SUMMER INTERNSHIP PROJECT 2018

AN OVERVIEW OF CONTAINER TERMINAL PORTS IN INDIA

(TERMINILOGY, BUSSINESS AND MARKETING)
PROJECT REPORT- PROSPECTS OF FRUIT IMPORT AT VCTPL

NAME OF THE ORGANISATION: VISAKHA CONTAINER TERMINAL PVT LTD.

VISAKHAPATNAM, ANDRA PRADESH

The report is submitted in partial fulfilment for the requirement of

MBA PROGRAM OF FACULTY OF COMMERCE

SUBMITTED TO- SUBMITTED BY-

Dr. C.P. MALL DAMINI JHOOMER
HEAD AND DEAN MBA (FOREIGN TRADE)
FACULTY OF COMMERCE ROLL NO-10
BANARAS HINDU UNIVERSITY ENROLMENT NO-343684
 FACULTY OF COMMERCE

DECLARATION

“I, DAMINI JHOOMER declare that the project that I have successfully completed on the topic “AN

OVERVIEW OF CONTAINER TERMINAL PORT IN INDIA (Terminology, Business And Marketing)

AND PROSPECT OF FRUIT IMPORT AT VCTPL” with VISAKHA CONTAINER TERMINAL for the

partial fulfilment of the requirement for the award of Master of Business Administration in Foreign Trade

(MBA-FT) is my original work to the best of my knowledge and the report has not been submitted for any

other award by anyone before this. The fact & figures are mentioned on the basis of my own effort of

collection, recording and analysis of primary and secondary data through exploratory, descriptive and casual

research.”

PLACE: DAMINI JHOOMER

DATE: MBA (FOREIGN TRADE)

BANARAS HINDU UNIVERSITY

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 ACKNOWLEDGEMENT

I would like to express my deep sense of gratitude to everyone who all gave me an opportunity and helped

me in building my Summer Internship Project on “AN OVERVIEW OF CONTAINER TERMINAL PORT IN

INDIA (Terminology, Business And Marketing) AND PROSPECT OF FRUIT IMPORT AT VCTPL ".

No project is created entirely by an individual. Many helped to create this project and each of their

contributions has been valued. I would like to thank Mr Sushil Moolchandani (COO) Mr Raj Shekhar

(HR MANAGER), Mr Harish Bobbadhi (PROCUREMENT MANAGER) for their suggestions and

encouragement.

I am grateful to my mentor Mr Sai Shyam (MANAGER, BDC), Mr Hema Mahindra (EXECTIVE, BDC)

for providing me information, support and unending encouragement for building this project. I also thank

them for getting me started and seeing through its successful completion.

I would like to express my appreciation towards my parents who trusted me and gave me immense valuable

support and friends for their encouragement throughout this project

I also express my sincere thanks to my Faculty guide Dr. Prashant Kumar, Course Coordinator MBA

(Foreign Trade) for his constant support and interest that he has shown in this Project.

DAMINI JHOOMER

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 EXECUTIVE SUMMARY

The international container shipping industry has entered new waters. Despite still being the most

environmentally sustainable transport mode for bulk cargo, the industry now is succumbing to a host of

social and environmental regulations and stakeholder expectations that will force changes in the

competition. While some carriers will resist these changes, others will embrace them to develop more

compelling value propositions. In the next five to seven years, market, stakeholder, customer, and regulatory

pressures related to sustainability will drive significant changes in the way international container shipping

lines operate and do business. Considering that the industry transports more than one-third of the value of

global trade, provides more than 4.2 million jobs2, and represents a heavy social and environmental

footprint, these are developments that will have far-reaching impact in a variety of sectors.

The giant strides made by the Visakha Container Terminal Pvt. Ltd. (VCTPL), has emerged as a gateway on

the east coast for handling container cargo. The terminal has transformed the image of

the Visakhapatnam port, from a major port in the country known primarily for handling bulk cargoes such as

iron ore and coal, to one handling containers by employing the state-of-art technology.

A joint venture of United Liner Agency of JM Baxi, which has 76 per cent stake and DP World with 24 per

cent, the VCTPL received the first vessel just two days after inauguration in June 2003 and since then

there has been no looking back. ”Now there are 32 sailings in a month which means everyday a ship will

connect us to some part of the world.

The growth is so phenomenal in recent times that after achieving monthly throughput of 10,000 TEU

(twenty feet equivalent units) for the first time in November 2009, the terminal is constantly handling 20,000

TEU during the past three months. Last year's cargo handling of 1.2 lakh TEU was already surpassed and a

target of two lakh TEU for the current fiscal, a growth of over 70 per cent, is well within reach. They hope

to reach five million TEUs by 2020.

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The success of VCTPL can be attributed to several factors. It is the deepest container terminal in India at

16.5 m and has the capacity to handle the world's largest ships; situated closest to Singapore and China, with

the latter, of late, emerging as the largest bilateral trading partner, and located midway between Kolkata and

Chennai to cover a vast hinterland.

While the depth of Kolkata and Haldia ports is about six to seven metres and it takes a 180 km voyage to

reach the deep seas, in Vizag the ship will be in deep waters merely after sailing a couple of kms.

Starting with reefer containers to carry seafood from Bhimavaram, today VCTPL is handling Ferro alloys,

aluminium products, machinery and spares, heavy minerals, food products, chemicals and refractories on a

large scale from not only Andhra Pradesh, but also from Orissa, Chhattisgarh and Nagpur,

although Guntur happens to be the last point in the south since Chennai was closer to trade further down.

“There has been immense growth in the immediate hinterland and they have graduated from mineral level to

commodities level and now to product level. They handle bulk drugs, glass, finished stone, marble, ceramic

products and garments,” he says.

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 INDEX

CHAPTER 1- SUMMARY OF PORT INDUSTRY…………………………….……….7

CHAPTER 2-COMPANY PROFILE (VCTPL)………………………………….……..16

CHAPTER 3-INTERNATIONAL TRADE & SUPPLY CHAIN MANAGEMENT....22

CHAPTER 4-CUSTOMS &CUSTOMS BROKER……………………………………..31

CHAPTER 5-CONTAINER FREIGHT STATION…………………………………….34

CHAPTER 6-TRANSPORTATION……………………………………………………..36

CHAPTER 7-INFRASTRUCTURE TO HANDLE CARGO AT TERMINAL…...….45

CHAPTER 8- EXIM DOCUMENTATION……………………………………………..50

CHAPTER 9-METHODS OF PAYMENT……………………………………………...55

CHAPTER 10- PROJECT REPORT: FRUIT IMPORT………………………………61

CHAPTER 11- FINDINGS AND SUGGESTIONS……………………….…………….82

CHAPTER 12- BIBLIOGRAPHY……………………………………………………….83

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 CHAPTER: 1
INTRODUCTION: PORT INDUSTRY

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 PORT INDUSTRY IN INDIA

The 6,000 km long Indian coastline has 12 major ports and 181 minor/ intermediate ports out of which 139
are operable. Indian Ports are the gateways to India's international trade by sea and are handling over 90% of
foreign trade. The major ports are located at Calcutta/ Haldia, Chennai, Cochin, Ennore, Jawaharlal Nehru
Port at Nhava Sheva, Kandla, Mormugao, Mumbai, New Mangalore, Paradip, Tuticorin and
Vishakhapatnam.

The 12 major Indian ports, which are managed by the Port Trust of India under Central Government
jurisdiction, handle 90 percent of the all-India port throughput, and thus bear the brunt of sea borne trade.
The 139 minor ports are under the jurisdiction of the respective State Governments. Dry and liquid bulk
make up about 80 percent of the port traffic in volume with general cargo, including the containerised cargo,
constituting the remaining traffic.

Though the bulk of Indian trade is carried by sea routes, the existing port infrastructure is insufficient to
handle trade flows effectively. The current capacity at major ports is overstretched. The major ports together
have a capacity of 215 million metric tonnes (MMT) at 1997- 98 levels. During 2001- 2002, the total cargo
handled at major ports was 287.56 million tonnes as against 281.10 million tonnes during 2000- 2001. The
traffic for total ports in India was worth 740.3 million tons (MT) in 2009 and this is expected to rise to
1,373.1 MT in 2015. Traffic at major ports is expected to grow at a compound annual growth rate (CAGR)
of 7.6 percent from 2010 to 2015.

The Indian ports sector is poised for significant growth driven by new manufacturing and power projects and
higher cargo traffic at ports. Increase in containerized trade coupled with the Government’s active initiatives
to develop the Indian ports sector, is expected to further boost the growth. The commissioning of power
projects based on imported coal and the setting up of steel projects and offshore exploration and production
projects are likely to drive the Indian ports sector.

The situation of limited capacity and high demand has inevitably resulted in port congestion. This results in
overstretched berths leading to pre-berthing delays and longer ship turnaround time. In recent years, major
investments in port construction have centred on container as well as bulk facilities. Modern equipment
exists for container and bulk handling. The equipment- mix for handling general cargo has to be planned and
provided in a manner that suits the needs of each port.

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Cargo traffic handled by India’s major ports increased 4.97 per cent year-on-year to 616.62 million tons (mt)
during April 2017-february 2018. The highest growth was witnessed by Cochin port at 17.63 per cent,
followed by Pradip at 15.56 per cent, Kolkata (including Haldia) at 14.29 per cent and Jawaharlal Nehru port
trust at 6.37 per cent. Container traffic saw the highest growth during this period at 8.37 per cent year-on-
year and reached 8,302 TEUs.

During 2016-17, major and non-major ports in India have accomplished a total cargo throughput of 1,133.09
million tonnes, an increase of 5.7 per cent previous year 2015-16. The growth in cargo handled at major and
non-major ports in 2016-17, were 6.8 per cent and 4.2 per cent, respectively. The share of major ports in the
total traffic handled by Indian ports increased from 56.5 per cent in 2015-16 to 57.2 per cent in 2016-17.

The country’s major ports handled a combined traffic volume of 647.76 million tonnes during 2016-17,
registering an annual growth rate of 6.80 per cent. The major ports recorded the highest ever capacity
addition of 100.37 mt in 2016-17, thereby raising the total capacity to 1065 mt per annum, as against a
capacity of 965.36 mt per annum in 2015-16. The government has taken several measures to improve
operational efficiency through mechanisation, deepening the draft and speedy evacuations.

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 MAJOR AND MINOR PORTS

India has 12 major ports viz. Kolkata Port, Paradip Port, New Mangalore Port, Cochin Port, Jawaharlal
Nehru Port, Mumbai Port, Kandla Port, Vishakhapatnam Port, Chennai Port, Tuticorin port, Ennore Port,
Mormugao Port and Port Blair Port. Out of them, the Mumbai, JNPT, Kandla, Mangalore, Cochin and
Mormugao are located at western coast while Kolkata, Vishakhapatnam, Paradip, Chennai, Tuticorin and
Ennore are located on East Coast. Port Blair is located in Andaman and Nicobar Islands.
Notable trivia about these ports for prelims are listed below:

MAJOR PORTS

WEST COAST

1. Kandla (Gujarat) Mumbai (Maharashtra)

2. Jawaharlal Nehru (Maharashtra)
3. Mormugao (Goa)
4. New Mangalore (Karnataka)
5. Cochin (Kerala)

EAST COAST

1. Tuticorin (Tamil Nadu)

2. Chennai (Tamil Nadu)
3. Ennore (Tamil Nadu)
4. Visakhapatnam (Andhra Pradesh)
5. Paradip (Orissa)
6. Kolkata, Haldia (West Bengal)

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KOLKATA PORT

 Only riverine major port in India.

 Known for twin dock systems viz., Kolkata dock system on the eastern bank and Haldia dock
complex on the western bank of river Hooghly.

PARADIP PORT

 Located at confluence of river Mahanadi in Bay of Bengal in Odisha.

