporter or a manufacturer exporter or exporting through a canalizing agency.

Determining Export Pricing

Export Pricing can be determined by the following factors:

Range of products offered.

Prompt deliveries and continuity in supply.

After-sales service in products like machine tools, consumer durables.

Product differentiation and brand image.

Frequency of purchase.

Presumed relationship between quality and price.

Specialty value goods and gift items.

Credit offered.

Preference or prejudice for products originating from a particular source.

Aggressive marketing and sales promotion.

Prompt acceptance and settlement of claims.

Unique value goods and gift items.

Export Costing

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Export Costing is basically Cost Accountant's job. It consists of fixed cost and variable cost

comprising various elements. It is advisable to prepare an export costing sheet for every export

product.

As regards quoting the prices to the overseas buyer, the same are quoted in the following

internationally accepted terms which are commonly known as Inco terms

An exporter without any commercial contract is completely exposed of foreign exchange risks

that arises due to the probability of an adverse change in exchange rates. Therefore, it becomes

important for the exporter to gain some knowledge about the foreign exchange rates, quoting of

exchange rates and various factors determining the exchange rates. In this section, we have

discussed various topics related to foreign exchange rates in detail.

Spot Exchange Rate

Also known as "benchmark rates", "straightforward rates" or "outright rates", spot rates

represent the price that a buyer expects to pay for a foreign currency in another currency.

Settlement in case of spot rate is normally done within one or two working days.

Forward Exchange Rate

The forward exchange rate refers to an exchange rate that is quoted and traded today but for

delivery and payment on a specific future date.

The various types of export risks involve in an international trade are as follow:

Credit Risk

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Sometimes because of large distance, it becomes difficult for an exporter to verify the

creditworthiness and reputation of an importer or buyer. Any false buyer can increase the risk of

non-payment, late payment or even straightforward fraud. So, it is necessary for an exporter to

determine the creditworthiness of the foreign buyer. An exporter can seek the help of

commercial firms that can provide assistance in credit-checking of foreign companies.

Poor Quality Risk

Exported goods can be rejected by an importer on the basis of poor quality. So it is always

recommended to properly check the goods to be exported. Sometimes buyer or importer raises

the quality issue just to put pressure on an exporter in order to try and negotiate a lower price.

So, it is better to allow an inspection procedure by an independent inspection company before

shipment. Such an inspection protects both the importer and the exporter. Inspection is normally

done at the request of importer and the costs for the inspection are borne by the importer or it

may be negotiated that they be included in the contract price.

Alternatively, it may be a good idea to ship one or two samples of the goods being produced to

the importer by an international courier company. The final product produced to the same

standards is always difficult to reduce.

Transportation Risks

With the movement of goods from one continent to another, or even within the same continent,

goods face many hazards. There is the risk of theft, damage and possibly the goods not even

arriving at all.

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Logistic Risk

The exporter must understand all aspects of international logistics, in particular the contract of

carriage. This contract is drawn up between a shipper and a carrier (transport operator). For this

an exporter may refer to Incoterms 2000

Legal Risks

International laws and regulations change frequently. Therefore, it is important for an exporter

to drafts a contract in conjunction with a legal firm, thereby ensuring that the exporter's interests

are taken care of.

Political Risk

Political risk arises due to the changes in the government policies or instability in the

government sector. So it is important for an exporter to be constantly aware of the policies of

foreign governments so that they can change their marketing tactics accordingly and take the

necessary steps to prevent loss of business and investment.

Unforeseen Risks

Unforeseen risk such as terrorist attack or a natural disaster like an earthquake may cause

damage to exported products. It is therefore important that an exporter ensures a force majeure

clause in the export contract.

Exchange Rate Risks

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Exchange rate risk is occurs due to the uncertainty in the future value of a currency. Exchange

risk can be avoided by adopting Hedging scheme.

Export Risk Management Plan

Risk management is a process of thinking analytically about all potential undesirable outcomes

before they happen and setting up measures that will avoid them. There are six basic elements of

the risk management process:

Establishing the context

Identifying the risks

Assessing probability and possible consequences of risks

Developing strategies to mitigate these risks

Monitoring and reviewing the outcomes

Communicating and consulting with the parties involved

A risk management plan helps an exporter to broaden the risk profile for foreign market. For a

small export business, an exporter must keep his risk management analysis clear and simple.

Export Risk Mitigation

Export risk mitigations are the various strategies that can be adopted by an exporter to avoid the

risks associated with the export of goods.

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Direct Credit: Export Credit Agencies support exports through the provision of direct credits to

either the importer or the exporter.

Importer: a buyer credit is provided to the importer to purchase goods.

Exporter: makes a deferred payment sale; insurance is used to protect the seller or bank.

Guarantees

o Bid bond (tender guarantee): protects against exporter’s unrealistic bid or failure

to execute the contract after winning the bid.

o Performance bond: guarantees exporter’s performance after a contract is signed.

o Advance payment guarantee (letter of indemnity): in the case where an importer

advances funds, guarantees a refund if exporter does not perform.

o Standby letter of credit: issuing bank promises to pay exporter on behalf of

importer.

Insurance

o Transportation insurance: Covers goods during transport; degree of coverage

varies.

o Credit Insurance: Protects against buyer insolvency or protracted defaults and/or

political risks.

o Seller non-compliance (credit insurance): Covers advance payment risk.

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o Foreign exchange risk insurance: Provides a hedge against foreign exchange risk.

Hedging

Instruments used to Hedge Price Risk

o Stabilization programs and funds.

o Timing of purchase/sale.

o Fixed price long-term contracts.

o Forward contracts.

INTERNATIONAL INCOTERMS

Incoterms or International commercial terms make trade between different countries easier. International Commercial Terms are a series of international trade terms that are used are used worldwide to divide he transaction costs and responsibilities between the seller and the buyer and reflect state-of-the-art transportation practices.

Incoterms directly deal with the questions related to the delivery of the products from the seller to the buyer. This includes the carriage of products, export and import responsibilities, who pays for what and who has the risk for the condition of the products at different locations within the transport process.

Incoterms and world customs Incoterms deal with the various trade transactions all over the world and clearly distinguish between the respective responsibilities of the seller and the buyers.

The 13 International Incoterms are:

Departure of goods by international transport with the risks and dangers to the Seller (Exporter) and Buyers (Importers)

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"EXW"- Ex Works

Title and risk pass to buyer including payment of all transportation and insurance cost from the seller's door. Used for any mode of transportation

Seller : In EXW shipment terms the Seller (Exporter) provides the goods for collection by the Buyer (Importer) on the seller or exporter's promise. Responsibility for the seller is to put the goods, in a good package which is adaptable and disposable by the transport.

Buyer : The buyer or Importer arranges insurance for damage transit goods. The Buyer or importer has to bear all costs and risks involved in shipment transactions.(However, if the parties wish the seller to be responsible for the loading of the goods on departure and to bear the risks and all the costs of such loading, this should be made clear by adding explicit wording to this effect in the contract of sale. )

"FCA"- Free Carrier named point

"FCA"- Free Carrier named point: Title and risk pass to buyer including transportation and insurance cost when the seller delivers goods cleared for export to the carrier. Seller is obligated to load the goods on the Buyer's collecting vehicle; it is the Buyer's obligation to receive the Seller's arriving vehicle unloaded.

Seller: The Seller’s responsibility is to deliver the goods into the custody of the transporters at defined points. It is important for the chosen place of delivery to have an impact on the obligations of loading and unloading the goods. Buyer: The Buyer nominates the means of transport or shipping mode and pays the shipment charges.

