Export Marketing

EXPORT MARKETING (ENTRY STRETEGY)

INTRODUCTION

WHAT IS Export marketing?

Marketing is defined as using all of the resources of the organization to satisfy customer needs for a profit. The difference between export marketing and domestic marketing is simply that it takes place across national borders. This means that you are faced with barriers to trade that you will not have encountered before, such as differing languages, politics, laws, governments and cultures. You may need to account for getting the product half-way across the globe to distant markets and pay the import duties imposed on these products by the importing country. You will also need to deal with the logistical and documentation problems surrounding exports. These are just some of the problems you will face.

Export marketing also involves preparing an offering that will entice the foreign buyer and customer. This offering comprises a product that is offered at a certain price and that is made available – distributed – to the foreign customer. At the same time, the offering is communicated – or promoted – to the buyer using certain communication or promotion channels. These elements – the product, price, distribution (also referred to as the place) and promotion – are called the marketing mix.

The features of export marketing includes the following

1) It is a process - Export marketing is a process of planning and implementing the production, and distributing of goods and services, it consists of various activities such as branding, packaging, advertising etc.

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2) Identification and satisfaction of consumer’s needs & wants- The heart of marketing is the identification of consumer needs and wants. The exporter must constantly try to find out the problems or needs and wants of the foreign buyer, so export marketing adopts a total consumer oriented approach in the foreign markets.

3) Flow of goods and services – Export marketing involves flow of goods and services across the national boundaries.

4) Large scale operations – Export marketing is carried in bulk quantities so as to derive the benefits of large scale selling such as in respect of transportation, handling etc.

5) Prominence of multinational – Export marketing in dominated by MNC’S. At present MNC’S from USA, EUROP and JAPAN play a dominant role in foreign trade. They are in a position of develop world wide contracts through their network of branches / offices / subsidiaries. These companies are in a position to carry on a large scale operation in foreign trade more efficiently and economically.

6) Tariff and non –tariff barriers – Export trade is subject to tariff and non tariff barriers , these are restrictions imposed mostly by importing countries , so as to restrict imports every export firm should have a close study of various trade barriers imposed by different countries , so as to carry on its export trade more efficiently .

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7) Presence of trading bloc’s - Certain nations of particular region come together to farm customs union or trading bloc’s for their mutual benefit and economic development the main purpose of such bloc is to eliminate trade barriers among member nations and they may impose external tariff and non-tariff barrier on non member’s .the exporter should have knowledge of the regulation of such trading blocs. The powerful trading blocs are NAFTA (north American free trade area) EC (European community) and ASEAN (association of south east Asian nation)

8) International marketing research – Knowing more about customer, dealer and competitor is a must not only in the domestic market but also in the export markets.

9) International forum - International trade is regulated to a great extent by international forum such a general agreement on tariff and trade (GATT). Now world trade organization (WTO).exporters from all over the world should have through knowledge of the rules regulation and principals of such forums.

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20 steps of export marketing

Step1:

Those who are interested in export- import business need to apply to the director general foreign trade regional office for getting importer-exporter code number. This is true for any individual or company willing to undertake export or import from India.

Step2:

One has to resister with the concerned export promotion council for example- in the case of garments, it is essential to obtain registration cum-membership certificate (RCMC) from the apparel export promotion council, registration is essential for obtaining various permissible benefits given by the government.

Step3:

With the completion of these formalities. The exporters can go in for procuring their export order.

Step4:

With export order in hand they start manufacturing or buy the goods from manufacturing

Step5:

Once manufacturing is over , the exporter make arrangements for quality control and obtain a certificate from the inspector of quality control confirming their quality.

Step6:

Exportable are then dispatched to parts, airports for transit.

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Step7:

With dispatch of goods, the export firm has to apply an insurance company for marine lair insurance cover.

Step 8:

After completion of these formalities, the contract the clearing and forwarding agent for storing the goods in warehouse, uses . The forwarding agent comes out with a document called shipping bill, required for allowing shipment by the custom authority.

Step 9 :

The clearing and forwarding (c and f ) agent submits the shipping bill in the customs house for verification .the customs appraised examines the documentation.

Step 10:

The C and F agent also submits a copy of the verified shipping bill to the shed superintendent and obtains certain order for exports.

Step 11:

There after for loading exports into ships or aircraft ,the C and F agent . present the shipping bill to the preventive officers who oversee the transit procedure

Step-12:

After loading goods in to the ship the captain of the ship issuer a receipt know as ‘ mate’s receipt’ to the ship superintendent of the port . The shed superintendent calculates port charges and bills the C and F agents for it.

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Step-13

When port payments are made the C and F agent takes delivery of mates receipt and requests port or airport authority to prepare bill of loading or airway bill.

Step-14

After obtaining bill of loading, the C and F agent sends these documents to the respective exporters.

Step-15

On receipt of the documents, the exporter makes an application to the relevant chamber for getting certificates of origin, stating that the goods originated from India.

Step-16

Exporters also send shipping documents to the importers stating date of shipment, name of vessel etc. Moreover, it is essential to send certain other documents like bill of loading ,custom invoice and packing list, to their foreign counterparts.

Step-17

The exporter now presents all important documents at bank. The bank scrutinizes this document against the original letter of credit / purchase order. The bank has to follow UCPDC/URC guidelines.

Step-18

The exporters’ bank sends all important documents to the foreign importers bank. This presents the documents to the importer.

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Then the importer accepts , the bill if it is a usance bill and pay before the due date.

Step-19

After receiving the requisite document , the importer makes the payments through .the bank, the money then gets credited in the name of the exporter here. Simultaneously, adockment called the GR from is sent to Reserve Bank of India.

Step-20

As a last step exporters apply for benefit from various duty drawback schemes which subsequently get credited in their account.

Need and Importance of Export-market

No country in the world, whether highly developed or not is self sufficient in every respect, more ever every country want to be more and more economically developed and in order to do so, it has to resort to foreign trade e.g. export and import, export trade bring in valuable foreign exchange which can be utilized to pay for imports and at the same time enhances. Foreign exchange reserve of the country.

The need and importance of export marketing can be explained from the viewpoint of the country and that of business organization

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NEED AND IMPORTANCE OF EXPORT MARKET

A)Review point of nation B)from view point of business orgnisation

Foreign exchange International relations Balance of payments Reputation in the world Employment

opportunities Financing of development

plans Research and

development efficiency Optimum utilization of

resources Spread effect Higher standard of living

reputation optimum production

optimum production spreading of risk export obligation keeping a live old improvement in

organizational improvement in product

standards liberal imports higher prices financial and non –

financial benefits

A) From view point of nation –

1) Foreign exchange – Export bring valuable foreign exchange to the exporting country which is mainly required to pay for import of capital goods raw material spares and components , also foreign exchange is required to pay for the import of techniques how and service external debts

2) International relation – All countries of the world want to proposer in a peace full environment, one way to maintain political and cultural .it make relation with other countries is through international trade 3) Balance of payment –

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A country external economic strength depends upon its balance of payments position .since export brings foreign exchange, it helps a country to solve and improve its balance of payments position.

4) Reputation in the world – A country which Is fore most in the fields of export, commands a lot of respect, goodwill and reputation from other countries for instance, Japan commands international reputation due to its high quality product and in the export markets.

5) Employment Opportunities : Export trade calls for more production more production opens the doors for more employment opportunities not only in the export sectors but also in allied sectors like banking, insurance etc.

6) Financing of development plans: Export earnings can be a source of financing development plans through the import of capital goods and sophisticated technology, thus the foreign exchange generated through exports can be utilized for planned economic development of the country.

7) Research and development: There is a continuous pressure on the export industry to improve technology and production system to retain its competitive edge in foreign markets. The fruits of Rs D would benefit the consumers not only in the overseas markets but also in the domestic market.

