IBM

International Business
Management
IBM www.prasaddesai.com 1
PART A
1] Answer any 10 questions
1) What do you mean by FOREX transaction?

Ans FOREX transactions typically involve one party purchasing a quantity of one currency in
exchange for paying a quantity of another to fulfill international trade obligations
2) Exchange control?
Ans Exchange contract is popular method employed to influence the BoP position of a country
under exchange control the central bank assumes complete control over the foreign exchange
reserves and earnings of the country.
3) Balance of trade?
Ans It takes into account only those transactions arising out of the exports & imports of the
visible items, it does not consider the exchange of invisible items such as service rendered or
received
4) Political risk & general risk?

Ans Imposition of restrictions by the Government of the buyer’s country or any Government
action which may block or delay the transfer of payment made by the buyer is called political risk
Failure of the buyer to make the payment due within a specified period normally 4 months
from the due date or any other problem which leads to delay in international trade is called general
risk
5) Trade block?
Ans Trade blocks is nothing but integration or association of different countries to create
economic synergy for strong and stable political, social, and economical development
6) Spot transaction?
Ans A spot transaction is a two-day delivery transaction, as opposed to the futures contracts,
which are usually three months. This trade represents a “direct exchange” between two currencies,
has the shortest time frame, involves cash rather than a contract; and interest is not included in the
agreed-upon transaction. The data for this study come from the spot market. Spot transactions has
the second largest turnover by volume after Swap transactions among all FX transactions in the
Global FX market
7) Turnkey project?
Ans Turnkey project refers to something that is ready for immediate use, generally used in the
sale or supply of goods or services. The term is common in the construction industry, for instance, in
which it refers to the bundling of materials and labor by sub-contractors, developing the entire
project to full extend & handing over it to actual owner who in return will turn the key & start the
project activities.
8) SEZ?
Ans Special Economic Zones (SEZs) are geographical regions that have economic laws different
from a country's typical economic laws. Traditionally SEZs are created as open markets within an
economy that is dominated by distortionary trade, macro and exchange regulation and other
regulatory governmental controls
9) Trade barriers?
Ans A trade barrier is a general term that describes any government policy or regulation that
restricts international trade. The barriers can take many forms, including the following terms that
include many restrictions in international trade within multiple countries that import and export any
items of trade. The trade barriers like: Import duties, Import licenses, Export licenses, Import quotas,
Tariffs, Subsidies, Non-tariff barriers to trade, Voluntary Export Restraints, Local Content
Requirements, and Embargo etc.
10) What do you mean by fully fledged and restricted money changes?
Ans Full fledged money changers means conversion of one currency into another currency
without any government retraction on other hand restricted money changer means conversion of
one currency into another currency with government retraction
11) What do you mean by AEZ’S Statistic Object?

Ans. AEZ’S: This is nothing but the agriculture economic zones, this zone are usually prepared for
the farmers for the effective and proper growth of agriculture by using modern techniques and
pesticides’.
12) State the contents of commercial invoice?

Ans. Commercial invoice is a basic export document. It is also known as a “Document of Contents”
as it contains all the information required for the preparation of other documents.
13) State 2 benefits of LC for the exporter?
Ans. The 2 benefits of LC for the exporter:
1. It will help for paying the amount to the exporter.
2. It fulfills the import regulations.
14) What is DDP and EX-W? State the exporter’s obligation in case of DDP and EX-W?
Ans: EX WORKS one of the simplest and most basic shipment arrangements places the minimum
responsibility on the seller with greater responsibility on the buyer. In an EX-Works transaction,
goods are basically made available for pickup at the shipper/seller's factory or warehouse and
"delivery" is accomplished when the merchandise is released to the consignee's freight forwarder.
The buyer is responsible for making arrangements with their forwarder for insurance, export
clearance and handling all other paperwork.
DDP[Delivered Duty Paid The seller is responsible for most of the expenses, which include the cargo
insurance, import customs clearance, and payment of customs duties and taxes at the buyer's end,
and the delivery of goods to the final point at destination, which is often the project site or buyer's
premises. The seller may opt not to insure the goods at his/her own risks.
15) State the currency of the countries?

Ans: Thailand = baht Muscat = Dinnar
Italy = Lira Germany = Deutsche Mark.
china – Yuan Malaysia – Ringgit
Kenya- Kenyan shilling (KES)
Myanmar- Kyat (MMK)
16) What are export promotion councils (EPC’S)? State two of its objectives?
ANS: The Export Promotion Councils are non-profit organizations registered under the Indian
Companies Act or the Societies Registration Act, as the case may be. They are supported by financial
assistance from the Government of India.
OBJECTIVE:
1. EPS is to promote and develop the exports from the country
2. Each council is responsible for promotion of a particular group of product, project and services
17) What is PCFC?

Ans : PCFC- Preshipment Credit in Foreign Currency.
It refers to financial assistance given by commercial bank or central bank in advance to fulfill
international trade financial obligation in repective foreign currency.
18) What do you mean by “Incoterms”?

Ans: The “Incoterms”* International Commercial Terms+ as a universally recognized set of
definitions of international trade terms such as FOB, CFR & CIF developed by the ICC- International
Chamber of Commerce.
19) What is Balance of Payment?

Ans: BOP is a systematic & summary record of a country’s economical & financial transactions
with the rest of the world over a period of time. In simple words it represents the inflow & outflow
of a country’s currency/finance in the international trade.
20) What is Marine Insurance?

Ans: Marine Insurance is a contract under which the insurer undertakes to indemnify the insured
against losses, caused due to perils of the sea. Here, perils of the sea includes:
(a) Sinking of ship.
(b) Damage to the ship due to dashing to the walls.
(c) Fire or explosion on the ship.
(d) Spoilage of cargo due to sea water.
21) State two differences between internal & external trade.

Ans: Internal Trade :
1. It is also known as domestic trade here the trade takes place within the country
2. In internal trade there is no need of converting one country’s currency into another form.
External Trade :
1. It is also known as foreign/international trade, here the trade activities take place between two or
more countries (Import Export Activities)
2. The currency has to be converted.
22) What is FOB & CIF?

Ans: FOB- Free On Board:
Under this term the seller fulfills his obligation of delivery when the goods pass the ships rail at the
named port of shipment; from that point onwards the buyer bears al costs & risks.
CIF- Cost, Insurance & Freight.
Here the seller pays the cost & freight necessary to the named port of destination & contracts for
insurance & pays the insurance premium.
23) State two objectives of exchange control?

Ans: a. Conservation of foreign exchange
b. Correcting disequilibrium in BOP
24) What is Foreign Exchange?

Ans: Foreign exchange is, “that section of economic science which deals with the means &
methods by which rights to wealth in one country’s currency are converted into rights to wealth in
terms of another country’s currency”.
25) What is bill of lading?

Ans: A document signed by a carrier (a transporter of goods) or the carrier’s representative and
issued to a consignor (the shipper of goods) that evidences the receipt of goods for shipment to a
specified designation and person.
26) What is blocked account?

Ans: In this method the bank a/c and other assets of foreigners are blocked and conversion
in to ere currency as prohibited .foreign cannot withdraw their money from abroad for the
purpose of remitting it in the abroad
27) What is bill of entry?
Ans: It is a document prepared by importer or his clearing agent in the prescribed form
under bill of entry regulations 1971 on the strength of which clearance of imported goods can
be made.
28) What is devaluation?

Ans: Devaluation means a deliberate reduction of the value of national currency in terms of
other currencies. A country with fundamental disequilibrium in the BOP may devalue its
currency in order to stimulate its exports & discourage imports to correct disequilibrium.
29) What is convertibility of rupee?

Ans. Free convertibility of a currency means that the currency can be exchanged for any other
convertibility currency, without any restrictions, at the market determined exchange rates.
Convertibility of rupee can be freely converted into dollar, pounds sterling, yen, and deutsche mark,
etc. and vice versa at the rates of exchange determined by the demand and supply forces.
30) What is packaging credit?
Ans. Credit given by competent authority for packing purpose to carry out international trade is
called packing credit
31) What do you mean by arbitrage?
Ans. Arbitrage is the simultaneous buying and selling of foreign currencies with the intention of
making profits from the difference between the exchange rate prevail at the same time in different
market.
32. What is Certificate of Origin?
Ans. Certificate of origin states that the goods exported are originally manufactured it the country
whose name is mentioned in the certificate. It is required for claiming the benefit of preferential
tariff rates in case of goods produced in a particular country are banned for import in the foreign
market.
33. What is hedging?
Ans. Hedging refers to covering of export risks, and it provides a mechanism to export and imports
to guard themselves against losses arising from fluctuations in exchange
34. Give two types of marine policies.
Ans. The two types of marine policies are:
1. Time policy
2. Voyage policy
35. Expand and explain (i) CIF AND (ii) CFR.
Ans. (i) CIF: cost insurance and freight: This arrangement similar to CFR, but instead of the buyer
insuring the goods for the maritime phase of the voyage the shipper/seller will insure the
merchandise.
(ii) CFR: cost and freight: it defines two distinct and separate responsibilities- one is dealing with the
actual cost of merchandise “C” and the other is “F” refers to the freight charges to a predetermined
destination points.
36. What is Mate’s Receipt?
Ans. MATE RECEIPT: after loading the goods on the vessel the captain or master of the ship issues
the mate receipt certifying that the goods have been loaded this is given to the port authorities. the
exporter or his agent pays the court dues to the port authorities and receive the mate receipt, which
is then heeded over to the agent of shipping company who gives a bill of lading to the exporter this
is an important document to the buyer through the bank.
37. What are the objective of exchange control
Ans. Conversion of foreign currency and utilizing it in the effective way as its is scarce and valuable
To improve the balance of payment position by restricting imports
38. What do you mean by Nastro &Vastro a/c?
Ans. Nastro a/c = it is our own a/c maintained by a bank in India were the bank abroad in foreign
currency for eg India maintain an a/c in America in dollars
Vasto a/c == it is the a/c maintained by the foreign bank with a bank in India in Indian rupee. While
corresponding with the foreign bank, the Indian bank would refer to the vastro a/c
39. What do you mean by is exchange intervention?
Ans: It refers to the Govt intervention or interference in the free working of the exchange market
with a view to overvalue or under value the country’s currency in terms of foreign money.
40. What do you mean by full fledged money changer?
Ans: Currency can be converted without any government restriction is called full fledged money
changer
41. Mention 2 benefits of LC to the importer?
Ans:. The 2 benefits of LC for the exporter:
1. It will help for paying the amount to the exporter.
2. It fulfills the import regulations.
42. What is certified invoice?
Ans: the certified which is endorsed by competent authority for the purpose of international trade is
called certified invoice
43. What do you mean by Black list certificate?
Ans: It is required for countries which have strained political relation. It certifies that the ship or the
aircraft carrying the goods has not touched those country(s).
44. Expand and explain DDU& CIP?.
Ans:
DDU: Delivered Duty Unpaid:
This arrangement is basically the same as with DDP, except for the fact that the buyer is responsible
for the duty, fees and taxes.
CIP: Carriage and Insurance Paid To:
This term is primarily used for multimodal transport. Because it relies on the carrier's insurance, the
shipper/seller is only required to purchase minimum coverage
When this particular agreement is in force, Freight Forwarders often act in effect, as carriers. The
buyer's insurance is effective when the goods are turned over to the Forwarder.
45. What is restricted money by exchange control?

