2. IMPORT PROCEDURE AND DOCUMENTATION
BY AMIT KARRA
 Learning objectives …. after studying, you will be able to understand..
 Import definition
 Why import?
 Key benefits
 Fruits of global trade
 4 ps and 4 cs
 Reasons for international trade
 Marketing mix concept
 Different forms to enter into an international trade
 Common Barriers to international trade

3.  Custom department and its objectives
 Import documents
 Cargo arrival notice, deliver order
 Bill of lading
 Custom clearance of import cargo
 Set up by government
 Time for filling of bill of entry, noting of bill of entry & bill of entry for
warehousing and home consumption
 Determining the rate of duty and custom tariff examination of the import cargo
 Port operation
 Difference b/w transit and transhipment of goods
 Custom house agent

4.  Types of risks
 Quality and pre shipment inspection
 Quality control
 Responsibility of person in-charge of conveyance
 Advance noting - mother vessel and feeder vessels
 Incoterms
 Methods and instruments of payment and pricing incoterms.

5. IMPORT: Import definition: Import trade refers to the purchase of goods from the
foreign countries.
The procedure for import trade differs from country to country, depending upon the
import polices, the statutory requirements and customs of different countries.
In almost all the countries of the world import trade is controlled by the government.
Categories of import items
-Freely imported
-Restricted items
-Prohibited items
-Canalised items - Exim only through the agencies designated by the central
government – wheat/soya bean etc.

7. WHY IMPORT?
Inequal distribution of recourses by nature between countries has lead to interdependence among
countries.
- Countries which have surplus exports and countries which have scarcity import. This
interdependence leads to international trade for. E.g. England which is very rich in capital goods
and has no food grains at all.
- Because of this uneven distribution, England depends on Australia for its requirements of food
grains and Australia depends upon England for its requirement of capital goods.
- Under these circumstances England would import food grains from Australia and Export capital
equipment's to Australia.

8. - In short this international trade is beneficial to both England and Australia.
- As would be evident from the above both imports and exports play an equal role in
international trade.
- One professor Hicks has commented and confirmed that no country in the world is
self sufficient. It has to import what it does not have and export what it has
abundance.
“Charles” economist has stated that export and import are the two wheels of the cart of
international trade. If one wheel that is import is missing the cart of international
trade will not be able to move further.

9. - Some economist of the European economic union feel that export is income and import as
expense.
- According to them export should be increased and encouraged and import to be curtailed,
reduced or totally abolished. They emphasized the tariff, safeguards and exchange control
be imposed to restricts imports.

10. WORLD TRADE ORGANISATION :
- BUT World Trade Organisation has specifically advised that countries adopting
these restricted practices for restricting imports would have to face disciplinary
action / penalties.
- WTO concluded that countries should increase their imports from undeveloped
and developing countries.
- It was concluded that if imports are curtailed or totally abolished it would result in
total disequilibrium in balance of payment and balance of trade. Resulting in
heavy exchange rate fluctuation there by disturbing the entire international trade.

11. Key benefits of imports in international trade:
To extend profit margins importing goods or raw material is one potential path toward
achieving the goal.
Import provides a host of benefits, including lower prices, higher quality goods and the
advantages associate with international trade agreement.
1) Comparative advantage means lower price goods out of the many benefits of
importing goods and raw materials, comparative advantage is the most common
reason why the companies choose to import.
2) If you can get the products or materials at a considerably cheaper rate, importing is
a quick and easy way to cut cost and boost your profit margins.

12. 3) Importing can mean higher quality products – it is no secret that each
country has its own strength and specialities.
4) All the governments actively support trade relation and aim to make
importing easy for business.
5) The various trade agreement negotiated by a country can give you access to
unique benefits that make importing easier and cost effective.
6) Foreign exchange outlay – Efficient use of foreign exchange for procuring
goods not available indigenously (locally) and can be made available by imports
only..

13. 7) Technical knowhow facilities through import of technologies.
8) Better international relations.
9) Access to new market.
10) Availability of improved quality.
11) Better profitability.