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8) Optimum utilization of resources: A country which passes a abundant resources in form of Raw Material or finished goods in exports of domestic requirements can be effectively export as much as there can be optimum use of resources.

9) Spread effect:

Because of export industry , other sectors also expands such as banking, transport, insurance, consultancies at the same number of ancillary industry come into existence to support the export sector

10) Higher Stander of living: Export trade calls for more production which in turn increases thus employment opportunities.More employment means more power as results of which people can enjoy better goods, which in turn improve standard of living of people

B) From view point of business organization

1) Reputation : A business organization which under takes export business can bring from to its name not only in the export market and but also in the home market i.e Sony , Glaxo, Tata etc . enjoy international reputation .

2) Optimum Production :

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It may be possible that the demand for a company ‘s product falls short of its optimum production capacity in the home country however the company can exported its excess production there by the production can be carried on up to the optimum production capacity and the company benefited from the economies of large scale production .

3) Spreading of risk : When a business organization face depression in the domestic market (low demand) it will be naturally suffer losses .However the company can spread its risk of losses by selling products of good price in the export market .

4) Export Obligation: Certain company need to import machinery and other requirement to compensate for imports the government of India, has imposed compulsory export obligation so as to narrow down the gap between rising imports and slowing moving export. Therefore such companies need to export to honor export obligation imposed on them.

5) Keeping alive old brand: A product brand may have reached the stage of declined in the home market but the same product may have good demand in the foreign market so in that case the exporters would benefits by exports.

6) Improvement in organization efficiency: Export marketing requires consent improvement in skills and technique not only in marketing

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aspects, but also production aspects thus research, training and experiences in dealing with foreign market unable the export to improve the overall organization efficiencies .

7) Improvement in product standards: An export firm has to maintain and improve standards in quality unable to international standards as a result of which consumer in the home market as well as in the international market can better quality of goods.

8) Liberal imports: Export organization can import capital goods spares components and raw materials liberally against export obligation .Such import not only improve the quality of goods produced but also lower down the cost of production.

9) Higher prices: Export can fetch higher prices as compared to domestic markets for instance, prices of old and petroleum product in the home markets of gulf countries are comparatively less than what they earn from the foreign markets, and as a result of this exporters can earn higher profits.

10) Financial and non –financial benefits: India exporters can avail of a number of facilities from the government and from banks to enhance exports.

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Functions of export marketing:The functions of export marketing omsist of those activities, which are necessary for smooth flow of goods from the producers or sellers to the purchasers or consumers.

The following are the functional areas of marketing:International marketing research: It is one of the important areas of the marketing, through international research. The exporter come to know about the likes, dislikes, tastes, and busing behavior of the foreign consumers marketing research is must in export markets due to various factors such as diversities in social, cultural, economic and political background of distant markets Thus, marketing research will help to identify the right export for the company’s products.

Export production: The fruits of marketing research and R&D can be put into use by producing the goods and services as per the needs

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and requirements of foreign markets, strict activity control must be maintained while producing export goods. Goods and services should confirm to international standards, and then only the export firm will survive and succeed in the overseas market.

Export packaging : Packagings for exports must be given due consideration proper and attractive packing not only protect the products but also sell. The product in the market , this is because attractive packaging has advertising valve, if required assistance can be taken from Indian institute of packaging located at Marol- Andheri Mumbai.Export pricing: It is one of the important aspects of export management; a proper pricing strategy spells a firm’s survival and success not only in the home market but also in the export market, while fixing prices, the exporter cost, demand and competitive environment prevailing in the export market.

Advertising: Now – A day, advertising is considered to be one of the most effective ways of promoting goods and services. It makes consumers aware of the qualities, uses and benefits of the products that are available in the market. The exporter can make use of various media of advertising such as news papers; magazines trade journals, trade directories, televisions etc. for selling in foreign markets.

Sales promotion:

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Apart from advertising, there are various sales promotion techniques such as sale on installment basis, free gifts, contests, offering discounts etc effective selling through sales can also increases sales in the overseas market.

Export risk management: Export risk involve risk to the export cargo in transit, which can be insured with marine insurers, A more important risk is that credit offered to overseas buyer , the government of India has set up export. Credit guarantee corporation (ECGC) to provide credit insurance to protect exporters from consequences of payment risks.

Financing: In order to carry out various marketing activities such as marketing research sales promotion etc, there is a need for funds, the funds can be obtained as advances from the customers, credit from suppliers, loans from institutions etc.

Branding: Branding is one of the important marketing function it refers to give name to the product the purpose of branding is to give a separate. Identity to the product, which is distinct from that of t competitor. At times catchy brand name can sell the product in the market. Care must be taken to see that the brand name so selected not have negative meanings in foreign languages.

Transporting-

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It refers to moving goods from one country to another normally the exporter make of transporting export goods i.e.- sea transport and air transport .the nature of goods ,cost transport ,buyers requirement and such other factors efficient export marketing requires the right choice of transport

Factors affecting export marketing - The major environment factor effecting export marketing are as follows

Economic factors-

The economic condition prevailing in the export markets must be considered the general demands, market recession rate of inflation, the level of economic development etc. Must be considered while designing a marketing mix .the exporter must enter in such export market were the economic factors are favorable and conductive to export trade.

Political factors –

The political factors also play on important role in the export marketing system. The action policies of the governments of the exporting country as well as that of the importing countries affect export trade.These factors include

Changes in government policies from time to time Relation of importing countries with India. Stability of the government in the importing countries etc.

Consumer factors-

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Its affects export marketing to great extent . those includes the age group , income range , occupation ,buying partners, buying behavior, tastes , likes –dislikes and preferences . the exporter should have good knowledge of this customers characters according the right type of products can be produce to suit the requirements to the target markets .

Geographic factors –

The exporter must also consider geographical factor such as area, to geography, climate and seasons. Again the availability of transport and port facilities must be studied.

Social factors:-

The social factors are also to be considered. The attitude of the buyer and the society are to be taken note of, the exporter has to know about the social values and life styles of the target consumer’s different life styles and attitude of the society may require different marketing mixes and marketing programmers.

Technological factors:-

The level of technology in the export markets also affects export marketing, for instance technology advanced; nations enjoy higher standards of living. They expect high quality goods .the exporter must considered the degree of technology advancement of the importing countries and accordingly supply the goods that are in tune with the requirement of the customers.

Trade factors:-

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The trade factors also must be considered by the exporter .the exporter must under stand that it is trade factors that finally sell the product in the market .one need to have good distributors to sell goods in the export market . The trade factors include

The channel of distribution The availability of distributors. The services provided by the distributors etc.

Difficulties / problems in export marketing:

Export marketing is restricted to some extent due to certain difficulties or drawback such as.

1) Difficulties of distance:- Export markets are spread over long distances naturally, the exporter will find difficult in catering to long distance markets. Longer the distance the more will be the transport cost. There are also possibilities delays in supply.

2) High risk and uncertainties: The risk may be both political and commercial .The political risk involves government instability, war, civil disturbances etc. The commercial risk involves insolvency of the buyer and so on certain political and commercial risk are insured by export credit guarantee corporation (ECGC).

3) Diverse languages, customs and traditions:

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The export markets differ in languages customs and traditions, these diversities therefore he has to be selective, and he should deal in only such markets. Where he can easily handle or overcome difference or diversities.

4) Different currencies, weights and measures: Different countries in the world have there own system of weights and measures. Some countries may measure in pounds others in kilograms or in some other measures. Again every, country has its own currency. Each currency has heavy fluctuation in exchange note.

5) Customs formalities: There are number of formalities in export of goods from one country to another, again there are customs formalities for the buyers i.e. customs formalities of the importing country.

6) Trade Barriers: Export trade is subject to a number of tariff and non-tariff barriers various importing countries do impose avariets of taxes and other formalities. This creates difficulty for the smooth flow of goods and services among countries .However efforts are now being a world trade organization (WTO) to reduce and simplify a number of trade barriers.

