CHAPTER-IV

EXPORT MARKETING

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Introduction:

Export marketing means exporting goods to other countries of the world. It

involves lengthy procedure and formalities. In export marketing, goods are
sent abroad as per the procedures framed by the exporting country as well as
by the importing country. Export marketing is more complicated to domestic
marketing due to international restrictions, global competition, lengthy
procedures and formalities and so on. Moreover, when a business crossed the
borders of a nation, it becomes infinitely more complex. Along with this,
export marketing offers ample opportunities for earning huge profits and
valuable foreign exchange. Export marketing has wider economic
significance as it offers various advantages to the national economy. It
promotes economic / business / industrial development, to earn foreign
exchange and ensures optimum utilization of available resources. Every
country takes various policy initiatives for promoting exports and for
meaningful participation in global marketing. Global business is a reality and
every country has to participate in it for mutual benefits. Every country has to
open up its markets to other countries and also try to enter in the markets of
other countries in the best possible manner. This is a normal rule which every
country has to follow under the present global marketing environment. In the
absence of such participation in global marketing, the process of economic
development of the country comes in danger.

4.1Definitions of Export Marketing:

1) According to B. S. Rathor―Export marketing includes the management of

marketing activities for products which cross the national boundaries of a
country‖.

2) ―Export marketing means marketing of goods and services beyond the

national boundaries‖.

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4.2 Features of Export Marketing:

The main important features of export marketing are as follows.

1) 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. To undertake the various marketing activities, the export
marketing manager should collect the right information from the right source;
analyze it properly and then take systematic export marketing decisions.

2) Large Scale Operations: - Normally, export marketing is undertaken on a

large scale. Emphasis is placed on large orders in order to obtain economies in
large sole production and distribution of goods. The economies of large scale
help the exporter to quote competitive prices in the overseas markets.
Exporting goods in small quantities is costly due to heavy transport cost and
other formalities.

3) Dominance of Multinational Corporation:- Export marketing is

dominated by MNCs, from USA, Europe and Japan. They are in a position to
develop worldwide contacts through their network and conduct business
operations efficiently and economically. They produce quality goods at low
cost and also on massive scale.

4) Customer Focus:- The focus of export marketing is on the customer. The

exporter needs to identify customers‟ needs and wants and accordingly design
and develop products to generate and enhance customer satisfaction. The
focus on customer will not only bring in higher sales in the overseas markets,
but it will also improve and enhance goodwill of the firm.

5) Trade barriers: - Export marketing is not free like internal marketing.

There are various trade barriers because of the protective policies of different
countries. Tariff and non-tariff barriers are used by countries for restricting
import. The export marketing manager must have a good knowledge of trade
barriers imposed by importing countries.

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6) Trading Blocs: - Export trade is also affected by trading blocs, certain
nations form trading bloc for their mutual benefit and economic development.
The non-members face problems in trading with the members of a trading bloc
due to common external barriers. Indian exporters should have a good
knowledge of important trading blocs such as NAFTA, European Union and
ASEAN.

7) Three – faced competition:- In export markets, exporters have to face

three-faced competition, i.e., competition from the three angles – from the
other suppliers of the exporter‘s country, from the local producers of
importing country and from the exporters of competing nations.

8) Documentation:-Export marketing is subject to various documentation

formalities. Exporters require various documents to submit them to various
authorities such as customs, port trust etc. The documents include – Shipping
Bill, Consular Invoice, and Certificate of Origin etc.

9) Foreign exchange regulations: - Export trade is subject to foreign

exchange regulations imposed by different countries. These regulations relate
to payments and collection of export proceeds. Such restrictions affect free
movement of goods among the countries of the world.

10) Marketing: -mix Export marketing requires the right marketing mix for
the target markets, i.e. exporting the right product, at the right price, at the
right place and with the right promotion. The exporter can adopt different
marketing – mixes for different export markets, so as to maximize exports and
earn higher returns.

11) International marketing Research:- Export marketing requires the

support of marketing research in the form of market survey, product survey,
product research and development as it is highly competitive. Various
challenges, identification of needs and wants of foreign buyer in export
marketing can be dealt with through international marketing research.

12) Spreading of Risks: - Export marketing helps to spread risks of business.

Normally export firms sell in a number of overseas markets. If they are

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affected by risks (losses) in one market, they may be able to spread business
risks due to good return from some other markets.

