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i
Sample copy. Not for distribution.
Export Import Management
(Practical Work Book)
ii
Sample copy. Not for distribution.
Publishing-in-support-of,
EDUCREATION PUBLISHING
RZ 94, Sector - 6, Dwarka, New Delhi - 110075 Shubham Vihar, Mangla, Bilaspur, Chhattisgarh - 495001
Website: www.educreation.in _____________________________________________________________________________
© Copyright, Author
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ISBN: 978-93-85247-39-2
Price: ` 370.00
The opinions/ contents expressed in this book are solely of the author and do not represent the opinions/ standings/ thoughts of Educreation.
Printed in India
iii
Sample copy. Not for distribution.
Export Import Management
(Practical Work Book)
By
Ajay Pathak
EDUCREATION PUBLISHING (Since 2011)
www.educreation.in
iv
Sample copy. Not for distribution.
About The Book
This book is practical approach related to foreign trade. This book
gives professional knowledge in export import procedure &
documentation, customs & bank formalities, government benefits,
exim policies, import sources, taxation, shipping, freight
forwarding with practical assignments & much more.
v
Sample copy. Not for distribution.
About The Author
Author, Ajay Pathak is a professional Consultant, consulting
documentation & facilitation service for exporter & importer in
India.
His exim consulting division deals with matters of Foreign
Trade Policy & Allied matters. Viz. Selection of firm’s name,
Basic registration with the government & other agencies,
Correspondence with prospective buyer, Arrangement to attend
foreign exhibition abroad, Bank documents negotiation assistance,
Complete freight forwarding assistance, Export benefit
documentation, Duty Drawback, DEPB /DFRC, advance EPCG
License, restricted item license, FEMA matter etc & lastly feeding
them regularly with information related to changes in exim
policies, customs, tariffs, & RBI matters, Custom clearance
matters.
He has assisted 2000 exporters & importers with fabulous result &
kept them satisfied.
vi
Sample copy. Not for distribution.
Prologue
I am a professional Consultant, consulting documentation &
facilitation service for exporter & importer in India.
Our exim consulting division deals with matters of Foreign
Trade Policy & Allied matters. Viz.
Selection of firm’s name.
Basic registration with the government & other agencies.
Correspondence with prospective buyer.
Arrangement to attend foreign exhibition abroad.
Bank documents negotiation assistance.
Complete freight forwarding assistance.
Export benefit documentation.
Duty Drawback, DEPB /DFRC, advance EPCG License,
restricted item license, FEMA matter etc & lastly feeding them
regularly with information related to changes in exim policies,
customs, tariffs, & RBI matters.
Customs clearance matters.
We have assisted 2000 exporters & importers with fabulous result
& kept them satisfied.
Now we wish to share our experience with new generation by
providing the practical approach related to foreign trade & started
writing this book for giving professional knowledge in export
import procedure & documentation, customs & bank formalities,
government benefits, exim policies, import sources, taxation,
shipping, freight forwarding with practical assignments & much
more.
Regards,
Ajay Pathak (Foreign Trade & Customs Consultant.
vii
Sample copy. Not for distribution.
Contents Table
S.No. TOPIC/CHAPTER/SUBJECT PAGE
1. Introduction 1-4
2. Choice Of Enterprise 5-8
3. Registration For Export /Import 9-10
4. Export Pricing/Costing 12-16
5. Contacting Prospective Buyer 17-27
6. Contacting Prospective Seller (Importer) 28-30
7. Processing Of An Export Order 31-44
8. Pre Shipment Documentation (Export)Air/Sea 45-57
9. Pre Shipment Documentation For Import(Air/Sea) 58-62
10. Post Shipment Documentation For Export 63-79
11. Post Shipment Documentation In Case Of Import 80-80
12. Guidance For How To Use Customs Tariff 81-81
13. Income Tax Applicability On Exporting
Firms/Companies 82-82
14. Sales Tax Applicability On The Exporting
Firms/Companies 83-83
15. General Banking & Day To Day Accounting 84-84
16. FAQ related to Export/Import /Shipping /Freight
Forwarding/Customs Clearance
85-161
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Ajay Pathak
1
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Since export & import are growing sector, every year government
claims that export is increasing but due to global competition &
poor government policy, our exportable commodity, their quantity
& especially price is not acceptable in the world market.
