Introduction to Export Marketing

a) Concept and features of Export Marketing; Importance of Exports for a Nation and
a Firm; Distinction between Domestic Marketing and Export Marketing
b) Factors influencing Export Marketing; Risks involved in Export Marketing;
Problems of India’s Export Sector
c) Major merchandise/commodities exports of India (since 2015); Services exports of
India (since 2015); Region-wise India’s Export Trade (since 2015)
Introduction
Export marketing is the practice of selling goods or services to customers in other countries.
It involves identifying foreign markets, adapting marketing strategies, and managing
logistics. Export marketing benefits businesses by expanding their reach and contributes to
economic growth for countries. Export marketing enables businesses to expand their reach
and tap into global opportunities, while contributing to the growth and prosperity of their
home countries. For instance, a tech company in the USA exporting its software to clients in
Europe and Asia.
“Export marketing means marketing of goods and services beyond the national boundaries.”
Features of EM
 Systematic Process: Export marketing involves following a step-by-step approach,
like doing research, creating products, and making decisions to sell things in other
countries. Example: A toy company does research to find out which countries like its
toys and then starts selling there.
 Customer Focus: In export marketing, it's important to understand and make
customers happy. This helps to sell more products in foreign countries. Example: A
clothing company makes special designs for customers in different countries based on
their preferences.
 Customs Formality: Export marketing means following specific rules when sending
products to other countries. Example: A food exporter makes sure all necessary
paperwork is complete before shipping its products overseas.
 Customs and Traditions: Knowing about the customs and traditions of other countries
helps companies adjust their marketing to fit local cultures. Example: A greeting card
company creates cards with designs and messages that match the festivals celebrated
in different countries.
 Documentation: Export marketing needs preparing and submitting various papers, like
invoices and certificates, for shipping and trade. Example: A furniture exporter gives
official papers to show where the furniture is made before sending it to other
countries.
 Dominance of MNCs: Big companies from developed countries often have a strong
presence in many countries because they work efficiently and have good connections.
Example: A famous fast-food chain has restaurants all around the world because it's
well-known and trusted.
  Reputation: Doing well in export marketing helps build a good name for both the
company and the country it's from. Example: A popular phone brand is known for its
high-quality phones, so people trust and like their products.
 Marketing Mix: Exporters need to change their marketing strategy (like product,
price, place, and promotion) to fit each country's preferences and needs. Example: A
car company adjusts the design and price of its cars based on what people in different
countries like.
 Spreading of Risk: Selling products in many countries lowers the risk of depending on
just one market. If there's a problem in one place, the company is still okay because it
sells in other places. Example: A fruit exporter sells to different countries, so if there's
a bad harvest in one country, they can still make money from other countries.

