PRACTICAL

ASPECTS OF
FOREIGN
TRADE

R K Maru
10 11 February, 2012

Agenda
Foreign Trade Indian Trade History,
Statistics and Facts
Foreign
Trade

Introduction,
Importance and Procedures
Foreign Trade Associated Risk,
Policies and Promotional Measures
Foreign Trade - Quiz
Questions and Answers

History of Indian Trade

From the 16th to the 18th centuries,
covering the two hundred years of Mughal
rule,
Indian
urbanization
saw
unexpected growth.
Textiles from Gujarat were sent to the Arab
countries and to South-east Asia
During the Sultanate period articles of
everyday use as well as luxury articles
were exported to Syria, Arabia and
Persia from Bengal and Cambay. These
included silks, gold-embroidered cloth caps,
exquisitely designed clay pots and pans,

 Arab traders shipped Indian goods to European

countries
through
the
Red
Sea
and
the
Mediterranean ports. Indian products were also sent to
East Africa, Malaya, China and the Far East. In China, Indian
textiles were valued more than silk.
Trade with China and Southeast Asia was mainly carried on
through the port of Sonargaon now known as Dacca.
Emergence of Mercantile community like Marwaris,
Gujaratis, Multan and Khurasanis
The political conditions in India in the 18th century was
marked by decline of the Mughal government and the rise
of the Maratha power.

 After Aurangzeb, who was the last of the great

Mughal Emperors, the state crumbled and it
could not protect the mercantile community as
before.
However, In the 18th century, the British
imposed heavy duties on both imports and
exports in order to disrupt the foreign trade
relations of India with the other countries.
By the time India gained Independence from the
Britishers in 1947, the economy was entirely
geared to only trade.
Hardly any manufacturing facilities to suffice the
needs of the growing Indian population.

 Past couple of decades in the history of

Indian Trade have seen the country
struggle
to
create
manufacturing
capacities
Government Focus has been on to enable
broad basing the development to
move
the
economy
from
an
underdeveloped
status
to
being
a
developed nation.

EXPORTS (including reexports)

Cumulative value of exports for the period AprilDecember 2011 -12 was US$ 217663.66 million
(Rs
1024706.95
crore)
as
against
US$
172964.94
million
(Rs.789068.93
crore)
registering a growth of 25.84 per cent in Dollar
terms and 29.86 per cent in Rupee terms over the
same period last year.
Export goods petroleum products, precious
stones, machinery, iron and steel, chemicals,
vehicles, apparel.
Main export partners US, UAE , China, Hong Kong.

IMPORTS
Cumulative value of imports for the period
April-December, 2011-12 was US$ 350935.69
million (Rs.1651239.75 crore) as against US$
269175.16 million (Rs. 1228074.48 crore)
registering a growth of 30.37 per cent in Dollar
terms and 34.46 per cent in Rupee terms over
the same period last year.
Import goods crude oil, precious stones,
machinery, fertilizer, iron and steel, chemicals
Main import partners China, UAE, Saudi Arabia,
US, Australia.

CRUDE OIL IMPORTS:

Oil imports during April-December, 2011-12 were valued at US$ 105588.7 million which
was 40.39 per cent higher than the oil imports of US$ 75211.4 million in the corresponding
period last year.

TRADE BALANCE
The trade deficit for April-December, 2011-12 was estimated at US$ 133272.03 million
which was higher than the deficit of US$ 96210.22 million during April-December, 2010-11.

Importance of Foreign Trade

WTO

General Agreement on Trade in

Services (GATS)

General Agreement on Trade in

Services (GATS)

AGREEMENT ON TRIPS

"TRADE-RELATED ASPECTS OF INTELLECTUAL PROPERTY RIGHTS"

Modes of Export

Getting Started for Export

Getting Started for Export

Sources of Information
How to locate a buyer /Where to get Statistics from? What are the
Rules & Regulations ?

