INTRODUCTION

WHAT IS Export marketing? Marketing is defined as using all of the resources of the organization to satisfy customer needsfor a profit. The difference between export marketingand domestic marketing is simply that it takes placeacross national borders. This means that you are faced with barriers to trade that you will not have encountered before, such as differing languages, politics, laws, governments and cultures. You may need to account forgetting the product half-way across the globe to distant markets and pay the import duties imposed on these products by the importing country. You will also need todeal with the logistical and documentation problemssurrounding exports.These is just some of the problems you will face. Export marketing also involves preparing an offeringthat will entice the foreign buyer and cu stomer. Thisoffering comprises a product that is offered at a certain price and that is made available distributed to the foreign customer. At the same time, the offering iscommunicated or promoted to the buyer usingcertain communication or promotion channels. Theseelements the product, price, distribution (also referred to as the place) and promotion area called the marketing mix. The features of export marketing includes the following 1) It is processExport marketing is a process Of planning and implementing the production, anddistributing of goods and services, it consis ts of various activities such as branding, packaging, advertising etc. 2) Identification and satisfaction of consumers needs & wants The heart of marketing is theidentification of consumer needs and wants. Theexporter must c onstantly try to find out theproblems or needs and wants of the foreign buyer, so export marketing adopts a total consumer oriented approach in the foreign markets. 3) Flow of goods and services Export marketing involves flow of godsend services across the national boundaries. 4) Large scale operations Export marketing is carried in bulk quantities so as to derive the benefits of large scale selling such as in respect of transportation, handling etc.

5) Prominence of multinational Export marketing in dominated by MNCS. At present MNCS from USA, EUROP and JAPAN play a dominant role in foreign trade. They are in a position of develop world wide contractsthrough their network of branches / offices /subsidiaries. These companies are in a position to carry on a large scale operation in foreign trade more efficiently and economically. 6) Tariff and non tariff barriers Export trade is subject to tariff adnoun tariff barriers, these are restrictions imposed mostly by importing countries, so as to restrict imports every export firm should have a close study of various trade barriers imposed by different countries, so as to carry on its export trade more efficiently. 7) Presence of trading blocsCertain nations of particular region come together to farm customs union or trading blocs frothier mutual benefit and economic development themain purpose of such bloc is to eliminate tradebarriers among member nations and they m ayimpose external tariff and non-tariff barrier on non-members .the exporter should have knowledge of the regulation of such trading blocs. The powerful trading blocs are NAFTA (North American free trade area) EC (European community) and ASEAN (association of south East Asian nation) 8) International marketing research Knowing more about customer, dealer and competitor is a must not only in the domestic market but also in the export markets. 9) International forumInternational trade is regulated to great extent by international forum such a generalagreement on tariff and trade (GATT). Now worldtrade organization (WTO).exporte rs from all overthe worlds should have through knowledge of therules regulation and principals of such forums.

NEED AND IMPORTANCE OF EXPORT-MARKET

No country in the world, whether highly developed or notis self sufficient in every respect, more ever everycountry want to be more and more econ omicallydeveloped and in order to do so, it has to resort to foreign trade e.g. export and import, export trade bringing valuable foreign exchange which can be utilized today for imports and at the same time enhances. Foreign exchange reserve of the country. The need and importance of export marketing can be explained from the viewpoint of the country and that of business organization A) From view point of nation 1) Foreign exchange Export bring valuable foreign exchange to the exporting country which is mainlyrequired to pay for import of capital goods rawmaterial spares and components , also f oreignexchange is required to pay for the import of techniques how and service external debts 2) International relation All countries of the world want to proposer in a peace full environment, one way to maintain political and cultural .it make relation with other countries is through international trade 3) Balance of payment A country external economic Strength depends upon its balance of payments position. since export brings foreign exchange, it helps acountry to solve and improve its balance of pa yments position. 4) Reputation in the world A country which is fore most in the fields of export, commands a lot of respect, goodwill and reputation from other countries for instance, Japan commands international reputation due to its high quality product and in the export markets. 5) Employment Opportunities: Export trade calls for more production more production opens the doors formore employment opportunities not only in The export sectors but also in allied sectors like banking, insurance etc.