7) Foreign exchange regulation -

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The exporter has to give a declaration to the reserve bank of India (RBI) that they will realize the full value of exports within a period of six months i.e.180days

8) Documentation formation- There are a number of documents to be prepared in export trade.

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ENETR INTO EXPORT CONTRACT

Export contract is based on terms & conditions between seller and buyer in order to avoid dispute, it is necessary to enter in to an export contracts with the overseas buyer, for this purpose, export contract should be carefully drafted incorporating comprehensive but in precise terms, all relevant and important condition of the trade dealThere should be not be any ambiguity regarding the exact specification of goods and terms of sale including export price ,mode of payment , storage and distribution ,methods ,type of packaging part of shipment ,delivery schedule etc . The different aspect of an export contract are enumerated as under

Quality of product .standards ,specific quality Packing ,labeling and marking Terms of payment In advance /at sight/L/C Terms of delivery /shipment (by seal/AIR)-FOB /CIF

/CNF Discount /commission if any Statutory requirement of importing &exporting

countries.

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REQUIRE PROCEDUER (REG.) TO START EXPORT

The exporter should have an organization to look after the export of his goods /services .the exporter has to register his organization with a number of authorities, before he proceeds to export. These registrations include the following:

1) To form a company –

The first and the foremost question you as a prospective exporter has to decide is about the kind of business organization needed for the purpose .you have to take a crucial decision as to whether a business will be run as a proprietary concern or a partnership firm or a company. The proper selection of organization will be depend upon

Your ability to raise finance Your capacity to bear the risk. Yo0ur desire to exercise control over the business Nature of regulatory frame work applicable to you

2) OPENING BANK ACCOUNT –

The exporter should open a current account in a schedule commercial bank, which is authorized by RBI to deal in foreign exchange to open a bank account for getting registration in port EDI (electronic data inter changing system).

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3) OBTANING INCOME TAX ACCOUNT NUMBER (PAN)-

The exporter should make an application to the income tax authorities to allot him a permanent account number (PAN) .for time being ,for a year or so the income tax authorities allots a temporary number called “general index registration (GIR) number .the PAN is subsequently allotted to the firm in due course of time.

4) TO REGISTER WITH DGPT FOR IEC NUMBER-

REGISTRATION WITH PORT

NO export or import shall be made by the registered /head office of the complaint to the licensing authority under whose jurisdiction, the registered office in case of other falls in the “Aayat Niryaat form”.

Only one IEC would be issued against a single PAN number .the licensing authority concerned shall be issue an IEC number. a copy of such IEC number shall be application form.

A consolidated statement of IEC numbers issued by the licensing authority shall be sent to the offices of the exchange control department of the RBI .an IEC number allotted to an applicant shall be valid for all its branches /division /units /factories . Where an IEC number is lost or miss placed, the issuing authority may consider request for grant of a duplicate copy of IEC number, if accompanied by an affidavit. If an IEC holder does not wish to operate the allotted number, he may surrender the same by informing the issuing authority shall immediately cancel the same and electronically transmit is to DGFT for transformation to the customs and regional licensing authority (RLA).

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5) To register with EPC for RCMC number –

Registration with port

An exporter may register and become a member of export promotion council (EPC) on being admitted to membership. The applicant shall be granted with registration .cum-membership certificate (RCMC)

Of the EPC concerned, subject to such terms and conditions as may be specified in this behalf, in case an exporter desire to get registration as manufacture exporter, he shall furnish evidence to that effect.

Prospective / potential exporters may also, on application, register and become an associate member of an export promotion council. an exporter desiring to obtain a registration cum-membership certificate (RCMC) shall declares his main line of business in the application which shall be made to the export promotion council (EPC) relating to that line of business . However a status holder has the option to obtain RCMC from federation of Indian exporter’s organization (FIEO)

Not with standing anything stated above exporters of drugs & pharmaceuticals shall obtain RCMC

From pharmexcil only -

In addition ,an exporter has the option to obtain an RCMC from FIEO or any other EPC .if the products exported by him related to those EPC’S , if the export product issue that is not covered by any EPC ,RCMC in respect thereof may be issued by FIEO .

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6) REGISTRATION WITH SALES TAX AUTHORITIES –

Exporters are exempted from payment of sales tax exemption can be available only when the exporter has sales tax registration number.

CENTRAL EXCISE REGISTRAION –

For the administration of the central excise act 1944and the central excise rules, 2002(referred to as the “said rules “) manufacturers of excisable goods with some exceptions, are required to get the premises registered with the central excise department before commencing business.

LEGAL PROVISIONS-

AS PER SECTION 6 of the central excise act 1944, any prescribed person who is engaged in –

A) The production and manufacture or any process of production or manufacturer of any specified included in to the central excise tariff act 1989(5 of 1986) or,

B) The whole sale purchases or sale (whether on his own account or as broker or commission agent) or the storage of any specified goods. To the central excise tariff act 1985(5 of 1986) shall get himself registered with the proper office in such manner as may be prescribed. For all the practical purposes, the legal provisions contained in rule 9 of the central excise rules, 2002 govern the scheme of registration .This rules is reproduced the below.

Registration:1) Every person, who produces, manufacturers’ carries on trade,

holds private store- room or warehouse or otherwise uses

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excisable goods, shall get registered, provided that a registration obtained under rule 174 of the central excise rules, 2001 shall be deemed to be as valid as the registration made under this sub rule for the purpose of these rules.

2) The board may by notification and subject to such conditions or limitations as may be specified in such notification, specify persons who may not require such registration.

3) Registration under sub rule (1) shall be subject to such conditions safe guards and procedure as may be specified by notification by the board.

Conditions, Safeguards and procedures for registrations.The central board of excises customs has specified certain conditions, safeguards and procedures for registration of a person by notification under central excise rule 9 in the specified cases.1) Application for registration-

Every person specified under sub-rule (1) of rule 9, unless exempted from doing so by the board under sub rule 9 shall get him self registered with the (jurisdictional deputy or assistant commissioner of central excise ) by applying in the form specified .

2) Registration of different premises of the same registered person - If the person has more than one remises requiring registration, separate registration certificate shall be obtained for each of such premises.

3) Registration certificate and number –

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It shall be granted within 7 days of the receipt of duly complete application.

4) Transfer of business – When a registered person transferred his business to another person, the transferee shall get himself registered a fresh.

5) Change in the constitution – Where a registered person is a firm or company or association of persons, any change in the constitution of firm company or association shall be intimated to the jurisdictional central excise officer within 30dayes of such change.

6) De- registration – Every registered person who cases to carry on the operation for which he is registered ,shall de-registered himself by making a declaration in the form and depositing his registration certificate with super indent of central exercise

7) REVOCATION OR SUSPENTIO OF REGISTRATION – A registration certificate granted under this rule may be revoked or suspends by the assistant commissioner of central excise or the deputy commissioner of central excise, if the holder of such certificate or any person in his employment is found to have committed branch of any of the provisions of the act or the rules made there under or has been convicted of an offence under section 161, read

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with section 109 or with section 116 of the Indian penal code (45of 1860)

CENTRAL EXCISE CLEARENCE - Export goods are exampled from central excise duty. However necessary clearance has to be obtained either in the two ways:

a) Removal of goods under bond – Under this system. The exporter does not pay excise duty but export the goods under supported by a bank guarantee for a sum equivalent to the excise duty chargeable on such goods

b) Export under rebate - Under this system, the manufacturer initially pays the duty and the claims the refund

Export Pricing and Costing

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Export pricing should be difference ate from export costing price is what we offer to the customer. Cost is the price that we paslincur for the product. Product includes our profit margin,’ cost includes only expenses we have incurred export pricing is the most important tool for promoting sales and facing international competition. The price has to be realistically worked out taking into consideration all export benefits and expenses. However there is no fixed formula for successful export pricing. It will differ from exporter to exporter depending upon whatever the exporter is a merchant exporter or a manufacturer. Exporter or exporting through a canalizing agency. You can still be competitive with higher prices but with better delivery package or other advantages.

