Global Country Study Report

On
Agriculture and Processed Foods Industry of
Morocco
Business Opportunities for Goa / India
Submitted to
Institute Code: 750
Institute Name: S.R. Luthra Institute of
Management
Under the Guidance of
Dr. Hemlata Agarwal
(Associate Professor)
In partial Fulfillment of the Requirement of the
award of the degree of Master of Business
Administration (MBA)
Offered By
Gujarat Technological University
Ahmedabad
Prepared by:
Students of
MBA (Semester - IV)
Group No.6
Month & Year:
April, 2016

STUDENTS DECLARATION
We, following students, hereby declare that the Global/ Country
Study Report titled Agriculture and Processed Foods Industry in
(Morocco) is a result of our own work and our indebtedness to
other work publications, references, if any, have been duly
acknowledged. If we are found guilty of copying any other report or
published information and showing as our original work, or
extending plagiarism limit, we understand that we shall be liable
and punishable by GTU, which may include Fail in examination,
Repeat study & re-submission of the report or any other
punishment that GTU may decide.

Enrolment No.
147500592070
147500592072
147500592073
147500592096
147500592099
147500592112
Place :

Name
Santosh Pansuriya
Tilak Parmar
Ankita Pasrija
Ritisha Soni
Sandhya Jayswal
Shailja Thakkar

Signature

Date :

INSTITUTE CERTIFICATE
Certified

that

this

Global

Country

Study

and

Report

Titled

Agriculture and Processed Foods Industry in (Morocco) is

the bona fide work of attached student list with enrolment numbers,
who have carried out their research under my supervision. I also
certify further, that to the best of my knowledge the work reported
herein does not form part of any other project report or dissertation
on the basis of which a degree or award was conferred on an earlier
occasion on this or any other candidate. I have also checked the
plagiarism extent of this report which is

% and the separate

plagiarism report in the form of html /pdf file is enclosed with this.

_____________________________
Signature of the Faculty Guide/s
(Dr. Hemlata Agarwal, Associate Professor)

_____________________________
Signature of Director
(Dr. J.M. Kapadia)

PLAGIARISM REPORT

PREFACE

To become a manager in future passing the theoretical subjects is

not enough. The subjects are the bases for our carrier from which
we can strengthen our knowledge to apply it in real world. The GCSR
project provides the platform of opportunity to know the current
market situation, various factors affecting the industrial and
economic performance and the behavior of environment. It gives
the opportunity where we can apply the theory knowledge in real
world and so that we can be a successful manager in future. This
changed the market structure, character and focus of marketing
strategies.
MBA is a course where unlike many other courses practical studies
are accompanied together with theoretical studies, case analysis
and preparation of various reports, giving presentations on various
topics are a vital part of the practical studies in this course.
The preparation of the GCSR is one such part of the practical studies
here. For this purpose we are required to select one particular topic
related to a country or trade and prepare a report through study
research. So, we go for detailed study of country Morocco, with
Agriculture and Processed Foods industry.

ACKNOWLEDGEMENT
No task is a single mans effort cooperation and coordination of
various

people

at

various

places

goes

into

successful

implementation. It is great pleasure to have the opportunity to

extend our heart-felt thanks to everybody who helped us through
the successful completion of this project.
We wish to take this opportunity to express our deep gratitude to
the persons that have helped, encouraged, inspired and enlightened
us with their constructive ideas and overall support towards the
completion of this project successfully.
We

would

like

to

express

gratitude

towards

GUJRAT

TECHNOLOGICAL UNIVERSITY and all members of S.R. Luthra

Institute

of

Management

for

their

kind

co-operation

and

encouragement which help us in completion of our project.

We also would like to express our special gratitude and thanks to Dr.
J.M. Kapadia for giving us such attention and time.
We are highly indebted to Dr. Hemlata Agarwal for her guidance
and constant supervision as well as for providing necessary
information regarding the project & also for her support in
completing the project.
Our thanks and an appreciation also goes to our group members
and classmates in developing the project and people who have
willingly helped us out with their abilities.

Sr.

Topics

Page

No.
1.

No.
EXECUTIVE SUMMARY
SEM - III
SEM IV

2.

SECTION ONE : THE BUSINESS

A. Description of Business
B. Products
C. Market Analysis and Marketing Plan
D. Competitive Environment
E. Import / Export Policies & Procedures
I. Import/Export Procedure
II.
Required Documents
III.
Mode of entry to Foreign Market
IV.
Supporting
Institutes
to
V.

facilitate

export/import
Shipping and Packaging

SECTION TWO : FINANCIAL DATA

A. Projected Financial Statement for next 3 years
B. Break Even Analysis
Findings
Conclusion
6.

Bibliography

Table

Name of Table

No.

Page
No.

SWOT Analysis of Farm Food dehydrates Pvt. Ltd.

P & L Account

Balance Sheet

Break Even Analysis

EXECUTIVE SUMMARY

(Sem. III)

In this particular study of GCSR report, to study and understand the

business environment and demographic profile of the Morocco and
India with Goa state. Also study the STEEPLED Analysis , to find
relative strengths and weakness, as well as opportunities and
threats

for Agriculture and food processing industry. To

identify

business segments or products or services in which Gujarat or

India

has substantial

bilateral

trade

(export

import)

and

bilateral investment in each-other countries. Also helpful to study

the export import and investment opportunity.
The Kingdom of Morocco is located in the northwest of Africa.
Agriculture

in

Morocco employs

about

40%

of

the

nation's

workforce. And it is the largest employer in the country. Moroccan

agricultural production also consists of orange, tomatoes, potatoes,
olives, and olive oil. High quality agricultural products are usually
exported to Europe. Agriculture industry in Morocco enjoy a
complete tax exemption.
The Moroccan Constitution provides for a monarchy with a
Parliament and an independent judiciary. Moroccos economic
growth fluctuates heavily with agricultural output, which is largely
determined by rainfall, as only 16 percent of total arable land is
irrigated.
Limited purchasing power of the Moroccan population. An estimated
10 % of the population (3 million) is able to buy imported products
regularly. Most importers are located in Casablanca and imports by
container are mostly done through the port of Casablanca.
Morocco produces enough food for domestic consumption except for
grains, sugar, coffee and tea. Moroccos GDP rate grow from 2.7 %
to 4.5 % in 2014 to 2015. Key exporters are clothing and textiles,
Electronic

components,

Inorganic

chemicals,

transistors,

crud

minerals, Fertilizers(including phosphates), Petroliam product, Citrus

fruits, Vegetables, Fish. And Key importers are Crud petroleum,

textile fabrics, telecommunication equipment, wheat, gas and
electricity, transistors, Plastics.
List of industries in Morocco are Phosphate Rock Mining and
Processing ,Food processing ,Manufacturing ,Tourism, Leather Goods
, Construction ,Textiles ,Selling of arts and crafts . The local food
industry is upgrading and becoming more demanding on quality and
regularity of supply. The steady Western influence on Moroccan
lifestyles is expected to result in even higher demand for consumeroriented products in the future.
India has a greater potential to export semi-finished products and
products for industrial uses such as milk powder, cheese, processed
nuts.

India officially the Republic of India is a country in South

Asia.

It

is the seventh-largest country by area, the second-most

popular country. India is the worlds second largest producer of food

next to China, and has the potential of being the biggest with the
food and agricultural sector.
In the United Nations, India supported the decolonization of Morocco
and the Moroccan freedom movement. India has been one of the
major markets for Moroccan phosphate and its derivatives. India is
the largest producer of pulses, milk, tea, cashew and mangoes and
buffalo meat.
Goa is one of the fastest growing states in the country. The states
gross state domestic product (GSDP) growth rate was at about 11.23
per cent between 2004-05 and 2014-15. Key industries are Tourism,
food processing, IT & ITeS, mining, biotechnology, pharmaceuticals
and fishing. Goa has a large educated manpower with the ability to
read and write in English. This is a big asset that would help it to
integrate into the global knowledge economy. The small size of the
State makes it possible for Goa to become a model state of the
country.

