FROM 1st JUNE 2008 TO 31st JULY 2008

SUBMITED BY GUIDED BY SUBMITED TO

AVTAR SINGH YOGESH KHATTAR F.M.S

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

HOSHIARPUR
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ACKNOWLEDMENT

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

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

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

gave us the opportunity to make this project. I express my sincere thanks to MR.
YOGESH KHATTAR MANAGER INTERNATIONAL BUSINESS,
INTERNATIONAL TRACTOR LIMITED my project guide for his help as team to my
project.

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

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

I find no words to acknowledge the moral support rendered by my parents, all the
members of International Tractor Limited Hoshiarpur & Seaking Shipping Agency
New Delhi in making this effort to success. This becomes a reality because of their
blessings and above all by the grace of GOD!

AVTAR SINGH
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M.B.A. – 3rd SEMESTER

FMS
HARIDWAR
5
6
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TABLE OF CONTENTS

1. ABOUT THE GROUP

2. ABOUT THE COMPANY

3. BASICS BEFORE THE EXPORT

4. SWOT ANALYSIS

5. WHY INTERNATIONAL TRADES HAPPEN

6. REGISTRATION REQUIRED FOR EXPORT

7. EXPORT LICENSE

8. SUMMARY OF MAIN REQUIREMENT FOR INTERNATIONAL TRADE

9. EXPORT MARKETING

10. PRICE AND COSTING

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11. RISK INVOLVED IN EXPORT

12. INTERNATIONAL INCO TERMS

13. EXPORT IMPORT CONTRACT

14. PACKING AND LABELING

15. CERTIFICATION REQUIRED

16. DOCUMENT CATEGORIES

17. APPOINTMENT OF CHA

18. ALL CUSTOM CLEARANCESAND SHIPPMENT PROCEDURE

19. ORGANISATION SUPPORTING THE EXPORTS

20. EXPORT SCHEMES

21. SUMMARY OF EXPORT PROCEDURE

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ABOUT THE SONALIKA GROUP

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

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

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

Himachal Pradesh. Sonalika is the one of the top 3 tractor manufacturing companies in

India; other products include Multi utility vehicles, engines and various farm equipments.

Today the group stands tall with an approximate turnover of 3200 Crore INR.

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

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

technocrats. History reveals that innovation is the key to continued progress and when

applied to technology that touches human life, it can unfold a whole new economic

phenomenon that has the power to change the world. With unique initiatives like the

Thought leadership Forum, Leadership Forum, they have been able to create a unique

platform for learning through success stories of industry leader. No, doubt that the sonalika

products has created a position for themselves not only in India but also in foreign market.

To maintain quality even a micro level is being taken care of and rectified. The industry

has gradually transformed themselves into a world-class player involved in building state-

of-the-art products, solutions and technologies. Sonalika Foundation intends to become a

catalyst, encouraging there members to do more, capturing best practices for quality and

harnessing a greater range of resources, from the industry and beyond, to make a major

impact on the development. It has been their vision to cater to the needful agriculture and

auto industry with quality products through untiring dedication and activities. As they step
 10

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

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

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

initiative and determination to have a leading position in the tractor industry in the days to

come. They have ventured in to automobile sector also with the launching of Rhino –

MUV- to write another success story.

VISION

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

quality abrasive products through untiring dedication and leadership.

MISSION

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

need, and not merely sell the products they build.

CORE VALVES

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

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

products and highest quality of service in the industry.

ETHO STATEMENT OR LOGO RATIONALE

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

surrounding the Sonalika produces a warming effect, arouses cheerfulness, stimulates

mental activity, and generates the same. Green Leaf in the center symbolizes growth,

harmony, freshness, and fertility. Black underlining the logo associates with power,

elegance, and formality. And Orange surroundings the complete logo represents

enthusiasm, fascination, happiness, creativity, encouragement, and stimulation. All this

permutation of persona represents the Sonalika group as an asset in the industry.

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

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

a time marked by rapidly changing technology, they have developed best of the R & D

team and have also developed the excellent quality control system to deliver high quality

results in the industry.

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

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

great as their products. Throughout their history, company has earned a reputation for high

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

to these expectations, not just because it is for good business, but also because it is the

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

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

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

in comfortable price and range. Sonalika is a team that has carved in itself successful
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entrepreneurship over the years. The Sonalika group is among the India’s leading

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

handling equipments and components having pioneered from mechanization in the country

Sonalika has played a fundamental role in the agricultural growth of India for over five

decades. When they decided to take up manufacturing of Tractors, it was a decision to

tread a path fraught with difficulties, problems and obstacles. But they carried on with a

clear vision, always seeing light at the end of the tunnel. Everything they did was with lot

of innovation and creativity. They always kept in mind that it is TIME which is wealth not

money. So their effort was to do everything in much less time than competition. This

became their competitive advantage and helped them in touching great heights in the

shortest possible time. The same scenario was repeated while developing MUV RHINO.

This has been a great experience involving their ICML team, vendors, suppliers and

dealers which is a fairly large family now. They wish that it should be a matter of great

happiness for their associates to deal with them. With their help and good wishes, they

wish to accomplish all the great promises hidden in the future, off course at the speed of

light.

INTERNATIONAL CARS & MOTORS LIMITED

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

promoted by Mr. L.D.Mittal, Chairman, Mr. A.S.Mittal, Vice Chairman & Mr. Deepak
 13

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

Farm machines & Automobiles.

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

having its state-of-the-art production facility, with centrally air-conditioned, dust &

pollution free environment, to manufacture multi-utility vehicles / sports – utility vehicles,

in Amb, Himachal Pradesh.

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

small units for meeting the raw material requirements yielding manifold employment

avenues, revenue & industrialization in the state.

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

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

MUV with the name of RHINO RX & the same MUV boasts of Rover engines. The

company is in-process of developing its own Common Rail Direct injection (CRDI)

engines.

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

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

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

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

Nepal, Bangladesh & Indonesia are also in an advanced stage. It will also offload the

product in African continent soon.

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

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

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

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

the Indian Automobile Industry.

SONALIKA AGRO

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

technology to facilitate persistence of green revolution. Sonalika Agro Industries

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

implements manufacturing companies in India with 80% share in threshers alone. Its

product line includes Combine Harvesters, Tractor/Self Driven straw reapers, Potato

Planters, Maize seller –cum-Dehuskers, Seed –Cum- Fertilisers Drills, various kinds of

threshers, etc.; Sonalika Agro is a pioneer in manufacturing tractors mounted combine

harvester, which is not popular in India, but also in various others countries across the

globe. Today, the company is supporting the farmers with world class farming equipment

to ease the process of making the Green Revolution II, a dream come true. In the light of

the company's mission, highly qualified and experienced staff is working as a family in the

manufacturing facility at Hoshiarpur (Pb).

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

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

equipments and implements to facilitate the farmers in all kinds of farming activities. It
 15

has a large dealer network spread all over country and have approximately 80% share in

Indian market of farm machinery. Its products are also exported to Asian & African

countries through various export promotion counsels.

INTERNATIONAL AUTO TRAC FINANCE LIMITED

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

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

customer friendly schemes. Its parent company Sonalika Group ranks among the largest

tractor & farm equipment manufacturer in India

BUSINESS PLANS OF IAFL

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

Haryana, Jammu, H.P (Done).

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

parts of Northern India.

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

India.

Whom to Finance

 Salaried

 Agriculturist

 Self Employed

 Partnership
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 Pvt. co. ,others

INTERNATIONAL TRACTORS LTD

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

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

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

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

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

pulling power, minimum fuel consumption and low emission. All this makes ITL one of

the top five tractor selling companies in India. These tractors are also exported to various

countries including South Africa, Australia, Zimbabwe, Sri Lanka, Canada, Bangladesh,

Algeria, Zambia, Senegal, Ghana etc.

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

tractors in India. ITL has a marketing arrangement with TATA International for

development of selected South American and African market. The company’s marketing

efforts are promoted by dealer network of 600, and 450 sub dealers. Such a networking

has enabled the company to grow like a well-knit family whose roots lie in its customers,

who have providing constant feedback and support to allow the company to turn their

dreams into products.

Their Manufacturing Process, Quality Control systems and Research & Development

facilities are ISO-2000 certified, by the joint Accreditation system Of Australia and New

Zealand. They are the first Tractor manufacturing company in the country to be accredited

with ISO-14001. It bears testimony to fact that company is having world-class R&D
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facilities, maintaining controls and systems of international Standard and Environment

norms.

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

and certified by ARAI, Pune. United States Environmental Norms Agency, Washington

DC has also certified our Engines. These certifications enabled SONALIKA Tractors to

enter into world Market. All the Models of Tractors and Combines Harvesters

manufactured by us are tested & approved by central Farm Machinery and Tractors

Training & Testing Institute, Bundi (MP) India, (the Government of India Institute

authorized for issuing test reports).

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

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

typical to small land holdings, the performance of ITL tractors is unparallel. Sonalika

tractors are easy to handle, with outstanding maneuverability, low center of gravity and a

tight turning radius, that combine to give fast and efficient operation in the field or yard.

 They also manufacture tractors whose specifications are approved and tested

dimensionally and structurally, according to EEC and other international standard

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

advanced features available on the market today, including hydrostatic

transmission, power steering, differential lock and advanced safety devices

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

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

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

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

assembled tractors. ITL assembly line producing tractors in broad range from 30HP to

90HP with effective planning of resources.

Quality, Assembly & Testing Tools:

 Hydraulic Test Rig Up to 1600Kg Lifting Capacity

 Millipore Testing Equipment. Torque calibrator

 Hydraulic presses

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

filtration

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

heavy castings, components & subassemblies

 Pipe flushing machine for proper cleaning of hoses & pipes

 Induction Heaters for controlled heating of bearings

Standard testing procedures for final product

 Roller testing

 Road testing

 Field Testing
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Sonalika
Brief of Rhave
& D :In House Design Engine R&D department with up-to-date technology.

