MBA_531_Export Import Documentation

UNIT 11: IMPORT PROCEDURE & DOCUMENTATION Structure 11.0 Learning Objectives 11.1 Introduction 11.2 Warehousing of Imported Goods 11.3 Exchange Control Provisions for Imports 11.4 Retirement of Export Documents 11.5 Summary 11.6 Keywords 11.7 Learning Activity 11.8 Unit End Questions 11.9 References 11.0 LEARNING OBJECTIVES After studying this unit, the student will be able to:  Describe the warehousing of imported goods.  Illustrate the exchange control provisions for imports.  Explain the retirement of export documents. 11.1 INTRODUCTION The import trade is referred to goods and services purchased into one nation from another. The word “import” originates from the word “port” considering the fact that the products are frequently transported via ship to foreign countries. Similar to exports, imports are also the backbone of foreign trade. Here, if the expense of a country’s imports is more than the worth of its exports than the country has a negative balance of trade (BOT), which is also known as a trade deficit. Every country import goods and services that the domestic country cannot manufacture, maybe because the country cannot produce effectively or cheaply like another exporting country. Few countries sometimes also import commodities and raw materials which are not available on their premises. For instance, many nations import oil they cannot manufacture it locally or cannot provide sufficient to meet the demand. The key objectives of import trade can be explained as below:  To Speed Up Industrialization Developing countries import scarce raw materials, capital goods and advanced technology required for rapid industrial development.  To Meet Domestic Demand 201 CU IDOL SELF LEARNING MATERIAL (SLM)

The goods which are in demand but are not accessible within the country are imported.  To Overcome Natural Disasters During drought, flood, earthquake and other natural calamities country import food grains and other essential commodities to prevent starvation.  To Improve Standard of Living Imports enable consumers in the home country to enjoy a wide variety of products of high quality. It helps in improving the standard of living of masses.  To Ensure National Defence The importer must get the receipt of credit from his concerned bank and send it to the foreign supplier.  Important Steps Involved in a Typical Import Transaction i. Trade enquiry and sending quotations. ii. The domestic buyer who wishes to buy the goods from the other country sends an inquiry relating to price, desired quality, terms, and conditions for the export of goods. iii. The exporter sends a reply to the inquiry by taking outlines of ‘Quotation’. iv. The quotation is also known as ‘Proforma Invoice’ which contains information about the selling price, quantity, quality, mode of delivery, etc. v. Procurement of Import License vi. Goods can be imported only upon the license; the importer requires an import license. vii. Obtaining Foreign Exchange- The overseas supplier asks payment in a foreign currency. Payment requires the exchange of Indian currency into foreign currency. In India, transaction related to foreign exchange is governed by Reserve Bank of India (RBI) under the Exchange Control Department. viii. Placing Order or Indent- After the receipt of the ‘Quotation’, if the prospective buyer finds the information suitable to him, he places the ‘Order/Indent’ for the import of goods. ix. Obtaining Credit Letter- The importer must get the receipt of credit from his concerned bank and send it to the foreign supplier. x. Arrangement of Finance- The importer makes the finance settlements in advance to remunerate towards the exporter when the shipment arrives at the destination. xi. Receipt of Shipment Advice- After storing the consignment on the ship, the foreign supplier sends the shipment advice in the direction of importer. The shipment advice includes data about the shipment of products such as: a. Invoice number b. The landing or airways bill date and number c. Name of the ship with date d. Port or Destination of export e. Classification of goods and quantity f. Date of the sailing of the vessel. 202 CU IDOL SELF LEARNING MATERIAL (SLM)

 Arrival of Goods- The overseas supplier dispatches the Goods as per the contract.  Customs Clearance and Release of Goods- in India, all the imported goods have to have a clearance from customs after they pass the Indian borders. When the ship arrives at the port, the importer has to obtain a delivery order/endorsement for delivery on the back of the bill at the time of lading from the concerned shipping company. 11.2 WAREHOUSING OF IMPORTED GOODS The facility of warehousing of imported goods in Customs Bonded Warehouses, without payment of Customs duty, is permitted under the Customs Act, 1962. In addition to that, the provision of the Warehoused Goods (Removal) Regulations, 1963 and Manufacture and Other Operations in Warehoused Regulations, 1966 are also applicable. Basically, goods after landing are permitted to be removed to a warehouse without payment of duty and duty is collected at the time of clearance from the warehouse. The law lays down the time period up to which the goods may remain in a warehouse, without incurring any interest liability and with interest liability.  The Customs Act, 1962: Different Provisions SECTION 57- Appointing of public warehouses. - At any warehousing station, the Assistant Commissioner of Customs or Deputy Commissioner of Customs may appoint public warehouses wherein dutiable goods may be deposited. SECTION 58. Licensing of private warehouses. – i. At any warehousing station, the Assistant Commissioner of Customs or Deputy Commissioner of Customs may license private warehouses wherein dutiable goods imported by or as an agent of the licensee, or any other imported goods in respect of which facilities for deposit in a public warehouse are not available, may be deposited. ii. The Assistant Commissioner of Customs or Deputy Commissioner of Customs may cancel a licence granted under sub-section a. By giving one month's notice in writing to the licensee; or b. If the licensee has contravened any provision of this Act or the rules or regulations or committed breach of any of the conditions of the licence: iii. Provided that before any licence is cancelled under clause (b), the licensee shall be given a reasonable opportunity of being heard. iv. Pending an enquiry whether a licence granted under sub-section (1) should be cancelled under clause (b) of sub-section (2), the Assistant Commissioner of Customs or Deputy Commissioner of Customs may suspend the licence.  Warehousing Stations The warehouses are to be appointed/licensed at particular places only which have been so declared by Central Board of Excise and Customs. The Board has delegated its power for declaring places to be Warehousing Stations to the Chief Commissioners of Customs. In 203 CU IDOL SELF LEARNING MATERIAL (SLM)

