What is Export in exporters India?
Indian Agricultural Exports Imports,As per Section 2(e) of Foreign Trade (Development & Regulation) Act. 1992, the term ‘export’ is defined to mean ‘taking out of India any goods by land, sea or air’.
As such, the goods must leave India, or cross the customs frontiers of India to a foreign destination, for being reckoned as export.
However, certain supplies of goods by main/sub-contractors to specified persons (who ultimately export such goods in the same form or after further processing) are reckoned at par with exports and thus called popularly as ‘deemed exports’.
Such supplies are specified in chapter 8 of the Foreign Trade Policy.
Common Steps involved in starting export import business in India.
- Setting up of a most suitable type of business organizations.
- Obtaining PAN from Income Tax Authorities, Securing Importer-Exporter Code No. from the Regional Licensing Authority, and Registration-cum-Membership Certificate from the concerned Export Promotion Councils, and Registration with the concerned VAT/Sales Tax Authorities etc. Obtaining registration as small scale industrial unit, medium or large scale unit or as a service provider from the concerned authorities.
- Doing Export Business Correspondence.
- Sending/Exporting samples and exhibits.
- Appointing overseas agents.
- Negotiating with prospective Buyers and entering into export Contracts.
- Understanding new Foreign Trade Policy and Procedures.
- Obtaining Credit Limit for the Buyer/Buyer’s Country from E.C.G.C.
- Obtaining Finance for Export.
- Booking Forward Exchange Contracts for Avoiding Loss from Adverse Exchange Rate
- Ensuring Compliance with Quality Control and Pre-shipment Inspection of Goods.
- Labelling, Packaging, and Marketing Export Consignments.
- Obtaining Excise Clearance.
- Arranging Marine Insurance of the Goods.
- Complying with the Exchange Control Regulations regarding Declaration of Goods.
- Preparing /Obtaining Export Documents.
- Shipping and Customs clearance of the Goods and Indian Customs EDI System.
- Tendering the Documents to the Bank.
- Understanding Foreign Exchange Regulations and Facilities.
- Obtaining various Facilities under the new Foreign trade Policy 2004-09
- Obtaining export incentives under the Duty Drawback Scheme, Natural Rubber Subsidy Scheme, Marketing Development Assistance etc.
- Reimbursement of Central Sales Tax.
- Availing Tax Exemptions /Deductions under the Income Tax Act and sale Tax Laws.
Starting export import business in India.
- Choosing appropriate mode of operations.
You can choose any of the following modes of operations:
- Merchant Exporter i.e. buying the goods from the market or from a manufacturer and then selling them to foreign buyers.
- Manufacturer Exporter i.e. manufacturing the goods yourself for export.
- Sales Agents/ Commission Agent/Indenting Agent i.e. acting on behalf of the seller and charging commissions.
- Buying Agent i.e. acting on behalf of the buyer and charging commission.
- Service provider i.e. providing service from India to another country.
- Naming the export import business in India.
Whatever the form of business organization has been finally decided, naming the business is an essential task for every exporter.
The name and style should be soft. Attractive, short and meaningful. Simple and attractive name indicating the nature of business is ideal.
The office should be located preferably in a commercial complex, in clean and workable surroundings. The letterhead should be simple and super providing information concerning Registered Office, Head Office, and Corporate Office. Email address, telephone number, fax, mobile number, bankers name and address etc.
Pick up a beautiful trade name and logo which reinforce your organisation’s name and image. Open a current account with a reputed Bank in the name of the Organisation in whose name you intend to export.
It is advisable to open an account with the Bank that is authorized to deal in foreign exchange.
- Selecting the Product to exporters India.
Carefully select the product to be exported. For proper selection of the product, study the trends of export of different items from India.
The selected product must be in demand in the countries where it is to be exported. It should be possible to procure or manufacture the selected product at most economical cost so that it can be competitively priced.
If should also be available in sufficient quantity acceptable quality standards; attractive packaging and it should be possible to supply it repeatedly and regularly.
Besides, while selecting the product. If has to be ensured that you are conversant with Government policy and regulations in respect of the products selected for export.
You should also know import regulations in respect of such commodities by the importing countries. If would be preferable if you have previous knowledge and experience of commodities selected by you for export.
A non-technical person should avoid dealing in high-tech products. Another important feature to be kept in mind is that product should be adapted as per market requirement.
- Making effective Business Correspondence import export companies.
Business communication is an interaction which clarifies issues. Resolves conflicts and misunderstanding and helps in decision making.
Messages also reflect many angles and levels: factual, emotional and cultural. With the information technology modes and paperless communication being used.
Conveyance of information amongst the interacting parties will speed up and these will cut down on the business process costs and times. Technologically advanced media are required to be used in business communication.
For creating a very favorable and excellent impression, you must use a decent letterhead on airmail paper and a good envelope, nicely printed, giving full particulars of your firm’s name, postal address, telephone number, mobile number, fax number and email address etc.
Your language should be polished, polite, soft, brief and to the point, giving a very clear picture of the subject to be put before the customer.