Ans: placed on a list that dictates that the trader may not maintain position, solicit
business, or provide indication in a stock, but may serve as broker in agency trade after being
properly cleared.
46. What is economic integration?
Ans: Two or more countries are coming together for mutual benefits & doing trade by flowing
certain common rules is called economic integration
47. What do you mean by private bonded warehouse?

Ans: An approved private warehouse used for the storage of goods until duties or taxes are
paid and the goods are properly released by Customs. Bonds must be posted by the
warehouse proprietor and by the importer to indemnify the government if the goods are
released improperly.
PART B
2] Rate of exchange? Explain the factors effecting rate of exchange?
Ans It refers to a rate at which one currency is exchanged with other.
The factor which affects the exchange rate is as follows:
Commercial transactions (imports &exports).

Investments (outflow inflow)
Govt. loans and grants.
Transactions with international and financial institutions.
Arbitrage
Short term capital movements
Confidence in the countries’ currencies
Technical factors.
Commercial transactions
It refers to the import and export transactions of the country. The rate of exchange of any
country’s currency is determined by its import and export of goods and services. The commercial
transaction can also be taken place where it can be affected.
Investments
Investment here means a country’s investment in foreign countries and simultaneously the
foreign countries investing in our domestic country. When the investment take place the exchange
can be affected.
Government loans and grants
It plays a very important role as the exchange rate is greatly influenced by the provisions of
the country’s government. The level loans and grants given for import / export activities determine
the exchange rate. When government gives loans to the country the foreign exchange gets affected.
Transaction with international and financial institutions
Short term investments
Arbitrary
Arbitrage is the simultaneous buying and selling of foreign currencies with the intention of
making profits from the difference between the exchange rate prevail at the same time in different
market.
Technical factors
Confidence in country currency
The country has to maintain certain level of secrecy in its financial and economical activities so as to
set the exchange rate in international trade.
3] Letter of credit? Explain the mechanism
Ans A letter of credit is an undertaking by a bank to pay or to arrange to pay for specified
merchandise. Provided that certain stipulated conditions are met by the beneficiary. The LC
arrangement offers advantages to both the seller & buyer. As far as the seller is concerned, a
LC ensures him payment for the goods he sells, provided of course he follows the
instructions. Though the buyer has to have the botheration of arranging for the LC, it may
enable him to obtain more liberal discounts & a lower price from the seller. Further the buyer
is assured that the shipment will be made by the date specified in the LC or else the credit
will expire.
Parties to the LC
•The opener: the opener is the buyer (importer). The LC is opened at the initiative & request
of the buyer.
• The issuer: is also called the opening bank, is the bank in the importer's country issuing the
LC at the request of the importer.
• The beneficiary: is the party in whose favor the credit is issued, i.e. the seller or exporter
• Negotiating bank: It is the bank which pays or accepts the drafts of the exporter. Negotiating
bank becomes an endorsee & bonafide holder of the draft & has recourse on the drawer of
the bill until it is accepted & paid by the drawee.
Mechanism of LC
Suppose a US based buyer wants to purchase goods from an Indian seller. The US importer
then applies to his bank in the USA to issue an LC. In his application for the LC to the bank, the
importer will set forth the terms of sale & will mention the documents which shall accompany the
draft, the usance, the final date of shipment, etc. if the bank is prepared to issue the credit, the
importer will sign the LC contract in which he will have agreed to reimburse the bank for all outlays
& to give such security as the bank demands.
The issuing bank will now notify it correspondent bank in the exporters place & will request
the latter to confirm the credit to the exporter. The notifying bank will now inform the exporter that
an irrevocable & confirmed LC has been arranged & will describe the terms under which the
shipment must be made before the draft is honored. This will make the contract binding on both the
issuing bank & the confirming bank.
The exporter will now ship the goods to USA, draw a time draft on the issuing bank & may
still sell the draft with documents attached to his own bank in India. The Indian bank will mail the
draft & documents to its own correspondent bank in the USA which in turn will present it to the
drawee bank for acceptance. The accepting bank will deliver the documents to the importer usually
against a trust receipt. The importer is expected to make the full payment when the draft matures.
4] Role of Commercial Bank in IT
Ans Provision of credit: This function plays a very important role in the growth of foreign trade
for international trade depends to a great extent on credit facilities, exporters may get pre shipment
and post shipment credit. Credit facilities are available also to importers.
Provision of heading facilities: Heading refers to securing of exports risk and it provides a
mechanism to exporters and importers to guard themselves against loses arising from fluctuation in
exchange rates.
Consultancy & advisory services: This facility will help customers to get information related to IT &
how to do imports & exports more strategically
Counter guarantee: This scheme helps exporter & importer to safeguard their interest by partnering
a known financial institution in case of any emergency or risk & also to get recognition & trust in
international trade activities
Marine insurance: This facilitates to minimize IT risk by insuring against natural & artificial calamities
5] Bills of exchange?
Ans A bill of exchange is a kind of check or promissory note without interest. It is used primarily
in international trade, and is a written order by one person to pay another a specific sum on a
specific date sometime in the future. If the bill of exchange is drawn on a bank, it is called a bank
draft. If it is drawn on another party, it is called a trade draft. Sometimes a bill of exchange will
simply be called a draft, but whereas a draft is always negotiable (transferable by endorsement), this
is not necessarily true of a bill of exchange.
Types of Bills of exchange
Domestic Bills of exchange
International bills of exchange
6] Discuss WTO and its impact on India
Ans WTO- It refers to world trade organization which is directed by a ministerial

conference that will meet @ least once every 2 years and its regular business is over seen by
the general council.
Objectives of WTO are as follows:
To ensure reduction of tariffs/ barriers of trade
To eliminate discriminatory treatment in international trade
To facilitate higher standard of living
To facilitate optimum use of world resource
To promote integration
To set an impartial means of setting disputes
Obligations of India under WTO are:
Administer the mechanism for setting trade disputes between the member countries
Monitoring national trade policy
Providing technical assistance & training for developing countries
Co operating with other international organization like the IMF & IBRD &its
affiliated agencies with a view to achieving greater coherence in global economic
policy making
Administer the WTO trade agreement
7] Functions of EXIM bank?

Ans: The export /import bank of India set up in by an act of parliament for the Purpose of financing
facilitating &promoting foreign trade of India. is the principal financial institution in the country for
co-coordinating the working institutions engaged in financing importer/exporter.
It is fully owned by the Govt. of India OR managed by a board of directors which has
representative for Govt. RBI export credit Guarantee Corporation .of India financial institution,
public sector bank &the business community
The bank functions are segmented into 4 major operating groups:
Overseas investment finance: Overseas investment finance which held a variety of financing
programs for export oriented unit’s importers and overseas investments by Indian
companies.
Project finance or trade finance: Project finance handle the entire range of export, credit
service such as supplier’s credit, pre shipment credit, finance for export of projects and
consultancy service, guarantees, for fating etc.
Export service groups: It offers a variety of advisory and value audit in information service
aimed at investment promotion.
Agri-Business group: Agri-business group which has been put in place to spearhead the
initiative to promote & support agri-export. The group handles projects & export transaction
in the agriculture sector for financing
Services of EXIM bank
1. Under writing
2. L/C Confirmation
3. Forfeiting
4. Project preparatory services
5. Guaranty facility over seas
6. Business Advisory &Technical assistance services
8] Explain the role of ECGC in foreign trade?
Ans: Export Credit & Guarantee Corporation of India (ECGC) which was setup originally in 1975 as
Export Risk Insurance Corporation but later on in 1964 reconstituted as Export Credit & Guarantee
Corporation. The primary objective of the institution is to promote exports by providing export
credit insurance and guarantee facilities to Indian exporters and commercial banks. In order to
promote the country's exports by covering the risk of export on credit, the ECGC provides:
• A range of insurance covers to Indian exporters against the risk of non-realization of export
proceeds due to commercial or political causes
• Different types of guarantees to banks and other financial institutions to enable them to
extend credit facilities to exporters on liberal basis.
The role of ECGC in foreign trade is as follows
Providing a range of credit risk insurance cover the exporters against loss in the export
of goods & services.
They offer guarantee to banks & other financial institution to enable export promotion
& obtain better facilities from them.
They provide insurance cover to exporters against political & commercial risks.
They provide insurance cover to against the risk of exchange rate fluctuations in respect
in deferred payment
Their role is to provide insurance to banks against export credit guarantee extended by
them.
The role of ECGC is to provide consultancy and advisory services to the exporters.
They provide the information about the latest trend in the international market to the
exporters.
They provide financial assistance to the exporters
EXPORT PROMOTION CAPITAL GOODS SCHEME
The scheme allows import of capital goods for pre production, production and post
production at 5% Customs duty subject to an export obligation equivalent to 8 times of duty saved on
capital goods imported under EPCG scheme to be fulfilled over a period of 8 year.
9] Short note on:
A] Export Promotion Councils:
The Export Promotion Councils are non-profit organizations registered under the Indian Companies
Act or the Societies Registration Act, as the case may be. They are supported by financial assistance
from the Government of India
Functions of EPC
• To provide commercially useful information and assistance to their members in developing

