EXPORT SCENARIO IN INDIA 5th February 2011

India: Opportunities Unlimited

India : Basic Facts India is a union of states with Parliamentary system of Govt. 28 States & 7 Unio n Territories Land Area: 3.29 Million sq.km Population: 1.2 Billion Language: En glish & Hindi Independence Day: 15 August 1947 Republic Day: 26 January 1950 GDP (PPP) US$ 3.29 trillion (2008 est.) Age structure: 0-14yrs ( 31%) 15-64 ( 63.6% ) 65 years & over ( 5.3%)

IMF's World Output Growth Forecast World AdvancedEconomies EmergingandDeveloping Economies India 2010 4.6 2.6 6.8 9.4 2011 4.3 2.4 6.4 8.4 Source:IMF,WEO(Update)July-2010

India: Fastest Growing Free Market Democracy

India: An Attractive Investment Destination World Investment Report 2010 from UNCTAD affirms India as the fourth most attrac tive FDI destination in the world. The FDI investment in 2010 11 is 14.025 Millio n USD. (Uptill Nov 2010) Top 5 Sector attracting FDI are: - Services - Computer Software & Hardware - Telecom - Housing & Real Estate - Construction sectors FDI is open to almost all sectors.

FDI Flows to India (US $ million) 2006-07 2007-08 2008-09 2009-10 April-July 2009-10 Equity Reinves ted Earnings Other Capital* Total 16,394 5,828 26,757 7,679 27,807 6,428 22,908 8,079 10,381 April-July 2010-11 7,557 517 22,739 292 34,728 757 34,992 695 31,682 10,381 7,557 * Inter company debt transactions of FDI entities

Major M&A Deals Undertaken Abroad by India Inc. Tata Steel buys Corus Plc Tata Steel buys Corus Plc USD 12.1 billion Hindalco acquired Novelis Inc. Hindalco acquired Novelis Inc. USD 6 billion Essar Steel acquired Algoma Steel Essar Steel acquired Algoma Steel USD 1.58 billion Suzlon Energy Ltd. acquires REpower Suzlon Energy Ltd. acquires REpower USD 1.6 billion Videocon Industries acquired Daewoo Videocon Industries acquired Daewoo Electron ics Corporation Limited Electronics Corporation Limited USD 730 million

Major M&A and Investments Announcements in India Vodafone buys Hutch Vodafone buys Hutch USD 11 billion Plans to spend on its development operations Plans to spend on its development o perations in India over the next four years in India over the next four years USD 1.7 billion Plans investment in private equity, real estate, Plans investment in private equ ity, real estate, and private wealth management and private wealth management USD 1 billion Aditya Birla Group increased its stake in Idea Aditya Birla Group increased its stake in Idea Cellular by acquiring 48.14-percent stake Cellular by acquiring 48 .14-percent stake Renault, Nissan and Mahindra & Mahindra Renault, Nissan and Ma hindra & Mahindra has initiated aaGreenfield automobile plant has initiated Gree nfield automobile plant project in Chennai. project in Chennai. Mylan Laboratori es acquired a majority stake Mylan Laboratories acquired a majority stake in Mat rix Laboratories in Matrix Laboratories USD 0.98 billion USD 0.905 billion USD 0.74 billion

Movement of Indias Foreign Exchange Reserve Increase in FDI and FII has facilitated an increase in forex reserves. Increase Forex Reserves has enabled prepayment of certain high cost foreign currency loan s of the government. It offers adequate security against any possible currency c risis or monetary instability.

India: Foreign Trade Indias Merchandise Exports/Imports * All figures in US $ Billion * All figures in US $ Billion Petroleum products are the major contributors towards Indias growing imports Services sector has been a major contributor for the increase in exports from India. Quality and cost advantage a re two important parameters leveraged by the Indian producers to market their pr oducts and services

CONTD Exports continued to surge for the tenth successive month growing by 22.5 per ce nt to $16.64 billion in August as compared to the same period last fiscal Export s during August, 2010 were valued at US $ 16644 million (Rs. 77509 crore) which was 22.5 per cent higher in Dollar terms (18.0 per cent higher in Rupee terms) t han the level of US $ 13586 million (Rs.65670 crore) during August, 2009. $200-b illion export target set for 2010-11 Coffee exports got a major boost surging 60 per cent to 2.72 lakh tonnes in the 2009-10 crop year ending September, on the back of higher production Higher domestic supply has driven exports of coffee

EXPORT DOCUMENTATION

EXPORT PROCESS FLOWCHART

EXPORT DOCUMENTATION There are a number of documents, which have to be prepared by the exporter in or der to arrange export of his consignments. hese documents can be mainly classifi ed into two i.e. a) Commercial Documents and b) Regulatory Documents

EXPORT DOCUMENTATION ExportDocuments CommercialDocuments Principal Auxiliary RegulatoryDocuments

