Q.1 What is export marketing?

(1)-18/16

In simple sense, marketing activities which are performed at international level are called export marketing. Export marketing
focuses on marketing the product in other countries instead of home country or Export marketing is the practice by which a
company sells products or services to a foreign country. Features:-

Systematic Process: Export marketing is a systematic process of developing and distributing goods and services in overseas
markets. The export marketing manager needs to undertake various marketing activities such as marketing research, product
design, branding, packaging, pricing, promotion, etc

Trade Barriers: Export trade is subject to trade barriers – tariff and non-tariff barriers. The trade barriers are the restrictions
on free movement of goods between countries. Normally, countries impose trade barriers on imports, in order to restrict
imports.

Three-faced Competition: In export markets, suppliers have to face three-faced competition, i.e., competition from three
angles : (a) From the other suppliers of the exporter’s country. (b) From the local producers of importing country, and (c)
From the exporters of competing nations.

NO-8 and 9 from copy

Q2. Components of logistics mgmt?(5)-18/17

The logistics system consists of the following components: Customer service, Inventory management, Transportation, Storage
and materials handling, Packaging, Information processing, Demand forecasting, Production planning, Purchasing, Facility
location and other activities. Other activities for a specific organization could include tasks such as after-sales parts and
service support, maintenance functions, return goods handling and recycling operations.

Q3.Entrepro trade:(1)-17 Entrepôt trade refers to the practice of re-exporting goods with or without processing or re-
packaging them again. This type of trade occurs at duty-free ports, where these goods do not have additional import or
export duties, or taxes, placed upon them.

Q4. Import export code(1)-18/17/18: Import Export (IE) Code is a registration required for persons importing or exporting
goods and services from India. IE Code is issued by the Directorate General of Foreign Trade (DGFT), Ministry of Commerce
and Industries, Government of India. IE Codes when issued can be used by the entity throughout its existence and doesn't
require any renewal or filing

Q5. eCRM? (2)-18/16/14 Merits(2)-15 Demerits(2)-18

The eCRM or electronic customer relationship management encompasses all the CRM functions with the use of the net
environment i.e., intranet, extranet and internet. Electronic CRM concerns all forms of managing relationships with
customers making use of information technology (IT). eCRM is enterprises using IT to integrate internal organization
resources and external "marketing" strategies to understand and fulfill their customers needs. Comparing with traditional
CRM, the integrated information for eCRM intraorganizational collaboration can be more efficient to communicate with
customers.

Advantages : Dynamic content. The contents of the knowledge base are limited only by what is thought will not be asked.
Therefore, self help tools are often very robust, cover a wide range of topics, and must be constantly updated by adding new
articles, and removing articles determined by user survey as incomplete, incorrect, or not relevant

Good coverage. Many topics can be covered and many users can use the tool.

Low cost. Relative to other electronic interaction channels, the cost of purchasing, implementing, and administering is low.

Disadvantages: Mixed resolution rate. Some questions, due to their nature, may not be answered.
No engagement. No human follows up or clarifies. What-you-see-is-what-you-get.

Impersonal. Does not easily recognize user or patterns of user.

Q6. Aligned documentation system(2)-18: Under this system the documents are aligned to one another in a manner that the
common items of information are given the same relative slots in each of the documents. This enables to prepare one Master
Document embodying the information common to all documents included in the aligned system and to zerox all the aligned
documents from the same Master Document with the help of suitable masking and reproduction technique.

Q7. What is a letter of credit?(2)-17: A letter of credit is a letter from a bank guaranteeing that a buyer's payment to a seller
will be received on time and for the correct amount. In the event that the buyer is unable to make a payment on the
purchase, the bank will be required to cover the full or remaining amount of the purchase.

Q8. EPZ I India(2)-18/14: Export Processing Zones are specialized areas in a country where tariffs are eliminated in the hope
of attracting FDI and new business. The main objectives behind the setting up of Export Processing Zones in India are to
encourage export and foreign exchange earnings.

Q9. Diff bet dirty and clean bill of lading?(2)-16/17/18/(5)-15

 A clean bill of lading is a sea transport document which is desired by the importers, whereas, a clause bill of lading is
not acceptable to the importers and the banks.

 A clean bill of lading is a standard document marked with standard shipped on board notation, whereas, a clause bill
of lading contains an additional clause along with the standard shipped on board notation. This additional clause
expressly declares that the packaging or the goods are in defective conditions.

 In terms of quality of goods, a clean bill of lading shows that the outer packaging of the goods was in good condition
when it was received by the carrier. On the other hand, clause bill of lading clearly shows that the goods are not in
the expected condition.

Q10. Free trade zones?(2)-15/14/17

Free-trade zone, also called foreign-trade zone, formerly free port, an area within which goods may be landed, handled,
manufactured or reconfigured, and reexported without the intervention of the customs authorities. Only when the goods are
moved to consumers within the country in which the zone is located do they become subject to the prevailing customs
duties. Free-trade zones are organized around major seaports, international airports, and national frontiers—areas with
many geographic advantages for trade.

Q11. Mate’s receipt?(2)-14 : Document signed by an officer of a vessel evidencing receipt of a shipment onboard the vessel.
It is not a document of title and is issued as an interim measure until a proper bill of lading can be issued

Q12. Objectives of sound export packaging(5)-17

(i) To insure the safe arrival of goods at destination. The type of packing which will deliver the commodity in a good condition
to the foreign customer will vary with: The product; The port of destination; The length of journey; The climate of the place
of delivery; Heat and moisture to which the goods are subjected during the voyage.