and increasing their exports
• To offer professional advice to their members in areas such as technology up gradation,
quality and design improvement, standards and specifications, product development and
innovation.
• To organize visits of delegations of its members abroad to explore overseas market
opportunities
• To organize participation in trade fairs, exhibitions and buyer-seller meets in India and
abroad.
• To promote interaction between the exporting community and the Government both at the
Central and State levels
• To build a statistical base and provide data on the exports and imports of the country,
exports and imports of their members, as well as other relevant international trade data
Role
The main role of the EPCs is to project India's image abroad as a reliable supplier of
high quality goods and services.
In particular, the EPCs encourage and monitor the observance of international
standards and specifications by exporters.
The EPCs keep abreast of the trends and opportunities in international markets for
goods and services and assist their members in taking advantage of such opportunities
in order to expand and diversify exports
B] SEZs
1: Special economic zones are geographical regions that have economic laws different from a
country’s typical economic laws.
2: The goal is usually an increase in FDI in the country.
3: Traditionally SEZs are created as open market within an economy that is dominated by
distortionary trade, macro & exchange regulations & other regulatory governmental controls.
4: SEZs are believed to create a conducive environment to the promote investment and
exports.
5: The EXIM policy [1997-2002] introduced a new scheme from April 1, 2000 for
establishment of the SEZs in different parts of the country. As per the policy.
6: The no of incentives both fiscal & non fiscal has been extended to the units Operating in
SEZs.
C] Tariff barriers & non-tariff barriers

Ans. Tariff barrier is a tax imposed on goods when they are moved across a political
boundary. They are usually associated with protectionism, the economic policy of restraining
trade between nations. For political reasons, tariffs are usually imposed on imported goods,
although they may also be imposed on exported goods.
Types of tariff barriers
An ad valorem tariff is a set percentage of the value of the good that is being imported
A specific tariff is a tariff of a specific amount of money that does not vary with the price
of the good. These tariffs may be harder to decide the amount at which to set them, and
they may need to be updated due to changes in the market or inflation.
A "revenue tariff" is a set of rates designed primarily to raise money for the government.
A "protective tariff" is intended to artificially inflate prices of imports and "protect"
domestic industries from foreign competition
A "prohibitive tariff" is one so high that no one imports any of that item.
Non-tariff barriers to trade (NTB's) are trade barriers that restrict imports but are not in the
usual form of a tariff. In some forms, they are criticized as a means to evade free trade rules
such as those of the World Trade Organization (WTO), the European Union (EU), or North
American Free Trade Agreement (NAFTA) that restrict the use of tariffs. Some common
examples of NTB's are anti-dumping measures and countervailing duties, which, although
they are called "non-tariff" barriers, have the effect of tariffs once they are enacted. Their use
has risen sharply after the WTO rules led to a very significant reduction in tariff use. Some
non-tariff trade barriers are expressly permitted in very limited circumstances, when they are
deemed necessary to protect health, safety, or sanitation, or to protect depletable natural
resources.
10] Discuss the functions of a foreign exchange department of commercial bank?
Ans: - Transfer foreign exchange market is a market in which foreign market transactions place. In
other words it is a market in which national currencies are brought and again one month.
Important functions are as follows:
I] Transfer of purchasing power:- The primary function of a foreign exchange is the transfer of
purchasing power from one country to another The international clearing function performed by
foreign exchange market playas a very important role in facilitating international trade and capital
movements
II]provision of credit:- The credit function performed by foreign exchange market also playas a very
important role I the growth of foreign trade for international trade depends to a great extent on
credit facilities exports may get pre-shipment and post-shipment credit. Credit facilities are
available also for import the euro dollar market has emerged as a major international credit market
III] Provision of hedging facilities:- The other important function of foreign exchange market is to
provide hedging facilities. Hedging refers to covering of exports risks and it provides a mechanism to
exports and imports to guard themselves against losses arising from fluctuations is exchange rate.
11] Discuss the procedures of import?
Ans: - Import procedures are classified into 4 stages.
1 Pre-Import Procedure
2 Legal dimensions of import procedure
3 Retirement of import documents
4 Customs clearance
1. Pre-Import procedure
It is further classified as follows:
Selecting the commodity
This is the first stage of import procedures which involves analytical & document oriented activities.
An importer should select the commodity for import after considering various commercial
factors as well as legal considerations including the regulations contained in the EXIM policy.
Prohibited goods cannot be imported at all. Canalized items can be imported through specified state
trading enterprises [STEs].
Selecting the overseas supplier:
Imports can be made from any country of the world except Iraq. The information regarding
overseas suppliers can be obtained from various trade directories, consulate generals, international
trade fairs & exhibitions & chamber of commerce
Capability & Creditworthiness of overseas supplier:
This information can be obtained from confidential reports about the supplier from the
banks & Indian embassies abroad. It is advisable to finalize contract through indenting agents of
overseas suppliers situated in India.
Role of overseas supplier’s agents in India:
These agents procure orders from the Indian parties & arrange for the supply of goods from their
principal abroad. They will help in case there is any dispute regarding quality or quantity of goods
imported, receipt of payment, documentation, formalities etc.
Inquiry, offer & counter-offer:
It is advisable that before finalizing the terms of import order, one should call for the sample
or catalogue & other relevant literature & the specifications of the items to be imported. Samples
are exempted from import duties.
2. Legal dimensions of Import Procedure
This is the second stage of import procedures which involves legal document oriented activities.
Finalization of the terms of contract:
There should not be any ambiguity regarding the exact specifications of the goods & terms
of the purchase including import price, mode of payment, type of packaging, port of shipment,
delivery schedule, license & permits, discounts, commissions, insurance etc.
Mode of pricing & INCO TERMS:
As regards mode of pricing/payment, the overseas supplier should quote the terms
prevailing in international trade.
Obtaining IEC no:
In India it is obligatory for every importer & exporter to register themselves with the DGFT &
obtain IEC no.
Mode of settlement:
There are 3 modes of settling international transactions depending upon the

creditworthiness of the importer or exporter, demand for commodity, exchange control etc.
1 Advance payment
2 Payment or acceptance against documentary collection
3 Payment under LOC.
Obtaining import license:
It is essential that every importer should have a valid licensed to do Int. trade. If the item
falls in the prohibited area then, this will help for importing with minimum legal formalities.
Obtaining foreign exchange:
Every importer is required to make an application to the RBI for getting sanctions for making
overseas payments.
Arranging finance for import:
Various financial instruments can be used to support financing of imports.
Obtaining import L/C limit:
Import L/C limits is sanctioned by the banks on submission of complete loan proposal as in
the case of other types of credit facilities.
Dispatch of LOC:
The importer must see to it that the LOC has been prepared in the strict conformity of the
import contract entered between them. As soon as the L/C issued it should be sent to exporter.
3. Retirement of import documents
This is the third stage of import procedures in which the suppliers forward documents to the
customer for further actions.
Loading of goods & receipt of shipment advice:
The overseas supplier dispatches the shipment advice to the importer informing him about
the shipment of goods. It contains invoice bill no, bill of lading, airway bill no & date, mane of the
vessel with date, the port of export, description of goods & quantity & date of sailing of the vessel.
Retirement of import documents:
After shipping the goods, the supplier prepares necessary documents as per LOC & hand
over to his bank for onward negotiation with importer. The set contains bill of exchange,
commercial invoice, bill of lading, packing list, certificate of origin, marine insurance policy etc.
Acceptance of bill of exchange:
It is of two types:
Documents against payment [sight draft]:
The drawer instructs the bank to hand over the relevant documents to the importer only
against payment.
Documents against acceptance
The drawer instructs the bank to hand over the relevant documents to the importer only
against his acceptance of bill of exchange.
Scrutiny of documents received under L/C:
The importers bank will scrutinize the documents as to their correctness as per the terms of
conditions of L/C & hands over them to the importer after payment.
Appointment of C & F agent:
The importer identifies a potential C & F agent to do the clearance activities from the
customs on behalf of him so that he can concentrate of core issues.
4. Customs Clearance
All goods imported in India have to pass through the customs clearance after they cross the Indian
border. The goods so imported are examined, appraised, assessed, evaluated & then allowed to be
taken out of customs charge for use by the importer.
Import manifest:
It is a complete list of all items the conveyance carries on board. It should be done within 24
hours of the arrival of goods.
Entry in the import dept of customs house:
The importers or their agents have to make an entry by filling a bill of entry in a prescribed
form in import dept.The date of presentation of bill of entry is an important date as the rate of duty
is varying of daily basis.
Presentation of bill of entry for appraisal:
The bill of entry along with following documents should be presented for appraising
counters for further actions:
Import license
Exporters invoice
A copy of L/C
Two copies of packing list
Weight specifications
Original bill of lading & its negotiable copy
Manufactures test certificate
Certificate of origin
Freight & insurance certificate
Customs declaration etc.
After appraisal it is then countersigned by the assistant collector & sent to the license
section with an order to the dock staff for examination of the goods before clearance.
Clearance of goods:
If the description of goods is found to be correct, on the basis of declared & accepted
particulars, clearance of goods is allowed by the appraiser.
Warehousing the goods:
The imported goods can be warehoused without payment of duty by presenting a bill of
entry for warehousing with a bond for twice the amount of duty payable. The period ranges from 3
months to 1 year.
Import follow-up:
Once an importer is allowed to remit foreign exchange out of the country he has an
obligation to import the permitted goods. Legal authority does this follow-up to know the status of
import & use of foreign currency.
12] Discuss the methods of exchange control?
Ans: The various methods of exchange control may be classified into 2 types:-direct and indirect
Direct methods of exchange control
1. Intervention:-It refers to government intervention OR interferences in the free working of the