From the above report, we have come to the conclusion that the
agriculture is the largest employer in the Morocco. Agriculture,
Forestry, Fishing and Hunting contributing 16.6% to GDP, from which
fishing contributing 1.0%.In Morocco high quality agricultural
product exported to Europe. Less than 40% of Moroccans families
have refrigerator at home. Morocco produces enough food for
domestic consumption except for grains, sugar, coffee and tea. More
than 40% of Morocco's consumption of grains and flour is imported
from the United States and France.
India is the worlds second largest producer of food, 3rd largest in
alcoholic beverages, 2nd largest rice producer having 20% global
share, 3rd largest in the world and 2nd largest in inland fish
production contribute 1.4% of total GDP.
Gujarat having export potentiality i.e. Cotton, cumin, Onion, Garlic,
Castor, Isabgul, Mango, other fruits and vegetables, Flowers, Duram
wheat, Processed maize.
Goa has a coastline of about 104 kms and inland waterways of
about 250 km. The coast is full of creeks and estuaries formed by
rivers; over 128,107 tones of marine fish and 3,718 tones of inland
fish were harvested in 2014. During 2014-15, exports of frozen fish
from Mormugao Port were recorded to be 42,940 tones

EXECUTIVE SUMMARY
(Sem. IV)
Farm food is one of the food commodity & manufacturer in India.
They started its incorporation on 16 th July 2001 .The Company deals
in a various food products such as tomato, Onion, sweet coin,
Mango Powder. S.K Associate founded in 1988 is associated in
Banking, Textiles and Construction sector. The company have
diversified in manufacture of freeze dried items in the name of Farm
food Dehydrates Pvt. Ltd. Farm Food Dehydrates Pvt. Ltd. is located
in a green belt area of kachholi near Navsari about 55 km From
Surat.
Tomato ranks third in priority after Potato and Onion in India but
ranks second after potato in the world. India ranks second in the
area as well as in production of Tomato. The major tomato growing
countries are China, USA, Italy, Turkey, India and Egypt. The process
start from sorting of tomatoes than washing, cutting than The
product is allowed to freeze at such low temperature for 8 hours so
that water content inside the tomatoes will be transformed in to ice
completely This frozen tomatoes is then transferred in to a vacuum
chamber where it is heated in vacuum and finally The finish product
is then packed with nitrogen flushing method

Market segmentation is a marketing strategy that involves dividing

a

broad target

market into

subsets

of consumers, businesses,

or countries that have common needs and priorities, and then

designing and implementing strategies to target them. Company
can target the top cities of Morocco country, which are Marakkech,
Fez, Essaouia, Tangir, Asilah. On this basis, company can target a
segment on the basis of income of Moroccan people Grand
Casablanca

Fs-Boulemane

Marrakesh-Tensift-El

Haouz

Tanger-

Tetouan Rabat-Sal-Zemmour-Zaer.
Four Ps analyses for Tomatoes like product, price, place and
promotion. Tomato ranks third in priority after Potato and Onion in
India but ranks second after potato in the world. India ranks second
in the area as well as in production of Tomato. Tomatoes production
by India in 2014 at 37.5 million tones. India is second largest
producer of Tomatoes. Company can target the top cities of Morocco
country like Marakkech, Fez, Essaouia, Tangir, Asilah and fourth that
is promotion in this There is no promotional strategy available for
dehydrate tomatoes in present situation.
The Porter's 5 Forces tool is a simple but powerful tool for
understanding where power lies in a business situation. This is
useful, because it helps in understand both the strength of
companys current competitive position, and the strength of a
position company are looking to move.
Majority of goods are allowed to be exported without obtaining a
license. Export licenses are only required for items listed in the
Schedule 2 of ITC (HS) Classifications of Export and Import items. An
application for grant of Export License for such items must 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. Export of samples up to specified limits are allowed

free.

The

exporter

is

required

to

be

registered

with

the

appropriate Export Promotion Council to avail of this benefit.

Import of goods helps to boost the economy by providing capital
good

for

infrastructure

or

industrial

development,

meeting

shortages and improving quality of production. It also helps

improving living standards by making available good and products
not produced in the country.
Bill of Entry a document certifying that the goods of specified
description and value are entering into the country from abroad.
three are types of Bills of Entry use like Bill of Entry for home
consumption, Bill of Entry for Warehouses,Bill of Entry for Ex-Bond
Clearance.
Dumping is said to have taken place when an exporter sells a
product to India at a price less than the price prevailing in its
domestic market where dumping causes or threatens to cause
material injury to the domestic industry of India, the Designated
Authority initiates necessary action for investigations. Some major
importers have been given the green channel clearance facility. It
means clearance of goods is done without routine examination of
the goods. They have to make a declaration in the declaration form
at the time of filing of bill of entry. This facility can be claimed by the
Importers who have been approved by the Customs as eligible for
claiming the facility.
In India, the import and export of goods is governed by the Foreign
Trade (Development & Regulation) Act, 1992and Indias Export
Import (EXIM) Policy. Importers are required to register with the
DGFT to obtain an Importer Exporter Code Number (IEC) issued
against their Permanent Account Number (PAN), before engaging in
EXIM activities. After an IEC has been obtained, the source of items
for import must be identified and declared. Certain goods that fall

under the following categories like Licensed (Restricted) Items

Canalized Items Prohibited Items.
The Indian Trade Classification (ITC)-Harmonized System (HS)
classifies goods into three categories like Restricted Canalized
Prohibited. Export procedure describes the documents required for
exporting from India. Special documents may be required depending
on the type of product or destination. Certain export products may
require a quality control inspection certificate from the Export
Inspection Agency.
Export procedure describes the documents required for exporting
from India. Special documents may be required depending on the
type of product or destination. Certain export products may require
a quality control inspection certificate from the Export Inspection
Agency. Some food and pharmaceutical product may require a
health

or

sanitary

certificate

for

export.

Shipping Bill/ Bill of Export is the main document required by the

Customs Authority for allowing shipment. Usually the Shipping Bill is
of four types and the major distinction lies with regard to the goods
being subject to certain conditions which are mentioned here,
Export duty/ cess, Free of duty/ cess ,Entitlement of duty drawback,
Entitlement of credit of duty under DEPB Scheme.
Many Documents Required for Post Parcel Customs Clearance. In
case of Post Parcel, no Shipping Bill is required. The relevant
documents are mentioned here like Customs Declaration Form,
Dispatch Note, Commercial invoice, Consular Invoice, Customs
Invoice, Legalised/Visaed Invoice, Certified Invoice, Certificate of
Inspection, Black List Certificate, Weight Note, Manufacturer's
Certificate, Certificate of Chemical Analysis, Certificate of Shipment,
Certificate of Conditioning, Antiquity Measurement, Transhipment
Bill, Shipping Order, Shipping Advice, Short Shipment Form, Shut
Out Advice.

Foreign market entry modes (Participation strategy) differ in degree

of risk they present, the control and commitment of resources they
require and the return on investment they promise. There are two
major types of entry modes: equity and non-equity modes. Indirect
exports is the process of exporting through domestically based
export intermediaries. The exporter has no control over its products
in the foreign market. Different types of it like Export trading
companies (ETCs), Export management companies (EMCs), Export
merchants, Confirming houses, Nonconforming purchasing agents,
Licensing, Franchising, Joint venture etc.
Indirect method for export dehydrate tomato in morocco Connect
with Abeltatoma PVT. LTD. Which is large establish company in
morocco that can provide local reference, Create joint venture with
Abc import-export company and Develop local leadership with
SOUSS FRUIT SARL to communicate effective vision and strong local
leaders relationship who understand language and culture of their
business.
Last part is financial calculation. Sales forecasting is the process of a
company predicting what its future sales will be. This forecast is
done for a particular period of a time in the near future, usually the
next fiscal year. Accurate sales forecasting enables a company to
make informed business decisions.

SECTION 1: THE BUSINESS

DESCRIPTION OF BUSINESS
Farm Food Dehydrates Private Limited
Farm food is one of the food commodity & manufacturer in India.
They started its incorporation on 16 th July 2001 .The Company deals
in a various food products such as tomato, Onion, sweet coin,
Mango Powder. The Company directly purchasing food products from
selected farmers so

they supply good quality of food Products to

their business partner.