Only experience and experimentation will prove or enable the exporter to develop the type of container or packing that is
best suited to the particular conditions.

(ii) To economize on the shipping space. Ocean shipping space is expensive and unless care is taken to ec0nomize on this
space, it can often be as costly to the exporter as the space actually occupied by the merchandise itself. Only ingenuity and
engineering applied to that end will produce the most satisfactory results.
(iii) To save expense by use of economical packing materials. It sin not always necessary or even desirable to use heavy
materials or to use first grade materials. As matter of fact, great advances have been made in the use of heavy paper cartons,
and some exporters. Have found that certain products can be successfully shipped overseas in these cartons.

(iv) To prevent pilferage. General safeguard against pilferage is to pack the goods securely and to put on the case nothing that
will announce the character of its contents to the intending pilferer.

(v) To insure the lowest possible customs duties. The basic rules to insure goods export packing are: He should ask from the
customers for complete instructions: how to pack his order, what conditions it must withstand during the voyage, whether
the packing will affect the duties to be levied on the shipment. He should then supplement this with advice form the shipping
agents and from information gathered from official reports. He should institute test in the factory to determine the strength
of the various styles of packing and should ask the customer to fill out a slip reporting the condition in which the goods are
received by him. Such a system, with the results tabulated and kept on office record cards, will quickly and surely culminate
and difficult that packing might present.

Q13. Diff bet import and export trade(2)-14

Import, as the name suggests, is the process in which goods of the foreign country are brought to the home country, for the
purpose of reselling them in the domestic market. Conversely, export implies the process of sending goods from the home
country to the foreign country for selling purpose.

The main idea behind importing the goods from another country is to fulfil the demand for a particular commodity which is
not present or in shortage in the domestic country. On the other hand, the basic reason for exporting the goods to another
country is to increase the global presence or market coverage.

Import at a high level shows a robust domestic demand, which indicates that economy is growing. As against, high level of
export represents trade surplus, which is good for overall growth of the economy.

Q14. Function of Export inspection council(1)-16

The main functions of the EIC as assigned in the Act are:

(i) To advise the Central Government regarding measures for enforcement of quality control and inspection in relation to
commodities intended for export and to draw up programmes therefore, and

(ii) To arrange pre-shipment inspection of notified commodities for export. With a view of inculcating quality consciousness
among the manufacturers and to motivate them to adopt quality discipline, the EIC has been engaged in quality development
and export promotional activities by way of arranging training on various quality control techniques to the personnel at all
levels in the industry.

In addition, the EIC also arranged seminars and workshops designed to educate the manufacturers and exporters on the
methods of maintaining quality including packaging.

Q15. Commercial invoice(2)-17/Imp(2)-15

When used in foreign trade, a commercial invoice is a customs document. It is used as a customs declaration provided by the
person or corporation that is exporting an item across international borders. Although there is no standard format, the
document must include a few specific pieces of information such as the parties involved in the shipping transaction, the
goods being transported, the country of manufacture, and the Harmonized System codes for those goods. A commercial
invoice must often include a statement certifying that the invoice is true, and a signature.
Record Keeping: One major importance of commercial invoice is record keeping. A Commercial invoice does not only aid good
record keeping but also, helps in determining your stock level per given period of time.

Sales Evidence: Commercial invoice also serves as sales evidence. It helps in preventing a customer from denying a
transaction. An invoice is a legal evidence with which to demand payment. Also, it is needful when the need to prove your
case in a law court arises.. It clearly shows buyer’s acknowledgement of goods sold.

Exploitation Prevention: Commercial invoice protects merchants from exploitation reason being that its detailed nature helps
in exposing fraudulent buyer or seller who tries to play smart on the other party.

Payment Assurance: Although a commercial invoice isn’t a payment instrument, it plays major role in payment assurance
reason being that it’s a legal document that proves that transaction actually takes place. Also, a seller could make reference
to an unpaid debt with the aid of a commercial invoice and this will invariably propel the customer to pay up their debts.

Q16. Commercial and regulatory documents(8)-17

Regulatory documents are otherwise called as Official documents, because most of these documents are required for
compliance of regulations of either the exporter’s country or the importer’s country.

1. Export Declaration Forms: As per Indian Exchange Control Regulations, details of all goods (except certain exempted
categories) by whatever means exported from India, are required to be declared on certain specified forms. These forms are
known as Export Declaration Forms. These forms are evolved by the Reserve Bank of India to ensure that the value of all the
goods exported from India is declared and the foreign exchange due there is repatriated to India. In export trade, the goods
leave under the supervision of one agency (Customs/Post Office) and proceeds thereof are received through another agency
(banks, etc.) These export declaration forms are so designed that they can have an effective check over the cycle of
movement of goods out of India and receipt of their value in foreign exchange into India, These forms enable the Reserve
Bank of India to compile vital foreign trade data of the country and also to exercise control over the exporter/ export
activities. These export declaration forms have two important aspects: one is the declaration of the exporter as to the nature
and exact (or appropriate market value in case exact value is not ascertainable at the time of import) value of goods being
exported. The second is an undertaking of the exporter to realize the full export value declared thereon and repatriate the
same into India. All these forms bear distinct serial numbers with a two-alphabet prefix followed by a six-digit numeral. Each
form has a specific validity date by which the same can be used for shipment. Presently the following types of such forms will
be printed only by Reserve Bank of India for sale to authorized dealers for supply to their exporter clients:

GR FORM: This form in duplicate is to be used when exports are made to all countries otherwise than by post.