The seller and the buyer agree upon the place for delivery of goods. If the buyer nominates a person other than a carrier or transporter to receive the goods, the seller is deemed to fulfill his obligation to deliver the goods when they are delivered to that person.

"FAS"- Free Alongside Ship

FAS- Free Alongside ship: Title and risk pass to buyer including payment of all transportation and insurance cost once delivered alongside ship by the seller. Used for sea or inland waterway transportation. The export clearance obligation rests with the seller.

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In FAS has price includes all the costs incurred in delivering the goods alongside the vessel at the port or nominated place of the buyer but there is not applicable charges to the seller for loading the goods on board of vessel and no ocean freight charges and marine insurance.Seller: The responsibility of the seller is fulfilled when the goods are placed cleared along the ship.

Buyer: Buyer or Importer bear all the expenses and risks of loss or damage of transit goods which are delivered along the ship.

"FOB" - Free On Board

The FOB (Free on Board) price is inclusive of Ex-Works price, packing charges, transportation charges up to the place of shipment., Seller also responsible for o clear customs dues, quality inspection charges, weight measurement charges and other export related dues. It is important that the shipment term in the Bill of Lading must carry the wording "Shipped on Board' it must bear with signature of transporter or carrier or his authorized representative with the date on which goods were "Boarded".

Seller: Seller responsible for clear customs dues, quality inspection charges, weight measurement charges and other export related dues. It is important that the shipment term in the Bill of Lading must carry the wording "Shipped on Board' it must bear with signature of transporter or carrier or his authorized representative with the date on which goods were "Boarded".Buyer: The buyer indicates the ship and pays freight, transfer expenses and risks is done when the goods passes or forwarding to the buyers warehouse by rail or ship.

"CFR"- Cost   And Freight

In this term the exporter bears the cost of carriage or transport to the selected destination port, in this term the risk transferable to the buyers at the port of shipment.

Seller: The chooses the carrier, concludes and bears the expenses by paying freight to the agreed port of destination, unloading not included. The loading of the duty-paid goods on the ship falls on him as well as the formalities of forwarding. On the other hand, the transfer of risks is the same one as in FOB.

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Buyer: The buyers supports all the risk of transport, when the goods are delivered aboard by ship at the loading port, buyer receives it from the carrier and takes delivery of the goods from nominated destination port.

"CIF"- Cost, Insurance and Freight

CIF- Cost, Insurance and Freight: Title and risk pass to buyer when delivered on board the ship by seller who pays transportation and insurance cost to destination port. Used for sea or inland waterway transportation.

This Term involves insurance with FOB price and ocean freight. The marine insurance is obtained by the exporter at his cost against the risk of loss or damage to the goods during the carriage.Seller: The CFR extends additional obligation to the seller for providing a maritime so insurance against the risk of loss or damage to the goods. The seller pays the insurance premium.Buyer: He supports the risk of transportation, when the goods have been delivered aboard the ship at the loading port. He takes delivery of the goods from the carrier to the appointed port or destination.

"CPT"- Carriage Paid To

CPT- Carriage Paid To: Title, risk and insurance cost pass to buyer when delivered to carrier by seller who pays transportation cost to destination. Used for any mode of transportation.This term uses land transport by rail, road and inland waterways. The seller and exporter are responsible for the carriage of goods to the nominated destination and have to pay freight up the first carrier.

Seller: The seller or exporter controls the supply chain after paying customs clearance for export. Seller or Exporter select the carrier and pay the expenses up to the destination.

Buyer: The risks of goods damages or loss are supported by the buyer as goods are given by the first carrier. The buyer or importer has to pay importation customs clearance and the unloading costs.

"CIP"- Carriage and   Insurance Paid To

CIP- Carriage and Insurance Paid To: Title and risk pass to buyer when delivered to carrier by seller who pays transportation and insurance cost to destination. Used for any mode of transportation.This term is similar to Carriage Paid To but the seller has to arrange and pay for the insurance against the risk or loss or damage of the goods during the shipment.

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Seller: The seller or buyer has to provide insurance and seller pays the freight and insurance premium.

Buyer: The buyer or importer supports the risks of damages or loss, as goods are given to the first carrier. The buyer has to pay customs clearance and unloading charges.

" DAF"- Delivered At Frontier

DAF- Delivered at Frontier: Title, risk and responsibility for import clearance pass to buyer when delivered to named border point by seller. Used for any mode of transportation.This term is used when the goods are to be carried by rail or road.

Seller: The seller is responsible to make the goods available to the buyer by the carrier till the customs border as defined in sales contract.

Buyer: The buyer takes delivery of the goods at the contract agreed point border and he is responsible for bearing all customs formalities.

DES"- Delivered Ex-Ship

DES- Delivered Ex-Ship: Title, risk, responsibility for vessel discharge and import clearance pass to buyer when seller delivers goods on board the ship to destination port. Used for sea or inland waterway transportation.

Seller: The seller is responsible to make the goods available to the buyer up to the named quay or after crossing the customs border.

Buyer: The buyer takes delivery of the goods from ship at destination port and pays the expenses of unloading.

DEQ"- Delivered Ex-Quay

DEQ- Delivered Ex-Quay: Title and risk pass to buyer when delivered on board the ship at the destination point by the seller who delivers goods on dock at destination point cleared for import. Used for sea or inland waterway transportation.

"DDU"- Delivered Duty Unpaid

DDU- Delivered Duty Unpaid: Seller fulfills his obligation when goods have been made available at the named place in the country of importation.

Seller: The seller is responsible for all transportation cost and accepts the customs duty and taxes as per defined in customs procedures.

Buyer: The buyer is responsible of the importation customs formalities.

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"DDP"- Delivered Duty Paid

DDP- Delivered Duty Paid: Title and risk pass to buyer when seller delivers goods to the named destination point cleared for import. Used for any mode of transportation. Seller: The seller is responsible to make the goods available to the buyer at his risk and cost as promised by the buyer. All the Taxes and duty on importation is promised by the buyer to the seller.

Buyer: The buyer is responsible to take delivery at a nominated place and pays the expenses for unloading of goods.

Export import contact

An agreement made this the ....... day ....... of between....... (Name and address) hereinafter

called the exporters of the first part and........ (Name and address) hereinafter called the

importers of the second part, wherein the exporters grant to the importers the importation and

selling right in the territory of.......... (Fill name of country) for......... (Names and brief

description of product) subject to the terms and conditions given below:

i. The exporter agrees that during the currency of the agreement he will not correspond or

in any way deal with any part in the territory specified unless requested to do so by the

importers.

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ii. The exporter agrees that any orders or enquiries relating to the specified territory

received by him during the currency of this agreement will be passed on to the importers

to deal with.

iii. The exporter agrees that he will make shipment of all orders received from the importers

by earliest shipping opportunity unless prevented from so doing by circumstances

beyond the former's control.

iv. The exporter agrees to charge the importers for all goods ordered during the currency of

this agreement the prices detailed in Price List No. ......... Appended to this agreement

unless any order is received at least one month after notification of price changes by the

exporter to the importer.

v. The exporter agrees to pay the importer commission on......... (Fill in the dates of each

year during the currency of this agreement) at the rate of ...... per cent of ....... the F.O.B.

value of all orders satisfactorily completed during the ...... months preceding the dates

specified.

vi. The exporter agrees that he will allow to the importers........ Per cent ....... of the value of

all business satisfactorily completed with the importers during the currency of this

agreement as contribution towards the importer's costs in publicizing the products

covered by this agreement. This allowance is to be settled by deduction from the

manufacturer's invoices to the importers.