Company Profile
S.K Associate founded in 1988 is associated in Banking, Textiles and
Construction sector. The company have diversified in manufacture
of freeze dried items in the name of Farm food Dehydrates Pvt.
Ltd. Farm Food Dehydrates Pvt. Ltd. is located in a green belt area of
kachholi near Navsari about 55 km From Surat. The company has a
freeze drier of ATLAS RAY (Denmark) make with an effective tray
area of 68 sq mt.It has complete facility of clean room as well as
skilled labor. The raw products are hygienically treated, washed and
prepared before entering them in to the process. The packaging of
the finished products is done by nitrogen flushing method which
helps retain the freshness of the products after packed.
Vision
To be an innovative world-class leader in food industry through total
quality consciousness and consistent development with core agenda
of customer satisfaction.
Mission

Concentration on quality with consistency Quality is about

what we live and survive

Continues improvement with development and customization

which satisfy the needs of time and customer

SWOT Analysis of Farm Food Dehydration Private Limited

Weakness
-High Price Products
-Seasonal avalibility of product
-Requirement of high capital
investment
-Require high
power energy
consumption

-High quality products

-Low weight peoducts
handling of products
-Long self life of products
-Customized Products
-Negligible Competition

&

easy

Strength

SWOT
Of Farm
Food
Opportunities
-High

-Competition from global players

-There is no specific standard for
farm controling

Threat

Scope Of
Backward
Integration
-High Potential in indian market
-Scope for global market
-There is no direct competitior in
indian market

A. PRODUCT
Brief about selected product
Tomato

Tomato ranks third in priority after Potato and Onion in India but
ranks second after potato in the world. India ranks second in the
area as well as in production of Tomato. The major tomato growing
countries are China, USA, Italy, Turkey, India and Egypt. Total area
under

tomato

is

4582438

thousand

ha

with

production

of

150513813 thousand tons and with productivity of 32.8 tons/ha.

The process start from sorting of tomatoes by bifurcating

orange and red tomatoes. 15 kg tomatoes contain in each
container

Then washing the tomatoes hygienically in 5 steps. In first two

steps washing by simple water and further two steps washing
it by chlorine. And last washing it by simple water

Further,Cutting to required size (6mm*6mm) by manually and

by machine and spreading in Teflon coated trays in an Air
conditioned room. Each tray contain 2 kg of tomatoes and in
each trolley, there are 60 trays. These trays will be placed in
to trolleys which are further transported to a cold storage
maintained at a temperature below (minus) -24 degrees
Celsius

The product is allowed to freeze at such low temperature for 8

hours so that water content inside the tomatoes will be
transformed in to ice completely. Then it is put into blast
freezing for 4hours

This frozen tomatoes is then transferred in to a vacuum

chamber where it is heated in vacuum where the ice on the
product will directly get transferred into vapor thus removing
all the water content of the tomatoes through Ammonia

Then trolley transfer to packing room. After that all damage

part are removed manually by straining and fetching

The finish product is then packed with nitrogen flushing

method and sealed so as to maintain its freshness.

Most of the freeze dried vegetables when kept in warm water for
about 20 minutes will reabsorb about 90% of removed water and
will regain its weight by 9times as it will be rehydrated completely
and will appear as fresh as purchased from the market.

UNIQUE ADVANTAGES OF PRODUCT

Increase the shelf life

Need of COLD CHAIN

The low weight and easy handling

No thawing of the product takes

place and its quality is preserved

water will be absorbed again

C. MARKET ANALYSIS & MARKETING PLAN

Segmentation
Market segmentation is a marketing strategy that involves dividing
a

broad target

market into

subsets

of consumers, businesses,

or countries that have common needs and priorities, and then

designing and implementing strategies to target them.
Market segments can be viewed from two perspectives. They can
be:
1. A group of products, or service providers in an industry
2. A particular group of buyers
Geographic Segmentation
Company can target the top cities of Morocco country, which are
Marakkech,
Fez,
Essaouia,
Tangir,
Asilah
Demographic Segmentation
On this basis, company can target a segment on the basis of income
of Moroccan people
Grand Casablanca
Fs-Boulemane
Marrakesh-Tensift-El Haouz
Tanger-Tetouan

Rabat-Sal-Zemmour-Zaer
Behavioral Segmentation
On this basis, company can target a segment on the basis of buyers
readiness stage and usage-rate.
Four Ps analyses for Tomatoes
Four Ps includes following terms:
1) Product
2) Price
3) Place
4) Promotion
1. Product : Tomato
Tomato ranks third in priority after Potato and Onion in India
but ranks second after potato in the world. India ranks
second in the area as well as in production of Tomato. The
major tomato growing countries are China, USA, Italy,
Turkey, India and Egypt. Total area under tomato is 4582438
thousand ha with production of 150513813 thousand tons
and with productivity of 32.8 tons/ha.
2. Price
Tomatoes production by India in 2014 at 37.5 million tones.
India is second largest producer of Tomatoes. The price of
tomatoes in farm food industries is :
1 plate =2 kg
30 plate =60 kg
120 plate = 2 tray = 240 kg
Selling price of tomato= 1700 Rs./kg
240*1700= 4,08,000 per batch
408000*30= 1,22,40,000 monthly selling
Breakup of monthly selling product:
Electricity = 5718750

Staff wage = 657360

Packaging = 260000
Cartage = 220000
Lab Testing = 170000
Gas Purchase = 175631
Raw material = 2138750
Total == 9340491
Profit (per month)= 28,99,509
3. Place
Utter Pradesh, Andhra Pradesh and Gujarat are major
producers of freeze dried tomatoes in India. The other
major

producers

are

Karnataka,

West

Bengal,

Bihar,

Tamilnadu in order of importance.

Company can target the top cities of Morocco country,
which are:
Marakkech,
Fez,
Essaouia,
Tangir,
Asilah
4. Promotion
There is no promotional strategy available for dehydrate
tomatoes in present situation.
There are some ways to promote dehydrate products
1) Developing Application for creating awareness in
customers
2) Hire agent

for

promoting

and

selling

dehydrate

tomatoes and give 10% Commission for every batch.

3) Hiring celebrity like Sanjiv kapoor for promoting
products

D. COMPETITIVE ENVIRONMENT
Porter Five Forces Analysis
The Porter's 5 Forces tool is a simple but powerful tool for
understanding where power lies in a business situation. This is
useful, because it helps in understand both the strength of
companys current competitive position, and the strength of a

position

company

are

looking

understanding of where power

to

move

into.

With

clear

lies, company can take fair

advantage of a situation of strength, improve a situation of

weakness, and avoid taking wrong steps. This makes it an important
part of planning toolkit. Conventionally, the tool is used to identify
whether new products, services or businesses have the potential to
be profitable. However it can be very illuminating when used to
understand the balance of power in other situations too.

E. IMPORT/EXPORT POLICIES & PROCEDURE

EXPORT IMPORT PROCEDURE
1) Export Procedures
Export License

Majority of goods are allowed to be exported without obtaining a

license. Export licenses are only required for items listed in the
Schedule 2 of ITC (HS) Classifications of Export and Import items. An
application for grant of Export License for such items must 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.
Export of Special Chemicals, Organisms, Materials, Equipment and
Technologies (SCOMET) items are also permitted under a license or
prohibited altogether. Guidelines for Export of SCOMET items can be
viewed here.
Export of Samples
Export of samples up to specified limits are allowed free. The
exporter is required to be registered with the appropriate Export
Promotion Council to avail of this benefit. Samples with permanent
marking as "sample not for sale" are allowed freely for export
without any limit.
Processing of Shipping Bill
In case of export by sea or air, the exporter must submit the
'Shipping Bill', and in case of export by road he must submit 'Bill of
Export' in the prescribed form containing the prescribed details such
as the name of the exporter, consignee, invoice number, details of
packing, description of goods, quantity, FOB value, etc. Along with
the Shipping Bill, other documents such as copy of packing list,
invoices, export contract, letter of credit, etc. are also to be
submitted. There are 5 types of shipping bills:

Shipping Bill for export of duty free goods. This shipping bill is
white color.

