Major Initiatives:1.

Focus Markets Scheme 26 new markets added in Latin America and Asia Oceania region, at present 83 countries in Africa, Central America, C I S and Eastern Europe. Incentive in the form of Duty Free Scripts has been raised from 2.5% to 3%. 2. EPCG scheme at Zero Duty introduced 3. DEPB scheme extended till 31-12-2010. 4. Market Linked Focus Product Scheme introduced for Export of identified products to 13 identified markets and incentive raised from 1.25% to 2%.

Major Initiatives:5. EOUs allowed to sell DTA upto 90% 6. 2% Interest Subvention upto 31-10-2010. 7. Rs. 5000 Crores refinance facility to EXIM Bank. 8. Special refinance facility to Banks. 9. Made in India Show at least in Six Countries. 10.Premier Trading House Rs. 7500 Crores (Cr.10,000) 11.Grant of 1% Status Holders Incentive Scripts for Import of Capital Goods

180000

160000
140000

168704 162983.9 126262.67

120000 103090.54 100000 80000

60000
40000 20000 0 -20000

51545 35432

Exports in ($ Million) Growth (in %)

23.41% 22.48% 29.08% 3.40% 22.30%

-31.20%

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

2. 2011-2014 Export growth 25% Per Annum, Double Exports of Goods and Services by 2014
3. Double Indias share in Global Trade by 2020

1. Business Structure 2. Raising Capital 3. Choosing Partners 4. Realty Issues 5. Sector Approvals 6. Tax Compliance 7. Forex Laws 8. Protecting IPR 9. Labour Laws 10. Product Liability

Buyer Study

Execution of an Export Order Successful execution of an Export Order at least in the context of SMEs in our Country it is mostly a verbal or a very sketchy, often even an e-mail order.

It neither contains full details normally desirable for an Exporter, nor the basis on which this order is received.

I am referring to an export Order conforming to the elements of an Export contract. If not it may lead to Trade Disputes in future, which often result in non-payment \ delay in payment by the buyer.

So friends in the changed scenario, i.e. when we have very little knowledge about the character and credit worthiness of buyer,

It is imperative to have at least an confirmed order which should be based on properly negotiated terms and conditions under which

We will Export. The least we can do is to know about 1. Product - Full

Details, Specification, Size, Number i.e. Quantity

2. Pre-Shipment Inspection 3. INCO-Terms like FCA, 4. Taxes, Charges etc. 5. Period of Delivery
- Mode of Transport

FAS, CPT, CIP, FOB, CIF, DDP

6. Currency Rate of

exchange Fluctuations Mode of Payment

7. Discount, Commissions, Packing, Licences Requirments

EXW FCA FAS FOB

- EX WORKS (named place)* - FREE CARRIER (named place) - FREE ALONGSIDE SHIP (named port of shipment)* - FREE ON BOARD (named port of shipment)

CFR

- COST AND FREIGHT (named port of destination)

CIF CPT

- COST, INSURANCE AND FREIGHT (named port of destination)* - CARRIAGE PAID TO (named place of destination)

CIP
DAF

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

- DELIVERED AT FRONTIER (named place)*

DES DEQ DDU

- DELIVERED EX SHIP (named port of destination) - DELIVERED EX QUAY (named port of destination)* - DELIVERED DUTY UNPAID (named place of destination)*

DDP

- DELIVERED DUTY PAID (named place of destination)*

ICC recommends that "Incoterms 2000" be referred to specifically whenever the terms are used, together with a location. For example, the term "Delivered at Frontier" (DAF) should always be accompanied by a reference to an exact place and the frontier to which delivery is to be made.

Here are three examples of correct use of Incoterms:

FCA Kuala Lumpur Incoterms 2000 FOB Liverpool Incoterms 2000

DDU Frankfurt Schmidt GmbH Warehouse 4 Incoterms 2000

1. Advance Payments 2. Documents against Payments 3. Documents against Acceptance

(a) Provision of Credit without Acceptance

4. Letter of Credit

A documentary credit is a signed instrument embodying an undertaking by the banker of a buyer to pay his seller a certain sum of money on presentation of documents evidencing shipment of specified goods and subject to compliance with the stipulated terms and conditions.