13) Reputation: - Export marketing brings name and goodwill to the export
firm. Also, the country of its origin the gets reputation. The reputation enables
the export firm to command good sales in the domestic market as well as
export market.

4.3 Importance of Export Marketing:

Exports are important for all countries whether developed or underdeveloped.

The need / importance / advantages of export marketing can be explained from
the viewpoint of a country and that of business organization.

4.3.1 Importance of Export Marketing at the National Level:

1) Earning foreign exchange:-Exports bring valuable foreign exchange to the

exporting country, which is mainly required to pay for import of capital goods,
raw materials, spares and components as well as importing advance technical
knowledge.

2) International Relations: - Almost all countries of the world want to

prosper in a peaceful environment. One way to maintain political and cultural
ties with other countries is through international trade.

3) Balance of payment in largescale:-exports solve balance of payments

problem and enable countries to have favorable balance of payment position.
The deficit in the balance of trade and balance of payments can be removed
through large-scale exports.

4) Reputation in the world: -A country which is foremost in the field of

exports, commands a lot of respect, goodwill and reputation from other
countries. For example, Japan commands international reputation due to its
high quality products in the export markets.

5) Employment Opportunities:- Export trade calls for more production.

More production opens the doors for more employment.Opportunities, not
only in export sector but also in allied sector like banking, insurance etc.

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6) Promoting economic development: -Exports are needed for promoting
economic and industrial development. The business grows rapidly if it has
access to international markets. Large-sole exports bring rapid economic
development of a nation.

7) Optimum Utilization of Resources: - There can be optimum use of

resources. For example, the supply of oil and petroleum products in Gulf
countries is in excess of home demand. So the excess production is exported,
thereby making optimum use of available resources.

8) Spread Effect:-Because of the export industry, other sectors also expand

such as banking, transport, insurance etc. and at the same time number of
ancillary industries comes into existence to suppo0rt the export sector. 9)
Higher standard of Living – Export trade calls for more productions, which in
turn increase employment opportunities. More employment means more
purchasing power, as a result of which people can enjoy new and better goods,
which in turn improves standard of living of the people.

4.3.2 Importance of export marketing at Business / Firm / Enterprise

Level:

1) Reputation: - An organization which undertakes exports can bring fame to

its name not only in the export markets, but also in the home market. For
example, firms like Phillips, HLL, Glaxo, Sony, coca cola, Pepsi, enjoy
international reputation.

2) Optimum Production: - A company can export its excess production after

meeting domestic demand. Thus, the production can be carried on up to the
optimum production capacity. This will result in economies of large scale
production.

3) Spreading of Risk: - A firm engaged in domestic as well as export

marketing can spread its marketing risk in two parts. The loss is one part (i.e.
in one area of marketing) can be compensated by the profit earned in the other
part / area.

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4) Export obligation:-Some export organization are given certain concessions
and facilities only when they accept certain export obligations Large-scale
exports are needed to honour such export obligations in India, units operating
in the SEZs / FTZs are expected to honour such export obligations against
special concessions offered to them.

5) Improvement in organizational efficiency:- Research, training and the

experience in dealing with foreign markets, enable the exporters to improve
the overall organizational efficiency.

6) Improvement in product standards:- An export firm has to maintain and

improve standards in quality in order to meet international standards. As a
result, the consumers in the home market as well as in the international market
can enjoy better quality of goods.

7) Liberal Imports: - Import Organizations exporting on a large-scale collect

more foreign exchange which can be utilized for liberal import of new
technology, machinery and components. This raises the competitive capacity
of export organizations.

8) Financial and non-Financial benefits:-In India, exporters can avail of a

number of facilities from the government. For example, exporters can get
DBK, tax exemption etc. They also can get assistance from export promotion
organizations such as EPCs IIP, etc. 9) Higher profits – Exports enable a
business enterprise to earn higher prices for goods. If the exporters offer
quality products, they can charge higher prices than those charged in the home
market and thereby raise the profit margin.