14. Fruits of global trades:
1) Import make possible availing fruits of international global trade, we can get
the best of the world through imports.
2) Import raise our standard of living. Foreign trade helps It providing a better
choice to the consumers. It helps in making available new varieties to consumers
all over the world.
3) We can imports French perfume, swiss watches, Chinese toys, best of the cars
from Germany.

15. 4) Crude oil without which no activity in the world is possible is available only
through imports from Gulf and middle east countries like…Iran, Turkey, Saudi
Arabia, Egypt and UAE etc. …..
5) Wall mart, the biggest mall and super store in the world imports / buys from
around the world and gives its customer the best in the world. This has been made
possible only through imports.
6) Generate employment opportunities.
7) Because of import of capital goods and technology, a country can generate growth
in all sectors of the economy i.e. Agriculture, any industry and service sector.

16. 8) Assistance during natural calamities – During natural calamities such as
earthquakes, floods, typhoon etc., the affected countries face the problem of shortage of
essential goods. Foreign trade enables a country to import food grains and medicine from
other countries to help the affected people.
9) Maintains balance of payment position – Every country has to maintain its balance of
payment position. Since, every country has to import which results in outflow of foreign
exchange, it also deals in export for the inflow of foreign exchange.
While importing is a great idea for many businesses it is important perform carful research
in order avoid costly mistake later.

17. Reasons for international trade/foreign trade:
Marketing – why enter in an international market? Because of..
 Profitability,
 Business growth,
 Access to imported inputs,
 Uniqueness of product and services,
 Marketing opportunities,
 Research & development, reaching new customers,
 Due to recession,
 Small domestic market,
 Customers empowerment,
 Increase competition.

18.  Uneven distribution of natural resources
 Expansion of market for products: foreign trade is necessary as
it helps to widen the market for goods produced.
 Difference in taste
 Difference in technology
 Difference in skills
 Difference in climatic condition
 Desire to improve the standard of living

19. COMMON ERRORS IN INTERNATIONAL TRADE OPREATION
1) Importer has sent order for supply of goat meat but received supplies of lamb
(sheep) meat.
2) Importer has sent order for men’s trousers but received supplies of women’s
trousers.
3) Importer has sent quotation for supply of P-3 computers and has received
supplies of P-4 computers.
4) Exporter fails to follow the homologation approve (a car, engine, etc.) for
sale in a particular market) requirement for a truck supply order to
Afghanistan and suppliers sent trucks with right hand steering trucks are used
in Afghanistan.
5) Exporters fails to take instructions of he fact that it is mandatory to provide
drug usage instructions in Arabic in Gulf countries.

21. Marketing mix concept :
The four Ps of marketing: product, price, place and promotion
The marketing mix can be divided into four groups of variables commonly known as the four Ps:
1. Product: The goods and/or services offered by a company to its customers.
2. Price: The amount of money paid by customers to purchase the product.
3. Place (or distribution): The activities that make the product available to consumers.
4. Promotion: The activities that communicate the product’s features and benefits and persuade
customers to purchase the product.

22. Marketing tools:
Each of the four Ps has its own tools to contribute to the marketing mix:
•Product: variety, quality, design, features, brand name, packaging, services
•Price: list price, discounts, allowance, payment period, credit terms.
•Place: channels, coverage (range and area), locations, inventory, transportation,
logistics.
•Promotion: advertising, personal selling, sales promotion, public relations.

23. 4c's is one of the business tools that you should take advantage of as an internet marketer. It’s a
modern version of the 4Ps (Product, Price, Place, and Promotion).
The 4Cs (Customer/consumer value, Cost, Convenience, and Communication) enables you to think
in terms of your customers’ interests more than your own. From being business-oriented, you’ll
become customer-oriented.
Here are some of the best tactics pros use to enjoy the benefits of the 4C's in marketing.
1) Customer : Once you understand your customer, it becomes much easier to create a product
that will be of benefit to them. The customer makes the purchase decision and is therefore the most
valuable resource in any marketing strategy. (Find what the customer wants and needs. Then create
the product, service or solutions.