Letters should be typed/computer typed set, preferably in the language of the importing country. Also make sure that the full and correct address is written and the envelope is duly stamped.
Selecting the Overseas Market the help of import export data.
Overseas markets are identified as traditional, potential and new. Target markets should be selected after careful consideration of various factors like political relations of India with the importing country, embargo, scope of exporter’s selected product, demand stability.
Preferential treatment to products from developing counties, market penetration by competitive countries and product, distance of potential market, transport problems, language problems.
Tariff and non-tariff barriers, distribution infrastructure, six of demand in the market, expected life span of market and product requirements, sales and distribution channels.
For this purpose you should collect adequate market information before selecting one or more target markets.
The information can be collected from various sources like Export Promotion Councils (Epics) /Commodity Boards. Federation of Indian Export Organisation (FIEO). Indian Institute of Foreign Trade (IIFT). Indian Trade Promotion Organisation (ITPO).
Indian Embassies and High Commissions abroad, Foreign Embassies and High Commissions in India. Import Promotion Institutions Abroad, Overseas Chambers of Commerce & Industries.
Various Directories, and Journals, market Survey Reports etc.
- Selecting prospective overseas buyers and importers in USA.
You can collect address of the prospective buyers of the commodity from the following sources:
- Enquiries from friends and relatives or other acquaintances residing in foreign countries.
- Visiting /participating in International Trade Fairs and Exhibition s in India and abroad.
- Contact with the Export Promotion Councils, Commodity Board and other Govt. Agencies.
- Consulting International Yellow Pages. (A publication from New York) by Dun & Bradstreet, USA or other Yellow Pages of different Counties like Japan, Dubai etc.)
- Collecting address from various Private Indian Publications.
- Collecting information from international Trade Directories/Journals/Periodicals available in the libraries of Directorate General of Commercial Intelligence and Statistics, IIFT, EPCs, ITPO etc.
- Browsing the Internet.
- Making contacts with Trade Representatives of Overseas Governments in India and India Trade and Other Representatives/International Trade Development Authorities abroad).
- Reading biweekly, fortnightly. Monthly bulletins such as Indian Trade Journal, Export Service Bulletin, Bulletins and Magazines issued and published by Federation of Exporters Organisation, ITPO, EPCs, Commodity Boards and Other allied agencies.
- Visiting Embassies, Consulates etc. of other countries and taking note of addresses of importers for products proposed to be exported.
- Advertising in newspapers having overseas editions and other foreign newspapers and magazines etc.
- Consulting ITPO. IIFT etc.
- Contacting authorized dealers in foreign exchange with whom exporter is maintaining bank account.
- Visiting popular Websites by making use of Internet Services.
- Creating a detailed Website about your Organisation.
How to contact Overseas Importers in USA?
- -By corresponding and sending and sending brochure and product literature to prospective overseas buyers.
- -By undertaking trips to foreign markets and establishing personal rapport with overseas buyers. The number of trips will depend on you budget and resources. But it is essential for long term success in international marketing to establish personal rapport. Foreign trip will provide first-hand information regarding the market. Overseas customers, their requirement, taste. Preference and better out communication about the merits of exporter’s products.
- -MSME units can take the help of SIDO’s Scheme- SSI MDA.
- -Participation in buyers-sellers meet and meeting the members of foreign delegation invited by Export Promotion Council Concerned.
- -Participation in International Trade Fairs, Exhibitions, Seminars and Buyer’s Sellers meet. Trade Fairs held in India as well as important world Centres provide contacts with a large number of buyers if an exporter has good quality products with reasonable price. These fairs are expensive, no doubt but such expenses are covered by future business.
- -Advertisement and publicity in overseas reputed newspapers and magazines as well as in popular websites which people usually visit. Facilities of free publicity can be availed from Import Development Centres.
- -Creating Websites and making it popular on international arena.
- Selecting Channels of Distribution from exporters India.
The following channels of distribution are generally utilized while exporting to overseas
- Exports through Export Consortia.
- Export through Canalizing Agencies.
- Export through Other Established Merchant Exporters or Export Houses. Or Trading Houses.
- Direct Exports.
- Export through Overseas Sales Agencies.
- Exports through e-Commerce which is in developmental stage in India.
- Negotiating with Prospective Overseas Buyers and importers in USA.
Whatever the channels or distribution for exporting to the overseas countries is proposed to be Utilized, it is essential that the exporters should possess necessary skill for negotiating with the overseas channels of distribution. The ability to negotiate effectively is needed for discussion with importers or trade agents.
While conducting business negotiations, the prospective exporter should avoid conflict, controversy and criticism vies-a-vies the other party.
During conversation the attitude should be to communicate effectively. There should be eight ‘Cs’ i.e. coherence. Creativity, compromise. Concessions. Commonality. Consensus. Commitment and compensation in business negotiations.
The general aspect to be kept in mind by you is about pricing. The buyer’s contention is that prices are too high. It should be noted that though the price is only one of the many considerations which are discussed during business negotiations, if influences the entire negotiating process.
Since this is the most sensitive issue in business negotiations, it should be fully postponed until all the other issues have been discussed and mutually agreed upon.