exchange market with a view to over value OR undervalue the countries in term of foreign money.
The government OR its agency: - The center banks can intervention in the free market by restoring
to buying and selling the home currency against foreign market to support OR depress. The
exchange rate of its currency
2. Pegging operation :- government intervention in the foreign exchange market takes the form of
‘pegging up’ or ‘pegging down ‘of the currency of the country to a choose rate of exchange since
under valuation or over valuation is not the equilibrium rate, it has to pegged. Thus pegging means
keeping a fixed exchange value of a currency, however intervention may be practiced by GOVT
without restoring to pegging
3. Exchange restriction: - It refers to policy or measures adopted by a GOVT which restrict or

company reduce the flow of home currency in the foreign exchange market exchange restriction
may be of 3 types
I) The GOVT may centralize all trading in foreign exchange with itself or a central authority usually
the central bank
II) The GOVT may present the exchange of local currency again foreign currencies without
permission
III) The GOVT may order all foreign exchange transaction to be made thought at agency
Exchange restriction may be:-
Block A/C:-Blocker A/ C refer to bank deposits securities and other assets held by foreign in a
country which dories them conversion of their into their home currency
2. Multiple exchange rates;-This implies official price discriminatory policy in foreign exchange
transactions
3.Exchange clearing agreement :Europe countries had adopted this form of EC in the direct bilateral
of goods on a nation scale under this device ,2 countries engaged in trade pay to the respective
central banks the amount payable to their respective foreign creditors.
4. Payment agreement: - to overcome the difficulties of problem of waiting and centralization of

payments observed in clearing agreement the device is formed as payment agreement under this
scheme a creditor is paid as soon as information is received by central bank of the creditor countries
Indirect method of exchange control
1. Change in interest rates:-it tends to influence indirectly rate of a country attract liquid capital and
banking fund of funds in their own country
2. Tariffs duties and imports quotas’:-the most imp indirect method is the use of tariffs & import
quota & other such quantitative restrictions on the volume of foreign trade import duty reduce
imports &with it rise the value of home currency relative to Foreign currency similarly Export duty
restricts as the result the value of home currency falls relative to foreign currencies
3. Export boundaries’:- Export boundaries of subsidies increase exports. As such external value of
the currency of the subsidies giving country rise. It should be noted that import duties and export
boundaries are treated as indirect instrument of exchange control.
13] Discuss the salient features of EXIM policy 2002-2007?
Ans: This policy plays a very imp role in directing, regulating and promoting foreign trade.
The objectives are as follows:
1. To establish the frame work for globalization of India’s foreign trade.

2. To simplify and streamline the procedures governing exports and imports.
3. To foster the countries R&D and technological capabilities.
4. To eliminate or minimize quantitative, licensing and other deacreastionary frame work of
India’s foreign trade.
Special focus initiatives
1. Agriculture
20 agricultural export zones have been notified.

Transport subsidy for export of fruits, vegetables, and floriculture and dairy products.
2. Cottage sector and handicrafts
Entitlement for export house status at Rs 5cr instead of Rs 15cr for others.
Entitlement to duty free imports of an enlarged list of items as embellishment up to
3% of FOB values of exports.
3. Small scale industries
EPCG facility for the common service providers in these areas.

Entitlement for export house status at Rs 5cr of Rs 15cr for others.
Implications
1. Implication on development of cottage industries:
Incentives such as MAI, duty free imports up to 3% of FOB value of exports, EPCG
facility etc.
2. Implication on small scale industry;
Common service providers in these areas shall be entitled for facility of EPGC scheme.
3. Implication on industrial sector:
Liberalization of EPCG scheme would help industries to promote quality up gradation

and would also enable sick units to revive.
Lastly I would conclude that this policy is mainly focused on the industries and the
infrastructure.
14]. Discuss the salient features of EXIM policy2004-2009?
ANS: the EXIM policy 2002-2007 has been replaced by the foreign trade policy 2004-2009.the foreign
trade policy 2004-2009, is effective from sept 1st 2004.
The new foreign trade policy (FTP) takes an integrated view of the overall development of India’s
foreign trade, and essentially provides a roadmap for the development of the sector. This policy
contains the basic principles and points to the direction in which the country proposed to go. By
virtue of its very dynamic a trade cannot be fully comprehensive in all its details. It would naturally
require modification from time to time.
The new policy envisages merchant exporter and manufactures exporters, business and
industries as partners of government in the achievement of its stated objectives and goals.
OBJECTIVES:
1. To double our percentage shares of global merchandise trade within the next five year.
2. To act as an effective instrument of economic growth by giving a thrust to employment

generation
STRATEGY:
1. Unshackling of controls and creating an atmosphere of trust transparency to unless the instate
entrepreneurship of our businessmen, industrialist and traders.
2. Simplifying procedure and bringing down transaction cost.
3. Faciliting development of India as a global hub for manufacturing, trading and service.
4. Upgrading our infrastrural network, both physical and virtual, related to the entire foreign trade
chain, to international standard.
SERVICES EXPORTS:
The export promotion council for services shall:
1. Map opportunities for key services in key markets and develop strategic market access
programmes for each components of the matrix.
2. Coordinate with sectoral players in undertaking intensive brand building and
Marketing programmes in target market.
3. Make necessary interventions with regard to policies, procedure and bilateral/multilateral issues
in coordination with recognized nodal bodies of the service industry.
FREE TRADE AND WAREHOUSING ZONES:
The objective of free trade and warehousing zones is to create trade related infrastructure to
facilitate the import and exports of goods and services with freedom to carry out trade transactions
in free currency. the scheme envisages creation of world-class infrastructure for warehousing of
various products, state of the art equipment, transportation and handling facilities commercial
office-space,water,power,communications and connectivity with one stop clearance of import and
export formalities, to support the integrated zones as international trading hubs. These zones could
be established in areas proximate to seaports, airport or dry port so as to offer easy access by rail
and road. The FTWZ shall be special categories of SEZ with a focus trading and warehousing.
EVALUATION:
The new policy has been widely hailed for its endeavor to improve export infrastructure and export
production garnering of export surplus, removal of quantitative restriction on exports, attempt to
reduce transaction costs, procedural simplification, and focused attention on export promotion and
so on.
The policy will not be able to produce the desire results unless we radically deviate from the
‘business as usually approach’.
The salient features of 2005annually supplements of the FTP include the following:
Removable of export cess on all agri and plantation commodities; reduced export obligation for SSLs
under EPCG scheme; proposal for an interstate trade council for export promotion ‘packages for
marine and EOU sectors’ ‘new deal to boost gem and jewellery sectors’ ‘new trade mark and
handlooms on the line of Woolmark and Silkmark’’measures for procedural simplification and
cutting transaction cost ‘encouragement to export of values added dairy and poultry and products’
‘and measures to make the EPGC scheme more attractive to exporters
15] Write short note on:
1. ECC:
Originally the European coal and steel community was formed with best Germany, France,
Italy, Belgium, Neither land and in 1952.The aims of ECSE was to eliminate import duties and quotas
on coal, iron-ore, steel and scrap regarding the international trade among the member countries.
The successful functioning of ECSE stimulated the member countries to extend this facility to all
commodities by the treaty of Rome in 1957. This treaty gave birth to European Economic
Community and it came into functioning on 1st January 1957.
2. WTO:
In short the WTO is GAT T plus a lot more. WTO was small and provisional, and not even
recognized in law as international organization. WTO has been amended and incorporated into the
new WTO agreements. WTO deals only with trade in goods. The WTO agreements now cover service
and intellectual property as well.
The WTO is a more powerful body with enlarged functions than the WTO and is
envisaged to play a major role in the world economic affairs. To become a member of the WTO, a
country must completely accept the result of the Uruguay round.
3. Marine insurance:
Business today knows no boundaries. We have an access to products and services
across borders as countries continue to globalize. However the farther our goods travel the
more risk they are exposed to. That’s why Bajaj Allianz brings to you the marine cargo
insurance cover, which compensates losses of goods in transit.
Scope of cover:
It covers transit of goods:
By Sea. (All ocean voyages and inland water ways.)
Send by post or parcels
Bay rail/road/Air.
4. Bill of exchange:
A bill of exchange or "Draft" is a written order by the drawer to the drawee to pay
money to the payee. The most common type of bill of exchange is the cheque, which is
defined as a bill of exchange drawn on a banker and payable on demand. Bills of exchange
are used primarily in international trade, and are written orders by one person to his bank to
pay the bearer a specific sum on a specific date sometime in the future.Prior to the advent of
paper currency, bills of exchange were a more significant part of trade. They are a rather
ancient form of instrument.
5. Import substitution
Even though ISI is a development theory, its political implementation and theoretical
rationale are rooted in trade theory. Baer contends that all countries which have industrialized
after the United Kingdom went through a stage of ISI in which the large part of investment in
industry was directed to replace imports (Baer, pp.95-96).
Advantages and disadvantages
The major advantages claimed for ISI include: increases in domestic employment (reducing
dependence on labour non-intensive industries such as raw resource extraction and export);
resilience in the face of a global economic shocks (such as recessions and depressions); less
long-distance transportation of goods (and concomitant fuel consumption and greenhouse gas
and other emissions). The disadvantages claimed for ISI is that the industries that it creates
are inefficient and obsolete, and that the focus on industrial development impoverishes local
commodity producers who are primarily rural.
In most manufacturing processes a point of output is reached after which the cost of
producing every additional unit of output diminishes. Different types of industries, given their
different production functions (combinations of capital and labor, etc.) obtain different scale
thresholds or minimum levels of output necessarily to begin accruing cost savings from large-
scale output. For example, a mechanical pencil factory may need to sell 5 million units of
output (pencils) each year before it can achieve economies of scale of production – efficient
level of production. An automobile industry may need to sell 519, 001 units of output (cars)
to achieve the same level of efficiency. Clearly, the more units of anything manufactured you
can sell the better the chances that your factories (consumer goods and intermediate, and
ultimately capital goods) will achieve economies of scale, efficient production. In a free
market global economy, industries that produce inefficiently (without obtaining economies of
scale of production) under the protections of ISI have been subject to criticism from more
efficient foreign industries – a force driving the neo-liberal campaign for open markets. What
determines whether a country obtains efficiency – economies of scale in production? Market
size (number of consumers, population) and purchasing power (usually but unreliably
indicated by GNP/capita). Hence, larger, richer economies were more likely to make ISI
succeed efficiently, whereas smaller countries with lower per capita incomes were less likely
to succeed with ISI.
16] Explain the methods of setting debts on international trade?
Ans FORFEITING :
The word forfeit is derived from the French word forfeit which means the surrender of right.
Forfeiting is the non-recoverable or non-reimbursable discounting of the export receivable. In a
forfeiting transaction the exporter surrenders without recover to his rights to claim for payment in
goods delivered to an importer in return for immediate cash payment from a forfeiter.
Forfeiting in short is a mechanism of financing exports.

