For Plus one CBSE and State syllabus following students.

1. PREPARED BY
PRASANTH.S.R

3. INTROUCTION
Export /import trade has to comply with
several formalities. In order to boost
international business, the government provides
various incentives and concession. It has also
set up various organizations to educate those
engaged in foreign trade. International agencies
like World Bank, IMF, WTO, etc.., accelerate the
pace of development and trade amongst
different nations.

5. Types of foreign trade
Import: purchase of goods from foreign country for
domestic use.
Export: sales of domestic goods to a foreign country
Entrepot: goods imported from a foreign country for
re- export to another country

7. Importers exporters’ code number should be
obtained first. This number should be shown in all export-
import documents. Regional import export licensing
authority issues this number when applied for in the
prescribed form.
This certificates is issued by export promotion
council/ commodity board / federation of Indian export
organization / marine products export development
agency, etc. this is needed to obtain facilities , benefits or

8. The exporter tries to explore foreign markets by
conducting surveys and market research to procure
export order.
After receiving the export order the exporter gives
the conformation to the importer after careful scrutiny.
The exporter then manufactures or procures the
goods required by the importer. He should adhere to the
specification given by the importer of goods.

9. The goods manufactured are subject to excise
duty. But export gods are either exempted or if paid, it s
later refunded to the exporter. So, the exporter has to
apply to the excise commissioner along with the
documents like invoice and AR4/AR5 forms.
In foreign trade, quality of goods must conform to
international standards. In India quality control and
inspection act insists on compulsory quality control and
pre-shipment inspection

10. No country will allow goods to cross its border
without the permission of the custom authority. This is to
ensure that
 The export and import are lawful
 The value of export and import is authenticated
 Duty is properly assessed
 The regulatory provision are complied with
 The data of export and import are available for
compilation

11. Custom authority grants permission through a
document called ‘shipping bill’. This is prepared by the
exporter or his agent. This is submitted to the customs
office along with other documents like invoice, license,
inspection certificate, etc. these documents are checked
by the customs officials. The goods may be physically
verified by them at the dock. When the port formalities are
over, permission is granted for shipment of goods. The
exporter puts ‘let ship order’ on the shipping bill. The
permission is shown to the master of the ship who allows
the goods to be loaded on the ship. When the goods are
loaded, the captain of the ship misuses a receipts known

12. The exporter has to hire a space in the ship
well in advance. The agent of the exporter brings
the goods near the port. After paying the port
charge and fulfillment the formalities, permission is
granted to bring the goods to the port. The
shipping bill is presented and the goods examined.
if everything is in order, the officer puts “let export
order’ on the shipping bill. Then the goods are
loaded under the supervision of a customs
preventive officer.

13. The agent of the
exporter hands over the
mate’s receipt to the
shipping company official
who in turn issues a bill of
lading.

14. After shipment of goods, the
relevant documents like bill of lading,
bill of exchange, letter of credit, invoice,
etc, are submitted to the bank by the
exporter. The bank then takes steps for
completing the formalities for payment.

16. The importer has to obtain IEC number and RCMC
Importer undertakes market research and makes enquiries for
the required items for import. He then identifies the products to be
imported. After that the enters into the import contract.
Letter of credit is an arrangement for payment to the
exporter through importers bank. When a letter of credit is opened,
the bank undertakes to make payment to or to the order of the
exporter against stipulated documents and terms and conditions.
The importer approaches his bank to open a letter of credit in favor
of the exporter.