24. Cost: Don’t confuse the cost of your product with its price. Price is only a small
segment of the overall cost of buying a product to a customer.
It is important to determine of overall cost – not price – of your product to the customer.
Cost not only includes price of the item, but also may include things such as the time it
takes for the customer to get to your location in order to buy your product.
Cost can also include the product’s benefit, or lack-there-of, to the customer.
Satisfy the customer first not the product you sell.

25. Convenience:
The Third “C” within this marketing mix is convenience. Convenience is often compared
to “place” in the 4P’s marketing strategy.
However, these two are very different. Place simply refers to where the product will be
sold. Convenience is a much more customer-oriented approach to this marketing strategy.
Once you have analyzed your customer’s habits, you should be able to know whether they
shop online or in stores as well as what they are willing to do to buy your product.

26. Communication:
The fourth and final “C” in this marketing mix is communication. Communication is
always key to business marketing; without it, the 4 C’s would not be effective.
Communication is often compared to the fourth P, promotion; however, it is very different.
Promotion of a product is used to say customers in order to get them to buy a product.
Promotion can often be manipulative and ineffective.
However, communication is again a customer-oriented approach to the task of selling
products. Communication requires interaction between the buyer and seller. This
marketing strategy can very easily be implemented through the use of social media.

27. Marketing a product on your social media sites, or even including links to your social media
profiles can be very beneficial to your customers. This allows them to interact with your brand
on a personal level and will eventually lead to greater brand loyalty among your customers.
The 4 C’s of marketing can be highly beneficial to any marketing strategy.
This strategy forces marketers to really understand their audience before they even being to
develop a product. This strategy requires communication throughout the entire process, from
start to finish, and begins with understanding what the customer wants and needs out of your
product.
When utilizing the 4 C’s, just remember to always think of your customer first, and
communicate with them along the way.

28. Different Forms to enter into an international Trade:
1) Direct Import - Direct Imports are products imported directly into a country and not
through the other authorized agent/distributor. Since there is no authorized middleman
involved in the import of the product, the added costs are lower and the customer pays
less. Like commission on product.
2) Subsidiaries - Setting up another organization thoroughly to begin activities abroad.
The parent organization can exert full control over its operations in a foreign nation.

29. 3) Joint venture - It prompts sharing of expenses and risk with a local accomplice which
help an organisation to enter in the global market. Both the foreign and local
entrepreneurs jointly forming a new enterprise.
4) Franchise - Franchising is an attractive way to enter foreign markets because it
requires little financial investment by the franchisor.
5) Third Party: Through Agents and representatives / Traders / Marchant importers and
Exporter

30. Barriers to International Trade/Foreign Trade:
Uncontrollable factors affecting international marketing decision...
 Difference in currency (eg IRAN)
 Difference in culture and beliefs
 Difference in language
 Distance
 Political instability or environment
 Problem of documentation
 Transportation, logistics and communication

31.  Government policy
 Difference in weights and measurement
 Level of infrastructural and technology affecting Distribution and
manufacturing problem
 Geography and climate of the country.

32. PRIVAT PARTIES : –
 CHA – Customs house agent. In India, a customs house agent (CHA) is
licensed to act as an agent for CUSTOM CLEARANCE purpose of the
import or export of goods at a customs station.
 Freight forwarder - A freight forwarder also known as a non-vessel operating
common carrier (NVOCC), is a person or company that organizes shipments
for individuals or corporation to get goods from the manufacturer or producer
to a market, customer or final point of distribution.[1] Forwarders contract with
a carrier or often multiple carriers to move the goods. A forwarder does not
move the goods but acts as an expert in the logistics network.

33.  Shipping line – Carrying cargo on vessel.
 Packaging Companies - The true function of product packaging is to protect the
product during shipment from the manufacturer to the store selling it.
 Marine insurance companies - Marine insurance protects against business losses
incurred during water / air transport operations.
 Transporter - Cargo movement from factory to port or airport.
 Banks – Transfer your fund
 Inspection agencies - Quality plays an important role in products and services for
customer satisfaction and customer loyalty. Inspection is a function of quality
discipline.