6) Financing of development plans: Export earnings can be a source of financing development plans through the import of capital goods and sophisticated technology, thusthe foreign exchange generated through ex portscan be utilized for planned economic development of the country. 7) Research and development: There is a continuous pressure on the export industry to improve technology and production system to retain its competitive edge in foreign markets. The fruits of Rs D would benefit the consumers not only in the overseas markets but also in the domestic market. 8) Optimum utilization of resources: A country which passes a abundant resources in form of Raw Material or finished goods in exports of domestic requirements can be effectively export as much as there can be optimum use of resources. 9) Spread effect: Because of export industry, othersectors also expands such as banking, transport, insurance; consultancies at the same number of ancillary industry come into existence to support the export sector 10) Higher Sander of living: Export trade calls for more productionwhich in turn increases thus employment opportunities. More employment means more power as results of which people can enjoy better goods, which in turn improve standard of living of people

B) From view point of business organization 1) Reputation: A business organization which undertakes export business can bring from to its name not only in the export market and but also in the home market i.e. Sony, Glico, Tata etc. enjoy international reputation. 2)Optimum Production: It may be possible that the demand for accompany s product falls short of its optimum production capacity in the home country however the company can exported its excess production. there by the production can be carried on up to the Optimum production capacity and the companybenefited from the economies of large scaleproduction . 3)Spreading of risk: When a business organization face depression in the domestic market (low demand) itwill be naturally suffer losses .However thecompany can spread its risk of losses by sellingp roducts of good price in the export market. 4) Export Obligation: Certain company need to import machinery and other requirement to compensate for imports the government of India, has imposed compulsory export obligation so as to narrow down the gap between rising imports and slowing moving export. Therefore such companies need to export to honour export obligation imposed on them. 5) Keeping alive old brand: A product brand may have reached the stage of declined in the home market but the same Product may have good demand in the foreign market so in that case the exporters would benefits by exports. 6) Improvement in organization efficiency: Export marketing requires Consentimprovement in skills and technique not only inmarketingaspects, but also production aspects thus research, training and experiences in dealing with foreignmarket unable the export to improve the overallorganization efficiencies. 7) Improvement in product standards: An export firm has to maintain and improve standards in quality unable to international standards as a result of which consumer in the home market as well as in the international market can better quality of goods.

8) Liberal imports: Export organization can import capital goods spares components and raw materials liberally against export obligation .Such import not only improve the quality of goods produced but also lower down the cost of production. 9) Higher prices: Export can fetch higher prices as compared to domestic markets for instance, prices of old and petroleum product in the home markets of gulf countries are comparatively less than what they earn from the foreign markets, and as a result of this exporters can earn higher profits. 10) Financial and non financial benefits: India exporters can avail of a number of facilities from the government and from banks to enhance exports.

FUNCTIONS OF EXPORT MARKETING

The functions of export marketing omits of those activities, which are necessary for smooth flow of goods from the producers or sellers to the purchasers or consumers. The following are the functional areas of marketing: International marketing research: It is one of the important areas of the marketing, through international research. The exporter come to know about the likes, dislikes, tastes, and busing behavior of the foreignconsumers marketing research is must in exportmar kets due to various factors such as diversities in social, cultural, economic and political background of distant markets Thus, marketing research will help to identify the right export for the companys products. Export production: The fruits of marketing research and Redcap be put into use by producing the goods andservices as per the needs and requirements of foreign markets, strict activity control must bemaintained while producing export goods. Goodsand services should confirm to internation alstandards, and then only the export firm will survive and succeed in the overseas market. Export packaging : Packagings for exports must be given due consideration proper and attractive packing not only protect the products but also sell. The production the market , this is because attractive packaging has advertising valve, if required assistance can be taken from Indian institute of packaging located amatol- Adhere Mumbai. Export pricing: It is one of the important aspects of export management; a proper pricing strategy spells a firms survival and success not only in the home market but also in the export market, whilefixing prices, the exporter cost, demand andcompetitive environment prevailing in the e xportmarket. Advertising: Now A day, advertising is considered to be one of the most effective ways of promoting goods and services. It makes consumers aware of the qualities, uses and benefits of the products that are available in the market. The exporter can make use of various media of advertising such as newspapers; magazines trade journals, trade directories, televisions etc. for selling in foreign markets.