17. When the goods reach the importer country, the
person in charge of the carrier informed the officer at
dock. He asks him to unload the cargo on a document
called ‘import general manifest’. The details of goods
imported are given in this document.
The customer authority informs the importer
about the arrival of goods. The importer of his prepares
called ‘bill of entry’ and submits it to customs authority
along with other documents. Bill of entry is a document
which customs officer permits the clearance of the

18. The bill of entry is marked by the customs
officers for assessment of import duty and appraisement
by the appraiser. The appraiser then examines the
documents and issues the examination order. This is
then procured by the importer / agent of importer and the
import duty is remitted.
The bill of entry is handed over to an official called
‘dock superintendent. He marks the document to the
physical examiner who examines physically the goods.
The examiner gives his report on the bill of entry. The
agent of the importer presents the bill of entry to the port

20. EXPORT/ IMPORT DOCUMENTS
In foreign trade buyers and sellers are
separated by long distances. The business activities
are carried out with the help of documents.
Documents protect the interest of both the buyers
and sellers. Documents in the export business may
be divided into two, viz.
 Principal export document
 Auxiliary export document

21. PRINCIPAL EXPORT DOCUMENTS
: it contains a detailed description
of the goods supplied by the exporter. The name of
buyer and seller, name of the ship , date of sailing,
quality and price, marks and numbers of packages. Etc.,
: it indicates the nature and number of
goods put in each packets/ container with distinctive
numbers and marks. This is to identify the goods
contained in each packages, by the importer.
; it is an important document issued by the
shipping company or its agent. Thus a bill of lading is,

22. PRINCIPAL EXPORT
DOCUMENTS……..: this is issued by an airline company in case of air
carriage. Airway bill is not a document of title : it can be
prepared in such a way that it can made a transferable
document
: the certificate of inspection issued byt
eh export inspection agency ensure that the consignment is
inspected as per quality control and inspection act.
: exported goods are exposed to perils of sea.
So they are invariably insured by the exporter. He obtains a
marine insurance policy from an underwriters or insurance
company.
: it indicates the country where the goods
have been originally produced. It is generally issued by chamber

23. PRINCIPAL EXPORT
DOCUMENTS……..
; this is document related to the payment
for the goods exported. As bill of exchange is also called
‘draft’ or ‘hundi’. It has three parties, viz., the drawer, the
drawee and the payee.
 A bill of exchange may be:
 Sight bill: payable at sight or on presentation
 Usance bill; payable after a stated number of days

24. AUXILIARY EXPORT DOCUMENTS
: it is a quotation sent by the seller to a potential
foreign buyer. It gives description of goods, m price and other terms
and conditions.
; this document is given by the export
inspection agency. The exporter informs the agency on this
document for the inspection of the export goods.
; it is on this document that the exporter
provides various instructions, connected with the export of goods,
6o the shipping agent.
; it is on this document that the exporter, who
requires insurance , makes a declaration related to the insurance

25. AUXILIARY EXPORT DOCUMENTS……
; it is through this document that the shipping
company intimates the exporter about the reservation of space
on board the ship.
; it is issued by the chief officer of the ship and
is an acknowledgement of the goods on ship.
: this application is
submitted to the chamber of commerce/ export promotion
council. It shown the origin of goods.
: this contains details about shipping documents of
the negotiation/ collection.

26. Import documents
The principal import document is bill of entry. The goods
imported are cleared on the strength of this document.
: when the importer wants to
clear the goods in one lot on payment of full customs duty, this
document, which is white in color, is used.
; when the importer does not want
to pay the duty on imported goods and want the goods to be
transferred to customs recognized bonded warehouses, this
document is used.
; this document is used when the importer
clears the goods from a bonded warehouse on payment of
duty. Its color is green.

27. Important terms:
 : in FOB contracts , the responsibility of
exporter ends with the delivery of goods on the ships rail at the
named port of shipment .
In these types of contract, exporter has
to bear all the costs and freight to bring the goods to the named
port of destination.
in this type of counteract, the
exporter bear all costs and freight for brining the goods to the
named port of destination together with the cost of insurance
against the risk of loss or damage to the goods during the
carriage.