 It was the first major port on east coast commissioned in independent India.

NEW MANGALORE PORT

 Located At A Site Called Panambur In Karnataka At Gurupura River Confluence With Arabian Sea.

COCHIN PORT

 Located on the Willington island on the south-west coast of India; located on the cross roads of the
east-west ocean trade
 The port is called natural gateway to the vast industrial and agricultural produce markets of the
south-west India.

JAWAHARLAL NEHRU PORT

 It is also known as Nhava sheva and is the largest container port in India, handling around half of
containers of all major ports.
 It is located on eastern shore of Mumbai harbour off Elephant Island and is accessed via thane creek.

MUMBAI PORT

 One of the oldest modern ports of India. Initially the location was used by navies of Shivaji.

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KANDLA PORT

 Kandla port was built after partition as the Karachi port on western coast had gone to Pakistan. It is
known for handling much of the crude oil imports of India.
VISHAKHAPATNAM PORT

 Vizag port is located in Andhra Pradesh and is known for bulk of cargo handling on east coast.

CHENNAI PORT

 Chennai port is the largest port in the Bay of Bengal and second largest port of India after JNPT. It is
largest port at east coast.

TUTICORIN PORT

 This port has been now renamed as V.O. Chidambaranar port. It is located in the Gulf of Mannar.
 Tuticorin is the only port in south India to provide a direct weekly container service to the USA.

ENNORE PORT

 This port is now named as Kamarajar port limited. It is first corporate port of India and is registered
as a public company with 68% stake held by government.

MORMUGAO PORT

 Mormugao port in Goa is leading iron ore exporting port of India

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 MINOR PORTS:

STATES/UNION TERRITORIES NO OF MINOR PORTS

GUJARAT 40

MAHARASHTRA 53

GOA 5

KARNATAKA 10

KERALA 13

DIU & DAMAN 2

LAKSHADWEEP ISLANDS 10

PONDICHERRY 1

TAMIL NADU 15

ANDHRA PRADESH 12

ORISSA 2

WEST BENGAL 1

ANDAMAN & NICOBAR 23

TOTAL 187

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 GEOGRAPHICAL LOCATION: VCT

Geographic location plays a crucial role in the port business, and Visakhapatnam, which is located between

Kolkata and Chennai, along the coast is primed to take advantage of these two major trading hubs. Lest we

forget, Andhra Pradesh has one of the highest concentrations of seaports in the country, which is largely

complemented by rail and road connectivity.

1. The port is located only 12 km away from the Golden Quadrilateral and has direct rail linkages to

major industrial regions such as Jharsuguda and Kalinganagar in Odisha, Nagpur in Maharashtra and

Raipur in Chhattisgarh.

2. The major Inland Container Depots (ICDs) are Hyderabad, New Delhi, Raipur and Nagpur.

3. Kolkata and Chennai are 882 km and 790 km away from it respectively. And in between, VCT is the

only full-service container terminal with ship-to-shore cranes and other allied infrastructure. Well,

there is a competitor in Chennai industrial cluster, but it lies 790 km away.

In FY2016, Visakhapatnam was the 6th busiest major port in India in terms of container volume (cargo in

terms of TEUs) and the 4th busiest container terminal among other major ports on the East Coast, with only

Chennai (1.56 million TEUs), Tuticorin (0.61 million TEUs) and Kolkata Dock (0.57 million TEUs)

surpassing Visakhapatnam (0.29 million TEUs). But with that said, recently, the Singapore-headquartered

PSA Singapore Terminals has started container handling operations at Kakinada. And being only 150-km

away from Visakhapatnam, it is poised to give VCT some competition.

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 STRATEGIC LOCATION: VCT

1. The Port town got its first rail headway back in the early 1900s. Subsequently, the city’s strategic

importance was realised with the establishment of Eastern Naval Command, Scandia Shipyard, crude

petroleum oil refinery, steel plant and a host of other heavy industries.

2. The Port city now has strategic sea-air-road-rail connectivity. And expansion of its existing two-lane

to a four-lane road, connecting the Port to the Golden Quadrilateral (NH-16/NH-5), is in final stages

of completion. Given Andhra Pradesh's concentrations of seaports and rail and road connectivity,

ports and logistics have thrived in the state. In addition, terminal operators have extended railheads

inside the terminal, which allows movement of containers directly to the vessel loading bay.

3. VCT also offers connectivity to both east and west bound sectors through dedicated weekly mainline

services. Except a direct service to Europe, VCT has a full basket of services connecting all other

major global destinations directly.

4. Visakhapatnam’s inherent advantage has been its geographical location and the marine parameters

that are one of the best in the sector. And being closest to the Strait of Malacca (a major shipping

channel between the Indian Ocean and the Pacific Ocean) has helped the port augment its business.

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 CHAPTER 2:

COMPANY PROFILE

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 EVOLUTION OF VCTPL

Visakha Container Terminal (VCT) is likely to achieve 20 percent year-on-year growth in its total annual
cargo container handling capacity at 2 million TEUs (twenty tonne equivalent units) by 2020 from the
current 0.36 million TEUs. The VCT was started in 2003 under the aegis of Visakhapatnam Port Trust with
a quay length of 450 metre. Currently, it can simultaneously handle only two big vessels as it takes 12-15
hours for loading and unloading of a vessel.

The joint venture between DP World and JM Baxi Group had proposed the expansion of the quay length to
another 395 metres. The expansion work is more likely to start by the end of Year 2018. The terminal can
accommodate 3-4 vessels once the quay length is extended, Visakhapatnam Port chairman Shri M.T.
Krishna Babu, IAS, said.

Along with the expansion, the chairman also plans for better connectivity, marketing and infrastructure
facilities at the terminal. It has been offering huge incentives on vessel-related charges to the ships that are
connecting to the international ports. The deepest state of art container terminal has all the modern
equipment including high capacity cranes, backup reach stackers and forklifts. Another vessel will also be
deployed soon for container loading and unloading at the port.

GROUP AND SISTER CONCERN COMPANIES

1. MUMBAI INTERNATIONAL CARGO TERMINAL

The MICT Container Freight Station Is Located At DRONAGRI NODE 14 Km From JNPT Port, Navi
Mumbai. A Highly Motivated Team Handles Operation Efficiently Backed By Knowledge And Skill And
Computerized Systems. Safety And Quality Are Given Paramount Importance To Maintain The High Level
Of Efficiency. With Custom Authorities Within Premises, And Complete Online Access It Provides A
Unique Single Window Solution For Customers.

2. VISAKHA CONTAINER TERMINAL

First Port In India To Receive Authorised Economic Operator (AEO) Certificate From Indian Customs. The
Visakha Container Terminal Was Set Up Under The Aegis Of Visakhapatnam Port Trust As A Joint Venture
Between J.M Baxi Group And D. P. World Commenced Operation In 2003.
Located On The Centre Of The East Coast Of India, VCT Is Ideally Located To Cater To Its Vast Hinterland
Of Andhra Pradesh, Orissa, Chhattisgarh, Jharkhand, MP, Up, North India And West Bengal.

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3. DEHLI INTERNATIONL CARGO TERMINALS
The DICT Inland Container Depot and Multi User Logistics Park in Strategically Located at Sonepat, off the
NH-1, The Arterial Cargo Route to Delhi. It Is Custom Designed To Bring Efficiency And Cost
Effectiveness To All EXIM And Domestic Cargo In The NCR Region. With Custom Authorities Within
Premises, And Complete Online Access It Provides A Unique Single Window Solution For Customers.

4. ROZI INTERNATIONAL CARGO TERMINAL

In The Mid -1990s JM Baxi & Co. Envisioned A Strategic Association With Gujarat Maritime Board And
The Government Of Gujarat To Construct A Captive Jetty On The Gujarat Coast. RICT Was Allocated A
100 Meter Jetty At Rozi Port Near Jamnagar, Which Was Commissioned In 1998 Primarily For Handling
Dry Bulk Cargoes. Subsequently, It Has Evolved As A Modern Logistics Hub For Fertiliser. The Backup
Has Been Developed With Fixed And Mobile Infrastructure To Handle, Store And Transport Bulk
Commodities. In The Mid -1990s JM Baxi & Co. Envisioned A Strategic association with Gujarat Maritime
Board and the Government of Gujarat to construct a captive jetty on the Gujarat coast. RICT was allocated a
100 meters jetty at Rozi Port near Jamnagar, which was commissioned in 1998 primarily for handling dry
bulk cargoes.

5. HALDIA INTERNATIONAL CONTAINER TERMINAL.

Kolkata Port Trust awarded the Operation and Maintenance contact for Haldia Container Terminal to HICT
for Integrated Container Handling operations for a period of 10 years. A highly motivated team handles
operations efficiently, backed by knowledge, skill and computerised systems. Safety and Quality are given
paramount importance to maintain the high levels of efficiency. There are well established Rail & Road
connections from mineral rich hinterland to the port, making it a preferred choice for the trade.

6. PARADIP INTERNATIONAL CARGO TERMINAL.

Paradip International Cargo Terminal Pvt. Ltd. (PICT) was awarded a contract for financing, designing,
construction and commissioning of a clean cargo terminal at Paradip, and operation, management and
maintenance for 30 years. The depth at the proposed berth will be 17.1 meters with a length of 450 meters,
which will facilitate handling of Cape-sized vessels up to 1,25,000 DWT. The rail siding for the berth for
loading and unloading of both containers and clean cargo, will enhance the last mile connectivity for the end
user by attracting rail-borne cargo. The berth will be utilised for handling containerised traffic and clean
cargo at Paradip port. Non-hazardous and dust-free cargoes including iron and steel products, aluminium
ingots, pig iron, finished fertiliser, food grains and sugar (both raw and finished) will be handled effectively
and efficiently in the multi-purpose berth.

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7. KANDLA INTERNATIONAL CONTAINER TERMINAL
Kandla International Container Terminal (KICT) is situated at Latitude 23º 01’ N and Longitude 70º 13’ E
on the shores of the Kandla Creek which runs into the Gulf of Kutch at a distance of 90 nautical miles from
the Arabian Sea., where it serves as critical gateway port for the western and north western hinterland of
India on international trade routes to Middle East and Upper Gulf. Kandla International Container Terminal
(Private) Limited (KICT) has been awarded by Kandla Port Trust for Development of a Container Terminal
at the port using the existing Berths 11 & 12. KICT envisages integrating all the operations with single point
of responsibility.

RELATIONS WITH VIZAG PORT TRUST

Visakhapatnam Port is one of the leading major ports of India. The Port is located on the east coast of India
in between Chennai and Kolkata at a latitude of 17042' 00'' North and longitude of 83023' 00'' East and the
time zone is GMT + 5:30. The Port has three harbours viz., outer harbour, inner harbour and the fishing
harbour. The outer harbour with a water spread of 200 hectares has 6 berths and the inner harbour with a
water spread of 100 hectares has 18 berths.

Bestowed with natural deep-water basins, the outer harbour is capable of accommodating vessels up to
200,000 DWT and draft upto 18.1 meters. The inner harbour is capable of accommodating fully laden
Panamax vessels with draft upto 14.5 meters, with tide advantage.

First port in the country to receive Authorised Economic Operator (AEO) certification from Indian customs.
The Visakha Container Terminal was set up under the aegis of Visakhapatnam Port Trust as a joint venture
between DP World and J M Baxi Group and commenced operations in 2003.

Located on the center of the East Coast of India, VCT is ideally located to cater to its vast hinterland of
Andhra Pradesh, Odisha, Chhattisgarh, Jharkhand, MP, UP, North India and West Bengal. With excellent
rail and road connectivity, it is an ideal alternative especially for shipments to and from Far East and South
East Asian regions to Delhi and other nearby ICDs of Hyderabad, Nagpur and Raipur.