PP FORM: This form is also in duplicate and should be used when exports are made to any country by post parcel except
when on “Value Payable” or “Cash on Delivery” basis.
SOFTEX FORM: This form is to be used when the computer software is being exported in a non-physical form. This form has to
be submitted in triplicate.

2. Export Certificate: Certain goods can be exported from India subject to conditions of export licensing policy, etc. For
example, the Government may restrict the quantity of exports to be made or the goods may be followed to be exported out
of quantitative restrictions placed by the importer’s country under the trade arrangements/ agreements. In such cases, the
goods will be allowed to be exported (and imported into the country of import) only when an export certificate is issued.
Generally these certificates are issued by the agencies like Commodity Boards, Export Promotion Councils nominated by
Government of India. For example, Cotton Textiles Export Promotion Councils issues export certificates for export of cotton
textiles to EEC (European Economic Community) countries in terms of trade agreements between Government of India and
EEC nations. This certificate may be needed for verification by the Customs of both, exporter’s/ Importer’s country.
3. Certificate of Origin: The certificate of origin indicates the country where the goods were originally
produced/manufactured. Generally in a certificate of origin of goods, on the basis of declaration made by the
manufacturer/exporter, an independent agency like Chamber of Commerce, Export Promotion Council, Trade Association or
any other body, which is authorized in this behalf issues a certificate of origin of goods.

This document may form part of the invoice itself or may be a separate document. In any of the countries, permission to
import is refused unless a certificate of origin is produced. Further, this is also used to determine the concessional tariff rates
applicable to the goods.

Q.17 Need for proper documentation procedure in international trade(5)-18/17/14

The Importance of Import - Export Documentation

One of the most crucial components of a successful international business transaction is the accurate completion of required
export documentation and import documentation. Failure to produce such documentation can hinder the dispatch of
products by a manufacturer or supplier, and can ultimately impede the timely receipt of goods by the customer. In more
severe cases, business owners can be subject to fines or incarceration for failing to comply with import or export
documentation requirements.

There are three common documents that businesses typically need to produce in order to ship products outside the United
States or to receive goods from another country. The first is a commercial invoice. The commercial invoice contains a formal
list of each product purchased along with purchase price and quantity ordered. The commercial invoice includes the full
name and address of the shipper or supplier and the complete name and address of the consignee or designated recipient.
Also included in the commercial invoice is the signature of the supplier and a statement indicating the nature of the products
purchased. The commercial invoice is perhaps the most important piece of import/export tax documentation because it
serves as an official record of the financial transaction between the exporter and importer.

The second document that is typically required with an international shipment is a packing list. The packing list also contains
the name and address of both the supplier and consignee, but focuses more on the contents of the shipment as opposed to
pricing. The packing list provides a detailed list of the components of the shipment and often contains information pertaining
to the total number of boxes and cartons supplied with the shipment.A third document that is often required when
participating in international trade is a Certificate of Origin. Also known as a C/O or COO, the Certificate of Origin is
completed by the exporter and indicates the specific country where the goods were originally manufactured. Such
documentation is particularly important because businesses may be forbidden to ship to or receive goods from a particular
country. For instance, business owners in the United States are prohibited from shipping goods to Cuba and Iran due to
longstanding trade embargoes. Attempts to ship to or receive goods from embargoed countries could result in serious
penalties.

In addition to the three common documents listed above, there are other less commonly requested items that may be
required in order to engage in international trade. Examples include a certificate of free sale, the shipping airway bill, or a
copy of the exporter's FDA registration. The airway bill indicates the date of dispatch and expected date of arrival and is often
requested by customers who must travel to their local airport or customs office to retrieve goods.

Q18. Import procedure(8)-16/15

Import trade refers to the purchase of goods from a foreign country. The procedure for import trade differs from country to
country depending upon the import policy, statutory requirements and customs policies of different countries. In almost all
countries of the world import trade is controlled by the government. This procedure involves a number of steps.

The steps taken in import procedure are discussed as follows:

 (i) Trade Enquiry: The first stage in an import transaction, like any other transaction of purchase and sale relates to making
trade enquiries. An enquiry is a written request from the intending buyer or his agent for information regarding the price and
the terms on which the exporter will be able to supply goods. The importer should mention in the enquiry all the details such
as the goods required, their description, catalogue number or grade, size, weight and the quantity required. Similarly, the
time and method of delivery, method of packing, terms and conditions in regard to payment should also be indicated. In reply
to this enquiry, the importer will receive a quotation from the exporter. The quotation contains the details as to the goods
available, their quality etc., the price at which the goods will be supplied and the terms and conditions of the sale.
(ii) Procurement of Import Licence and Quota: The import trade in India is controlled under the Imports and Exports (Control)
Act, 1947. A person or a firm cannot import goods into India without a valid import licence. An import licence may be either
general licence or specific licence. Under a general licence goods can be imported from any country, whereas a specific or
individual licence authorises to import only from specific countries. The Government of India declares its import policy in the
Import Trade Control Policy Book called the Red Book. Every importer must first find out whether he can import the goods he
wants or not, and how much of a certain class of goods he can import during the period covered by the relevant Red Book.
(iii) Obtaining Foreign Exchange: After obtaining the licence (or quota, in case of an established importer), the importer has
to make arrangement for obtaining necessary foreign exchange since the importer has to make payment for the imports in
the currency of the exporting country. The foreign exchange reserves in many countries are controlled by the Government
and are released through its central bank.
(iv) Placing the Indent or Order: After the initial formalities are over and the importer has obtained the licence quota and the
necessary amount of foreign exchange, the next step in the import of goods is that of placing the order. This order is known
as Indent. An indent is an order placed by an importer with an exporter for the supply of certain goods.
It contains the instructions from the importer as to the quantity and quality of goods required, method of forwarding them,
nature of packing, mode of settling payment and the price etc. An indent is usually prepared in duplicate or triplicate. The
indent may be of several types like open indent, closed indent and Confirmatory indent.