Sales promotion: Apart from advertising, there are various sales promotion techniques such as sale oninstallment basis, free gifts, contests, offeringdiscounts etc effective selling through sales c analso increases sales in the overseas market. Export risk management: Export risk involve risk to the export cargo in transit, which can be insured with marine insurers, A more important risk is that credit offered to overseas buyer , the government of India has setup export. Credit guarantee corporation (ECGC) to provide credit insurance to protect exporters from consequences of payment risks. Financing: In order to carry out various marketing activities such as marketing research sales promotion etc, there is a need for funds, the funds can be obtained as advances from the customers, credit from suppliers, loans from institutions etc. Branding: Branding is one of the Importantmarketing function it refers to give name to theproduct the purpose of branding is to give a separate. Identity to the product, which is distinct from that of t competitor. At times catchy brand name can sell the product in the market. Care must be taken to see that the brand name so selected not have negative meanings in foreign languages. TransportingIt refers to moving goods from one country to another normally the exporter make of transporting export goods i.e.sea transport and air transport .the nature of goods ,cost transport, buyers requirement and such other factors efficient export marketing requires the right choice of transport

FACTORS AFFECTING EXPORT MARKETING

The major environment factor effecting export marketing are as follows Economic factorsThe economic condition prevailing in the export markets must be considered the generaldemands, market recession rate of inflation, thelevel of economic development etc. M ust beconsidered while designing a marketing mix .theexporter must enter in such export market were the economic factors are favourable and conductive to export trade. Political factors The political factors also play unimportant role in the export marketing system. The action policies of the governments of the exporting country as well as that of the importing countries affect export trade. These factors include Changes in government policies from time to time Relation of importing countries with India. Stability of the government in the importing countries etc. Consumer factorsIts affects export marketing to great extent. those includes the age group , income range ,occupation ,buying partners, buying behaviour, tastes ,likes dislikes and preferences . The exporter should have good knowledge of these customers characters according the right type of products can be produce to suit the requirements to the target markets. Geographic factors The exporter must also consider geographical factor such as area, to geography, climate and seasons. Again the availability of transport and port facilities must be studied. Social factors:The social factors are also to be considered. The attitude of the buyer and the society are to be taken note of, the exporter has to know about the social valuesand life styles of the target consumers different lifestyles and attitude of the society may require different marketing mixes and marketing programmers. Technological factors:The level of technology in the export markets also affects export marketing, for instance technology advanced; nations enjoy higher standards of living. They expect high quality goods .the exporter must considered the degree of technology advancement of the importing countries and accordingly supply the goods that are intone with the requirement of the customers.

Trade factors:The trade factors also must be considered by the exporter .the exporter must under Stand that it is trade factors that finally sell the production the market .one need to have good distributors to sell goods in the export market. The trade factors include The channel of distribution The availability of distributors. The services provided by the distributors etc.

DIFFICULTIES / PROBLEMS IN EXPORT MARKETING

Export marketing is restricted to some extent due to certain difficulties or drawback such as. 1) Difficulties of distance:Export markets are spread over long distances naturally, the exporter will find difficult in catering to long distance markets. Longer the distance the more will be the transport cost. There are also possibilities delays in supply. 2) High risk and uncertainties: The risk may be both political and commercial .The political risk involves governmentinstability, war, civil disturbances etc. Thecommercial risk involves insolvency of the buyerand so on certain political and commercial risk is insured by export credit guarantee corporation (ECGC). 3) Diverse languages, customs and traditions: The export markets differ in languages customs and traditions, these diversitiestherefore he has to be selective, and he shoulddeal in only such markets. Where he can easilyhandle or overcome difference or diversities. 4) Different currencies, weights and measures: Different countries in the world have their own system of weights and measures. Some countries may measure in pounds others in kilograms or in some other measures. Again every, country has its own currency. Each currency has heavy fluctuation in exchange note. 5) Customs formalities: There are number of formalities inexpert of goods from one country to another, again there are customs formalities for the buyers i.e. customs formalities of the importing country. 6) Trade Barriers: Export trade is subject to a number of tariff and nontariff barriers various importingcountries do impose avariets of taxes and otherformalities. Th is creates difficulty for the smoothflow of goods and services among countries.However effor ts are now being a world tradeorganization (WTO) to reduce and simplify a number of trade barriers. 7)Foreign exchange regulation The exporter has to give a declarationto the reserve bank of India (RBI) that they willrealize the full value of exports within a period of six months i.e.180days 8) Documentation formationThere are a number of documents to be prepared in export trade.

A CHALLENGING PHASE FOR THE INDIAN EXPORT SECTOR Despite the slowdown in the global economy, the Indian export sector has shown a commendable growth in its exports in the past years. India has a major landmark in exports of Gems and jewellery, textiles, engineering goods, chemicals, leather goods, etc. Exports in India have a major share towards the countrys GDP (Gross domestic product- an indicator to measure the health and size of the economy). Many large and small scale industries have been showing consistent performance in their overseas sales.