Your prices will be determined by the following factors.

Range of products offered Prompt deliveries and continuity in supply. After sales services in product like machine tools , consumer

durables Product differentiation and brand image Frequency of purchase. Presumed relationship between quality and price. Specialist value. Goods and gift items Credit offered. Preference or prejudice for products originating from particular

source Aggressive marketing and sales promotion Prompt acceptance and settlements of claims Unique value goods and gift items

Export costing –

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Some of the major cost items of cost areas as under

Material cost Labour cost Direct expenses Factory overheads Sales and distribution cost Packaging cost Cargo handling charges Freight charges Marine insurance Commission to agent abroad

Export costing is basically cost accountants 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

INCO TERM’S –

The decision for exports depends upon the terms of delivery. These are severed such trade terms that are used at international level. Inco terms describe the most commonly used term of trade in commercial contracts and are published by international chambers of commerce (ICC). These terms aim to standardize the terminology used international trade.

The aim is to eliminate doubts between buyer and seller by:

Defining the method of delivery of the goods by the seller Stating exactly what charges are included in the seller’s price. Defining the responsibilities of the parties to the contract of sale

for the arrangement of insurance, shipping and packing the use of Inco terms are applied to-

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A transaction, it must be incorporatal by specific references in the contract.Inco terms (various costs incurred during shipment)Maritime and inland waterway transport only:

Free Alongside ship(FAS) Free on board (FOB) Cost & Freight(C&R) Cost Insurance and Freight (CIF) Delivery Ex-quay(DEQ) Delivery Ex-Ship (DES)

Multimodal Mode of Transport

Free carrier (FC) Carriage paid to (CPT) Carriage and Insurance paid to (CIP) Delivered at frontier (All modes) Deliver Duty paid (All modes)

Export finance

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The exporter may require short term, medium term or long term

finance depending upon the types of goods to be exported and the

terms of statement offered to overseas buyer.

The short-term finance is required to meet “working capital” needs.

The working capital is used to meet regular and recurring needs of a

business firm. The regular and recurring needs of a business firm refer

to purchase of raw material, payment of wages and salaries, expenses

like payment of rent, advertising etc.

The exporter may also require “term finance”. The term finance or

term loans, which is required for medium and long term financial

needs such as purchase of fixed assets and long term working capital.

Export finance is short-term working capital finance allowed to an

exporter. Finance and credit are available not only to help export

production but also to sell to overseas customers on credit.

PRE-SHIPMENT FINANCE

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MEANING:

Pre-shipment is also referred as “packing credit”. It is working capital

finance provided by commercial banks to the exporter prior to

shipment of goods. The finance required to meet various expenses

before shipment of goods is called pre-shipment finance or packing

credit.

DEFINITION:

Financial assistance extended to the exporter from the date of receipt

of the export order till the date of shipment is known as pre-shipment

credit. Such finance is extended to an exporter for the purpose of

procuring raw materials, processing, packing, transporting,

warehousing of goods meant for exports.

IMPORTANCE OF FINANCE AT PRE-SHIPMENT STAGE:

To purchase raw material, and other inputs to manufacture goods.

To assemble the goods in the case of merchant exporters.

To store the goods in suitable warehouses till the goods are

shipped.

To pay for packing, marking and labeling of goods.

To pay for pre-shipment inspection charges.

To import or purchase from the domestic market heavy machinery

and other capital goods to produce export goods.

To pay for consultancy services.

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To pay for export documentation expenses.

TYPES OF PRE-SHIPMENT FINANCE

Packing credit Advance against cheques /draft etc representing advance

payments.

Preshipment finance is expected in the following forms:Packing credit in Indian rupeesPacking credit in foreign currency

Requirement for getting packing credit –

This facility is provided to an exporter who satisfies the following criteria

A ten digit importer-exporter code number allotted by DGFT.

Exporter should not be in the caution list of RBI. If the goods to be exported are not under OGL (open

general license).the exporter should have the required license permit to export the goods.

Packing credit facility can be provided to an exporter on production of the following evidence to the bank.

1. formal application for release the packing credit with undertaking to the effect that the exporter would be ship the goods within stipulated due date and submit the relevant shipping documents to the banks within prescribed time limit .

2. Firm order or irrevocable I/C or against cable /fax message exchange between the exporter and the buyer.

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3. Licensed issued by DGFT if the goods to be exported fall under the restricted or canalized category. If the item falls under quota system. Proper quota allotment proof needs to be submitted.

Eligibility -

Pre shipment credit is only issued to that exporter who has the export order in his own name .however ,as an exception ,financial institution can also grant credit to a third party manufacturer or supplier of goods who does not have export orders in their own name .

In this case some of the responsibility of meeting the export requirements have been out sourced to them by the main exporter .in other cases where the export order is divided between two or more than two exporters, pre-shipment credit can be shared between them.

QUANTUM OF FINANCE -

The quantum of finance is granted to an exporter against the LC or an expected order. The only guideline principle is the concept of need based finance. Banks determine the percentage of margin, depending on factors such as:

The nature of order. The nature of the commodity. The capability of exporter to bring in the requisite contribution.

Different stages of pre shipment finance

Appraisal and sanction of limits-

Before making any an allowance for credit facilities banks need to check the different aspects like product profile ,political and economic details about country .apart from these things , the bank

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also looks in to the status report of the prospective buyer , with whom the exporter proposes to do the business . To check all these information, banks can seek the help of institution like ECGC or international consulting agencies like dun and street etc.

The bank extended the packing credit facilities after ensuring the following:

a) The exporter is a regular customer, a bona fide exporter and has a goods standing in the market.

b) Whether the exporter has the necessary licenses and quota permit (as mentioned earlier) or not.

c) Whether the country with which the exporter wants to deal is under the list of restricted cover countries (RCC) or not.

DISBURSEMENT OF PACKING CREDIT:

After proper sanctioning of credit limits, the disbursing

branch should ensure:

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To inform ECGC the details of limit sanctioned in the prescribed format

within 30 days from the date of sanction.

a) To complete proper documentation and compliance of the terms of

sanction i.e. creation of mortgage etc.

b) There should be an export order or a letter of credit produced by

the exporter on the basis of which disbursements are normally

allowed.

POST-SHIPMENT FINANCE

MEANING:

Post shipment finance is provided to meet working capital

requirements after the actual shipment of goods. It bridges the

financial gap between the date of shipment and actual receipt of

payment from overseas buyer thereof. Whereas the finance provided

after shipment of goods is called post-shipment finance.

DEFENITION:

Credit facility extended to an exporter from the date of shipment of

goods till the realization of the export proceeds is called Post-

shipment Credit.

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IMPORTANCE OF FINANCE AT POST-SHIPMENT STAGE:

To pay to agents/distributors and others for their services.

To pay for publicity and advertising in the over seas markets.

To pay for port authorities, customs and shipping agents charges.

To pay towards export duty or tax, if any.

To pay towards ECGC premium.

To pay for freight and other shipping expenses.

To pay towards marine insurance premium, under CIF contracts.

To meet expenses in respect of after sale service.

To pay towards such expenses regarding participation in exhibitions

and trade fairs in India and abroad.

To pay for representatives abroad in connection with their stay

board.

Financing for various types of export Buyer’s credit

Post shipment finance can be provided for three types of export:

Physical exports :

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Finance is provided to the actual exporter or to the

exporter in whose name the trade documents are

transferred.

Deemed export :

Finance is provided to the supplier of the goods which

are supplied to the designed agencies.