4.4 Export Marketing of Automotive industry in India:

Export activities are known to be important for the economic well-being of a

nation. The arguments of specialization and comparative advantage
notwithstanding, a nation has to generate sufficient outflow activities to
compensate for the inflow activities. In the long run, the balance of payments
has to be maintained. In case of deficit, gold or capital transfers have to be
resorted to for setting right the imbalances (Czinkota, 1982). Such financing,
however, "can go on only as long as the gold and foreign assets last or as long

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as foreign countries are willing to accept the IOUs of , the deficit country,
permitting it to pile up foreign liabilities' (Kreinin, 1971 1. )

Developing countries have to nurture a dynamic export sector not only to pay
for their import bills but also for attaining economic sovereignty. An
expanding export trade is a matter of concern in a country's development
process. The experience of a few advanced nations has clearly shown how
foreign trade can be an 'Engine of Growth'.

India is at a critical juncture in its economic endeavor. The trade deficit is

gradually mounting up and there are no indications of its receding, because of
the growing developmental needs, both in terms of updating technology and
increasing the level of production. The imbalance situation regarding
payments is getting out of control. International commercial banks refuse to
extend new credits. Industrial growth has slowed down because of a severe
import squeeze and inflation too is accelerating. It looks as if India might, for
the first time in its history, default on .the external payments obligations. If
this continues, the country's economic and financial system would face an
unprecedented disruption, leading to widespread unemployment, loss of
output, and emergence of a higher inflationary spiral.

More disturbing is the recent report given by the World Bank which states that
India has become the largest debtor nation in Asia as its total external debt was
71.5 billion dollars as on 1991. Oil imports will continue to increase,
reflecting the burgeoning shortfall between domestic supply and demand,
while higher investment is expected to result in more capital goods imports.

India is the 9th industrial power in the world. However, India's share in the
world exports is negligible, accounting for only 0.57 per cent on 19990-91
(vide table1.2). Besides, India's share in world exports is continually
declining, indicating that India's exports have lagged behind in its growth in
world trade. Another disappointing feature is the poor export growth rate. The
average annual growth rate has been just 50 per cent of the world trade
growth. During the period 1950-80, world trade grew by 12.4 per cent, while
India's growth was only 6.7 per cent. With regard to trade deficit, there has
been a sharp. In this economic scenario, the urgency and importance of

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boosting exports to keep the widening adverse trade balance within
manageable limits has become national imperative. Besides, the IMF loan
carries conditionality‘s that India should adopt an outward-looking strategy to
overcome the balance of payments difficulties it may face in the coming years.

There have been some perceptible changes in the pattern of India's exports,
indicative of structural changes occurring in the Indian economy. The trend of
India's exports has been visibly in favor of manufactured items. During the
first phase of planning (1951-561, tea, jute and cotton fabrics contributed 50
per cent of our export earnings, but the share had come down to 13.8 per cent
in1580-81. Now many new (non-traditional) products have been added to the
export list.

In terms of the composition and volume of India's exports, leather and leather
products have in the last few years emerged as one of the most vibrant sectors
of India's exports. Among the non-traditional group of products, it has shown
one of the highest rates of contribution over the years.

The ranking has been done based on the basis of percentage contribution of
Export to the overall volumes. The background for considering the %
contribution and not directly export volumes is to measure the OEM's
dependency on Exports and hence the focus of these OEMs on the same.
Surprisingly, a lot of OEM's have garnered higher volumes in Exports
compared to Domestic Sales and the intention of making India as a
Manufacturing & Export Hub is quiet evident from that. Also the OEMs
having higher Export focus are based at locations near to ports giving it the
required accessibility. The Domestic Sales / Export volume is from April to
July 2013 (Quarter 1 of FY14).

India has gained importance by global automakers not only as a growing

market, but also a strategic location to export its products. "Made in India"
vehicles have found global acceptance because of its value engineering,
localization and its central location. Carlos Ghosn was once found
commenting on the issue - "If we get a product right in India then the product
is ready to be accepted elsewhere..in growing markets". The cost of making a
car in India is 15-20% lower than any developed / even developing markets.

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India made products are also rebadged for various international markets. Now,
strong export lineup is also considered as an advantage to offset the
depreciating rupee!

Table: 4.1Export lineups:

Passenger Cars:-

 Nissan emerges as the OEM with the highest dependency on Export.

No wonder the OEM is undeterred with its poor performance in the Indian
market, as it has been able to successfully expand its Export portfolio - kindly
note that Micra is made ONLY in India for global markets. Also Sunny
contributes significantly to the OEM. In the coming times, Datsun brand
would also be based in India and would be exported to various countries - Do
remember that Datsun's world premiere was done in India and for a reason!