2012, however, would be a year of major challenge to this sector as fierce competition lies ahead from industries across the globe. The Government here has to input facilitative norms to the export sector in order to provide a suitable platform for consistent increase in the countrys exports. FIEO (Federation of Indian Export organizations) has already started pushing the RBI to improvise its credit policy for rising liberal lending norms for the export sector. India is also seeking membership of four export control regimes which will give the country the power to decide on export control issues and to organize the countrys export regulations on high International standards. Market dynamics are continuously changing, and therefore Export organizations have to tighten up and have to show tremendous improvements in the quality of their goods and services. There should be common platform for Indian exporters to get to share their views, trade ethics and practices with other exporter organizations, which would help creating more opportunities for Indian exporters to create worldwide business and trade. We hope that 2012 should be a successful year for our Indian exporters and they would thoroughly utilize all their resources in order to collectively uplift the growth of the Indian Economy.

Language Difference: - Each country has its own language. When a trader of one country deals with trader of another country then because of different languages, it becomes difficult More Risk: - the quantum of risk is higher in foreign trade than that in internal business. In foreign trade, goods are transported from quite long distances and usually through seaways. Rocks, waves and climate in sea can damage the goods to a great extent. While in transit, enemy countries can also attack.

6. Government Control: - international business is usually done under government control. For import & export of products, various licenses are taken and various information is to be submitted. Moreover, the whole procedure is quite complexion Difference in laws: - the rules related to export-import are separate in each country. Due to the difference of rules in each country, there is always some doubt in the mind of trader regarding payment and other terms of business. 7. Custom duty: - to control the export- import of country, the government uses custom duty. The objective of tax on import is to increase the price of foreign goods so that it becomes unattractive for domestic consumers. The objective of tax is to reduce the flow of foreign goods Difficulty in payment: - each country has different currency. So, businessmen face allots of problems while paying or receiving money. 8. Lack of information: - It is difficult to find out the details of financial position and business of any businessman sitting at distant places. Such information can be taken from banks, information agencies, chamber of commerce, etc. Evil effects of foreign trade:- the advanced countries of the world are benefitted through international trade, while developing and underdeveloped are hit hard. These countries are unable to produce at that pace as, they should be producing. 9. Economic Dependence: - if a country depends upon other country for raw materials and if due to war or some other reasons imports are stopped, the whole economic life of that country will be paralyzed. Sometimes economic crisis of one country spreader all over theworld.o Disadvantages to Agricultural countries:-the law of increasing returns applies in industries, while the law of diminishing returns applies in agriculture. It is clear that the quantum of importing of manufactured goods isomer than the exporting of agricultural goods. 10. International Jealousy: - the biggest problem in the international trade is the jealousy between the trading companies. The developed countries always exploit the weaker nations and ultimately they have to bow down before their trading terms and conditions. One-sided development of the country: - the international trade is conducted on the basis of geographical division of labours and specialization. Therefore, it does not provide the chance to develop each and every country. Thus, the development of the country becomes one- sided rather than multi-sided. 11. Dumping: - according to this policy, the advanced countries export their goods at the rates even below the cost of production. Japan adopted this policy during the presecond world war and put Indian Textile industry under great loss. 12. Other problems:-o Affected by weather & climate Low labour productivity Less technology Patent (high payment of royalty)o Laziness

ENETR INTO EXPORT CONTRACT Export contract is based on terms & conditions between seller and buyer in order to avoid dispute, it is necessary to enter in to an export contracts with the overseas buyer, for this purpose, exportcontract should be carefully drafted incorporatingcomprehensive but in precise terms, a ll relevantand important condition of the trade deal There should be not be any ambiguity regarding the exact specification of goods and terms of sale including export price ,mode of payment , storage and distribution ,methods ,type of packaging part of shipment ,delivery schedule etc . The differentaspect of an export contract are enumerated asunder Quality of product .standards, specific quality Packing, labelling and marking Terms of payment In advance /at sight/L/C Terms of delivery /shipment (by seal/AIR)-FOB /CIF /CNF Discount /commission if any Statutory requirement of importing exporting countries. The exporter should have an organization to look after the export of his goods /services .the exporter has to register his organization with a number of authorities, before he proceeds to export. These registrations include the following: 1) To form a company The first and the foremost question you as a prospective exporter has to decide is about the kind of business organization needed for the purpose .you have to take a crucial decision as to whether a business will be run as a proprietary concern or a partnership firm oar company. The proper selection of organization will be depend upon Your ability to raise finance Your capacity to bear the risk. Yo0ur desire to exercise control over the business Nature of regulatory frame work applicable to you