Placing a premium on Quality, Health, Safety and care for the Environment, it has successfully adopted and
is certified with prestigious ISO 9001:2008, ISO 14001:2004, OHSAS 18001:2007 and ISO 28000:2007.

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 DEPARTMENTAL STRUCTURE OF VCT

ROLES AND RESPONSIBILITIES OF BDC

Business development combines sales and skills in managing relationships in order to create growth and

new business for a company. It is often linked very closely to marketing. For example, the business

development team may work with the marketing department to identify a new market for the company's

products or services. While the marketing department concentrates on developing suitable marketing

materials, members of business development are responsible for identifying and working with business

partners in that market. The business development executive works as a relatively junior member of the

business development team.

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A.RESEARCH

A key part of the business development executive's role is based on research, who uses the media and

various market sector reports to identify market trends and, potentially, new opportunities. If executives or

their manager is going to meet a prospective new client or partner, they will research the organization and,

where possible, the individuals they will be meeting. It is also their responsibility to identify events, such as

conferences and exhibitions, at which the company should have a presence.

B.NEW LEADS

The business development executive creates new leads for the company either by making cold calls over the

telephone or by meeting new people at industry events. They may have a target number of new business

contacts to make when attending an event. Sometimes they may have picked out beforehand specific people

they wants to meet. Once they has made initial contact, it is her responsibility to make follow-up calls and

develop the relationship.

C.PRESENTATIONS

A large part of any business development executive's role is preparing and making presentations. These may

be general presentations about the company or more specific presentations focusing on particular products or

ideas. Members of the business development team will also seek opportunities to speak at industry

conferences or other relevant business-focused events.

D.MAINTAINING RELATIONSHIPS

The key characteristic of business development is that it is about creating long-term relationships that

deliver long-term benefits to the business. This means that, as well as creating new opportunities and

relationships, the business development executive must nurture the contacts they had already made. They do

this by organizing regular update meetings and telephone calls. In addition, she may make informal contacts,

such as forwarding a press article that she thinks her contact will find interesting.

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 CHAPTER: 3

INTERNATIONAL TRADE

&

SUPPLY CHAIN MANAGEMENT

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 INTERNATIONAL TRADE

International Trade refers to the exchange of products and services from one country to another. In other

words Imports and Exports.

International trade consists of goods and services moving in two directions:

1. Imports – flowing into a country from abroad.

2. Exports – flowing out of a country and sold overseas.

Visible trade refers to the buying and selling of goods – solid, tangible things between countries. Invisible

trade, on the other hand, refers to services. Most economists globally agree that international trade helps

boost nations’ wealth. When a person or company purchases a cheaper product or service from another

country, living standards in both nations rise. There are several reasons why we buy things from foreign

suppliers. Perhaps, the imported options are cheaper. Their quality may also be better, as well as their

availability.

ADVANTAGES OF INTERNATIONAL TRADE

1. It Provides A Foundation For International Growth.

2. International Trade Improves Financial Performance.

3. It Spreads Out The Risk A Brand And Business Must Assume.

4. International Trade Encourages Market Competitiveness.

5. International Exchange Rates Can Be Beneficial To A Business.

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DISADVANTAGES OF INTERNATIONAL TRADE

1. There is always a political risk involved with international trade.

2. There can be severe exchange rate risks.

3. International trade also presents cultural complications.

4. It has a credit risk that must be specifically managed.

5. International trade increases the risk of proprietary information theft.

EXPORTS

Exports are the goods and services produced in one country and purchased by citizens of another country. It

doesn't matter what the good or service is. It doesn't matter how it is sent. It can be shipped, sent by email, or

carried in personal luggage on a plane. If it is produced domestically and sold to someone from a foreign

country, it is an export. Export can be defined as a form of trade in which domestically manufactured goods

are sent to the foreign country, on demand of the overseas buyer. The process followed for exporting the

goods to another country is given as under:

 Enquiry and Sending Quotations receipt: The potential buyer of the goods send an enquiry to

various exporting firms and requests for quotations that comprise of its price, quantity, quality and

terms and conditions. The exporters in return send Performa invoice detailing the items such as size,

weight, quality, color, grade, mode of delivery, packing type, payment etc.

 Order receipt: Once the buyer agrees to price, quantity, terms and conditions of the exporter, he/she

places an order for dispatching the goods called as an indent.

 Determination of creditworthiness of the importer: After receiving the order, the exporter

enquires about the credibility of the buyer (importer). This is to ensure that what are the chances of

default in payment by the importer, once they reach the destination. And so a letter of credit is

demanded by the exporter from the importer, to know the credibility.

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  Obtaining license: The exporter has to fulfil certain legal formalities, as the goods are subject to

customs laws which require that the exporter organization must have an export license before it

moves forward.

 Pre-shipment finance: After obtaining the export license, the exporter approaches the bank or

financial institution for obtaining pre-shipment finance for carrying out production activities.

 Production of goods: Once the exporter receives finance from the bank, the exporter then starts the

production of the goods, as per the requirements of the importer.

 Pre-shipment inspection: There is a mandatory inspection of the goods by the relevant authority to

ensure that only good quality products are exported from the country.

 Obtaining a certificate of origin: The importer countries provide tariff concessions or other

exemptions to the exporter country goods and to avail such benefit, the exporter is required to send a

certificate of origin to the importer. It ensures that the goods are actually produced in that country.

 Shipping space reservation: The exporter approaches the shipping company to reserve shipping

space for the goods to be dispatched. For this purpose, the exporting firm has to specify the nature

and type of the goods to be exported, shipment date, the destination of the port, etc.

 Packing and Forwarding: After completing all the legal formalities and applying for the shipping

space, goods are carefully packed and then all the details such as gross and net weight, name and

address of the importer, country of origin and so forth. After that, all the necessary steps are taken by

the exporting firm for transferring the goods to the port.

 Insurance of Goods: The exporter insures the goods with an insurance company to get protection

from the risk of loss or damage during transit.

 Customs clearance: Next the goods should be customs cleared before loading them on the ship.;

 Obtaining mates receipt: The ship captain issues a mate’s receipt to the port superintendent when

the goods are loaded on board the ship.

 Payment of freight: The mate’s receipt is surrendered by the Clearing and Forwarding (C&F) Agent

to the shipping company determining the freight. After receiving it, the company issues the bill of

lading that acts as a proof that the shipping entity has got the goods for taking it to the destination.

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  Preparation of Invoice: Once the goods are sent to the destination, invoice of the goods is prepared,

which states the quantity of the goods and amount due to the importer.

 Securing Payment: Lastly, the exporter communicates the importer regarding the shipment of

goods. Next, to claim the goods title, the importer requires certain documents such as a bill of lading,

invoice, insurance policy, letter of credit, certificate of origin etc., on its arrival and clearing customs.

The exporting company sends these documents to the importing firm with the banker and instructs to

deliver it only when the bill of exchange is accepted.

HOW EXPORTS AFFECT THE ECONOMY

Most countries want to increase their exports. Their companies want to sell more. If they've sold all they can

to their own country's population, then they want to sell overseas as well. The more they export, the greater

their competitive advantage. That's because they gain expertise in producing the goods and services. They

also gain knowledge about how to sell to foreign markets. Governments encourage exports. That's because it

increases jobs, brings in higher wages and raises the standard of living for residents. They

become happier and more likely to support their national leaders. Exports also increase the foreign exchange

reserves held in the nation's central bank. That's because foreigners pay for exports either in their own

currency or the U.S. dollar. A country with large reserves can use it to manage their own currency's value.

They have enough foreign currency to flood the market with their own currency. That lowers the cost of

their exports in other countries. Countries also use currency reserves to manage liquidity. That means they

can better control inflation, which is too much money chasing too few goods. To control inflation, they use

the foreign currency to purchase their own currency. That decreases the money supply, making the local

currency worth more.

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 IMPORTS

Imports are foreign goods and services bought by residents of a country. Residents include citizens,

businesses, and the government. It doesn't matter what the imports are or how they are sent. They can be

shipped, sent by email, or even hand-carried in personal luggage on a plane. If they are produced in a foreign

country and sold to domestic residents, they are imports.

Even tourism products and services are imports. When you travel outside the country, you are importing any

souvenirs you bought on your trip. Import refers to a type of foreign trade in which goods or services are

brought into the home country from a foreign country, for the purpose of reselling them in the domestic

market. The following procedure is followed for the import of the goods:

 Trade Enquiry: The import procedure starts with the trade enquiry that how many countries and

firms export the product required and so the importing company needs to obtain all the details from

trade directories, trade associations etc. After getting the required information, the importing firm

communicates with the exporting companies to know about their rates and terms of delivery.

 Obtaining import license: Some goods are subject to import license while others are not. So, the

importer is required to have knowledge of the Export-Import policy in practice, to know whether the

goods required by the importer needs import license or not. If it is required, then the importer must

follow all the necessary steps for obtaining it.

 Procurement of foreign exchange: The importer is required to obtain foreign exchange as the

exporter resides in a foreign country, and he/she will demand payment for the goods in the currency

prevalent in the country, in which he/she resides.

 Placement of order: The importer places an order with the exporter for supplying the products. The

import order contains details concerning the price, quality, quantity, colour, grade, etc. of the goods

to be despatched.

 Acquiring letter of credit: On the agreement of the payment terms between the importer and

exporter, then the importing company must obtain the letter of credit from its bank that shows the

credibility regarding the realization of obligation.

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  Arranging funds: The importer of the goods needs to arrange finance before they arrive at the port.

 Receipt of shipment advice: Once the goods are loaded on the ship, the exporter sends the shipment

advice that contains the detailed information about the shipment of goods, such as invoice number,

vessel name, bill of lading number, port of export, description of the goods despatched.

 Retirement of import documents: After shipping the goods, the exporter makes certain important

documents as per contractual terms and gives it to the banker, to transfer it further, in the manner, as

specified in the letter of credit.

 Arrival of goods: The exporter ships the goods, according to the contractual terms. The ship in

charge informs the officer in charge at the dock that the products are arrived in the country and

provides a document, namely, import general manifest.

 Customs clearance and release: Once the goods reach India, they are subject to customs clearance,

which is a huge process, wherein a number of legal formalities have to be completed.

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 SUPPLY CHAIN MANAGEMENT

Supply chain management is the management of the flow of goods and services and includes all processes

that transform raw materials into final products. It involves the active streamlining of a business's supply-

side activities to maximize customer value and gain a competitive advantage in the marketplace. SCM

represents an effort by suppliers to develop and implement supply chains that are as efficient and

economical as possible. Supply chains cover everything from production to product development to the

information systems needed to direct these undertakings.

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 SHIPPING LINES

A Shipping Line is a company that operates the ships that actually carry the containers (owned or leased)

and cargo from load port to discharge ports.

Example: Hapag Lloyd, Maersk, China Shipping, Some of the shipping lines have container services

covering most ports of the world, and it is common that they might run into a situation where by they have

shortage of containers at certain locations or they might have requirement of certain types of containers (Flat

Racks, Open Tops etc) at certain locations.

THE SHIPPING PROCESS

Step 1: Request quotes

Step 2: Choose a freight forwarder

Step 3: Prepare necessary documents for the shipping process

Step 4: Confirm the shipment details on Fleet

Step 5: Approve the charges on Fleet

Step 6: Pay with credit card or via bank account

Step 7: Shipment passes through customs inspection at port of entry

Step 8: Receive and pay the bill for customs duties and taxes

Step 9: Receive the shipment

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 CHAPTER: 4
CUSTOMS AND CUSTOMS
BROKER

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 CUSTOMS

Government agency entrusted with enforcement of laws and regulations to collect and protect import-

revenues, and to regulate and document the flow of goods in and out of the country.