 Hyundai has always set benchmarks in Exports - It is the country's

largest car exporter and in 2010 touched the milestone of exporting over 10
Lakh cars! No wonder, "Made in India" Hyundai cars is being exported to
over 120 countries! Also over 50% of its production is being exported.

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Table:- 4.2Export milestones:

Date
July 21, 2000
October 31, 2004
October 31, 2006
March 27, 2008
November 5, 2008
February 22, 2010
Milestone
First export of 760 Accent and Santro cars
from Chennai port to Algeria
One lakh cars export
HMIL rolls out the fastest 300,000th export
car
Fastest export of 5 lakh units
First batch of ‗i20‘ cars to Europe
Fastest exports of 10 lakh cars

 Ford also has recently re- aligned its strategy to accelerate the
export volumes to adapt to the changing Indian market conditions
and strong global demand for compact cars and SUVs. With addition of
Ecosport in its portfolio, not only making it a success in India - but also
exporting the model to various other developing countries is also its part of the
strategy. Ford is also looking at integrating India with its global manufacturing
network as part of its "One Ford" strategy.

 VW India has been exporting cars since Pune last year as fully built
units to markets such as South Africa, Srilanka, Nepal, Bangladesh, Malaysia
and LHD version of the Vento to West Asia.

 Who can forget Toyota's big plans to the Indian made Etios / Liva for
the global markets. The OEM currently exports to Indonesia & South Africa.
The India-made Etios though didn't perform as it was expected in India - but is
the 4th bestselling car in South Africa!

 Renault India exports the Duster to RHD markets - UK and Ireland.

 Maruti - is aiming to overtake Hyundai in exports. By 2020, Maruti is

planning to invest Rs. 18,000 crore in new factories to support its expansion
and export strategy.

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Despite current market challenges and macroeconomic factors, Export is the
strategy being used by various OEMs to shield itself from the economic
slowdown.

A look at the India made products which are the best-sellers in international
markets

Table:- 4.3 Export volumes in Commercial Vehicles:

A glance at the Export volumes in Commercial Vehicles, Two & Three

Wheelers:-

The ranking has been done based on the basis of percentage contribution of
Export to the overall volumes. The background for considering the %
contribution and not directly export volumes is to measure the OEM's
dependency on Exports and hence the focus of these OEMs on the same.
Surprisingly, a lot of OEM's have garnered higher volumes in Exports
compared to Domestic Sales and the intention of making India as a
Manufacturing & Export Hub is quiet evident from that. Also the OEMs
having higher Export focus are based at locations near to ports giving it the
required accessibility.

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Table 4.3.1 A glance at the Export volumes in Commercial Vehicles,
Three Wheelers:-

*Force Motors volumes have been considered separately as its domestic

numbers are nil.

Table 4.3.2 A glance at the Export volumes in Two Wheelers:-

India has gained importance by global automakers not only as a growing

market, but also a strategic location to export its products. "Made in India"
vehicles have found global acceptance because of its value engineering,
localization and its central location. Carlos Ghosn was once found
commenting on the issue - "If we get a product right in India then the product
is ready to be accepted elsewhere..in growing markets". The cost of making a
car in India is 15-20% lower than any developed / even developing markets.
India made products are also rebadged for various international markets. Now,

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strong export lineup is also considered as an advantage to offset the
depreciating rupee!

According to KPMG, Indian auto manufacturers are likely to soon join the
bandwagon of established international automobile giants, such as Toyota,
Hyundai, Volkswagen and Honda, as they are well positioned to significantly
increase their market share in the coming five years (till 2014), as per the news
published by Press Trust of India.

Automobile exports from India registered growth of 23.61% in 2008-09 to

1.53 Million Units. Separately, exports of passenger vehicles stood at 335.74
Thousand Units and that of commercial vehicles and two-wheelers at 42.67
Thousand and over one million Units respectively.

One of the key factors responsible for the growth of the Indian automobile
industry is its low cost advantage. On the back of cheap labor and raw material
cost, the cost of production becomes extremely less. This ultimately leads to
low cost of end product, thereby luring people who are not in a position to
own expensive luxury cars. Moreover, the cost competition, which is getting
increasingly tough in the developed markets under the pressure of high input
cost, will provide an additional edge to the Indian automobile industry in
increasing its passenger car sales in overseas markets.

Besides this, India is rapidly emerging as a quality auto component

manufacturing base, which is further supporting the country‘s auto industry.
There are several well-equipped small passenger car assembling plants, as a
result of which India-manufactured small passenger cars are gaining good
response in the overseas markets.