Shipping bill for export of goods under claim for duty

drawback. This shipping bill is green color

Shipping bill for export of duty free goods ex-bond i.e. from
bonded warehouse. This shipping bill is pink color.

Shipping Bill for export of dutiable goods. This shipping bill is

yellow color.

Shipping bill for export under DEPB scheme. This shipping bill
is blue in color.

The Bills of Export are:

Bill of export for goods under claim for duty drawback

Bill of export for dutiable goods

Bill of export for duty free goods

Bill of export for duty free goods ex-bond

2) Import Procedures
Import of goods helps to boost the economy by providing capital good for
infrastructure or industrial development, meeting shortages and improving
quality of production. It also helps improving living standards by making
available good and products not produced in the country. With the rise in
disposable incomes in India, the marked for imported goods is growing.
Starting a business of importing goods can be a profitable venture, but
requires that the rules and regulations governing such trade and the markets
in respect of both the countries, and the trade agreements with the country
of interest, are studied and understood well.
Import Duties

The government levies import duties on most of the items imported

for trade purposes. These are of different types including Basic
Duty, Additional Customs Duty, True Countervailing Duty, AntiDumping or Safeguard Duty and Education Cess. Details about
these can be viewed here.

Payment of Duty

Provisional Deposit Account with Bank: Facilities are available

to debit duty amounts directly from the Banks nominated by
Customs. This facility reduces delays in receipt of customs
duties from Importers and also payment of interest after 2
days. Importers are required to open a deposit account with
the nominated Bank and maintain a minimum balance as per
the Banks guidelines. On completion of assessment of the
Entries, the importer can authorize debit of the duty amount
against authorization slips.

Payment by Draft/Bankers Cheque: RBI has issued new

guidelines

to

the

nominated

banks

for

acceptance

of

payments against instruments from nationalized banks only.

Interest: Interest is charged on duties not paid within 2 days.

Bill of Entry
It is a document certifying that the goods of specified description
and

value

are

entering

into

the

country

from

abroad.

If the goods are cleared through the Electronic Data Interchange

(EDI) System no formal Bill of Entry is filed as it is generated in the
computer system, but the importer is required to file a cargo
declaration having prescribed particulars required for processing of

the

entry

for

customs

clearance

The Bill of entry, where filed, is to be submitted in set, different

copies meant for different purposes and also given different colour
scheme. Bills of Entry are of three types:

Bill of Entry for home consumption

Bill of Entry for Warehouses

Bill of Entry for Ex-Bond Clearance

Green Channel facility

Some major importers have been given the green channel clearance
facility. It means clearance of goods is done without routine
examination of the goods. They have to make a declaration in the
declaration form at the time of filing of bill of entry. The
appraisement is done as per normal procedure except that there
would be no physical examination of the goods. Only marks and
number are to be checked in such cases. However, in rare cases, if
there are specific doubts regarding description or quantity of the
goods, physical examination may be ordered.
This facility can be claimed by the Importers who have been
approved by the Customs as eligible for claiming the facility.
Importers having a clean record can apply to the Customs (EDI) with
a request for Green Channel facility against a covering letter and
enclosing copy of Balance Sheet showing proof of Duty paid in a
year.
Dumping

Dumping is said to have taken place when an exporter sells a

product to India at a price less than the price prevailing in its
domestic market. However, the phenomenon of dumping is per se
not condemnable as it is recognized that producers sell their goods
at different prices to different market. However, where dumping
causes or threatens to cause material injury to the domestic
industry of India, the Designated Authority initiates necessary action
for investigations and subsequent imposition of anti-dumping
duties.Anti-Dumping Guidelines issued by the Government of India
must be understood and complied with while carrying out import of
goods.

Licensing Policy
In Chemical Sector, 100% FDI is permissible. Manufacture of most
chemical products inter-alia covering organic / inorganic, dyestuffs &
Pesticides is delicensed. The entrepreneurs need to submit only IEM
with the Department of Industrial Policy & Promotion provided no
locational angle is applicable. Only the following items are covered
in the compulsory licensing list because of their hazardous nature.

Hydrocyanic acid & its derivatives

Phosgene & its derivatives
Isocynates& di-isocynates of hydrocarbons.

Indias Import Policy: Procedures and Duties

In India, the import and export of goods is governed by the Foreign
Trade (Development & Regulation) Act, 1992and Indias Export
Import (EXIM) Policy. Indias Directorate General of Foreign Trade
(DGFT) is the principal governing body responsible for all matters
related to EXIM Policy, and new guidelines on Foreign Trade Policy
(FTP) are expected to be released soon to replace previous FTP
guidelines that expired in March 2014.
Importers are required to register with the DGFT to obtain an
Importer

Exporter

Code

Number

(IEC)

issued

against

their

Permanent Account Number (PAN), before engaging in EXIM

activities. After an IEC has been obtained, the source of items for
import

must

be

identified

and

declared.

The

Indian

Trade

Classification Harmonized System (ITC-HS) allows for the free

import of most goods without a special import license. Certain goods
that fall under the following categories require special permission or
licensing, however:
1.

Licensed (Restricted) Items: Licensed items can only be

imported after obtaining an import license from the DGFT. These
include some consumer goods such as precious and semiprecious stones, products related to safety and security, seeds,
plants, animals, insecticides, pharmaceuticals and chemicals,
and some electronic items.

2.

Canalized Items: Canalized items can only be imported via

specified transportation channels and methods, or through
government agencies such as the State Trading Corporation
(STC). These include petroleum products, bulk agricultural
products

such

as

grains

pharmaceutical products.

and

vegetable

oils,

and

some

3.

Prohibited Items: These goods are strictly prohibited from

import and include tallow fat, animal rennet, wild animals, and
unprocessed ivory.

Bill of Entry
Every importer is required to begin by submitting a Bill of Entry
under Section 46. This document certifies the description and value
of goods entering the country. The Bill of Entry should be submitted
as follows:
1) The original and duplicate for customs
2) A copy for the importer
3) A copy for the bank
4) A copy for making remittances
Under the Electronic Data Interchange (EDI), no formal Bill of Entry
is required (as it is recorded electronically) but the importer is
required to file a cargo declaration after prescribing particulars
required for processing of the entry for customs clearance. Bills of
Entry can be one of three types:
1.

Bill of Entry for Home Consumption- This form is used when

the imported goods are to be cleared on payment of full duty.
Home consumption means use within India. It is white colored
and hence often called the white bill of entry.

2.

Bill of Entry for Housing- If the imported goods are not

required immediately, importers may store the goods in a
warehouse without the payment of duty under a bond and then
clear them from the warehouse when required on payment of
duty. This will enable the deferment of payment of the customs
duty until goods are actually required. This Bill of Entry is printed
on yellow paper and is thus often called the yellow bill of entry.
It is also called the into bond bill of entry as the bond is

executed for the transfer of goods in a warehouse without paying

duty.
3.

Bill of Entry for Ex-Bond Clearance The third type is for exbond clearance. This is used for clearance from the warehouse
on payment of duty and is printed on green paper.

It is important to note that the rate of duty applicable is as it exists

on the date a good is removed from a warehouse. Therefore, if the
rate changes after goods have been cleared from a customs port,
the customs duty as assessed on a yellow bill of entry (Bill of Entry
for Housing) and paid on the value listed on the green bill of entry
(Bill of Entry for Ex-Bond Clearance) will not be the same.