Following Are The Few Reasons
Poor licensing policy (Export Import Code).
Direct benefits given by the government (DBK-DEPB).
Government could not control merchant exporter to stop
international competition.
Manufacturer is not exporter & exporter is not manufacturer.
Government is not providing export marketing facility to small
manufacturer (Like MDA).
Because of WTO, import of consumable items are increasing
every year.
Policy makers are not aware of foreign trade & international
trade complications that’s why import export policy is not up to
the mark.
Export order is not against L/C & most of importers are buying
materials on credit basis.
Threats from other country like China, South Korea, Singapore,
Japan, Taiwan etc.
INTRODUCTION 01
Export Import Management (Practical Work Book)
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Because of the above reasons, Indian export declines every year.
India is the largest manufacturer of rice, leather, goods, garments,
& handmade handicrafts (Wooden, Brass & glass), gem &
jewellery, fruit & vegetable etc. Because of the government policy,
exporter could not achieve their target.
Previous Year - Main Commodities For Export
Rice/Tea/Wheat/Pulses
Readymade garments
Handicrafts (Brass /Glass / Wooden)
Floriculture product
Leather footwear
Gem & Jewellery
Fruit & Vegetable
Marine product
Engineering Goods & Electronic Goods
Wool &Woolen
Textiles
Chemical Products
Computer Software
Allied item (Marbles –Stones)
Furnishing product (Made-ups)
Major Countries - For Export
Europe (ECM Countries)
Belgium, Denmark, France, Germany, Greece, Italy, Spain,
United Kingdom, Sweden, Austria, Finland, Norway, Switzerland,
Bulgaria, Czechoslovakia, Hungary, Poland, Romania, Russia,
Slovenia, Ukraine, Slovakia, Holland , Rest of Europe –Malta ,
Turkey & Cyprus.
Ajay Pathak
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Asian Countries
Japan, Bangladesh, Iran, Hong–Kong, Indonesia, Korea,
Republic, Singapore, Thailand, Afghanistan, China, Fiji,
Malaysia, Nepal, Pakistan, Sri Lanka,Vietnam, Philippines.
Gulf Countries Bahrain , Iraq , Jordan , Kuwait , Oman , Qatar , Saudi
Arabia,U.A.E, Yemen , Israel .(Credit Market)
America
North - Canada, USA, Australia, New Zealand (HOT).
South - Argentina, Bolivia, Brazil, Chile, Peru, Columbi ,
Uruguay & Venezuela.
Other - Cuba, Guyana, Bahamas, Mexico, Panama,
Nicaragua.
African countries
Algeria, Kenya, Libya, Mauritius, Morocco, Nigeria, Senegal,
Sudan, Ghana , Ethiopia, Egypt, Maladi, Somalia, Swaziland ,
Tanzania, Tunisia, Uganda, Zambia, Zaire.
SAARC Countries
1. Bangladesh ( + )
2. Afghanistan ( + )
3. Pakistan ( - )
4. Nepal (Rupee Trade) ( - )
5. Bhutan (Free Trade) ( - )
6. Maldives ( - )
7. Sri Lanka ( + )
Export Import Management (Practical Work Book)
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Our Country Strength & Foreign Country Weakness
Before deciding the country for locating foreign market & buyer,
we should analyse the following points:
Attitude of foreign buyer /customer.
Social factor Culture of the country: In Europe, U.K, USA people usually
give & take the gift items (Gift Theory) so there is more
demand of the products .We have the strength for the
handicraft items in India.We should take care of buying habits,
eating habits & export the same with standardized products.
We should decide the segments & population ratio.
Acceptance of the product: We should not sell our products
against their religion & hurt their sentiments.