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vii. The importers agree that during the currency of this agreement they will not sell,

recommend or in any other way deal with any competing or rivaling lines in the territory

specified.

viii. The importers agree that they will use their best efforts and endeavors at all times during

the currency of this agreement to promote the sales of products covered by this

agreement.

ix. The importers agree that they will make net and full payment for all goods ordered

through confirmed and irrevocable letter of credit established in........... (Name of

manufacturer's town or city). OR The importers agree that they will make net and full

payment for all goods ordered against presentation of draft and shipping documents

in......... (Name of importer's town or city). OR The importers agree that they will

immediately upon presentation at ......... and retire such drafts net and in full upon

maturity.

x. The importers agree that they will write to the manufacturer at least once each calendar

month and will send to the manufacturer a full market report on the prospects for sale of

the products covered by this agreement every six months.

xi. The importer agrees that they will place regular and adequate order with the

manufacturer amounting in total to not less than........ During the first calendar year and

not less than Rs. in each and every subsequent year during the currency of this

agreement.

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xii. This agreement shall become valid with effect from the date of shipment of the

substantial order amounting in value of not less than Rs......... And remain in force for a

period of twelve calendar months there from subject to either party being at liberty to

terminate this agreement without notice in the event of the other party being in breach of

any of the terms and conditions stated herein.

xiii. Notwithstanding anything herein aforesaid if during the first twelve calendar months the

importers have placed satisfactory orders with the exporters amounting to not less than

Rs. ....... this agreement shall be automatically renewed year after year provided that in

the twelve calendar months immediately preceding the expiry date satisfactorily business

amounting in total to not less than Rs. ....... has been placed by the importers with the

manufacturer.

xiv. Any disputes arising under this agreement shall be settled in accordance with Indian Law

in (.............)

Witness.............. (Exporter)

Witness.............. (Importer)

Exporter according to the requirement of the importer produces the product (as per the

description of the importer) Exporter use to manufacture the product as per the delivery

schedule. An important stage after manufacturing of goods or their procurement is their

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preparation for shipment which involves packaging and labeling of goods to be exported. Proper

packaging and labeling not only makes the final product look attractive but also save a huge

amount of money by saving the product from wrong handling the export process.

Packaging

the primary role of packaging is to contain, protect and preserve a product as well as aid in its

handling and final presentation. Packaging also refers to the process of design, evaluation, and

production of packages. The packaging can be done within the export company or the job can be

assigned to an outside packaging company. Packaging provides following benefits to the goods

to be exported:

Physical Protection – Packaging provides protection against shock, vibration,

temperature, moisture and dust.

Containment or agglomeration – Packaging provides agglomeration of small objects into

one package for reason of efficiency and cost factor. For example it is better to put 1000

pencils in one box rather than putting each pencil in separate 1000 boxes.

Marketing: Proper and attractive packaging play an important role in encouraging a

potential buyer.

• Convenience - Packages can have features which add convenience in distribution,

handling, display, sale, opening, use, and reuse.

Security - Packaging can play an important role in reducing the security risks of

shipment. It also provides authentication seals to indicate that the package and contents

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are not counterfeit. Packages also can include anti-theft devices, such as dye-packs,

RFID tags, or electronic article surveillance tags, that can be activated or detected by

devices at exit points and require specialized tools to deactivate. Using packaging in this

way is a means of loss prevention.

Labeling

Like packaging, labeling should also be done with extra care. It is also important for an exporter

to be familiar with all kinds of sign and symbols and should also maintain all the nationally and

internationally standers while using these symbols. Labeling should be in English, and words

indicating country of origin should be as large and as prominent as any other English wording

on the package or label.

Labeling on product provides the following important information:

Shipper's mark

Country of origin

Weight marking (in pounds and in kilograms)

Number of packages and size of cases (in inches and centimeters)

Handling marks (international pictorial symbols)

Cautionary markings, such as "This Side Up."

Port of entry

Labels for hazardous materials

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Labeling of a product also provides information like how to use, transport, recycle, or dispose of

the package or product. With pharmaceuticals, food, medical, and chemical products, some

types of information are required by governments.

It is better to choose a fast dyes for labeling purpose. Only fast dyes should be used for labeling.

Essential data should be in black and subsidiary data in a less conspicuous colour; red and

orange and so on. For food packed in sacks, only harmless dyes should be employed, and the

dye should not come through the packing in such a way as to affect the goods. An important

aspect about the goods to be exported is compulsory quality control and pre-shipment

inspection. For this purpose, Export Inspection Council (EIC) was set up by the Government of

India under Section 3 of the Export (Quality Control and Inspection) Act, 1963. It includes more

than 1000 commodities which are organized into various groups for a compulsory pre-shipment

inspection. It includes Food and Agriculture, Fishery, Minerals, Organic and Inorganic

Chemicals, Rubber Products, Refractoriness, Ceramic Products, Pesticides, Light Engineering,

Steel Products, Jute Products, Coir and Coir Products, Footwear and Footwear Products.

An important aspect about the goods to be exported is compulsory quality control and pre-

shipment inspection. For this purpose, Export Inspection Council (EIC) was set up by the

Government of India under Section 3 of the Export (Quality Control and Inspection) Act, 1963.

It includes more than 1000 commodities which are organized into various groups for a

compulsory pre-shipment inspection. It includes Food and Agriculture, Fishery, Minerals,

Organic and Inorganic Chemicals, Rubber Products, Refractoriness, Ceramic Products,

Pesticides, Light Engineering, Steel Products, Jute Products, Coir and Coir Products, Footwear

and Footwear Products.

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ISI Certification

Indian Standards Institute now known as Bureau of Indian Standard (BIS) is a registered society

under a Government of India. BIS main functions include the development of technical

standards, product quality and management system certifications and consumer affairs. Founded

by Professor P.C. Mahalanobis in Kolkata on 17th December, 1931, the institute gained the

status of an Institution of National Importance by an act of the Indian Parliament in 1959.

AgMmark Certification

AgMark is an acronym for Agricultural Marketing and is used to certify the food products for

quality control. Agmark has been dominated by other quality standards including the non

manufacturing standard ISO 9000.

Benefits of ISI and Agmark Certification

Products having ISI Certification mark or Agmark are not required to be inspected by any

agency. These products do not fall within the purview of the export inspection agencies

network. The Customs Authorities allow export of such goods even if not accompanied by any

pre-shipment inspection certificate, provided they are otherwise satisfied that the goods carry ISI

Certification or the Agmark.

In-Process Quality Control (IPQC)

In-Process Quality Control (IPQC) inspection is mainly done for engineering products and is

applied at the various stages of production. Units approved under IPQC system of in-process

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quality control may themselves issue the certificate of inspection, but only for the products for

which they have been granted IPQC facilities. The final certificate of inspection on the end-

products is then given without in-depth study at the shipment stage.

Self Certification Scheme

Under the self Certification Scheme, large exporters and manufacturers are allowed to inspect

their product without involving any other party. The facility is available to manufacturers of

engineering products, chemical and allied products and marine products. Self-Certification is

given on the basis that the exporter himself is the best judge of the quality of his products and

will not allow his reputation to be spoiled in the international market by compromising on

quality. Self-Certification Scheme is granted to the exporter for the period of one year.

