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MFM 3

INTERNATIONAL BUSINESS

Himanshu

Roll No. 27

ASSIGNMENT:

The objectives of the subject “Foreign Trade and Doing Business in the Republic of Yemen”
are the following:

1. To analyse the Yemeni economy and foreign trade


2. To evaluate the business opportunities in Yemen
3. To explore Yemen's trade relations with the country
4. To know Yemen's Trade Agreements with INDIA
5. To develop a business plan for the Yemeni market
Yemen

The Republic of Yemen :

1. Borders of Yemen: Saudi Arabia and Oman


2. Yemeni Capital: Sana'a
3. Seaport: Aden
4. Official language: Arabic
5. Area: 528,076 square kilometres
6. Yemeni population: 25.4 millions of people
7. Abolition of the Slavery in Yemen: 1962

Religion in Yemen.

1. Main religion is Sunni Islam


2. Fiqh (Islamic Jurisprudence): Fiqh-al-Hambali
3. 40% of the population is Shiite

Yemeni Economy.

1. The economic policy of the Republic of Yemen is based on market mechanism


and economic freedom
2. Yemen ranks within economies that are less growing.
3. However, Yemen has significant economic resources, not been exploited
economically, especially oil and petrol field, fisheries and different mineral
resources
4. Currency of Yemen: Yemeni Rial (YER)

Yemeni Foreign Trade.

1. The Yemeni exports constitute 33.4% of the gross domestic production and
imports constitute 29.3% of the gross domestic production. Therefore, the
exposure ratio for the Yemeni economy reached 63%.
2. Main international partners of Yemen are Thailand, China, South Korea,
Singapore, Japan, and Saudi Arabia
3. The largest Yemeni exports are related to the field of crude products that
constitute 94-97% of gross exports whereas direct consumption products
constitute the rate between 1-4%, and the crude goods at imports range
between 55-60% of gross imports that constitute direct consumption goods
15-20% and the capital goods constitute 20-25%
4. Yemen imports from the Arab Countries between 30-40% of gross imports
whereas its exports to the Arab Countries range between (5-10%) of gross
exports to abroad
India–Yemen relations :
Diplomatic relations between these countries were established in November 1967
when India recognized Yemen's independence from the United Kingdom. Relations
continue to be in good shape notwithstanding India's close partnership with Saudi
Arabia or Yemen's close ties with Pakistan.

India has an embassy in Sana'a, while Yemen has an embassy in New Delhi.

India is the third largest importer of Yemeni goods, after China and Thailand while
India is the fifth largest exporter to Yemen after UAE, Switzerland, Netherlands and
China (Statistics 2012). The total bilateral trade for FY 2014-15 is US$ 1.53 billion, as
per statistics of Department of Commerce, GOI.
India exports mineral oils and products of their distillation, cereals, sugars and sugar
confectionery, pharmaceutical products, articles of apparel and clothing accessories,
tea, rice, wheat, cereals, spices, tobacco, meat and meat products, hand tools,
chemicals etc to Yemen.

On the other hand, India imports mineral fuels, mineral oils and products of their
distillation, lead and articles thereof, raw hides and skins (other than fur skins),
leather and limestone from Yemen. India ranks among the top in Pharma imports of
Yemen with Ranbaxy, Cipla, Sun Pharma, Alkem Laboratory limited, Cadilla,
Wockhardt, Glenmarc, Kopran Laboratories Ltd, Orchid, Medley and Biocon among
others active in the country’s market.

India has shown keen interest in tapping the main Yemeni industry of petroleum and
natural gas. In the past, Indian Oil Corporation, Bharat Petroleum Corporation
Limited, Reliance and Mangalore Refineries have imported Yemeni crude oil.
Reliance, Gujarat State Petroleum Corporation and Oil India Limited, Indian Oil
Corporation in a consortium have been allocated blocks in Yemen.
Indian community:
India and Yemen cherish a rich blend of pulsating contacts spanning many centuries.
The British rule saw Aden being governed by the Bombay Presidency from 1839 till
1939 during which time a garrison of 2000 Indian soldiers were stationed in Aden
and a regular steamer service was operational between Bombay and Aden from
1855. Till the mid 1950’s many Indians viz. Hindus, Muslims and Parsis had taken
residence in Aden. This has led to establishment of rich Indian heritage temples built
to serve Hindu, Jain and Parsi communities – out of 10 such temples one is still being
actively patronized. Since independence, many Indians have taken up Yemeni
citizenship – married into Yemeni communities. Sizable populations among them
follow Indian customs and traditions.