34. CUSTOM DEPARTMENT AND ITS OBJECTIVES :
To handle growing international traffic properly and effectively and to make it
administratively possible that all the cargo / goods / passengers etc., imported /
coming into India or exported going out of the country by sea, air, land or rail routes
are checked by the customs.
In tune with international practice the entry / exit of carries / passengers etc. is
therefore regulated in this country by law and the custom act, 1962 is the basic statue
which governs / regulates this entry / exit of different categories of vessels / goods /
passengers etc., into or outside the country.

35. Imports Documentation:
 Import documentation, it is a time complex, is an integral part of international
business.
 It is important to have good knowledge and understanding of these documents and
procedure, so that there are no mistakes in it compliance.
 Errors can result in delays in clearance of the imported consignment and penalties
such as demurrage and storage charges may be applicable.
 A set of various standard documents as per customs rules are required for clearance of
import shipments.
 To ensure smooth and quick clearance of cargo, error free documentation are
essential.

36.  These documents are required to be produce to customs at the time of
clearance from customs.
 In case of the custom officer has any doubts he can ask for any other papers
to support the claim and clearance.
Here are the list of documents:
 Commercial invoices
 Packing list
 Bill of lading / airway bill
 CHA authority letter
 Import licence if required for benefits
 Copy of purchase order / sales order / letter of credit
 Insurance policy

37.  Industrial Licence if required.
 Test report, if required (e.g. . W652ires)
 Product catalogue / Technical details
 Certificate of origin / Non Preferential / Preferential (Concessional
Duty benefit)

38. Cargo Arrival Notice
It is the notice sent by a carrier or an agent, to the consignee to inform the consignment
about the arrival of the shipment.
Delivery order
It indicates shipping line charges which are required for Delivery order.
Letter of Authority, in favour of CHA.
This is an authority letter given by the consignee to customs, indicating that they are
authorising a particular “CHA – (xyz name)” to clear our shipment from customs on
our behalf.

39. What is the bill of lading?
Ocean Bill of Lading
Multi Modal Bill of Lading (More than 2 transport involved)
Seaway / Express / Surrender Bill of Lading
A documents signed between shipper (Seller) and carrier (Shipping line / Logistics company)
that details type, quantity and description of goods being carried.
Seller’s shipping Agent issue 2 set of documents.
1) Original Negotiable bill of lading (Signed and stamped) – 3 copies
2) Non Negotiable bill of lading (without sign and stamped) – 3 Copies

40. B/L servers main 3 functions
- A RECEIPT that goods have been loaded.
- Evidence of CONTRACT of carriage between shipper and carrier.
- Documents of “TITLE” of the goods.
Bill of Lading issued 3 originals…
1st original must be surrender for delivery of goods at destination (Import country)
Once goods are “RECEIVED”, all other B/Ls are null and void.

41. CUSTOM CLEARANCE OF IMPORT CARGO…
 As per the custom manual, goods imported in a vessel / aircraft have to cross
the customs barrier in the country of import, complete the customs clearance
procedure and pay applicable custom duty.
 Detailed customs clearance formalities of the loaded goods have to be followed
by the importer.
 As per the custom Act, custom station and custom authorities effectively have
the same meaning.

42.  Custom station means customs port for ship / by sea.
 Custom airport (for airlines)
 Land custom station for trucks / motor vehicles
 Containerised cargo, the customs formalities can also be completed at ICDs
(Inland container depot) or
 Special Economic Zone (SEZs)

43. SET UP BY GOVERNMENT OR APPROVED BY THE GOVERNMENT
In case of goods are being taken to a customs bonded warehouse, the customs clearance
formalities can be completed and applicable duty can be paid by the importer at the time of
taking delivery of the cart at the warehouse.
The basic documents required for custom clearance is called the “BILL OF ENTRY”
Time for filling of bill of entry :
A bill of entry has to be filed after delivery of import general manifest by the carrier.
Every importer must file a Bill of Entry a per section 46 of the custom Act, for home
consumption or warehousing in a prescribed form.