 ITL R & D center is recognized by government of INDIA

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

implementation
Capabilities :

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

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

R&D through vendors & commercial settlement

 Vendor quality control is capable for ensuring quality requirements of components

through verification at vendor end

 High skilled workers are capable for making any types of prototypes
Facilities :

 High configuration workstations are used for design activities

 Team center is used for PLM concepts

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

 Two transmission test rigs

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

 Hydraulic system test rig

 Endurance test rig for operator seat & fenders

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

 Proto machine shop with HMC, radial drilling & turning centre
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Engines developed so far available in rating of 28-90 HP. Sonalika has started spreading

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

with latest technology.

In-house R&D capabilities :

TRACTOR INDUSTRY IN INDIA

Higher productivity and greater output are the two major contributions in farm
mechanization. Tractors form an integral part of farm mechanization and have a crucial
role to play in increasing agricultural productivity. Tractor is a highly versatile piece of
machinery having a multitude of uses, used in agriculture both for land reclamation and
for carrying out various crop cultivation and also employed for carrying out various
operations connected with raising the crops by attaching suitable implements and to
provide the necessary energy for performing various crop production operations involved
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in the production of agricultural crops. Tractors are capital intensive, labor displaying used
as a mode of transport, in electricity generation, in construction industry and for haulage
operation. It has now become an integral part of farm structure .The application of tractor
for agricultural activities which swept India during the last twenty years have erased the
problem of farmers. Farm mechanization program in India aims to integrate the use of
available human and animal farm power with mechanical sources of power for increasing
the productivity.

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

spectacular pace during last four decades. Consequently it now occupies a place of pride in
India's automobile industry. U.S.A., U.S.S.R. and only a few Western European countries
exceed the current production of tractors in India, but in terms of growth India's growth is
unmatched even with countries of long history of tractor manufacturing. The spectacular
achievement reflects the maturity and dynamism of tractor manufacturers and also the
policies adopted by the government to enable it to effectively meet the demand. The
tractor industry in India has made a significant progress in terms of production and
capacity as well as indigenization of technology. It is a typical sector where both imported
technology and indigenous developed technology have developed towards meeting the
overall national requirements. The global spotlight on tractors manufacturers certainly in
terms of volume seems to be swinging away from the USA, UK and Western and Eastern
Europe towards India where growth in the number of producers and the total volume in
recent years have been impressive. In India tractor industry has played a vital role in the
development.

India's gross cropped area is next only to United States of America and Russia and along
with fragmented land holdings has helped India to become the largest tractor market in the
world. But it drops to eight position in terms of total tractor in use in the country when
compared to international figures, only 3% of total tractors used all over the world . It is to
be noted that while the overall automobile industry is facing recession the tractor industry
is growing at 9%.About 20% of world tractor production is carried out in our country only.
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The arable land in India is high as 12% of the total arable land in the world. Tractor market
in India is about Rs. 6000 crores. On an average around 400000 tractors are produced and
their sale is 260000.Uttar Pradesh is the largest tractor market in our country. One out of
every four tractor is being purchased here. Indian tractor market has to be viewed
considering its position in the world with respect to key parameters as given below:

INDIAN TRACTOR MARKET

WORLD
DESCRIPTION UNITS INDIA INDIA RANK
TOTAL/AVG
Arable Land Mn Hectare 1444 170 2
Irrigated Area Mn Hectare 249.6 45.8 2
Tractors In Use Tractors/000 Hectares 28 10.5 8

The Tractors available in developed countries have advanced features and accessories that
is not found in Indian tractors .Tractor industry has made a steady and satisfactory
progress even in drought areas. Four factors have contributed to the steady progress:

* Government laid stress on the mechanization of agriculture with a view to boost food
grain production. Therefore agriculture sector started receiving financial assistance.

* There is an increase in awareness among the farmers for the need of farm mechanization
and are keen to acquire tractor with the help of credit facilities from financial institutions.

* Agronomists believe that there is need for more tilling due to depletion of moisture and
repeated cultivation of land .It is precisely for this reason that the demand for tractors was
well maintained even during a draught period.

* Animal power available is too inadequate to meet power demand of our farmers.
Mechanized operations are preferred to eliminate drudgery and delay, also labour shortage
during harvesting increased the use of tractor.
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At the end of the day there are enough reasons to believe that the industry will grow
because:

* More farmers are opting for multiple cropping over last decade. Country's net cropped
area had remained virtually stagnant while gross cropped area increased by about 4.7%.
This indicates the increased popularity of multiple cropping.
* 95% of tractor sales are on credit. Credit is extended by commercial banks, state land
development banks and regional rural banks.
* Irrigation facilities reduce reliance on the monsoon and allow for quick yielding varieties
of food -grain .This reduces the cropping cycle to 3-4 months from the traditional 5-6
months. Reduced cropping cycle require deep tilling which translates into higher demand
for tractors.
* Cost of tractors in India is the cheapest in world .The cost of a finished tractor here is as
much as the cost of gear box in developed countries. Hence there exists tremendous scope
for exports.

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

purchase of tractor involves a big investment its demand in affected by the availability and
easiness of credit. A higher availability of credit will lead to a higher demand for tractors.

* The tractors between the 31-40 horse power and 31-40 hp range dominate the market
.The reason for medium horse power tractors being more popular are that the major tractor
demanding states like Punjab Haryana and Uttar Pradesh have plenty of alluvial soil which
does not require deep tilling. Lately it is visualised that higher hp segment has the
maximum growth potential Higher horse powered tractors will be the future requirement
with the government intention to encourage contract farming through the leasing in and
leasing out of farm lands.

* Regarding exports India of latter has been exporting tractors to a number of countries,
but predominantly to Sri Lanka, Nepal and U.S.A .However the study reveals that exports
from India are going down in the recent years .The major reason for the decline in exports
 24

of tractors of tractor from India is being the failure to find an extensive market overseas
,deteriorating foreign exchange situation in African countries and their poor buying
capacity, comparatively cheaper imports of second hand tractors by South East Asian
countries from developed countries and the disintegration of erstwhile U.S.S.R. but also
the potential export markets can be explored by Indian in the future. Since Indian tractors
confirm to the international standard by virtue of their foreign collaboration it is possible
for India to export to more tractors to the rice and wheat growing countries like Canada,
Philippines and Bangladesh.

* FOREIGN COLLABORATION

Tractor industry along with others benefited from this policy which allowed free inflow of
foreign technology .The manufacture of tractors started in India mainly with the help of
foreign collaboration secured from internationally reputed companies from the USA ,UK,
USSR ,WEST GERMANY, POLAND ,CZECH SLOVAKIA . Most of the models which
were taken up for manufacture in India were developed overseas. Soon after the decision
for the manufacture of tractors was made during second plan, government approved
number of foreign collaboration agreements. The establishment and present status of
tractor industry owes a great deal to the support received by the Indian entrepreneurs from
foreign collaboration during the initial phase of manufacture.

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

envisages review and analysis of imported technologies in the country and suggested
measures for appropriate choices acquisition and implementation of foreign know-how.
Major objective of scheme is:

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

collaboration.

* Carry out a technological analysis of the imported technology and provide a stage of art
technology in the country and status of implementation of collaboration.
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* Co-ordinate with Ministry of Industry, Commerce and Finance by providing technology

data input.

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

absorption.

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

production:

MANUFACTURERS AND COLLABORATORS

MANUFACTURER COLLABORATOR YEAR

Eicher Tractors Ltd Gebr, Eicher Tractor. West Germany 1961
Gujarat Tractors Ltd Motokov –Praha. Czechoslovakia 1963
TAFE Messey Ferguson. UK 1961
Escorts Ltd Moloimport Arazawa Zaklady Mechaniczne 1964
.Ursus Poland
Mahindra And Mahindra International Harvestor. UK 1965
+Escorts Tractor Ltd Ford .U.K. 1971
Hindustan Machine Tools Motokov -Praha. Czechoslovakia 1971
*Kirloskar Tractors Limited Klochner-Humboldt Deutz. Germany 1974
Punjab Tractor Limited CMERI.INDIA 1974
*Pittie Tractor Limited Own know-how 1974
*Harsha Tractor Ltd Moto Import. Russia 1975
*Auto Tractor Ltd British Leyland. U.K. 1981
*Pratap Steel Rolling Mill Own know-how 1983
Vst Tillers Mitsubishi. Japan 1983
*United Auto Tractor Ltd Uzina Tractorul. Romania 1986
*Asian Tractor Ltd Own know-how 1989
Bajaj Tempo Ltd Own know-how 1987
International Tractors Own know-how 1998
Larsen And Tourbo Ltd John Deere. USA 1999
New Holland Tractor New Holland Tractors .Italy 1999
Greaves Ltd Same Deutz- Fahr. Italy 1999

Summary
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Agriculture accounts for about 22% of country's GDP and engage around 70% of the
population. With good spell of monsoon across the country this year the agricultural sector
would experience a good yield for both kharif and Rabi crops. Further government efforts
to implement irrigation projects and increase the gross cropped area (GCA) will drive
surplus incomes of farmers, and given the strong correlation of the agricultural growth
with tractor demand, it will be positive for the tractor industry.

With the increasing awareness of mechanized farming, the penetration levels of tractors in
India are expected to increase. Despite being the largest tractor market in the world tractor
penetration levels in India is low at 11 tractors per 1,000 hectare of Gross Cropped Area
(GCA) as compared to world average of an estimated 19 tractors per 1,000 hectare of
GCA. Also India has the largest irrigated area in the world and second largest arable land
in the world; hence there is a larger domestic market that remains untapped.

The steps taken by manufacturers on inventory and new product fronts may put the sector
on a profitable growth path in the next couple of years. New product launches are also
expected to drive the growth. The new products are ergonomically designed and are of
higher power. Further, better monsoon, easy credit availability, perky export market and
marked improvement in the economy contribute to this optimism.