Importance of Exports for a Nation and a Firm

Nation:
 Foreign Exchange: Exports help a country make money from selling its goods or
services to other nations, which increases its foreign money reserves. Example: India
earns money by selling its software services to companies in the USA.
 International Relations: Exports build strong friendships with other countries, leading
to better cooperation and understanding between nations. Example: Japan's export of
advanced machinery helps create good relationships with other countries that need
their technology.
 Balance of Payment: Exports bring in more money than what a country spends on
imports, which helps maintain a healthy financial balance. Example: Germany earns
more money from exporting goods than it spends on importing goods from other
countries.
 Reputation: Successful exports make a country famous for producing high-quality
products, improving its image in the world market. Example: Italy is well-known for
its stylish fashion and luxury brands, which makes it highly respected in the fashion
industry.
 Optimum Use of Resources: Exports let a country sell extra goods it produces,
ensuring efficient use of its resources. Example: Australia exports its surplus natural
resources like iron ore and coal to other countries that need them.
 Standard of Living: Exports create more jobs and economic growth, leading to a
better life for people in the country. Example: Singapore's strong exports of
electronics provide more job opportunities and improve the living standards of its
citizens.
 Economic Growth: Exports help a country's economy grow by bringing in money,
creating jobs, and attracting investments. Example: Brazil's exports of agricultural
products and natural resources help its economy to grow and develop.
Firm:
 Importance of Exports for a Firm: Exports help firms grow and make more money by
selling their products in other countries. Example: A small shoe company sells shoes
to customers in different countries, increasing its sales and profits.
 Reputation: Successful exports make a firm well-known and respected, which attracts
more customers and business partners. Example: A popular smartphone brand gains a
good reputation globally for its reliable and innovative products.
 Optimum Production: Exports require firms to produce goods efficiently and at the
right amount, leading to cost savings and better quality. Example: A bike
manufacturer improves its production process to meet the demand from foreign
markets.
 Spreading of Risks: Selling in different countries reduces the risk of relying too much
on one market, making the firm more stable. Example: A coffee exporter sells coffee
beans to various countries, avoiding losses if there is a problem in one market.
 Research and Development (R&D): Firms invest more in research and development
to create better products and stay ahead of the competition in foreign markets.
Example: A technology company spends money on R&D to develop new gadgets for
global customers.
 Organisation Efficiency: Exporting requires firms to be well-organized and efficient
in managing their operations. Example: A toy manufacturer improves its supply chain
to deliver toys to different countries on time.
 Economies of Scale: Producing more for export markets can lower costs, allowing the
firm to earn more money. Example: A clothing company makes clothes in larger
quantities for export, reducing the cost of each item.
 Higher Prices: Export markets may pay more for goods, helping firms make more
profit. Example: A luxury watch brand sells its watches at higher prices in
international markets, earning more money.
Factors influencing Export Marketing
Country's Inflation Rate: If prices rise a lot in a country, people may prefer to buy cheaper
imports instead of local products. When inflation is low, the country can sell more goods
abroad because they become more competitive in price. Example: When prices increase in a
country, people may buy cheaper clothes from foreign countries instead of local ones.
Country's Exchange Rate: When a country's money value decreases, its goods become
cheaper for other countries to buy, so exports may increase. On the other hand, if the
exchange rate goes up, imports may become more expensive, leading to less spending on
foreign products. Example: If a country's currency becomes weaker, its fruits and vegetables
can be sold at lower prices to foreign buyers.
Productivity: If a country's workers can produce things faster and at lower costs, its products
become more attractive to buyers in other countries, leading to more exports. Example: A
country with efficient factories can produce cars at a lower cost, making them appealing to
international customers.
Quality: If a country's products are not as good as those made by other countries, foreign
buyers may not be interested in buying them, affecting the trade balance. Example: If a
country's electronics have more issues compared to better quality ones from other countries,
its exports may decrease.
Marketing: How well a country's companies promote and advertise their products impacts
export sales. Similarly, foreign companies' marketing affects how much people buy their
products. Example: If a country's fashion brands are well-promoted, more people around the
world will buy their clothing.
Domestic GDP: If people in a country have more money, they may buy more imports, while
some local businesses might stop exporting and focus on selling within the country. Example:
If a country's economy is booming, people might buy more imported electronics due to
higher incomes.
Foreign GDP: If people in other countries have more money, they may buy more goods from
a country, increasing its exports. Example: When neighbouring countries' economies grow, a
country may see more demand for its agricultural products.
Trade Restrictions: When foreign trade rules become less strict, it becomes easier for a
country's companies to sell their products in other countries, potentially increasing exports.
Example: If a country reduces taxes on imported cars, foreign car manufacturers can sell
more vehicles within that country.
Risks involved in Export Marketing;
 Quality Related Risk: Risk of customers being unhappy with the product's quality,
which can harm the company's reputation and make it hard to sell more products to
foreign buyers. Example: A toy company might face quality risks if its toys easily
break, making customers unhappy and not wanting to buy more.
 Foreign Exchange Risk: Risk of money value changing, which can affect the
company's earnings when converting foreign money into the local currency. Example:
An apparel exporter might face exchange risks if the money in the country they sell to
becomes less valuable, reducing their earnings.
 Credit Risk: Risk of customers not paying or delaying payment, causing problems for
the company's finances. Example: A furniture exporter might face credit risks if a
customer doesn't pay for the furniture they bought on time.
 Cargo Rates Risk: Risk of transportation costs going up unexpectedly, making it
harder for the company to make a profit from exporting goods. Example: A fruit
exporter might face cargo rates risk if the cost of shipping fruits goes up, reducing
their profits.
 Legal Risk: Risk of breaking foreign laws and rules, leading to penalties or even
stopping the export business. Example: An electronics company exporting its products
must follow foreign safety rules to avoid legal problems.
 Language and Culture Risk: Risk of misunderstandings because of language and
culture differences, causing problems in business relationships. Example: A software
company might have language and culture risks when talking to foreign partners, as
they might not understand each other well.
 Political Risk: Risk of changes in foreign government policies or unstable situations,
which can disrupt trade and business. Example: A medicine company might face
political risks if a foreign government puts limits on importing medicines, affecting
their sales.
 Commercial Risk: Risk of more competition or changes in the market, making it
harder for the company to sell products in foreign markets profitably. Example: A car
exporter might face commercial risk if new competitors enter the market, leading to
less demand and lower profits.
Problems of India’s Export Sector
World Market Slowdown/ Recession: When other countries face economic troubles, they buy
fewer Indian products, reducing India's exports. Example: During a global economic
downturn, fewer people may buy Indian-made clothes, leading to less clothing exports.
Less Export Incentives: The government gives benefits to encourage exports. If these benefits
decrease, companies may lose interest in selling abroad. Example: If the government stops
giving tax benefits to software export companies, they may export less.
Competition from China: China's products can be cheaper or similar to India's, making it hard
for Indian goods to stand out. Example: If China exports cheaper electronic gadgets, Indian
electronics may struggle to compete.
Product Standards Issue: Some countries have strict rules for imports' quality and safety. If
Indian goods don't meet these standards, they may get rejected. Example: If a country has
strict pesticide regulations, Indian fruits may not be allowed for export if they exceed the
limits.
Anti-Dumping Duties: Other countries impose extra charges on cheap imports to protect their
industries. If Indian goods seem too cheap abroad, anti-dumping duties may apply, making
them less competitive. Example: If a country thinks Indian steel is too cheap, they may add
extra charges to its imports.
Foreign Exchange Paperwork: Exporting involves a lot of paperwork, especially with foreign
currencies. The process can be time-consuming and burdensome for businesses. Example:
Indian companies exporting to the USA need to fill out forms and follow regulations for
smooth dollar transactions.
Poor Infrastructure: Basic facilities for transportation and production are crucial. Bad
infrastructure can raise costs and delay exports. Example: If roads between a factory and a
port are in bad condition, exporting goods can become slower and costlier.
These challenges affect India's ability to sell products globally. Addressing them can boost
India's exports and economic growth.

Major merchandise/commodities exports of India (since 2015):

