Exports up 13.2% in July

Exports grew by 13.2 per cent to USD 16.24 billion in July compared to the same period last fiscal, posting growth for the ninth month in a row. Imports too jumped by 34.3 per cent to USD 29.17 billion in July compared to the same month last fiscal, according to the official data released on Wednesday. During April-July this fiscal, exports posted a growth rate of 30 per cent to USD 68.62 billion on year-on-year basis. Imports during the April-July period grew by 33.3 per cent to USD 112.2 billion. Oil imports in July grew by 4.4 per cent to USD 7.6 billion, while non-oil imports jumped by 49.6 per cent to USD 21.5 billion. The country's trade deficit widened to USD 12.93 billion in July compared to the year-ago period.

More sops for exporters on the cards as Govt mulls sectoral review by December

Exporters might look forward to yet another booster dose from the government after it concludes a sector-wise review by December, said commerce and industry minister Anand Sharma.

At an interaction with some of the chambers of commerce, he said the government would also implement measures to reduce procedural and transaction costs of exports by early October. Challenges remain on container transport under the railways, he said, and on port charges that come under the shipping ministry, which might take some time to address.

The sectoral review would be undertaken in November, with the report in December. This would be done to especially evaluate and analyse the performance of some ailing sectors like handicrafts, carpets, toys and readymade garments, which were given a series of incentives under the annual supplement of the Foreign Trade Policy 2009-2014.

The government had done a couple of similar reviews in 2009-10, too, which induced it to come out with incentives worth Rs 1,050 crore through the FTP announced on Monday, aimed mainly at labour-intensive sectors.

While Sharma sounded confident of achieving exports of $200 billion (Rs 9.34 lakh crore) during the year, he also expressed apprehension over sustaining the growth in the remaining months, saying there would be "bumpy rides". Merchandise exports from India grew by 48 per cent during April-September in 2008, after which it started plummeting due to the slowdown in demand in some significant markets such as the US, Germany, France and Japan, which account for almost 60 per cent of our exports.

The decline in exports was sharpest in May last year, when the fall inched towards 40 per cent year-on-year. However, things started taking a positive turn from October onwards. During the period between October 2009 and March 2010, exports posted a growth rate of 32 per cent, compared to the same period in 2008-09.

Export and Import Correspondence

The Correspondence  in Overseas Business if very Important and the Success of Business is depends on the way of Correspondence. while dealing with Overseas Client : Always use clear, simple and straightforward language when corresponding with a foreign buyer. Avoid poetic and artistic expressions, idioms, colloquialisms, and slang, these will confuse the buyer

Global Business Opportunities and the Importance of Trade Commissions Abroad

The trade commissions abroad are very important. They are the market intelligence unit of the exporting country. Unfortunately, some people unfairly brand the trade commission as a spy agency. Its market information gathering is an overt operation that is sanctioned by the host country, as opposed to the unauthorized covert operation of spying.

Export market information, such as business opportunities and market analysis of target products and services, and various trade publications from the host country are being relayed by trade commissions abroad to the head office. Such information is then relayed by the head office to the exporting community through its trade publication.

Exporters in some countries may find it unnecessary to contact their trade commissions abroad for export information. The information is often available at the head office.

The responsibilities of a trade commission generally are similar from country to country. The primary responsibility is to assist its exporters in selling their products in the foreign markets. The trade commission, however, cannot do everything for the exporter. Some of the can do's and cannot do's of the Canadian Trade Commissions to the Canadian exporters that are outlined by the Department of Foreign Affairs and International Trade (DFAIT) in Canada are as follows:

Can :-

• Recommend appropriate technical experts to help exporter negotiate a deal
• Help exporter find good translators and interpreters
• Help exporter select effective agents
• Maintain a liaison with exporter's agents and encourage them
• Advise on the settlement of overdue accounts
• Advise exporter on situations and circumstances affecting travel to and within a country

Cannot :-


• Be present at all the negotiations when exporter is closing a deal
• Serve as exporter's translator and interpreter
• Act as exporter's agent
• Train or supervise exporter's agents
• Act as exporter's collector
• Act as exporter's travel agent

The Trade Commission are help full to make Export Business easy and Exporters develop the Strong International Business.

By : Bhadresh Bhatt

International Business Communications --- Crossing the Language Barriers in Exporting-Importing

English is the principal language of world trade. Knowledge of more than one language is helpful in exporting, but it is not a prerequisite.

In international business, knowing how to speak and write in English is a necessity. However, proficiency in English or any languages is not a guarantee of export success. Being able to speak and write in the buyer's language will be advantageous in countries where the use of the native tongue is of national pride.