Buyer

Seller

Issuance
Issuing Bank Advising Bank

Buyer

Seller

Utilization
Issuing Bank Advising Bank

Bill of Exchange
1. Date 2. Signature 3. Endorsement 4. Letter of Credit Number 5. Term-Sight or Usance Dates 6. Amount and Currency 7. Words and Figures tally 8. Drawn on correct Party

Invoice
1.
2. 3.

4. 5.

Invoice heading in your companys name, expressed and spelled as in Letter of Credit. Made out in name of buyer, expressed and spelled exactly as in the Letter of Credit. Description of goods including import licence or proforma details price and terms of delivery worded and spelled exactly as set out in the Letter of Credit. Value not more then the Letter of Credit and the Bills of Exchange Authenticated as required under the credit.

Transport Document
1. Type of transport Documents 2. Consignor can be different from beneficiary 3. Consignees name and spelling 4. Places and Ports 5. Clauses 6. On-Deck shipment

Insurance Documents

1. Type e.g. a Certificate 2. Correct amount e.g. CIF or CIP plus per cent 3. Same currency as the Letter of Credit unless otherwise stipulated in the Letter of Credit 4. Risks covered 5. Date not later then date of issue of the transport document. 6. Endorsed if necessary 7. The insurance document must indicate the risks are covered at least between the place of taking in charge or shipment and the place of discharge or final destination as stated in credit.

Once the discrepant documents are tendered to the negotiating bank. The element of delay is introduced in the transaction and if the discrepancies are beyond correction, the security afforded by the documentary credit is lost and the seller is solely at the mercy of the buyer.

The buyer has the following options available to him

The buyer take up the documents despite discrepancies The buyer may use discrepant document as a means to delay the payments One of the virtues of L\C is insurance against renegotiation The buyer might like to wriggle out or transaction

Following penalties on the exporterbeneficiary of L\C

Interest loss on account of delays at various stages Cost of indemnity

Demurrage and warehousing charges at destination

Cost of Funds

Cost of discount either offered or foregone

Discount % / (100-discount%) X 365 / (final date discount period) For example if terms are 3/10 net 30 (i.e. 3% discount if paid within 10 days, otherwise full amount paid within 30 days) 3/97 X 365/20 = 0.309 X 18.25 = 56%

Working Capital Management

Management of Receivables

Inventory Management

ECGC
The corporation has classified almost 220 countries into its sevenfold classification for country risk assessment purposes and for determining its premium rates under the short, medium and long term insurance covers issued by it.

A1 A2 B1 B2 C1 C2 D

Insignificant Low Moderately Low Moderate Moderately High High Very High

Apply for the credit limit on the buyer well in time At the time of making shipment check that the ECGC Policy is in force Send your monthly declarations of shipment regularly along with premium amount Make sure that the outstanding bills against the buyer\policy at any time do not exceed the maximum liability Obtain special endorsement for covering export under L\C Your overseas buyer should have no knowledge of your insurance policy Inform defaults at the earliest to the ECGC Do not pay premium after default by the buyer Do not make compromise with your buyer without the prior approval of the ECGC Do not extend tenure of the bills without approval of ECGC For calling back the goods take prior approval of the ECGC

Covering the Foreign Exchange risk is termed as hedging the risk. If the company dose not want to hedge, it means it is taking a view that the future movements of exchange rate will move in its favour.

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

An Exporter may need finance for execution of an Export Order from the date of receipt of an ExportOrder till the date of realization of the Export proceeds at any stage. Financial assistance extended to the Exporter from the date of receipt of Export Order till the date of shipment is known as pre-shipment credit. This finance is extended to an exporter for the purpose of procuring raw materials processing, packing transporting, warehousing of goods meant for exports. Credit facility extended to an Exporter from the date of shipment of goods till the realization of the Export proceeds is known as post-shipment credit.

Export
Financing by Banks

PreShipment

PostShipment

Packing Credit

Import Letters of Credit

Export Bill Finance