Internal sources: Your own files,

your co.s records
Indian/Foreign Missions
Chambers of Commerce, FIEO, IMC
etc.
Trade/Industry Associations, EPCs,
Commodity Boards, Development
Authorities etc.
Import Promotion Organization
abroad
International Banks
Port Authorities
Customs House Agents
Overseas Buying Offices in India
Daily List of Exports (by customs )
D G C I & S - Libraries/Publications
Foreign Trade Policy
Handbook of Procedures

Exchange Control Manual EXIM Bank

FEDAI
ECGC
IIFT
ITPO
I T C, Geneva
(www.intracen.org/tradeforum)

C B I - Rotterdam, Netherlands
Trade Fairs
Internet
(www.dgft.gov.in,
www.alibaba.com,
www.indiamart.com,
www.kompass.com,
www.ecplaza.com,
www.meaindia.nic.in
www.maxyellowpages.com etc)

Personal Friends/Relatives

INCOTERMS

Other Terms

Export Pricing
1. Ex Factory Price
2. Loading charges
3. Freight up to the port
4. Insurance premium, wherever necessary
5. Fumigation charges
6. Phytosanitary Certificate
7. Inspection charges
8. Certificate of Origin
9. Marine Insurance, if required as per L/C
10. E C G C Premium
11. Export Duty/Cess
12. C H A service charges/Port
expenses
13. Sea Freight
14. Commission of foreign agent
15. Interest (depending upon the payment terms)
16. Profit
Less: Incentives

Modes of Payment

Export Finance

Shipping Documents
Shipping Bill/Bill of Export:
Free Shipping Bill
Dutiable Shipping Bill
Drawback Shipping Bill
Shipping Bill for shipment ex-bond
Coastal Shipping Bill
Softex form for software export
(triplicate). Value on softex to be certified
by STP official
Form SDF
Mate Receipt

Shipping Documents
Bill of Lading/Airway Bill/RR/LR/Post parcel
receipt
Negotiable/Non-negotiable B/L
Straight/To Order B/L
Freight Paid/Freight Collect B/L
Clean/Claused B/L
Direct/Through B/L
Stale B/L
On Board B/L
Charter Party/Steamship B/L
Container B/L
House B/L (MMTD)

Export Procedure
Offer letter to prospective buyers
Export enquiry
Work out the price and make an offer
Negotiate and send your confirmation and get buyers
confirmation
Send your Export Contract
Get LC
Purchase/manufacture the goods
Excise Clearance
Transportation to the port
Pre-shipment Inspection
Customs Clearance
Get Mate Receipt/Bill of Lading
Collect all other documents required as per LC
Submit documents to the bank for negotiation
Follow up for payment with the buyer

Associated Risks

POLICY PROVISIONS

Chapter 1B: Special Focus Initiatives

1B.1 With a view to continuously increasing our
percentage share of global trade and
expanding employment opportunities,
certain special focus initiatives have been
identified/continued for Market
Diversification, Technological Upgradation,
Support to status holders, Agriculture,
Handlooms, Handicraft, Gems & Jewellery,
Leather, Marine, Electronics and IT Hardware
manufacturing Industries, Green products,
Exports of products from North-East, Sports
Goods and Toys sectors. Government of India
shall make concerted efforts to promote
exports in these sectors by specific sectoral
strategies that shall be notified from time to

Chapter 3 : Promotional
Measures
A S I D E (Assistance to States for Infrastructural Development of
Exports)
M A I (Market Access Initiative)
M D A (Market Development Assistance)
Town of Export Excellence
Brand Promotion and Quality
Star Export Houses:
Export House..Rs 20 Cr.(Current plus previous 3
years)
Star Export HouseRs 100 Cr.
Trading House.Rs 500 Cr.
Star Trading House..Rs 2500 Cr.
Premier Trading House.Rs 7500 Cr .
Services Exports: Regn. with FIEO. However, for Software Exports,
Regn. with Electronic & Software EPC. For 15 specific services
listed in Sl no. 34 of app 2 of HBP Vol 1 are required to register
themselves with Services EPC.
Served from India Scheme.
Vishesh Krishi and Gram Udyog Yojna (Special
Agricultural and Village Industries Scheme)
Focus Product Scheme, Focus Market Scheme, Market Linked Focus
Product Scheme,

Chapter 4: Duty Exemption and Remission Schemes

Duty Exemption Scheme: a) Advance Authorisation Scheme and b) Duty Free
Import Authorisation Scheme (DFIA)
Duty Remission Scheme:
DEPB (Duty Entitlement Passbook Scheme)
Duty Drawback Scheme
Chapter 5
EPCG (Export Promotion Capital Goods) Scheme
Chapter 6
100% EOU
EHTP (Electronics Hardware Technology Park)
STP (Software Technology Park
BTP (Bio Technology Park
Chapter 7
SEZ (Special Economic Zones)
Chapter 8
Deemed Exports
AEZ (Agri Export Zone)

R K Maru
Indore
Mobile: +91 94250 77856
Email: rkmaru2000@rediffmail.com