As far as the price is concerned, you should try to determine the buyer’s real interest in the product from the outset, only then a suitable counter proposal should be presented.
It should also be remembered that the buyer may request modifications in presentation of the product. You should show the willingness to meet such request, if possible, provided that it will result in profitable export business.
Price being the most important sales tool, it has to be properly developed and presented. Therefore, in order to create a favourable impression, minimize costly errors and generate repeated business.
The following points should be kept in mind while preparing the price list:
- Submit a computer printed list, printed on a regular bond paper and laid out simply and clearly (with at least an inch between column and between groupings.)
- Prominently, indicate the name of your company, its complete address, telephone number, mobile number and fax numbers and email address, including the country and city codes.
- Fully describe the items being quoted.
- Group the items logically (i.e. the fabrics together, all the made ups together etc.)
- Specify whether shipped by sea or by air, f.o.b.,or c.i.f., and to which port.
- Quote exact amount and not rounded off figures.
- Mention the dates up to which the prices quoted will remain valid.
- Where there is an internal reference number which must be quoted try to keep it Mention as short as possible (the buyer has no interest in the detail and the more complex it is, the greater the risk of errors. As regards the factors determining your price, please refer to the papa on ‘Export Pricing and Costing ‘further in the chapter.
- Clearly mention payment terms required by you.
- Preshipment inspection should be well defined.
One main point regarding export pricing is that while negotiating with overseas buyer. You may not remember the cost of a product.
It may also be difficult for you to remember the profit margin built in various prices quoted by you. A clear jotting of this information is not free from the risk of being leaked out to the competitors or to the overseas buyers.
Some coding is, therefore, essential for the prices quoted by you so that at any stage/ point of time, you can always utilize the information enabling you to profitably negotiate with the overseas buyers.
This can be done by assigning codes to the cost prices
Processing an Export Order as a exporters India.
You should first acknowledge the export order, and then proceed to examine carefully in respect of items, specification, Pre-shipment inspection, payment conditions, special packaging, labeling and marketing requirements, shipments and delivery date, marine insurance, documentation etc.
and if you are satisfied on these aspects, a formal confirmation should be sent to the buyer, otherwise clarification should be sought from the buyer before confirming the order.
After confirmation of the export order immediate steps should be taken for procurement/manufacture of the export goods. In the meanwhile, you should proceed to enter into a formal export contract with the overseas buyer.
Entering into export Contract as export import Business.
In order to avoid disputes, if is necessary to enter into an export contract with the overseas buyer. For this purpose. Export contract should be carefully drafter incorporating comprehensive but in precise terms.
All relevant and important conditions of the trade deal. There should not be any ambiguity regarding the exact specific actions of goods and terms of sale including export price.
Mode of payment, storage and distribution methods, type of packaging. Port of shipment, delivery schedule etc. The different aspects of an export contract are enumerated as under:
- Product, Standard and Specifications.
- Total Value of the contract.
- Terms of Delivery.
- Duties and Charges,
- Period of Delivery/Shipment.
- Labelling and Marking.
- Terms of Payment – Amount /Mode and Currency.
- Discounts and Commissions.
- Licences and Permits.
- Documentary Requirements.
- Force Majeure of Excuse for Non-Performance of Contract.
It will not be out of place to mention here the importance of arbitration clause in an export contract. Court proceedings do not offer a satisfactory method for settlement of commercial disputes as they involve inevitable delays, costs and technicalities.
On the other hand, arbitration provides an economics, expeditious and informal remedy for settlement of commercial disputes.
Arbitration proceedings are conducted in privacy and the awards are kept confidential. The Arbitrator is usually an expert in the subject’s matter of dispute.
The dates for arbitration meetings are fixed with the convenience of all concerned. Thus arbitration is the most suitable way for the settlements of commercial disputes and it may be invariable used by the businessmen in their commercial dealings.
Export Pricing and Costing to importers in USA
Export pricing should be differentiated from export costing. Price is what we offer to the customer. Cost is the price that we pay/incur for the product. Price includes our profit margin. Cost includes only expenses. We have incurred.
Export pricing is the most important tool for promoting sales and facing international competition. The price has to be realistically worked out taking into consideration all export benefits and expenses.
However there is no fixed formula for successful export pricing. It will differ from exporter to exporter depending upon whether the exporter is a merchant agency.
You should also assess the strength of your competitor and anticipate the move of the competitor in the market. Pricing strategies will depend on various circumstantial situations.
You can still be competitive with higher price but with better delivery package or other advantages. Your prices will be determined by the following factors:
- Range of products offered.
- Prompt deliveries and continuity in supply.
- After Sales Service in products like machine tools, consumer durables.
- Product differentiation and brand image.
- Frequency of purchase and total Annual Requirement.
- Presumed relationship between quality and price.
- Specialty value goods and gifts items.
- Credit Offered.
- Preference or prejudice for products originating from a particular source.
- Aggressive marketing and sales promotion;
- Prompt acceptance and settlement of claims:
- Unique value goods and gift items.