Learning a language other than English in order to export is not absolutely required, as translation services are readily available in most countries. Certain countries even have foreign language escort services to accommodate the exporters' needs. The services of the foreign language escorts are to translate for and accompany the foreign buyer on dining and tour. The escort usually knows very little or nothing about the products of the exporter.

English is not the official language in many countries. Learning a language like English can be tedious. It is important to understand that an English word is not always pronounced the same way everywhere. The varied pronunciation is influenced by the native tongue and ethnic background.

There is no such thing as perfect English. It is not uncommon to hear the novice export person say "I don't quite understand what the buyer has said" (in English). Ironically, the export person is often not from the English speaking country, while the buyer is from U.S.A., United Kingdom, or another English speaking country.

The export person may have spent several years mastering the so-called correct English pronunciation. A different accent puts the export person at a disadvantage. The U.S.A., like Canada, is a multicultural society having a diverse ethnic background. The people in the United Kingdom usually speak English, Welsh and Gaelic.

Fluency in a language is merely a tool to facilitate communication. To fully understand what the buyer says and wants is the essence of export communication. An exporter having difficulty in conversation and comprehension seldom arouses the buyer's interest.

Sometimes it may be impolite to say 'No' directly to show disagreement in such countries as the Japan and China. 'Yes' may mean what is said is understood, but not necessarily accepted. In exporting and importing, it is important to say what is meant and to mean what is said.

The exporter must verify with the buyer in case of doubt about the message received. Do not guess or assume, for example, that the word "dinero" in the message "We want to have the dinero at 6 p.m." must be "dinner." The word "dinero" in Spanish means money.

The use of language 'mixtures' in export communication must be avoided because it may generate confusion.

Precautions to be taken at the time of establishing Letter of Credit

Letter of credit offers almost complete protection to the seller but the buyer is put to many disadvantages and has to make payments against documents only. Before agreeing to open a letter of credit in favour of the seller, the opener must be satisfied with the creditworthiness and general reputation of the seller. Entire success of an L/C transaction depends on proper conduct of the seller.

Confidential report on the seller must be obtained at the time of first transaction with him.

Letter of credit also does not offer any protection for the quality/quantity of goods supplied under the L/C. It would, therefore be necessary to know the nature of goods and specify submission of quality reports/inspection reports from an independent agency to ensure receipt of goods of proper quality. This is particularly important in case of import of chemicals and such other goods. The opener has to submit an L/C application to the opening bank. The instructions contained in the L/C application is the mandate for the issuing bank and letter of credit will be issued in accordance with this application. It is, therefore, necessary that complete and precise information must be given in the L/C application form specifying therein the description, unit rate and quantity of the goods covered under L/C and details of documents required in absolute clear and unambiguous terms. The reference to underlying sale contract must be avoided as far as possible. The L/C application must nevertheless contain all the required/information based on which L/C could be opened by the bank.

After the L/C has been issued by the bank, a copy thereof must be obtained immediately. The L/C must be scrutinized to ensure that it has been properly issued and is in conformity with L/C application. Discrepancy, if any, must be brought to the notice of opening bank immediately.

Import contact may be concluded either in terms of INR or in foreign currency. Where the contracts are in INR, the related documents are also prepared in INR and no conversion is involved. However, where the bill is drawn in foreign currency, the payment is made in Indian rupees equivalent to the foreign currency. The equivalent rupee value is arrived at by applying suitable exchange rate. These rates are applied by banks to standardise the foreign exchange-rupee conversion process.

When the price of foreign currency is quoted in terms of home or local currency it is called direct quotation basis. This has been in application since 02.08.1993. However, there is a difference between inter-bank exchange rates and merchant rates.

Merchant rates are the exchange rates applied by the bankers for transaction with their customers for various purposes, including imports and exports. These rates are calculated by the banks as per the guidelines issued by the Foreign Exchange Dealers Association of India (FEDAI). Inter-bank rates are the rate for transactions amongst the authorised dealers in foreign exchange and depend on the market conditions.

Since exchange rates are volatile, documents delivered by the bank at the time of a favourable exchange rate will enable the Indian purchaser to pay less of Indian rupees. Forex rates are always quoted as two way price i.e. at a rate at which the bank is willing to sell foreign currency(buying rate) and at a rate at which the bank is willing to buy foreign currency(selling rate). There is always some difference in buying and selling rates. However, the maximum spread available to bank is restricted in terms of celling imposed by RBI. All exchange rates by authorised dealers are quoted in terms of their capacity as buyer or seller.

By : Bhadresh Bhatt

Letter of Credit vs Bank Gaurantee

Letter of Credit vs Bank Gaurantee :

A letter of credit differs from a bank guarantee. An issuing or confirming bank's obligation is independent of, and unqualified by, the contract of sale under the transaction. A commercial credit is neither a performance bond, nor it is a guarantee of the quantity or quality of the goods shipped.