Other non-EDI Documents

If a Bill of Entry is filed without using the Electronic Data Interchange
system, the following documents are also generally required:

Signed invoice

Packing list

Bill of lading or delivery order/air waybill

GATT declaration form

Importer/CHA declaration

Import license wherever necessary

Letter of credit/bank draft

Insurance document

Industrial license, if required

Test report in case of chemicals

Ad hoc exemption order

DEEC Book/DEPB in original, where applicable

Catalogue,

technical

write

up,

literature

in

case

of

machineries, spares or chemicals as may be applicable

Separately
machinery

split

up

value

of

spares,

components,

and

Certificate of Origin, if preferential rate of duty is claimed

Import Duties
The Indian government levies several types of import duties on
goods. These include:
Basic Customs Duty
Basic Customs Duty (BCD) is the standard tax rate applied to goods,
or the standard preferential rate in the case of goods imported from
specified countries. The rates of customs duties are outlined in the
First and Second Schedules of the Customs Tariff Act, 1975. The First
Schedule specifies rates of import duty and the Second specifies
rates of export duty. BCD is divided into standard and preferential
rates, with goods imported from countries holding trade agreements
with the Indian central government eligible for lower preferential
rates.
Additional Customs Duty (Countervailing Duty)
Countervailing duty (CVD) is equal to central excise duty and is
levied on imported articles produced in India. With CVD, the process
of production amounts to manufacture as it is defined in
the Central Excise Act, 1944. CVD is based on the aggregate value
of goods including landing charges and BCD. An additional CVD
may be levied equivalent to sales tax or VAT, not exceeding four
percent. This duty can be refunded if the importer pays all customs
duties, the sales invoice indicates the credit is not allowed, and the
importer pays VAT/sales tax on the sale of the good.
Other CVDs may be imposed on specific imported goods to
neutralize the effect of a subsidy in the country of origin. A
notification issued by the central government on these specified
goods is valid for five years and potentially subject to further
extension not exceeding ten years. Subsidies related to research
activities, assistance to disadvantaged regions in the destination
country, and assistance in adapting existing facilities to new
environmental requirements are exempt.

Anti-Dumping Duty
The central government may impose an anti-dumping duty if it
determines a good is being imported at below fair market price, and
an importer will be notified if this is the case. The duty cannot
exceed the difference between the export and normal price (margin
of dumping). This does not apply to goods imported by 100 percent
Export Oriented Units (EOU) and units in Free Trade Zones (FTZs)
and Special Economic Zones (SEZs). If an importer is notified by the
central government then an Anti-Dumping duty is to be imposed,
the notification will remain valid for five years with the possibility of
being extended to 10 years.
Safeguard Duty
Unlike Anti-Dumping Duty, the imposition of Safeguard Duty does
not require the central government to determine a good is being
imported at below fair market price. Safeguard Duty is imposed if
the government decides that a sudden increase in exports is
causing, or threatens to cause, serious damage to a domestic
industry. A notification regarding the imposition of Safeguard Duty is
valid for four years with the possibility of being extended to 10
years.
Protective Duty
A protective duty is sometimes imposed to protect domestic
industry

from

imports.

If

the

Tariff

Commission

issues

recommendation for the imposition of a Protective Duty, the central

government may choose to impose this at a rate that does not
exceed that recommended by the Tariff Commission. The central
government can specify the period up to which the protective duty
will remain in force, reduce or extend the period, and adjust the
effective rate

Import and Export Licensing Procedures in India

Indias import and export system is governed by the Foreign Trade

(Development & Regulation) Act of 1992 and Indias Export Import
(EXIM) Policy. Imports and exports of all goods are free, except for
the items regulated by the EXIM policy or any other law currently in
force. Registration with regional licensing authority is a prerequisite
for the import and export of goods. The customs will not allow for
clearance of goods unless the importer has obtained an Import
Export Code (IEC) from the regional authority.
Import Policy
The Indian Trade Classification (ITC)-Harmonized System (HS)
classifies goods into three categories:
1.

Restricted

2.

Canalized

3.

Prohibited

Goods not specified in the above mentioned categories can be freely

imported without any restriction, if the importer has obtained a valid
IEC. There is no need to obtain any import license or permission to
import such goods. Most of the goods can be freely imported in
India.
Restricted Goods
Restricted goods can be imported only after obtaining an import
license from the relevant regional licensing authority. The goods
covered by the license shall be disposed of in the manner specified
by the license authority, which should be clearly indicated in the
license itself. The list of restricted goods is provided in ITC (HS). An
import license is valid for 24 months for capital goods, and 18
months for all other goods.
Canalized Goods
Canalized goods are items which may only be imported using
specific procedures or methods of transport. The list of canalized
goods can be found in the ITC (HS). Goods in this category can be
imported only through canalizing agencies. The main canalized

items are currently petroleum products, bulk agricultural products,

such as grains and vegetable oils, and some pharmaceutical
products.
Prohibited Goods
these are the goods listed in ITC (HS) which are strictly prohibited on
all import channels in India. These include wild animals, tallow fat
and oils of animal origin, animal rennet, and unprocessed ivory.
Export Policy
Just like imports, goods can be exported freely if they are not
mentioned in the classification of ITC (HS). Below follows the
classification of goods for export:

Restricted

Prohibited

State Trading Enterprise

Restricted Goods
Before exporting any restricted goods, the exporter must first obtain
a license explicitly permitting the exporter to do so. The restricted
goods must be exported through a set of procedures/conditions,
which are detailed in the license.
Prohibited Goods
These are the items which cannot be exported at all. The vast
majority of these include wild animals, and animal articles that may
carry a risk of infection.
State Trading Enterprise (STE)
Certain items can be exported only through designated STEs. The
export of such items is subject to the conditions specified in the
EXIM policy.
Types of Duties
There are many types of duties that are levied in India on imports
and exports. A list of these duties follows below:
Basic Duty

Basic duty is the typical tax rate that is applied to goods. The rates
of custom duties are specified in the First and Second Schedules of
the Customs Tariff Act of 1975. The First Schedule contains rates of
import duty, and the second schedule contains rates of export
duties. Most of the items in India are exempt from custom duty,
which is generally levied on imports.
The first schedule contains two rates: Standard rate and preferential
rate. The preferential rate is lower than the standard rate. When
goods are imported from a place specified by the central
government (CG) for lower rates, the preferential rate is applicable.
In any other case, the standard rate will be applicable. If the CG has
signed a trade agreement with the country of origin, then the CG
may opt to charge a lower basic duty than indicated in the first
schedule.
Additional Customs Duty (Countervailing Duty)
In addition to the basic duty on imported goods, a countervailing
duty is also applicable to imported goods. The rate of duty is equal
to the rate of excise applied to goods manufactured in India. If the
article is not manufactured in India, then goods of a similar nature
are used to determine the correct duty amount. If there are different
rates of duty on similar goods, then the highest rates of the known
products will be applied to the article in question.
Additional Duty (VAT)
The CG may levy an additional duty equivalent to sales tax or VAT
charged on sale/purchase in India. The rate cannot exceed 4
percent. However, the additional duty shall be refunded when the
imported goods are sold if the following conditions are satisfied:
1.

The importer pays all the custom duties;

2.

The sale invoice shall bear the indication that the credit of
such duty shall not be allowed; and

3.

Importer shall pay VAT/sales tax on the sale of these goods.

Anti-Dumping Duty

The CG may impose an anti-dumping duty if an article is imported to

India at less than its normal price, and will notify the importer if they
decide to do so. The amount of duty cannot exceed the margin of
dumping. The margin of dumping means the difference between the
export price and the normal price.
The notification issued by CG in this regard shall be valid for five
years. The period can be further extended. However, the total
period cannot exceed 10 years from the date of first imposition.
Countervailing

Duty

on

Subsidized

Articles

A countervailing duty is a tariff applied to imported goods to

neutralize the effect of a subsidy from the country of origin. If any
country grants subsidies on any article to be imported to India,
whether directly from the same country or otherwise, then the CG
may impose a countervailing duty equal to or less than the subsidy
itself. However, the duty will not be imposed if the the article is
subsidized for the following reasons:
1.

Research

activities

conducted

by

person

engaged

in

manufacturing or export
2.

Assistance to disadvantaged regions in destination country

3.

Assistance

in

adaptation

of

existing

facilities

to

new

environment requirements.
The notification issued by CG in this regard shall be valid for five
years and possibly subject to further extension. However, the total
period cannot exceed 10 years from the initial date of imposition.
Safeguard Duty
A safeguard duty is a tariff designed to provide protection to
domestic goods, favoring them over imported items. If the
government determines that increased imports of certain items are
having a significantly detrimental effect on domestic competitors, it
may opt to levy this duty on those imports to discourage their
proliferation. However, the duty does not apply to articles imported
from developing countries. The CG may exempt imports of any

article from this duty. The notification issued by CG in this regard is

valid for four years, subject to further extension. However, the total
period cannot exceed 10 years from the date of first imposition.
Protective Duties .In addition to safeguard duties, the CG also
bolsters domestic industries using protective duties. Should the
Tariff Commission issue a recommendation for a protective duty, the
CG may impose on any goods imported to India a protective duty to
provide protection to domestic industry.
The

duty

cannot

exceed

the

amount

proposed

in

the

recommendation. The CG may specify the period up to which

protective duty shall be in force, reduce or extend the period, and
adjust the effective rate.