By discounting export receivables.
Without recovers to the seller.
Evidence by means of exchange by promise note.
On a fixed rate basis.
Up to 100% contract value.
FACTORING :
The word factor is derived from the Latin word “FACERE” which means to make or to do. In
other words it means to get things done.
Factoring is define as “it is a service of financial nature involving the conversion of credit bills
into cash or factoring is also called as invoice discounting or purchase discounting of all receivables
FUNCTIONS :
Purchase and collection of debts

Sales ledger management
Credit investigation and undertaking of credit risk
Provision of finance against debt
Rendering consultancy services
LETTER OF CREDIT :
It is an undertaking by a bank to pay or to arrange to pay for specified merchandise,

provided that certain stipulated conditions are met by the beneficiary.
The parties of LC are:
The Opener:
The opener is the buyer. The LC is opened at the initiative and request of the buyer.
The Issuer:
Is also called the opening bank, is the bank in the importers country issuing the LC at the
request of the importer.
The Beneficiary:
Is the party in whose favor the credit is issued that is the seller or exporter.
The Negotiating Bank:
Is the bank which pays or accepts the drafts of the exporters.
17] Explain the forms of trade blocks. Discuss any two trade blocks?
Ans: Trade blocks is nothing but integration or association of different countries to create economic
synergy for strong and stable political, social, and economical development
The most important trade blocks are as follows.
European Economic Community [EEC]

North American Free Trade Activity [NAFTA]
Latin American Free Trade Association [LAFTA]
Association of South-East Asian Nation [ASEAN]
ASEAN Free Trade Area [AFTA]
South Asian Association for Regional Co-operation [SAARC]
EUROPEEN ECONOMIC COMMUNITY [EEC]
It was established in the year 1952 the aim of EEC is was to eliminate the import duties and
quotas on coal, ore, iron, steel and scrap regarding the international trade among the member
countries. The member countries are as follows GERMANY, FRANCE, ITALY and BELGIUM.
ACTIVITIES OF EEC’s
1. Eliminate of custom duties restriction with regard to export and import of the goods among
member countries
2. Establishment or formation of common custom tariff and common commercial tariff policy with
regard of non member countries
NORTH AMERICAN FREE TRADE ASSOCIATION [NAFTA]
A free trade agreement was signed by USA and Canada in 1989 this was extended to Mexico in 1994.
The NAFTA has a population of 363 million people hence it is one of the significant trading areas in
world trade.
OBJECTIVES
1. To create new business opportunities particularly in Mexico
2. To enhance the industrial development and there by employment through the region
Latin American Free Trade Association [LAFTA]
It was formed in 1960 the countries sign the LAFTA agreement where Argentina, Brazil,
Chile, Mexico, Paraguay, Columbia and Venezuela later the Latin American integration association
replaced LAFTA.
Objectives
1. To eliminate restrictions on trade among member countries.

2. To reduce the customs and tariffs and eliminate them gradually.
Operations
Members prepare a list of goods on which they consider duty reduction, member countries
negotiates ones in 3years for complete exemptions of tariffs.
Association of South-East Asian Nation [ASEAN]

A group of six countries Singapore Burma, Malaysia, Philippines, Thailand and
Indonesia agreed in Jan 1992 to establish a common effective preferential tariff [CEPT] plan.
This plan of south East Asian nation [ASEAN] free trade area in 15 years with effect from
1993 the CEPT allows for tariff cut ranging from 0.50% to 20% beginning with 15 products.
The emergence of successful operation of EEC and NAFTA gave import for the forming of
ASEAN the ASEAN members countries have developed economically at a fast rate in the
global there strength is well educated and skilled them to achieve faster industrialization
further ASEAN member countries are rich in oil, mineral resources, agriculture goods and
modern industrial product these countries allow the free flow of foreign capital. The
formation of ASEAN enable the member of countries to have close share their economic and
human resources and achieve synergy in the development of their agriculture sectors
industrial sector and services sectors.
AFTA [ASEAN Free Trade Area]
The ASEAN countries are vigilant of the developments in the international environment like
the formation NAFTA, SAARC and the introduction of euro. The AFTA in sep1994 are formed the
AFTA initially set to function for 10 years in order to develop inter ASEAN trade.
South Asian Association for Regional Co-operation [SAARC] :
The successful performance of EEC, NAFTA and other trade blocks in the economic
development of the member countries and in improving the employment opportunities, income and
living standard of the people of region gave impetus for the formation SAARC
India, Bangladesh, Bhutan, Pakistan, the Maldives, and Sri Lanka adopted a declaration on
SAARC in August 1983. The charter of the SAARC was formally adopted in December 1985 by the
heads of the member countries.
OBJECTIVES:
To improve the quality of life and welfare of the people of the SAARC member countries.
To develop the region economically socially and culturally.
To provide the opportunity for the people of the region to live in dignity and to exploit their
potentialities.
To enhance the self reliance of the member countries jointly.
To enhance the co-operation with other developing economies.
To extend co-operation to other trade blocks.
European Free Trade Association [EFTA] :
The European free trade association was formed in 1959. The member countries of EFTA
include Austria, Norway, Portugal, Sweden, and Switzerland. The associate member countries are
Finland and Iceland, Great Britain and Denmark.
OBJECTIVES:
To eliminate almost all tariffs among member countries.

To abolish the trade restrictions regarding import and export of goods among member
countries.
To enhance economic development employment, income and living standard of the
people of the member countries.
To enable free trade in Western Europe.
The EFTA achieved most of its objectives during it 40 years of existence. EFTA does not regulate the
agriculture and economy of the member countries and member trade outside the EFTA.
18] Explain the following:

1. Free trade area
2. Customs union
3. Common market
4. Economic unions
Ans: Free Trade Area
A free trade area is a zone where regulations have been removed but each member
country can still maintain their individual customs on specific areas.
It's usually done to encourage development in some areas where there is not big
competition.
Example one country has many unemployed people that another country can use
because they have facilities that require cheap labor. Or to attract business to an
underdeveloped area.
Custom Unions
Custom unions are made to encourage trade between desired countries or to avoid
trade with specific countries by charging equally higher customs for products from
outside the union.
Example a country has good export opportunities for a specific product or raw
material "rewards" that other country by making it worthwhile to import specific
products from them instead of other countries. It could also be a slight extension of a
common market.
Common Markets
Common markets like EU make it simpler to trade between member countries. This
benefits all members’ trade balance towards the rest of the world. By harmonizing
customs, laws and rules in every member country it also reduces expensive control
organizations and allow free movement of goods internally.
19] What is Letter of Credit? Explain its types.
Ans A letter of credit is an undertaking by a bank to pay or to arrange to pay for specified
merchandise. Provided that certain stipulated conditions are met by the beneficiary.
The letter of credit offers advantage to both the seller and buyer as far as the seller is
concerned a letter of credit ensures him payment for the goods he sells provided he follows the
instructions. Though the buyer has to have the botheration of arranging for the letter of credit.
The types of letter of credit
1. Clean letter of credit
This kind of L.C may be negotiated against a clean draft. A clean draft is a draft without any
documents attached to it.
3. Documentary letter of credit

Under this L.C the draft must be accompanied by the documents specified in the L.C
4. Assignment (assignable) credit