Exporters with proven reputation can obtain the permission for self certification by submitting

an application to the Director (Inspection and Quality Control), Export Inspection Council of

India, 11th Floor, Pragati Tower, 26 Rajendra Place, New Delhi.

ISO 9000

The discussion on inspection certificate and quality control is incomplete without ISO-9000.

Established in 1987, ISO 9000 is a series of international standards that has been accepted

worldwide as the norm assuring high quality of goods. The current version of ISO 9000 is ISO

9000:2000.

Documentation categories

Document can be broadly divided into three categories

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1. commercial documents

2. Legal or regulatory documents

3. Incentives and assistance claim documents

Commercial documents

Performa Invoice

Letter of credit

Commercial Invoice

Packing list

Bill of lading

1. Performa Invoice

In documentation of exports the first stage is Performa Invoice. The Performa Invoice is like a

quotation in which the terms and conditions, quantity, rates of goods, description of goods,

country of origin, port of loading, port of discharging, final destination, terms of delivery

payment etc. are mentioned. The Performa for this is known as Performa Invoice.

A Performa invoice (sometimes written as pro forma invoice) is little more than a 'pre advice' or

indication of what will stand in the commercial invoice once negotiations have been completed.

Indeed, the perform invoice and the commercial invoice often look exactly the same, except that

it should state clearly "Performa invoice" on this document, whereas the commercial invoice

will state "invoice" or "commercial invoice". The Performa invoice serves as a negotiating

instrument. The initial Performa invoice often sets the stage for the first round of negotiations if

the exporter and importer have not yet had any real discussions.

The Performa invoice sets the stage for the negotiation process

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Assuming that an importer e-mails you - an exporter - asking you to submit a Performa invoice

(or a quotation) for the supply of 100 pumps according to a set standard. You would then

prepare and submit a Performa invoice to the potential importer outlining a description of the

product, what the price is, what the delivery terms will be, what the payment terms will be, as

well as any other information that may be pertinent to the sale. Before this, of course, you will

have done the costing exercise mentioned above. The importer will most likely reply to your

Performa invoice requesting/negotiating different requirements such as a lower price, longer

terms of payment, different methods of payment, a different delivery schedule and may even

request changes to the product specifications. You may be required to revisit the design and

manufacture of your product, the costing exercise mentioned earlier, as well as you pricing

strategies. You may even have to find alternative ways of getting your product to the customer

and you may need to carefully rethink issues such as packaging, labeling, insurance,

commissions, etc.

The Performa invoice must be comprehensive, accurate, clear and concise

In other instances where the exporter and importer have met before and have already discussed

and thrashed out an agreement perhaps in a face-to-face meeting, only one final Performa

invoice is necessary to confirm that the two parties are indeed in agreement. If the importer is

satisfied with this final Performa invoice, he/she will request their bank to issue an L/C on the

strength of information stipulated in the Performa invoice. For this reason, it is essential that the

Performa invoice be comprehensive, accurate, clear and concise. Any errors or

misunderstandings will be transferred to the L/C and will cause problems, frustrations and

delays down the line. What is more, the Performa invoice is also important to the importer for

the purpose of obtaining an import permit and foreign exchange allocation within his country.

At the same time, the exporter may use the Performa invoice and acceptance of the order from

the importer to obtain funding to pay for the manufacturer of the goods concerned.

Details pertinent to the Performa invoice

The following details are pertinent to the setting up of the Performa invoice and need careful

attention:

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The document title should clearly state "Performa Invoice"

The name of the exporter (referred to as the shipper) and their contact details (Tel, fax,

cell, e-mail), including physical (not postal) address

The name of the importer (referred to as the consignee, meaning the person or firm to

whom the goods are to be sent) and their contact details (Tel, fax, cell, e-mail), including

physical (not postal) address (In the case of transshipment, there may be an intermediate

consignee and their contact details and address should then also be included on the

invoice.)

If the person or firm buying the goods (the importer) is not the same as the person or

firm to whom the goods are being sent, then you should include both their contact details

and addresses in the Performa invoice

The name of the person and company to notify once shipment has taken place and their

contact details and physical address (here the contact details such as telephone, fax and

cell number and e-mail address are more important than the physical address)

A Performa invoice reference number

An order number or similar reference to correspondence between the supplier and

importer

The date of issue of the Performa invoice (the 'quotation date') - quite important

A complete, detailed and clear description of the goods in question, incorporating the

appropriate HS codes and brand marks if applicable (here the importer may ask you to

remove these codes as they may not be the same in the importing country and may thus

incur additional or higher duties to the importer's detriment because of their inadvertent

misuse)

The quantity of goods in question, including the number of units/items

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The packing details, including their external dimensions, cubic capacity, weight,

numbers and contents of each package shipped, and kinds of packaging involved

(pallets, boxes, bags, etc.)

The grand total price of the goods for the whole consignment

Where applicable, the unit prices should be indicated - the unit price multiplied by the

number of units/items should be reflected in the line total. The various line totals (in the

case where different items are included in the same commercial invoice, or where

additional services are itemized in the invoice), should add up to the total price for the

whole consignment (also referred to as the 'Grand Total')

The currency in which the goods will be sold (e.g. US dollars)

The type and amount of any discount given, where applicable

The likely delivery schedule and delivery terms

The payment methods (for example cash in advance, documentary collection, L/C, etc.)

The payment terms (for example 30 days on sight)

The Inco terms to be used (Inco terms 2000 - FAS, CIF, CFR, DDP, etc.)

Who is responsible for the banking fees and other related costs (insurance and freight

costs are covered by the Inco terms in question)

What the freight and insurance charges are

The exporter's banking details

A declaration of the country of origin of the goods

The expected country of final destination

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Any freight details such as the port of loading and discharge

Any additional exporter-provided services that should be added to the invoice to come to

the grand total

Any transshipment requirements

The validity of the Performa invoice - that is, when does the offer expire (leaving it

open-ended could be very risky)

Any other information relevant to the order

Make sure the Performa invoice is signed, together with the signature's name written

underneath, with initials, title and position

PROFORMA INVOICE (FOR EXPORT)

EXPORTER: PROFORMA INVOICE NO. & DATE

IEC CODE NO. 059704952

Buyer’s Order No. & Date

Other references G.R.E.1 Form noBuyer (If other than Consignee)

CONSIGNEE:Country or the origin of goods

Country of final destination

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PRE CARRIAGE BY: PLACE OF RECEIPT OF PRE CARRIER

Terms of delivery payment

C I FVESSEL NO. PORT OF LOADING

PORT OF DISCHARGE FINAL DESTINATION

S. NO. DESCRIPTION OF GOODS

QTY. RATE (In USD) AMOUNT (In USD)

1DI-750 with their specification

OUR BANKERS: -

0 0000.00 00000.00

TOTAL VALUE

AMOUNT CHARGEABLE 00000.00 USD

INSURANCE TO BE BORNE BY ITL UPTO COLOMBO PORT

Declaration: - We declare that this Commercial Invoice shows the actual price of the goods described and that all particulars are true and correct.

Letter of Credit

After getting the Performa Invoice from the consignor the second step is that the consignee

issued the Letter of Credit to consignor, which is also called L/C. In L/C it means the

confirmation about the payment through the bankers or financial institution on documented

proof of clear dispatch. The mode of realizing secured payment through financial institution.

In an export trade, the exporter would like to ensure that there is no risk of non- payment.