Capital goods and project exports:-

Finance is sometimes extended in the name of overseas

buyer. The disbursal of money is directly made to the

domestic exporter.

Types of post shipment finance

The post shipment finance can be classified as:

1) Export bill purchased /discounted.

2) Export bill negotiated

3) Advance against export bills sent on collection basis.

4) Advance against export on consignment basis

1. Export Bills Purchased /Discounted. ( DP& DA Bills)

Export bills (Non L/C Bills) is used in terms of sale contract/ order

may be discounted or purchased by the banks. It is used in

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indisputable international trade transactions and the proper

limit has to be sanctioned to the exporter for purchase of export

bill facility.

2. Export Bills Negotiated ( Bill under L/C)

The risk of payment is less under the LC, as the issuing bank

makes sure the payment. The risk is further reduced, if a bank

guarantees the payments by confirming the LC .Because of the

inborn security available in this method, Bank often become

ready to extend the finance against bills under LC.

However, this arises two major risk factors for the banks:

1. The risk of nonperformance by the exporter, when he is

unable to meet his terms and conditions. In this case, the issuing

banks do not honor the letter of credit.

2. The bank also faces the documentary risk where the issuing

bank refuses to honour its commitment .So, it is important for

the negotiating bank and the lending bank to properly check all

the necessary documents before submission.

3. Advance Against Export Bills Sent on collection Basis

Bills can only be sent on collection basis, if the bills drawn under

LC have some discrepancies. Sometimes exporter requests the

bill to be sent on the collection basis, anticipating the

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strengthening of foreign currency. Banks may allow advance

against these collection bills to an exporter with a concessional

rates of interest depending upon the transit period in case of DP

Bills and transit period plus usance period in case of usance

bill .The transit period is from the date of acceptance of the

export documents at the banks branch for collection and not

from the date of advance.

4 .Advance Against Export on Consignments Basis

Bank may choose to finance when the goods are exported on

consignment basis at the risk of the export for sale and eventual

payment of sale proceeds to him by the consignee. However, in

this case bank instructs the overseas bank to deliver the sale

proceeds by specified date, which should be within the

prescribed date even if according to the practice in certain

trades a bill for part of the estimated value is drawn in advance

against the exports.

For any amount: Working Group.

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Upto Rs. 50 crores: Scheduled Commercial Banks.

Upto Rs. 200 crores: Exim Bank.

Above Rs. 200 crores: Working Group.

SERVICES BIDS / CONTRACTS

On Cash Terms

Upto Rs. 5 crores: Scheduled Commercial Banks.

Upto Rs. 10 crores: Exim Bank.

Above Rs. 10 crores: Working Group.

BANKING TRANSACTION IN EXPORTS

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When ever there is international trade and inflow /outflow of foreign exchange, there must be some methods of settlements for the transaction. The need for settlement leads to opening of accounts by banks in other countries which are called NASTRO and VOSTRO account as under

NOSTRO-

NOSTRO Account means “Our account with you. The account that a home bank maintains with a foreign bank is known as NOSTRO account.

For example, Dhaka Bank’s US Dollar account maintained with City Bank NA New York, USA is NOSTRO Account of Dhaka Bank

When a bank in India issues a draft payable abroad in USA is drawn on bank of new York .the draft when presented for payment in new York is debited to the NOSTRO account bank of India and paid to the beneficiary .similarly all payment proceeds are received through this account and all payment of import transaction are paid through this account. Bank in India are permitted freely to open one or more such account as per their requirement with their branches or correspondence banks abroad .opening of such accounts must be advised to RBI by a separate letter.

VOSTRO ACCOUNT:

VOSTRO Account means “your account with us”. The account maintained by a foreign bank is known as VOSTRO account. We can term NOSTRO account when referred to its account holder (foreign bank) by home bank as VOSTRO account. For example, State Bank of India’s taka account maintained with Dhaka Bank is a VOSTRO account of Dhaka Bank.

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Any draft issued by bank of New York and drawn on bank is paid to beneficiary by bank of India to the debit of this account.

MIRROR- The banks in India maintained the replica of the NOSTRO account they maintain with banks abroad and the same are called MIRROR account helps in reconciliation of the account.

Foreign exchange market –There are three types of markets

1) Merchant markets – It is the retail market with involves the transaction of customer with authorized dealers (AD’S)

2) Inter bank market - The market where transaction takes place between authorized dealers (AD’S) within the country.

3) International market – The market where transaction takes place between banks’s in different countries The base for all these type of markets is need to square off the position of authorized dealers (AD’S).authorized dealers are permitted to retain balances only up to a certain level.

BANK FORMALITISE IN THE RALISATION OF EXPORT PROCEEDS

Payments against export should be realized only through authorized dealers (commercial bank allowed to deal in foreign exchange). No payment can be received even through bank draft and cheques unless exempted otherwise by RBI

Following are the steps in realizing export proceeds-

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1) Approaching bank – After dispatch of goods either by sea, or by air, the exporter should approach his bank (Authorized dealers) with a formal request to realize proceed from the foreign buyer.It is obligatory to submit the shipping documents to an authorized dealer within 21 days of the date of shipment in India the exporter have to realize the full value of exports within 180 days from the date of shipment. Where it is not possible to realize the sale proceeds within the prescribed period.

2) Submission of documents to the bank – The exporter should submit the following documents

i) Bill of exchange (first and second )ii) Full set of bill of leading /airways bill in case of air

shipment.iii) Commercial invoice copies iv) Packing list v) Certificate of origin vi) Insurance policy vii) Inspection certificate viii) Shipping bill exchange control copy ix) Other relevant documents

3) Latter of indemnity - If the exporter wants immediate payment from his bankers then his bankers may provide advance payments only when the exporter signs an indemnity letter. The implications or indemnity letter is that in the event of refusal of payment by the issuing bank in respect of LC. Then

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the negotiating bank can ask the exporter to pay back money advanced along with necessary charges.

DISPATCH OF DOCUMENTS – Before the transaction of documents for negotiation /collection the bank examine them through with reference to the terms and conditions of the buyer’s order .letter of credit and the laws relating to foreign exchange control .if after scrutiny , the documents are in order the bank dispatches them to the overseas branch /correspondent branch as early as possible . The overseas branch of the bank then submits the documents to the importer bank and the importers bank hands it over to importer.Methods of realization – For purpose of receiving payments against export countries have been divided in to groups.1) Asian clearing union (ACU) –

Consisting of Bangladesh, Burma, Pakistan, Iran and Srilanka. The payment is allowed in rupees from the account of bank situated in any country of this group

2) All other countries, where the payment is allowed in any permitted currency.

Processing of exchange control- After realizing the export proceeds , the exporter ‘s bank makes necessary entries in the account of the exporter the amount mentioned in the original exchange control copy of shipping bill and the amount realized by the bank must match.

Promotional Measures

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Assistance to States for Infrastructure Development of Exports (ASIDE)

The State Governments shall be encouraged to participate in promoting exports from their respective States. For this purpose, Department of Commerce has formulated a scheme called ASIDE.

Suitable provision has been made in the Annual Plan of the Department of Commerce for allocation of funds to the states on the twin criteria of gross exports and the rate of growth of exports.

The States shall utilise this amount for developing infrastructure such as roads connecting production centers with the ports, setting up of Inland Container Depots and Container Freight Stations, creation of new State level export promotion industrial parks/zones, augmenting common facilities in the existing zones, equity participation in infrastructure projects, development of minor ports and jetties, assistance in setting up of common effluent treatment facilities, stabilizing power supply and any other activity as may be notified by Department of Commerce from time to time.

Market Access Initiative (MAI)

The Market Access Initiative (MAI) scheme is intended to provide financial assistance for medium term export promotion efforts with a sharp focus on a country and product.