Under this kind of L.C, the beneficiary may assign his rights to another beneficiary either
within a stated period or the expiry date of the credit.
5. Non-assignable credit
As opposed to the assignable credit the named beneficiary of a non assignable L.C cannot
transfer his rights to another party.
6. Cash credit
In this case the beneficiary will receive cash for the drafts as soon as the goods are ready for
shipment at the relevant documents in proper order are represented to the bank.
7. Acceptance credit
Under this arrangement the bank merely accepts the drafts drawn by the exporter. After it
has been accepted by the bank the draft becomes a bank acceptance which may be readily
discounted or sold by the exporter to the accepting bank to other banks or to exchange dealer.
8. Recoverable (revocable) credit

It may be cancelled at any time without the consent of and without to the beneficiary as the
revocable L.C does not adequately protect the beneficiary exports on the basis of this type of L.C are
not common.
9. Irrevocable credit
This L.C is one which cannot be revoked, amended or modified by the issuing bank without
the express consent of all the parties concerned.
10. Confirmed credit

In this case the bank issuing the L.C sends it through its branch or correspondences bank
located in the beneficiary country with the request to add its confirmation credit, confirmation
constitutes a definite and legal undertaking on the part of the confirming bank that it will duly honor
the payment or acceptance as the case may be or presentation of stipulated documents.
11. Back to back credit

It is essentially a secondary credit opened by a bank on behalf of the beneficiary of an
original credit in favor of a domestic supplier. The original L.C backs another credit and facilitates the
purchase of the goods from local supplier by the beneficiary of the original L.C.
12. Red clause credit

This L.C enables the beneficiary to draw a predetermined value of the L.C as soon as it is
established. The red clause is an authority to the negotiating bank to make advances to the
beneficiary for the purpose of purchasing the relevant goods.
20] What are the causes for disequilibrium in Balance Of Payment? Explain the remedial measures.
Ans The BOP of a country is said to be in equilibrium when the demand for foreign exchange is
exactly equivalent to the supply of it the BOP is regarded as being in disequilibrium when it shows
either a surplus or a deficit, there will be a deficit in the BOP when the demand for foreign exchange
exceeds its surplus when the supply of foreign exchange exceeds the demand.
There are a number of factors that may cause disequilibrium in the BOP. These are
various causes may be broadly categorized into:
Economical factors: there are number of economical factors which may cause disequilibrium in the
BOP:
Development disequilibrium: Large scale development expenditure usually increases the

purchasing power, aggregate demand and price resulting in substantially large imports.
Development disequilibrium is common in the case of developing countries because the
above factors and the large scale import of capital goods needed for carrying out the various
development programmers gives rise to a deficit in their BOP.
Cyclical disequilibrium: depression always beings about a drastic shrinkage in world trade
while prosperity stimulates it. A country enjoying a boom all by itself will ordinarily
experience a more rapid growth in its imports than in its exports, while the opposite will be
true of other countries but production of other countries will be activated as a result of the
increased exports to the former.
Secular disequilibrium: in a develop country the disposable income is generally very high
and there for so is the aggregate demand. At the same time the production costs are also
very high due to the higher wages. This naturally results in higher prices. These 2 factors
higher aggregate demand and higher domestic may result in the imports being much higher
than the exports.
Structural disequilibrium: structural changes include development of alternative sources of
supply development of better substitute’s exhaustion of productive resources or changes in
transport roots and costs.
Political factors: Certain political factors could also produce a BOP disequilibrium for , a country
ploughed with political instability may experience large capital outflow and inadequacy of domestic
investment and production. Factors like war or changes in world trade routes would also produce
similar difficulties.
Sociological factors: Certain social factors also influence BOP for instance changes in the taste,
preference and fashion, may affect import and exports and there by the BOP.
The remedial measures of BOP are:
There are number of measures available for correcting the BOP

disequilibrium. They fall into two broad groups namely:
Automatic correction: The theory of automatic correction is that if the market forces of
demand and supply of time, equilibrium will be automatically restored.
Deliberate corrections: Deliberate measures refer to correction of disequilibrium by means
of measured taken deliberately with this end in view.
The various deliberate measures may be broadly grouped into:
Monetary measures.
Trade measures.
Miscellaneous measures.
21] Define bill of lading. Explain any three types of bill of lading
Ans: A bill of lading (sometimes referred to as a BOL,or B/L) is a document issued by a

carrier, e.g. a ship's master or by a company's shipping department, acknowledging that
specified goods have been received on board as cargo for conveyance to a named place for
delivery to the consignee who is usually identified. A through bill of lading involves the use
of at least two different modes of transport from road, rail, air, and sea. The term derives
from the noun "bill", a schedule of costs for services supplied or to be supplied, and from the
verb "to lade" which means to load a cargo onto a ship or other form of transport.
Types of bill of lading:
Straight bill of lading
This bill states that the goods are consigned to a specified person and it is not
negotiable free from existing equities, i.e. any endorsee acquires no better rights than those
held by the endorser. So, for example, if the carrier or another holds a lien over the goods as
security for unpaid debts, the endorsee is bound by the lien. Although, if the endorser
wrongfully failed to disclose the charge, the endorsee will have a right to claim damages for
failing to transfer an unencumbered title. Also known as a non-negotiable bill of lading.
Order bill of lading
This bill uses express words to make the bill negotiable, e.g. it states that delivery is
to be made to the further order of the consignee using words such as "delivery to A Ltd. or to
order or assigns". Consequently, it can be endorsed by A Ltd. or the right to take delivery can
be transferred by physical delivery of the bill accompanied by adequate evidence of A Ltd.'s
intention to transfer. Also known as a negotiable bill of lading.
Bearer bill of lading
This bill states that delivery shall be made to whosoever holds the bill. Such bill may
be created explicitly or it is an order bill that fails to nominate the consignee whether in its
original form or through an endorsement in blank. A bearer bill can be negotiated by physical
delivery.
Surrender bill of lading

Under a term import documentary credit the bank releases the documents on receipt
from the negotiating bank but the importer does not pay the bank until the maturity of the
draft under the relative credit. This direct liability is called Surrender Bill of Lading (SBL),
i.e. when we hand over the bill of lading we surrender title to the goods and our power of sale
over the goods.
PART C
1] CASE ANALYSIS
M/S Ganga Textile (P) Ltd is a domestic garment MFG firm utilizing its 70% of production
capacity. To insure 100% capacity utilization, the Mgmt thought to identify export
opportunities for its garments. Because of their efforts they got export order from Malaysia.
Looking at this scenario, as an export consultant I would suggest the following methodology
to M/S Ganga Textile (P) Ltd to fulfill their export obligation
Export procedure
Registration Stage: This is the first stage of export procedure & following steps should be
carried out
Obtaining importer-exporter code no. [IEC No] issued by Director General of Foreign
Trade [DGFT
Registration with EPC to obtain the Registration-cum-membership certificate [RCMC] to
avail the benefits
Registration with ECGC
Registration with other authorities such as
Federation of Indian export org [FIEO]
Indian trade promotion org [ITPO]
Chamber of commerce [COC
Pre-Shipment stage: This is the second stage of export procedure & following steps need to
be carried out
• Confirmation of order
• Opening L/C
• Arrangement of pre-shipment finance
• Production or procurement of goods
• Packing & marking
• pre-shipment Inspection
• Obtaining insurance cover
• Appointment of C&F agent
Shipment Stage: This is the third stage of export procedure & following steps need to be
carried out
• Reservation of shipping space
• Transportation up to the port of shipment
• Preparation & processing of shipping documents
• Customs clearance
• Obtaining carting order from the port trust authorities
• Customs examination & issue of “Let Export order”
• Obtaining “Let ship order” from customs preventive officer
• Obtaining mate’s receipt & bill of lading
Post-shipment stage: This is the fourth & final stage of export procedure. It involves
settlement of bills, documents, collection of export proceedings & conversion of foreign
currency into domestic currency
The main documents involved during export operations are as follows:
PROFORMA INVOICE: This occurred in two separate situations. First when the buyer wants a
quotation, the exporter sends him a Performa invoice. This enables to confirm the order by signing
the duplicate copy and sending it back to the exporter. In the 2nd instance, when the goods are ready
for shipment, the Performa invoice together with the documents like shipping bill etc. is sent to the
customs for clearance for export.
COMMERCIAL INVOICE: This is the final invoice prepared by the exporter to be given to the bank at
the time of negotiating the documents after shipment of the goods. Apart from the various details
contained in the Performa invoice, this will in addition, contain the bill of lading number and date,
the name of the ship through which the goods have shipped, GR-1 from, number and date of
shipping, and any other attachments and requirements as mentioned in the letter of credit.
CERTIFICATE OF ORIGIN: it is mandatory in certain importing countries that certificate of origin