However players are likely to face pressure on margins despite higher turnover growth
prospects in light of stiff competition and rising input costs. It has to be remembered that
the industry currently is operating at less than 50% capacity utilisation. With such a large
demand-supply gap, pricing power is likely to be on the lower end of the spectrum.

Further given the large dependence of the sector on monsoon, the span out of the monsoon
in the current year will have an impact on industry's fortune. The dependence could reduce
over the long-term only if measures like irrigation projects, yield improvement and
infrastructure development gains momentum.

Tractors: Sales at a glance

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

Bajaj Tempo 3906 2.1 3595 2.1 8.7

Eicher 16775 8.8 15814 9.2 6.1

Escorts 25550 13.4 21013 12.2 21.6

MGTL 2009 1.1 1251 0.7 60.6

HMT 5563 2.9 6802 4.0 -18.2

M&M 49562 26.0 47033 27.4 5.4

PTL 25602 13.5 24200 14.1 5.8

TAFE 24895 13.1 24465 14.3 1.8

VST 527 0.3 367 0.2 43.6

LT-JD 8216 4.3 4337 2.5 89.4

NHI 7723 4.1 6316 3.7 22.3

Sonalika 20020 10.5 16464 9.6 21.6

Total Industry 190348 100.0 171657 100.0 10.9

Tractors: Categories-wise sales at a glance

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

< 20 HP 527 0.3 367 0.2 43.6

21 - 30 HP 42841 22.5 36619 21.3 17.0

31 - 40 HP 95346 50.1 92843 54.1 2.7

41 - 50 HP 39235 20.6 33594 19.6 16.8

> 51 HP 12399 6.5 8234 4.8 50.6

Total 190348 100.0 171657 100.0 10.9

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CONTRIBUTION OF INDIAN TRACTOR INDUSTRY IN GLOBAL TRADE

India manufactures about 38,00,000 2-wheelers, 5,70,000 passenger cars, 1,25,000 Multi
Utility Vehicles, 1,70,000 Commercial Vehicles and 2,60,000 tractors annually. India
ranks second in the production of two wheelers and fifth in commercial vehicles.

FOREIGN DIRECT INVESTMENT

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

automobiles and component is permitted.

INCENTIVE FOR RESEARCH AND DEVELOPMENT

The Government shall promote Research & Development in automotive industry by
strengthening the efforts of industry in this direction by providing suitable fiscal and
financial incentives.

The current policy allows Weighted Tax Deduction under I.T. Act, 1961 for sponsored
research and in-house R&D expenditure. This will be improved further for research and
development activities of vehicle and component manufacturers from the current level of
125%.

In addition, Vehicle manufacturers will also be considered for a rebate on the applicable
excise duty for every 1% of the gross turnover of the company expended during the year
on Research and Development carried either in-house under a distinct dedicated entity,
faculty or division within the company assessed as competent and qualified for the
purpose or in any other R&D institution in the country. This would include R & D leading
to adoption of low emission technologies and energy saving devices. Government will
 29

encourage setting up of independent auto design firms by providing them tax breaks,
confessional duty on plant/equipment imports and granting automatic approval.
Allocations to automotive Cess fund created for R&D of automotive industry shall be
increased and the scope of activities covered under it enlarged.

Budget Impact

Continued focus on agriculture positive for tractor industry

A. The hike in the excise duty on steel is likely to result in an increase in tractor prices, as
cenvat credit cannot be availed on inputs since agricultural tractors are exempt from
excise duty.

B. The extension of the 150 per cent deduction on R&D expenditure up to March 31,
2007, will benefit the industry in terms of new product development.

C. The cut in the peak customs duty on components as well as the cut in the excise duty
on tractor front tyres is not expected to have a significant impact, given the high levels of
indigenization and the low value of tractor front tyres.

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

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

credit in 2005-06 and an increase in the number of borrowers by 5,000,000.
- Increase in the area under irrigation under the Bharat Nirman Project and
the micro irrigation scheme.
- Road connection for all villages.
- Schemes for agricultural diversification.
- Continuation of farm insurance scheme.
- The commission of National Horticulture Mission to cover research,
production,
- Post harvest management, processing and marketing in an integrated
manner.
 30

- Scheme for strengthening agricultural marketing infrastructure.

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

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

Major Tractors Exporters

Company Name Impact Impact factors

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

Escorts Ltd. Positive A, B, C, D

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

International Tractors Limited Positive A, B, C, D

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

TAFE Ltd. Positive A, B, C, D

Notwithstanding the recent announcement to sell its tractor division to TAFE that will take
time to come into effect.

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

• Tractor and utility vehicle maker Mahindra & Mahindra (M&M) has emerged as
the fourth-largest tractor brand in the US in the 15-90 horse power (HP) segment.
During 2004, Mahindra US clocked sales of US$128m. Sales are expected to cross
US$250m by December 2008. It has created a market for itself in the Latin
American and South African markets too. It has opened an assembly line for its
Bolero range pick-up vehicles in Uruguay. The firm also launched its sports utility
 31

vehicle, the Scorpio, in Kuwait in July 2004. The Scorpio model in Kuwait comes
equipped with a Renault petrol engine.
• Tata Motors Ltd, the country's leading truck maker, acquired a Daewoo truck
manufacturing unit in South Korea in 2004. The firm plans to introduce its heavy
duty trucks in India in the next 12 months. These 200-400 horse power trucks with
49-tonne freight capacity will be launched in India and select countries as part of
Tata's strategy to enter the global transportation market.

The Ambassador is back in demand in Wales. Merlin Garages of Carmarthenshire, the UK's only
importer of the Ambassador, is now planning a new, soft top version of the Ambassador for the
British market

BASICS BEFORE THE EXPORT

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

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

for export.
 32

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

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

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

also be successful in international market, at least those where similar needs and

conditions exist.

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

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

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

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

in strategy formulation and selection.

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

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

of five relevant aspects of your business and external market environment. Strengths and

weaknesses apply to internal aspects of your business; opportunities and threats relate to

external research.

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

plans, and help guide your market selection process.

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

weaknesses, and those external to the company can be classified as opportunities or

threats.
 33

Strengths

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

developing a competitive-advantage. Examples of such strengths include:

• Patents

• Strong brand names.

• Good reputation among customers.

• Cost advantages from proprietary know-how.

• Exclusive access to high grade natural resources.

• Favorable access to distribution networks.

Weaknesses

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

following may be considered weaknesses:

• Lack of patent protection.

• A weak brand name.

• Poor reputation among customers.

• High cost structure.

• Lack of access to the best natural resources.

• Lack of access to key distribution channels.

Opportunities
 34

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

growth. Some examples of such opportunities include:

• An unfulfilled customer need.

• Arrival of new technologies.

• Loosening of regulations.

• Removal of international trade barriers.

Threats

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

examples of such threats include:

• Shifts in consumer tastes away from the firm's products

• Emergence of substitute products.

• New regulations.

• Increased trade barriers

Successful SWOT Analysis

Simple rules for successful SWOT analysis:

Be realistic about the strengths and weaknesses of the organization.

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

be in the future.
 35

Be specific.

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

competition.

Keep your SWOT short and simple.

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

negative factors first in order to turn them into positive factors.

WHY TRADES HAPPEN

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

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

important reason for trade is the concept of absolute advantage and comparative advantage or

plainly speaking making money or earning profit. Both the parties either exporter or importer

should have any one of the above advantages.

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

advantage.

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

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

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

at a lower opportunity cost relative to another country.

 36

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

processes to ease the flow of goods and services.

According to ELI Heckcher & Berlin Ohlin International trade

happens due to.

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

country will try to export labour intensive goods.

WHY COMPANIES ENGAGE IN THE INTERNATIONAL BUSINESS

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

• To expand their sales.

• To acquire resources.

• To diversify their sources of sales and supplies.

• To minimize competitive risk.

Expand sales Companies

Sales are dependent on two factors

1. The consumers.
 37

2. Willingness and ability to buy them.

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

Acquire resources

Manufacturers and distributors influence for the international business for foreign capital

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

their costs

DIVERSIFY SOURCES OF SALES AND SUPPLIES

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

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

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

Minimize the competitive risk

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

benefits from the international business.

Reasons for recent international business growth

1. Rapid increase in and expansion of technology

 38

2. Liberalization of government policies

3. Development of the institution needed to support and facilitate

4. Increased global competition

Registration require for the Export.

• Registration with Director General of Foreign Trade (DGFT)

• Registration with Export Promotion Council

• Registration with Commodity Boards

• Registration with Excise Income Tax Authorities

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

government authorities.

Registration with Director General of Foreign Trade (DGFT)

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

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

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

for the purpose of export as well as import. No exporter is allowed to export his good

abroad without IEC number.

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

boarder or to China through Gunji, Namgaya, Shipkila or Nathula ports then it is not
 39

necessary to obtain IEC number provided the CIF value of a single consignment does not

exceed Indian amount of Rs. 25, 000 /-.

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

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

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

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

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

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

and Bankers Certificate.

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

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

Transfer by Nominated Bank by DGFT.

Registration with Export Promotion Council

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

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

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

Government of India and act as a platform for interaction between the exporting

community and the government.

 40

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

certificate (RCMC) from the EPC. An application for registration should be accompanied

by a self certified copy of the IEC number. Membership fee should be paid in the form of

cheque or draft after ascertaining the amount from the concerned EPC.

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

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

specified.

Registration with Commodity Boards

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

Government of India for purposes of export-promotion and has offices in India and

abroad. At present, there are five statutory Commodity Boards under the Department of

Commerce. These Boards are responsible for production, development and export of tea,

coffee, rubber, spices and tobacco.

Registration with Excise and Income Tax Authorities

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

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

exporter to get registered with the Tax Authorities.