The Merchandise Exports from India Scheme (MEIS) is a program that replaced five older
schemes to encourage exports of goods from India. Under MEIS, exporters receive rewards
without any complicated rules. Now, exporters get rewards based on how much their goods
are worth when sent to certain markets. It is like a bonus for selling stuff abroad!
MEIS Products: The scheme covers various types of products, and certain categories have
shown good results for exporters. These categories are:
 Pharmaceuticals: India exports medicines and vaccines to other countries.
 Information Technology (IT) Services: India provides software and IT services to
global clients.
 Automobiles and Auto Components: India sells cars and auto parts to various
countries.
 Textiles and Garments: India exports fabrics and ready-made clothes.
 Petroleum Products: India supplies refined petroleum to other countries.
 Gems and Jewellery: India is a major exporter of gems and gold jewellery.
 Chemicals and Chemical Products: India sells various chemicals and dyes
internationally.
 Engineering Goods: India exports machinery and engineering products.
 Rice and Agricultural Products: India sends rice, spices, and fruits to other nations.
 Iron and Steel Products: India supplies iron and steel items to industries worldwide.
Services exports of India (since 2015);
Services exports of India means Indian businesses and professionals selling their skills and
expertise to other countries. It includes services like IT, business consulting, healthcare,
education, tourism, and more. These exports help India earn money from international
customers and contribute to the country's economic growth.
SEIS Scheme: The Served from India Scheme (SEIS) replaced the Service from India
Scheme (SFIS) to reward service providers offering services from India.
 Rewards Based on Foreign Exchange: The rewards under SEIS are determined by the
amount of net foreign exchange earned from the exported services.
 Duty Credit Scrips: Successful service providers receive duty credit scrips as rewards,
which can be used to deduct service tax on services and product transactions,
providing financial benefits.
 Different Reward Rates: There are two reward rates - 3% and 5% - based on the
service sector categories and the net foreign exchange earned.
Examples of Service Sectors and Reward Rates:
 Business Services (5%): Includes services like legal counsel, accounting, engineering,
medical services, and more.
 Services for R&D (5%): Research and development services in various fields are
eligible for a 5% reward.
 Communication Services (5%): Audio-visual creation, motion pictures, radio and TV
services, etc., qualify for 5% rewards.
 Construction and Engineering Services (5%): General construction work, civil
engineering, and related services receive a 5% reward.
 Educational Services (5%): Services for adult education and various levels of formal
education are eligible for 5% rewards.
 Health and Social Services (5%): Hospital services are rewarded at 5%.
 Tourism and Travel-Related Services (3% to 5%): Hotel, restaurant, travel agency,
and tourist guide services receive rewards ranging from 3% to 5%.
 Recreational, Cultural, and Sporting Services (5%): Entertainment services, cultural
institutions, and sports-related services are eligible for 5% rewards.
 Transport Services (5%): Services related to maritime transport, airline transportation,
road transport, and auxiliary services for all modes of transportation are rewarded at
5%.
Region-wise India’s Export Trade (since 2015):
Region-wise India's export trade refers to the way India sells its goods and services to
different parts of the world, organized by specific regions or continents. Since 2015, India has
been exporting its products to various countries in different regions, expanding its trade
globally. In very simple terms, India sends its products to different parts of the world, like
Asia, Europe, North America, South America, Africa, and other regions. This helps India
connect with countries all over the globe, allowing businesses to grow and bringing in money
from international customers. Export trade plays a crucial role in India's economy, helping the
country thrive in the global market.
Global Framework for Export Marketing
a) Trade barriers; Types of Tariff Barriers and Non-Tariff barriers.
b) Major Economic Groupings of the World; Positive and Negative Impact of Regional
Economic Groupings; Agreements of World Trade Organisation (WTO)
c) Need for Overseas Market Research; Market Selection Process, Determinants of
Foreign Market Selection

Trade barriers; Types of Tariff Barriers and Non-Tariff barriers.

Introduction
Trade barriers are like walls set up by governments between countries to make it harder for
goods and services from other places to come in. They use things like taxes (tariffs), limits on
how much can be imported (quotas), and regulations that make it more difficult for foreign
products to enter. These barriers can slow down trade and make things more expensive for
everyone.
Tariff Barriers
Tariffs barriers are like taxes imposed by a country on goods coming from other places. They
make foreign products more expensive, encouraging people to buy local goods instead. It
protects domestic industries but can also raise prices for consumers.
Classification of Tariffs
 Export Duty: Tax on goods leaving a country, aimed at generating revenue.
 Import Duty: Tax on goods entering a country, generates income and protects
domestic industries.
 Transit Duty: Tax on goods passing through a country, beneficial for countries with
favourable geographical locations.
Types of Tariff Barriers
 Specific Duty: A fixed amount of money collected as tariff based on the physical
qualities of an item, like its weight or quantity. Example: Rs. 10,000 tariff per
machine imported, if 100 machines are imported, the total tariff is Rs. 10,00,000.
 Compound Duty: A combination of specific and ad-valorem duty on a single product.
Example: 10% duty on the value and Rs. 5000 per piece of machinery imported.
 Sliding Scale Duty/Seasonal Duties: Import duties that change with the commodity's
price, mainly applied to agricultural items due to natural price fluctuations.
 Revenue Tariff: Tariffs intended to generate revenue for the domestic government,
usually levied on luxury goods.
 Anti-dumping Duty: Applied when exporters sell goods at very low prices in foreign
markets, harming local industries. Anti-dumping duties counteract this effect.
 Protective Tariff: Imposed to protect domestic industries from foreign competition,
often by making imports more expensive.
  Single Column Tariff: Same tariff rates applied to imports from all countries for
individual commodities.
 Double Column Tariff: Two different duty rates; a friendly country or a trade
agreement partner gets the cheaper rate, while others face the higher rate.
 Triple Column Tariff: Three separate rates: general, international, and preferential;
preferential rate lower and applies to friendly countries. Example: Lower duty rate for
imports from a trade agreement partner, higher rate for imports from other countries,
and lowest rate for friendly countries.
Non-Tariff barriers
Non-tariff barriers are like special rules set by governments to control trade with other
countries. They don't use taxes (tariffs) but use different ways to make it difficult for foreign
goods to enter the country. Examples are restrictions, requirements, and standards that can
protect local industries but can also make trade complicated.
Types of Non-Tariff barriers
 Quota System: Countries set limits on how much of a product can be imported from
other countries. Different types include tariff quota (limited duty-free imports),
unilateral quota (no prior discussions), and bilateral quota (agreed between countries).
 Prior Import Deposits: Importers may need to pay money in advance to their country's
central bank before importing goods.
 Foreign Exchange Regulations: Importers must get approval to ensure they have
enough foreign currency for imports.
 Consular Formalities: Strict document requirements for imports, non-compliance
leads to penalties.
 State Trading: Government decides on imports, limiting imports from other countries.
 Export Obligation: Importers must also export goods, or they face fines.
 Preferential Arrangements: Trading groups with special agreements, giving preference
to members.
 Other Non-Tariff Barriers: Health, safety, technical rules, and more that can impact
international trade.