(which confirms that the goods are produced in the country exporting) should be attached to the
commercial invoice. These certificates can be given by local chamber of commerce. There are also
countries which insist that their Consulates located in the country of the exporter should give this in
a prescribed Performa, and normally they give this form for a fee. This form helps the buyer to clear
the goods through his customs Clarence.
This certificate is essential and useful especially in instances where the importing country gives
specific conceptions in duties such as GSP or common wealth preferences etc for the imports. It is in
the interest of the exporter and buyer to get this certificate in the form required by the authorities.
CONSULAR INVOICE: certain countries like Australia required that the goods imported into the
country are certified by their own embassy or consular office situated in the exporting country. This
is usually obtained from the consular for a fee. Where this is mandatory or mentioned in the letter of
credit, the exporter as to obtain this form from the respective consulate and attached to the
negotiating documents handed over to the bank. In case it is not done, the negotiating document
will be termed incomplete, delaying the payment. For the buyer in the importing country, the lack of
this invoice will prevent him from clearing his goods from the port through the customs authorities.
SHIPPING BILL: this is the main documentary required by the custom authorities for granting
permission for shipment of goods. The shipping bill is first stamped by the customs authorities for
granting permission for shipment of goods. The bill is first stamped by customers to enable the
goods to go into the docks. After the costumes the port examines the goods together with the
shipping bill and Performa invoice they endorse on the duplicate copy of the shipping bill as “Let
ship”. Only after this those the exporter have the authority to load his goods on the ship
MATE RECEIPT: after loading the goods on the vessel the captain or master of the ship issues the
mate receipt certifying that the goods have been loaded this is given to the port authorities. The
exporter or his agent pays the court dues to the port authorities and receive the mate receipt, which
is then heeded over to the agent of shipping company who gives a bill of lading to the exporter this
is an important document to the buyer through the bank.
BILL OF LADING: this is a document issued by the shipping company upon shipment of goods. It can
be deemed as a legal contract between the exporter and the shipping company to carry goods
without any damage from the port of shipment to the buyer’s destination port. More than that it is
‘title’ to the goods on the ship and is required by the buyer (to whom it is endorsed) to clear the
goods at the port of destination.
AIRWAYS BILL: in case the goods are sent by air, the airways will play the same role in the export
documentation as the bill of lading when goods are sent by ship.
MARINE INSURANCE POLICY: invariably most of the exports of products are made by sea. Hence a
comprehensive marine insurance policy for the goods to be exported is very important in export
trade. It is the normal practice to get a marine insurance policy from godown to godown. The goods
will be fully covered from insurance from the moment it lives the godown (warehouse) of the
exporter, through road or rail to the port, sea voyage and until it is the warehouse of the exporter.
GR FROM: This exchange control document required by the RBI. As per RBI regulation an exporter
has to realize his export proceeds within 180 days from the date of shipment from India.
CONTAINERISATION: containerization in shipping has developed enormously in the last two

decades. Earlier Export goods had to be suitably packed and the ship would load then into the
various holds in the ship. This is like storing goods in the godown with no problems of damage in
transit.
COMPUTERISATION OF DOCUMENT: much work has been done over the last two decades in
simplifying export documents, and also computerizes them. After much work, the UN also helped in
this effort and produces a UN layout key. This is also referred to as the aligned document system.
ALIGNED DOCUMENTATION SYSTEM (ADS): export in India was always

distinguished by massive documentation work. In order to eliminate this and bring it down to
manageable level, a committee was set up and its findings were accepted and implemented by
the government.
2] CASE ANALYSIS – MAY 2005

The given case about Millennium garments (P) ltd .having its manufacturing facility to manufacture
kids wear at Tirupur. Its products well accepted in the market. Mr.Swaminath Kannan who is a
engineering graduate in textiles. The company wants to export its products. Suggest Mr. Kannan
regarding export.
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?
Registration Stage
1. It is the first stage & it includes: Registration of the Export Organization

2. A joint stock company under the Co’s act 1956
3. A partnership firms under the Indian partnership act 1932
4. A sole trader with local authorities
1 Opening current bank A/C

2 Obtaining importer-exporter code no. [IEC No] issued by Director General of Foreign Trade
[DGFT]
3 Obtaining PAN
4 Obtaining sales tax number
5 Registration with EPC to obtain the Registration-cum-membership certificate [RCMC] to avail
the benefits.
The following is the export procedure
Every exporter should take following initial steps -–
1. Obtain BIN (Business Identification Number) from DGFT. It is a PAN based number
2. Open current account with designated bank for credit of duty drawback claims
3. Register licenses / advance license / DEPB etc. at the customs station, if exports are under
Export Promotion Schemes
Exporter has to submit ‘shipping bill’ for export by sea or air and ‘bill of export’ for export by road.
Goods have to be assessed for duty, even if no duty is payable for most of exports, as ‘Nil Duty’
assessment is also an assessment.
Shipping Bill to be submitted by Exporter - Shipping Bill and Bill of Export Regulations prescribe form
of shipping bills. It should be submitted in quadruplicate. If drawback claim is to be made, one
additional copy should be submitted. There are five forms : (a) Shipping Bill for export of goods
under claim for duty drawback - these should be in Green (b) Shipping Bill for export of dutiable
goods - this should be yellow colour (c) shipping bill for export of duty free goods - it should be white
colour (d) shipping bill for export of duty free goods ex-bond - i.e. from bonded store room - it
should be pink color (e) Shipping Bill for export under DEPB scheme - Blue colour.
The shipping bill form requires details like name of exporter, consignee, Invoice Number, details of
packing, description of goods, quantity, FOB Value etc. Appropriate form of shipping bill should be
used.
Relevant documents i.e. copies of packing list, invoices, export contract, letter of credit etc. are also
to be submitted. In case of excisable goods, from ARE-1 prepared at the time of clearance from
factory should also be submitted.
Excise formalities at the time of Export - If the goods are cleared by manufacturer for export, the
goods are accompanied by ARE-1. This form should be submitted to customs authorities. The
Customs Officer certifies that the goods under this form have indeed been exported. This form has
then to be submitted to Maritime Commissioner for obtaining ‘proof of export’. The bond executed
by Manufacturer-exporter with excise authorities is released only when ‘proof of export’ is accepted
by Maritime Commissioner or Assistant Commissioner, where bond was executed.
Duty drawback formalities - If the exporter intends to claim duty drawback on his exports, he has to
follow prescribed procedures and submit necessary papers. The procedures are discussed in the
chapter on ‘Export Incentives'. He has to make endorsement of shipping bill that claim for duty
drawback is being made. If he fails to do so due to genuine reasons, Commissioner of Customs can
grant exemption from this provision. [proviso to rule 12(1)(a) of Duty Drawback Rules].
G R / SDF / SOFTEX Form under FEMA - Reserve Bank of India has prescribed GR / SDF form under
FEMA. “G R” stands for ‘Guaranteed Receipt’ form, while SDF stands for 'Statutory Declaration
Form’). SDF form is to be used where shipping bills are processed electronically in customs house,
while GR form is used when shipping bills are processed manually in customs house.
Other documents required for export - Exporter also has to prepare other documents like (a) Four
copies of Commercial Invoice (b) Four copies of Packing List (c) Certificate of Origin or pre-shipment
inspection where required (d) Insurance policy. (e) Letter of Credit (f) Declaration of Value (g) Excise
ARE-1/ARE-2 form as applicable (h) GR / SDF form prescribed by RBI in duplicate (i) Letter showing
BIN Number.
RCMC certificate from Export Promotion Council - Various Export Promotion Councils have been set
up to promote and develop exports. (e.g. Engineering Export Promotion Council, Apparel Export
Promotion Council, etc.) Exporter has to become member of the concerned Export Promotion
Council and obtain RCMC - Registration cum membership Certificate.
Check in customs – Document submitted is processed by customs authorities, and following are–
Examination of goods before export - After shipping bill is passed by export department, the goods
are presented to shed appraiser (exports) in dock for examination. Goods will be examined by
examiner. This inspection is necessary (a) to ensure that prohibited goods are not exported (b) goods
tally with description and invoice (c) duty drawback, where applicable, is correctly claimed.
3] CASE ANALYSIS: MAY 2007
In the above case XYZ is a co which manufactures engineering units. And naw they want to
step into international business. XYZ wants to export its products to foreign countries. So as
a consultant advisor I would like to give the following suggestions to XYZ co.
MEANTNG OF EXPORT: Goods and services that are producer in the domestically and sold
to buyers in another country.
ABOUT EXPORT MARKET
Export plays a vital role in development of Indian economy. Export market is broad in nature
and has a wider approach. All most all the countries export their goods to other countries and
make maximum profit and increase the sales. Export increases the standard of living and also
by exporting the goods we can meet the quality standards of international business.
EXPORT PRCEDURE
While exporting the goods XYZ co should follow the following procedure.
• Registration stage
• Pre-shipment stage
• Shipment stage
• Post-shipment stage
1: Registration stage:
This is the 1st stage & it includes.
a: Registration of the export organization.
If XYZ is partnership firm then it should register under Indian partnership act 1952 & a
joint stock co under the co’s act 1956.
b: XYZ co should open its current bank account.
c: Then it should obtain the importer/exporter code no. issued by director general of foreign
trade [DGFI]
d: XYZ co should obtain the PAN card.
e: It should register with EPC to obtain registration cum membership certificate[RCMC] to
avail the benefit.
2: Pre-shipment stage:
Approaching the foreign buyer XYZ should approach the foreign buyer to whom or to which
country they want to export their goods.
After approaching the buyer the exporter should inquire about the offer.
Once the inquiry is done about the order the exporter should confirm about the order quantity.
Then the exporter should open the LC.
If any finance is needed to export the goods then the exporter should arrange for pre shipment
finance.
The exporter should start the production of goods as per the quantity ordered.
Then packaging and marking of goods should be done and then the inspection of goods takes
place.
The exporter should obtain the insurance cover eg [marine insurance] so as to offset
uncertainty.
The next step is to appoint the clearance and forward agent so as to carryout the transaction
effectively.
3: Shipment stage
The exporter should do the reservation of shipping space.
The exporter should transport the goods up to the port of shipment
The exporter should clear all the shipment documents and should get the custom clearance.
Once all the custom examination is done then the exporter will get “let ship order” from
customs preventive officer.
After obtaining mate’s receipt 7 bill of lading the will be sent to the destination of the
impostor.
So this was all about export procedure that as a consultant advisor I would suggest to XYZ
co.
CONCLUSION:
Export plays important role in development of Indian economy so i would suggest XYZ co to
export its goods to foreign countries where the demand for the products is high. And by
exporting the goods the co con make profit an even their sales will increase. so due to this
reason I say that XYZ should contribute to the national income of the country.
4] Case analysis: NOV 2006
The following case is about increasing the sales laxmi garments so the board of director is buying the
level best to increase the sales. The general manager wants the advice on export promotion an
incentives available to exporter.
As a consultant adviser I would suggest the following information to the general manager. As
export plays vital role in a growth of Indian economy I would suggest the general manager to export
the garments to middle east countries as the demand for garment in these countries is more & due
to this even this sales of the garment industry will increase.
The general manager should follow the following export procedure to export its goods. In Middle
East countries.
The export manager should follow the following export procedure to export its goods. In middle east
countries.
The export procedure consist 4 important stages.
• Registration stage
• Pre-shipment stage
• Shipment stage
• Post-shipment stage
1. Registration stage:-
A) Registration of the Export Organization:
The garment industry should if it is partnership firm it should register under Indian partnership act
1952.if it is joint stock Company It should register under company act 1956.
B) The garment industry should open it current bank a/c it might be.
C) It should obtain importers &exporter code number issued by director general of foreign trade.
D) It should obtain a PAN card so that the importer transaction will be done correctly.
E) The exporter should obtain sales tax number.
F) The registration should be done with EPC. To avail the benefits & to get certificates it is that
registration-cum-membership certificate.
G) Then exporter should register with ECGC.
2. Pre-shipment stag:
i. The exporter should approach the middle east countries.
ii. Inquiry of offer. The exporter should tell about the offer to the medalist countries so that they can
order the goods.
iii. After the enquiry offer is made the exporter should make confirmation about the offer.
iv. Once the quantity to be order is confirmed the importer should issue the letter of credit.
v. Once the L/C issued than the exporter should make the arrangement of pre-shipment finance so that
shipping activity are done effectively.
vi. After confirming the orders quantity the exporter should start production &procurement of
garment.
vii. Once the goods are manufactured they should be packed &marketing should be done.
viii. The pre-shipment exporter should inspect the goods before they are loaded into ship.
ix. The exporter should obtain the insurance cover it may be marine insurance are any other insurance
so that if any damages takes place it can be recovered.
x. Both the importer/exporter should appoint agent so that the transaction takes place easily.
3. shipment stage
1. Both the importer/exporter should decide the shipping space whichever is convent for them.
2. The exporter should clear all the documents regarding shipment should obtain the customer
clearance then the customs are examined &the custom examiner will issue a let export. Then the
exporter should obtain &by this last stage the goods will be exported to the midlist countries.
So, I would suggest the general manager should follow the above mention procedure to
export the garment &increase the sales.
Incentives available to exporter.
1. This is the financial assistance provided to exporters so that