28. EXPORT PROMOTION /
INCENTIVESGovernment has taken various measures to improve the export position.
for this purpose it announces EXIM policy from time to time. Important such
measures adopted are as follows:
EPZs have been set up to provide
internationally competitive duty free environment for exports. Govt. has
taken initiative to provide infrastructural facilities in these zones to
produce goods at lower cost. Custom=ms clearances and other formalities
simplified.
: these units are set up for the export of
the entire products; they can be set up anywhere in India. They get all the
benefits provided to units in the EPZ.
: it has been created to encourage fr5ee
trade. It is treated as a deemed foreign territory for duty purposes. Goods
going into the SEZ area from the domestic tariff area (DTA) is treated as

29. EXPORT PROMOTION / INCENTIVES……….
these export houses, in different names, are
given national recognition so that they can take all out efforts to
promote exports.
: to promote the export of services, various
categories of service houses have been given recognition.
: the idea behind
this is to encourage import of capital goods for export production.
: deemed exports refer to those transactions in
which goods supplied are not supposed to leave the country. If goods
are supplied to specific categories of organizations like EPZ, EOV
projects funded by United Nations agencies, etc. they are treated as
deemed exports.

30. EXPORT PROMOTION /
INCENTIVES………. : these schemes are aimed at
facilitating import for the purpose of export production. The duty
exemption enables import of inputs for export production.
: under this scheme of duty drawback customs and
excise duties on raw materials and components used in export
products are refunded to the exporters.
: export finance is provided to the exporters at
concessional rate. There are two types of finance requirements, viz.,
 Pre-shipment finance/ packing credit
 Post –shipment credit

31. EXPORT PROMOTION /
INCENTIVES……….
: under this scheme
assistance is given for marketing Indian products in the
international markets.
: tax exemption is allowed to boost exports. Under
this scheme, export profits and foreign exchange earnings
from other specified sources are exempted from income tax.
; quality is the most
important element of export marketing. In order to promote
Indian brands in the overseas market, India brand equality
fund (IBEF) trust has been established in 1996.

32. EXPORT PROCESSING ZONES
These are set up increases production for export. These are
industrial estates which from enclaves within the national
customs territory. They are usually located near the international
air port or sea port. There are seven export processing zones in
India.
 Kandla export processing zone, kandla,Gujarat.
 Santa Cruz electronic export processing zone (SEEPZ), Santa
Cruz, Bombay.
 Noida export processing zone (NEPZ) noida , UP
 Madras export processing zone (MEPZ), Chennai, Tamil nadu.
 Cochin export processing zone (FEPZ) falta, cochin , Kerala
 Falta export processing zone (FEPZ) , west Bengal.

33. OBJECTIVES OF EXPORT PROCESSING
ZONES
The major objectives of these zones are:
 To earn foreign exchange
 To provide employment
 To acquire and update labour and management skills.
 To create links between EPZ industries and the domestic
economy.

34. SPECIAL ECONOMIC ZONES
These are set up in different parts of the country to
provide an internationally competitive free environment for
export production. They may be set up in the public, private,
joint sector or by the state government. The activities in these
zones may be trading, manufacturing or service. They enjoy
exemption from industrial licensing for manufacture of items
reserved for SSIs. They are also exempt form sectarian
ceilings on FDI. It is a deemed foreign territory for purpose of
trade operations and duties and tariffs. Goods going into SEZ
from DTA are treated as deemed exports. SEZ are exempted
from duty on import of raw materials and capital goods. If

35. Features SEC
 A duty free enclave has been created which is treated as foreign
territory for trade operations.
 Units can be set up for manufacturing, trading and service
activities.
 Units are exempted from routine examination of import and
export of cargo by customs
 Units should be a positive foreign exchange earner in three years
 Sale in domestic market is permitted on payment of duty
 Duty free goods are allowed to be utilized within the approval
period of 5 years
 Subcontracting of production is allowed
 100%foreign direct investment is permitted through automatic

38. DEPARTMENT OF COMMERCE
Department of commerce, coming under the
ministry of commerce, is the apex body in this direction.
Department of commerce helps to better commercial
relation with other countries and enhance export
promotional measures and regulations of certain export
– oriented industries and products. it formulates policies
on foreign trade –import and exports –of our country.

39. EXPORT PROMOTION COUNCILS
(EPCS)These are registered either as joint stock
companies under the companies act or the societies
registration Act. These are non-profit organizations. The
basic objective of these councils is to promote and
develop exports of particular products under their
jurisdiction. There are 21 EPCs at present, dealing with
different products.