2. Required documents
Export procedure describes the documents required for exporting
from India. Special documents may be required depending on the
type of product or destination. Certain export products may require
a quality control inspection certificate from the Export Inspection
Agency. Some food and pharmaceutical product may require a
health

or

sanitary

certificate

for

export.

Shipping Bill/ Bill of Export is the main document required by the

Customs Authority for allowing shipment. Usually the Shipping Bill is
of four types and the major distinction lies with regard to the goods
being subject to certain conditions which are mentioned below:

Export duty/ cess

Free of duty/ cess

Entitlement of duty drawback

Entitlement of credit of duty under DEPB Scheme

Re-export of imported goods

The following are the export documents required for the processing
of the Shipping Bill:

GR forms (in duplicate) for shipment to all the countries.

4 copies of the packing list mentioning the contents, quantity,

gross and net weight of each package.

4 copies of invoices which contains all relevant particulars like

number of packages, quantity, unit rate, total f.o.b./ c.i.f. value,
correct & full description of goods etc.

Contract, L/ C, Purchase Order of the overseas buyer.

AR4 (both original and duplicate) and invoice.

Inspection/ Examination Certificate.

The formats presented for the Shipping Bill are as given below

White Shipping Bill in triplicate for export of duty free of

goods.

Green Shipping Bill in quadruplicate for the export of goods

which are under claim for duty drawback.

Yellow Shipping Bill in triplicate for the export of dutiable

goods.

Blue Shipping Bill in 7 copies for exports under the DEPB

scheme

Note: - For the goods which are cleared by Land Customs, Bill of
Export (also of 4 types - white, green, yellow & pink) is required

instead

of

Shipping

Bill.

Documents Required for Post Parcel Customs Clearance

In case of Post Parcel, no Shipping Bill is required. The relevant
documents are mentioned below:

Customs Declaration Form - It is prescribed by the Universal

Postal Union (UPU) and international apex body coordinating
activities of national postal administration. It is known by the
code number CP2/ CP3 and to be prepared in quadruplicate,
signed by the sender.

Dispatch Note, also known as CP2. It is filled by the sender to

specify the action to be taken by the postal department at the
destination in case the address is non-traceable or the parcel is
refused to be accepted.

Prescriptions regarding the minimum and maximum sizes of

the parcel with its maximum weight: Minimum size: Total surface
area not less than 140 mm X 90 mm. Maximum size: Lengthwise
not

over

1.05

m.

Measurement

of

any

other

side

of

circumference 0.9 m./ 2.00 m. Maximum weight: 10 kg usually,

20 kg for some destinations.

Commercial invoice - Issued by the seller for the full realisable

amount of goods as per trade term.

Consular Invoice - Mainly needed for the countries like Kenya,

Uganda,

Tanzania,

Mauritius,

New

Zealand,

Burma,

Iraq,

Australian, Fiji, Cyprus, Nigeria, Ghana, Zanzibar etc. It is

prepared in the prescribed format and is signed/ certified by the
counsel of the importing country located in the country of
export.

Customs Invoice - Mainly needed for the countries like USA,

Canada, etc. It is prepared on a special form being presented by
the Customs authorities of the importing country. It facilitates
entry of goods in the importing country at preferential tariff rate.

Legalised/Visaed Invoice - This shows the seller's genuineness

before the appropriate consulate/ chamber of commerce/
embassy. It do not have any prescribed form.

Certified Invoice - It is required when the exporter needs to

certify on the invoice that the goods are of a particular origin or
manufactured/ packed at a particular place and in accordance
with specific contract. Sight Draft and Usance Draft are available
for this. Sight Draft is required when the exporter expects
immediate payment and Usance Draft is required for credit
delivery.

Packing List - It shows the details of goods contained in each

parcel/ shipment.

Certificate of Inspection - It shows that goods have been

inspected before shipment.

Black List Certificate - It is required for countries which have

strained political relation. It certifies that the ship or the aircraft
carrying the goods has not touched those country(s).

Weight Note - Required to confirm the packets or bales or

other form are of a stipulated weight.

Manufacturers/ Supplier's Quality/ Inspection Certificate.

Manufacturer's Certificate - It is required in addition to the

Certificate of Origin for few countries to show that the goods
shipped have actually been manufactured and are available.

Certificate of Chemical Analysis - It is required to ensure the

quality and grade of certain items such as metallic ores,
pigments, etc.

Certificate of Shipment - It signifies that a certain lot of goods

have been shipped.

Health/ Veterinary/ Sanitary Certification - Required for export

of foodstuffs, marine products, hides, livestock etc.

Certificate of Conditioning - It is issued by the competent

office to certify compliance of humidity factor, dry weight, etc.

Antiquity Measurement - Issued by Archaeological Survey of

India in case of antiques.

Transhipment Bill - It is used for goods imported into a

customs port/ airport intended for transhipment.

Shipping Order - Issued by the Shipping (Conference) Line

which intimates the exporter about the reservation of space of
shipment of cargo through the specific vessel from a specified
port and on a specified date.

Cart/ Lorry Ticket - It is prepared for admittance of the cargo

through the port gate and includes the shipper's name, cart/
lorry No., marks on packages, quantity, etc.

Shut Out Advice - It is a statement of packages which are shut

out by a ship and is prepared by the concerned shed and is sent
to the exporter.

Short Shipment Form - It is an application to the customs

authorities at port which advises short shipment of goods and
required for claiming the return.

Shipping Advice - It is prepared in aligned document to be

used to inform the overseas customer about the shipment of
goods.

3. Mode of entry to foreign markets

Foreign market entry modes (Participation strategy) differ in
degree of risk they present, the control and commitment of
resources they require and the return on investment they promise.
There are two major types of entry modes: equity and non-equity
modes.

The

non-equity

modes

category

includes export

and

contractual agreements. The equity modes category includes: joint

venture and wholly owned subsidiaries.

Exporting
Exporting is the process of selling of goods and services produced in
one country to other countries. There are two types of exporting:
direct and indirect.
DIRECT EXPORTS
Direct exports represent the most basic mode of exporting made by
a

(holding)

company,

capitalizing

on economies

of

scale

in

production concentrated in the home country and affording better

control over distribution. Direct export works the best if the volumes

are small. Large volumes of export may trigger protectionism. The

main characteristic of direct exports entry model is that there are no
intermediaries. Passive exports represent the treating and filling
overseas orders like domestic orders.
TYPE
Sales representatives
Sales representatives represent foreign suppliers/manufacturers in
their local markets for an established commission on sales. Provide
support services to a manufacturer regarding local advertising, local
sales

presentations,

customs

clearance

formalities,

legal

requirements. Manufacturers of highly technical services or products

such as production machinery, benefit the most form sales
representation.
Importing distributors
Importing distributors purchase product in their own right and resell
it in their local markets to wholesalers, retailers, or both. Importing
distributors are a good market entry strategy for products that are
carried in inventory, such as toys, appliances, prepared food.
Advantages

Control over selection of foreign markets and choice of foreign

representative companies

Good information feedback from target market, developing

better relationships with the buyers

Better protection of trademarks, patents, goodwill, and other

intangible property

Potentially greater sales, and therefore greater profit, than

with indirect exporting.

Disadvantages

Higher start-up costs and higher risks as opposed to indirect

exporting

Requires higher investments of time, resources and personnel

and also organizational changes

Greater information requirements

Longer time-to-market as opposed to indirect exporting.

INDIRECT EXPORTS
Indirect exports is the process of exporting through domestically
based export intermediaries. The exporter has no control over its
products in the foreign market.