EXPORT DOCUMENTATION Out of the 15 commercial documents, eight are principal and the rest are auxiliary. The eight principal documents are 1. The Commercial Inv oice, 2. Packing List 3. Bill of Lading/Air Waybill 4. Certificate of Inspection /Quality control 5. Certificate of origin 6. Bill of Exchange and 7. Shipment Ad vice 8. Insurance Certificate

EXPORT DOCUMENTATION The seven auxiliary documents are 1. Proforma Invoice 2. Intimation for inspecti on 3. Shipping instructions 4. Insurance Declaration 5. Application for certific ate of origin. 6. Mate's Receipt 7. Letter to bank of

EXPORT DOCUMENTATION Regulatory Documents There are seven regulatory documents a ssociated with the pre-shipment stage of the export transaction. They are: 1. AR E Form ( for Central Excise) 2. Shipping Bill/Bill of Export (for Customs) - For export of goods Ex. Bond - For export of duty free goods - For export of dutiab le goods - For export of goods under claim of

EXPORT DOCUMENTATION 3. Port Trust Copy of Shipping Bill/ Export Application/Dock Challan Port 5. Exc hange Control Declaration/GR/PP forms RBI 6. Freight Payment Certificate Steamer Agents 7. Insurance Premium Payment Certificate Port 4. Vehicle ticket

Commercial Documents Document Functions Prepared by Quotation An offer to sell goods and should Exporter state clearly the price, de tails of quality, quantity, trade terms, delivery terms, and payment terms. Sale s Contract An agreement between the buyer and the seller stipulating every detai ls of the transaction. It is a legally binding document. It is therefore advisab le to seek legal advice before signing the contract. Exporter and Importer

Commercial Documents Document Functions Prepared by Pro Forma An invoice provided by a supplier prior to Exporter the shipment of me rchandise, informing the Invoice buyer of the kinds and quantities of goods to be sent, their value, and importation specifications (weight, size and simila r characteristics). Commercia It is a formal demand note for payment l Invoice issued by the exporte r to the importer for Exporter goods sold under a sales contract. It should give details of the goods sold, pay ment terms and trade terms. It is also used for the customs clearance of goods a nd sometimes for foreign exchange purpose by the importer.

Commercial Documents Document Packing List Functions Prepared by A list with detailed packing information of the goods shipped. A report issued b y an Inspection independent surveyor Certificate (inspection company) or the exp orter on the specifications of the shipment, including quality, quantity, and/or price, etc; required by certain buyer and countries. Exporter Inspection Company or Exporter

Commercial Documents Document Insurance Policy/ Certificate Functions Prepared by An insurance policy is an insurance Insurer or document evidencing i nsurance has been Insurance taken out on the goods shipped, and it gives full de tails of the insurance coverage.Agent or An insurance certificate certifies that the Insurance shipment has been insured under a given Broker open policy and is to cover loss of or damage to the cargo while in transit. A certificate to cert ify the products are conformed to a certain international/national technical sta ndard, such as product quality, safety and specifications, etc. Product Testing Certificate Accredited Laboratorie s

Commercial Documents Document Health Certificate Functions Prepared by Document issued by the compete nt country Exporter / when agricultural or food products are being Inspection ex ported, to certify that they comply with the Authority relevant legislation in t he exporter's country and were in good condition at time of inspection, prior to shipment and fit for human consumption. Frequently an international requirement that Exporter/ Phytosanitar any consignment of plants or planting Authority y C ertificate materials importing into a country shall be accompanied by a Phytosan itary Certificate issued by the exporting country stating that the consignment i s found substantially free from diseases and pests and conforms with the current phytosanitary regulations of the importing country.

Commercial Documents Document Functions Prepared by Fumigation A pest control certificate issued to c ertify that Exporter or Certificate the concerned products have been undergone I nspection the quarantine and pre-shipment fumigation by Company the approved fum igation service providers. It is mainly required by the US, Canada, Australia, N ew Zealand and UK's customs on solid wood packing material. An international cus toms document used to Exporter/ obtain a duty-free temporary admission for ATA g oods such as exhibits for international trade Authority Carnet fairs, samples an d professional equipment, into the countries that are signatories to the ATA Con vention.

Commercial Documents Document Functions Prepared by Consular A document required by some foreign Exporter Invoice countries, showing shipment information such as consignor, consignee, and value description, etc. Certified by a consular official of the importing country stationed in the forei gn country, it is used by the country's customs officials to verify the value, q uantity and nature of the shipment.