Usually, the exporter asks the importer to send a letter of credit to him. A letter of credit is an

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undertaking by its issuer (usually importer’s bank) that the bill of exchange drawn by the

foreign dealer on the importer will be honored on presentation upon specified amount. L/C is

simply a guarantee by the bank to the foreign dealer (exporter) that their bills up to a specified

amount would be honored. There are three parties to a 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 exporter in whose favour the letter of credit is opened.

The mode of bill realization by an organization through financial

institution and the party to whom the consignment is billed through their financial institution

is known as negotiations through letter of credit namely the documents are routed through one

banker to the other banker whose responsibility to make the payment on behalf of their client.

Payment terms i.e. payment in advance, payment through demand draft, payment through letter

of credit, payment at sight, payment after the receipt of shipping bill etc. proof of dispatch,

insurance bill, original bill etc. and other instructions and documents required are also

mentioned in the L/C. Name of the bankers, Currency Code, Description of goods,

Transshipment, Partial Shipment, Pre-shipment etc. are also mentioned in the letter of credit. In

the L/C the consignor dispatches the goods before the expiry of L/C. Every Consignor has

mentioned his terms and conditions for loading the goods to discharging the goods in the L/C.

:

Sight credits

This is an easy enough term to explain. A sight credit or L/C is one which paid upon

presentation of the required documentation (as stipulated in the original L/C) to the issuing or

confirming bank. As exporter, you need to be careful however, as some L/Cs state that payment

will only be made at a specified branch counter of the issuing or confirming bank (and won't

necessarily be paid or transferred directly into your account). The process of having to go to a

particular branch and receive payment and then to transfer this payment into your account will

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slow down the payment process and may add further costs to the overall process. Thus, when

working with sight L/Cs (or any L/Cs for that matter) make sure where payment will be made.

Usance credits

An L/C can specify any credit period that you have negotiated with the importer. A letter of

credit that that incorporates a payment after a given term (e.g. 60 days) is known as a usance

credit (also referred to as a term or acceptance credit). The correct phrase is hat the L/C is at

usance, meaning that it will come into effect at some future date (also referred to as maturity).

You should note that the maturity date may also have further stipulations associated with it; for

example:

90 days sight

120 days from Bill of Lading (B/L) date

60 days and upon issuing of a FDA (US Food and Drug Administration) clearance

Some of these provisos can have a significant impact on your receiving payment and you should

make yourself fully aware of any such provisos to your L/C. A usance/term credit will require

you, as exporter, to finance the gap between delivery and payment.

Transferable credits

An irrevocable L/C may also be transferable. In the case of a transferable L/C, the exporter can

transfer all or part of his/her rights to another party. Transferable letters of credit are often used

when the exporter is the importer's agent or a middleperson (i.e. export agent) between supplier

and importer, and not the actual supplier of merchandise. With a transferable letter of credit, the

exporter uses the credit standing of the issuing bank and avoids having to borrow or use his own

funds to buy goods from a supplier. Hence, it is a viable pre-export financing vehicle. Before

transfer can be made, the exporter must contact, in writing, the bank handling the disbursement

of funds - the transferring bank. Transferable L/Cs can only be transferred based on the terms

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and conditions specified in the original credit, with certain exceptions. Therefore, it may be

difficult to achieve flexibility and confidentiality with this finance method.

The transferring bank, whether it has confirmed the letter of credit or not, is only obligated to

make the transfer to the extent and in the manner expressly specified in the L/C. Transferable

L/Cs involve specific risks. When a bank opens a transferable letter of credit for a buyer, neither

party can be certain of who will be the ultimate supplier. Both parties must rely upon the

importer's assessment of the exporter's reputation and ability to perform. To reduce overall risk

and prevent the shipment of substandard goods, an independent certificate of inspection may be

required in the documentation.

For simplicity's sake, many banks prefer single transfer and discourage multiple transfers, but

will do multiple transfers if conditions are right. Partial transfers can also be made to one or

several suppliers if the terms of the original L/C allow for partial shipments. The processing of

this type of letter of credit can become complicated and tricky, requiring logistics coordination

and the highest level of precision. Incomplete and/or ambiguous information on the transferable

letter of credit almost always leads to problems. Furthermore, the beneficiary of the transferable

letter of credit must be available throughout the entire negotiation process to assist the

transferring bank.

Revolving credits

The term "revolving" is used to describe a letter of credit, which, incorporates a condition

whereby the credit amount is to be renewed or reinstated automatically without the need for a

specific amendments to the credit. This type of credit is used when regular trade is conducted

between an exporter and an overseas buyer. A revolving credit can be irrevocable or confirmed.

Although a credit may, in theory, revolve in relation to amount, in practice this is rare, as it

would mean that there might be no limit to the number of times a specific amount could be

drawn. A credit, which revolves in relation to time, is a much more common form of a revolving

credit. For example, a revolving credit could be made available for an amount of US$ 10 000

per month (irrespective of whether any sum was drawn during the previous month) with an

overall validity of six months. A revolving credit may be:

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Cumulative, i.e. any sum not utilised during the first period is carried over and may be utilised

in the subsequent period.

Non-cumulative i.e. any sum not utilised during the first period ceases to be available in

subsequent periods.

Back-to-back credits

Back-to-back L/Cs is another common occurrence in the world of international trade. When an

exporter, who is not a manufacturer, but obtains goods from a supplier by acting as an export

agent for the supplier for example, has received an L/C from an importer, the exporter, in turn,

may request his bank to open a L/C in favour of his supplier on the strength of the existing L/C.

These two credits are said to be "back-to-back", that is to say the one is issued on the security of

the other. A bank will only consider opening a second credit if the same goods are involved in

both credits. In terms of the back-to-back L/C, the exporter is both the beneficiary/exporter of

the first credit and the applicant/buyer for the second credit.

Standby credits

A standby L/C is one which is issued in favour of the exporter for the purpose of "backing-up"

certain specified obligations of the importer. A standby letter of credit requires the exporter's

presentation of documents which indicate that importer has not met the obligations which the

standby letter of credit backs-up. A standby letter of credit, therefore, is not intended to be

drawn upon by the standby letter of credit beneficiary unless the standby letter of credit

applicant does not meet its obligations as specified by the standby letter of credit

Commercial Invoice

The third step in documentation is Commercial Invoice in which the total payments of goods are

to be finalized by the consignor. In Commercial Invoice the engine / chassis no., No. and kind of

packing, description of goods, quantity of goods, rate of goods in Indian currency as well as US

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dollars, amount of goods in Indian currency as well as US dollars are also mention. The

Performa of Commercial Invoice is as same as Proforma Invoice. In Commercial Invoice the

terms of delivery payment can also be mentioned. The port of loading, port of discharge, final

destination can also be mentioned. The main difference between the commercial invoice and the

proforma invoice is that the proforma invoice is like a quotation in where the consignor and

consignee may change the price list of the goods. The Proforma Invoice may be change but once

the commercial invoice is dispatched it cannot be changed. Following is the proforma of

Commercial Invoice: -

After the pro-forma invoice is accepted by the importer, the exporter must prepare a commercial

invoice. The commercial invoice is required by both the exporter (to obtain the necessary export

documents to enable the consignment to be exported, to prove ownership and to enable

payment) and importer (who require the commercial invoice to facilitate the import of the goods

into the country in question). In exporting, the commercial invoice is considered a very

important document as it serves as the starting or initiating document that underpins the rest of

the export transaction.

