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Foreign Trade and India. Ancient maritime trading nation Bay of Bengal was once known as CHOLA LAKE Exports touch $155 billion in 2007-08 India is among the top ten in services exports The export basket. Laws to note. The foreign trade ( development and regulation ) Act

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Foreign trade and india
Foreign Trade and India

  • Ancient maritime trading nation

  • Bay of Bengal was once known as CHOLA LAKE

  • Exports touch $155 billion in 2007-08

  • India is among the top ten in services exports

  • The export basket


Laws to note
Laws to note

  • The foreign trade ( development and regulation ) Act

  • The Foreign Trade Policy 2004-09

  • The FEMA 2000

  • RBI Regulations

  • The Customs Act

  • The Central excise Act


Steps in exporting
Steps in Exporting

  • A business organization

  • Manufacturer exporter

  • Merchant exporter

  • Agent/ intermediary

  • Service provider

  • Product selection

  • Procurement of order


Essentials of export contract
Essentials of export contract

  • Product, standards & specification

  • Quantity

  • Inspection

  • Value

  • Terms of delivery

  • Taxes, duties and charges

  • Period of shipment


Export contract contd
Export contract contd….

  • Packing, labeling,marking

  • Terms of payment- Amount.mode & currency

  • Discounts and commissions

  • Licences and Permits

  • Insurance

  • Documentary requirements

  • Guarantee


Export contract contd1
Export contract contd……

  • Force majeure

  • Remedies

  • Arbitration

  • The case of Dalmia & Arun Jain of Polaris


Incoterms
Incoterms

  • EXW– Ex works

  • FCA--- Free Carrier

  • FAS---- Free alongside ship

  • FOB---- Free on board

  • C&F----- Cost and freight

  • CIF----- cost ,insurance and freight

  • CPT– Carriage paid to

  • CIP---- Carriage and insurance paid to


Incoterms contd
Incoterms contd------

  • DAF– delivered at frontier

  • DES--- delivered EX ship

  • DDU--- delivered duty unpaid

  • DDP---- delivered duty paid

  • DEQ– delivered ex quay


Risks in international trade
Risks in International trade

  • Credit risk

  • Currency risk

  • Carriage risk

  • Country risk

  • Voyage risk


Export registration
Export registration

  • IEC with DGFT

  • PAN

  • Bank account

  • Appointment of agents

  • Export licenses

  • Customs registration

  • Registration with export promotion councils


Export inspection
Export inspection

  • IPQC– In process quality control

  • ISI, AGMARK

  • Fumigation

  • ISO- 9000 & ISO – 14000

  • EIA

  • SA- 8000

  • Global compact


Currency management
Currency management

  • Understanding currency fluctuations

  • Invoicing currency

  • Forward contract

  • Hedging

  • Repatriation

  • EEFC


Reading ftp
Reading FTP

  • The policy

  • The handbook of procedures

  • The ITC- HSN classification

  • Export licenses

  • Import licenses

  • OGL

  • State Trading


Customs procedure export
Customs procedure- export

  • Exporter

  • Person in charge of conveyance

  • Bill of lading

  • Export general manifest

  • Shipping bill, packing list,ARE etc

  • Stuffing/ examination/ sealing

  • Self- sealing/ self- certification


Customs procedure contd
Customs procedure contd----

  • Importance of ICD/CFS/

  • Customs bonded warehouse

  • Green channel for exporters

  • Assessment

  • New concept of Transaction value


Customs import procedure
Customs import procedure

  • Importer

  • Person in charge of conveyance

  • Bill of entry

  • Import general manifest

  • Assessment

  • EDI

  • RMS


Central excise export procedure
Central excise export procedure

  • Exports are free of duty

  • Bond clearances

  • Rebate clearances

  • ARE 1

  • ARE 2

  • UT1

  • Proof of export

  • Sealing of container


Export promotion schemes
Export promotion schemes

  • Section 65 of customs Act

  • Advance authorization / DFIAS

  • Export promotion capital goods

  • DEPB

  • Drawback

  • EOU

  • SEZ


EOU

  • Minimum investment of INR 10 million

  • 300 warehousing districts as location

  • Nearly 3000 units in existence

  • New or conversion from DTA

  • Manufacturing & services covered

  • Trading units are not permitted


Eou contd
EOU contd-------

  • Widest definition of manufacture

  • Single B – 17 Bond

  • Duty-free import of raw materials and inputs and similar sourcing of inputs and capital items from DTA