(v) Despatching a Letter of Credit: Generally, foreign traders are not acquainted to each other and so the exporter before
shipping the goods wants to be sure about the creditworthiness of the importer. The exporter wants to be sure that there is
no risk of non-payment. Usually, for this purpose he asks the importers to send a letter of credit to him.
A letter of credit, popularly known as ‘L/C or ‘L.C is an undertaking by its issuer (usually importer’s bank) that the bills of
exchange drawn by the foreign dealer, on the importer will be honoured on presentation upto a specified amount.

(vi) Obtaining Necessary Documents: After despatching a letter of credit, the importer has not to do much. On receipt of the
letter of credit, the exporter arranges for the shipment of goods and sends Advice Note to the importer immediately after the
shipment of goods. An Advice Note is a document sent to a purchaser of goods to inform him that goods have been
despatched. It may also indicate the probable date on which the ship is expected to reach the port of destination.
The exporter then draws a bill of exchange on the importer for the invoice value of goods. The shipping documents such as
the bill of lading, invoice, insurance policy, certificate of origin, consumer invoice etc., are also attached to the bill of
exchange. Such bill of exchange with all these attached documents is called Documentary Bill. Documentary bill of exchange
is forwarded to the importer through a foreign exchange bank which has a branch or an agent in the importer’s country for
collecting the payment of the bill.

(viii) Making the Payment: The mode and time of making payment is determined according to the terms and conditions as
agreed to earlier between the importer and the exporter. In case of a D/P bill the documents of title are released to the
importer only on the payment of the bill in full. If the bill is a D/A bill, the documents of title of the goods are released to the
importer on his acceptance of the bill. The bill is retained by the banker till the date of maturity. Usually, 30 to 90 days are
allowed to the importer for making the payment of such bills.
(ix) Closing the Transactions: The last step in the import trade procedure is closing the transaction. If the goods are to the
satisfaction of the importer, the transaction is closed. But if he is not satisfied with the quality of goods or if there is any
shortage, he will write to the exporter and settle the matter. In case the goods have been damaged in transit, he will claim
compensation from the insurance company. The insurance company will pay him the compensation under an advice to the
exporter.

Q.19. What is consular invoice and its imp(5)-18/16/15

A consular invoice is a document certifying a shipment of goods and shows information such as the consignor, consignee and
value of the shipment. Generally, a consular invoice can be obtained through a consular representative of the country you're
shipping to and must be certified by the consul of the country of destination, who will stamp and authorize the invoice. The
consular invoice is required by some countries to facilitate customs and collection of taxes.

Q20. IMF(4)-18 and its functions(2)-16

The International Monetary Fund (IMF) is the central institution embodying the international monetary system and promotes
balanced expansion of world trade, reduced trade restrictions, stable exchange rates, minimal trade imbalances, avoidance of
currency devaluations, and the correction of balance-of-payment problems. The IMF's goal is to prevent and remedy
international financial crises by encouraging countries to maintain sound economic policies. Because of its size, the IMF is
also a forum for discussion of global economic policies. The IMF is headquartered in Washington, D.C., but has offices in Paris,
Tokyo, New York, and Geneva.

The IMF monitors economic and financial developments and policies in member countries and at the global level and then
gives policy advice to its members based on its observations and experience. IMF advice generally focuses on
macroeconomic, financial-sector regulation, and structural policies

The IMF also provides technical help and training to the market participants and governments of member countries. This
often comes in the form of advice on banking regulation, tax administration, and budget formulation as well as managing
statistical data and drafting or reviewing legislation. They also provide training courses for government and central
bankofficials. One of the IMF's single biggest functions is lending money to members in need. If a country is unable to make
payments to other countries without taking "measures destructive of national or international prosperity," such as
implementing trade restrictions or devaluing its currency, it may borrow money from the IMF. The IMF also lends money to
countries dealing with sudden losses of financial confidence, such as after natural disasters or wars, in order to prevent the
spread of financial crises stemming from those countries.

Q21.Foreign trade policy 2015-20(8)-18/(5)-15/14

The Government of India, Ministry of Commerce and Industry announced New Foreign Trade Policy on 01st April 2015 for the
period 2015-2020, earlier this policy known as Export Import (Exim) Policy. After five years foreign trade policy needs
amendments in general, aims at developing export potential, improving export performance, encouraging foreign trade and
creating favorable balance of payments position. The Export Import Policy (EXIM Policy) or Foreign Trade Policy is updated
every year on the 31st of March and the modifications, improvements and new schemes becomes effective from April month
of each year.