respect of 100% EOUs, the powers to declare places to be Warehousing Stations have been delegated to the Commissioners of Customs.  Storage Period of Warehoused Goods Any goods deposited in a warehouse may be stored up to a period of one year in the Bonded Warehouse. In the case of capital goods intended for use in any 100% EOU, such goods can, however, be stored up to a period of 5 years. The warehousing period can be extended by the Commissioner of Customs for a min of 6 months and by the Chief Commissioner of Customs for such further period as is deemed fit by him. The importers should file their applications for extension well before the expiry of the initial/extended period of warehousing. Before granting extensions, officers have to examine the condition of the goods to see that they are not likely to deteriorate during the extended period. A somewhat liberal approach in extending warehousing period in the following categories of cases is considered, if the interests of revenue are not likely to be jeopardized: i. Goods supplied as ship stores/aircraft stores. ii. Goods supplied to diplomats. iii. Goods used in the unit’s operating under manufacture-in-bond scheme. iv. Goods imported by 100% EOUs. v. Goods warehoused and sold through duty free shops. vi. Machinery, equipment and raw material imported for building and fitment to ships. Extensions in warehousing period are not meant to be granted routinely but only in those cases where the goods have to be kept in the warehouse under circumstances beyond the control of the importer. Lack of finance to pay the duty is not considered as valid and good ground of seeking extensions which are otherwise given for short period. In case the warehoused goods are likely to deteriorate, the Commissioner of Customs may reduce the one year's period of warehousing to such shorter period as he may deem fit.  Rate of Interest on Customs Duty in Case of Bonded Goods In Cases where the capital goods for 100% EOUs remain in a warehouse beyond a period of 5 years, interest at the rate of 24% per annum shall be charged on the Customs duty payable at the time of clearance of the goods for the period from the expiry of the supposed warehousing period till the date of payment of duty. In the case of all other goods interest at the rate of 24% per annum is payable after the expiry of thirty days in the warehouse  Recovery of Duty on Bonded Goods Customs Officers may demand from the owner of bonded goods the full amount of duty chargeable on such goods, along with all penalties, rent, interest and other charges payable in the following cases: (a) Where any warehoused goods are removed in contravention in regards of Customs Act, 1962;(b) Where such goods have not been removed from a warehouse at the expiry of the period permitted under section 61;(c) Where any warehoused goods have been taken under section 64 as samples without payment of duty; and (d) Where any bonded goods have not been cleared for home consumption or exportation or are not duly accounted for to the 204 CU IDOL SELF LEARNING MATERIAL (SLM)

satisfaction of the department of custom. In case the owner fails to pay the amount as demanded above, Customs may detain and sell, after notice to the owner, such sufficient portion of the bonded goods as may be selected. Figure 11.1: The Warehouse Developing and Regulatory Authority The Warehousing Development and Regulatory Authority (WDRA) was constituted on 26th October 2010 under the Warehousing (Development and Regulation) Act, 2007 vide Government of India Gazette Notification dated 26th October 2010. The Act provides for the establishment of the WDRA to exercise the powers conferred on it and to perform the functions assigned to it under the Act, Rules and Regulations for the development and regulation of warehouses, negotiability of warehouse receipts and promote orderly growth of the warehousing business in the country. The WDRA is a Statutory Authority under the Department of Food and Public Distribution, Government of India. The Authority has its Headquarters in New Delhi. The mission of Warehousing Development and Regulatory Authority (WDRA) is to regulate and ensure implementation of the provisions of the Warehousing (Development and Regulation) Act, 2007 for the development and regulation of warehouses, Regulations of 205 CU IDOL SELF LEARNING MATERIAL (SLM)