Major Economic Groupings of the World

Major Economic Groupings of the World are like teams of countries that work together to
boost their economies. They remove trade barriers between member countries, making it
easier to buy and sell goods.
One example is the European Union (EU), where many European countries team up. They
can sell products to each other without paying extra taxes, making trade smoother. This helps
businesses grow and brings more choices for people to buy things from different EU
countries.
Positive Impact of Regional Economic Groupings
Regional economic groupings have positive impacts on member countries because they
reduce tariffs and trade restrictions, leading to increased trade and production.
 Competition: Economic groupings create healthy competition globally, as member
countries work together and grow economically.
 Economy of Large Scale: More trade and competition result in economies of large
scale.
 Economic Growth: Economic groupings benefit member countries, leading to
increased GDP and national income, especially for developing nations.
 Employment Creation: The high competition and large-scale production require a
large workforce, leading to more jobs in the country.
 Technological Development: To face competition, advanced technology is used,
promoting technological growth.
 Investment Attraction: Developing nations attract investors due to their economic
growth within the grouping.
 Socio-Cultural Relations: Economic groupings foster understanding and relations
among member countries.
 Utilisation of Resources: Regional economic groupings help efficiently use resources,
both human-made and natural.
 Consumer Welfare: Regional economic groupings prioritize consumer welfare by
ensuring product quality, benefiting international customers.

Negative Impact of Regional Economic Groupings

 Trade Diversion: Members prioritize trading within the group, ignoring better partners
outside, leading to inefficiencies.
 Market Dependency: Over-reliance on specific markets within the grouping can harm
economies if those markets face issues.
 Inequality: Larger members benefit more, causing inequality among nations.
 Dependency on Imports: Reduced tariffs on imports may harm domestic industries.
 Non-Members Disadvantage: Non-members may face higher trade barriers with
member countries.
 Trade Conflicts: Groupings may lead to trade conflicts with non-members.
 Inefficient Resource Allocation: Resource allocation may be based on politics rather
than efficiency.

Agreements of World Trade Organisation (WTO)

The World Trade Organization (WTO) was established on January 1, 1995, to replace the
General Agreement on Tariffs and Trade (GATT) formed in 1947. The WTO aims to promote
global trade and reduce trade barriers among its member countries.
Principles of the WTO:
  Non-discrimination: Treat all member countries equally in trade relations.
 Free trade: Encourage trade without unnecessary restrictions.
 Predictability: Create a stable and predictable trading environment.
 Promoting fair competition: Ensure fair competition among nations.
 Encouraging development and economic reforms: Help developing countries to grow
economically.
Scope of the WTO:
 The WTO covers various agreements related to goods, services, and intellectual
property rights, providing a common framework for conducting trade relations among
its 164 member countries.
Function of the WTO:
 Facilitate trade relations and implement trade agreements.
 Provide a forum for negotiations among members and settle disputes.
 Administer dispute settlement mechanisms and trade policy reviews.
 Cooperate with other international organizations to achieve global economic
coherence.
Structure of the WTO:
 Ministerial Conference: Represents all member countries, meets every two years, and
makes decisions on trade matters.
 General Council: Represents all members and conducts WTO functions in between
Ministerial Conferences.
 Dispute Settlement Body: Administers rules for settling trade disputes.
 Trade Policy Review Body: Conducts reviews of member countries' trade policies.
The WTO plays a crucial role in promoting fair and open trade globally, benefiting
economies and businesses around the world.