1) OPENING BANK ACCOUNT The exporter should open a current accounting a schedule commercial bank, which is authorized barb to deal in foreign exchange to open a bank account for getting registration in port EDI (electronic data interchanging system). 2) OBTANING INCOME TAX ACCOUNT NUMBER (PAN)The exporter should make an application tithe income tax authorities to allot him a permanent account number (PAN) .for time being ,for a year or so the income tax authorities allots a temporary number called general index registration (GIR) number .trepan is subsequently allotted to the firm in due course of time. 3) TO REGISTER WITH DGPT FOR IEC NUMBER-REGISTRATION WITH PORT NO export or import shall be made by the registered /head office of the complaint to the licensingauthority under whose jurisdiction, the registeredoffice in case of other falls in the Anaya Marryat form. Only one IEC would be issued against a single PAN number .the licensing authority concerned shall be issue an IEC number. A copy of such IEC number shall be application form. A consolidated statement of IEC numbers issued by thelicensing authority shall be sent to the offices of theexchange control department of the RBI .an IEC numberallotted to an applicant shall be valid for all itsbranches /division /units /factories . Where an Encumber is lost or miss placed, the issuing authority may consider request for grant of a duplicate copy of Encumber, if accompanied by an affidavit. If an IEC holder does not wish to operate the allotted number, he may surrender the same by informing the issuing authorityshall immediately cancel the same and electronicallytransmit is to DGFT for transformation to the customs and regional licensing authority (RLA). 4) To register with EPC for RCMC number Registration with port An exporter may register and become member of export promotion council (EPC) on being admitted to membership. The applicant shall be grantedwith registration .cummembership certificate (RCMC)Of the EPC concerned, subject to such terms andconditions as may be specified in this behalf, in case an exporter desire to get registration as manufacture exporter, he shall furnish evidence to that effect.Prospective/ potential exporters may also, onapplication, register and become an associ ate memberof an export promotion council. an exporter desiring to obtain a registration cummembership certificate (RCMC)shall declares his main line of business in theapplication which shall be made to the export promotion council (EPC) relating to that line of business . However status holder has the option to obtain RCMC from federation of Indian exporters organization (FIEO) not withstanding anything stated above exporters of drugs & pharmaceuticals shall obtain RCMC

5)REGISTRATION WITH SALES TAX AUTHORITIES Exporters are exempted from payment of sales tax exemption can be available only when the exporter has sales tax registration number. CENTRAL EXCISE REGISTRAION For the administration of the central excise act1944and the central excise rules, 2002(referred to as the said rules ) manufacturers of excisable goods withsome exceptions, are required to get the premisesregistered with the central excise depart ment beforecommencing business. LEGAL PROVISIONSAS PER SECTION 6 of the central excise act1944, any prescribed person who is engaged in A) The production and manufacture or any process of production or manufacturer of any specified included in to the central excise tariff act 1989(5 of 1986) orb) The whole sale purchases or sale (whether on his own account or as broker or commission agent) or the storage of any specified goods. To the central excise tariff act 1985(5 of 1986) shall get himself registered with the proper office in such manner as may be prescribed. For all the practical purposes, the legal provisions contained in rule 9 of the central excise rules, 2002govern the scheme of registration .This rules is reproduced the below. Registration: 1)Every person, who produces, manufacturerscarries on trade, holds private storeroom orwarehouse or otherwise uses excisable goods,shall get registered, provided that a registration obtained under rule 174 of the central excise rules, 2001 shall be deemed to be as valid as the registration made under this sub rule for the purpose of these rules. 2)The board may by notification and subject to such conditions or limitations as may be specified in such notification, specify persons who may not require such registration. 3)Registration under sub rule (1) shall be subject touch conditions safe guards and procedure as may be specified by notification by the board.

Conditions, Safeguards and procedures for registrations. The central board of excises customs hasspecified certain conditions, safeguards andprocedu res for registration of a person bynotification under central excise rule 9 in thespecified cases. 1) Application for registrationEvery person specified under sub-rule (1) of rule 9, unless exempted from doing So by the board under sub rule 9 shall get him registered with the (jurisdictional deputy or assistant commissioner of central excise) by applying in the form specified. 2) Registration of different premises of the same registered person If the person has more than One remises requiring registration, separateregistration certificate shall be obtained foreach such premises. 3) Registration certificate and number It shall be granted within 7 days of the receipt of duly complete application. 4) Transfer of business When a registered person transferred his business to another person, the transferee shall get himself registered a fresh. 5) Change in the constitution Where a registered person is affirm or company or association of persons, any change in the constitution of firm company orassociation shall be intimated to the jurisdictional central excise officer within30dayes of such change. 6) De- registration Every registered person who cases tocarry on the operation for which he isregistered, shall deregistered himself bymaking a declaration in the form and depositinghis registration certificat e with super indent of central exercise of