44. Bill of comprises different copies meant for different purpose.
Four copies issued - Original retain by custom department.
- Duplicate and third copy is meant for the importer
- 4th Copy – submission to the bank for making remittance to the foreign
supplier.
Noting of bill of entry :
IMPORTER
/ CHA
Customs
IT System
Generate
Check list
Appraisal
Section
Assessment of
Value and
Computation of
Duty
Custom IT
System
Registration of
BOE and
Payment of Duty
Filling of
Documents
online
Generation
of E-BOE
Shed
Appraiser
Customs
Examination
Shed
Appraiser’s out
of Charge
Remarks on B/E
Delivery of
Import
Cargo

45. Bill of entry for home consumptions :
1. Bill of entry will be presented to entry inward counter clerk along with invoice,
packing list, bill of landing or delivery order along with importers or CHAs
declaration, licence whenever clearance under licence is claimed,
acknowledgement / movement sheet in the prescribed form.
2. In addition to the above essential documents, the importer and CHAs are also
advised to file other documents facilitating expeditious clearance like contract,
proforma invoice and insurance policy, test report import licence declaration
and serial number in the policy, industrial licence if required by the policy,
concessional duty certificate if applicable, catalogue, drawing, technical data,
literature in case of machinery or spares, split up value for spares, components
etc…

46. 3. Receipt of documents will be marked in acknowledgment movement sheet by
the entry inward clerk. After entering CHA number, he will distribute the bills of
entry to the noters.
4. The noters will verify description of goods, importer’s name, address, gross
weight, bill of lading number and date, container number, marks declared in
the bill of entry with that of IGM. A NUMBER GENERATED BY THE
COMPURTER WILL BE ENDORESD ON ALL THE COPOIES OF BILL OF
ENTRY. Afterwards, the bill of entry will be forwarded to the apprising groups.

47. 5. In case of discrepancies between B/E and IGM it will be noted on the reverse
of original B/E. The office superintendent or the Dy. Superintendent will verify
this discrepancy with hard copy of IGM. If “note and show” is allowed, the B/E
will be forwarded to data entry operators IGM section. The operator will capture
the data and forward the B/E to appraising groups. Otherwise., the B/E will be
returned to the importer or CHA.
Bill of Entry for warehousing :
A separate form of bill of entry is used for clearance of goods for warehousing.
All documents as required to be attached with a bill of entry for home
consumption are also required to be filed with bill of warehousing.

48. The bill of entry is assessed in the same manner and duty payable is determined.
However, since duty is not required to be paid at the time of warehousing of the
goods, the purpose of assessing the goods at this stage is to secure the duty in case
of goods do not reach the warehouse. The duty is paid at the time of clearance of
goods. The rate of duty applicable to imported goods cleared from a warehouse is
the rate in –force on the date on which the goods are actually removed from the
warehouse.

49. Details mentioned over Bill of Entry:
 Importer Exporter code (IEC) Number
 CHA code number
 Port of shipment
 Country of consignment
 Master B/L of lading / HBL
 Category of Importer – Govt / Public / private
 Container size
 No of packages
 Country of origin
 Gross weight

50.  Type of Bill of entry – Home / warehouse / advance / High seas sale
 IGM NO and date
 Marks and no’s
Invoice details – Number / date/ value / currency
Container no / seal no
Terms (FOB,CIF,C&F),
freight charges, insurance etc
Nature of transaction – sale/hire/gift/others
And Terms of payment – LC / DP / DA / FOC (Free of charge), buyer and seller
related (Yes/no) etc.

51. Determining the rate of duty:
Normally, rate of duty in force on the date on which a bill of entry is presented under
section 46 will apply.
If the bill of entry is presented prior to the arrival of vessel or aircraft, the rate of duty in
force on the date on which “Entry inward” is granted by the custom house will apply.
If the goods are cleared from the warehouse, the rate of duty applicable will be as on the
date of presentation of the bill of entry for home consumption.
And in any other case, the rate of duty in force, on the of actual payment of duty, will
apply.