Letters of Credit are Separate Transactions

A contract for sale of goods between the seller and the buyer incorporates mode of settlement. Letters of credit by their nature are separate from the sale contract, and banks are not concerned or bound by such sale contracts even if the credits bear reference to them.

The credits stipulate documents which have to be tendered for payment and it, therefore, follows that in credits parties deal with documents and not with goods, services or performances to which the documents relate.

It is, therefore, in the interest of all the parties concerned that the conditions and terms of credit are complete and precise and banefit of excessive details.

Payment under a letter of credit does not depend on the performance obligation on the part of the exporter except those which the credit imposes. Banks accept documents under letters of credit for what those document purport to be on their face. Contract between the buyer and the seller is obligatory between themselves. The seller(beneficiary) cannot take advantage of any contractual terms in between the buyer and the opening bank and between the opening bank and the advising/confirming bank.

By : Bhadresh Bhatt

Getting and Import Export Code No for Export and Import

Registration with Regional Licencing Authority and obtaining IEC Code

Registration with Regional Licensing Authority:

Registration with Regional Licensing Authority is a pre-requisite for import of goods. The Customs will not allow clearance of goods unless:

The importer has obtained IE Code Number from Regional Licensing Authority. However, no such registration is necessary for persons importing goods from/ to Nepal provided Value of a single Consignment does not exceed Rs. 25000/=

Obtaining IEC Code Number

An application for grant of IEC Code Number should be made in the prescribed proforma given at Appendix 3.I. The application duly signed by the applicant should be supported by the following documents:

Bank Receipt (in duplicate)/demand draft for payment of the fee of Rs.1000/- Certificate from the Banker of the applicant firm as per Annexure1 to the form. Two copies of passport size photographs of the applicant duly attested by the banker of the applicant.

A copy of Permanent Account Number issued by Income Tax Authorities, if PAN has not been allotted, a copy of the letter of legal authority may be furnished. If there is any non-resident interest in the firm and NRI investment is to be made with repatriable benefits, full particulars thereof along with a photocopy of RBI's approval. If there is NRI investment without repatriation benefit, a simple declaration indicating whether it is held with the general/specific permission of the RBI on the letter head of the firm should be furnished. In case of specific approval, a copy may also be furnished.

Declaration by the applicant that the proprietors/partners/directors of the applicant firm/company, as the case may be, are not associated as proprietor/partners/directors with any other firm/company the IEC No. is allotted with a condition that be can export only with the prior approval of the RBI.

By : Bhadresh Bhatt

Export Invoice : Proforma Invoice and Commercial Invoice

 In Export Procedure the Invoice is the Main and Lead Document for any firm.

There are two types of invoices are prepared for the Export.

Proforma Invoice : Proforma Invoice is Prepared for the Export Consignment which is sent to the Consignee or Buyer for approval of the contract and after getting approval from the International buyer the party / Exporter has to prepare the Commercial Invoice to get accounted their Export Consignment.

Commercial Invoice : Commercial Invoice and Excise Invoice are Both Same. The Commercial Invoice has to prepare for the Export Cargo and Submission to Customs/ Excise Authority for the Export Clearance. 

The Both Invoices are Prepared and Presented against Customs/Excise Authority for Clearance of Export.

The Invoice is cross verified for the Purpose of Value assessment and Export Declaration Purpose.


The Export firm has to monitor some of the points regarding Invoice i.e. Value , Description of Goods and Export Declaration Like the Export Charges terms of payment and other Commercial aspects.

Bhadresh Bhatt

Current Economy Position and Foreign trade Policy

The World Economy is sailing on the flow of Stimulus packages, and as far as the Export and Import are concern the Profit or margin of the sale is very much depended on Government benefits and Subsidiaries Provided to Exporters and Importers.

 

The New Foreign Trade Policy is Going to be on the Doorstep to Indian Exporters and Importers though there are many beneficiary announcements and schemes are already provided; we can just wait for our commerce minister to surprise us with the some of the fresh benefits or withdrawals ?????

 

The Positive growth of Indian Exports are due to the past Stimulus packages provided by Government of India.

 

The Indian Trade are looking towards the DEPB Extention or any other substitute. Expansion of Focus Scheme with New markets and Products.

 

Hope that Commerce Department and Policy makers are Produce the Good Policy and provide equal weitage to all Industry.

 

Bhadresh Bhatt 

THE BASICS

You can start your import/export business at home with a telephone. You'll need a file system, business cards, and a machine to answer the phone calls. Once you get going, you'll want a cable address or a telex hook-up.

And you'll need a classy letterhead. Until you establish personal contacts, it is your letterhead that represents you. Make it look professional,