40. These boards are supplementary to EPCs. These are specially
established by the government of India for the development of
production of certain traditional commodities.
It was set up by the central government as per section 3 of the
export quality control and inspection act, 1963. It aim at
development of export trade adhering to strict quality slandered
and pre-shipment inspection. All the commodities meant for export
must have the quality specification prescribed by the EIC,
excepting certain items.

41. Indian Trade Promotion Organization
(ITPO)ITPO was formed by merging two erstwhile entities,
viz., trade development authority and trade fair authority
of India. IT WAS SET UP IN 1992 BY REGISERING AS PER
COMPANIES Act, under the ministry of commerce. Its
headquarters is at New Delhi. Being a service
organization it always keeps in touch with trade, industry
and the government. It organizes trade fairs and
exhibitions in India and outside. It assists export firms to
participate in international trade fairs and exhibitions.

42. It was set up in 1963 by the government of India and is registered
under the societies registration Act. It is an autonomous body.
IIFT was formed with the prime objective of introducing
professionalism in the country’s foreign trade management.
It was set up in 1966 as a national institute jointly by the ministry
of commerce and the Indian packaging industry. It acts as the
training –cum-research centre for packaging and testing. It caters
to the needs of both domestic and foreign markets.

43. STATE TRADING CORPORATION
Domestic firms find it difficult to complete in the
international market. Existing trade channels are either
unsuitable for promotion of exports or are failing in
bringing about diversification of trade with countries
other than European countries. Forming of state trading
corporation (STC) in 1956 was to set these
shortcomings. The main objective of STC is to stimulate
export trade among different trading partners across the
globe.

44. World Bank / International Bank for
Reconstruction and Development (IBRD)
The World Bank was reacted at the 1944 Bretton woods conference.
Although many countries were represented at that conference, the US and UK
dominated the negotiations. It is based in Washington D.C. the IBRD is
commonly known as World Bank. The IBRD was established with the original
mission of financing the reconstruction of European nations following world
war2. After the reconstruction of Europe it turned its attention towards
eradicating poverty around the world. In 1960, the international development
association (IDA) was set up to serve as the banks concessional lending arm
and provide low and no-cost finance and grants to the poorest nations whose
per capita incomes were below a critical level. The IBRD began investing in
development projects and in social sector of underdeveloped nations like
health and education.

45. World Bank is a group of five
international organizations
International bank for reconstruction and development(IBRD)
1944
International Finance Corporation(IFC)1956
International Development Association (IDA)1960
Multinational Investment Guarantee Agency(MIGA)1988
International Centered For Settlement Of Investment Disputes
(ICSID)1966

46. Functions of World Bank
 Granting reconstruction loans to war-torn nations
 Granting development loans to underdeveloped nations
 Providing loans to government for agriculture , irrigation, power
, transport, water supply, education , health, etc.,
 Providing loans to concerns for specified projects
 Promoting foreign investment by guaranteeing loans provided
by other organizations.
 Providing technical, economic and monitory advice to member
countries for specific projects
 Encouraging industrial development of underdeveloped
countries by promoting economic reforms.

47. International development association
(IDA)The IDA, set up in 1960, is the part of the World Bank that
helps the world’s poorest countries. it helps these countries to
reduce poverty by providing no-interest loans and improving living
conditions.
Objectives
 To provide development finance to the less developed countries
on easy and flexible terms
 To promote economic development , increase productivity , raise
the standard of living in the less developed countries
 To supplement the objectives and activities of the world bank
 To extend macroeconomic management services in areas

48. International Finance Corporation
(IFC)
IFC is an affiliated institution of the World Bank established
on July 20, 1956. It assists private enterprises in developing
countries by providing them with risk capital .all the members of
the world bank are eligible to become members in IFC.
 Accelerate the pace of economic development of the member
countries in underdeveloped areas
 Invest in private productive enterprises in association with private
investors.
 Bring together investment opportunities , privae capital, both foreign
and domestic and experienced management
 Stimulate productive investment of private capital in the developing
countries.