REVOCATION OR SUSPENTIO OFREGISTRATION A registration certificate granted under this rule may be revoked or suspends by the assistant commissioner of central excise or the deputy commissioner of central excise, if the holder of such certificate or any person in his employment is found to have committed branch of any of the provisions of the act or the rules made there under or has been convictedof an offence under section 161, read withsection 109 or with section 116 of the Ind ian penal code (45of 1860)

CENTRAL EXCISE CLEARENCE Export goods are examples from central excise duty. However necessary clearance has to be obtained either in the two ways: A) Removal of goods under bond Under this system. The exporter does not pay excise duty but export the goods under supported by a bank guarantee for a sum equivalent to the excise duty chargeable on such goods b) Export under rebateUnder this system, the manufacturer initially pays the duty and the claims the refund

Export pricing should be difference ate from export costing price is what we offer to the customer. Cost is the price that we paslincur for the product. Product includes our profit margin, cost includes only expenses we have incurred export pricing is the most importanttool for promoting sales and facing internationalcompetition. The price has to be realistically worked out taking into consideration all export benefits andexpenses. However there is no fixed formula for successful export pricing. It will differ from exporter To exporter depending upon whatever the exporter is amerchant exporter or a manufacturer. Exporter or exporting through a canalizing agency. You can still be competitive with higher prices 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 services in product like machine tools, consumer durables

Product differentiation and brand image Frequency of purchase. Presumed relationship between quality and price. Specialist value. Goods and gift items Credit offered. Preference or prejudice for products originating from particular source Aggressive marketing and sales promotion Prompt acceptance and settlements of claims Unique value goods and gift items Export costing Some of the major cost items of cost areas as under Material cost Labour cost Direct expenses Factory overheads Sales and distribution cost Packaging cost Cargo handling charges Freight charges Marine insurance Commission to agent abroad Export costing is basically cost accountants job. Itconsists of fixed cost and variable cost comprisingvarious elements. It is advisable to prepare an export costing sheet for every export product INCO TERMS The decision for exports depends upon the terms of delivery. These are severed such trade terms that are used at international level. Inco terms describe the most commonly used term of trade in commercial contracts and are published by international chambers of commerce

(ICC). These terms aim to standardize the terminology used international trade. The aim is to eliminate doubts between buyer and seller by: Defining the method of delivery of the goods by the seller Stating exactly what charges are included in the sellers price. Defining the responsibilities of the parties to the contract of sale for the arrangement of insurance, shipping and packing the use of Inco terms are applied toA transaction, it must be incorporate by specific references in the contract. Inco terms (various costs incurred during shipment) Maritime and inland waterway transport only: Free Alongside ship (FAS) Free on board (FOB) Cost & Freight(C&R) Cost Insurance and Freight (CIF) Delivery Ex-quay (DEQ) Delivery Ex-Ship (DES) Multimodal Mode of Transport Free carrier (FC) Carriage paid to (CPT) Carriage and Insurance paid to (CIP) Delivered at frontier (All modes) Deliver Duty paid (All modes) Export finance The exporter may require short term, medium term or long term finance depending upon the types of goods tube exported and the terms of statement offered to overseas buyer. The shortterm finance is required to meet workingcapitalneeds. The working capital is used to meet Regular and recurring needs of a business firm. The regular and recurring needs of a business firm refer to purchase of raw material, payment of wages and salaries, expenses like payment of rent, advertising etc. The exporter may also require Term finance. The term finance or term loans, which is required for medium and long term financial needs such as purchase of fixed assets and long term working capital.Export finance is shortterm working capital financeallowed to an exporter. Finance and credit are available not only to help export production but also to sell to overseas customers on credit.

