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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
slide19
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
slide24
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
slide28
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
slide29
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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