Export license
 41

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

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

after a careful review of the facts surrounding the given export transaction. Export license

depends on the nature of goods to be transported as well as the destination port. So, being

an exporter it is necessary to determine whether the product or good to be exported

requires an export license or not. While making the determination one must consider the

following necessary points:

• What are you exporting?

• Where are you exporting?

• Who will receive your item?

• What will your items will be used?

Canalization

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

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

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

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

Application for an Export License

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

service, an exporter must first classify the item by identifying what is called ITC (HS)
 42

Classifications. Export license are only issued for the goods mentioned in the Schedule 2

of ITC (HS) Classifications of Export and Import items. A proper application can be

submitted to the Director General of Foreign Trade (DGFT). The Export Licensing

Committee under the Chairmanship of Export Commissioner considers such applications

on merits for issue of export licenses.

Exports Free unless regulated

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

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

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

may include Minimum Export Price (MEP), registration with specified authorities,

quantitative ceilings and compliance with other laws, rules, regulations.

Summary of Main requirement for international trade

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

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

3. Forex Bank Account Number

 43

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

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

Procedure of getting an I.E CODE

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

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

Requirement for an I.E.CODE

1. Two passport size form

2. DGFT form ( if not online)

3. Demand draft of Rs :- 1000

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

5. Pan card copy

6. Address proof

7. Birth proof

8. Partnership deed (if partnership firm)

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

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

15 days of apply.
 44

Need of I.E CODE

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

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

social element out of the world.

Procedure for the AUTHORISED DEALER CODE

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

Export marketing

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

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

importer by their marketing strategies. They use to tell them about the various advantages

of their products along with their suitable price.

How to develop the export marketing

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

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

Direct export marketing

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

middlemen is involved .high degree of marketing skills is required

 45

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

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

the marketing decisions

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

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

and selling for a fee

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

socialist countries

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

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

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

firm to produce and market jointly in the foreign country.

Pricing and costing

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

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

what an exporter pay for manufacturing the same product.

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

international trade competition. It is important for the exporter to keep the prices down
 46

keeping in mind all export benefits and expenses. However, there is no fixed formula for

successful export pricing and is differ from exporter to exporter depending upon whether

the exporter is a merchant exporter or a manufacturer exporter or exporting through a

canalizing agency.

Determining Export Pricing

Export Pricing can be determined by the following factors:

• Range of products offered.

• Prompt deliveries and continuity in supply.

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

• Product differentiation and brand image.

• Frequency of purchase.

• Presumed relationship between quality and price.

• Specialty value goods and gift items.

• Credit offered.

• Preference or prejudice for products originating from a particular source.

• Aggressive marketing and sales promotion.

• Prompt acceptance and settlement of claims.

• Unique value goods and gift items.

Export Costing
 47

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

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

every export product.

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

internationally accepted terms which are commonly known as Inco terms

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

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

becomes important for the exporter to gain some knowledge about the foreign exchange

rates, quoting of exchange rates and various factors determining the exchange rates. In this

section, we have discussed various topics related to foreign exchange rates in detail.

Spot Exchange Rate

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

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

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

Forward Exchange Rate

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

for delivery and payment on a specific future date.

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

Credit Risk
 48

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

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

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

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

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

companies.

Poor Quality Risk

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

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

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

lower price. So, it is better to allow an inspection procedure by an independent inspection

company before shipment. Such an inspection protects both the importer and the exporter.

Inspection is normally done at the request of importer and the costs for the inspection are

borne by the importer or it may be negotiated that they be included in the contract price.

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

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

to the same standards is always difficult to reduce.

Transportation Risks
 49

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

continent, goods face many hazards. There is the risk of theft, damage and possibly the

goods not even arriving at all.

Logistic Risk

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

contract of carriage. This contract is drawn up between a shipper and a carrier (transport

operator). For this an exporter may refer to Incoterms 2000

Legal Risks

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

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

exporter's interests are taken care of.

Political Risk

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

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

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

take the necessary steps to prevent loss of business and investment.

Unforeseen Risks
 50

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

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

majeure clause in the export contract.

Exchange Rate Risks

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

Exchange risk can be avoided by adopting Hedging scheme.

Export Risk Management Plan

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

outcomes before they happen and setting up measures that will avoid them. There are six

basic elements of the risk management process:

Establishing the context

Identifying the risks

Assessing probability and possible consequences of risks

Developing strategies to mitigate these risks

Monitoring and reviewing the outcomes

Communicating and consulting with the parties involved

 51

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

For a small export business, an exporter must keep his risk management analysis clear and

simple.

Export Risk Mitigation

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

avoid the risks associated with the export of goods.

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

credits to either the importer or the exporter.

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

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

Guarantees

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

failure to execute the contract after winning the bid.

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

signed.

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

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

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

importer.
 52

• Insurance

o Transportation insurance: Covers goods during transport; degree of

coverage varies.

o Credit Insurance: Protects against buyer insolvency or protracted defaults

and/or political risks.

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

o Foreign exchange risk insurance: Provides a hedge against foreign

exchange risk.

• Hedging

Instruments used to Hedge Price Risk

o Stabilization programs and funds.

o Timing of purchase/sale.

o Fixed price long-term contracts.

o Forward contracts.

INTERNATIONAL INCOTERMS

Incoterms or International commercial terms make trade between different countries

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

Incoterms directly deal with the questions related to the delivery of the products from the
seller to the buyer. This includes the carriage of products, export and import
 53

responsibilities, who pays for what and who has the risk for the condition of the products
at different locations within the transport process.

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

The 13 International Incoterms are:

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

"EXW"- Ex Works

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

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

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

"FCA"- Free Carrier named point

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

Seller: The Seller’s responsibility is to deliver the goods into the custody of the
transporters at defined points. It is important for the chosen place of delivery to have an
impact on the obligations of loading and unloading the goods.
Buyer: The Buyer nominates the means of transport or shipping mode and pays the
shipment charges.
 54

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

"FAS"- Free Alongside Ship

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

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

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

"FOB" - Free On Board

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

Seller: Seller responsible for clear customs dues, quality inspection charges, weight
measurement charges and other export related dues. It is important that the shipment term
in the Bill of Lading must carry the wording "Shipped on Board' it must bear with
signature of transporter or carrier or his authorized representative with the date on which
goods were "Boarded".
Buyer: The buyer indicates the ship and pays freight, transfer expenses and risks is done
when the goods passes or forwarding to the buyers warehouse by rail or ship.
 55

"CFR"- Cost And Freight

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

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

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

"CIF"- Cost, Insurance and Freight

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

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

"CPT"- Carriage Paid To

CPT- Carriage Paid To: Title, risk and insurance cost pass to buyer when delivered to
carrier by seller who pays transportation cost to destination. Used for any mode of
transportation.
This term uses land transport by rail, road and inland waterways. The seller and exporter
are responsible for the carriage of goods to the nominated destination and have to pay
freight up the first carrier.
 56

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

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

"CIP"- Carriage and Insurance Paid To

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

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

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

"DAF"- Delivered At Frontier

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

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

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

DES"- Delivered Ex-Ship

DES- Delivered Ex-Ship: Title, risk, responsibility for vessel discharge and import
clearance pass to buyer when seller delivers goods on board the ship to destination port.
Used for sea or inland waterway transportation.
 57

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

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

DEQ"- Delivered Ex-Quay

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

"DDU"- Delivered Duty Unpaid

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

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

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

"DDP"- Delivered Duty Paid

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

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

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

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

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

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

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

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

correspond or in any way deal with any part in the territory specified unless

requested to do so by the importers.

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

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

importers to deal with.

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

importers by earliest shipping opportunity unless prevented from so doing by

circumstances beyond the former's control.

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

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

this agreement unless any order is received at least one month after notification of

price changes by the exporter to the importer.

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

each year during the currency of this agreement) at the rate of ...... per cent of .......

the F.O.B. value of all orders satisfactorily completed during the ...... months

preceding the dates specified.

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

value of all business satisfactorily completed with the importers during the

currency of this agreement as contribution towards the importer's costs in

publicizing the products covered by this agreement. This allowance is to be settled

by deduction from the manufacturer's invoices to the importers.

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

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

territory specified.

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

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

this agreement.

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

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

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

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

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

they will immediately upon presentation at ......... and retire such drafts net and in

full upon maturity.

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

calendar month and will send to the manufacturer a full market report on the

prospects for sale of the products covered by this agreement every six months.

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

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

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

agreement.

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

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

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

liberty to terminate this agreement without notice in the event of the other party

being in breach of any of the terms and conditions stated herein.

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

months the importers have placed satisfactory orders with the exporters amounting

to not less than Rs. ....... this agreement shall be automatically renewed year after

year provided that in the twelve calendar months immediately preceding the expiry

date satisfactorily business amounting in total to not less than Rs. ....... has been

placed by the importers with the manufacturer.

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

Indian Law in (.............)

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

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

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

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

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

Proper packaging and labeling not only makes the final product look attractive but also

save a huge amount of money by saving the product from wrong handling the export

process.

Packaging

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

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

evaluation, and production of packages. The packaging can be done within the export

company or the job can be assigned to an outside packaging company. Packaging provides

following benefits to the goods to be exported:

• Physical Protection – Packaging provides protection against shock, vibration,

temperature, moisture and dust.

• Containment or agglomeration – Packaging provides agglomeration of small

objects into one package for reason of efficiency and cost factor. For example it is
 62

better to put 1000 pencils in one box rather than putting each pencil in separate

1000 boxes.

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

potential buyer.

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

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

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

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

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

dye-packs, RFID tags, or electronic article surveillance tags, that can be activated

or detected by devices at exit points and require specialized tools to deactivate.

Using packaging in this way is a means of loss prevention.

Labeling

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

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

nationally and internationally standers while using these symbols. Labeling should be in

English, and words indicating country of origin should be as large and as prominent as any

other English wording on the package or label.