Color, size & number: In Europe, white flower means for
widow.
In Japan, people are of small size.
Japanese is quality concuss .We have great opportunities in
market in Japan .Japan is leader in electronics & so their is
great demand for Buddha statues & handlooms, cotton made
products & wear natural things.
Fashion due to the season: It will change every season & after
the season the product will be outdated.
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Ajay Pathak
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The first most important decision is regarding the choice of
enterprise. Type of enterprise should be selected on the basis of the
size of the proposed business and availability of fond resources.
An export/import business can start in any of the following forms:'
Proprietorship
It means business owned by a single person.
The proprietorship concern has no separate status apart from its
owner.
Income of the concern is treated as the income of the proprietor.
Liability of the owner is unlimited.
Only plus point is that it can be set up easily.
Partnership
It means business owned by 2 or more persons.
The first requirement for establishing a partnership firm is to
execute a partnership deed between partners on Rs.20 stamp paper
(minimum).
The partnership concerns in India are governed by the Indian
partnership Act 1936.
The limitation of partnership firm is that the personal liability of
the partners is unlimited & retirement or death of any partner may
result in the dissolution of partnership firm (for copy of Performa
deed, refer different clause).
CHOICE OF ENTERPRISE 02
Export Import Management (Practical Work Book)
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Registration of Partnership Firm
For registration of an application in the prescribed form 1 or A
under the relative state rules along with the prescribed fee, has to
be submitted to the registrar of firm of the state in which the firm is
situated.
The application form should be signed by all partners in the
presence of gazetted officer or advocate, attorney of a chartered
accountant. A firm shall not be registered in the same name of
existing firm (form 1 or A for reference).
Private limited Company
It can be formed by just 2 persons subscribing its share, capital but
it cannot have more than 50 shareholders. Public cannot be invited
to subscribe.
The main benefits of private limited company is that the liability of
the shareholders are limited to the extent of their share capital.
The disadvantage of private limited company is that the tax rate on
the income of a company is high (Flat rate 35%) & dividend
declared by the company is also taxable U/S 115o of I.T Act.
Steps in Establishing a Private Limited Company
Name Approval from registrar of companies (fees Rs.500) printing
memorandum & articles of association.
Depositing Fee Authorized Capital Fees
Rs.1,00,000
Rs.4800
Rs.5,00,000
Rs.17,200
Rs.10,00, 000
Rs.27,200
Ajay Pathak
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After depositing the fees, ROC will issue a certificate of
incorporation. After all these formalities are completed, business
can be started.
Advice
For establishing a private limited company, please approach a
company secretary or chartered accountant for information.
Note
Tax rate for both partnership firms & domestic companies are 35%
(Flat) on taxable income with an additional charge of 5% on the
tax calculated.
Public limited company
It can be incorporated with minimum seven members & the
company can invite public to subscribe to its capital .Transfer of
shares are permitted. The liability of shareholders is limited to the
capital subscribed by them.
Disadvantage
Formation of public limited company involves lot of
formalities to be completed & the process is a bit lengthy &
complicated.
The income of a public limited company is subjected to tax
@35% with 5% charge. Moreover, dividend declared by the
company is also subjected to tax.
Advice
For public limited company, please approach company secretary &
chartered accountant for information.
Export Import Management (Practical Work Book)
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Firm/ Company Names
Name of the firm/company should be simple & attractive & it
should indicate nature of the business. For e.g.:
Vinayak Export House
Vinayak Impex
Vinayak International
Vinayak Enterprises
Vinayak World wide
Note
Only in case of garment exports, name approval from AEPC
(NBCC Building Bhikaji Cama Place, New Delhi) is mandatory. In
case of proprietorship or partnership, name approval fee is
Rs.100/-.
Letter Heads /Visiting Cards
Letterheads should be simple & all necessary informations namely:
address, telephone /mobile /fax no, E-mail & a brief description
about the nature of business.