TYPE
Export trading companies (ETCs)
These provide support services of the entire export process for one
or more suppliers. Attractive to suppliers that are not familiar with
exporting as ETCs usually perform all the necessary work: locate
overseas trading partners, present the product, quote on specific
enquiries, etc.

Export management companies (EMCs)

These are similar to ETCs in the way that they usually export for
producers. Unlike ETCs, they rarely take on export credit risks and
carry one type of product, not representing competing ones.
Usually, EMCs trade on behalf of their suppliers as their export
departments.
Export merchants
Export merchants are wholesale companies that buy unpackaged
products from suppliers/manufacturers for resale overseas under
their own brand names. The advantage of export merchants is
promotion. One of the disadvantages for using export merchants
result in presence of identical products under different brand names
and pricing on the market, meaning that export merchants
activities may hinder manufacturers exporting efforts.

Confirming houses
These are intermediate sellers that work for foreign buyers. They
receive the product requirements from their clients, negotiate
purchases, make delivery, and pay the suppliers/manufacturers. An
opportunity here arises in the fact that if the client likes the product
it may become a trade representative. A potential disadvantage
includes suppliers unawareness and lack of control over what a
confirming house does with their product.
Nonconforming purchasing agents
These are similar to confirming houses with the exception that they
do not pay the suppliers directly payments take place between a
supplier/manufacturer and a foreign buyer.
Advantages

Fast market access

Concentration of resources towards production

Little or no financial commitment as the clients' exports

usually covers most expenses associated with international
sales.

Low risk exists for companies who consider their domestic

market to be more important and for companies that are still
developing their R&D, marketing, and sales strategies.

Export management is outsourced, alleviating pressure from

management team

No direct handle of export processes.

Disadvantages

Little or no control over distribution, sales,

marketing, etc. as opposed to direct exporting

Wrong choice of distributor, and by effect, market, may lead to

inadequate

market

feedback

success of the company

affecting

the

international

Potentially lower sales as compared to direct exporting

(although low volume can be a key aspect of successfully
exporting directly). Export partners that incorrectly select a
specific distributor/market may hinder a firm's functional
ability.

Those companies that seriously consider international markets as a

crucial part of their success would likely consider direct exporting as
the market entry tool. Indirect exporting is preferred by companies
who would want to avoid financial risk as a threat to their other
goals.
Licensing
An international licensing agreement allows foreign firms, either
exclusively or non-exclusively to manufacture a proprietors product
for a fixed term in a specific market.
Summarizing, in this foreign market entry mode, a licensor in the
home country makes limited rights or resources available to the
licensee in the host country. The rights or resources may include
patents, trademarks, managerial skills, technology, and others that
can make it possible for the licensee to manufacture and sell in the
host country a similar product to the one the licensor has already
been producing and selling in the home country without requiring
the licensor to open a new operation overseas. The licensor earnings
usually take forms of one time payments, technical fees and royalty
payments usually calculated as a percentage of sales.
As in this mode of entry the transference of knowledge between the
parental company and the licensee is strongly present, the decision
of making an international license agreement depend on the respect
the host government show for intellectual property and on the
ability of the licensor to choose the right partners and avoid them to
compete in each other market. Licensing is a relatively flexible work

agreement that can be customized to fit the needs and interests of

both, licensor and licensee.
Following are the main advantages and reasons to use an
international licensing for expanding internationally:

Obtain extra income for technical know-how and services

Reach new markets not accessible by export from existing

facilities

Quickly

expand

without

much

risk

and

large

capital

investment

Pave the way for future investments in the market

Retain established markets closed by trade restrictions

Political risk is minimized as the licensee is usually 100%

locally owned

Is highly attractive for companies that are new in international

business.

On the other hand, international licensing is a foreign market entry

mode

that

presents

some

disadvantages

and

reasons

why

companies should not use it as:

Lower income than in other entry modes

Loss of control of the licensee manufacture and marketing

operations and practices leading to loss of quality

Risk of having the trademark and reputation ruined by an

incompetent partner

The foreign partner can also become a competitor by selling

its production in places where the parental company is already
in.

Franchising
The franchising system can be defined as: A system in which semiindependent business owners (franchisees) pay fees and royalties to
a parent company (franchiser) in return for the right to become

identified with its trademark, to sell its products or services, and

often to use its business format and system.
Compared to licensing, franchising agreements tends to be longer
and the franchisor offers a broader package of rights and resources
which usually includes: equipment, managerial systems, operation
manual, initial trainings, site approval and all the support necessary
for the franchisee to run its business in the same way it is done by
the franchisor. In addition to that, while a licensing agreement
involves things such as intellectual property, trade secrets and
others while in franchising it is limited to trademarks and operating
know-how of the business.
Advantages of the international franchising mode:

Low political risk

Low cost

Allows simultaneous expansion into different regions of the

world

Well selected partners bring financial investment as well as

managerial capabilities to the operation.

Disadvantages of the international franchising mode:

Franchisees may turn into future competitors

Demand of franchisees may be scarce when starting to

franchise a company, which can lead to making agreements
with the wrong candidates

A wrong franchisee may ruin the companys name and

reputation in the market

Comparing to other modes such as exporting and even

licensing, international franchising requires a greater financial
investment to attract prospects and support and manage
franchisees.

The key success for franchising is to avoid sharing the strategic

activity with any franchisee especially if that activity is considered

importance to the company. Sharing those strategic activities may

increase the potential of the franchisee to be our future competitor
due to the knowledge and strategic spill over.
Joint venture
There are five common objectives in a joint venture: market entry,
risk/reward

sharing,

technology

sharing

and

joint

product

development, and conforming to government regulations. Other

benefits include political connections and distribution channel
access that may depend on relationships. Such alliances often are
favorable when:

The partners' strategic goals converge while their competitive

goals diverge

The partners' size, market power, and resources are small

compared to the Industry leaders

Partners are able to learn from one another while limiting

access to their own proprietary skills

The key issues to consider in a joint venture are ownership, control,

length of agreement, pricing, technology transfer, local firm
capabilities and resources, and government intentions. Potential
problems include:

Conflict over asymmetric new investments

Mistrust over proprietary knowledge

Performance ambiguity - how to split the pie

Lack of parent firm support

Cultural clashes

If, how, and when to terminate the relationship

Joint ventures have conflicting pressures to cooperate and compete:

Strategic imperative: the partners want to maximize the

advantage gained for the joint venture, but they also want to
maximize their own competitive position.

The joint venture attempts to develop shared resources, but

each firm wants to develop and protect its own proprietary
resources.

The joint venture is controlled through negotiations and

coordination processes, while each firm would like to have
hierarchical control.

Some Companies trading in morocco are:

All Rich,
Rice International Pvt Ltd,
Almeena Trade Fzco,
Toil Cvba,
Hanoi Trade Corp.,
Thanh Nghe Tinh Food Jsc Co.

Indirect method for export dehydrate tomato in morocco

Countertrade : Ways to go international
1) Connect with Abeltatoma PVT. LTD. Which is large establish
company in morocco that can provide local reference
2) Create joint venture with Abc import-export company
3) Develop local leadership with SOUSS FRUIT SARL
communicate

effective

vision

and

strong

local

to

leaders

relationship who understand language and culture of their

business
4)

SECTION TWO: FINANCIAL DATA

Sales Forecast
Sales forecasting is the process of a company predicting what its
future sales will be. This forecast is done for a particular period of a
time in the near future, usually the next fiscal year. Accurate sales
forecasting

enables

company

to

make

informed

business

decisions. These sales forecasting for farm food dehydrated PVT ltd
is based on certain assumption and calculation.
Projected Sales Forecast (Rs.)
Particulars

2016

2017

2018

Unit

Price

Unit

Price

Unit

Price

Morocco

16,000

1740

20,000

1740

25,000

1740

Total Sales

2,78,40,000

Tomatoes

3,48,00,000

4,35,00,000

Assumption:
Latest Exchange Rates: 1 Morocco Dirham = 6.96 Indian

rupees
Dehydrate Tomato Price in India is 1700 Rs./Kg
The sales per unit in the year 2016 is 16,000
Every year the sales price is remains constant.
Every year, number of units increases by 80.00%.