Labeling on product provides the following important information:

• Shipper's mark
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• Country of origin

• Weight marking (in pounds and in kilograms)

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

• Handling marks (international pictorial symbols)

• Cautionary markings, such as "This Side Up."

• Port of entry

• Labels for hazardous materials

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

dispose of the package or product. With pharmaceuticals, food, medical, and chemical

products, some types of information are required by governments.

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

labeling. Essential data should be in black and subsidiary data in a less conspicuous

colour; red and orange and so on. For food packed in sacks, only harmless dyes should be

employed, and the dye should not come through the packing in such a way as to affect the

goods. An important aspect about the goods to be exported is compulsory quality control

and pre-shipment inspection. For this purpose, Export Inspection Council (EIC) was set up

by the Government of India under Section 3 of the Export (Quality Control and

Inspection) Act, 1963. It includes more than 1000 commodities which are organized into

various groups for a compulsory pre-shipment inspection. It includes Food and

Agriculture, Fishery, Minerals, Organic and Inorganic Chemicals, Rubber Products,

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Refractoriness, Ceramic Products, Pesticides, Light Engineering, Steel Products, Jute

Products, Coir and Coir Products, Footwear and Footwear Products.

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

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

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

1963. It includes more than 1000 commodities which are organized into various groups for

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

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

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

Products, Footwear and Footwear Products.

ISI Certification

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

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

technical standards, product quality and management system certifications and consumer

affairs. Founded by Professor P.C. Mahalanobis in Kolkata on 17th December, 1931, the

institute gained the status of an Institution of National Importance by an act of the Indian

Parliament in 1959.

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

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

non manufacturing standard ISO 9000.

Benefits of ISI and Agmark Certification

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

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

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

any pre-shipment inspection certificate, provided they are otherwise satisfied that the

goods carry ISI Certification or the Agmark.

In-Process Quality Control (IPQC)

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

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

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

products for which they have been granted IPQC facilities. The final certificate of

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

Self Certification Scheme

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

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

manufacturers of engineering products, chemical and allied products and marine products.
 66

Self-Certification is given on the basis that the exporter himself is the best judge of the

quality of his products and will not allow his reputation to be spoiled in the international

market by compromising on quality. Self-Certification Scheme is granted to the exporter

for the period of one year. Exporters with proven reputation can obtain the permission for

self certification by submitting an application to the Director (Inspection and Quality

Control), Export Inspection Council of India, 11th Floor, Pragati Tower, 26 Rajendra

Place, New Delhi.

ISO 9000

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

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

accepted worldwide as the norm assuring high quality of goods. The current version of

ISO 9000 is ISO 9000:2000.

Documentation categories

Document can be broadly divided into three categories

1. commercial documents

2. Legal or regulatory documents

3. Incentives and assistance claim documents

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Commercial documents

• Performa Invoice

• Letter of credit

• Commercial Invoice

• Packing list

• Bill of lading

1. Performa Invoice

In documentation of exports the first stage is Performa Invoice. The Performa Invoice is
like a quotation in which the terms and conditions, quantity, rates of goods, description of
goods, country of origin, port of loading, port of discharging, final destination, terms of
delivery payment etc. are mentioned. The Performa for this is known as Performa Invoice.

A Performa invoice (sometimes written as pro forma invoice) is little more than a 'pre
advice' or indication of what will stand in the commercial invoice once negotiations have
been completed. Indeed, the perform invoice and the commercial invoice often look
exactly the same, except that it should state clearly "Performa invoice" on this document,
whereas the commercial invoice will state "invoice" or "commercial invoice". The
Performa invoice serves as a negotiating instrument. The initial Performa invoice often
sets the stage for the first round of negotiations if the exporter and importer have not yet
had any real discussions.

The Performa invoice sets the stage for the negotiation process
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Assuming that an importer e-mails you - an exporter - asking you to submit a Performa
invoice (or a quotation) for the supply of 100 pumps according to a set standard. You
would then prepare and submit a Performa invoice to the potential importer outlining a
description of the product, what the price is, what the delivery terms will be, what the
payment terms will be, as well as any other information that may be pertinent to the sale.
Before this, of course, you will have done the costing exercise mentioned above. The
importer will most likely reply to your Performa invoice requesting/negotiating different
requirements such as a lower price, longer terms of payment, different methods of
payment, a different delivery schedule and may even request changes to the product
specifications. You may be required to revisit the design and manufacture of your product,
the costing exercise mentioned earlier, as well as you pricing strategies. You may even
have to find alternative ways of getting your product to the customer and you may need to
carefully rethink issues such as packaging, labeling, insurance, commissions, etc.

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

In other instances where the exporter and importer have met before and have already
discussed and thrashed out an agreement perhaps in a face-to-face meeting, only one final
Performa invoice is necessary to confirm that the two parties are indeed in agreement. If
the importer is satisfied with this final Performa invoice, he/she will request their bank to
issue an L/C on the strength of information stipulated in the Performa invoice. For this
reason, it is essential that the Performa invoice be comprehensive, accurate, clear and
concise. Any errors or misunderstandings will be transferred to the L/C and will cause
problems, frustrations and delays down the line. What is more, the Performa invoice is
also important to the importer for the purpose of obtaining an import permit and foreign
exchange allocation within his country. At the same time, the exporter may use the
Performa invoice and acceptance of the order from the importer to obtain funding to pay
for the manufacturer of the goods concerned.

Details pertinent to the Performa invoice

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

 The document title should clearly state "Performa Invoice"

 The name of the exporter (referred to as the shipper) and their contact details (Tel,
fax, cell, e-mail), including physical (not postal) address
 The name of the importer (referred to as the consignee, meaning the person or firm
to whom the goods are to be sent) and their contact details (Tel, fax, cell, e-mail),
including physical (not postal) address (In the case of transshipment, there may be
an intermediate consignee and their contact details and address should then also be
included on the invoice.)
 If the person or firm buying the goods (the importer) is not the same as the person
or firm to whom the goods are being sent, then you should include both their
contact details and addresses in the Performa invoice
 The name of the person and company to notify once shipment has taken place and
their contact details and physical address (here the contact details such as
telephone, fax and cell number and e-mail address are more important than the
physical address)
 A Performa invoice reference number
 An order number or similar reference to correspondence between the supplier and
importer
 The date of issue of the Performa invoice (the 'quotation date') - quite important
 A complete, detailed and clear description of the goods in question, incorporating
the appropriate HS codes and brand marks if applicable (here the importer may ask
you to remove these codes as they may not be the same in the importing country
and may thus incur additional or higher duties to the importer's detriment because
of their inadvertent misuse)
 The quantity of goods in question, including the number of units/items
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 The packing details, including their external dimensions, cubic capacity, weight,
numbers and contents of each package shipped, and kinds of packaging involved
(pallets, boxes, bags, etc.)
 The grand total price of the goods for the whole consignment
 Where applicable, the unit prices should be indicated - the unit price multiplied by
the number of units/items should be reflected in the line total. The various line
totals (in the case where different items are included in the same commercial
invoice, or where additional services are itemized in the invoice), should add up to
the total price for the whole consignment (also referred to as the 'Grand Total')
 The currency in which the goods will be sold (e.g. US dollars)
 The type and amount of any discount given, where applicable
 The likely delivery schedule and delivery terms
 The payment methods (for example cash in advance, documentary collection, L/C,
etc.)
 The payment terms (for example 30 days on sight)
 The Inco terms to be used (Inco terms 2000 - FAS, CIF, CFR, DDP, etc.)
 Who is responsible for the banking fees and other related costs (insurance and
freight costs are covered by the Inco terms in question)
 What the freight and insurance charges are
 The exporter's banking details
 A declaration of the country of origin of the goods
 The expected country of final destination
 Any freight details such as the port of loading and discharge
 Any additional exporter-provided services that should be added to the invoice to
come to the grand total
 Any transshipment requirements
 The validity of the Performa invoice - that is, when does the offer expire (leaving it
open-ended could be very risky)
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 Any other information relevant to the order

 Make sure the Performa invoice is signed, together with the signature's name
written underneath, with initials, title and position

PROFORMA INVOICE (FOR EXPORT)

EXPORTER: PROFORMA INVOICE NO. & DATE

IEC CODE NO. 059704952

Buyer’s Order No. & Date

Other references G.R.E.1 Form no

Buyer (If other than Consignee)

CONSIGNEE: Country or the origin of Country of final destination

goods

PRE CARRIAGE BY: PLACE OF RECEIPT OF Terms of delivery payment

PRE CARRIER

VESSEL NO. PORT OF LOADING

CIF
PORT OF DISCHARGE FINAL DESTINATION

S. NO. DESCRIPTION OF QTY. RATE (In USD) AMOUNT (In USD)

GOODS
1 DI-750 with their 0 0000.00 00000.00
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specification

OUR BANKERS: -
TOTAL VALUE

AMOUNT CHARGEABLE 00000.00 USD

INSURANCE TO BE BORNE BY ITL UPTO COLOMBO PORT

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

Letter of Credit

After getting the Performa Invoice from the consignor the second step is that the
consignee issued the Letter of Credit to consignor, which is also called L/C. In L/C it
means the confirmation about the payment through the bankers or financial institution on
documented proof of clear dispatch. The mode of realizing secured payment through
financial institution.

In an export trade, the exporter would like to ensure that there is no risk of non- payment.
Usually, the exporter asks the importer to send a letter of credit to him. A letter of credit is
an undertaking by its issuer (usually importer’s bank) that the bill of exchange drawn by
the foreign dealer on the importer will be honored on presentation upon specified amount.
L/C is simply a guarantee by the bank to the foreign dealer (exporter) that their bills up to
a specified amount would be honored. There are three parties to a letter of credit.

 The opener or importer- the buyer who opens the credit.