The commercial invoice is essentially a bill (i.e. invoice) from the seller (the exporter) to the

buyer (the importer) describing the parties to the agreement, the goods to be sold, and the terms

involved, as agreed between the exporter and importer. As such, the commercial invoice is the

final bill exchanged between the seller and the buyer. The commercial invoice will normally be

presented on the exporter's letterhead and will be addressed to the importer. It should contain

full details of the consignment, including price and other related costs, in order to facilitate

customs clearance. It must also be signed and dated. Freight and insurance, when included in the

selling price, should be itemized separately as these charges are not subject to duty in certain

countries. It is important that the commercial invoice clearly differentiates between the dutiable

component of the order (the market value of the order), any other typically non-dutiable charges

such as freight and insurance, and the total invoice value of the order.

You should be aware that the commercial invoice is used by Customs authorities throughout the

world for assessing Customs duties, inspection purposes, and for the keeping of statistics. If

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there is specific information required to appear on the commercial invoice by the Customs'

authorities in the importing country, the importer should advise you of this. It does no harm,

however, just to ask him/her if they don't mention it on their own. If it later transpires that

certain additional information was required, you can at least say that you did ask!

Customs' and consular invoices

Some countries, however, may require the commercial invoice to be completed on their own

specified forms - such commercial invoices are known as "Customs' invoices" and may be

provided in lieu of or in addition to the standard commercial invoices referred to above. In

addition, a "consular invoice" is required by certain countries. The consular invoice must be

prepared in the language of the destination country and can be obtained from the country's

consulate, and often must be "consularised" (i.e. stamped by an authorised Consul official in the

exporting country).

The following details should appear in the commercial invoice:

The document title should clearly state "Commercial Invoice"

The name of the exporter (referred to as the shipper) and their contact details (tel, fax,

cell, e-mail), including physical (not postal) address

The name of the importer (referred to as the consignee, meaning the person or firm to

whom the goods are to be sent) and their contact details (tel, fax, cell, e-mail), including

physical (not postal) address (In the case of transshipment, there may be an intermediate

consignee and their contact details and address should then also be included on the

invoice.)

If the person or firm buying the goods (the importer) is not the same as the person or

firm to whom the goods are being sent, then you should include both their contact details

and addresses in the commercial invoice

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The name of the person and company to notify once shipment has taken place and their

contact details and physical address (here the contact details such as telephone, fax and

cell number and e-mail address are more important than the physical address)

A commercial invoice reference number

A purchase order number or similar reference to correspondence between the supplier

and importer

The date of issue of the commercial invoice

A complete, detailed and clear description of the goods in question, incorporating the

appropriate HS codes and brand marks if applicable (here the importer may ask you to

remove these codes as they may not be the same in the importing country and may thus

incur additional or higher duties to the importer's detriment because of their inadvertent

misuse)

The quantity of goods in question, including the number of units/items

The packing details unless provided in a separate packing list, including their external

dimensions, cubic capacity, weight, numbers and contents of each package shipped, and

kinds of packaging involved (pallets, boxes, bags, etc.) - if a separate packing list is

used, reference should be made in the commercial invoice to the packing list

The grand total price of the goods for the whole consignment

Where applicable, the unit prices should be indicated - the unit price multiplied by the

number of units/items should be reflected in the line total. The various line totals (in the

case where different items are included in the same commercial invoice, or where

additional services are itemised in the invoice), should add up to the total price for the

whole consignment (also referred to as the 'Grand Total')

The currency in which the goods will be sold (e.g. US dollars)

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The type and amount of any discount given, where applicable

The likely delivery schedule and delivery terms

The payment methods (for example cash in advance, documentary collection, L/C, etc.)

The payment terms (for example 30 days on sight)

The Incoterms to be used (Incoterms 2000 - FAS, CIF, CFR, DDP, etc.)

Who is responsible for the banking fees and other related costs (insurance and freight

costs are covered by the Incoterms in question)

What the freight and insurance charges are

The exporter's banking details

A declaration of the country of origin of the goods

The expected country of final destination

Any freight details such as the port of loading and discharge

Any additional exporter-provided services that should be added to the invoice to come to

the grand total

Any trans-shipment requirements

The validity of the commercial invoice - that is, when does the offer expire (leaving it

open-ended could be very risky)

Any other information relevant to the order

Make sure the commercial invoice is signed, together with the signature's name written

underneath, with initials, title and position.

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COMMERCIAL INVOICE

EXPORTER: - INVOICE NO. & DATE

IEC CODE NO. 059704952Buyer’s Order No. & Date

Other references G.R.E.1 Form no

Buyer (If other than Consignee)

CONSIGNEE: -Country or the origin of goods Country of final

destination

Pre-carriage by Place of receipt of pre-carrierTerms of delivery payment

Vessel no. Port of loading

Port of discharge Final destination

Qty. Rate Amount

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Engine/Chassis No.

No. & kind of packing

Description of goods

In Indian In USD

In Indian In USD

Total Value

Packing list

Packing list is another vital it contain the description of the product. It is used in the various

places along with the invoice. It is a detail that the consignment has been packed in the

following manner and consignment has packed and checked thoroughly. Packing list contain the

following items

1. Customer name and address of the exporter/shipper

2. Name and address of the consignee

3. Notify party (if any)

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4. Port of loading

5. Port of discharge

6. Final destination

7. Invoice No. and Date

8. I.E. Code with date of issue

9. Product name

10. Excise packing no.

11. Pkg no. No. of packages

12. Description of goods

13. Quantity

14. Gross weights (kgs)

15. Net weight

16. Name of the manufacturer

17. Signature of the authorized person

Purchase order number (P.O number)

PACKING LIST

Exporter: -

International Tractors Ltd.

Invoice No. & Date

Buyer’s order no. & Date

Other Reference(s)

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Consignee: - Buyer (if other than consignee)

Terms of Delivery Payment

Pre Carriage ByPlace of Receipt of Pre-Carrier

Vessel No.Port of Loading

Port of Discharge Port of Delivery Bangladesh

Components Description Details Tractors Specification Quantity Identification no.

ANNEXURE OF PACKING LIST

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Sr. No. Component Description Details Quantity

Net Weight Gross Weight Size

Total

FOR INTERNATIONAL TRACTORS LTD.

Authorized Signatory

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LEGAL AND REGULATORY DOCUMENT

Besides commercial necessity, documents in the trade have a legal dimension. All over

the world, laws regulating export import trade have been enacted. In some countries,

these regulations are few and are enforced by simple procedures. While in other

countries, the regulations are very many and enforcement procedures are complex. How

ever the basic objectives of this regulation are to account for movement of goods and

foreign exchange, protect economic political cultural and other interests and implement

bilateral and multilateral trade agreement.

Many countries require permission or registration for the firms to operate in the

international business for this purpose documents are prescribed, which are verified

before getting the permission.

In the Indian context a number of document are needed, starting from securing importer

exporter code number from the office of the director general foreign trade (DGFT) to

custom clearance of cargo. Both for export and import main legal document require are

1. Application for allotment of importer exporter code number by (DGFT) and the

subsequent allotment letter.

2. Permanent accounting number letter issued by the income tax authorities

3. Registration –cum-membership certificate (RCMC) from the exporter promotion

agencies (export promotion council/commodity board / development authority /

federation of Indian export organization )

4. Insurance premium payment certificate from the insurance company.

5. Exchange control declaration form. SDF

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6. Inspection Certificate are Required Under the Export(Quantity Control And

Inspection) Act 1963

7. Shipping bill/ bill of export application to the customs clearance of export cargo.

Similarly, bill of entry is needed for import clearance.