The cross border contacts have culminated in nearly 300,000 (approx.)Indians of


Yemeni origin prominent in Hyderabad and its contiguous cities in Andhra Pradesh,
Maharashtra, Gujarat and Karnataka. Likewise there is a strong 200,000
(approx.)Indian origin diaspora in the provinces of Aden, Hadramout, Hodeidah, Taiz
and Sana’a.

Business Opportunities:

There is an excellent potential for Indian companies to look for investments in


power, P&NG, infrastructure development, agriculture and fisheries and SMEs etc.
Besides, Aden Free Zone enjoys excellent port infrastructure that offers facilities for
Indian exporters / importers to access transshipment / storage infrastructure
arrangements besides Indian establishments should potential investments in wind
and solar energy. BHEL has begun implementing US$ 434 million project to develop
400 MW Marib Gas Turbine Power Station (Phase II) in Yemen.
New Business IDEA

Mango Export from India - Analysis Report


Mango is the national fruit of India (known as King of fruits), it is grown in all the
states of India. India occupies the top position in total production among mango
exporter countries in the world. India cultivates a wide variety of mangoes, some of
them are colourful and attractive with par excellence edible quality. According to
Apeda data, India cultivates mangoes in around 220 thousand hectare and the
annual output is around 19 Million tonne. India did export business of mango with a
worth of USD 60.41 Million from January to April 2017. During this period, the pulp
mangoes under HS code 08045040 registered 47% of the value while it is nearly 40%
for the fresh mango export under HS code 08045020.

That export value has recorded during the lean season of mangoes in India. The peak
season of mangoes has been started from month of May, which will give raise in the
mango export business of India. Here, we take a comprehensive look at the Indian
Mango Export data with the complete analysis from January to April 2017 in this
article.

Indian Mango Export Data: Variety Wise Analysis

India is the home of more than 1000 varieties of mangoes. As per the mango export
business plan, there are near about 30 varieties of mangoes which are grown
commercially for export business including Totapuri, Alphonso, Dashehri, Kesar etc.
Totapuri mangoes are the most exported mango of India with the value of USD
19504972 from January to April 2017. The Totapuri mango is medium in size and
orange yellow in colour. It is soft, firm, fibreless and mid-season variety. Totapuri
mangoes have exported from India in various types like Pulp, Slices, Concentrate,
Chunks, Ripe etc. India has exported Pulp mangoes of Totapuri with 27% of value
from the total’s mango export value.

Alphonso mango export value is USD 14081737 and stood second in the list. If you
want to know the Alphonso mango price online, fill up a quick enquiry form on the
website of Export Genius. Refer the below table to check the variety of mangoes
exported from India.
Variety of Mango Export Value in USD
Totapuri 19273809
Alphonso 14081737
Kesar Mango 4826395
Badami 1699190
Banganapalli 549835
Rajapuri 130788
Green Mango 127381
*above stats is based on Jan to April 2017 report
Mango Export from India: Type Wise Analysis

India is exporting around 10 types of mangoes in the various countries across the
world. India has generated highest value of USD 27.83 Million from the
export of Pulp type mangoes. It is followed by ripe type mangoes. Ripe mango export
from India, recorded value of USD 26.83 Million from January to April 2017. Here, we
are providing the list of most exported mango type from India.
Mango Exporters in India

There are more than 480 mango exporter companies in India. Capricorn Food
Products India Ltd is the largest mango exporter in India, the company has recorded
USD 3968160 export value from January to April 2017. Sunrise Naturals Private
limited is the second largest mango exporter company in India with the export value
of USD 3350639.

Indian mango exporters mandatorily give their products hot water treatment before
exporting them to the European market. Here is the table for top 10 mango
exporters in India with their export value. Here is the table for top 10 mango
exporters in India as per the report of Export Genius.