Need for Overseas Market Research

In the era of globalization, where the entire world is a market, there is intense competition for
companies offering products and services. To succeed, multinational companies must conduct
thorough market research to understand opportunities, customers, and market conditions.
Proper research leads to efficient operations and sustained success in the global market.
Overseas market research is crucial for successful export marketing. It helps companies adapt
to international market demands. Market research gathers information about customers,
competitors, pricing, distribution, and more, making decision-making easier.
 Consumer needs and wants: Research identifies what customers want, ensuring
companies meet their expectations. Example: A smartphone company surveys
customers to improve features based on user preferences.
  Promotional campaign: Research helps design effective marketing campaigns to reach
target customers in foreign markets. Example: An apparel brand uses local influencers
to promote their products in a new country.
 Competitive advantage: Understanding competitors' strengths and weaknesses allows
companies to improve their products and gain an edge. Example: A coffee chain
analyses rival coffee shops to offer unique blends and better service.
 Appropriate pricing decisions: Market research helps determine the right pricing for
products, considering competition and customer preferences. Example: An electronics
manufacturer adjusts prices based on local income levels and competitor prices.
 Effectiveness of distribution channels: Research assesses the performance of
distribution channels to ensure smooth operations. Example: A beverage company
evaluates different distributors to choose the most efficient one.
 Determine product positioning: Market research considers socio-cultural factors to
position products effectively in international markets. Example: A luxury brand tailors
its marketing message to align with local cultural values.
 Packaging design: Research helps create appealing and eco-friendly packaging to
attract customers. Example: A skincare brand uses sustainable packaging to appeal to
environmentally conscious consumers.
 Forecasting sales: Research predicts market demand for new and existing products,
aiding sales planning. Example: A toy company uses research to estimate holiday
season demand for their latest toy.
Market Selection Process
Export marketing objectives are crucial for exporters to determine their desired outcomes in
terms of product development, profitability, sales volume, and market share. To succeed in
export marketing, exporters need to set clear objectives and gather relevant information about
foreign markets. Regular evaluation and follow-up are essential for maintaining a seamless
flow of goods to international buyers. This process involves several steps:
 Collection of information: The exporter gathers important data from foreign markets,
such as product demand, competition, consumer behaviour, and import rules.
 Analysis of information: The exporter evaluates the collected data to understand
overseas markets better, considering consumer preferences and purchasing power.
 Shortlisting of markets: Based on the analysis, the exporter narrows down potential
target countries that are most suitable for their products.
 Detailed investigation: The exporter conducts a thorough examination of specific
markets, understanding customer needs, trade policies, and competition.
 Evaluation and selection of markets: The exporter eliminates countries with trade
barriers and selects markets that offer good returns on investment.
 Entry in overseas markets: The exporter makes arrangements to enter the selected
markets, such as hiring salespeople or intermediaries.
 Follow-up: The exporter evaluates performance in foreign markets and takes
corrective actions if needed.
Determinants of Foreign Market Selection
International marketers have various methods to choose from when expanding to foreign
markets. Each method offers unique benefits, and the choice depends on factors like cultural
differences, distribution networks, and investment opportunities. These methods play a
significant role in the success of a company's global expansion strategy.
When entering overseas markets, an international marketer can choose from various methods,
each with its own advantages. Here are some of the important methods:
 Direct Exporting: Selling products directly to the target market without intermediaries
like export houses.
 Indirect Exporting: Exporting through middlemen like trading houses or government
organizations.
 Joint Venture: Collaborating with foreign firms to enter foreign markets and benefit
from their expertise.
 Franchising Strategy: Allowing another independent organization to use the parent
company's brand and business approach.
 One Country Production Base: Manufacturing products in one country and
distributing them globally.
 Licensing: Granting another company the right to use assets like patents or trademarks
in exchange for fees.
 Contract Manufacturing: Hiring a foreign company to manufacture goods while
retaining control over sales.
 Acquisitions: Purchasing a company already operating in the target foreign market.
 Turnkey Contracts: Completing a project before handing it over to the government or
domestic company.
 Green-Field Development: Establishing production facilities and distribution
networks in foreign countries.
India’s Foreign Trade Policy
a) New Foreign Trade Policy (FTP) - Highlights and Implications, Export Trade
facilitations and ease of doing business as per the new FTP
b) Role of Directorate General of Foreign Trade (DGFT), Negative list of Exports
2020, Export Promotion Capital Goods Scheme, Duty Exemption/Remission
Schemes, Gems and Jewellery Promotion Scheme.
c) Other Schemes -Special Economic Zones (SEZS), Free Trade Warehousing Zones
(FTWZ), Star Export Houses, Deemed exports, Agri Export Zones, Target Plus
Scheme, Duty Drawback (DBK); IGST