 The issuer- the bank that issues the letter of credit
 The beneficiary- the exporter in whose favour the letter of credit is opened.
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The mode of bill realization by an organization through financial

institution and the party to whom the consignment is billed through their financial
institution is known as negotiations through letter of credit namely the documents are
routed through one banker to the other banker whose responsibility to make the payment
on behalf of their client. Payment terms i.e. payment in advance, payment through demand
draft, payment through letter of credit, payment at sight, payment after the receipt of
shipping bill etc. proof of dispatch, insurance bill, original bill etc. and other instructions
and documents required are also mentioned in the L/C. Name of the bankers, Currency
Code, Description of goods, Transshipment, Partial Shipment, Pre-shipment etc. are also
mentioned in the letter of credit. In the L/C the consignor dispatches the goods before the
expiry of L/C. Every Consignor has mentioned his terms and conditions for loading the
goods to discharging the goods in the L/C. :

Sight credits

This is an easy enough term to explain. A sight credit or L/C is one which paid upon
presentation of the required documentation (as stipulated in the original L/C) to the issuing
or confirming bank. As exporter, you need to be careful however, as some L/Cs state that
payment will only be made at a specified branch counter of the issuing or confirming bank
(and won't necessarily be paid or transferred directly into your account). The process of
having to go to a particular branch and receive payment and then to transfer this payment
into your account will slow down the payment process and may add further costs to the
overall process. Thus, when working with sight L/Cs (or any L/Cs for that matter) make
sure where payment will be made.

Usance credits

An L/C can specify any credit period that you have negotiated with the importer. A letter
of credit that that incorporates a payment after a given term (e.g. 60 days) is known as a
usance credit (also referred to as a term or acceptance credit). The correct phrase is hat the
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L/C is at usance, meaning that it will come into effect at some future date (also referred to
as maturity).

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

 90 days sight
 120 days from Bill of Lading (B/L) date
 60 days and upon issuing of a FDA (US Food and Drug Administration) clearance

Some of these provisos can have a significant impact on your receiving payment and you
should make yourself fully aware of any such provisos to your L/C. A usance/term credit
will require you, as exporter, to finance the gap between delivery and payment.

Transferable credits

An irrevocable L/C may also be transferable. In the case of a transferable L/C, the exporter
can transfer all or part of his/her rights to another party. Transferable letters of credit are
often used when the exporter is the importer's agent or a middleperson (i.e. export agent)
between supplier and importer, and not the actual supplier of merchandise. With a
transferable letter of credit, the exporter uses the credit standing of the issuing bank and
avoids having to borrow or use his own funds to buy goods from a supplier. Hence, it is a
viable pre-export financing vehicle. Before transfer can be made, the exporter must
contact, in writing, the bank handling the disbursement of funds - the transferring bank.
Transferable L/Cs can only be transferred based on the terms and conditions specified in
the original credit, with certain exceptions. Therefore, it may be difficult to achieve
flexibility and confidentiality with this finance method.

The transferring bank, whether it has confirmed the letter of credit or not, is only obligated
to make the transfer to the extent and in the manner expressly specified in the L/C.
Transferable L/Cs involve specific risks. When a bank opens a transferable letter of credit
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for a buyer, neither party can be certain of who will be the ultimate supplier. Both parties
must rely upon the importer's assessment of the exporter's reputation and ability to
perform. To reduce overall risk and prevent the shipment of substandard goods, an
independent certificate of inspection may be required in the documentation.

For simplicity's sake, many banks prefer single transfer and discourage multiple transfers,
but will do multiple transfers if conditions are right. Partial transfers can also be made to
one or several suppliers if the terms of the original L/C allow for partial shipments. The
processing of this type of letter of credit can become complicated and tricky, requiring
logistics coordination and the highest level of precision. Incomplete and/or ambiguous
information on the transferable letter of credit almost always leads to problems.
Furthermore, the beneficiary of the transferable letter of credit must be available
throughout the entire negotiation process to assist the transferring bank.

Revolving credits

The term "revolving" is used to describe a letter of credit, which, incorporates a condition
whereby the credit amount is to be renewed or reinstated automatically without the need
for a specific amendments to the credit. This type of credit is used when regular trade is
conducted between an exporter and an overseas buyer. A revolving credit can be
irrevocable or confirmed. Although a credit may, in theory, revolve in relation to amount,
in practice this is rare, as it would mean that there might be no limit to the number of times
a specific amount could be drawn. A credit, which revolves in relation to time, is a much
more common form of a revolving credit. For example, a revolving credit could be made
available for an amount of US$ 10 000 per month (irrespective of whether any sum was
drawn during the previous month) with an overall validity of six months. A revolving
credit may be:

Cumulative, i.e. any sum not utilised during the first period is carried over and may be
utilised in the subsequent period.
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Non-cumulative i.e. any sum not utilised during the first period ceases to be available in
subsequent periods.

Back-to-back credits

Back-to-back L/Cs is another common occurrence in the world of international trade.

When an exporter, who is not a manufacturer, but obtains goods from a supplier by acting
as an export agent for the supplier for example, has received an L/C from an importer, the
exporter, in turn, may request his bank to open a L/C in favour of his supplier on the
strength of the existing L/C. These two credits are said to be "back-to-back", that is to say
the one is issued on the security of the other. A bank will only consider opening a second
credit if the same goods are involved in both credits. In terms of the back-to-back L/C, the
exporter is both the beneficiary/exporter of the first credit and the applicant/buyer for the
second credit.

Standby credits

A standby L/C is one which is issued in favour of the exporter for the purpose of "backing-
up" certain specified obligations of the importer. A standby letter of credit requires the
exporter's presentation of documents which indicate that importer has not met the
obligations which the standby letter of credit backs-up. A standby letter of credit,
therefore, is not intended to be drawn upon by the standby letter of credit beneficiary
unless the standby letter of credit applicant does not meet its obligations as specified by
the standby letter of credit

Commercial Invoice

The third step in documentation is Commercial Invoice in which the total payments of
goods are to be finalized by the consignor. In Commercial Invoice the engine / chassis no.,
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No. and kind of packing, description of goods, quantity of goods, rate of goods in Indian
currency as well as US dollars, amount of goods in Indian currency as well as US dollars
are also mention. The Performa of Commercial Invoice is as same as Proforma Invoice. In
Commercial Invoice the terms of delivery payment can also be mentioned. The port of
loading, port of discharge, final destination can also be mentioned. The main difference
between the commercial invoice and the proforma invoice is that the proforma invoice is
like a quotation in where the consignor and consignee may change the price list of the
goods. The Proforma Invoice may be change but once the commercial invoice is
dispatched it cannot be changed. Following is the proforma of Commercial Invoice: -

After the pro-forma invoice is accepted by the importer, the exporter must prepare a
commercial invoice. The commercial invoice is required by both the exporter (to obtain
the necessary export documents to enable the consignment to be exported, to prove
ownership and to enable payment) and importer (who require the commercial invoice to
facilitate the import of the goods into the country in question). In exporting, the
commercial invoice is considered a very important document as it serves as the starting or
initiating document that underpins the rest of the export transaction.

The commercial invoice is essentially a bill (i.e. invoice) from the seller (the exporter) to
the buyer (the importer) describing the parties to the agreement, the goods to be sold, and
the terms involved, as agreed between the exporter and importer. As such, the commercial
invoice is the final bill exchanged between the seller and the buyer. The commercial
invoice will normally be presented on the exporter's letterhead and will be addressed to the
importer. It should contain full details of the consignment, including price and other
related costs, in order to facilitate customs clearance. It must also be signed and dated.
Freight and insurance, when included in the selling price, should be itemized separately as
these charges are not subject to duty in certain countries. It is important that the
commercial invoice clearly differentiates between the dutiable component of the order (the
market value of the order), any other typically non-dutiable charges such as freight and
insurance, and the total invoice value of the order.
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You should be aware that the commercial invoice is used by Customs authorities
throughout the world for assessing Customs duties, inspection purposes, and for the
keeping of statistics. If there is specific information required to appear on the commercial
invoice by the Customs' authorities in the importing country, the importer should advise
you of this. It does no harm, however, just to ask him/her if they don't mention it on their
own. If it later transpires that certain additional information was required, you can at least
say that you did ask!

Customs' and consular invoices

Some countries, however, may require the commercial invoice to be completed on their
own specified forms - such commercial invoices are known as "Customs' invoices" and
may be provided in lieu of or in addition to the standard commercial invoices referred to
above. In addition, a "consular invoice" is required by certain countries. The consular
invoice must be prepared in the language of the destination country and can be obtained
from the country's consulate, and often must be "consularised" (i.e. stamped by an
authorised Consul official in the exporting country).