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Ajay Pathak
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X
Establish a firm /company in any name ( Proprietor
,partnership, private limited , or limited)
Open a bank account in any bank dealing in foreign
exchanges.
Obtain income tax pan no. (Form No. 49A) .Get assistance of
income tax lawyer /CA or apply direct to NSDL Mumbai cost
Rs.65/-
Make an application in the prescribed form in duplicate
(Part A,B,C,D).
Fees of Rs.1000 is payable by way of pay order in favour of
joint Director general of Foreign Trade (CLA).
Fill up the form & submit it to the bankers & get one
certificate on banker's letterheads & fix one photograph on the
certificate & get it attested.
Tick mark declaration in the form (S.NOS.NRI).
In case of partnership firm, a list of directors is to be
submitted (With Father's name & complete address).
A consent letter from other partners, duly signed by all
partners has to be submitted.
A board resolution in case of private limited company should
be submitted, signed by at least two directors.
Enclose a photocopy of partnership deed duly signed by the
partnership (Notary Attested).
Enclose two photocopies of pan number duly signed by
proprietor /partner /director (front & back side of the partner).
REGISTRATION FOR
EXPORT/IMPORT 03
Export Import Management (Practical Work Book)
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Sample copy. Not for distribution.
Enclose a copy of Memorandums & articles of association
duly signed by the directors (certified of incorporation &
list of director).
Enclose the self-addressed envelope with 30 Rs. postal stamps
& one envelope with the banker address (In NCR 35Rs).
Make a covering letter & submit it to the Joint Director
General of foreign Trade, Indraprastha Bhavan, ITO, New
Delhi.
A computer receipt will be issued after submitting the
application after 10 days. I.E Code will come by speed post.
In case of duplicate IEC, the government fees is Rs.200/,
original FIR & affidavit notary attested has to be submitted .
In case of any modification behind 60 days, you have to pay
Rs.200-/as penalty.
Export Promotion Council
For export registration with export promotion council is
mandatory.
Only in case of garments, export registration with AEPC is
mandatory to get endorsement.
In case of made ups exports registration with Texprocil is
mandatory (The Cotton Textile export Promotion Council)
to get endorsement.
In case of export of agriculture products , registration form
APEDA is mandatory (PHD House, Asiad Village ,Delhi) to
obtain quality permission in case of export of rice ,pulses &
wheat ( Fees Rs.500/- life time)
Council registration is also required to avail government
benefits like DEPB/Advance License EPCG from DGFT.
Council registration is not required for claiming duty
drawback.
ITPO registration helps export dealing for marketing & market
study of export (Fees Rs.1500-/Yearly).
Ajay Pathak
11
FIEO registration help exporters dealing in multi products for
export (Fees Rs5000-/ Yearly).
X
Export Import Management (Practical Work Book)
12
Sample copy. Not for distribution.
Get Complete Book
At Educreation Store
www.educreation.in
This book is practical approach related to foreign trade. This
book gives professional knowledge in export import procedure
& documentation, customs & bank formalities, government
benefits, exim policies, import sources, taxation, shipping,
freight forwarding with practical assignments & much more.
_______________________________________
ABOUT THE AUTHOR
His exim consulting division deals with matters of Foreign Trade Policy &
Allied matters. Viz. Selection of firm’s name, Basic registration with the
government & other agencies, Correspondence with prospective buyer,
Arrangement to attend foreign exhibition abroad, Bank documents negotiation
assistance, Complete freight forwarding assistance, Export benefit
documentation, Duty Drawback, DEPB /DFRC, advance EPCG License,
restricted item license, FEMA matter etc & lastly feeding them regularly with
information related to changes in exim policies, customs, tariffs, & RBI matters,
Custom clearance matters.
He has assisted 2000 exporters & importers with fabulous
result & kept them satisfied.
You may reach the author at: [email protected]
ACADEMIC
Also available as an eBook
EDUCREATION PUBLISHING (Delhi) www.educreation.in
Author, Ajay Pathak is a professional Consultant, consulting
documentation & facilitation service for exporter & importer
in India.