Customs is an authority or agency in a country responsible for collecting tariffs and for controlling the flow

of goods, including animals, transports, personal, and hazardous items, into and out of a country. The

movement of people into and out of a country is normally monitored by migration authorities, under a

variety of names and arrangements. Immigration authorities normally check for appropriate documentation,

verify that a person is entitled to enter the country, apprehend people wanted by domestic or

international arrest warrants, and impede the entry of people deemed dangerous to the country.

Compare illegal emigration.

Each country has its own laws and regulations for the import and export of goods into and out of a country,

which its customs authority enforces. The import or export of some goods may be restricted or

forbidden.[2] in most countries, customs are attained through government agreements and international laws.

A customs duty is a tariff or tax on the importation (usually) or exportation (unusually) of goods.

Commercial goods not yet cleared through customs are held in a customs area, often called a bonded store,

until processed. All authorized ports are recognized customs areas.

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 CUSTOMS BROKER

In the global trade world, we always hear the term “customs broker” but how much do we know about

customs brokers? Many questions will be asked by inexperienced importers, such as “Who is a customs

broker?” and “What do they do?” Customs brokers are private for-profit individuals, corporations, or

associations that are licensed, regulated, and empowered by customs to assist the importing public in

meeting federal requirements governing global trade. Like the freight forwarder for international shipping,

customs brokers play an important role in the supply chain of trade. Entries of foreign-made goods represent

billions of dollars in duty collection by customs, and virtually almost all of them are prepared by customs

brokers on behalf of importers. There are brokers who operate as sole proprietors at one entry port, while

others can be large corporations with branches in different entry ports. However, regardless of the company

size, customs brokers are all licensed and regulated by the Department of Treasury. Customs brokers are not

only knowledgeable in customs regulations, but there are many well-experienced brokers on the market who

have expertise on entering products that require Other Government Agencies (OGA) filings.

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 CHAPTER:5
CONTAINER FREIGNT STATION

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 CONTAINER FREIGHT STATION

A facility where freight shipments are consolidated or de-consolidated and staged between transport legs. A

CFS is typically located in proximity to an ocean, port, or airport, where cargo containers are transported to

and from. The term CFS at loading port means the location designated by carriers for the receiving of cargo

to be loaded into containers by the carrier. At discharge or destination ports, the term CFS means the bonded

location designated by carriers for deveining of containerized cargo. The Visakha Container Terminal -

Container Freight Station (VCT - CFS) is located in the EXIM park area of Visakhapatnam Port Trust. A

green field project is being set up in an area of 34 acres with an annual capacity of 1, 00,000 TEUs per

annum. The facility is well located at a distance of only 12 kms from the Container Terminal and 5

Kilometres from the Kolkata – Chennai national highway.

The EXIM process of CFS is done by these following process:

 CFS stuffing: Once the cargo unloaded in to Container Freight Station for stuffing, the customs

house agents file documents with customs to complete customs procedures. After obtaining LEO -

‘let export order’ from customs official, as last procedure of customs clearance under export, the

customs house agents delivers the required documents to carrier. Carrier files necessary documents

with CFS to load the container. After obtaining necessary permission, cargo will be loaded in to

container.

 Direct stuffing: The truck carrying goods to export enters in the area of Container Freight Station

which is a customs bonded area. The customs official can inspects the cargo and after necessary

completion of customs procedures and CFS procedures, cargo is directly loaded in to container. This

is called direct stuffing of cargo in Container Freight Station.

 Factory Stuffing: The exporter can obtain necessary permission to move the empty container from

Container Freight Station (CFS) which is a customs bonded area to the exporter’s factory. The

stuffing of cargo will be undertaken under the customs official’s supervision at factory premises.

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 CHAPTER: 6
TRANSPORTATION

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 INLAND TRANSPORTATION: ROADS

VCT Is Well Connected To National Highway Via Port Connectivity Road. Presently There Is Plan For

Expansion Of Port Connectivity Road

1. Part Of Golden Quadrilateral

2. Separate Port Connectivity

3. 12-15 Kilometers within the range of VCT Vicinity

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 INLAND TRANSPORTATION: RAIL

Around 65% of total cargo handled at ports is through the railways. VCT is well connected to the hinterland

through rail networks. Apart from coal which completely move by rail; fertilizers, limestone and food-grains

are the other dry bulk commodities move by rail.

Rail transport is primarily used for low value commodities for which transport costs are an important

component of the delivered price.

Key challenges faced by rail moving traffic includes:

1. Inadequate investments in capacity and proper rail siding

2. Handover time from east coast railway to port railways authorities

3. Low quality of service and slow response to various segments of growing freights demand

4. Lack of availability of wagon

5. Rail bottlenecks in hinterland

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 SEA ROUTE

There is potentially an infinite number of maritime shipping routes that can be used for commercial
circulation, but the configuration of the global system is relatively simple. The main axis is a circum-
equatorial corridor linking North America, Europe and Pacific Asia through the Suez Canal, the Strait of
Malacca and the Panama Canal. Maritime routes are a function of obligatory points of passage, which are
strategic locations that act as chokepoints. Physical constraints (coasts, winds, marine currents, depth, reefs,
Ice) and political borders also play an important role in shaping maritime routes. As a result, maritime routes
draw arcs on the earth water surface as intercontinental maritime transportation tries to follow the great
circle distance. Core routes are those supporting the most important commercial shipping flows servicing
major markets. Secondary routes are mostly connectors between smaller markets. In part due to geography,
geopolitics and trade flows specific locations play a strategic role in the global maritime network. They are
labelled as chokepoints and can be classified into two main categories:

Primary chokepoints. The most important since without them there would be limited cost effective
maritime shipping alternatives, which would seriously impair global trade. Among those are the Panama
Canal, the Suez Canal, the Strait of Hormuz and the Strait of Malacca, which are key locations in the global
trade of goods and commodities.

Secondary chokepoints. Support maritime routes that have alternatives but would still involve a notable
detour. These include the Magellan Passage, the Dover Strait, the Sunda Strait and the Taiwan Strait.

38 | P a g e
 TYPES OF VESSEL

1. CONTAINER VESSELS

Containers have become the main way of transporting manufactured goods around the world. A container
can be transferred between truck, train and ship relatively easily and is a standard size to simplify
transportation. Containers can accommodate anything from foodstuffs to electrical equipment to
automobiles. Containers are also used to transport bagged and palletised goods, liquids and refrigerated
cargo. Standard containers are measured as TEUs (Twenty-foot Equivalent Units) and are generally 20 feet
(1 TEU) or 40 feet (2 TEUs) long. All standard shipping containers are 8 feet wide and 8 feet 6 inches tall.
There are also longer, taller and even shorter standard sizes, but these are less common.

2. REEFER VESSELS
Ships designed to carry a refrigerated cargo usually comprising perishable goods such as fruit or meat are
known as "Reefer Vessels". Cargo is stowed in holds which are then sealed and temperature controlled.
Traditional reefer vessels have been largely replaced by the use of reefer containers which may be carried on
board a container vessel. Reefer containers only need a power source to function although they are usually
loaded to allow the crew to inspect them during the voyage.

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3. RORO (ROLL ON ROLL OFF)

Most vehicles that are being transported over water internationally are done on a Roll on Roll off ship. The
reason this ship is so popular to transport vehicles is that it’s safer and much faster to just drive a car onto
the ship than using a crane. Once the cars are aboard, they are braced to the ship’s deck to keep them from
moving around while the ship is at sea. This is the type we use primarily for shipping to the UK & other
countries for our vehicles

4. DRY-BULK VESSEL

Designed for the carriage of ore, coal, grain, and the like, dry-bulk ships bear a superficial likeness to
container ships since they often have no cargo handling gear and, unlike the tanker, have large cargo
hatches. The absence of containers on deck is a decisive indicator that a vessel is a dry-bulk ship, but an
observer may be deceived by the occasional sight of a dry-bulk ship carrying containers and other no bulk
cargo on deck. An incontrovertible indicator is the self-unloading gear, usually a large horizontal boom of
open truss work, carried by some bulk ships. On the Great Lakes of North America this gear is a near-
universal feature of ships built since 1960.

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 TYPES OF CONTAINERS

1. DRY STORAGE CONTAINER

The most commonly used shipping containers; they come in various dimensions standardized by ISO. They are used
for shipping of dry materials and come in size of 20ft, 40ft and 10ft

2. FLAT RACK CONTAINER

With collapsible sides, these are like simple storage shipping containers where the sides can be folded so as to
make a flat rack for shipping of wide variety of goods.

3. OPEN TOP CONTAINER

With a convertible top that can be completely removed to make an open top so that materials of any height can be
shipped easily

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4. TUNNEL CONTAINER

Container storage units provided with doors on both ends of the container, they are extremely helpful in quick loading
and unloading of materials.

5. OPEN SIDE STORAGE CONTAINER

These storage units are provided with doors that can change into completely open sides providing a much wider room
for loading of materials.

6. DOUBLE DOORS CONTAINER

They are kind of storage units that are provided with double doors, making a wider room for loading and unloading of
materials. Construction materials include steel, iron etc in standardized sizes of 20ft and 40ft.

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7. REFRIGERATED ISO CONTAINERS

These are temperature regulated shipping containers that always have a carefully controlled low temperature. They are
exclusively used for shipment of perishable substances like fruits and vegetables over long distances.

8. TANKS

Container storage units used mostly for transportation of liquid materials, they are used by a huge proportion of entire
shipping industry. They are mostly made of strong steel or other anti-corrosive materials providing them with long life
and protection to the materials.

9. DRUMS

As the name suggests, circular shipping containers, made from a choice of materials like steel, light weight metals,
fiber, hard plastic etc. they are most suitable for bulk transport of liquid materials their shape, may need extra space.

43 | P a g e
 CHAPTER: 7
Infrastructure to handle
the cargo at terminal

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 INFRASTRUCTURE: VISAKHA CONTAIENER TERMINAL

1. RAIL MOUNTED QUAY CRANE: 4

It is a structure used to straddle an object or workspace. Gantry cranes for marine application are imposing,
multi-story structures prominent at most container terminals, used to load intermodal containers on and off
container ships. They can range from these enormous "full" gantry cranes, capable of lifting some of the
heaviest loads in the world, to small shop cranes, used for tasks such as lifting automobile engines out of
vehicles.

2. RUBBER TYRE GANTRY CRANE: 6

A rubber tyre gantry crane (RTG crane) (also transtainer) is a mobile gantry crane used in intermodal
operations to ground or stack containers. Inbound containers are stored for future pickup by drayage trucks,
and outbound are stored for future loading onto vessels. RTGs typically straddle multiple lanes, with one
lane reserved for container transfers. Advantages: its mobility gives a rubber tyred gantry crane wild
appliance

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3. REACH STACKERS: 4

A reach stacker is a vehicle used for handling intermodal cargo containers in small terminals or medium-
sized ports. Reach stackers are able to transport a container short distances very quickly and pile them in
various rows depending on its access

4. TON REACH STACKER: 3

10 Ton Reach Stacker is a vehicle used for handling intermodal cargo containers in major ports. Reach
stackers are able to transport a container short distances very quickly and pile them in various rows
depending on its access.it capacity to carry 10 ton weight containers

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5. FORKLIFT: 2

A forklift (also called a lift truck, a fork truck, or a forklift truck) is a powered industrial truck used to lift
and move materials short distances. Forklift hydraulics are controlled either with levers directly
manipulating the hydraulic valves, or by electrically controlled actuators, using smaller "finger" levers for
control. The latter allows forklift designers more freedom in agronomical design

6. INTERNAL TRANSFER VEHICLES: 22

7. REEFER POINTS: 204

REEFER POINTS meaning or plugs. Power outlet in ship or shore facility which integrated containers can
connected to. Otherwise for containers without their own cooling system but connects via ducts to a cooling
system

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8. 3000 KVA BACKUP GENERATOR:

Diesel generating sets are used in places without connection to a power grid, or as emergency power-supply
if the grid fails, as well as for more complex applications such as peak-lopping, grid support and export to
the power grid.