The following details should appear in the commercial invoice:

The document title should clearly state "Commercial Invoice"

 The name of the exporter (referred to as the shipper) and their contact details (tel,
fax, cell, e-mail), including physical (not postal) address
 The name of the importer (referred to as the consignee, meaning the person or firm
to whom the goods are to be sent) and their contact details (tel, fax, cell, e-mail),
including physical (not postal) address (In the case of transshipment, there may be
an intermediate consignee and their contact details and address should then also be
included on the invoice.)
 79

 If the person or firm buying the goods (the importer) is not the same as the person
or firm to whom the goods are being sent, then you should include both their
contact details and addresses in the commercial invoice
 The name of the person and company to notify once shipment has taken place and
their contact details and physical address (here the contact details such as
telephone, fax and cell number and e-mail address are more important than the
physical address)
 A commercial invoice reference number
 A purchase order number or similar reference to correspondence between the
supplier and importer
 The date of issue of the commercial invoice
 A complete, detailed and clear description of the goods in question, incorporating
the appropriate HS codes and brand marks if applicable (here the importer may ask
you to remove these codes as they may not be the same in the importing country
and may thus incur additional or higher duties to the importer's detriment because
of their inadvertent misuse)
 The quantity of goods in question, including the number of units/items
 The packing details unless provided in a separate packing list, including their
external dimensions, cubic capacity, weight, numbers and contents of each package
shipped, and kinds of packaging involved (pallets, boxes, bags, etc.) - if a separate
packing list is used, reference should be made in the commercial invoice to the
packing list
 The grand total price of the goods for the whole consignment
 Where applicable, the unit prices should be indicated - the unit price multiplied by
the number of units/items should be reflected in the line total. The various line
totals (in the case where different items are included in the same commercial
invoice, or where additional services are itemised in the invoice), should add up to
the total price for the whole consignment (also referred to as the 'Grand Total')
 The currency in which the goods will be sold (e.g. US dollars)
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 The type and amount of any discount given, where applicable

 The likely delivery schedule and delivery terms
 The payment methods (for example cash in advance, documentary collection, L/C,
etc.)
 The payment terms (for example 30 days on sight)
 The Incoterms to be used (Incoterms 2000 - FAS, CIF, CFR, DDP, etc.)
 Who is responsible for the banking fees and other related costs (insurance and
freight costs are covered by the Incoterms in question)
 What the freight and insurance charges are
 The exporter's banking details
 A declaration of the country of origin of the goods
 The expected country of final destination
 Any freight details such as the port of loading and discharge
 Any additional exporter-provided services that should be added to the invoice to
come to the grand total
 Any trans-shipment requirements
 The validity of the commercial invoice - that is, when does the offer expire
(leaving it open-ended could be very risky)
 Any other information relevant to the order
 Make sure the commercial invoice is signed, together with the signature's name
written underneath, with initials, title and position.
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COMMERCIAL INVOICE

EXPORTER: - INVOICE NO. & DATE

IEC CODE NO. 059704952

Buyer’s Order No. & Date

Other references G.R.E.1 Form no

Buyer (If other than Consignee)

CONSIGNEE: - Country or the origin of goods Country of final

destination

Pre-carriage by Place of receipt of pre-carrier Terms of delivery

Vessel no. Port of loading payment
Port of discharge Final destination

Engine/ No. & kind of Description of Qty. Rate Amount

Chassis packing goods In Indian In In Indian In USD
No. USD
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Total Value

Packing list

Packing list is another vital it contain the description of the product. It is used in the

various places along with the invoice. It is a detail that the consignment has been packed

in the following manner and consignment has packed and checked thoroughly. Packing list

contain the following items

1. Customer name and address of the exporter/shipper

2. Name and address of the consignee

3. Notify party (if any)

4. Port of loading
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5. Port of discharge

6. Final destination

7. Invoice No. and Date

8. I.E. Code with date of issue

9. Product name

10. Excise packing no.

11. Pkg no. No. of packages

12. Description of goods

13. Quantity

14. Gross weights (kgs)

15. Net weight

16. Name of the manufacturer

17. Signature of the authorized person

Purchase order number (P.O number)

PACKING LIST
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Exporter: - Invoice No. & Date

International Tractors Ltd.

Buyer’s order no. & Date

Other Reference(s)
Consignee: - Buyer (if other than consignee)

Terms of Delivery Payment

Pre Carriage By Place of Receipt of Pre-
Carrier

Vessel No. Port of Loading

Port of Discharge Port of Delivery

Bangladesh

Components Details Tractors Specification Quantity Identification no.

Description
 85

ANNEXURE OF PACKING LIST

Sr. No. Component Description Details Quantity

Net Weight Gross Weight Size

Total

FOR INTERNATIONAL TRACTORS LTD.

Authorized Signatory
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LEGAL AND REGULATORY DOCUMENT

Besides commercial necessity, documents in the trade have a legal dimension. All

over the world, laws regulating export import trade have been enacted. In some

countries, these regulations are few and are enforced by simple procedures. While

in other countries, the regulations are very many and enforcement procedures are

complex. How ever the basic objectives of this regulation are to account for

movement of goods and foreign exchange, protect economic political cultural and

other interests and implement bilateral and multilateral trade agreement.

Many countries require permission or registration for the firms to operate in the

international business for this purpose documents are prescribed, which are

verified before getting the permission.

In the Indian context a number of document are needed, starting from securing

importer exporter code number from the office of the director general foreign trade

(DGFT) to custom clearance of cargo. Both for export and import main legal

document require are

1. Application for allotment of importer exporter code number by (DGFT)

and the subsequent allotment letter.

2. Permanent accounting number letter issued by the income tax authorities

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3. Registration –cum-membership certificate (RCMC) from the exporter

promotion agencies (export promotion council/commodity board /

development authority / federation of Indian export organization )

4. Insurance premium payment certificate from the insurance company.

5. Exchange control declaration form. SDF

6. Inspection Certificate are Required Under the Export(Quantity Control And

Inspection) Act 1963

7. Shipping bill/ bill of export application to the customs clearance of export

cargo. Similarly, bill of entry is needed for import clearance.

8. Freight payment certificate from the carrier in case freight has been paid

by the exporter

9. Insurance premium payment certificate from the insurance company.

Incentives and assistance claim documents

Export commands a premium in most of the countries in the world. Exporters are either

provided direct incentives or subsidies or are extended export promotion support in many

ways. With the globalization process and active role of WTO, direct incentives are losing

importance. But such support measures as duty drawback and cheap finance continue to

provide to the exporter .natural y for claiming export incentive and support benefits,

documentary claims are made.

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In India apart for export facilities and assistance granted by banks and other institutions

Appointment of a CHA

(Custom house agent) the exporter through the reference of other exporters select the best

CHA from the list of many CHA’S the best one of them which can provide the best

services at the suitable prices services such as

Custom clearance

Transportation

Warehousing

Door delivery

Invoice along with packing list are given to CHA

Registration

Any exporter who wants to export his good need to obtain PAN based Business

Identification Number (BIN) from the Directorate General of Foreign Trade prior to filing

of shipping bill for clearance of export goods. The exporters must also register themselves

to the authorized foreign exchange dealer code and open a current account in the

designated bank for credit of any drawback incentive.

Registration in the case of export under export promotion schemes:

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All the exporters intending to export under the export promotion scheme need to get their

licences / DEEC book etc.

Processing of Shipping Bill Non-EDI:

In case of Non-EDI, the shipping bills or bills of export are required to be filled in the

format as prescribed in the Shipping Bill and Bill of Export (Form) regulations, 1991. An

exporter need to apply different forms of shipping bill/ bill of export for export of duty

free goods, export of dutiable goods and export under drawback etc.

Processing of Shipping Bill - EDI:

Under EDI System, declarations in prescribed format are to be filed through the Service

Centers of Customs. A checklist is generated for verification of data by the exporter/CHA.

After verification, the data is submitted to the System by the Service Center operator and

the System generates a Shipping Bill Number, which is endorsed on the printed checklist

and returned to the exporter/CHA. For export items which are subject to export cess, the

TR-6 challans for cess is printed and given by the Service Center to the exporter/CHA

immediately after submission of shipping bill. The cess can be paid on the strength of the

challan at the designated bank. No copy of shipping bill is made available to

exporter/CHA at this stage.

Quota Allocation
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The quota allocation label is required to be pasted on the export invoice. The allocation

number of AEPC (Apparel Export Promotion Council) is to be entered in the system at the

time of shipping bill entry. The quota certification of export invoice needs to be submitted

to Customs along-with other original documents at the time of examination of the export

cargo. For determining the validity date of the quota, the relevant date needs to be the date

on which the full consignment is presented to the Customs for examination and duly

recorded in the Computer System.

Arrival of Goods at Docks:

On the basis of examination and inspection goods are allowed enter into the Dock. At this

stage the port authorities check the quantity of the goods with the documents.

System Appraisal of Shipping Bills:

In most of the cases, a Shipping Bill is processed by the system on the basis of

declarations made by the exporters without any human intervention. Sometimes the

Shipping Bill is also processed on screen by the Customs Officer.

Customs Examination of Export Cargo:

Customs Officer may verify the quantity of the goods actually received and enter into the

system and thereafter mark the Electronic Shipping Bill and also hand over all original

documents to the Dock Appraiser of the Dock who many assign a Customs Officer for the
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examination and intimate the officers’ name and the packages to be examined, if any, on

the check list and return it to the exporter or his agent.

The Customs Officer may inspect/examine the shipment along with the Dock Appraiser.

The Customs Officer enters the examination report in the system. He then marks the

Electronic Bill along with all original documents and check list to the Dock Appraiser. If

the Dock Appraiser is satisfied that the particulars entered in the system conform to the

description given in the original documents and as seen in the physical examination, he

may proceed to allow "let export" for the shipment and inform the exporter or his agent.

Stuffing / Loading of Goods in Containers

The exporter or export agent hand over the exporter’s copy of the shipping bill signed by

the Appraiser “Let Export" to the steamer agent. The agent then approaches the proper

officer for allowing the shipment. The Customs Preventive Officer supervising the loading

of container and general cargo in to the vessel may give "Shipped on Board" approval on

the exporter’s copy of the shipping bill.

Drawal of Samples:

Where the Appraiser Dock (export) orders for samples to be drawn and tested, the

Customs Officer may proceed to draw two samples from the consignment and enter the

particulars thereof along with details of the testing agency in the ICES/E system. There is

no separate register for recording dates of samples drawn. Three copies of the test memo

are prepared by the Customs Officer and are signed by the Customs Officer and
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Appraising Officer on behalf of Customs and the exporter or his agent. The disposal of the

three copies of the test memo is as follows:-

• Original – to be sent along with the sample to the test agency.

• Duplicate – Customs copy to be retained with the 2nd sample.

• Triplicate – Exporter’s copy.

The Assistant Commissioner/Deputy Commissioner if he considers necessary, may also

order for sample to be drawn for purpose other than testing such as visual inspection and

verification of description, market value inquiry, etc.

Amendments:

Any correction/amendments in the check list generated after filing of declaration can be

made at the service center, if the documents have not yet been submitted in the system and

the shipping bill number has not been generated. In situations, where corrections are

required to be made after the generation of the shipping bill number or after the goods

have been brought into the Export Dock, amendments is carried out in the following

manners.