A. PROJECTED FINANCIAL STATEMENTS FOR NEXT 3

YEARS
Income Statement
Particulars

2015-16

2016-17

2017-18

(16000 Units)

(20000

(25000

Sales

2,78,40,000

Units)
3,48,00,000

Units)
4,35,00,000

Excise Duty

TOTAL SALES

2,78,40,000

3,48,00,000

Operating Expenses :Electricity

Staff Wages
Packaging
Cartage
Lab Testing
Licensing
Travel Cost
Gas Purchase
Vegetable purchase
Bank charges

4718750
627360
260000
218000
164880
25000
26666
172631
1938750
15000

5898437
660389
280000
218000
173158
26000
35500
181720
1978340
15000

7373045
695145
300000
218000
181850
27000
47410
191280
2018715
15000

Stationary & printing

19767

22985

26730

81,86,804

94,89,529

1,96,53,196
1,76,000
1,94,77,196
36,64,200
1,58,12,996
3162599

2,53,10,471
1,76,000
2,51,34,471
29,31,360
2,22,03,111
4440622

1,26,50,397

1,77,62,489

TOTAL

OPERATING

EXPENSES
PBDIT
Interest Expanse
PBDT
Depreciation (20%)
PBT
Taxes
Net Profit

4,35,00,00
0

1,10,94,17
5
3,24,05,825
1,76,000
3,22,29,825
23,45,088
2,98,84,737
5976947
2,39,07,78
9

Assumptions
Interest paid on share capital is 8%
20% Depreciation charged on fixed assets by WDV method
Tax rate is 20%

 Balance Sheet
Particulars
Sources of Funds
Total share Capital
Reserve
Unsecured Loans

2015-16

2016-17

2017-18

2200000
316260
1,37,87,009

2200000
444062
1,46,28,483

2200000
597695
1,53,72,523

Current Liability
Total Liabilities
Application of Funds
Gross Block

147601
1,64,50,870

178911
1,74,51,456

221332
1,83,91,550

18321000
36,64,200

18321000
29,31,360

18321000
23,45,088

Cash and Bank

14656800
480000

15389640
640000

15975912
853333

Air Conditioner

289333

385778

514370

Electric Equipment

360000

360000

360000

GEB Deposit

2,00,000

2,00,000

2,00,000

FD

2,50,000

2,50,000

2,50,000

LPG System

2,14,737

2,26,038

237935

Total Asset

1,64,50,870

1,74,51,456

1,83,91,550

Less: Accum. Dep

Net Block

Assumption: Reserves is 2.5% on net profit

Break Even Analysis

Particular

2015-16

2016-17

2017-18

Sales

2,78,40,000

3,48,00,000

4,35,00,000

Less: Variable cost

81,86,804

94,89,529

1,10,94,175

Contribution

1,96,53,196
70,02,799

2,53,10,471
75,47,982

3,24,05,825
84,98,036

Less: Fixed Cost

Profit

1,26,50,397

1,77,62,48
9

2,39,07,789

Unit

16,000

20,000

25,000

Contribution per unit

1228.32

1265.52

1296.23

BEP (in Units)

5701.12

5964.33

6555.95

25,000

20,000
Unit

15,000

Contribution per unit

BEP (in Units)

10,000

5,000

Assumptions
Variable cost includes electricity, cartage, lab testing etc
Contribution per unit is calculated as total contribution (in
Rs)/total numbers of unit
BEP (in units) = Fixed Cost / Contribution per Unit

Particulars
Asset:Current Asset

FY 2015-16

FY 2016-17

FY 2017-18

Cash/Bank in Hand

400000

444444

493827

Inventory

710526

747922

787286

3121000
0
255294
160000
1515500

3121000
0
300346
160000
1515000

3121000
0
353348
160000
1514444

1,00,000
50,000
2,14,737

1,00,000
50,000
2,26,038

1,00,000
50,000
237935

Fixed Assets
Building Extension
Steel Fabrication
Air Conditioner
Electric Equipment
Machinery
Investment
GEB Deposit
FD
LPG System

Electric Equipment
Total Assets
Liabilities:Current liabilities
TDS Payable
Gas Bill Payable
VAT and Service Tax Payable
Unsecured loan
Owners equity
Paid In capital
Retain Earning
Net Profit
Total Liabilities

Particulars
Sales
Additional

sales

1,60,000
66,87,057

1,60,000
68,24,750

1,60,000
69,77,840

47058
87500
13043
21397500

55363
109375
14173
26746875

69204
136718
15410
33433593

2200000
15441610
583566
66,87,057

2200000
20990284
889248
68,24,750

2200000
27890663
1213578
69,77,840

2012-13
50,78,700
(Retail 18,15,552

2013-14
56,43,000
18,91,200

2014-15
62,70,000
19,70,000

service)
TOTAL SALES

68,94,252

75,34,200

82,40,000

Cost of sales

(4,70,401)

(5,63,490)

(6,75,000)

GROSS PROFIT (A)

Operating Expenses :Electricity
Staff Wages
Packaging
Cartage
Lab Testing
Licensing
Travel Cost
Depreciation (machinery)
Gas Purchase
Vegetable purchase
Bank charges
Stationary & printing

64,23,851

69,70,710

75,65,000

34,23,455
3,81,440
2,17,376
1,97,823
1,42,379
22,658
11,250
1800
1,04,960
17,14,750
8438
12,340

35,94,933
4,76,800
2,28,408
2,07,667
1,49,511
23,800
15,000
2700
1,31,200
18,05,000
11,250
14,484

37,75,000
5,96,000
2,40,000
2,18,000
1,57,000
25,000
20,000
4,050
1,64,000
19,00,000
15,000
17,000

66,60,753

71,31,050

3,09,957
(65,713)
2,44,244

4,33,950
(92,000)
3,41,950

TOTAL

OPERATING 62,38,669

EXPENSES (B)
Net income before Taxes (A-B)
Provision for Tax On Income
Net Income After Taxes

1,85,182
(39,260)
1,45,922

Findings

Scope for global market due to low weight products & easy handling

of products long self-life of products

Tomato ranks third in priority after Potato and Onion in India but

ranks second after potato in the world

Tomatoes production by India in 2014 at 37.5 million tones, India is

second largest producer of Tomatoes

Gujarat is in the top list of major producers of freeze dried tomatoes

in India
There are two major types of entry modes: equity and non-equity
modes.

The

non-equity

modes

category

includes export

and

contractual agreements. The equity modes category includes: joint

venture and wholly owned subsidiaries.

Conclusion & Suggestion

From the above report, we have come to the conclusion that

Export of Samples can be beneficial for the company as export of

samples up to specified limits are allowed free. Samples with
permanent marking as "sample not for sale" are allowed freely for

export without any limit

As our product is costly so company can target highly rich city in
Morocco i.e. Grand Casablanca and also top cities of Morocco

country i.e. Marakkech, Fez, Essaouia, Tangir, Asilah

Currently, culture along with Indian mindset does not accompany so
there is need to create awareness in order to penetrate in Indian

market.
Direct export involves higher start-up costs and higher risks and
takes longer time to capture market as opposed to indirect

exporting.
We suggest to company go for Indirect export because it involves
low risk exists for companies who consider their domestic market to
be more important and for companies that are still developing their

R&D, marketing, and sales strategies.

Countertrade is the best way to enter into foreign trade.
1) It will connect with Abeltatoma PVT. LTD. Which is large establish
company in morocco that can provide local reference
2) It will create joint venture with Abc import-export Company.
3) It will develop local leadership with SOUSS FRUIT SARL to
communicate effective vision and strong local leaders relationship
who understand language and culture of their business.

We suggest to go hire agent for promoting and selling dehydrate

tomatoes and give 10% Commission for every batch.

As company is not so old and large, not so financially strong. We
suggest for expanding it should go for indirect export in that
countertrade.

 Along with it can do promotion on social media through doing

different contest, games, etc. and also through launching its
application (promoted by Master chef Sanjiv Kapoor) for creating
awareness in existing and as well as potential customers.
As per current market scenario of company, It will require minimum 3
years to analyze the results of these different activities and
promotions and to understand the market in foreign for their
products. Then it should go for direct export.

Bibliography