9. 60 MT WEIGHBRIDGE:

Weighbridge (non-US) or railroad scale is a large set of scales, usually mounted permanently on a
concrete foundation, that is used to weigh entire rail or road vehicles and their contents. By weighing the
vehicle both empty and when loaded, the load carried by the vehicle can be calculated.

10. RAIL SIDING - 790 METERS

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 CHAPTER: 8
EXPORT AND IMPORT
DOCUMENTATION

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 IMPORT DOCUMENTATION

BILL OF ENTRY

 Bill of entry is one of the major import document for import customs clearance. Bill of Entry is one
of the indicators of ‘total outward remittance of country’ regulated by Reserve Bank and Customs
department.
 Bill of entry must be filed within thirty days of arrival of goods at a customs location. Once after
filing bill of entry along with necessary import customs clearance documents, assessment and
examination of goods are carried out by concerned customs official.
 After completion of import customs formalities, a ‘pass out order’ is issued under such bill of entry.
Once an importer or his authorized customs house agent obtains ‘pass out order’ from concerned
customs official, the imported goods can be moved out of customs.

COMMERCIAL INVOICE

 Commercial invoice is the prime document in any business transactions. Invoice is one of the
documents required for import customs clearance for value appraisal by concerned customs official.
 Assessable value is calculated on the basis of terms of delivery of goods mentioned in commercial
invoice produced by importer at customs location. The concerned appraising officer verifies the
value mentioned in commercial invoice matches with the actual market value of same goods.
 This method of inspection by appraising officer of customs prevents fraudulent activities of importer
or exporter by over invoicing or under invoicing. So Invoice plays a pivotal role in value assessment
in import customs clearance procedures.

BILL OF LADING / AIRWAY BILL:

 Bill of lading under sea shipment or Airway bill under air shipment is carrier’s document required to
be submitted with customs for import customs clearance purpose. Bill of lading or Airway bill issued
by carrier provides the details of cargo with terms of delivery

IMPORT LICENSE:

 Import license may be required as one of the documents for import customs clearance procedures
and formalities under specific products. This license may be mandatory for importing specific goods
as per guide lines provided by government. Import of such specific products may have been being
regulated by government time to time. So government insist an import license as one of the
documents required for import customs clearance to bring those materials from foreign countries.

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INSURANCE CERTIFICATE:

 Insurance certificate is one of the documents required for import customs clearance procedures.
Insurance certificate is a supporting document against importer’s declaration on terms of delivery.
 Insurance certificate under import shipment helps customs authorities to verify, whether selling price
includes insurance or not. This is required to find assessable value which determines import duty
amount

PURCHASE ORDER:

 Purchase order is one of the documents required for import customs clearance. A purchase order
reflects almost all terms and conditions of sale contract which enables the customs official to confirm
on value assessment.
 If an import consignment is under letter of credit basis, the importer can submit a copy of Letter of
Credit along with the documents for import clearance

RCMC. REGISTRATION CUM MEMBERSHIP CERTIFICATE

 For the purpose of availing import duty exemption from government agencies under specific goods,
production of RCMC with customs authorities is one of the requirements for import clearance. In
such cases importer needs to submit Registration Cum Membership Certificate along with import
customs clearance documents.

GATT/DGFT DECLARATION:

 As per the guidelines of Government of India, every importer needs to file GATT declaration and
DGFT declaration along with other import customs clearance documents with customs. GATT
declaration has to be filed by Importer as per the terms of General Agreement on Tariff and Trade

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 EXPORT DOCUMENTATION

BILL OF LADING
 The bill of lading is usually the first common document used in international shipment and it is a
contract between the owner of the goods and the carrier.
 It will state what goods are shipping, where they are going and where the shipment started. In
addition, once the shipment is picked up, the bill of lading serves as a receipt issued by the carrier.

CERTIFICATE OF MANUFACTURER
 This is a notarized document certifying that the goods have been produced by the manufacturer,
fulfills the general product requirements and is ready for shipment.

CERTIFICATE OF ORIGIN
 This document is prepared by the manufacturer and is certified by a government entity or chamber of
commerce. It’s used to identify the country of the manufacturer where the goods were made. For
example, the U.S. Food & Drug Administration requires a certificate of origin for every product
imported to the US.

COMMERCIAL INVOICE
 When the international sale is complete and goods are ready to be shipped out, a commercial invoice
is the document used to describe the entire export transaction from beginning to end including the
shipping terms.
 It is one of the most important documents because it provides critical information and instructions to
all parties involved: buyer, freight forwarder, customs, import broker, banks, carriers, etc.

DOCK RECEIPTS
 The purpose of this receipt is to provide the exporter with proof that the delivery of goods to the
international carrier was successful and in good condition.

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INSPECTION CERTIFICATE
 These inspections are usually done with industrial equipment, perishable merchandise and meat
products. It certifies the items were received in good condition and that the shipment contained the
correct quantity.

INSURANCE CERTIFICATE
 For export shipments, this document certifies you have bought an insurance policy for cargo on
board. Insurance may be purchased because liability and large losses are a concern to the exporter.

PACKING LIST
 A packing list is similar to a shipping list in that it lists the goods being shipping, information on how
it was packed, how the goods are numbered, and weight/height dimensions.
 Even though it’s not always required, it’s an important document used by freight forwarders to
prepare a bill of lading and to understand how much cargo is needed.

CONSULAR INVOICE
 A consular invoice is a form available through a consular representative of the country you’re
shipping to and it certifies the shipment of goods.
 It is not required in every country, but is used to help many emerging nations facilitate customs and
collection of taxes.

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 CHAPTER: 9
METHODS OF PAYMENTS

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 PAYMENT TERMS

 In international trade, the growing competition is not confined to quality, price and delivery schedule
but extends to terms of payment. International trade has been not only highly competitive, equally
sensitive.
 Credit facilities extended to the importers, many a time, tilt the choice of exporter. Importer may
prefer that exporter who can afford credit even though the price is relatively higher.
 When all the factors stand on the same footing between competing exporters, it is all the more choice
of the importer to finalize with that exporter who extends credit on favorable terms. Here, the role of
institutional credit comes into full play.
 The terms of payment play an important role in export business. How and when the exporter has to
receive payment are decided during early negotiations between the exporter and importer.
 Payment terms are determined by a host of factors, including the exchange control regulations of the
country, financial competence of the exporter, monopolistic conditions of the product and above all
bargaining strength of the parties. The following factors are usually taken into consideration, while
deciding the terms of payment:
 Exporter’s knowledge of the Buyer.
 Buyer’s financial ability.
 Degree of security of payment, if advance payment is not considered.
 Speed of Remittance.
 Cost of remittance, which normally depends on speed of remittance.
 Competition faced by the exporter.
 Exchange restrictions in the importer’s country.

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 METHODS OF RECEIVING PAYMENT

1. PAYMENT IN ADVANCE:

 This is most favoured method of payment from the viewpoint of the exporter. This mode does
not have any credit or transfer risk to the exporter in executing the contract, whatsoever.
 When the conditions in the importer’s country are unstable and there is no guarantee of receipt of
payment, even after successful execution of the contract, advance payment is always insisted by
the exporter.
 This methods works out to be the cheapest mode of contract to the exporter as there would be no
commission charges as banks do not charge while crediting the demand draft/ mail
transfer/telegraphic transfer amount to the account of the exporter

2. DOCUMENTARY BILLS:

 When the exporter is unable to get the advance payment from the importer, the next best alternative
mode of payment is ‘Documentary Bills’.
 The exporter is unwilling to part with the documents of title till he receives the payment and the
importer is not prepared to part with payment and assume the risk until he is sure of receiving the
goods.
 Under those circumstances, ‘Documentary Bills’ is a bridge, as documents are routed through the
bank. It provides the required solution as it satisfies the claims of both the parties.
 In this system of payment, banks act as a media to reconcile the conflicting requirements of the
exporter as well as importer.
 Documentary Bills can be in the form of Sight Bill and Acceptance Bill.

3. OPEN ACCOUNT
An open account transaction is a sale where the goods are shipped and delivered before payment is due,
which is usually in 30 to 90 days. Obviously, this option is the most advantageous option to the importer in
terms of cash flow and cost, but it is consequently the highest risk option for an exporter. Because of intense
competition in export markets, foreign buyers often press exporters for open account terms since the
extension of credit by the seller to the buyer is more common abroad. Therefore, exporters who are reluctant
to extend credit may lose a sale to their competitors. However, the exporter can offer competitive open
account terms while substantially mitigating the risk of non-payment by using of one or more of the
appropriate trade finance techniques, such as export credit insurance

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 4. DOCUMENTARY CREDIT UNDER LETTERS OF CREDIT:

 This method of payment has become highly popular in recent times. The greatest attraction to the
exporter is elimination of credit and payment risks.
 Exporter is not concerned with the creditworthiness of the borrower while entering into the
contract. In other words, the credit of the banker is substituted for that of the importer. There is no
payment risk as negotiating bank makes the payment to him, once the stipulated conditions are
complied with.
 Above all, an important advantage from the viewpoint of the exporter, he can obtain the payment
from a bank, at his own centre. The documentary bills finance a large part of overseas trade.

TYPES OF LETTER OF CREDIT

There are different types of letter of credit. They are:

1. Documentary Letter of Credit:

This letter of credit specifies the various documents that are required to be submitted by the exporter
to the importer. That is the reason why it is called documentary letter of credit. Following documents
are usually specified in the letter of credit.
• Sight bill of exchange
• Commercial Invoice/Customs Invoice
• Consular invoice
• Packing List
• Full set clean-on-board Bill of lading/Airway Bill/Combined Transport Document
• Inspection Certificate
• Marine insurance policy/certificate
• Certificate of origin
• Any other document as required by the buyer, mentioned in letter of credit

2. Revocable and Irrevocable Credit:

 Under revocable letter of credit, the opening bank reserves the right to cancel or modify the
credit, at any time, without the consent of the beneficiary.
 In case of irrevocable letter of credit, the opening bank has no right to change the terms of
credit, without the consent of the beneficiary. The opening bank is irrevocably committed
itself to make the payment, if the documents are in conformity to credit terms specified in the
letter of credit.

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3. With Recourse or Without Recourse Letter of Credit:

 The revocable and irrevocable credits are further classified into “With Recourse” and
“Without Recourse” letter of credit.
 Under ‘With Recourse” letter of credit, the negotiating bank can make the exporter liable, in
case of default in payment by the opening bank or importer.
 Under “Without Recourse” letter of credit, the negotiating bank has no recourse to the
exporter. But, if the confirming bank happens to be the negotiating bank, it cannot have
recourse to the exporter.
 A confirmed letter of credit is without recourse to the beneficiary. Unconfirmed or negotiable
credit is always with recourse to the beneficiary.

4. Confirmed and Unconfirmed Letter of Credit:

 Once confirmation is added, the confirming bank, which is normally the correspondent bank
of the opening bank, adds a clause to the effect that:
“The above credit is confirmed by us and we hereby irrevocably undertake to honor the drafts
drawn under this credit on presentation, provided that all the terms and conditions of the
credit are duly satisfied”.

5. Transferable and Non-Transferable Letter of Credit:

 Under transferable letter of credit, exporter can transfer the credit fully or partly to one or
more parties. This is possible when the credit clearly states it is “transferable” (no other term
is acceptable).
 In cases, when the product is to be fabricated by a third party, fully or partly, a portion of the
credit is made transferable to the third party. Such transfer of credit must be informed to the
issuing bank.
 It is used when the seller is a middleman who can transfer a part of the credit to the exporter
for shipping the goods. When the credit is not transferable, it is non-transferable credit.