8. Freight payment certificate from the carrier in case freight has been paid by the

exporter

9. Insurance premium payment certificate from the insurance company.

Incentives and assistance claim documents

Export commands a premium in most of the countries in the world. Exporters are either

provided direct incentives or subsidies or are extended export promotion support in many ways.

With the globalization process and active role of WTO, direct incentives are losing importance.

But such support measures as duty drawback and cheap finance continue to provide to the

exporter .natural y for claiming export incentive and support benefits, documentary claims are

made.

In India apart for export facilities and assistance granted by banks and other institutions

Appointment of a CHA

(Custom house agent) the exporter through the reference of other exporters select the best CHA

from the list of many CHA’S the best one of them which can provide the best services at

the suitable prices services such as

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Custom clearance

Transportation

Warehousing

Door delivery

Invoice along with packing list are given to CHA

Registration

Any exporter who wants to export his good need to obtain PAN based Business Identification

Number (BIN) from the Directorate General of Foreign Trade prior to filing of shipping bill for

clearance of export goods. The exporters must also register themselves to the authorized foreign

exchange dealer code and open a current account in the designated bank for credit of any

drawback incentive.

Registration in the case of export under export promotion schemes:

All the exporters intending to export under the export promotion scheme need to get their

licences / DEEC book etc.

Processing of Shipping Bill Non-EDI:

In case of Non-EDI, the shipping bills or bills of export are required to be filled in the format as

prescribed in the Shipping Bill and Bill of Export (Form) regulations, 1991. An exporter need to

apply different forms of shipping bill/ bill of export for export of duty free goods, export of

dutiable goods and export under drawback etc.

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Processing of Shipping Bill - EDI:

Under EDI System, declarations in prescribed format are to be filed through the Service Centers

of Customs. A checklist is generated for verification of data by the exporter/CHA. After

verification, the data is submitted to the System by the Service Center operator and the System

generates a Shipping Bill Number, which is endorsed on the printed checklist and returned to the

exporter/CHA. For export items which are subject to export cess, the TR-6 challans for cess is

printed and given by the Service Center to the exporter/CHA immediately after submission of

shipping bill. The cess can be paid on the strength of the challan at the designated bank. No

copy of shipping bill is made available to exporter/CHA at this stage.

Quota Allocation

The quota allocation label is required to be pasted on the export invoice. The allocation number

of AEPC (Apparel Export Promotion Council) is to be entered in the system at the time of

shipping bill entry. The quota certification of export invoice needs to be submitted to Customs

along-with other original documents at the time of examination of the export cargo. For

determining the validity date of the quota, the relevant date needs to be the date on which the

full consignment is presented to the Customs for examination and duly recorded in the

Computer System.

Arrival of Goods at Docks:

On the basis of examination and inspection goods are allowed enter into the Dock. At this stage

the port authorities check the quantity of the goods with the documents.

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System Appraisal of Shipping Bills:

In most of the cases, a Shipping Bill is processed by the system on the basis of declarations

made by the exporters without any human intervention. Sometimes the Shipping Bill is also

processed on screen by the Customs Officer.

Customs Examination of Export Cargo:

Customs Officer may verify the quantity of the goods actually received and enter into the system

and thereafter mark the Electronic Shipping Bill and also hand over all original documents to the

Dock Appraiser of the Dock who many assign a Customs Officer for the examination and

intimate the officers’ name and the packages to be examined, if any, on the check list and return

it to the exporter or his agent.

The Customs Officer may inspect/examine the shipment along with the Dock Appraiser. The

Customs Officer enters the examination report in the system. He then marks the Electronic Bill

along with all original documents and check list to the Dock Appraiser. If the Dock Appraiser is

satisfied that the particulars entered in the system conform to the description given in the

original documents and as seen in the physical examination, he may proceed to allow "let

export" for the shipment and inform the exporter or his agent.

Stuffing / Loading of Goods in Containers

The exporter or export agent hand over the exporter’s copy of the shipping bill signed by the

Appraiser “Let Export" to the steamer agent. The agent then approaches the proper officer for

allowing the shipment. The Customs Preventive Officer supervising the loading of container and

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general cargo in to the vessel may give "Shipped on Board" approval on the exporter’s copy of

the shipping bill.

Drawal of Samples:

Where the Appraiser Dock (export) orders for samples to be drawn and tested, the Customs

Officer may proceed to draw two samples from the consignment and enter the particulars

thereof along with details of the testing agency in the ICES/E system. There is no separate

register for recording dates of samples drawn. Three copies of the test memo are prepared by the

Customs Officer and are signed by the Customs Officer and Appraising Officer on behalf of

Customs and the exporter or his agent. The disposal of the three copies of the test memo is as

follows:-

Original – to be sent along with the sample to the test agency.

Duplicate – Customs copy to be retained with the 2nd sample.

Triplicate – Exporter’s copy.

The Assistant Commissioner/Deputy Commissioner if he considers necessary, may also order

for sample to be drawn for purpose other than testing such as visual inspection and verification

of description, market value inquiry, etc.

Amendments :

Any correction/amendments in the check list generated after filing of declaration can be made at

the service center, if the documents have not yet been submitted in the system and the shipping

bill number has not been generated. In situations, where corrections are required to be made

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after the generation of the shipping bill number or after the goods have been brought into the

Export Dock, amendments is carried out in the following manners.

1. The goods have not yet been allowed "let export" amendments may be permitted by the

Assistant Commissioner (Exports).

2.  Where the "Let Export" order has already been given, amendments may be permitted

only by the Additional/Joint Commissioner, Custom House, in charge of export section.

In both the cases, after the permission for amendments has been granted, the Assistant

Commissioner / Deputy Commissioner (Export) may approve the amendments on the system on

behalf of the Additional /Joint Commissioner. Where the print out of the Shipping Bill has

already been generated, the exporter may first surrender all copies of the shipping bill to the

Dock Appraiser for cancellation before amendment is approved on the system.

Export of Goods under Claim for Drawback:

After actual export of the goods, the Drawback claim is processed through EDI system by the

officers of Drawback Branch on first come first served basis without feeling any separate form.

Generation of Shipping Bills:

The Shipping Bill is generated by the system in two copies- one as Custom copy and one as

exporter copy. Both the copies are then signed by the Custom officer and the Custom House

Agent.

Organizations’ Supporting to Exporters.

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In India there are a number of organization and agencies that provides various types of support

to the exporters from time to time. These export organizations provides market research in the

area of foreign trade, dissemination of information arising from its activities relating to research

and market studies. So, exporter should contact them for the necessary assistance.

Export Promotion Councils (EPC)

Export Promotion Councils are registered as non -profit organizations under the Indian

Companies Act. At present there are eleven Export Promotion Councils under the administrative

control of the Department of Commerce and nine export promotion councils related to textile

sector under the administrative control of Ministry of Textiles. The Export Promotion Councils

perform both advisory and executive functions. These Councils are also the registering

authorities under the Export Import Policy, 2002-2007.

Commodity Boards

Commodity Board is registered agency designated by the Ministry of Commerce, Government

of India for purposes of export-promotion and has offices in India and abroad. There are five

statutory Commodity Boards, which are responsible for production, development and export of

tea, coffee, rubber, spices and tobacco.    

Federation of Indian Export Organisations (FIEO)

FIEO was set up jointly by the Ministry of Commerce, Government of India and private trade

and industry in the year 1965. FIEO is thus a partner of the Government of India in promoting

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India’s exports. Address: Niryaat Bhawan, Rao Tula Ram Marg, Opp. Army Hospital. Research

& Referral, New Delhi 110057

Indian Institute of Foreign Trade (IIFT)

The Indian Institute of Foreign Trade (IIFT) was set up in 1963 by the Government of India as

an autonomous organization to help Indian exporters in foreign trade management and increase

exports by developing human resources, generating, analyzing and disseminating data and

conducting research.