The financial assistance is available for Export Promotion Councils, Industry and Trade associations, Agencies of State Governments, notified from time to time, Indian Commercial Missions abroad and other eligible entities as may be

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A whole range of activities can be funded under the MAI scheme. These include market studies, setting up of showroom/ warehouse, sales promotion campaigns, international departmental stores, publicity campaigns, participation in international trade fairs, , brand promotion, registration charges for pharmaceuticals and testing charges for engineering products etc. Each of these export promotion activities can receive financial assistance from the Government ranging from 25% to 100% of the total cost depending upon the activity and the implementing agency, as indicated in the detailed guidelines.

Marketing Development Assistance (MDA)

The Marketing Development Assistance (MDA) Scheme is intended to provide financial assistance for a range of export promotion activities implemented by export promotion councils, industry and trade associations on a regular basis every year.

As per the revised MDA guidelines with effect from 1st April,2004 assistance under MDA is available for exporters with annual export turnover upto Rs 5 crores.

These include participation in Trade Fairs and Buyer Seller meets abroad or in India, export promotion seminars, etc

Further, assistance for participation in Trade Fairs abroad and travel grant is available to such exporters if they travel to countries in one of the four Focus Areas, such as , Latin America, Africa, CIS Region, ASEAN countries, Australia and New Zealand.

For participation in trade fairs, etc, in other areas financial assistance without travel grant is available.

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Meeting Legal expenses for Trade related matters

Financial assistance would be provided to deserving exporters on the recommendation of Export Promotion Councils for meeting the cost of legal expenses relating to trade related matters

Towns of Export Excellence

A number of towns in specific geographical locations have emerged as dynamic industrial clusters contributing handsomely to India’s exports. It is necessary to grant recognition to these industrial clusters with a view to maximizing their potential and enabling them to move higher in the value chain and tap new markets.

Selected towns producing goods of Rs. 1000 crore or more will be notified as Towns of Exports Excellence on the basis of potential for growth in exports. However for the Towns of Export Excellence in the Handloom, Handicraft, Agriculture and Fisheries sector, the threshold limit would be Rs 250 crores.

Common service providers in these areas shall be entitled for the facility of the EPCG scheme.

The recognized associations of units will be able to access the funds under the Market Access Initiative scheme for creating focused technological service.Further such areas will receive priority for assistance for rectifying identified critical infrastructure gaps from the ASIDE scheme.

The notified towns of export excellence are listed in Appendix 41.

Brand Promotion and Quality

The Central Government aims to encourage manufacturers and exporters to attain internationally accepted standards of quality for their products. The Central Government will extend support and

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assistance to Trade and Industry to launch a nationwide programmed on quality awareness and to promote the concept of total quality management.

Test Houses

The Central Government will assist in the modernization and up gradation of test houses and laboratories in order to bring them at par with international standards.

Quality Complaints/ Disputes

The Regional Sub-Committee on Quality Complaints (RSCQC) set up at the Regional Offices of the Directorate General of Foreign Trade shall investigate quality complaints received from foreign buyers.

Trade disputes affecting trade relations

If it comes to the notice of the Director General of Foreign Trade or he has reason to believe that an export or import has been made in a manner that

i) Is gravely prejudicial to the trade relation India with any foreign country.

ii) Is gravely prejudicial to the interest of other persons engaged in exports or imports;

iii) Has brought dispute to the country

The director general of foreign trade may take action against the exporter or importer concerned in accordance with the provision of the act, the rules and orders made there under.

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VISHESH KRISHI UPAJ YOJANA (SPECIAL AGRICULTURAL PRODUCE SCHEME)

Objective -

The objective of the scheme is to promote export of fruits, vegetables, flowers, minor forest produce, and their value added products, by incentivizing exporters of such products

Entitlement -

Exporters of such products shall be entitled for duty credit scrip equivalent to 5% of the FOB value of exports for each licensing year commencing from 1st April, 2004. The scrip and the items imported against it would be freely transferable

Imports allowed -

The Duty Credit may be used for import of inputs or goods including capital goods, as may be notified, provided the same is freely importable under ITC (HS).

Imports from a port other than the port of export shall be allowed under TRA facility as per the terms and conditions of the notification issued by Department of Revenue.

Cenvat/ Drawback-

Additional customs duty/excise duty paid in cash or through debit under Vishesh Krishi Upaj Yojana shall be adjusted as CENVAT Credit or Duty Drawback as per rules framed by the Department of Revenue

.

Special Provision-

Government reserves the right in public interest, to specify from time to time the export products which shall not be eligible for calculation of entitlement.

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CASE STUDY

TRADE OF INDIA –NEWZELAND (2001-2008)

1. Bilateral Trade, Economic and Cooperation Relations

This chapter looks at the existing India-New Zealand bilateral trade relationship as well as touching on other aspects of the bilateral relationship. It considers the extent or strength of current bilateral trade linkages and the stability of such linkages.

Bilateral trade statistics reported by any two countries can at times differ. These differences arise for two reasons. First, when exports are required to travel through an intermediary country en route to their final destination, they may be counted as an export to that intermediary country instead. Second, the countries’ customs authorities may classify specific products differently which will create statistical discrepancies. The solution to this problem used in this study is to use import statistics from each country, which are generally agreed to be more accurate. Therefore in this study, Indian exports are described using New Zealand import data and vice versa.

1.1. Goods

Historically the bilateral merchandise trading relationship between India and New Zealand has been under-developed. The recent trading performance is beginning to change this position. Since 2002, bilateral merchandise trade has nearly tripled in size from US$168.2 million to US$469.9 million, with an average growth rate of 23.5% per year. With improved market access, as a result of a CECA/FTA, there is great potential for the relationship to continue to develop.

The under-developed nature of the merchandise trading relationship is highlighted by the low relative importance in mutual trade between the two countries. Bilateral imports from each country account for less than 1 % of each country’s total imports. In the 2007 calendar year,

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India’s exports to New Zealand accounted for 0.64 % of total goods coming into New Zealand. This had increased from 0.57 % in 2003. In 2007, New Zealand’s exports into India accounted for 0.15 % of all goods entering India. This had grown from 0.11 % in 2003. These increases show that the importance of trade with each country is increasing. It also implies that trade between the two countries is growing at a faster rate than each country’s total trade.

New Zealand’s sustained economic growth has fuelled demand for imports from India, which have grown at an average rate of 17.0 % per year between 2002 and 2007. Growth in India’s exports to New Zealand has been consistently higher than from New Zealand’s other sources of imports. This underscores the potential for this part of the trading relationship to be expanded further.

1.1.1. India’s Exports to New Zealand

India’s export profile to New Zealand is diverse. The key products at the HS4 level are diamonds, linen, medication, jewellery, and monument stone. On average, each year between June 2004 and July 2007, these products collectively only accounted for US$34.0 million, out of India’s average exports to New Zealand during this period of US$162.3 million. These five products account for less than 20% of India’s exports to New Zealand. This is a good indicator of the broad profile of India’s exports.

However levels do not tell the whole story. Between 2002 and 2007, in terms of trade weighted growth, a number of other products also contributed significantly to the growth in India’s exports to New Zealand. Growth in diamonds and jewellery contributed 12.7% of India’s total export growth to New Zealand over that period. The next 8 most important products contributed an additional 20.1% towards the total export growth.

In addition, a number of other products have a lower level of trade, but have shown strong and consistent growth between 2002 and

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2007. These products include sewing machines, plastic plates, sheets and film, base metal fittings and mountings, and semiconductors. The persistent growth of these products demonstrates that the growth of India’s exports to New Zealand is driven by a broad range of India’s export interests. This shows great promise for the bilateral trading relationship as it continues to develop.

India’s recent spectacular economic performance has been well documented. This performance has led to a large increase in India’s demand for imports. This increased import demand has generated opportunities for New Zealand exporters. India’s imports from New Zealand have grown at an average rate of 31.8% per year between July 2002 and June 2007. The largest year on year gain was between 2005 and 2006, where New Zealand’s exports grew 87.1%. With India’s economic performance forecast to remain robust, there are prospects for further growth for New Zealand’s exports although access/regulatory/SPS issues will significantly influence the ability for New Zealand firms to seize these opportunities.