6. Fixed and Revolving Letter of Credit:

 A fixed letter of credit is for a fixed period and amount. Letter of credit expires if the credit is
exhausted or period is over, whichever is earlier.
 In case of revolving letter of credit, the letter of credit would be revived automatically for the
same amount and period, once it is exhausted. Such letter of credit is beneficial when the
exporter and importer have frequent dealing of the same nature.

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7. Freely Negotiable and Restricted Letter of Credit:

 When the letter of credit does not put any condition for the negotiation of documents, it is a
freely negotiable letter of credit. This letter of credit can be negotiated through any willing
bank.
 In case, the credit names a specific bank for negotiation, then the letter of credit is a restricted
credit. In case, the bank that has been named for negotiation refuses to negotiate, then it is the
responsibility of the opening bank to pay as per the terms of credit.

8. Red Clause and Green Clause Letter of Credit:

 A red clause letter of credit is one that authorizes the exporter to avail pre-shipment finance
on the strength of the credit. In this letter of credit, the clause is printed or typed in red ink.
Hence, such letter of credit is known as red clause letter of credit. This is a pre-shipment
finance provided to the beneficiary by the importer. This credit is liquidated once the
documents are negotiated.
 In a green clause letter of credit, in addition to pre-shipment finance, storage facilities are
allowed at the port of shipment to the exporter by opening bank. Such type of clause is typed
or printed in green ink. So, this letter of credit is known as “green clause letter of credit”.

9. Back-to-Back Letter of Credit:

 This letter of credit provides pre-shipment finance to the beneficiary.

 When the beneficiary wants to purchase raw materials from a third party for the purpose of
executing export order, or is only a middleman and not the actual supplier of goods, he can
ask the bank to open a new letter of credit, on the strength of this credit, in favor of a third
party.
 In this case, a new letter of credit has to be opened while in the case of transferable credit; the
existing credit is only transferred.

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 CHAPTER: 10
PROJECT REPORT:
PROSPECT OF FRUIT IMPORT AT
VCT

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 FRUITS AND VEGETABLES PRODUCTION: INDIA

India's diverse climate ensures availability of all varieties of fresh fruits & vegetables. It ranks second in
fruits and vegetables production in the world, after China. As per National Horticulture Database published
by National Horticulture Board, during 2014-15 India produced 86.602 million metric tonnes of fruits and
169.478 million metric tonnes of vegetables. The area under cultivation of fruits stood at 6.110 million
hectares while vegetables were cultivated at 9.542 million hectares.
India is the largest producer of ginger and okra amongst vegetables and ranks second in production of
potatoes, onions, cauliflowers, brinjal, Cabbages, etc. Amongst fruits, the country ranks first in production
of Bananas (26.04%), Papayas (44.51%) and Mangoes (including mangosteens, and guavas) (40.75%).
The vast production base offers India tremendous opportunities for export. During 2016-17, India exported
fruits and vegetables worth Rs. 10,369.96 crores/ 1,552.26 USD Millions which comprised of fruits worth
Rs. 4,448.08 crores/ 667.51 USD Millions and vegetables worth Rs. 5,921.88 crores/ 884.75 USD Millions.
Mangoes, Walnuts, Grapes, Bananas, Pomegranates account for larger portion of fruits exported from the
country while Onions, Okra, Bitter Gourd, Green Chilles, Mushrooms and Potatoes contribute largely to the
vegetable export basket.
The major destinations for Indian fruits and vegetables are UAE, Bangladesh, Malaysia, Netherland, Sri
Lanka, Nepal, UK, Saudi Arabia, Pakistan and Qatar. Though India's share in the global market is still
nearly 1% only, there is increasing acceptance of horticulture produce from the country. This has occurred
due to concurrent developments in the areas of state-of-the-art cold chain infrastructure and quality
assurance measures. Apart from large investment pumped in by the private sector, public sector has also
taken initiatives and with APEDA's assistance several Centres for Perishable Cargoes and integrated post-
harvest handling facilities have been set up in the country. Capacity building initiatives at the farmers,
processors and exporters' levels has also contributed towards this efforts.

In India per capita availability of fruits and vegetables is quite low because of postharvest losses which
account for about 25% to 30% of production. Table shows the projected domestic demand of fruits and
vegetables in India for the years 2010, 2015 and 2020 with 2010 as base year. Besides, quality of a sizable
quantity of produce also deteriorates by the time it reaches the consumer. Most of the problems relating to
the marketing of fruits and vegetables can be traced to their perishability. Perishability is responsible for
high marketing costs, market gluts, price fluctuations and other similar problems. There is a rise of about 4%
in the production of fruits and vegetables but there is significant increase in production area also which
results in low per hectare production.

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 FRUIT IMPORTS

India being the second largest producer of fruits and vegetables in the world , it still have to invest so much
on the import of fruits due to the following reason:-

1. To fulfil the requirement of the country

2. To fulfil the demand for other variety of fruits not produced in the country

WHAT ARE THE SPECIAL REQUIREMENTS TO IMPORT EDIBLE FRUITS AND NUTS, PEEL
OF CITRUS OR MELONS?

Different countries may have their own requirements to import Edible Fruits and nuts, peel of citrus or
melons. The process and formalities to import Edible Fruits and nuts, peel of citrus or melons may differ
from one another and in country to country. Also different procedures and formalities to import each items
might be under Edible Fruits and nuts, peel of citrus or melons. However, some of the common requirements
in major countries are explained below:

WHO ARE RESPONSIBLE GOVERNMENT AGENCIES?

In most of the counties, other than respective customs department of importing location, Agriculture
department, Animal and Plant Health department, Health department and Food and Drug safety department
are the major government agencies involved in importation of Edible Fruits and nuts, peel of citrus or
melons

IMPORT PERMIT OR PHYTO SANITARY CERTIFICATE

Why is Phyto Sanitary certificate required to import Edible Fruits and nuts, peel of citrus or melons?

Phyto Sanitary certificate is required to protect food, plant and animal resources of importing country. In
most of the countries, plant quarantine department is responsible to issue such certificate. A pest risk
management is conducted, if an importer wants to import product that either has no previous history of being
imported in the country or product is from new origin. The importing products could be have pests, weeds or
diseases that cause losses affecting man or animal of importing country. Normally, plant pests are
introduced through wood packaging, soil, firewood, containers, transport vehicles etc.

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The international partners of countries share quality measures each other and exempt from double inspection
on same products. However, in most of the developed countries, the export goods from third countries need
to be certified at exporting country under agencies at load port and at importing country as per the norms of
importing country.

NOC FROM PLANT QUARANTINE AUTHORITY

A no objection certificate from plant quarantine authority of importing country also has to be obtained to
import Edible Fruits and nuts, peel of citrus or melons to most of the countries.

CERTIFICATE OF ORIGIN

The source of origin of imported Edible Fruits and nuts, peel of citrus or melons is required in almost all
countries. So a certificate of origin issued by necessary approved authorities at exporting country is required
to import Edible Fruits and nuts, peel of citrus or melons.

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 REEFER CONTAINERS

Simply put, reefer containers are big fridges that are used to transport temperature controlled cargoes such as
fruits, meat, fish, seafood, vegetables, dairy and also non-food products such as flowers, pharmaceuticals
and film across many miles and oceans. Some cargoes may need to be shipped chilled or frozen or in
controlled temperatures. Reefer containers have the ability to maintain the cargo at the required temperatures
for the duration of the transit.

Some general tips on stowage of reefer cargo

 Cargo should not be stuffed beyond the end of the T-floor

 Cargo should not be stuffed above the red load line
 Cargo must be stable on the floor and tightly wedged so it doesn’t shift during passage
 Unit must always be set at the proper carrying temperature and this set temperature will vary
according to the cargo being loaded
 Dehumidification controls must be checked
 If pre-cooling is required, it must be the cargo that is pre-cooled and not the container, unless the
container is loaded in an air locked cold tunnel in the cold storage
 Ventilation setting is of utmost importance and must be set at the correct level
 As air will follow the path of least resistance, there should not be any restrictions for air flow and any
gaps between the pallets and the doors must be closed using cardboard or even wood. This will then
force the air to circulate correctly and reduce the potential for heat sinks (warm air continuously
circulating) near the doors

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 REPORTS ON FRUIT IMPORT: INDIA

India Imports of Edible fruits, nuts, peel of citrus fruit, melons was US$2.63 Billion during 2017, according
to the United Nations COMTRADE database on international trade.

The statistic represents the value of fruits and vegetables imported by India between 2010-11 and 2016-17.
It is very visible from the data that china has been the largest exporter not only the other products to India
but also the fruits. The share of china is 17% in the imports of fruits in India followed by USA, UAE,
SAUDI ARABIA, and SWITZERLAND.

COUNTRY SHARE OF TOTAL IMPORTS

CHINA 17%

USA 5.8%

UAE 5.4%

SAUDI ARABIA 5.2%

SWITZERLAND 4.2%

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 VALUES OF IMPORT OF FRUITS FROM OTHER COUNTRIES TO INDIA

COUNTRIES VALUE

China $55.89B

United States $19.14B

United Arab Emirates $16.68B

Saudi Arabia $15.44B

Switzerland $14.93B

South Korea $12.50B

Indonesia $12.21B

Iraq $11.51B

Australia $10.08B

Germany $9.80B

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 VALUES OF EXPORT OF FRUIT TO OTHER COUNTRIES FROM INDIA

COUNTRIES VALUE

United States $34.83B

United Arab Emirates $20.78B

Hong Kong $10.78B

China $9.10B

Singapore $7.52B

United Kingdom $6.69B

Germany $6.24B

Vietnam $6.08B

Bangladesh $5.81B

Belgium $4.45B

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 ANDHRA PRADESH

Andhra Pradesh is the eighth largest State of India in terms of geographical area and the tenth largest in
terms of population. It has a 974 km long coastline on the east, and shares borders with the States of Odisha,
Chhattisgarh, Telangana, Karnataka, Puducherry and Tamil Nadu. The State consists of 13 districts namely,
Srikakulam, Vizianagaram, Visakhapatnam, East Godavari, West Godavari, Krishna, Guntur, Prakasam, Sri
Potti Sriramulu Nellore, YSR Kadapa, Kurnool, Anantapur and Chittoor. Of these, nearly nine districts fall
under the Coastal Andhra Pradesh, while Anantapur, Chittoor, Kadapa and Kurnool are part of the
Rayalaseema region of Andhra Pradesh. Spread over an area of 1,60,205 sq. km, the State has diverse
topography ranging from the hills of Eastern Ghats and Nallamallas to the coast of Bay of Bengal. Owing to
this diversity, the economy of the State is multi-faceted, with the coastal region providing requisite
environment for development of manufacturing activities; the fertile river plains supporting agriculture and
allied activities, and the districts in Rayalaseema being conducive for the mineral based industries. The State
boasts of fairly well developed infrastructure facilities which is favourable for most forms of economic
activities. Andhra Pradesh has 974 Km long coast line with a major Port at Visakhapatnam under
Government of India control and 14 notified ports under State Government. Of which, 4 are captive ports.
One port is proposed at Duggarajapatnam in SPSR Nellore district. The State Government declared
Kakinada SEZ as a minor port. It is proposed to handle all cargos in SEZ through this captive port.

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 PORT CAPACITY

Ports have always known to be a key driver of economic growth. And this is true for Andhra Pradesh too.
Considered to be the second-highest cargo handling State in India and bestowed with the second largest
coastline of 970 km, Andhra Pradesh owes a significant slice of its economic growth to its ports. Ports also
played a key role in doubling exports from Andhra Pradesh from Rs 40,601 crore in 2006-07 to Rs 76,868
crore in 2009-10. Apart from having India's premier port in terms of cargo throughput, Visakhapatnam port,
which handles 65 million tonnes of cargoes, the State also has the deepest draft port, Gangavaram port. This
apart, the State has two operational non-major ports — Kakinada, with a capacity of 10 MT and
Krishnapatnam (15 mt). The Government is targeting a port capacity of 2,500 MT by 2020.