52. CUSTOM TARIFF :
Assessable value – Import duty in India is basically calculated on assessable value or A.V.,
which is the sum of CIF (COST INSURANCE AND FREIGHT) and 1% landing charges.
Suppose assessable value of Pan Masala imported into India in INR. 100/-. The rates of taxes
on pan masala (HS CODE 21069020) are - Basic custom duty (37.5%),IGST rate (28%) and
compensation cess (60%).
Calculation of Total Import Duty on Pan Masala –
(A) Basic Customs Duty: 37.5% of 100 = INR 37.5/-
(B) IGST: 28% of (A.V. + BCD) = 28% of (100 + 37.5) = 28% of 137.5 = INR 38.5/-
(C) Compensation Cess: 60% of (A.V. + BCD) = 60% of (100 + 37.5) = 60% of 137.5 =
INR 82.5/-
(D)Total Taxes = [(A) + (B) + (C)] = 37.5 + 38.5 + 82.5 = INR 158.5/-

53. (D) HSN CODE (Called Harmonised system of Nomenclature) – First four digit describe the
chapter heading under which goods fall. All the six digits together are known as the chapter
sub heading number.
E.g.
Chapter xx
Chapter heading no xx xx
Chapter subheading no xx xx xx
Tariff item xx xx xx xx
EG.
0.9 COFFEE, TEA, MATE AND SPICES
09.02 - TEA, WHETEHR OR NOT FLAVOURED
09.02.10 - GREEN TEA

54. EXAMINATION OF THE IMPORT CARGO :
- Physical examination of goods is normally done on random basis, as it is physically not
possible to examine entire consignment.
- Based on the finding of examination of cargo by the shed appraiser, the assessing officer
assess the duty.
- The appraiser also verifies the importer’s declaration for correctness of entries and
genuineness of the original documents.
- If the goods are cleared, the shed appraiser give “out of charge”.

55. PORT OPERATION:
The sequence of variance operation right from arrival of a ship at port till its departure are
as under
a) Shipping line submit “IMPORT GENERAL MANIFEST” (IGM), which is a
documents giving the description of the ship’s cargo to the custom authorities at the
port of destination of the cargo.
b) IGM is submitted in advance of the arrival at the ship.
c) The ship announces its arrival to the port authorities.
d) Along with IGM., an application for entry inward is filed as a part of IGM. Unless
entry inward is granted by the proper officer, goods can not be unloaded from the
vessel and aircraft. Baggage of crew and passengers, animals hazardous goods and
perishables may be unloaded.

56. d) If IGM and application for entry inward cannot be filed, the proper officer
must be satisfied before granting entry inward.
e) Port Authorities request the ship to wait on high seas until a vacant berth is
available at the port to receive it.
f) A pilot vessel is sent by the port authorities to high seas to escort the visiting
ship to the vacant berth.
g) Shipping or cargo Agents complete the paper formalities for the unloading
of import cargo and loading of export cargo.
h) Unloading and loading operations begin. Import cargo is unloaded and
stacked at the designated area in the port premises for customs examination
and further formalities.

57. i) All unloading of goods must be done under the supervision of customs
officers.
ii) Unloading or loading of goods can not be done on holidays or Sundays or
after working hours. Such a facility is permissible only upon giving notice
to the department and on payment of prescribed fee, which are generally
overtime fees (OTM).
i) Export cargo, which is custom cleared is loaded on board the ship.
ii) After the port operations are complete, the pilot vessel escorts the ship out of
the port back on the high seas.

58. DIFFERENCE B/W TRANSIT AND TRANSHIPMENT OF GOODS:
- Transit goods are those which remain on board a conveyance for future
journey to another destination. They are also known as “same bottom
cargo”
- On the other hand, transhipment goods are those which are discharged
from a conveyance and loaded on to another vessel, or aircraft or vehicle
for further journey.

59. CUSTOM HOUSE AGENT:
Section 146 is the enabling provision which allows agent of importers and
exporter to act on behalf of importers and exporters.
The importers and exporters themselves may have neither time nor the
requisite knowledge on their own.
Therefore, agent are allowed to act on their behalf.
As per custom rule, agent too everything that an importer and an exporter can
do.
Filling of bill of entry, shipping bill, submitting supporting documents
therewith, helping in examination of goods, payment of duty on behalf of the
principal, warehousing of goods, removal from warehouse and the like.

60. TYPES OF RISKS
1) Commercial Risks :
- Lack of knowledge about foreign market.
- Inadaptability of the products
- Longer transit time
- Competition
- Change in preference and fashion.
This risks can be minimized by using forecasting techniques and by keeping carful
watch on the changing business scenario in the concerned country.
2) Political Risk :
- Change in political power and polices
- Civil war
- Wars between country (China and USA)
- Captured of cargo during war
- Insurance companies can agree to cover risks, if paid some additional premium.