Exports of passenger cars from India are expected to chip in a CAGR of

around 20% between 2009-10 and 2012-13, reaching 610 Thousand Units, up
from 335.74 Thousand Units in 2008-09, predicts a market research pioneer
RNCOS in its report “Indian Automobile Sector Analysis”.

According to a Research Analyst at RNCOS, ―India is highly capable of

surfacing as a pioneer of a new stream of emerging economy automobile
innovators, but the way to this will not be easy. The country has to confront a

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number of challenges, one of them being to improve its quality and
simultaneously build and retain automotive R&D skills. Indian automakers
need to give attention to innovation rather than simply manufacturing.
Suppliers also need to meet the international quality standards so as to make
India a world leader in global automobile market.‖

Higher exports and robust sales of cars, bikes and tractors in rural India have
come to the rescue of auto makers hit by anemic demand in the cities, where
the weakest economic growth in a decade is taking its toll on consumer
confidence.

Auto makers have sharpened their focus on overseas markets to offset slowing
sales growth in India and higher import costs resulting from the steep
depreciation of the rupee, which has retreated 13.5% against the dollar this
year. The rupee‘s depreciation has also helped the export thrust.

In the five months from April to August, exports of passenger vehicles rose
12% to 251,386 units while domestic sales fell 5% to 984,761 units, according
to the Society of Indian Automobile Manufacturers.

Hyundai Motor India Ltd, the local unit of the Korean auto maker and India‘s
biggest car exporter, shipped 120,108 units in April-August, up 8.22% from a
year ago. Home-grown auto makers like Tata Motors Ltd and Mahindra and
Mahindra Ltd (M&M), too, saw exports rise 16.2% and 11%, respectively,
albeit on a low base.

Volkswagen Group Sales India Pvt. Ltd, the local arm of the German car
maker, shipped 9,528 units between April and August, a fourfold jump over
last year.

ToyotaKirloskar Motor Pvt. Ltd has also been increasing exports steadily, said
managing director H. Nakagawa. The local content across Toyota‘s model
line-up is 50%, he said. To offset its inflating import bill, Toyota has
commenced exporting the Etios sedan to South Africa.

The higher overseas shipments, mainly destined for emerging markets, and
sales in rural India are providing a degree of comfort to auto makers at a time

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when demand in the big cities has been eroded by the economic slowdown,
high interest costs and rising fuel prices. Automobile sales slumped year-on-
year for eight months in a row before recovering slightly in April

The economy grew 5% in the year ended 31 March, the slowest annual pace in
10 years. The rate of economic expansion was 4.4% in the quarter ended June,
the slowest quarterly pace in four years.

Shoring up exports, however, has its fair share of challenges, said Kenichi
Ayukawa, managing director and chief executive at car market leader
MarutiSuzuki India Ltd.

Maruti Suzuki, which exported 120,000 units in fiscal 2013, expects exports to
remain flat this fiscal. ―With currencies in most of the emerging markets
weakening against the dollar, it‘s not going to be easy,‖ said Ayukawa.

Analysts agree that sustaining overseas demand wouldn‘t be easy.

―Indian auto makers are exporting primarily to emerging markets. Even as the
export story sounds good, executing it on the ground has not been easy,‖ said
Joseph George, an analyst at domestic brokerage firm IIFL Ltd. He added that
companies are likely to cut prices in the export markets to prop up sales
volumes.

Demand in rural India, which has benefited from a healthy monsoon, rainfall
has also provided some succor to auto makers in these hard times.

ArunMalhotra, senior vice-president (sales and channel development,

automotive sector) at M&M, said the rural market contributed 35% of the
company‘s sales in the last fiscal and he expects the share to rise in the current
year. Sales have been driven by the Bolero and Scorpio utility vehicles, he
said.

MayankPareek, chief operating officer (sales and marketing) at Maruti Suzuki,

said the company‘s rural sales had jumped 20% in the four months to July and
are expected to increase in the coming months. The hinterland accounts for
32% of the company‘s total sales.

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―Of late, it‘s the rural sales that are holding on,‖ said Anil Dua, senior vice-
president (sales and marketing) at Hero MotoCorp Ltd, India‘s largest two-
wheeler maker.