1.1.2. New Zealand’s Exports to India

Over the last five years massive growth in the export of coal and wood in the rough has changed New Zealand’s export profile markedly. Since July 2002, exports of coal and wood in the rough have grown at an average rate of 81.8%, and 39.4% per year respectively. As New Zealand is naturally abundant in these products, there is scope for this trend to continue.

Prior to that period of change, New Zealand exported a reasonably diverse range of products to India. Typically, the products which New Zealand exports are unprocessed goods and machinery which contribute to production processes within India. New Zealand’s key exports are in coal, wood in the rough, wool, butter, and scrap aluminium. Exports in these products have accounted for 73.8% of New Zealand’s total exports to India on average since 2002. As India continues to grow, there will be a large degree of mutual benefit, as

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New Zealand will continue to be able to supply vital intermediate and final products to help drive India’s economy.

In terms of products’ direct share of New Zealand’s export growth to India, energy related products are the dominant contributor. The growth in this area has accounted for nearly half of New Zealand’s total export growth to India since 2002. Wood in the rough, wool, scrap zinc and scrap aluminium have also contributed significantly to the growth in exports.

While the share of growth has been dominated by coal, wood in the rough and wool, there are a number of other products which have exhibited very strong growth between 2002 and 2007. Scrap aluminium, scrap iron, and paper have on average, doubled each year since 2002, and are now among New Zealand’s ten largest exports.

There are a number of products which are not yet dominant in New Zealand’s export profile, but have grown strongly and consistently since 2002. The exports of these products are now at the level which products like paper, scrap iron, and scrap aluminium were at in 2002. A number of these are more highly processed, technical products such as parts for electrical apparatuses, liquid pumps, medical instruments, and semi-conductors. This ongoing development highlights the diversity of products which New Zealand has the potential to export to India.

These numbers indicate the considerable potential for New Zealand to contribute to India’s ongoing economic performance through the export of vital intermediate, and final consumer products. Continued development of the merchandise trading relationship could deliver substantial benefits to both countries.

1.2. Services

Services trade represents an increasingly important channel of bilateral economic engagement between India and New Zealand. However, due to the inherent complexities and confidentiality issues associated with measuring bilateral services trade, it is difficult to

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obtain accurate official statistics to quantify the extent of the relationship.

Accordingly, we use secondary sources of data and industry statistics as indicators to describe the changes in the bilateral relationship, such as the number of student and visitor arrivals recorded.

As outlined in chapter 2, section 2.3.2.2, New Zealand’s global services exports are centred on tourism and education. New Zealand’s services export profile to India follows this same pattern.

The India-New Zealand education relationship is one that has been steadily growing. Since 2003 the number of Indian students studying in New Zealand has increased from approximately 800 students to over 4,000. The number of Indian students in New Zealand is projected to surpass 5,000 by 2009.

Tourist numbers have also been growing strongly in both directions. In the year ended March 2008, the number of Indian visitors to New Zealand was near 23,000. This was a 35% increase from five years ago from the year ended March 2003. New Zealanders visiting India in the year ended March 2008 numbered 26,500 people. This has increased nearly 300% since the year ending March 2003.

While the tourism and education sectors are significant contributors to the bilateral trade in services, and have exhibited strong growth, trade in other services sectors is also growing. Areas of interest include, among others, a wide range of professional and business services, environmental services and transport services.

1.3. Investment

1.3.1. Indian FDI Inflows

In terms of countries investing in India, New Zealand ranks 39th and accounts for about 0.13% of FDI into India. In the same period, actual cumulative FDI inflows from all countries amounted to US $ 67.33 billion. New Zealand ranks 55th and cumulative inflows (net of American Depository Receipts (ADRs) and/or Global Depository

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Receipts (GDRs)) from New Zealand were US$ 8.5 million (0.01%), excluding FDI inflows received for acquisition of existing shares (up to 1999), stock swapped, RBI’s-NRI schemes & advance pending for issue of shares.

The top sectors attracting FDI approvals (from August 1991 to December 2007) from New Zealand were: the services sector (57.65%), food processing industries (28.37%), telecommunications (12.83%), boilers and steam generating plants (0.52%), and electrical equipments (including computer software & electronics) (0.36%). Top sectors attracting FDI inflows (from January 2000 to December 2007) from New Zealand were: power (90.79%), computer software & hardware (4.44%), and trading (2.17%).

1.3.2. New Zealand FDI Inflows India’s outward investment to New Zealand has remained

meagre. However, in more recent years New Zealand’s FDI inflows from India in the forms of Joint Ventures (JVs) and Wholly-owned Subsidiaries (WOS) have increased from a miniscule US $ 0.13 million (1996-2002) to US$ 2.745 million (2007-2008).

1.3.3. Technical Collaborations

In the last 16 years, India has engaged in nearly 8000 projects involving technical collaborations with other nations. New Zealand has been granted 20 technical collaborations since 1991. Top sectors attracting technology from New Zealand are electrical equipment (including computer software & electronics) and metallurgical industries.

Leading information and communications technology (ICT) solutions company CMC Limited is partnering with a New Zealand university to take New Zealand’s innovative ICT technologies and capabilities to the world. Tata owned CMC ltd has signed a Memorandum of Understanding (MoU) with Massey University’s e-Centre in Auckland,

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New Zealand. The two have jointly established a technology centre that will give New Zealand companies a direct pipeline into CMC’s domestic and international distribution and sales channels. Known as the CMC Technology Export Centre (CMCTEC), the New Zealand-based venture ensures products are suited to market needs before they are passed to CMC, with the first offering – performance-based software developed by Auckland company QLBS – already sent to CMC. The current focus is on securing Indian domestic sales for three NZ companies – the most advanced of these is Auckland-based email spam prevention specialist, SMX Ltd.

1.4. Other Areas of Cooperation

Drawing on a shared history, India and New Zealand have much in common - the English language, parliamentary democracy, a broadly similar legal system with an emphasis on the rule of law, Commonwealth ties, a fondness for cricket and the strong links developed by Sir Edmund Hillary.

The relationship between India and New Zealand is growing and expanding. Underpinning the bilateral trade and economic profiles described above sits a wide range of bilateral cooperation.

In recent years there has been an increase in high level visits between the two countries reflecting the greater importance both sides are now placing on the relationship.

India’s economic growth has been matched by an expansion in New Zealand’s trade and economic relationship with India. There is potential for growth in tourism, education, business interaction, timber exports, export of niche products and consultancy services. There has been solid growth in the number Zealand has also served to strengthen people to people ties.

India's "Look East" policy and its participation in regional institutions such as the East Asia Summit (EAS) and ASEAN Regional Forum mean that India and New Zealand are increasingly interacting in the regional context. India’s interest extends to the Pacific Island states and, in

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2003, India became a dialogue partner of the Pacific Forum. Our common membership of the EAS has also provided a high level platform for bilateral dialogue, including on climate change. Other areas where out interests coincide include our interest in United Nations reform, Commonwealth matters, human rights, the Alliance of Civilisations process, counter-terrorism and other transnational issues.

1.4.1. Treaties and Arrangements

There are a number of bilateral treaties in force between New Zealand and India the earliest of which date from 1963. These cover a range of areas including air services, double taxation and wool purchasing. In terms of bilateral arrangements of less-than-treaty status, there are arrangements on areas including agriculture, plant quarantine, information technology, education, and the recent Joint Understanding on Science and Technology Cooperation signed during the then Minister Anderton’s visit to India in March 2008.