Rank Exporter Company


1 Capricorn Food Products India Ltd
2 Sunrise Naturals Pvt. Ltd.
3 Allanasons Private Limited
4 Raien Fresh Produce Pvt Ltd
5 Keventer Agro Ltd
6 Bombay Fruits & Vegetables Import Export Pvt. Ltd.
7 Vimal Agro Products Pvt Ltd
8 Royal Foodstuffs Private Limited.
9 Shre Devaraja Agro Aseptic Industries
10 Raj Impex
*above stats is based on Jan to April 2017 report
Mango Export from India: Importer Country Wise Analysis

United Arab Emirates (UAE) is the top market for mango exporters in India. The value
of mango export from India to UAE is USD 14.99 Million during the period January to
April 2017. United Arab Emirates is followed by Saudi Arabia, Kuwait and United
kingdoms in the list mango importer countries of India. According to Indian Mango
Export data, around 25% of mango exports in terms of value go to United Arab
Emirates, while around 19% is shipped to the Saudi Arabia.

Kuwait and UK are other major export destinations for Indian mangoes. The value of
Mango export from India to USA is USD 3.07 Million while it is USD 1.01 Million for
mango export from India to Canada. Check the following table to know the top
mango importer countries of India.

Importer Country Value in USD Million


United Arab Emirates 14.99
Saudi Arabia 11.68
Kuwait 5.01
United Kingdom 4.01
Netherlands 3.67
United States 3.07
Yemen, Democratic 1.74
*above stats is based on Jan to April 2017 report
Strengths of the market
- Investment incentives in any large investment projects in the country.
- Freedom of transfer hard currency to and from Yemen
- No nationalisation, reservation or seizure of investment projects
- The Yemeni government encourages foreign investment across all sectors
and projects are exempted from profit tax for a period of 7 years expandable
to 16 years.

Exporting to Yemen

Rather than opening an office or subsidiary in Yemen, Indian companies may wish to
appoint an agent or distributor to look after their interests. However, there is no
requirement that a foreign seller appoints a commercial agent, and they can sell direct.

The appointment of a local partner/representative will only be the first step. Yemen is a
market in which family structures predominate in the business environment, and where
personal relationships therefore are important.

Regular visits to the market, especially during the early phase, are an important part of a
successful interaction with the agent / distributor.

Key areas for Business

Sana'a is considered the main city for most of the businesses in Yemen. Aden, Taiz and
Hodeidah are potential cities for businesses and several manufacturing plants are based
there.

Market entry and start up Considerations

There are many ways to establish a business in Yemen. The market is import-oriented,
highly competitive and prefers to deal through agents. The success of a product, to a great
extent depends on the agent. Several major end-users encourage vendors to have a
registered local agent.

There is no standard format for agency agreements; however it is recommended that if


necessary, representational or selling arrangements are tested out over a trial period before
being formalised. Such arrangements can become difficult to get out of once firmly in place.

The appointment of a local partner/representative will only be the first step. Yemen is a
market in which family structures predominate in the business environment, and where
personal relationships therefore are important. This requires an investment primarily of
time and personal presence.
Taxes

The current income tax law includes corporate profits, personal income tax, and real estate
tax. The tax year is the calendar year, unless otherwise stated. Corporate tax is levied at a
unified rate of 35%. Companies are eligible for registration under the investment law for
investment projects are exempt from corporate tax for a period of seven years. The Yemeni
government has approved Sales Taxes or VAT and the sales tax is 10%.

India and Yemen are discussing signing the Double Taxation Avoidance Agreement
(DTAA).

India and Yemen have signed the Bilateral Investment Promotion and Protection
Agreement.

Documentation

The normal commercial documents with the export (e.g. invoices, packing lists and
certificate of origin) are needed for any export transaction to Yemen. Import documentation
and requirements are available from the Ministry of Industry and Trade and/or the relevant
ministry governing a company's activities. A health certificate must be obtained to export
animal and fisheries products. The government eliminated import licensing in 1996, except
on controlled products and materials such as alcohol and explosives.

The following documents are required:

- Commercial Invoice
- Certificate of Origin
- Bill of Lading
- Health Certificate
- Free Sale certificate

All documents need to be legalized from the Yemeni Embassy in New Delhi or the Yemeni
Consulate in Mumbai and Chambers of Commerce in India.

Getting your Goods to the Market

The main options for Yemen are airfreight and sea-freight and it is often easier to use
freight forwarder that knows the procedures for exporting to Yemen. The freight
Forwarders will prepare all the documents required for exporting to Yemen which
will make the delivery of the goods easier and faster.

THANK YOU !!!