Any form of cash infusion by the government into rural India will prop up
demand for two-wheelers and other household goods, Dua said, referring to
better minimum support price for crops and other incentives that the villages
typically receive ahead of elections, which are due around May next year.

While HeroMotoCorp and Maruti Suzuki, which have been traditionally

strong in rural India, are strengthening their presence to fend off competition,
their rivals are drafting marketing strategies to woo rural buyers.

Hyundai Motor India, for instance, is appointing so-called ―Hyundai

Champions‖ or rural sales consultants to promote its range of cars in the
villages, according to Rakesh Srivastava, its senior vice-president for sales and
marketing.

―In 2011, around 15% of Hyundai‘s sales came from the rural and semi-urban
markets. In 2012, it expanded to 16.9%. In 2013 (first half of the calendar
year), sales grew to 18.6% and we expect it will increase to over 20% by
2014,‖ said Srivastava.

In a bid to tap demand in the festive season, Hyundai is offering customized

schemes for farmers, traders and panchayat (village council), members. It also
plans to increase its rural sales outlets from 270 to 350 by the end of this year,
according to Srivastava.

Hero MotoCorp, which drew 46% of its sales from rural areas in fiscal 2013,
has also been honing its rural strategy. The Delhi-based firm, which has a
separate division to deal with the rural market, has its marketing and sales
promotion initiatives linked to the crop cycles, said Dua.

Hero has close to 1,200 custom-made bikes to cater to rural customers. For
instance, it offers a bike with an adjustable suspension and higher ground
clearance. The suspension can be easily altered without any tool, said Dua.

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The road to rural India may not be equally smooth for all the companies
driving into the market, said Kumar Kandaswami, senior director and country
leader overseeing the manufacturing practice at consultancy Deloitte Touche
Tohmatsu India Pvt. Ltd.

Rural buyers need a model that fits them, he said. ―Very few manufacturers
have the right product (to succeed in rural markets),‖ he said.

Tractor makers have benefited from the good monsoon, with sales of the farm
vehicles rising 18% to 275,332 units in the five months to August from
232,894 units in the year-ago period, according to the Tractor Manufacturers
Association, a lobby group.

Sales were led by tractor market leader M&M, whose sales rose 20% to
107,204 units in April-August compared with 89,336 units a year ago.

M. Venkatesham, a sugar cane farmer based in Machnoor village in Zahirabad

district of Andhra Pradesh, bought a second Mahindratractor six months ago.
His disposable income has increased thanks to the higher price he gets for the
crop. ―From Rs.90 per tonne two years back, I get Rs.110 now,‖ said
Venkatesham, who plans to buy a third tractor once he pays off the loan on his
two tractors

Rajesh Jejurikar, chief executive of M&M‘s tractor and farm mechanization

unit, is optimistic that sales growth in the second half, too, would remain
healthy. The company has its tractor plants running at optimal capacity, he
said. M&M is ramping up capacity at its plant in Zaheerabad in Andhra
Pradesh.

At the end of fiscal 2014, the output is forecast to rise from 60 tractors per day
to 100 per day, said Jejurikar, adding that the company expects the tractor
industry to end the year with 10% growth against the estimated 6%.

Tafe Ltd, India‘s second largest tractor maker by sales, also saw its sales rise
20% to 68,395 units against 56,609 units in the April-August period, said a
company spokesman.

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Meanwhile, sales of used or second-hand cars has seen a surge as buyers
postpone new car purchases, offering auto makers another sweet spot.

The market for used cars is largely unorganized. Mahindra First Choice
Wheels Ltd and Maruti True Value are among the few organized firms in the
space.

The used car market in India is estimated to be 2.8 million units a year now
and expected to touch 7.8 million units by 2017, according to NagendraPalle ,
chief executive of Mahindra First Choice—the used car business of M&M.

Mahindra First Choice‘s sales increased 40% to 4,300 units in August

compared with last year. It plans to sell 65,000 units by the year end, Palle
said.

The rising demand for used cars also has a downside. Deloitte‘s Kandaswami
cautioned that with more people opting for used cars, the availability of
quality cars is going to be an issue.