production capacity increase &they can export quality standard goods.
2. Consultancy services:
Consultancy services provided to the exporters so that they can export quality standard goods &they
can help in developing &increase the export.
Conclusion:
Export plays a vital development of Indian economy so I would suggest to the general manager of
laxmi garments to export it goods to medalist countries so as to increase its sales & to meet the
quality standard of international trade as various incentives provided to exporters so the general
manager should incentives provided to exporters so the general manager should export the goods in
medalist countries.
5] Case analysis - DEC 2008
Case Analysis – MAY 2006
Mr.A.V.Patil is a mechanical engineering graduate is sufficient running a medium size engg

unit by name M/S Smooth Flow ltd, in gokul industrial estate .the Company is engaged in
manufacturing special pumps which are used in chemical industry. He is planning to expand his
business in Middle East countries.
There is very scope in the pumps in the Middle East is he must go international so that he
can earn much revenue .
Hear Mr. patil is exporting his product for the first time so these are the following steps of
Export procedure
OR
Case analyses - NOV 2007

The given case late is about M/s Ragini footwear(P) Ltd a manufacturer of leather footwear and he
had got an export order for its product from china.
I as export consultant advice M/s Ragini regarding export procedure as follows;
The following is the export procedure
Every exporter should take following initial steps -–
1. Obtain BIN (Business Identification Number) from DGFT. It is a PAN based number
2. Open current account with designated bank for credit of duty drawback claims
3. Register licenses / advance license / DEPB etc. at the customs station, if exports are under
Export Promotion Schemes
Exporter has to submit ‘shipping bill’ for export by sea or air and ‘bill of export’ for export by road.
Goods have to be assessed for duty, even if no duty is payable for most of exports, as ‘Nil Duty’
assessment is also an assessment.
Shipping Bill to be submitted by Exporter - Shipping Bill and Bill of Export Regulations prescribe form
of shipping bills. It should be submitted in quadruplicate. If drawback claim is to be made, one
additional copy should be submitted. There are five forms : (a) Shipping Bill for export of goods
under claim for duty drawback - these should be in Green (b) Shipping Bill for export of dutiable
goods - this should be yellow colour (c) shipping bill for export of duty free goods - it should be white
colour (d) shipping bill for export of duty free goods ex-bond - i.e. from bonded store room - it
should be pink color (e) Shipping Bill for export under DEPB scheme - Blue colour.
The shipping bill form requires details like name of exporter, consignee, Invoice Number, details of
packing, description of goods, quantity, FOB Value etc. Appropriate form of shipping bill should be
used.
Relevant documents i.e. copies of packing list, invoices, export contract, letter of credit etc. are also
to be submitted. In case of excisable goods, from ARE-1 prepared at the time of clearance from
factory should also be submitted.
Excise formalities at the time of Export - If the goods are cleared by manufacturer for export, the
goods are accompanied by ARE-1. This form should be submitted to customs authorities. The
Customs Officer certifies that the goods under this form have indeed been exported. This form has
then to be submitted to Maritime Commissioner for obtaining ‘proof of export’. The bond executed
by Manufacturer-exporter with excise authorities is released only when ‘proof of export’ is accepted
by Maritime Commissioner or Assistant Commissioner, where bond was executed.
Duty drawback formalities - If the exporter intends to claim duty drawback on his exports, he has to
follow prescribed procedures and submit necessary papers. The procedures are discussed in the
chapter on ‘Export Incentives'. He has to make endorsement of shipping bill that claim for duty
drawback is being made. If he fails to do so due to genuine reasons, Commissioner of Customs can
grant exemption from this provision. [proviso to rule 12(1)(a) of Duty Drawback Rules].
G R / SDF / SOFTEX Form under FEMA - Reserve Bank of India has prescribed GR / SDF form under
FEMA. “G R” stands for ‘Guaranteed Receipt’ form, while SDF stands for 'Statutory Declaration
Form’). SDF form is to be used where shipping bills are processed electronically in customs house,
while GR form is used when shipping bills are processed manually in customs house.
Other documents required for export - Exporter also has to prepare other documents like (a) Four
copies of Commercial Invoice (b) Four copies of Packing List (c) Certificate of Origin or pre-shipment
inspection where required (d) Insurance policy. (e) Letter of Credit (f) Declaration of Value (g) Excise
ARE-1/ARE-2 form as applicable (h) GR / SDF form prescribed by RBI in duplicate (i) Letter showing
BIN Number.
RCMC certificate from Export Promotion Council - Various Export Promotion Councils have been set
up to promote and develop exports. (e.g. Engineering Export Promotion Council, Apparel Export
Promotion Council, etc.) Exporter has to become member of the concerned Export Promotion
Council and obtain RCMC - Registration cum membership Certificate.
Check in customs – Document submitted is processed by customs authorities, and following are–
Examination of goods before export - After shipping bill is passed by export department, the goods
are presented to shed appraiser (exports) in dock for examination. Goods will be examined by
examiner. This inspection is necessary (a) to ensure that prohibited goods are not exported (b) goods
tally with description and invoice (c) duty drawback, where applicable, is correctly claimed.

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International Business

1) What do you mean by FOREX transaction?

4) Political risk & general risk?

11) What do you mean by AEZ’S Statistic Object?

12) State the contents of commercial invoice?

1. It will help for paying the amount to the exporter.

2. It fulfills the import regulations.

15) State the currency of the countries?

Italy = Lira Germany = Deutsche Mark.

china – Yuan Malaysia – Ringgit

Kenya- Kenyan shilling (KES)

Myanmar- Kyat (MMK)

1. EPS is to promote and develop the exports from the country

17) What is PCFC?

18) What do you mean by “Incoterms”?

19) What is Balance of Payment?

20) What is Marine Insurance?

(a) Sinking of ship.

(b) Damage to the ship due to dashing to the walls.

(c) Fire or explosion on the ship.

(d) Spoilage of cargo due to sea water.

21) State two differences between internal & external trade.

2. The currency has to be converted.

22) What is FOB & CIF?

CIF- Cost, Insurance & Freight.

23) State two objectives of exchange control?

24) What is Foreign Exchange?

25) What is bill of lading?

26) What is blocked account?

27) What is bill of entry?

28) What is devaluation?

29) What is convertibility of rupee?

30) What is packaging credit?

31) What do you mean by arbitrage?

32. What is Certificate of Origin?

33. What is hedging?

Ans. The two types of marine policies are:

35. Expand and explain (i) CIF AND (ii) CFR.

36. What is Mate’s Receipt?

37. What are the objective of exchange control

To improve the balance of payment position by restricting imports

38. What do you mean by Nastro &Vastro a/c?

39. What do you mean by is exchange intervention?

40. What do you mean by full fledged money changer?

41. Mention 2 benefits of LC to the importer?

Ans:. The 2 benefits of LC for the exporter:

1. It will help for paying the amount to the exporter.

2. It fulfills the import regulations.

42. What is certified invoice?

43. What do you mean by Black list certificate?

44. Expand and explain DDU& CIP?.

DDU: Delivered Duty Unpaid:

CIP: Carriage and Insurance Paid To:

45. What is restricted money by exchange control?

46. What is economic integration?

47. What do you mean by private bonded warehouse?

2] Rate of exchange? Explain the factors effecting rate of exchange?

Ans It refers to a rate at which one currency is exchanged with other.

The factor which affects the exchange rate is as follows:

Commercial transactions (imports &exports).

Government loans and grants

Transaction with international and financial institutions

Short term investments