On its part, the Andhra Pradesh Government has prepared a perspective development plan in its vision 2020
document for development of ports, which seeks to enhance the cargo handling capacity of its non-major
ports to 173 mt by 2020. The Visakhapatnam-Kakinada zone, identified by the Andhra Pradesh Government
as one of the most potential and promising ones in the State, is set to witness a sea change in the future in
terms of infrastructure development and industrialisation.

The two ports - Visakhapatnam and Kakinada - besides Gangavaram port, is expected to stimulate growth in
this area and attract investment on a large scale.

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 FRUITS AND VEGETABLES PRODUTION

The noteworthy feature of the growth pattern in Agriculture is that this key sector which is supporting about
62% of the population, is consistently maintaining an ascending trend during the last three years, especially
marked by an encouraging growth rate of 14.03% in 2016-17 at Constant (2011-12) Prices with a GVA of
Rs.1,38,833 Crore.

Agriculture proper has registered a growth rate of 9.19 percent during 2016-17. Agriculture sub sector alone,
despite a deficit rainfall of 28% and depleted ground water levels, registered a growth rate of 2.03%,
bouncing back from a dismal (-) 9.94% growth rate in last year.

The agrarian state of Andhra Pradesh is heading towards a value addition platform from the conventional
production approach. ‘Horticulture’ sub sector, recognized by the government as is an essential component
for food and nutritional security in the State, continued its ascendency, showing an impressive growth of
16.79 per cent, a reflection of initiatives of the government such as Sprinkling /Drip Irrigation, Polynets/
Shadenets, Panta Sanjeevini, Panta Raksha. These initiatives augur well for the state to realize its goal of
making Rayalaseema as a Horticulture hub. It is pertinent to note that horticulture, no longer a sub sector to
agriculture sector, has crossed agriculture in terms of value addition.

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 AVAILABILITY AND PROSPECTS OF COLD STORAGES

According to the analysis conducted in this study, the State should have at least 19 million tonnes of storage
space only from the perspective of agro and agro based industries. However, according to the Andhra
Pradesh State Warehousing Corporation, the State currently has only about 1.1 million MT per annum of
warehousing capacity. Andhra Pradesh also needs substantial expansion of cold storage infrastructure, which
is critical for ensuring quality and maintaining shelf life of products. Currently, the State has 203 cold
storage units, with capacity of 584 thousand MT. There is need for more such units to meet the growing
demand for safe handling of trade. The State can also develop a multimodal cold-chain network which shall
involve two or more modes of transport for facilitating transportation and storage of perishable products.
Investment in development of last mile connectivity can also serve as an objective for this proposed multi
modal network

Number. of Percentage Capacity

S.No Name of the State Cold storages (%) (In M.T.)

1 Uttar Pradesh 1589 29.53 10118000

2 Maharashtra 466 8.66 546748

3 West Bengal 463 8.60 5682000

4 Punjab 422 7.84 1345193

5 Gujarat 398 7.40 1267304

6 Andhra Pradesh 290 5.40 900606

7 Bihar 246 4.57 1147041

8 Haryana 244 4.53 393121

9 Madhya Pradesh 197 3.66 808052

10 Others 1066 19.81 2242587

Total 5381 100 24450652

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 GOVERNMENT INITIATIVES

Union Minister of State for Commerce and Industry Shri Nirmala Sitharaman has promised Chief Minister
Shri N. Chandrababu Naidu to support financially the plans to strengthen cold storage and warehousing
infrastructure in Andhra Pradesh finalised with a total outlay of Rs.123 crore. Confirming this, AP State
Warehousing Corporation Chairman L.V.S.R.K. Prasad told The Hindu on Friday that as part of the project
modern warehousing, processing and cold storage facilities would come up at Visakhapatnam and
Bhimavaram.
APSWC has already acquired 12 acres from Visakhapatnam Port Trust for developing the facility. This
would help the fisheries sector immensely for getting a remunerative price for their products, Mr. Prasad
said.
Of the Rs.123-crore plan, the Centre would give Rs.44 crore, a matching grant by the State and Nabard will
release Rs.30 crore. The remaining amount will be borne by APSWC. Mr. Prasad said once amount was
released, they would also spend part of it on Spice Park at Yedlapudi (Guntur) in an area of 24.8 acres for
storage of mirchi and turmeric cold storage. He said the State government due to visionary leadership of the
Chief Minister was firm on improving warehousing and cold storage infrastructure all over the State to
ensure better price for farmers on real-time basis by using latest available technologies.

INVESTMENT IN COLD STORAGES: VISAKHAPATNAM

The state government has proposed to set up cold storages in the three north coastal districts of Srikakulam,
Vizianagaram and Visakhapatnam to help farmers preserve fruits, vegetables, fish, and poultry products.
As many as 15 cold storage units will be constructed, of which six will come up in Vizianagaram district.
According to sources, cold storage units have been planned in mandals, which grow large quantities of
horticultural crops. These mandals include Pendurthy, Padmanabham, Anadapuram, Chodavaram, Paderu,
Araku and Anakapalle in Visakhapatnam district, Narasannapeta, Hiramandalam, Kotturu, Srikakulam rural
and Palakonda in Srikakulam district, Ramabhadrapuram, Salur, Gurla, Parvatipuram and Srungavarapukota
in Vizianagaram district.
They will come up under public private partnership (PPP) mode. AP State Warehousing Corporation and
National Bank for Agriculture and Rural Development will jointly take up the project.
Officials of marketing, horticulture and agriculture departments in north coastal Andhra have already
launched the ground work. A team of officials from NABARD recently visited Srikakulam to study the
feasibility of the project. The proposal will take a concrete shape in a couple of weeks, said YV Shyam
Kumar, assistant director (marketing), Srikakulam district. He said the district already has one private cold
storage at Munasabpeta. The units will store up to 500 tonnes.

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 COMPETITIVE ADVANTAGE OF VIZAG PORT

 As part of Indian Prime Minister Narendra Modi’s neighbourhood connectivity policy, India allowed
Nepal to use Visakhapatnam Port of Andhra Pradesh in 2016 for trade with third countries. It was for
a long time that Nepal had been making a demand for the use of this Port as an alternative to
Kolkata/Haldia Port in India.

 Because of its linkages with the internet, the importer and exporter might track the location of the
containers from the point of “origin” to the “destination.”

 Because of its nearness with Malacca Strait, the transportation cost is less at Visakhapatnam Port as
compared to Kolkata Port. It also offers direct connectivity to China, South East Asia and the Middle
East.

 Because of the railway links between Visakhapatnam Port and Birgunj, Nepal could import dry fruits
from Andhra Pradesh in India far cheaper than what is available in the local market here today. Also,
the Visakhapatnam Port is the hub for fish and seafood, which could also be imported into Nepal
cheaper. Additionally, a great opportunity waits for Nepal to do business in South India, which is
until today unexplored land. The containers returning from Birgunj to Visakhapatnam Port could be
used for exporting goods produced in Nepal. Thus, Nepal could export to the South Indian states,
including Andhra Pradesh, all such items as spring water, herbs, Pashmina and various agricultural
and industrial goods at minimal transportation cost.

 Equipped with latest technology, the Visakhapatnam port offers advanced logistic services of global
standards for 24x7 days. It is fully automated and most modern in South Asia where manual
interventions are least. Almost all the customs formalities at Visakhapatnam port are performed
through computers. As such, the transactions are paperless and fast. Each activity is transparent
there. It provides end to end solution from the port to destination and also from source to destination.

 Obviously, the Kolkata port has a geographical advantage over all other Indian ports because of its
nearness with the Nepalese territory. The distance between Birgunj and Kolkata Port is almost half of
the distance between Birgunj and Visakhapatnam Port. Accordingly, the freight charge between
Birgunj and Kolkata Port is also nearly half as compared to the same with Visakhapatnam Port. Yet,
the net gain to the business community is far more from Visakhapatnam Port as compared to the
Kolkata Port. With 16.5 meters deep water, the Visakhapatnam Port is deepest one in India. Four
ships of small size or three ships of larger size could operate at this Port simultaneously.

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  Presently, the Visakhapatnam Port is operating below its capacity. Unlike the Kolkata/Haldia Port
that is over utilized, only 60 per cent of Visakhapatnam’s capacity has been utilized. Additionally,
the services at Visakhapatnam Port are so efficient that imports are discharged and exports loaded in
the shortest possible time.

 Service between Birgunj and Visakhapatnam Port has already resumed. The first train with
containers from Visakhapatnam Port reached Birgunj last June and now the second train is likely to
follow. It takes five days for the railway containers to reach Birgunj from Visakhapatnam. On the
contrary, it normally takes 10 days for the containers to reach Birgunj from Kolkata, though the
distance between the two places is almost half of Birgunj and Visakhapatnam.

 The distance between Kolkata Port (India) and Birgunj (Nepal) is 706 km; while the distance
between Haldia Port and Birgunj is 818 km. Dhamra Port Company Limited (DPCL), which is a
private port, is 941 km from Birgunj and the Visakhapatnam Port is 1,439 km from there. With the
increase in the distance, the freight cost between Birgunj and different ports in India also increases.
For example, the base freight of coal traffic between Kolkata Port and Birgunj is INR 1,093, which is
INR 1,208 for Haldia, INR 1,400 for Dhamra and INR 2,003 for Visakhapatnam.

 The Visakhapatnam Port at the present time appears to be more advantageous to Nepal for trade with
third countries than the Kolkata Port considering the time and overall freight cost factors. Any
diversion of goods from Kolkata port to Visakhapatnam port on Nepal’s trade with third countries
will also compel the Kolkata port authorities to improve their services and be competitive. In view of
the generous attitude of India towards Nepal’s development, the country could now ask India to
allow it to use not only the Kolkata/Haldia and Visakhapatnam Ports for trade with third countries,
but also to use any Indian port that could be of use to it.

 There are two railway sidings with full rake handling facility at Visakhapatnam terminal. It has
adequate arrangement for refrigeration of goods.

 Today, the Visakhapatnam Port handles vessels carrying up to 7,000 containers, but it could handle
vessels of still larger sizes like with 10,000 containers. Normally, the cost of transportation per
container is the US $ 700 to 800 through Visakhapatnam Port; whereas it is as high as the US $
12,000 per container if it comes through Singapore.

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 INDIAN APPLE IMPORTS RESTRICTED TO ONE PORT

The government on 14 Sept, 2015 restricted imports of apple by allowing its inbound shipment only through
Nhava Sheva port in Maharashtra. According to an industry source the move is a kind of non-tariff
barrier. Apple producers in India's key production belts of Himachal Pradesh and Kashmir have been
complaining of increased competition from imported apples for some time, and they have lobbied the
government to raise apple import tariffs to protect their industries. Apples are the most heavily consumed
imported fruit in India. India imports the fruit from the US, China, Chile, New Zealand, Italy, Iran and
Afghanistan, among others. But due to high demand, increased prices, and loss in revenue for ports and
customs led government to give approvals to Chennai, Cochin, and Kolkata port to import apples. Vizag
port has a huge prospects of import of apples and so the Visakha Port Trust has submitted a series of
representation to the DGFT to exempt it from the restriction of apple imports.

POTENTIAL: APPLE IMPORTS MAY BE PERMITTED FROM VIZAG

VCTPL COO Mr Sushil Mulchandani said “there is a huge demand to handle imported apples through the
VIzag port to bring down the prices and enhance its shelf life”

The price of apples in Andhra Pradesh is poised to fall in the near future and be sustained at a low, as they
can henceforth be imported through a seaport closer home, which reduces the overheads significantly.