4.5 Present Problems / Difficulties faced by Indian Exporters:

At present, Indian exporters face a number of problems / difficulties. The

problem demotivates the business firms to enter into foreign markets. These
problem / difficulties are as follows.

a) Recession in world market:- The world market, faced recession in 2008

and in the first half of 2009. The recession was triggered due to sub-prime
crisis of USA in September 2007. Due to recession, the demand for several
Indian items such as Gems and Jewellery, Textiles and Clothing and other
items were badly hit. During recession, exporters get low orders from overseas
markets, and they have to quote lower prices. Therefore, exporter gets law
profits or suffers from losses.

b) Technological differences:- The developed countries are equipped with

sophisticated technologies capable of transforming raw materials into finished
goods on a large scale. Less developed countries, on the other hand, lack
technical knowledge and latest equipments. And therefore they have to use

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their old and outdated technologies. It leads to the lopsided development in the
international market.

c) Reduction in export Incentives:- Over the years, the Govt. of India has
reduced export incentives such as reduction in DBK rates, withdrawal of
income tax benefits for majority of exporters, etc. The reduction in export
incentives demotivates exporters to export in the overseas markets.

d) Several competitions in global marketing:-Export marketing is highly

competitive. This competition relates to price, quality, production cost and
sales promotion techniques used. Indian exporters face three-faced
competition while exporting. This includes competition from domestic
exporters, local producers where the goods are being exported and finally from
producers of competing countries at global level. Such competition is one
special problem to the exporters.

e) Problem of product standards: -Developed countries insist on high

product standards from developing countries like India. The products from
developing countries like India are subject to product tests in the importing
countries. At times, the importing countries do not allow imports of certain
items like fruits, textiles and other items on the grounds of excessive toxic
content. Therefore Indian exporters lose markets especially in developed
countries.

f) Fluctuations in Exchange Rate:- Every country has its own currency

which is different from international currencies. The dominant international
currencies are US dollar or Sterling Pound. From the point of view of Indian
exporters we are interested to realize the payment in international currency.
Foreign exchange earned by the operators is converted into Indian rupees and
paid to the exporters in Indian currency; this exposes the exporters to the
dangers of fluctuation in foreign exchange rates.

g) Problems of Sea Pirates Attacks:- A major risk faced by international

trade is attack by pirates in the Gulf of Aden. More than half of India‟s
merchandise trade passes through the piracy infested Gulf of Aden. New

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exporters and importers are facing problem, because of increased pirate
attacks as they find it difficult to get insurance cover.

h) Problem of subsidies by Developed countries:- The developed countries

like USA provide huge subsidies to their exporters. For example, in case of
agriculture exporters, USA, UK and other provide huge subsidies to their
exporters. Therefore, the exporters of developing countries like India find it
difficult to face competition in the world markets.

i) Problem in preparing Documents: - Export involves a large number of

documents. The exporter will have to arrange export documents required in his
country and also all the documents as mentioned in the documentary letter of
credit. In India, there are as many as 25 documents (16 commercial and a
regulatory documents) to be filled in.

j) Government restrictions and foreign exchange regulations:-

The Government restrictions compel the exporters to follow certain rules and
regulations in the form of licenses, quotas, and customs formalities. Due to
such restrictions, new problems develop before the exporters. Even trade
restrictions in foreign countries create problems before exporters. Indian
exporters face this difficulty of government restrictions and foreign exchange
regulations even when trade policy is now made substantially liberal.

k) High risk and Uncertainties: - Export marketing is subject to high risks

and uncertainties. The risks may be both political and commercial. Political
risks involve government instability, war, civil disturbances, etc. The
commercial risks involve insolvency of the buyer, protracted default on the
part of the buyer dispute on quality and so on.

l) Competition from China India is facing stiff competition from China in the
world markets, especially in the OECD markets. As a result, India‘s share of
export of OECD markets has declined from 53% of total exports in 2000-01 to
about 38% in 2007-08. Some of the Indian exporters have lost their overseas
contracts due to cheap Chinese goods and supplies. This is the major problem
of exporters.

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SUMMARY:

Export marketing of automobile industry in India easier and faster mobility of

people and goods across the regions, countries andcontinents is a cherished
yearning of mankind. The automobile industry‘s potential for facilitating this
mobility is enormous. Wheels of development across the globe would have to
be powered by this industry. However, a seamless development of this
industry across countries and continents alone will help in realization of this
objective. For such seamless and barrier-free development of the sector,
countries will have to come together and develop better understanding.
Industry across countries will have to meet challenges of newer technologies,

Alternative fuels and affordability of automobiles by people at large through

constructive cooperation. The earlier we are able to achieve this the better it
would be for the world development.

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