Q.22 Post shipment credit(2)-17/15

Post shipment credit means any loan or advance granted or any other credit provided by a bank to an exporter of goods or
(and) services from India from the date of extending credit after shipment of goods or (and) rendering of services to the date
of realization of export proceeds as per the period of realization prescribed by FED, and includes any loan or advance granted
to an exporter, in consideration of, or on the security of any duty drawback allowed by the Government from time to time.
Banks serves with low interest rate to exporters under post shipment credit based on the guidelines of Reserve Bank.
Since the current instructions of FED, the period prescribed for realization of export proceeds is 12 months from the date of
shipment, and if amount has not been realized from overseas buyer within the stipulated period, bank can crystalize such
export bills with commercial interest rate.
(a) Export Bills Negotiated under L/C: If the exporter has obtained documentary letter of credit and has submitted the
required documents, as mentioned in the UC, to the bank, the bank negotiates them and sanctions the equivalent amount of
post-shipment finance to the exporter, Post-shipment finance is released after liquidating the pre-shipment finance availed
by the exporter.
(b) Purchase/Discount of Export Bills: If export bills are not covered under letter of credit, the bank may extend post-
shipment finance by either purchasing or discounting export bills. But before extending such finance, the bank ensures that
the exporter has complied with the terms of the export contract. Such advances are generally insured by an appropriate
policy of ECGC.
(c) Advance against Bills sent for Collection: Post-shipment finance can also be granted:
When the assistance available under foreign bills purchased is exhausted; or
When some export bills drawn under L/C have discrepancies; or
Where it is a customary practice in the particular line of trade.
(d) Advance against Goods sent on Consignment Basis: When goods are, exported on consignment basis export proceeds are
received after sale of goods In such cases, the overseas branch of exporter’s bank delivers documents against Trust Receipt
and the post-shipment advance is adjusted against export proceeds realised later.
(e) Advance against Duty Drawback: The Government of India extends certain incentives to the exporters such as the Duty
Drawback (DBK), Such incentives are realised only after the shipment of goods and receipt of expects proceeds. Banks offer
pre-shipment as well as post-shipment finance agars such incentives.
(f) Advance against Undrawn Balances: in certain Ines of exports, exporters do riot draw bills for the full invoice value of
goads but leave a small part undrawn for adjustments on account of differences in rates, weight quality etc. Such differences
can be adjusted only on the approval of the goods. Banks offer post-shipment finance against such balances.
(g) Advance against Retention Money: In the case of exports of capital goods contracts, the importer retains a part of
contract price towards guarantee of performance or completion of the project. This unpaid part is known as retention
money. Banks offer post-shipment finance against such money for a period of 90 days.
(h) Advance against Deferred Payments: In case of exports of capital goods or construction contracts, exporters receive a
certain portion of the contract advance or down payment while the balance is received in instilments over a period of time.
Banks together with the EXIM Bank otter post4hiprfleflt finance against such deferred payment.

Q23. Preshipment credit(2)-17 Procedure(8)-14

Pre-shipment finance refers to the credit extended to exporters prior to the shipment of goods for the execution of export
order. It is also known as 'Packing Credit. It, refers to any loan granted to an exporter for financing the purchase, processing
manufacturing or packing of goods as defined by the Reserve Bank of India. Pre-shipment finance is of particular importance
to small scale manufacturers and exporters who do not possess sufficient financial resources to meet the expenditure
involved in the production of goods for export. Exporters can get pre-shipment credit from: (a) Indian commercial banks. (b)
Branches of foreign commercial banks in India. Pre-shipment stage consists of the following steps:

(a) Approaching Foreign Buyers: In order to secure an export order, a new exporter can make use of one or more of the
techniques, such as, advertising in international media, sales promotion, public relation, personal selling, publicity and
participation in trade fairs and exhibitions.
(b) Inquiry and Offer: An inquiry is a request from a prospective importer about description of goods, their standard or grade,
size, weight or quantity, terms of payments, etc. On getting an inquiry, the exporter must process it App immediately by
making an offer in the form of a proforma invoice.

(c) Confirmation of Order: Once the negotiations are completed and the terms and conditions are finalised, the exporter
sends three copies of proforma pre invoice to the importer for the confirmation of order. The importer signs these copies and
sends back two copies to the exporter.

(d) Opening Letter of Credit: The documentary credit or letter of credit is the most appropriate and secured method of
payment adopted to settle international transactions. On finalization of the export contract, the importer opens a letter of
credit in favor of the exporter, if agreed upon in the contract.

(e) Arrangement of Pre-shipment Finance: On securing the letter of credit, the exporter' Procures a pro-shipment finance
from his bank for procuring raw materials and other components, processing and packing of goods an transfer of goods to the
port of shipment

(f) Production or Procurement of Goods: On securing the pre-shipment finance from the bank, the exporter either arranges
for the production of the required goods or procures thorn from the domestic market as per the specifications of the
importer.

(g) Packing and Marking: Then the goods should be properly packed and marked with necessary details such as port of
shipment and destination, country of origin, gross and net weight, etc. If required, assistance can be taken from the Indian
Institute of Packing (IIP).

(h) Pre-shipment Inspection: If the goods to be exported are subject to compulsory quality control and pre-shipment
inspection then the exporter should contact the concerned Export Inspection Agency (EIA) for obtaining an inspection
certificate.

(i) Central Excise Clearance: Exportable goods are completely exempted from the central excise duty. Such exemption can be
sought in one of the following ways: Export under Rebate. Export under Bond.

(j) Obtaining Insurance Cover: The exporter must take appropriate policies in order to insure risks: ECGE policy in order to
cover credit risks. Marine policy, if the price quotation agreed upon is CIF.