61. 3. Cargo Risks:
Most of cargo are transported by Sea / Air
-Storm
-Leakage
-Fire
-Explosion etc.
Cargo risks can be covered by taking on insurance policy.
4. Credit Risks :
Selling on credit is becoming a common business phenomenon. At the same time,
insolvency rates are on the rise and many countries are suffering from balance of
payment deficit.
Inability of the buyers to pay on the due date.
Payment in /out blocked country to county (US and China)
This can be avoided by using the services of an insurance policy.

62. ORGANISATION COVERING CREDIT RISKS IN INDIA
In India, “The Export Risks Insurance corporation (ERIC)” set up in 1957, in order
to provide export credit insurance support to Indian exporters.
Its renamed “Export credit and Guarantee corporation limited (ECGC) in 1964.
Its again re-named, “Export credit Guarantee corporation of India Limited in 1983.
5. Foreign Exchange Risks:
Foreign exchange risks occur when the invoice is prepared in foreign currency.
If the foreign currency depreciate in terms of rupees, the exporter will receive lesser
amount in rupees, and vice – versa.

63. QUALITY AND PRE SHIPMENT INSPECTION”
The international market is highly competitive and the quality of procedure and
important determinant in export and import business.
One of the critical problems faced by developing countries is quality or rather lack of
it.
Therefore, improvements of quality is one of the pre-requisites in driving
international business.
Quality Control:
Qc is a set of producers intended to ensure that a product or services adheres to
defined quality criteria or meet the requirements of clients.
It is carried by specialized agencies / councils, as per the buyers’ specification.

64. Export inspection agency under the government.
The export act 1965 deals with quality and inspections.
- Consignment wise inspection
- Self certification.
- In process quality control –
- a) Raw material,
- b) Process control,
- c) Product control,
- d) Packaging control

65. RESPONSIBILITY OF PERSON IN CHARGE OF CONVEYANCE:
- The vessels and aircrafts arriving in country have to call only at a customs port
or a custom air port. They can not call at any other airport or sea port.
- If due to emergencies, an aircraft or vessel is compelled to call at a different
place or land at any other place, the person in charge of the vessel has the
following duties to perform.
- Such arrival must be immediately reported to the nearest polices station or
nearest custom officers. If required, procedure for their examination would be
complete by officer.
- Without the permission of such officers, no goods should be unloaded.
Passengers or crew should not leave the vessel or aircraft, unless the health or
safety of the persons requires such movement.

66. Advance noting - Mother vessel and feeder vessels:
Large number of containers are moved from intermediate ports to their destination
from the mother vessel through smaller vessels known as “feeder vessel”.
The importer would not know the name of the feeder vessel for the purpose of
advance noting of bill of entry.
In such case, advance noting will be done on the basis of bill of lading of the
mother vessel.
Upon arrival of feeder vessel, the bill of entry will be amended to contain both
mother vessel as well as feeder vessels names.
A "mother vessel" is a term in oceangoing transport -- basically a seagoing ship
that serves only major ports. It is usually used in contrast to a "feeder vessel"
which is smaller in size and serves both smaller and major ports.

67. Incoterms :
International commercial Terms, known as incoterms, are a series of international
sales terms widely used and accepted through out the world.
They divided transactions cost and responsibilities between a buyers and sellers.
Incoterms were devised and published by the international chamber of commerce
(ICC), and endorsed by the united commission on international trade law.
List of incoterms are …
Incoterms are all the possible ways of distributing responsibilities and obligations
between two parties. It is important for buyer and seller to pre-define the
responsibilities and obligations for transport of the goods.