New Foreign Trade Policy

The Foreign Trade Policy (FTP) 2015-20 was a plan by the Indian government to boost the
country's exports and encourage manufacturing. It aimed to help Indian businesses sell more
products and services to other countries, which would create more jobs and increase the value
of what India produces.
 Boost Exports: Increase the sale of Indian goods and services to other countries.
 Promote "Make in India": Encourage manufacturing within India and export those
products globally.
 Diversify Export Markets: Explore new countries to sell products and reduce
dependence on a few markets.
 Support Services Export: Promote export of services like IT, software, tourism, etc.
 Attract Foreign Investment: Encourage foreign companies to invest in India.
 Facilitate Trade: Make trade processes easier and more efficient.
 Help Small Businesses: Support small enterprises to participate in global trade.
 Balance Trade Deficits: Reduce import reliance and increase exports.
 Sustainable Trade: Promote environmentally friendly and socially responsible trade
practices.
Highlights and Implications
Highlights
 Make in India: Encouraging Indian companies to manufacture mobile phones
domestically and export them worldwide.
 Reward Schemes: Exporting agricultural products to the USA and receiving duty
credit scrips as a reward.
 Different Rewards: Exporting pharmaceuticals to Europe and getting a higher reward
rate than exporting to Africa.
 Help for Domestic Manufacturers: Indian automotive companies buying equipment
from local manufacturers and exporting vehicles to foreign markets.
  Incentives for E-commerce Exports: Exporting handloom sarees through an online
platform and receiving special incentives.
 Easy Access to International Markets: A manufacturer self-certifying their electronics
goods' origin as "Made in India" to access preferential trade benefits with other
countries.
 Focus on MSMEs: A small Indian software company receiving support to export its
IT services to clients in the USA and Europe.
Implications
 Economic Growth: Boosting exports can lead to economic growth and create more
jobs.
 Trade Balance: By promoting exports and reducing imports, the policy aims to
improve the trade balance.
 Competitiveness: Support for domestic manufacturers can enhance their
competitiveness.
 Foreign Investment: The FTP's facilitative measures can attract foreign investment.
 Diversification: Exploring new markets reduces reliance on specific countries.
 MSME Support: Special focus on MSMEs can boost their international participation.
 "Make in India": The policy aligns with the initiative, encouraging domestic
production.
 Sustainability: Emphasis on responsible and sustainable trade practices.
 Ease of Doing Business: Simplified procedures make trade easier.
 Global Market Access: Self-certification helps gain access to international markets.
 Technology-Driven E-commerce: Utilizing technology can enhance e-commerce
exports by streamlining processes, reaching more customers, and facilitating cross-
border transactions.
Export Trade facilitations and ease of doing business as per the new FTP
Export trade facilitation makes exporting goods and services simpler and smoother. It
involves using technology, improving customs procedures, and streamlining logistics. This
helps businesses sell products internationally, create jobs, and boost economic growth. It
benefits exporters by reducing delays and costs, making it easier to access global markets and
compete successfully.
 Online Document Filing CA, CS, CMA: Exporters can now apply and submit
documents online through the Foreign Trade Policy (FTP) platform, saving time and
effort. Certain documents, like those from Chartered Accountants, can now be
digitally uploaded, reducing paperwork.
 Inter-Ministerial Online Consultations: Faster approvals for certain exports are done
through online consultations, eliminating the need for physical document submissions
and making the process more efficient.
 Simplification and E-Governance: The government simplified export procedures and
introduced e-governance initiatives. For example, certain requirements for EPCG
authorizations were removed, and exporters no longer need to keep records for more
than two years as they can be stored electronically.
  Communication Improvements: Mandatory fields like mobile phone numbers and
email addresses were added to the IEC database, allowing better communication with
exporters through SMS and email notifications.
 Upcoming E-Government Initiatives: The government is working on more e-
government initiatives to further simplify exports, like message exchange for export
rewards, data exchange with the Ministry of Corporate Affairs, and online application
fee payment.
 E-Commerce Exports: The FTP benefits small businesses selling handloom products,
books, footwear, toys, and custom fashion garments through e-commerce platforms.
This encourages them to export through Foreign Post Offices and airports.
Role of Directorate General of Foreign Trade (DGFT)
The Directorate General of Foreign Trade (DGFT) is a government organization that supports
and regulates India's international trade. It helps businesses export and import goods by
implementing trade policies, providing unique identification codes, managing transit of
goods, and resolving trade-related issues. DGFT makes international trade easier for Indian
businesses.
 Foreign Trade Policy Implementation: DGFT carries out the government's plans to
boost exports by introducing various schemes and guidelines through its regional
offices.
 IEC Number Assignment: DGFT provides a unique code called the Importer-Exporter
Code (IEC) to Indian exporters and importers, which helps them do international
trade.
 Regulating Goods Transit: DGFT manages the movement of goods between India and
neighbouring countries based on agreements to ensure smooth trade.
 Resolving Export Related Problems: DGFT helps exporters with their issues and
works with other departments to solve trade problems promptly.
 Interaction with Trade and Industry: DGFT offers a chat window on its website to talk
with businesses and provide information about foreign trade policies.
 Co-ordination with Other Offices: DGFT collaborates with customs, central excise,
and other offices to make trade processes easier.
 Publications: DGFT publishes important information about foreign trade policies,
procedures, and classification of export-import items.
 Trade Facilitator: DGFT helps in resolving quality complaints from foreign buyers,
supporting Indian exporters in global markets.
 Example for Trade Facilitator: If an Indian exporter faces a complaint about the
quality of their products from a foreign buyer, DGFT steps in to solve the problem
and maintain India's reputation as a reliable exporter.
 In summary, DGFT plays a crucial role in supporting exporters, simplifying trade
processes, and promoting India's trade globally.
Negative list of Exports 2020
Negative List of Exports: The negative list of exports consists of items that are completely
banned for export. These items cannot be exported under any circumstances. Example: Let us
say that certain rare and endangered species of animals are on the negative list of exports.
This means that no one can export these animals or their products, like their skins or parts,
from India.
 Prohibited Items: Prohibited items are specific goods that are banned for export due to
legal, environmental, or security reasons. Exporting these items is strictly forbidden.
Example: Nuclear weapons and materials used in making them are prohibited items
for export. It is illegal to export them from India or any other country.
 Restricted Items: Restricted items are goods that can be exported, but they require
special permissions or licenses from the government before export. These items have
certain limitations or conditions for export. Example: Some types of precious
gemstones, like diamonds, might be restricted for export. Exporters need to obtain a
special license from the government before they can export these gemstones.
 Canalized Items: Canalized items are goods for which only specific government
agencies or entities have the authority to export. Private exporters are not allowed to
export these items directly. Example: Certain agricultural products like wheat might
be canalized, which means only a government-owned agency is authorized to export
them. Private exporters cannot directly export wheat; they must go through the
designated government agency.