Transport Documents Document Functions Prepared by Dock Receipt D/R or Mate's Receipt A receipt to confirm the receipt of Shipping cargo on quay/warehouse pending Com pany shipment. The dock receipt is used as documentation to prepare a bill of la ding. It has no legal role regarding processing financial settlement. An evidenc e of contract between the shipper of the goods and the carrier. The customer usu ally needs the original as proof of ownership to take possession of the goods. Bill of Lading (B/L) Shipping Company

Transport Documents Document Functions Prepared by Air Waybill (AWB) A kind of waybill used for the carriage Airline of goods by air. This serves as a receipt of goods for delivery and states the condition of carriage but is not a title document or transferable/ negotiable instrument. A list providing information needed for transportation purpose, such as details of invoice, buyer, consignee, country of origin, vessel/flight date, port/airpor t of loading, port/airport of discharge, place of delivery, shipping marks / con tainer number, weight / volume of merchandise and the fullest details of the goo ds, including packing information. Packing List Shipper

Financial Documents Document Functions Prepared by Documenta A bank instrument began (issuing or opening Issuing Bank ry Credit ban k), at the request of the buyer, evidencing upon an the bank's undertaking to the seller to pay a application certain sum of money p rovided that specific made by the requirements set out in the D/C are satisfied. Importer An unconditional written order, in Bill of which the importer addressed to and E xchange required by the exporter to pay on (B/E) or demand or at a future date a certain Draft amount of money to the order of a person or bearer. Exporter

AFTER SHIPMENT, SUBMIT DOCUMENTS TO BANK FOR REALISING EXPORT PROCEEDS

PHARMACEUTICAL SECTOR EXAMPLE

MEDNEXT PHARMA

Corporate Profile Mednext pharma is WHO/CGMP QUALIFIED AND CERTIFIED and an experience driven phar maceutical manufacturing and marketing company, where quality products & people always come first. Is engaged in the manufacturing and marketing of next generati on finished dosage forms (FDFs) and exporting to abroad. Marketing Footprints Exp orts to Asian and African Continents

Products Major supplier of its pharmaceutical specialty formulations Therapeutic categories and general area of usage Gynecological Antibiotics Gastroenterology Cardiology ENT Pre Filled Syringes (Vaccines) Microsoft Office Excel Worksheet

Markets The company enjoys strong presence in the pharmaceutical markets of Africa and A sia.

Markets Africa Kenya Central African Republic Togo Gabon Senegal Mozambique Ghana Camero on Benin Ivory-coast Congo R.D.Congo Burkina Faso Mali Niger South East Asia Cam bodia Vietnam Sri Lanka Laos Philippines Myanmar Indonesia

Practical Aspects Countries exporting to: Africa Sri lanka Cumbodia Dealing with Africa: LC has no significance in Africa In Africa, Eurimax Pharma is present as an independent d istributor associated with Mednext Eurimax Pharma is a French company Significan ce of a French company dealing

Practical Aspects Countries exporting to: Africa Sri lanka Cumbodia Dealing with Sri Lanka: Plant Registration is of Utmost importance when dealing in Sri Lanka 2-3 people come f rom Sri-Lanka and $ 5000 has to be provided by Mednext towards airfare and stay at the plant. Once approved then the process of exports can start to Sri Lanka

Practical Aspects Dealing with Cumbodia: Product Registration is of utmost importance Process of Pr oduct Registration Samples are tested in the laboratory COPP (Certificate of Pharma Product) and Dos siers have to be prepared and given Dossiers have information of the procedure b y which it is made, the temperature to be stored, etc. - Pros & Cons of Medicine : Should not be used by pregnant women, protect from sunlight, etc. - Also, it h as the composition information of the salts Registration of the products take 6 18 months once the sample clears quality checks

New Export Initiatives after 2009

The Foreign Trade Policy for the period 2009-2014 was announced on 27th August 2 009 at a time when the world was emerging from the shadow of a challenging econo mic period, the worst we have seen in the last 7 decades.

Higher Support for Market and Product Diversification Additional benefit of 2% b onus, over and above the existing benefits of 5% / 2% under Focus Product Scheme, allowed for about 135 existing products, which ha ve suffered due to recession in exports. Nearly 300 products (at 8 digit level) from the readymade garment sector incentivised

Support for Technological up-gradation Zero duty EPCG scheme, introduced in Augu st 2009 and valid for only two years upto 31.3.2011, has been extended by one more year till 31.3.2012. Additio nal Towns of Export Excellence (TEEs) announced

Benefit and flexibility to Status Holders: 1% Status Holder Incentive Scheme (SH IS) introduced in August 2009 and valid for only two years upto 31.3.2011, has been extended by one more year for 2011-12 exports. Additional flexibility provided for transferability of Duty Credit Scrips by allowing transfer of scrip for import of cold chain equipments to unit(s) in the Food Park.

Stability / Continuity of the Foreign Trade Policy The popular and exporter frie ndly Duty Entitlement Passbook (DEPB) scheme has been extended beyond 31.12.2010 till 30.06.2011 Availability of conce ssional Export Credit

Procedural Simplification and Reduction of Transaction Cost Exporters shall now have the flexibility to get a high value EPCG authorization by filing their EPCG application on Annual basis, without the need to file the a pplication for individual capital goods from time to time. It will reduce transa ction time and cost. To impart flexibility to exporters and to facilitate smooth clearance of consignments Chartered Engineer Certificate for Advance Authorisat ion on self declared basis, has been dispenced with. This will reduce documentat ion and the transaction cost.

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