(k) Appointment of C&F Agent: Since exporting is a complex and time-Consuming process, the exporter should appoint a
Clearing and Forwarding (C&F) agent for the smooth clearance of goods from the customs and preparation and submission of
various export documents.
Q24.Factors determining choice of particular transportation mode in export? (8)-18/16

1. Cost of Service: The cost of transportation adds to the cost of the goods so it should always be kept in mind. Rail transport
is comparatively a cheaper mode of transport for carrying heavy and bulky traffic over long distances. Motor transport is best
suited and economical to carry small traffic over short distances. Motor transport saves packing and handling costs. Water
transport is the cheapest mode of transport. It is suitable to carry only heavy and bulky goods over long distances where time
is not an important factor. Air transport is the most costly means of transport but is particularly suited for carrying perishable,
light and valuable goods which require quick delivery.

2. Speed of Transport: Air transport is the quickest mode of transport but it is costliest of all. Motor transport is quicker than
railways over short distances. However, the speed of railways over long distances is more than that of other modes of
transport except air transport and is most suitable for long distances. Water transport is very slow and thus unsuitable where
time is an important factor.
3. Flexibility: Railways, water and air transport are inflexible modes of transport. They operate services on fixed routes and at
preplanned time schedules. The goods have to be carried to the stations, ports and airports and then taken from there.
Motor transport provides the most flexible service because it is not tied to fixed routes or time schedules. It can operate at
any time and can reach the business premises for loading and unloading.

4. Regularity of Service: Railway service is more certain, uniform and regular as compared to any other mode of transport. It
is not much affected by weather conditions. On the other hand, motor transport, ocean transport and air transport are
affected by bad weather such as heavy rains, snow, fog, storms etc.

5. Safety: Safety and security of goods in transit also influence the choice of a suitable means of transport. Motor transport
may be preferred to railway transport because losses are generally less in motor transport. Water transport exposes the
goods to the perils of sea and, hence from safety point of view, sea transport is thought of as a last resort.

6. Nature of Commodity: Rail transport is most suitable for carrying cheap, bulk and heavy goods. Perishable goods which
require quick delivery may be carried through motor transport or air transport keeping in mind the cost and distance.

7. Other Considerations: A number of special services such as warehousing, packing, loading and unloading are also taken
into consideration while deciding about a mode of transport. From the above discussion it is clear that each mode of
transport is suited for a particular type of traffic. The rail transport is particularly suited for carrying heavy and bulky goods
over long distances. Motor transport is suitable for carrying small consignments over short distances. Air transport is suited to
light and precious articles which are to be delivered quickly. Ocean transport is appropriate for carrying heavy bulky goods
over long distances at the cheapest possible cost.

Q25.Commodity board and its functions(8)-18/17/15/14+

The Government of India has set up Commodity Board as a separate organization to promote the export of
commodities. Commodity Boards regard themselves as a match to export promotion council. Commodity boards play a
constructive and positive role in the export promotion of primary and traditional commodities such as tea, coffee, rubber,
handicrafts, handlooms, coir, etc. these boards offer varied services to government as well as exporters of these
commodities. Trade information and guidance is given to exporters. The boards participate in trade fairs and exhibitions and
also sponsor trade delegations. Market surveys are conducted for the benefit of exporters and timely advice is given to
government on export matters. These services of commodities boards indicate the active interest which the boards take in
export promotion and their positive role in promoting exports of traditional commodities. Along with exporters, services are
also offered to growers, producers and cultivators of different commodities

Functions and objectives of Commodity Boards:

1. Advising the government on policy matters such as fixing quotas for exports, entering into trade agreements with foreign
countries, etc.

2. Undertaking promotional activities such as participation in exhibition and trade fairs, opening of foreign offices abroad,
conducting marketing surveys, sponsoring trade delegations, etc.

3. Promoting the consumption of commodities in their jurisdiction by opening branch offices in foreign countries.

4. Resolving all problems relating to commodities in their jurisdiction.

5. Undertaking research activities to develop production and marketing activities within the country. Commodity Boards have
research units of their own. Examples include Central Coffee Research Institute, Rubber Research Institute, Coir Research
Institute at Allepply, the Central Sericulture Research Station at Berhampur, etc.
6. Imparting training to workers engaged in the production of the commodity concerned. The National Coir Training and
Design Centre, Institutes of Handloom Technology at Salem and at Varanasi are the training institutes set up by their
respective commodity Boards.

Kinds of Commodity Boards in India: The Government of India has established eight commodity Boards to guide production
and export of commodities in their jurisdiction:

Coffee Board Tea Board Cardamon Board Rubber Board Coir Board Central Silk Board
The All India Handicrafts Board The All India Handloom Board.

commodity Boards are statutory in character and Operate under the administrative Control of the Ministry of Commerce.
Their major functions are:

(a) To takes active interest in production, development and exports of respective Commodities. (b) To introduce new
methods of cultivation of commodities. (c) To offer advice to the government on export matters such as fixing quota for
exports and significant trade agreements. (d) To provide trade information, guidance and various other services to their
members and help them in their export promotion efforts. (e) To participate in trade fairs and exhibitions abroad. (f)
To sponsor trade delegations and conduct market surveys. (g) To arrange pre-shipment inspection for export items.

Q26. Functions of C & F agents in export trade(5)-17/16/14

Shipping is the most commonly used method of dispatching goods to a foreign country. Under shipment, one shall cover all
the procedural aspects from the time the product meant for export leaves the factory site till it is loaded on board the ship
and the relevant documents are collected from the shipping company. Since the type of work involved is somewhat
specialized it is usually entrusted to the clearing and forwarding agents.