It is the public sector Visakhapatnam port that is all set to join four other ports–Nava Seva in Mumbai and
Kolkata, Chennai and Cochin ports–as a designated port that can import apples.

This will mainly cut the expenditure hitherto incurred on transportation of the fruit from those long distances
to Hyderabad from where wholesalers procure the consignments, and help in maintaining quality.

But one catch in all this is the fruits will remain costly unless cold chain facilities are set up in the proximity
of Visakhapatnam and other major markets to get processing and value addition done.

According to Visakhapatnam MP K. Haribabu, Commerce Minister Suresh Prabhu had instructed the
Director General of Foreign Trade (DGFT) to take necessary action on the request by BJP leaders from
Andhra Pradesh., to allow the import of apples through Vizag port.

Annual imports

A senior official of Andhra Pradesh Food Processing Society said a bulk of the apples consumed in AP was
sourced from Bangalore and Hyderabad, and pegged the annual imports by India at about 3.50 lakh metric
tons, of which the State procures nearly 20%.

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ASSOCHAM Andhra Pradesh State Development Council Co-Chairman P. Bhaskar Rao said apples were
mostly imported from the United States and Australia, and the cultivation of the fruit has of late picked up in
the Agency areas of Visakhapatnam district, particularly Araku and Lambasingi along with coffee.

Cold storages

However, for the permission to Visakhapatnam port to import apples to yield the desired result, the supply
chain should have no missing links. Priority should be on setting up cold storages and other issues like
licensing importers have to be sorted out, he added.

MARKETING OF FRUITS AND VEGETABLES

Marketing of horticultural crops is quite complex and risky due to the perishable nature of the produce,
seasonal production and bulkiness. The spectrum of prices from producer to consumer, which is an outcome
of demand and supply of transactions between various intermediaries at different levels in the marketing
system, is also unique for fruits. Moreover, the marketing arrangements at different stages also play an
important role in price levels at various stages viz. from farm gate to the ultimate user. These features make
the marketing system of fruits to differ from other agricultural commodities, particularly in providing time,
form and space utilities. While the market infrastructure is better developed for food grains, fruits and
vegetables markets are not that well developed and markets are congested and unhygienic.

DIFFERENT MARKETING CHANNELS

• Producer-trader-wholesaler-retailer-consumer.
• Producer-trader-retailer-consumer.
• Producer-trader-consumer.
• Producer-consumer.

AN EFFICIENT MARKETING SYSTEM CAN

• Reduce post-harvest losses.

• Enhances farmers’ realisation.
• Reduce consumer price.
• Promote grading and food safety practices.
• Induce demand-driven production.
• Enable higher value addition.
• Facilitate export.

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 SUPPLY CHAIN MANAGEMENT

Supply Chain Management represents the management of the entire set of production, manufacturing/
transformations, distribution and marketing activities by which a consumer is supplied with a desired
product. Supply chain management encompasses the planning and management of all activities involved in
sourcing procurement, conversion, and logistics management. It also includes coordination and collaboration
with channel partners, which may be suppliers, intermediaries, third-party service providers, or customers.
Supply chain management integrates supply and demand management within and across companies. Hence,
supply chain management is defined as the design and operation of physical, management information and
financial systems needed to transfer goods and services from point of production to point of consumption in
an efficient and effective manner. The entire supply chain management process is a value chain where
bottlenecks, value adding factors and liability factors are identified and addressed, thus enabling the retail
organization to have an efficient supply chain. The supply is the part of retail operations that ensures that the
right product is in the right place, at the right time and at the right cost. The supply chain perspective can
help the retailers identify superior suppliers and distributors and help them to improve productivity, which
ultimately brings down customers costs.

NEED FOR A SUPPLY CHAIN IN FRUIT MARKETING

• Reduction of product losses in transportation and storage.

• Increasing of sales.

• Dissemination of technology, capital and knowledge among the chain partners.

• Better information about the flow of products, markets and technologies.

• Transparency of the supply chain.

• Tracking and tracing to the source.

• Better control of product safety and quality.

• Large investments and risks are shared among partners in the chain.

• Productivity Improvement

• High customer satisfaction

• Increased profit

• On time delivery

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 FACTORS AFFECTING INDIA’S SUPPLY CHAIN MANAGEMENT

AVAILABILITY OF COLD STORAGE

Total no of cold storages in India is 6000. With the total installed capacity of 25.5 million MT. Uttar Pradesh
,Maharashtra, West Bengal, Punjab and Gujarat account for more than 60% cold storage capacity followed
by Andhra Pradesh, Haryana and Madhya Pradesh. The growth of the cold storages in India from 1955 to
2008 has not uniform, Region wise and State wise also. Region wise no. of cold stores in India are – Central
Region -352 (6%), South Region-778 (7%), East Region-947 (33%), North Region -2386 (47%) and West
Region -853 (7%) at the end of the 2007

GOVERNMENT POLICIES
The Governments play a leading role in formulating the policies for food and agriculture which includes
farming, production, processing, distribution besides the financing and retailing these activities. There are
several multitudes of departments handled between both State and Central Governments. In view of the
globalization of this industry, the decisions if are mutually reinforcing and consistent would be extremely
productive. Further research initiated in various other fields of food and agriculture may be helpful to further
strengthen our economy.

CONNECTIVITY
Transferring goods from one place to connectivity plays a vital role in its successful implementation. In
India the road infrastructure is not so good so transferring food and other goods is a real big challenge. Thus
to improve the efficiency of food supply chain more attention is needed in this aspect.

SORTING AND GRADING TECHNOLOGY

The sorting and grading methodology needs to be updated technically as farmers do it themselves and they
have very little knowledge about the processes. To improve the efficiency of the supply chain we need to
improve the skills of the farmers.

HANDLING AND PACKAGING

Most of the agriculture is in remote village areas and all the places are not provided with proper facilities of
handling and packaging. Because of this lot of fruits and vegetables are getting spoiled, wasted and quality
deteriorated to be used in supply chain. Thus proper training and knowledge is required to be given to these
people.

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 PROBLEMS IN INDIAN FOOD SUPPLY CHAIN

Andhra Pradesh has a huge opportunity to become a leading global food supplier if only it has an agile,
adaptive, responsive and efficient supply chain. Some of the problems that are to be mentioned in Indian
food supply chain are:

• Numerous stake holders working in isolation: The food supply chain is complex with perishable goods and
numerous small stake holders.

• Lack of demand estimation: Demand forecasting is totally absent and the farmers try to push whatever they
produce into the market.

• Lack of technology applications: Cold chain logistic supply chains should take advantage of technology
improvements in data capture and processing, product tracking and tracing, synchronized freight transport
transmit times for time compression along the supply chain and supply-demand matching.

• Lack of system integration: The supply chain needs to be designed and built as a whole in an integrated
manner. The process of new product development, procurement and order to delivery processes should be
well designed and well supported with the help of IT tools and software.

• Presence of large number of unorganized retailers: At present the unorganized retailers are linked with
farmers through wholesalers or commission agents. The commission agents and wholesalers redundant
supply chain practices make unorganized further inefficient.

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 CHAPTER: 11
FINDINGS AND SUGGESTIONS

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 MEASURES FOR IMPROVING SUPPLY CHAIN AND ITS EFFECTIVENESS

There has to be structural changes at different levels - farmers, intermediaries and consumer. The
government, private, public-private partnership, cooperatives, technology providers, and even media can
play a crucial role. Infrastructure like roads, transport, information and communication technology and cold
storage are basic requirement for better results in Supply chain.

1. Demand forecasting is one of the important requirements for improving SC effectiveness. Due to poor
forecasting, there is a imbalance between supply and demand. In some months fruits are either not plucked
from the farm due to lack of demand. In some reasons, produce is not available and a result, prices are boost
up.

2. The Department of Horticulture acts as the facilitator for creation of infrastructure facilities for marketing
of fruits and vegetables in the state. The Department of Agricultural Marketing is facilitating the marketing
of agricultural/horticultural produces in the state. The Department of Agricultural Marketing recently
established Raithra Santhe wherein the growers/farmers can bring their fruits and vegetables to the market
and sell them directly to the growers. The Department of Agricultural Marketing is also handles the notified
Fruits and Vegetables in the state through APMCS.

3. Vertical coordination of farmers through cooperatives, contract farming and retail chains would facilitate
better delivery of output, reduce market risks, provide better infrastructure, attract more public interest,
acquire better extension services, and create awareness regarding the prevailing and new technologies.

4. Customized logistics is another important immediate requirement to make logistic effective. This reduces
the cost, facilitates the maintenance of quality of the produce and fulfils the requirements of targeted
customers.

5. The State Government is providing subventions of Rs.1/- per KWH of electricity consumed by cold
storages in the horticulture sector. Further, National Horticulture Board is providing a back ended subsidy of
25% (maximum of Rs.50 lakhs whichever is less) for construction/modernization of cold storage units. Cold
storages are classified as Agro Food Processing Industry for providing incentives and concessions available
to Agro Food Industry.

6. Information system for better coordination among different stakeholders from farmers to consumers is the
need of the hour. The internet AND mobile communication can also be used to enable information and
financial transfer between the stakeholders.

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 CONCLUSION

Thus we can conclude that:-

1) There is a need to develop the infrastructure required for handling the storage and transportation of fruits
from Visakhapatnam.

2) The request for removing the restriction on import of apples from Vizag port has been requested by VPT
to DGFT, the approval of which will definitely help in increasing the import of apples from Vizag port.

3) Competitive advantage of VCTPL over other major ports on east coast is huge and also the congestion at
this port is not much which will induce more business in near future.

4) The Visakhapatnam Port at the present time appears to be more advantageous to Nepal for trade with
third countries than the Kolkata Port considering the time and overall freight cost factors.

5) Establishing Food and Technology Parks to promote agro and processing industries in cluster in area
where there is predominant production of process able agriculture and Horticulture Products. These parks
will also provide the required infrastructural and common facilities which are essential for sustenance of the
industries.

6) Allowing the logistic and operational triumphs like Walmart, Sears etc. to shares their technology,
investment and good practices which can help this sector which is mostly dominated by unorganised players
to gain competitive advantage through unparalleled distribution costs and efficient time lines.

7) Introduction of Dedicated Freight Corridors, time tabled freight services and guaranteed transit times is
still the need of hours.

8) Ministry of railway should plan to make a proper connectivity of coastal areas so that more viable plans
should be laid.

9) Development of cold chains which will not only benefit the private sectors but also creates spin-offs that
stimulate social, economic, and environmental sustainable development in the region.

10) Reefer container rail transportation facilities should be developed to ensure the easy and efficient
penetration of imported fruits in India

11) Europe market has certain fruit which are not produced in any part of the world so since the market is
untapped it is important to ensure the imports from such markets and thus the VCT port can be used

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 BIBLIOGRAPHY

1) http://apeda.gov.in/apedawebsite/six_head_product/FFV.htm

2) https://www.statista.com/statistics/625099/import-value-of-fruits-and-vegetables-india/

3) http://agriexchange.apeda.gov.in/indexp/reportlist.aspx

4) www.omicsonline.org/open-access/scope-of-supply-chain-management-in-fruits-and-vegetables-in-
india-2157-7110-1000427.php?aid=41037

5) https://www.vifindia.org/article/2017/august/16/visakhapatnam-port-more-beneficial-to-nepal

6) https://www.thehindu.com/todays-paper/tp-national/tp-andhrapradesh/apple-prices-may-fall-and-
stay-low-in-state/article22218477.ece

7) https://www.livemint.com/Politics/c0mp0BDBW974jmXjqlTbTM/Where-are-the-horticulture-
hotspots-of-India.html

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