68. Incoterms :
EXW ( EX-WORK) - “Ex Works” means that the seller delivers when it places the goods
at the disposal of the buyer at the seller’s premises or at another named place (i.e.,works,
factory, warehouse, etc.). The seller does not need to load the goods on any collecting
vehicle, nor does it need to clear the goods for export, where such clearance is applicable.
FOB (FREE ON BOARD) - “Free On Board” means that the seller delivers the goods
on board the vessel nominated by the buyer at the named port of shipment or procures the
goods already so delivered. The risk of loss of or damage to the goods passes when the
goods are on board the vessel, and the buyer bears all costs from that moment onwards.
CFR / C&F (COST AND FREIGHT) - “Cost and Freight” means that the seller delivers
the goods on board the vessel or procures the goods already so delivered. The risk of loss
of or damage to the goods passes when the goods are on board the vessel. the seller must
contract for and pay the costs and freight necessary to bring the goods to the named port
of destination.

69. CIF (COST INSURANCE AND FREIGHT) - “Cost, Insurance and Freight”
means that the seller delivers the goods on board the vessel or procures the goods
already so delivered. The risk of loss of or damage to the goods passes when the
goods are on board the vessel. The seller must contract for and pay the costs and
freight necessary to bring the goods to the named port of destination.
DDP (DELIVERY DUTY PAID) - “Delivered Duty Paid” means that the seller
delivers the goods when the goods are placed at the disposal of the buyer, cleared
for import on the arriving means of transport ready for unloading at the named
place of destination. The seller bears all the costs and risks involved in bringing
the goods to the place of destination and has an obligation to clear the goods not
only for export but also for import, to pay any duty for both export and import and
to carry out all customs formalities.

70. Just think of some of the frightening scenarios below! You
didn’t understand the delivery term and you didn’t deliver
the goods to a destination from where buyer could arrange
for subsequent transportation. Goods become stuck at
some place and delivery is delayed due to your lack of
knowledge of INCO terms.
You have not taken up the insurance and left it for the
buyer to insure goods. Goods are lost during transit. You
bear the full risk!

71. AREAS OF PRECAUTIONS IN DELIVERY DATE :
• Whether part or partial shipment is allowed
• Whether transhipment is permitted or not
• Conditions with regard to choice of port of loading and shipment
• Conditions regards to choice of transport route
• Conditions regards to choice of port of destination or a terminal at
port of unloading.

72. AREAS OF CLARIFICATIONS IN AN IMPORT ORDER
Terms of
Payment Price
Delivery date
and Schedule
Product
Specification
Pre-
Shipment
Inspection
QuantityNumber
of Items
Quality
Issues
Labelling
and
marking
Special
Packaging
Shipping
Marks
Marine
Insurance
Any Other
documents
required

73. OBJECTIVES OF LABELLING AND MARKING IN INTERNATIONAL
BUSINESS
• Meet import country’s shipping rules and regulations
• Help identify the product shipment and explain proper handling procedure.
• Display Brand name
• Display an indication of green labelling and packaging (that can be reuse)
• Provide information on product origin such as “Made in India”
• Comply with Importing country’s environment and safety standards.

74. METHODS AND INSTRUMENTS OF PAYMENT AND PRICING INCOTERMS
While negotiating sales contract you also have to decide on the way money will
be paid to you for your export and import.
The best scenario would be that you get money before you make any shipment.
But trade is not that simple.
You also have to take steps to ensure that there is no delay or default on payment
from your buyers.
Any delay or default will disturb your trade cycle. So be aware and avoid
complications.

75. 1) Advance payment:
- An exporter would prefer payment in advance of the shipment. A telegraphic
transfer is commonly used for international remittances.
- For importer advance payment tend to increase risks.
- Buyers are often concerned that the items may not send if payment is made in
advance.
2) Letter of credit :
A letter of credit (L/C) is often used to protect the interests of both the buyer and the
sellers.
When importers do not prefer to pay in advance, exporters may ask then to get a
letter of credit opened by well known banks.
Since payment by this methods is made on the basis of documents, all terms of
payment should be clearly specified in the LC in order to avoid confusion.

76. 3) Delivery against payments:
The exporter wishes to get the payment before the importer collect the goods
from the port.
4) Delivery against acceptance:
The draft states that payment is due by a specific time after the buyer accepted
and received the goods. Also called usance bill (Time draft) (like…30 Days
after acceptance)
5) 30% Advance (Advance Variation) and Balance against Fax of
Documents

77. THE END