1.4.2. Business Linkages

The India/New Zealand Joint Business Council (JBC) was established in 1988. The JBC brings together the business sectors of both countries for a stock taking and also looks ahead to future possibilities. In New Zealand, the India Trade Group is also actively promoting the bilateral economic relationship.

Officials met in New Delhi in June 1987 for the first meeting of the New Zealand/India Joint Trade Committee (JTC), which was established under the New Zealand/India Trade Agreement signed during the visit of Prime Minister Rajiv Gandhi to New Zealand in October 1986. The purpose of the JTC is to discuss and negotiate bilateral trade policy and trade access issues.

The JTC and the JBC last met in Wellington in late October 2007. At that meeting of the JTC, Indian and New Zealand officials agreed on the Terms of Reference (TOR) for this Joint Study.

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It would be appropriate to review these institutional arrangements following the conclusion of a CECA/FTA or even during the course of a negotiation. Suggestions have been made elsewhere in this study for additional mechanisms to promote greater understanding, information exchange, dialogue and cooperation in particular areas of the trade and economic relationship. Other proposals may arise during the negotiation in relation to how aspects of the agreement are to be implemented. As new mechanisms and processes are established, either during or following a negotiation, the JTC could operate as an umbrella institution to monitor, discuss and coordinate these subsidiary mechanisms and processes. It might be necessary to alter the frequency and composition of JTC meetings, to ensure it can perform these roles adequately. The relationship between the JBC and these new mechanisms and processes might also need to be considered. These are matters that should be discussed further at the next meeting of the JTC.

1.4.3. Defence

New Zealand has modest but warm defence links with India. Most bilateral defence interaction occurs between the two navies. Most recently HMNZS Te Mana visited Mumbai in August 2008. Earlier, HMNZS Te Mana and Endeavour visited Port Blair in the Andaman Islands in May 2007 following exercises with Indian naval ships; HMNZS Te Mana visited Kochi and Mumbai ports in June 2006; and the Indian ship Tabar visited Auckland in 2006.

New Zealand has useful defence interaction with India in the ASEAN Regional Forum, through the defence dialogue process and through the Forum’s range of confidence-building measures.

1.4.4. Diaspora

India has passed legislation that allows dual citizenship or “overseas citizenship of India” to citizens of a number of countries including New Zealand. Within New Zealand there are some 120,000 citizens of

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Indian descent/origin, many of whom have achieved considerable prominence in New Zealand society.

1.4.5. Cultural Linkages

The Asia New Zealand Foundation has organised highly successful Diwali Festivals to celebrate the Indian festival of lights, since 2002. The Diwali Festivals are well-attended and have become one of the largest annual events in the Auckland and Wellington calendars. The New Zealand International Festival of the Arts has also featured Indian artists and in each of the last three years there have been Indian entries in the World of Wearable Art show in Wellington. There is also now an annual World of Wearable Art event taking place at the New Zealand High Commission in New Delhi in conjunction with the Fashion Design Council of India.

In May 2003, as part of India’s celebration of the 50th Anniversary of the ascent of Everest, Sir Edmund Hillary was honoured by the Indian government. A plaque was presented to Sir Edmund Hillary by the Indian Prime Minister, Atal Bihari Vajpayee, and two roads in front of the New Zealand High Commission in New Delhi were named after Sir Edmund Hillary and Tenzing Norgay. In January 2008, Sir Edmund Hillary was posthumously awarded the “Padma Vibhushan”, India’s second highest civilian honour.

New Zealand and India also have strong cricketing relations. New Zealand and Indian cricket teams play each other frequently at various international arenas and also tour each others’ countries regularly. In 2009, the Indian cricket team will tour New Zealand. A former New Zealand opening batsman, John Wright, was the first international coach of the Indian cricket team. The new Indian 20/20 League, in which New Zealand players participate, has attracted wide interest in New Zealand and worldwide.

In October 2008, the Commonwealth “Youth” Games will be held in Pune attracting the participation of some 60 young New Zealand competitors. In 2010 India will host the Commonwealth Games.

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1.4.6. High Level Visits

Ministerial visits in both directions are a valuable way of enhancing political connections and bringing the relationship to the forefront. On the New Zealand side, since the former Prime Minister’s visit to India in October 2004, there has been increased Ministerial interaction: the former Minister of Education, Hon Trevor Mallard (2005 and 2006), former Minister of Trade and Defence, Hon Phil Goff (2005 and April 2007), former Deputy Prime Minister, Dr Cullen (October 2007) and former Minister of Local Government and Youth Affairs, Hon Nanaia Mahuta (December 2007). The most recent visit was by the former Minister of Agriculture and Forestry, Hon Jim Anderton who led a forestry delegation to India in March 2008. The New Zealand Governor-General and Commander-in-Chief His Excellency the Hon Anand Satyanand visited India from 8-14 September 2008.

Visits by Indian ministers have included a 2006 visit by the Minister of Finance, Chidambaram and two visits in 2007, by the Minister of Textiles and the Minister of Panchayati Raj (Local Government). The Government of India was represented at the state funeral for Sir Edmund Hillary in January 2008 by the Minister of State for Environment and Forests, Shri Meena. The Minister of Youth, Sports and Local Government, Mani Shankar Aiyar, visited New Zealand in April 2008. In May 2008 Commerce and Industry Minister Kamal Nath visited New Zealand. There is an outstanding invitation for Prime Minister Manmohan Singh to visit New Zealand.

1.5. Summary

This chapter has shown that the bilateral economic relationship between India and New Zealand has evolved considerably in the areas of trade in goods, services, investment flows and a wide range of cooperation activities. These linkages provide a sound basis for further deepening the relationship through a comprehensive CECA/FTA that addresses these areas.

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CONCLUSION

In export marketing Having decide about which country you are going to export to ,doing the required market research and finally developing a ’’market entry plan ‘’ for the country .

Market entry strategy involves strategic partnerships with other companies or individuals with complementary skills and capabilities. A partner can often provide the insight, contacts and expertise that fill the gap in your export readiness. A strategic alliance with a company selling a complementary product or service can provide more effective market access, resulting in more foreign sales in less time. As with indirect exporting relationships, contractual agreements with partners must be stated in clear terms and, whenever possible, refer to Canadian laws for the protection of the Canadian company.

Strategic marketing action plan is a set of key functional areas of export marketing which should be performed well and followed step by step to get succeed in Export marketing. Performing following key tasks step by step will give you a rapid success in export marketing with sustainable and profitable export sales growth.

International bank is the exchange of goods and services across national boundaries, it is the most traditional form of international business activity and had played ‘a major role in shaping world history .it facilities the what action should take for export of goods and services, it allows the manufacturer and distribution to seek out product and component produced in countries .companies acquire them because of cost advantages or to learn about advanced technical methods used abroad.

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Export strategy consider the requirement of the finance for the producer during the export, it require the bank formalities to help the exporter for the financial purposes. During the export some promotional measures is needed to promote the export market in international trade.

International trade and strategy will continue to be the engine that runs most nations .the continued strength of the world economy has been supported by strong growth in international trade while the United States and Europe continued to under in international trade growth over the past decade the increase the importance of international marketing in the world economy

It is clear that in export marketing certain export policy measures are inconsistent with competition and hence such trade policy intervention can be determinant to international trade and the fostering of universal competition polices.

This is the new way to living in the area of the new economy because of the small exporter can go for the international trade in India many small manufacturer going for export in international market .this is helpful for our economy .

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BIBILOLIOGRTAPHY /REFERENCE

WWW.INDIAN DATA.COM WWW.COMMERCE.NIC.COM WWW.GOOGLE.COM WWW.MSN.COM

IMPORT-EXPORT BOOK(VIVPUL PRAKASHAN)

EXPORT MARKETING

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http://WWW.MSN.COM/

http://WWW.GOOGLE.COM/

http://WWW.COMMERCE.NIC.COM/

http://WWW.INDIAN/

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Export Marketing