  • NFE= A – B = 0 +

  • EO over 5 years


Eou contd1
EOU contd-----

  • Can subcontract part of production to DTA

  • Can sell upto 50% of production in DTA

  • Can sell to other EOU/ BTP/ EHTP/STP/SEZ and count against EO

  • Exempt from state trading and SSI reservation restrictions

  • 100% EEFC retention


Eou contd2
EOU contd-----

  • Clubbing of exports with exports of parent company for export house status

  • CST exemption

  • PC and CT3 procedure

  • Self sealing

  • Green channel clearance on import


Drawback
Drawback

  • Recouping of duties of customs and central excise and service taxes

  • All industry rates

  • Brand rate

  • Special brand rate

  • Post export documentation


EPCG

  • Import of capital goods at 5% concessional customs duty

  • EO is 8 times the duty saved in 8 years

  • 12 years for SSI holders and licenses for INR1000million

  • Covers manufacturer exporters or merchant exporters with supporting manufacturers


Epcg contd
EPCG contd-----

  • Direct as well as third party exports allowed

  • Shipments under Advance authorization DFIAS , DEPB & draw back will count for fulfillment of EO

  • Physical exports required but certain deemed exports allowed

  • Clubbing of licenses allowed


Advance authorization
Advance authorization

  • Duty free import of inputs

  • Fuel, oil and energy are also allowed to be imported

  • SION norms

  • Ad hoc SION permitted

  • Positive value addition

  • Issued for annual requirement also


Advance authorization contd
Advance authorization contd--

  • Advance release order/ Invalidation

  • Supplies to SEZ counted

  • Actual user condition

  • Disposal of imported items after meeting EO

  • License transferable after meeting EO and with the permission of DGFT


DEPB

  • Duty free post export remission scheme

  • SION norms

  • Ad hoc SION norms permitted

  • Schedule of rates

  • Can be used to pay for import duties

  • Transferable scrip

  • Scheme valid upto March 2009


SEZ

  • Exclusive geography

  • Duty free enclave

  • Sales to DTA permitted

  • Special concessions for promoters

  • Positive EO is required

  • Customs duty, excise duty, service tax and VAT & CST are exempt on supplies to SEZ units


High tech products promotion scheme
High Tech products promotion scheme

  • Appendix 37E goods

  • Duty free scrip equal to 10% incremental export growth

  • Ceiling of INR 150 million

  • Some exports not counted

  • Scrip freely transferable


Focus products scheme
Focus products scheme

  • Goods notified in appendix 37D

  • Some exports not counted

  • Duty credit scrip equal to 1.25% of FOB value of exports for each year

  • Scrip transferable


Focus markets scheme
Focus markets scheme

  • Notified as per Appendix 37C

  • Duty credit scrip of 2.5% on the FOB value of exports achieved

  • Certain exports not allowed

  • Scrip transferable


Deemed exports
Deemed Exports

  • The concept of deemed exports

  • Covers supply of goods against:

  • Advance authorization/ DFIAS

  • EOU/ STP/EHTP/BTP

  • EPCG

  • Projects under International competitive bidding procedure


Deemed exports contd
Deemed exports contd-----

  • Projects approved by ministry of finance

  • Supplies of capital stock to fertilizer plants

  • Supplies of goods to Refineries and power projects

  • Supplies of goods to UN- funded projects

  • Supplies of goods to Nuclear power projects thro competitive bidding


Benefits to deemed exports
Benefits to deemed exports

  • Advance authorization / DFIAS

  • Deemed duty drawback

  • Exemption from terminal excise duty if supplies are against International competitive bidding