1. The goods have not yet been allowed "let export" amendments may be permitted

by the Assistant Commissioner (Exports).

2. Where the "Let Export" order has already been given, amendments may be

permitted only by the Additional/Joint Commissioner, Custom House, in charge of

export section.
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In both the cases, after the permission for amendments has been granted, the Assistant

Commissioner / Deputy Commissioner (Export) may approve the amendments on the

system on behalf of the Additional /Joint Commissioner. Where the print out of the

Shipping Bill has already been generated, the exporter may first surrender all copies of the

shipping bill to the Dock Appraiser for cancellation before amendment is approved on the

system.

Export of Goods under Claim for Drawback:

After actual export of the goods, the Drawback claim is processed through EDI system by

the officers of Drawback Branch on first come first served basis without feeling any

separate form.

Generation of Shipping Bills:

The Shipping Bill is generated by the system in two copies- one as Custom copy and one

as exporter copy. Both the copies are then signed by the Custom officer and the Custom

House Agent.

Organizations’ Supporting to Exporters.

In India there are a number of organization and agencies that provides various types of

support to the exporters from time to time. These export organizations provides market

research in the area of foreign trade, dissemination of information arising from its
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activities relating to research and market studies. So, exporter should contact them for the

necessary assistance.

Export Promotion Councils (EPC)

Export Promotion Councils are registered as non -profit organizations under the Indian

Companies Act. At present there are eleven Export Promotion Councils under the

administrative control of the Department of Commerce and nine export promotion

councils related to textile sector under the administrative control of Ministry of Textiles.

The Export Promotion Councils perform both advisory and executive functions. These

Councils are also the registering authorities under the Export Import Policy, 2002-2007.

Commodity Boards

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

Government of India for purposes of export-promotion and has offices in India and

abroad. There are five statutory Commodity Boards, which are responsible for production,

development and export of tea, coffee, rubber, spices and tobacco.

Federation of Indian Export Organisations (FIEO)

FIEO was set up jointly by the Ministry of Commerce, Government of India and private

trade and industry in the year 1965. FIEO is thus a partner of the Government of India in

promoting India’s exports. Address: Niryaat Bhawan, Rao Tula Ram Marg, Opp. Army

Hospital. Research & Referral, New Delhi 110057

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Indian Institute of Foreign Trade (IIFT)

The Indian Institute of Foreign Trade (IIFT) was set up in 1963 by the Government of

India as an autonomous organization to help Indian exporters in foreign trade management

and increase exports by developing human resources, generating, analyzing and

disseminating data and conducting research.

Address: B-21 Kutub Institutional Area, Mehrauli Road, New Delhi-110016

Indian Institution of Packaging (IIP)

The Indian Institute of Packaging or IIP in short was established in 1966 under the

Societies Registration Act (1860). Headquartered in Mumbai, IIP also has testing and

development laboratories at Calcutta, New Delhi and Chennai. The Institute is closely

linked with international organizations and is recognized by the UNIDO (United Nations

Industrial Development Organization) and the ITC (International Trading Centre) for

consultancy and training. The IIP is a member of the Asian Packaging Federation (APF),

the Institute of Packaging Professionals (IOPP) USA, the Institute of Packaging (IOP) UK,

Technical Association of PULP AND Paper Industry (TAPPI), USA and the World

Packaging Organization (WPO).

Address: B-2, MIDC Area, P.B. 9432, Andheri (E), Mumbai 400096.

Export Inspection Council (EIC)

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The Export Inspection Council or EIC in short, was set up by the Government of India

under Section 3 of the Export (Quality Control and Inspection) Act, 1963 in order to

ensure sound development of export trade of India through Quality Control and

Inspection.

Address: 3rd Floor, ND YMCA, Cultural Centre Bldg., 1, Jai Singh Road, New Delhi-

110001.

Indian Council of Arbitration (ICA)

The Indian Council for Arbitration (ICA) was established on April 15, 1965. ICA provides

arbitration facilities for all types of Indian and international commercial disputes through

its international panel of arbitrators with eminent and experienced persons from different

lines of trade and professions.

Address: Federation House, Tansen Marg, New Delhi-110001

India Trade Promotion Organisation (ITPO)

ITPO is a government organisation for promoting the country’s external trade. Its

promotional tools include organizing of fairs and exhibitions in India and abroad, Buyer-

Seller Meets, Contact Promotion Programmes, Product Promotion Programmes,

Promotion through Overseas Department Stores, Market Surveys and Information

Dissemination.

Address: Pragati Bhawan Pragati Maidan, New Delhi-10001

Chamber of Commerce & Industry (CII)

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CII play an active role in issuing certificate of origin and taking up specific cases of

exporters to the Govt

Federation of Indian Chamber of Commerce & Industry (FICCI)

Federation of Indian Chambers of Commerce and Industry or FICCI is an association of

business organisations in India. FICCI acts as the proactive business solution provider

through research, interactions at the highest political level and global networking.

Address: Federation House, Tansen Marg, New Delhi-110001

Bureau of Indian Standards (BIS)

The Bureau of Indian Standards (BIS), the National Standards Body of India, is a statutory

body set up under the Bureau of Indian Standards Act, 1986. BIS is engaged in standard

formulation, certification marking and laboratory testing.

Address: 9, Manak Bhavan, Bahadur Shah Zafar Marg, New Delhi-110002

Textile Committee

Textile Committee carries pre-shipment inspection of textiles and market research for

textile yarns, textile machines etc.

Address: Textile Centre, second Floor, 34 PD, Mello Road, Wadi Bandar, Bombay-400009

Marine Products Export Development Authority (MPEDA)

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The Marine Products Export Development Authority (MPEDA) was constituted in 1972

under the Marine Products Export Development Authority Act 1972 and plays an active

role in the development of marine products meant for export with special reference to

processing, packaging, storage and marketing etc.

Address: P.B No.4272 MPEDA House, pannampilly Avenue, Parampily Nagar, Cochin-

682036

India Investment Centre (IIC)

Indian Investment Center (IIC) was set up in 1960 as an independent organization, which

is under the Ministry of Finance, Government of India. The main objective behind the

setting up of IIC was to encourage foreign private investment in the country. IIC also

assist Indian Businessmen for setting up of Industrial or other Joint ventures abroad.

Address: Jeevan Vihar, 4th Floor, Parliament Street, New Delhi-110001

Directorate General of Foreign Trade (DGFT)

DGFT or Directorate General of Foreign Trade is a government organisation in India

responsible for the formulation of guidelines and principles for importers and exporters of

country.

Address: Udyog Bhawan, H-Wing, Gate No.2, Maulana Azad Road, New Delhi -110011

Director General of Commercial Intelligence Statistics (DGCIS)

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DGCIS is the Primary agency for the collection, compilation and the publication

of the foreign inland and ancillary trade statistics and dissemination of var

various types of commercial informations.

Address: I, Council House Street Calcutta-700001,

Important schemes of export

1. DUTY FREE

2. ADVANCE LICIENCE

3. DEPB SCHEME

4. DRAW BACK SCHEME

5. EXPORT ORIENTED UNIT

6. NO FOREIGN EXCHANGE INVOLVED

7. SEZ (SPECIAL ECONOMIC ZONE)

DUTY FREE

Means that the exporter will not get any benefit from the DGFT

Advance License

Means that the exporter will issue a bond to the DGFT that he require a product to import to

manufacture a new product. And he will export that newly manufacture product.
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DEPB SCHEME

Duty Entitlement passbook scheme means that the exporter will get an certain amount of

benefit for IMPORT from the DGFT (under the license issued by the DGFT)

DRAWBACK SCHEME

Means that the exporter will be refund a cash transfer from PNB to exporter account

EXPORT ORIENTED UNIT

Means that the exporters are provided with certain benefits to increase the exports

PROCEDURE OF TRACTORS EXPORT FROM INDIA

International tractor limited is one of largest exporter of tractors to various countries of the
world

Step 1:

Invoice and packing list are prepared by the exporter and is send to the custom house
agent for filling the document s in the customs
 102

Step 2:

From the detailed invoice and packing list, the C.H.A will file the papers in the C.M.C

Two kind of filling can be done by the C.H.A

1. On line filing

2. Hand Written Document Filing

Step 3:

C.M.C will issue a checklist for the verification of the C.H.A SO that he should check the
detailed filed by him.

Step 4:

CHA verify the details and sign the check list that the detailed are ok.

Step 5

Shipping Bill No. Is issued by the C.M.C

Step 6:

Now the shipping bill will display on the screen of the superintendent, the superintendent
will verify the checklist and other details and forward it to the Assistant Commissioner.

Step 7:

Assistant commissioner will release the shipping bill and display for marking or goods
arrival.

Step 8:

Inspector will inspects the goods and forward it to the superintendent for inspection. If
valve is more than 5lakhs than transfer it to the AC otherwise the superintendent will give
LET EXPORT order.

Step 9:
Now the role of custom is finished by issuing the following copy
Exporter copy the exporter send this copy to the importer
Exchange control copy sends to the bank
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Export promotion copy kept by the exporter

DEPB COPY Is deposited in the DGFT for issue of
license
DEPB DECLARATION Is deposited in the DGFT for issue of
license
SDF FORM
TR 1 sends to shipping line
TR2 sends to shipping line

Step10.
TR1 and TR2 copy is hand over to the shipping line. With all the custom clearances.

Step11.
Clearing agent hand over all custom documents to the office now the export department
Now the export department will prepare a B/L instructions send it to the shipping line
along with a
Photocopy of EP copy, measurement copy, invoice and packing list.

Now the goods are stuffed into the container along with custom seal and line seal no.
Now the container
Will be railed out and sent to the vessel loading port. From the port the container is
transferred to the
Importing country.
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