In summary, the negative list of exports includes items that are completely banned, prohibited
items cannot be exported due to legal or security reasons, restricted items require special
permissions, and canalized items can only be exported through specific government entities.
These rules and lists help regulate trade and ensure that certain goods are handled responsibly
and in the best interest of the country.
Export Promotion Capital Goods Scheme
The EPCG scheme helps Indian exporters by allowing them to buy machines and equipment
from other countries at a lower tax rate of 5%. To get this benefit, they must promise to
export goods worth five times the machine's cost over a specific period. This scheme makes it
easier for exporters to grow their businesses and contribute to the country's economy.
Conditions under the EPCG scheme:
 Actual User Condition: Importers must use the imported machines for their own
business until they meet their export goal.
 Types of Goods: They can import various types of machines, tools, and equipment for
manufacturing, quality control, and more.
 New and Second-hand: Both new and second-hand machines are allowed, but second-
hand ones must have at least ten years of remaining life.
 Specific Rules for Second-hand: There are certain conditions for importing second-
hand machines that must be followed.
Eligible participants for the EPCG scheme include:
 Manufacturers and Service Providers: Both manufacturing companies and service
providers, such as hotels, hospitals, travel and tour operators, can take part in the
scheme.
 Merchant Exporters: Exporters who are linked to supporting manufacturers are also
eligible to import capital goods under the EPCG scheme.
Features:
 Buy from Local Manufacturers: EPCG license holder can purchase machines from
Indian manufacturers.
 Use the Imported Goods: They must use the machines themselves until export
commitment is met.
 Report Export Progress: Every six months, they report how much they exported.
 Fulfil Export Obligations: They must meet the promised export value.
 Show Export Accomplishment: Once the export target is achieved, they inform the
government.
 Bank Confirmation for Foreign Payments: They show the bank's certificate for
foreign payments.
 EPCG is a facility given to the exporters to improve their business.
Duty Exemption/Remission Schemes
Duty Exemption/Remission Schemes are like special gifts from the government to help
businesses that export or import things.
Their main goals are to:
 Boost exports (selling products to other countries).
 Encourage local manufacturing (making things within the country).
 Make businesses stronger and more competitive in the world market.
These programs give benefits and incentives to exporters and importers, making it easier and
cheaper for them to do their trade. They play an essential role in helping businesses grow and
contribute to the country's economic development.
Types of Schemes: There are various duty exemption/remission schemes, each catering to
specific needs of exporters and importers. Some common schemes include:
 Export Promotion Capital Goods (EPCG) Scheme
 Advance Authorization Scheme
 Duty-Free Import Authorization (DFIA) Scheme
 Export Oriented Units (EOUs) Scheme
 Special Economic Zones (SEZs) Scheme
  For Exporters: They get to import materials and machines without paying import
taxes, making it cheaper for them to produce goods for export. They can also get
refunds on taxes paid for materials used in exports.
 For Importers: They can bring in materials for manufacturing without paying import
taxes, encouraging local production. They might also get duty-free imports for certain
purposes.
These schemes aim to increase exports, boost local manufacturing, and make businesses more
competitive globally. To benefit from these schemes, companies need to apply and follow the
rules set by the government.
Gems and Jewellery Promotion Scheme.
The Gems and Jewellery Promotion Scheme is a special initiative by the Indian government
to support and promote the gems and jewellery industry in the country. This scheme aims to
enhance the competitiveness of the sector, boost exports, and create more employment
opportunities. Here's an easy explanation of the scheme:
Purpose: The main goal of this scheme is to make the gems and jewellery industry more
competitive, increase exports of these products, and create more job opportunities.
Key Features:
 Boosting Exports: The scheme focuses on selling more gems and jewellery products
to other countries, making Indian businesses stronger globally.
 Financial Help: It provides financial assistance or support to the industry to help it
grow and improve.
 Promoting Indian Products: The scheme helps promote and advertise Indian gems and
jewellery in international markets.
 Improving Quality: It encourages investing in research and development to make
better quality products.
 Skill Development: The scheme supports training programs to develop skilled
workers for the industry.
 Better Technology: It promotes the use of modern technology to increase productivity.
Benefits for the Industry:
 The scheme helps the gems and jewellery industry compete better in the world
market.
 It supports businesses with financial help and incentives, leading to more growth.
 Exporting more gems and jewellery brings in more money for the country.
 The industry can improve product quality and craftsmanship through research and
development.
 Training workers makes them more skilled, creating better job opportunities.
Special Economic Zones (SEZS)
Special Economic Zones (SEZs) are special areas or zones set up by the government to
promote businesses and boost the country's exports. These zones provide a favourable
environment for companies to operate, making it easier for them to do business and export
their products. SEZs aim to attract more investment, create jobs, and contribute to the
country's economic growth. They offer various incentives and facilities to encourage
businesses to set up and flourish within these designated areas.
 Domestic Sales/Purchases: Goods going into SEZ from India are treated as exports,
and goods coming from SEZ into India are treated as imports. Example: When a
company sends goods to SEZ from India, it's like exporting them.
 Export and Import of Goods: SEZ units can export various products and import
goods, including machinery, without paying import taxes. Example: An SEZ unit can
export jewellery and import machines for production without paying taxes.
 Net Foreign Exchange Earning (NFE): SEZ units must earn more foreign exchange
through exports than they spend on imports over five years. Example: If an SEZ earns
$100 million from exports and spends $70 million on imports, it has a positive NFE of
$30 million.
 Administration and Setting Up of SEZ: SEZs are managed by development
commissioners and can be set up by the government or private companies, even by
converting existing EPZs. Example: The government appoints a commissioner to
oversee an SEZ being built by a private company.
 Export Proceeds: SEZ units can bring back export earnings within 360 days (instead
of 180 days) and keep 100% of it in a special account. Example: An SEZ unit exports
goods and can bring back the money within 360 days and store it without restrictions.
 Export through Status Holder: SEZ units can also export their products through a
merchant exporter/status holder or other EOU/EPZ/SEZ units. Example: An SEZ unit
can ask a status holder to export its products to foreign countries.
Sales in DTA (Domestic Tariff Area) means that when manufacturing units in SEZs (Special
Economic Zones) or EOU (Export Oriented Units) sell goods within India, they have to pay
regular taxes and duties like other businesses. But for exports, they get special benefits and
discounts to make their products competitive in foreign markets and boost international sales.
Incentives provided to units in SEZs:
 Duty-Free Imports: Companies in SEZs can import goods like machinery, materials,
and equipment without paying import taxes.
 Tax-Free Procurement: They can buy materials from the Domestic Tariff Area without
paying central excise duty.
 Exemption from Central Excise: Products manufactured in the SEZs for export are
exempt from central excise duty.
 Tax Holiday: Units enjoy a five-year tax holiday, meaning they don't have to pay
certain taxes for this period.
 Sales in Domestic Market: They can sell up to 25% of their annual production in the
local market without import licenses, but customs duty needs to be paid.