PRE-SHIPMENT FINANCE MEANING: Pre-shipment is also referred as packing credit. It is working capital finance provided by commercial banks tithe exporter prior to shipment of goods. The finance required to meet various expenses before shipment of goods is called pre-shipment finance or packing credit. DEFINITION: Financial assistance extended to the exporter from the date of receipt of the export order till the date of shipment is known as pre-shipment credit. Such finances extended to an exporter for the purpose of procuringraw materials, processing, packing, transporting, warehousing of goods meant for exports. IMPORTANCE OF FINANCE AT PRE-SHIPMENTSTAGE: To purchase raw material, and other inputs to manufacture goods. To assemble the goods in the case of merchant exporters. To store the goods in suitable warehouses till the goods are shipped. To pay for packing, marking and labelling of goods. to pay for pre-shipment inspection charges. To import or purchase from the domestic market heavy machinery and other capital goods to produce export goods. to pay for consultancy services. To pay for export documentation expenses. TYPES OF PRE-SHIPMENT FINANCE Packing credit Advance against cheques /draft etc representing advance payments. Reshipment finance is expected in the following forms: Packing credit in Indian rupees packing credit in foreign currency Requirement for getting packing credit This facility is provided to an exporter who satisfies the following criteria A ten digit importer-exporter code number allotted by DGFT. Exporter should not be in the caution list of RBI.

If the goods to be exported are not under OGL (open general license).the exporter should have the required license permit to export thegoods.Packing credit facility can be provided to an exporter on production of the following evidence to the bank.1. formal application for release the packing credit with undertaking to the effect that the exporter would be ship the goods within stipulated due date and submit the Relevant shipping documents to the banks within prescribed time limit .2. Firm order or irrevocable I/C or against cable /fax message exchange between the exporter and the buyer.3. Licensed issued by DGFT if the goods to be exportedfall under the restricted or canalized category. If theitem falls under quota system. Proper quota allotment proof needs to be submitted. Eligibility Pre shipment credit is only issued to that exporter who has the export order in his own name. however, as an exception, financial institution can also grant credit to a third party manufacturer or supplier of goods who does not have export orders in their own name .In this case some of the responsibility of meeting the export requirements have been out sourced to them byte main exporter .in other cases where the export orders divided between two or more than two exporters, pre-shipment credit can be shared between them. QUANTUM OF FINANCE The quantum of finance is granted to an exporter against the LC or an expected order. The only guideline principle is the concept of need based finance. Banks determine the percentage of margin, depending on factors such as: The nature of order. The nature of the commodity. The capability of exporter to bring in the requisite contribution. Different stages of pre shipment finance Appraisal and sanction of limitsBefore making any an allowance for credit facilities banks need to check the different aspects like product profile ,political and economic details about country .apart from these things , the bank also looks into the status report of the prospective buyer , with whom the exporter proposes to do the business . To check all these information, banks can seek the help of institution like ECGC or international consulting agencies like dun and street etc. The bank extended the packing credit facilities after ensuring the following: a) The exporter is a regular customer, a bona fid exporter and has a good standing in the market.

b) Whether the exporter has the necessary licenses and quota permit (as mentioned earlier) or not. c) Whether the country with which the exporter wants to deal is under the list of restricted cover countries (RCC) or not. DISBURSEMENT OF PACKING CREDIT: After proper sanctioning of credit limits, the disbursing branch should ensure: To inform ECGC the details of limit sanctioned in theprescribed format within 30 days from the date of sanction.a) to complete proper documentation and compliance of the terms of sanction i.e. creation of mortgage EST.)There should be an export order or a letter of creditproduced by the exporter on the basis of whichdisbursements are normally allowed. POST-SHIPMENT FINANCEMEANING: Post shipment finance is provided to meet working capital requirements after the actual shipment of goods. It bridges the financial gap between the date of shipment and actual receipt of payment from overseas buyer thereof. Whereas the finance provided after shipment of goods is called post-shipment finance. DEFENITION: Credit facility extended to an exporter from the date of shipment of goods till the realization of the export proceeds is called Post-shipment Credit. IMPORTANCE OF FINANCE AT POST-SHIPMENTSTAGE: To pay to agents/distributors and others for their services. to pay for publicity and advertising in the overseas markets. to pay for port authorities, customs and shipping agents charges. To pay towards export duty or tax, if any. To pay towards ECGC premium. To pay for freight and other shipping expenses. To pay towards marine insurance premium, under CIFcontracts. To meet expenses in respect of after sale service. To pay towards such expenses regarding participation in exhibitions and trade fairs in India and abroad. To pay for representatives abroad in connection with their stay board. Financing for various types of export Buyers credit

Post shipment finance can be provided for Three types of export: Physical exports: Finance is provided to the actual exporter or to the exporter in whose name the trade documents are transferred. Deemed export : Finance is provided to the supplier of the goods which are supplied to the designed agencies. Capital goods and project exports:Finance is sometimes extended in the name of overseas buyer. The disbursal of moneys directly made to the domestic exporter. Types of post shipment finance The post shipment finance can be classified as: 1) Export bill purchased /discounted. 2) Export bill negotiated 3) Advance against export bills sent on collection basis. 4) Advance against export on consignment basis