  • In other cases refund of terminal excise duty paid will be given


Served from india scheme
Served from India scheme

  • To promote served from India image

  • Appendix 10

  • Minimum previous year exports of INR1 million

  • 10% duty credit scrip

  • Scrip transferable within corporate group and not otherwise


Status holders under the ftp
Status Holders under the FTP

  • Export House Rs 20 crores

  • Star export House Rs 100 crores

  • Trading House Rs 500 crores

  • Star Trading House Rs 2500 crores

  • Premier Trading House Rs 10000 crores

  • Benefits allowed to status holders


Excise export concessions
Excise export concessions

  • Export without payment of duty

  • Export under claim for duty

  • Procurement of excisable goods for export production without payment of duty

  • Drawback

  • Concessional notifications


Service tax concessions
Service tax concessions

  • Drawback

  • Its limitations

  • ASTR 1

  • ASTR 2

  • Clearances to SEZ exempt

  • Refund of service tax paid on export related input services


Wto gatt
WTO/ GATT

  • International Treaty

  • Governing Principles

  • MFN

  • Non discrimination

  • National treatment

  • Reduction of tariffs

  • Elimination of Non tariff barriers


Free trade agreements
Free Trade Agreements

  • NAFTA

  • EU

  • MECOSUR

  • ASEAN

  • SAFTA

  • Indian agreements with Sri Lanka, Thailand and Singapore

  • Implications of FTAs


Importance of ports in international trade
Importance of Ports in International Trade

  • 70% of international trade is over the seas

  • For India, it is 90%

  • Trade through Air is comparatively very expensive and cannot become a common preference, and is unsuited for heavy, large cargo

  • Many coastal states possess a number of ports


Ports in india
Ports in India

  • India has 12 major ports and more than 180 lesser ones

  • India has a coastline of nearly 6000 KMs

  • All ports of India together handled 519 million tons of cargo during the fiscal year ended March 2008

  • Growth rate of 12%


Problems of indian ports
Problems of Indian Ports

  • Limited land area

  • Industries located in hinterland

  • Low channel draft

  • Too many players

  • Inadequate deployment of skill and technology

  • Lack of coordinated approach


Requirements of modern world class port
Requirements of modern World class port

  • Skill – Intensive

  • Technology driven, minimal paper work

  • Port is the best when its an industrial complex by itself

  • Quay cranes

  • Crane productivity

  • Fully automated terminals with good quay length


Port stake holders in india
Port stake holders in India

  • Customs

  • Port Trusts

  • Port Health Organization

  • Plant Quarantine

  • Immigration

  • Terminal operator

  • Vessel operating agent


Continued
continued

  • Steamer agent / Mainline operator

  • Container operating agent ( NVOCC, VOCC )

  • Stevedore

  • CHA / Exporters / Importers

  • Transport operators

  • CFS / ICD

  • Security agencies / External players


A comparison
A comparison

  • Factor JNPT SINGAPORE PORT

  • Terminals 3 4

  • Vessels per

    terminal 9 41

  • Quay length 600 m 11,754 m

  • Total area 133 ha 425 ha


Continued1
continued

  • Factor JNPT SINGAPORE

  • Total no of quay

    cranes 8 131

  • Crane moves

    per hour 20 – 25 25 -30

  • Crane rate per hour 60 -70 100


Continued2
continued

  • All Indian ports in 2005 -06 together handled cargo of 423.3 million tons

  • Singapore port in the same period handled 423 million tons of cargo

  • Transaction costs at Indian ports are 10 %

  • Transaction costs in leading ports are 6 %

  • The transaction costs at Indian ports are in money terms - $ 12 billion per annum


Dwell time at indian ports as on 2005 06
Dwell time at Indian ports as on 2005 - 06

  • Cargo type As on 2005-06 expected

    export import exp imp

  • Dry bulk 3.57 3.23 1.7 1.6

  • Break Bulk 6.6 5.62 3.3 1.5

  • Containers 3.78 1.88 1.5 1.00


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