1. Customs Formalities: Goods can be shipped out of India only after obtaining the customs clearance. To obtain the customs
clearance, the clearing and forwarding agent should submit a shipping bill in the prescribed form. The shipping bill is to be
prepared in quadruplicate. The shipping bills should be accompanied by the following documents.

1.Contract with the overseas buyer in original.

2.Invoice for the goods.

3.Packing list.

4.GR-1 form or EP forms prescribed by the Exchange Control under the Foreign Exchange Regulation Rules.

5.AR 4 or AR 4A forms in original and duplicate.

6.A proforma showing details of drawback of duty if any claimed.

7.In case deferred payment, a copy of the approval of the RBI.

8.Copy of the L/C if any.

The customs authorities scrutinize the shipping bill and other requisite documents and if prima facie satisfied, they put it for
export subject to the physical examination of the cargo by the customs staff. The export cargo can enter the port and can be
kept in the Harbour Transit Shed even before the shipping bill is passed by the customs. However, only after obtaining the
shipping bill the authorities allows the cargo to ship into the vessel.

2. Obtaining of the Carting Order: The export cargo lying in the Harbour Transit Shed should then be moved inside the port
area and subsequently loaded on board the assigned ship. Permission should be obtained from the Superintendent of the
Port Trust, in charge of the shed for moving the goods into the concerned shed of the port. The order issued by him is known
as carting order.

3. Customs Examination of Cargo at Docks: The main purpose of the customs examination at the dock is to verify whether the
goods packed and kept ready for shipment are the same as those mentioned in the shipping bill. The customs‘ appraiser, if
necessary, may physically examine the goods packed inside. He shall make an endorsement on the shipping bill thus certifying
that the goods have been examined. Once the endorsement is made, the goods are deemed to be “Out of Charge” of the
customs.

4. Let Ship Order: The preventive officer of the customs department shall supervise the loading of the cargo on board the
vessel nominated for export. Before the goods are actually loaded, permission from the preventive officer should be
obtained. The permission is known as “Let Ship Order”. The let ship order is given as an endorsement on the duplicate copy of
the shipping bill. It is in fact an authorization given by the customs department to the shipping company to accept the cargo
on board of the vessel.

5. Mate Receipt: As soon as the goods are loaded on board the vessel, the captain or master of the ship shall issue a
document known as Mate Receipt direct to the port trust superintendent, in charge of the shed.

Q27.Electronic processing of document and its advantages and disadvantages(8)-18/14

Electronic information handling or EDP is a quick, secure and hassle-free information preparing framework that can produce
any kind of information. Electronic Data processing is the best in an industry to process information and data sets. EDP is the
preparing of information by a computer and its projects in a situation including electronic correspondence.

Cost effective: Paperwork or document management is very expensive, given the long record control requirements for
regulated content in the Information Technology. We can easily manage to process, store and implement records when
moving to electronic environments. Therefore, EDP reduces all cost for paperwork and makes it easy for all vendors to save
their cost in the unnecessary documentation.

Better management: With the help of EDP, you can easily search for any document or information you have stored in your
systems. Being able to easily find data and knowledge from stored content allows us to improve decision making. Also, it
reduces the amount of time lost or we spent looking for information.

Compliance: An Electronic Data Processing provides us with all of the documentation/technical controls such as audit trails,
backups, management, cost efficiency and security to be compliant. In addition, the use of workflows and document lifecycle
management can also help with compliance.

Reliable content: An EDP provides us with controlled management and distributed responsibility and document revision
management. It can also automate the PDF publishing process to ensure that all content is published in a uniform manner.
Content is saved and retrieved for usage in a managed approach.

Security and control: We need proper security and control when data is extremely sensitive. However, collecting
information via papers is extremely challenging. EDP can help us with the use of audit trails, traceable and better security
controls. Documents are our primary assets and protecting/managing these should be top priority.
Disadvantages of Electronic Data Processing

 When the computer hackers make the strike on the computer, then the processing of data will make the insecurity.
Then the data will be the loss. The fault in a equipment will harm all the equipment in the office. The security of the
computer would be the big problem. In a coding process, a computer not recognizes the same individuals.
 When a small number of digit codes are compared with a large number code then, it occupies the computer storage
less. The alphabetic codes can be descriptive.
Examples of EDP: It is used in a telecom company to format bills and to calculate the usage-based charges. In schools, they
use EDP to maintain student records. In supermarkets, used for recording whereas hospitals use it to monitor the progress of
patients.

Q.28 Adv and disadv of emarketing(5)-17/14

E marketing also known as online or internet advertising which uses the internet technology to promote online message to
customer. E-marketing examples are email or social media advertising, web banners and mobile advertising.

Advantage of E-Marketing
1. Internet provides 24 hours and 7 days “24/7” service to its users. So you can build and make customers relationships
worldwide, and your customer can shop or order product at any time.
2. The cost of spreading your message on internet is nothing. Many social media sites like Facebook, Linkedin and Google
plus allow you freely advertise and promote your business.
3. You can easy and instantly update your registered customers or subscribers through email.
4. Visitors or potential customers of your website can get up to the minute information on each visit.
5. If you are having a sale, your customers can start shopping at the discounted prices literally as soon as they open their
email.
6. If a company has an information sensitive business, like a law firm, newspaper or online magazine, that company can
also deliver its products directly to customers without having to use a courier.