49. Multinational investment
guarantee agency (MIGA)
MIGA is a member of the world bank group . it was
established in 1988 as an investment insurance facility to
encourage confident investment in developing countries.
Objectives
 To promote foreign direct investment (FDI) into developing
countries
 To provide insurance facility to investors against political risks
 To provide guarantee against non-commercial risks
 To target projects that Endeavour to create new jobs, develop
infrastructure and generate new tax revenues.

50. International Monetary Fund (IMF)
It is the second international organization next to the World
Bank. It was initiated in 1944 at the Britton woods conference and
formally created in 1945 with 29 member countries. Its
headquarters is at Washington D.C .the IMF,s goal was to assist in
the reconstruction of the world’s international payment system
post world war 2. To promote exchange rate stability among the
different countries
 To make an arrangement of goods exchange between the
countries
 To promote short term credit facilities to the member countries
 To assist in the establishment of international payment system
 To make the member countries balance of payment favorable

51. World Trade Organization (WTO)
The WTO, the principal international institution for the
management of international trade, was created at the
Uruguay round of trade talks in 1994. It was to transform
the general agreement on tariffs and trade (GATT) into a
permanent institution. GATT negotiations started in
Uruguay in 1986 meant for promotion of free trade. It was
the origin of the WTO and a range of multilateral
agreement. It currently has 160 member states. The WTO
is responsible for providing a forum for trade negotiations,
handing trade disputes and monitoring national trade
policies.

52. Functions of WTO
It was only a legal arrangement. The WTO is a new
international organization set up as a permanent body. It is
designed to play the role of a watchdog in the spheres of trade in
goods, trade in services, foreign investment, intellectual property
rights, etc.,
 The WTO shall facilitate the implementation , administration and operation
and further the objectives of this agreement and of the multilateral trade
agreements
 The WTO shall providing the forum for negotiations among its members
concerning their multilateral trade relations
 The WTO shall administer the understanding on rules and procedures
governing the settlement of disputes
 The WTO shall administer trade policy review mechanism

53. Objectives of WTO
 To implement the world trade system as visualized in the agreement
 To promote world trade in a manner that benefits every country
 To ensure that developing countries secure a better balance in the sharing of the
advantages resulting from the expansion of international trade corresponding to
their developmental needs
 To demolish all hurdles to an open world trading system and usher in international
economic renaissance
 To enhance competitiveness among all trading partners so as to benefits
consumers and help in global integration
 To increase the level of production and productivity with a view to ensuring level
of employment in the world
 To expand and utilize world resources to the best
 To improve the level of living for the global population and speed up economic
development of the member nations.

54. Benefits of WTO
 Lower prices for consumers. removing tariffs
enables to buy cheaper imports
 Free trade encourages greater competitiveness.
 Law of comparative advantage
 Economies of scale
 Free trade can help increase global economic
growth.

56. The General Agreement on Tariffs and Trade (GATT)
It was a multilateral agreement regulating
international trade. Employment and was the outcome of
the failure of negotiating government to create the
international trade organization (ITO). GATT was signed in
1947, took effect in 1948, and lasted until 1994; it was
replaced by the world trade organization in 1995.
The Agreement on Agriculture (AOA)
It is an international treaty of the world trade
organization. It was negotiated during the Uruguay round
of the general agreement on tariffs and trade, and came
into force with the establishment of the WTO on January 1,

57. The agreement on trade – related aspects of intellectual property
rights (TRIPS)
It is an international agreement administered by the
world trade organization (WTO) that sets down minimum
standards for many forms of intellectual property (IP) regulation as
applied to nationals of other WTO members. Intellectual property
refers to information with commercial values like ideas,
inventories, creative expression and others.
The general agreement on trade in services (GATS)
It is a treaty of the world trade organization (WTO) that
entered into force in January 1995 as a result of the Uruguay
round negotiations. The treaty was created to extend the
multinational trading system to service sector, in the same way the