  Foreign Investment: Foreign investors can participate and hold 100% equity in SEZ
industrial ventures.
 Repatriation of Profits: Units can freely send back profits to their home country,
subject to applicable taxes.
 Export Promotion: Units in SEZs get a special facility called "blanket permits" for
export promotion.
 Extended Credit Period: SEZ units can get longer credit periods of up to 360 days for
transactions.
Free Trade Warehousing Zones (FTWZ)
Free Trade Warehousing Zones (FTWZ) are special areas created by the government to make
international trade and storing goods easier. They offer services like customs clearance, tax-
free storage, and value-added services for businesses. FTWZs are strategically located near
transport hubs, saving time and money for businesses. They help in smooth import, export,
and storage of goods, making trade more efficient and cost-effective.
 Customs Clearance: FTWZs help businesses with the paperwork and processes
needed to bring goods in and send goods out of the zone.
 Duty-Free Storage: Goods stored in FTWZs don't have to pay taxes or customs duties,
which saves companies from extra expenses.
 Value-Added Services: FTWZs provide helpful services like packaging, labelling, and
sorting, making it easier for businesses to get their products ready for sale.
 Easy Access to Transport: These zones are located near important transport hubs like
ports, airports, and highways, making it convenient to move goods in and out.
 Foreign and Domestic Trade: FTWZs are beneficial for both international and local
trading, offering a complete solution for businesses.
 Time and Cost Savings: FTWZs efficiently handle customs and warehousing tasks,
helping businesses save time and money in their operations.
Benefits:
 Simplified customs procedures facilitate faster movement of goods.
 Tax exemptions on stored goods save businesses from additional financial burdens.
 Value-added services support businesses in preparing goods for sale.
 Convenient location near transportation hubs ensures easy access to markets.
Star Export Houses
 Star Export Houses: Star Export House is a special title given to top-performing
merchant exporters for their excellent export performance.
 Benefits: Star Export Houses receive privileges and recognition from the government,
including faster customs clearance and access to special schemes.
 Recognition: It's a prestigious recognition of the company's achievements and
contributions to the country's export sector.
Deemed exports
Deemed exports are a special type of trade where goods are supplied within the country, and
the payment is made in Indian rupees. The goods don't actually leave the country, but they are
treated as exports for certain benefits and facilities under the government's EXIM policy. In
simple terms, it's like doing export business within India, and it qualifies for certain export
benefits even though the goods stay in the country.
Example: If a company supplies machinery to another Indian company for a project, and the
payment is made in Indian rupees, it's deemed as an export, even though the goods stay
within India. The supplying company can get certain export benefits for this transaction.
Categories:
 Supply against Duty-Free Licenses: Companies supplying goods against duty-free
licenses.
 Supply to Special Units: Companies supplying goods to SEZs, EOU, EHTP, STP, and
100% EOU.
 Supply of Capital Goods: Companies supplying capital goods to EPCG scheme
holders.
 Supply to Power, Oil, and Gas Sectors: Companies supplying goods to these sectors
with duty approval.
 Supply to Projects with Zero Customs Duty: Companies supplying goods to projects
approved by the Ministry of Finance with zero customs duty.
 Supply to Fertilizer Plants under Competitive Bidding: Companies supplying capital
goods and spares to fertilizer plants under competitive bidding.
 Supply to Projects Financed by Agencies: Companies supplying goods to projects
financed by specified agencies under competitive bidding.
Benefits:
 Special Import License: Deemed exporters can get a special import license worth 6%
of the value of their exports.
 Duty Drawback: They can claim a refund of customs duties paid on exported goods.
 Refund of Excise Duty: Deemed exporters can get a refund of excise duty paid on raw
materials used for export production.
 Duty-Free Imports: They can import specific inputs duty-free to support their
production.
 Proof of Export: To claim these benefits, they need to show evidence of receiving
payment for exported goods.
 Benefits for Capital Goods and Spares: These benefits also apply to supplies of capital
goods and spares.
Agri Export Zones
Agri Export Zones (AEZs) are special places in a country where they grow specific crops or
products that are good for exporting. They focus on making these crops of high quality so
that they can be sold in other countries easily. AEZs also have good storage and
transportation facilities to help with exporting. It's a way to help farmers and businesses sell
their agricultural products to other countries and make more money.
 Focused Agriculture: They concentrate on growing crops that are suitable for the
region's climate and soil, so they can produce a lot of high-quality crops.
 Quality Control: They make sure the crops meet strict quality standards, making them
attractive to buyers in other countries.
 Good Facilities: AEZs have good storage and transportation facilities to handle the
crops properly for exporting.
 Modern Techniques: They use modern farming methods to grow more crops
efficiently and improve the quality.
 Financial Support: Farmers and exporters get financial help and incentives from the
government to encourage exporting.
 Direct Market Access: AEZs help farmers and exporters connect directly with
international markets, reducing the involvement of middlemen.
 Training: They provide training to farmers and others involved in agriculture to
improve their skills for exporting.
 In short, AEZs are special areas where they grow specific crops for export. They focus
on quality, use modern techniques, and provide support to improve agricultural
exports.
Benefits of Agri Export Zones:
 Boosts agricultural exports by focusing on crops with export potential.
 Improves product quality and compliance with international standards.
 Creates employment opportunities in the agricultural sector.
 Increases farmers' income and promotes rural development.
 Strengthens the country's position in the global agricultural market.
Target Plus Scheme
Duty Drawback (DBK)
 Duty Drawback: It's a refund given to exporters for customs and central excise duties
paid on importing raw materials, components, and packing materials.
 Purpose: It compensates exporters for the extra costs they incur due to these taxes, in
addition to the actual import costs.
 How it Works: Exporters apply for Duty Drawback after exporting their products.
 Refund: Once approved, they receive a refund for the customs and excise duties they
previously paid.
 Benefits: Duty Drawback helps exporters save money, reduce expenses, and
encourages them to export more products.
Duty Drawback is available on:
 Raw materials and components used in manufacturing.
 Materials used in making raw materials and components.
 Irrecoverable wastages in the manufacturing process.
 Materials used for packing finished export products.
 Finished export products.
Duty Drawback is not allowed in these cases:
 When the entitlement is less than Rs. 50.
 If goods are used after manufacturing, except tea chests for export of blended tea.
 When imported materials or excisable materials without paid duties are used.
 If the drawback amount is less than 2% of the net FOB value of exports.
 For goods exported to Nepal, Bhutan and Tibet.
Procedure
Whom to Apply: Submit the application to the nearest Customs House.
When to Apply: Apply within 60 days from the date of obtaining the "Let Export Order" from
the customs examiner.
Documents Required: Include the following documents with your application:
 Non-negotiable copy of Bill of Lading (shipping document).
 Copy of duty drawback document.
 Copy of the commercial invoice (sales document).
 Copy of special brand rate letter (if required).
 Other necessary documents as per guidelines.
There are two types of Duty Drawback rates:
 All Industry Rates: These rates are set by the Government of India for entire
industries. All units in that industry get the same rate.
 Special Brand Rates: These rates are customized for individual exporters based on
their specific products or exports.