1. Export Bills Purchased /Discounted. (DP& DAB ills) Export bills (Non L/C Bills) is used in terms of sale contract/ order may be discounted or purchased byte banks. It is used in indisputable international trade transactions and the proper limit has to be sanctioned to the exporter for purchase of export bill facility. 2. Export Bills Negotiated (Bill under L/C) His risk of payment is less under the LC, as the issuing bank makes sure the payment. The risk is further reduced, if a bank guarantees the payments by confirming the LC .Because of the inborn security available in this method, Bank often become ready to extend the finance against bills under LC. However, this arises two major risk factors forth banks:

1. The risk of non-performance by the exporter, when he is unable to meet his terms and conditions. In this case, the issuing banks do not honour the letter of credit. 2. The bank also faces the documentary risk where the issuing bank refuses to honour its commitment .So, it is important for the negotiating bank and the lending bank to properly check all the necessary documents before submission. 3. Advance Against Export Bills Sent on collectionBasisBills can only be sent on collection basis, if the bills drawn under LC have some discrepancies. Sometimes exporter requests the bill to be sent on the collection basis, anticipating the strengthening of foreign currency. Banks may allow advance against these collection bills to an exporter with concessional rates of interest depending upon the transit period in case of DP Bills and transit period plus since period in case of since bill .The transit period is from the date of acceptance of the export documents at the and not branch for collection and not from the date of advance. 4. Advance Against Export on Consignments Basis Bank may choose to finance when the goodsareexported on consignment basis at the risk of theexport for sale and eventual payment of saleproceeds to him by the consignee. However, in this case bank instructs the overseas bank to deliver the sale proceeds by specified date, which should be within the prescribed date even if according to the practice in certain trades a bill for part of theestimated value is drawn in advance against thee xports. For any amount: Working Group.

Upton Rs. 50 cores: Scheduled Commercial Banks. Upton Rs. 200 cores: Exam Bank. Above Rs. 200 cores: Working Group. SERVICES BIDS / CONTRACTS On Cash Terms Upton Rs. 5 cores: Scheduled Commercial Banks. Upton Rs. 10 cores: Exam Bank. Above Rs. 10 cores: Working Group.

BANKING TRANSACTION IN EXPORTS When ever there is international trade and inflow/outflow of foreign exchange, there must be somemethods of settlements for the transaction. The need for settlement leads to opening of accounts by banks other countries which are called NASTRO and VOSTROaccount as under NOSTRO-NOSTRO Account means Our account with you. The account that a home bank maintains with a foreign bank is known as NOSTRO account. For example, Dhaka Banks US Dollar account maintained with City Bank NA New York, USA is NOSTROAccount of Dhaka Bank When a bank in India issues a draft payable abroad infuse is drawn on bank of new York .the draft when presented for payment in new York is debited to theNOSTRO account bank of India and paid to the beneficiary .similarly all payment proceeds are receivedthrough this account and all payment of importtransaction are paid through this account. Bank in India are permitted freely to open one or more such accountas per their requirement with their branches orcorrespondence banks abroad .opening of such accounts must be advised to RBI by a separate letter. VOSTRO ACCOUNT: VOSTRO Account means your account with us. Theaccount maintained by a foreign bank i s known asVOSTRO account. We can term NOSTRO account when referred to its account holder (foreign bank) by home bank as VOSTRO account.For example, State Bank of Indias taka accountmaintained with Dhaka Bank is a VOSTRO account of Dhaka Bank. Any draft issued by bank of New York and drawn on banks paid to beneficiary by bank of India to the debit of this account. MIRRORThe banks in India maintained the replica of the NOSTRO account they maintain with banks abroadand the same are called MIRROR account helps inreconciliation of the account. Foreign exchange market There are three types of markets 1) Merchant markets It is the retail market with involves the transaction of customer with authorized dealers (ADS) 2) Inter bank market The market where transaction takes place between authorized dealers (ADS) within the country. 3) International market The market where transaction takes place between banks in different countries

The base for all these types of markets is need tosquare off the position of authorized dealers (ADS).authorized dealers are permitted to retainbalances only up to a certain level.

BIBILOLIOGRTAPHY /REFERENCE WWW.INDIANDATA.COM WWW.COMMERCE.NIC.COM WWW.GOOGLE.COM WWW.MSN.COM IMPORT-EXPORT BOOK (VIVPUL PRAKASHAN) EXPORT MARKETING