Address: B-21 Kutub Institutional Area, Mehrauli Road, New Delhi-110016

Indian Institution of Packaging (IIP)

The Indian Institute of Packaging or IIP in short was established in 1966 under the Societies

Registration Act (1860). Headquartered in Mumbai, IIP also has testing and development

laboratories at Calcutta, New Delhi and Chennai. The Institute is closely linked with

international organizations and is recognized by the UNIDO (United Nations Industrial

Development Organization) and the ITC (International Trading Centre) for consultancy and

training. The IIP is a member of the Asian Packaging Federation (APF), the Institute of

Packaging Professionals (IOPP) USA, the Institute of Packaging (IOP) UK, Technical

Association of PULP AND Paper Industry (TAPPI), USA and the World Packaging

Organization (WPO).

Address: B-2, MIDC Area, P.B. 9432, Andheri (E), Mumbai 400096.

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Export Inspection Council (EIC)

The Export Inspection Council or EIC in short, was set up by the Government of India under

Section 3 of the Export (Quality Control and Inspection) Act, 1963 in order to ensure sound

development of export trade of India through Quality Control and Inspection.

Address: 3rd Floor, ND YMCA, Cultural Centre Bldg., 1, Jai Singh Road, New Delhi-110001.

Indian Council of Arbitration (ICA)

The Indian Council for Arbitration (ICA) was established on April 15, 1965. ICA provides

arbitration facilities for all types of Indian and international commercial disputes through its

international panel of arbitrators with eminent and experienced persons from different lines of

trade and professions.

Address: Federation House, Tansen Marg, New Delhi-110001

India Trade Promotion Organisation (ITPO)

ITPO is a government organisation for promoting the country’s external trade. Its promotional

tools include organizing of fairs and exhibitions in India and abroad, Buyer-Seller Meets,

Contact Promotion Programmes, Product Promotion Programmes, Promotion through Overseas

Department Stores, Market Surveys and Information Dissemination.

Address: Pragati Bhawan Pragati Maidan, New Delhi-10001

Chamber of Commerce & Industry (CII)

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CII play an active role in issuing certificate of origin and taking up specific cases of exporters to

the Govt

Federation of Indian Chamber of Commerce & Industry (FICCI)

Federation of Indian Chambers of Commerce and Industry or FICCI is an association of

business organisations in India. FICCI acts as the proactive business solution provider through

research, interactions at the highest political level and global networking.

Address: Federation House, Tansen Marg, New Delhi-110001

Bureau of Indian Standards (BIS)

The Bureau of Indian Standards (BIS), the National Standards Body of India, is a statutory body

set up under the Bureau of Indian Standards Act, 1986. BIS is engaged in standard formulation,

certification marking and laboratory testing.

Address: 9, Manak Bhavan, Bahadur Shah Zafar Marg, New Delhi-110002

Textile Committee

Textile Committee carries pre-shipment inspection of textiles and market research for textile

yarns, textile machines etc.

Address: Textile Centre, second Floor, 34 PD, Mello Road, Wadi Bandar, Bombay-400009

Marine Products Export Development Authority (MPEDA)

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The Marine Products Export Development Authority (MPEDA) was constituted in 1972 under

the Marine Products Export Development Authority Act 1972 and plays an active role in the

development of marine products meant for export with special reference to processing,

packaging, storage and marketing etc.

Address: P.B No.4272 MPEDA House, pannampilly Avenue, Parampily Nagar, Cochin-682036

India Investment Centre (IIC)

Indian Investment Center (IIC) was set up in 1960 as an independent organization, which is

under the Ministry of Finance, Government of India. The main objective behind the setting up of

IIC was to encourage foreign private investment in the country. IIC also assist Indian

Businessmen for setting up of Industrial or other Joint ventures abroad.

Address: Jeevan Vihar, 4th Floor, Parliament Street, New Delhi-110001

Directorate General of Foreign Trade (DGFT)

DGFT or Directorate General of Foreign Trade is a government organisation in India

responsible for the formulation of guidelines and principles for importers and exporters of

country.

Address: Udyog Bhawan, H-Wing, Gate No.2, Maulana Azad Road, New Delhi -110011

Director General of Commercial Intelligence Statistics (DGCIS)

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DGCIS is the Primary agency for the collection, compilation and the publication of the

foreign inland and ancillary trade statistics and dissemination of var various types of

commercial informations.

Address: I, Council House Street Calcutta-700001,

Important schemes of export

1. DUTY FREE

2. ADVANCE LICIENCE

3. DEPB SCHEME

4. DRAW BACK SCHEME

5. EXPORT ORIENTED UNIT

6. NO FOREIGN EXCHANGE INVOLVED

7. SEZ (SPECIAL ECONOMIC ZONE)

DUTY FREE

Means that the exporter will not get any benefit from the DGFT

Advance License

Means that the exporter will issue a bond to the DGFT that he require a product to import to

manufacture a new product. And he will export that newly manufacture product.

DEPB SCHEME

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Duty Entitlement passbook scheme means that the exporter will get an certain amount of benefit

for IMPORT from the DGFT (under the license issued by the DGFT)

DRAWBACK SCHEME

Means that the exporter will be refund a cash transfer from PNB to exporter account

EXPORT ORIENTED UNIT

Means that the exporters are provided with certain benefits to increase the exports

PROCEDURE OF TRACTORS EXPORT FROM INDIA

International tractor limited is one of largest exporter of tractors to various countries of the world

Step 1:

Invoice and packing list are prepared by the exporter and is send to the custom house agent for filling the document s in the customs

Step 2:

From the detailed invoice and packing list, the C.H.A will file the papers in the C.M.C

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Two kind of filling can be done by the C.H.A

1. On line filing 2. Hand Written Document Filing

Step 3:

C.M.C will issue a checklist for the verification of the C.H.A SO that he should check the detailed filed by him.

Step 4:

CHA verify the details and sign the check list that the detailed are ok.

Step 5

Shipping Bill No. Is issued by the C.M.C

Step 6:

Now the shipping bill will display on the screen of the superintendent, the superintendent will verify the checklist and other details and forward it to the Assistant Commissioner.

Step 7:

Assistant commissioner will release the shipping bill and display for marking or goods arrival.

Step 8:

Inspector will inspects the goods and forward it to the superintendent for inspection. If valve is more than 5lakhs than transfer it to the AC otherwise the superintendent will give LET EXPORT order.

Step 9:

Now the role of custom is finished by issuing the following copy

Exporter copy the exporter send this copy to the importer

Exchange control copy sends to the bank

Export promotion copy kept by the exporter

DEPB COPY Is deposited in the DGFT for issue of license

DEPB DECLARATION Is deposited in the DGFT for issue of license

SDF FORM

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TR 1 sends to shipping line

TR2 sends to shipping line

Step10.

TR1 and TR2 copy is hand over to the shipping line. With all the custom clearances.

Step11.

Clearing agent hand over all custom documents to the office now the export department

Now the export department will prepare a B/L instructions send it to the shipping line along

with a

Photocopy of EP copy, measurement copy, invoice and packing list.

Now the goods are stuffed into the container along with custom seal and line seal no. Now the

container

Will be railed out and sent to the vessel loading port. From the port the container is transferred

to the

Importing country.

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