Disadvantages of E-Marketing
1. If you want a strong online advertising campaign you have to spend money. The cost of web site design, software,
hardware, maintenance of your business site, online distribution costs and invested time, all must be factored into the
cost of providing your service or product online.
2. Almost over 60% of households now a day shop online. While that numbers are continuously growing, your company
needs to reach maximum people.
3. Some people prefer the live interaction when they buy any product. And if your company has a small business with
one location, this may also deter customers from buying who lives on long distances.
4. Your company should have updated information on your site. This requires research and skills and thus timing of
updates is also critical.
5. Is your company web site secure? There are many incorrect stereotypes about the security of the internet. As a result,
many visitors of your business web site will not want to use their credit card to make a purchase. So there is a fear in
the minds of your visitors of having their credit card info stolen.

Q.29 Type of risks associated with international marketing(8)-17/16/15/14

1. Commercial Risks: Causes of Commercial Risks: Commercial risks are caused due to the factors: (i) Lack of knowledge about
the foreign markets: (ii) Inadaptability of the export product to change to the conditions of the foreign market
requirements (iii) Longer transit time and (iv) Varying situations to be handled, not anticipated before export.

2. Political Risks: These risks arise due to change in political situations in the concerned importing and exporting countries.
Following are the factors, affecting the political situation: (i) Changes in the party in power in the concerned countries,
followed by 1 head of the Government; (ii) Coups, civil wars and rebellions: (iii) Wars between the countries or among-
many countries and (iv) Capture of cargo by enemies during war.

3. Risks Arising out of Foreign Laws (Legal Risks): Every country has its own commercial law. So, different laws prevail both in
exporter and importer countries. Legal proceedings are complex as well as expensive. In every relationship, however cordial
and long-standing may be, differences are likely to arise. Legal risks can be avoided to a great extent by incorporating the
provision for appointment of an arbitrator, in case of dispute about contractual terms.
4. Cargo risks: Transportation of cargo has undergone radical improvements over a period. Most of the goods are transported
by sea. Transit risks are a common hazard for those engaged in export/import business. The list of dreary and hazardous risks
in transit is long viz. Storms, collisions, theft, leakage, explosion, spoilage, fire, and high sea robbery. Every exporter should
have working knowledge of marine insurance so that he knows whether he is getting the required risk protection at the
minimum cost, It is always possible to transfer the financial losses resulting from perils of sea and perils in transit to
professional risk bearers known as underwriters Principles of marine insurance are also equally applicable to insurance of air
cargo also.

5. Credit Risks, Risks are inherent in credit transactions; more so in international business. International business is invariably
riskier than the domestic trade. Credit risk. is not the same whether one sells the goods in domestic market or in foreign
market. Success, in international business depends, largely, on the ability of the exporters to give credit to importers on tree
competitive and favorable terms. Export business has become highly risky as selling on credit has become very common.
Importers are sought after so it is but natural they dictate terms as there are many exporters competing for the cake of
international trade. Insolvency rate is on the increase. Balance of payment difficulties has severely affected the capacity of
many countries to pay the import price. However, offering credit has become unavoidable to the exporters to face
competition. Two issues stand before the exporters: (i) The exporter must have sufficient funds to offer credit to the buyers
abroad and (ii) The exporter should be prepared to take credit risks

6.Foreign Exchange Fluctuations Risks: If the exporter has invoiced in the buyer's currency, he will be subjected to risk of
foreign exchange fluctuations. If the foreign currency depreciates in terms of rupees, exporter will receive lesser amount in
terms of rupees or vice versa. In the same circumstances, if the Indian currency depreciates, exporter stands to gain. If the
export, bill is purchased or negotiated under letter of credit and the foreign currency undergoes fluctuation, the bank will be
bearing the risk.

Settlement Risk: This is the risk of counterparty failing during settlement, because of time difference in the markets in which
cash flows the two currencies have to be paid and received viz. settled. Settlement risk depends on the various risks like risk
of the borrowing company’s ability to meet its debt service obligation in time, represented by the risk of its business, financial
risk, market risk, labour problems, restrictions on dividend distribution, fluctuations in profits and a host of other company
related problems.

Q30. International trade dispute and mechanism used for dispute settlement(8)-17/16/15/14

A dispute arises when a member government believes another member government is violating an agreement or a
commitment that it has made in the WTO. While most trading partners enter in a contractual agreement with the best of
intentions, disputes do happen and can have serious consequences. Disputes can result in the importer delaying or defaulting
on the payment or the exporter violating the contractual terms of delivery. Two main types of disputes can occur between
parties engaged in international trade finance. Financial disputes arise when counterparties disagree on the amount
outstanding amongst themselves. Contractual disputes arise when the counterparties disobey signed contractual
agreements.
Q. Functions of EXIM bank?

(i) It provides direct financial assistance to exporters of plant, machinery and related service in the form of medium-term
credit.

(ii) Underwriting the issue of shares, stocks, bonds, debentures of any company engaged in exports.

(iii) It provides rediscount of export bills for a period not exceeding 90 days against short-term usance export bills discounted
by commercial banks.

(iv) The bank gives overseas buyers credit to foreign importers for import of Indian capital goods and related services.

(v) Developing and financing export oriented industries.

(vi) Collecting and compiling the market and credit information about foreign trade.

Activities of Exim Bank: The bank can raise additional resources through borrowing from Government of India, from RBI and
from the market through the issue of bonds and debentures. Exam bank also provides refinance facilities to the commercial
bank and financial institutions against their export-import financing activities.