Negotiability of Warehouse Receipts and promote orderly growth of the warehousing business.  Powers and Functions of Authority Chapter (VI) of Warehousing Development and Regulation Act 2007 provides the powers and functions of authority as under:- i. Subject to the provisions of this Act and any other law for the time being in force, the Authority shall have the duty to regulate and ensure implementation of the provisions of this Act and promote orderly growth of the warehousing business. ii. Without prejudice to the generality of the foregoing provisions, the powers and functions of the Authority shall include the following, namely: - (a) To issue to the applicants fulfilling the requirements for warehousemen a certificate of registration in respect of warehouses, or renew, modify, withdraw, suspend or cancel such registration. (b) To regulate the registration and functioning of accreditation agency, renew, modify, withdraw, suspend or cancel such registration, and specify the code of conduct for officials of accreditation agencies for accreditation of the warehouses. (c) To specify the qualifications, code of conduct and practical training for warehousemen and staff engaged in warehousing business. (d) To regulate the process of pledge, creation of charges and enforcement thereof in respect of goods deposited with the warehouse. (e) To promote efficiency in conduct of warehouse business. (f) To make regulations laying down the standards for approval of certifying agencies for grading of goods. (g) To promote professional organizations connected with the warehousing business. (h) To determine the rate of, and levy, the fees and other charges for carrying out the provisions of this Act. (i) To call for information from, undertaking inspection of, conducting enquiries and investigation including audit of the warehouses, accreditation agencies and other organizations connected with the warehousing business. (j) To regulate the rates, advantages, terms and conditions that may be offered by warehousemen in respect of warehousing business. (k) To specify, by regulations, the form and manner in which books of account shall be maintained and statement of accounts shall be rendered by warehousemen. (l) To maintain a panel of arbitrators and to nominate arbitrators from such panel in disputes between warehouses and warehouse receipt holders. (m) To regulate and develop electronic system of holding and transfer of credit balances of fungible goods deposited in the warehouses. (n) To determine the minimum percentage of space to be kept reserved for storage of agricultural commodities in a registered warehouse. 206 CU IDOL SELF LEARNING MATERIAL (SLM)

(o) To specify the duties and responsibilities of the warehouseman. (p) To exercise such other powers and perform such other functions as may be prescribed. 11.3 EXCHANGE CONTROL PROVISIONS FOR IMPORTS The Exchange Control was introduced in India with the outbreak of Second World War on September 3, 1939. This was done by virtue of the emergency powers derived under the financial provisions of the Defence of India Rules. The main purpose was to conserve the non-sterling area currencies and utilise them for essential purposes. India was a part of British Empire; hence, it was basically introduced to boost up the war-efforts of the United Kingdom's Government. In modern times various devices have been adopted to control international trade and regulate international indebtedness arising out of international workings and dealings. The spirit of economic nationalism induces every country to look primarily to its own economic interests. Exchange controls are government-imposed controls and restrictions on private transactions conducted in foreign currency. The government’s major aim of exchange control is to manage or prevent an adverse balance of payments position on national accounts. It involves ordering all or part of foreign exchange received by a country into a common pool controlled by authorities, typically the central bank. Foreign Exchange control is special type of the devices adopted for the purpose. Foreign Exchange control is a system in which the government of the country intervenes to maintain a rate of exchange which is quite different from what would have prevailed without such control and to require the home buyers and sellers of foreign currencies to dispose of their foreign funds in particular ways.  Understanding Exchange Controls The foreign exchange pool is rationed to cater for “essential” or priority payments abroad. It involves controlling the trading of foreign currency and transfers across national borders. The government will determine how foreign exchange earned by individuals and businesses is spent. It will be mandatory for all earned foreign exchange to be sold at the central bank at a predetermined rate. Limits on foreign currency amount that individuals and businesses can purchase from the central bank will also be put in place. Exchange control is also used to restrict non-essential imports, encourage the importation of priority goods, control the outflow of capital, and manage the country’s exchange rate. Generally, countries use foreign exchange control to manage the worth of local currency. It’s not every nation that can legitimately introduce exchange control measures. According to the articles of agreement by the International Monetary Fund (IMF), only countries with transitional economies can apply exchange controls. Several western nations employed exchange control measures soon after World War II but gradually phased them out before the 1980s as their economies strengthened overtime. The phasing out of exchange controls was also necessitated by trends towards globalization, free trade, and economic liberalization in 207 CU IDOL SELF LEARNING MATERIAL (SLM)

the 1990s, which does not co-exist with the application of exchange controls. Presently, exchange controls are mostly utilized by developing countries with weak economies, low exports, are import-dependent, and with low foreign currency reserves.  Countries with History of Exchange Controls i. United Kingdom – until 1979 ii. South Korea – 1985 to 1989 iii. Egypt – until 1995 iv. Argentina – 2011 to 2015; and v. Fiji, Mexico, Peru, Finland, Chile, Zimbabwe, among others  Factors that Lead Governments to Impose Exchange Controls The justification and motivation for the imposition of foreign exchange controls vary from country to country and their respective economic situations. Below are few justifications: i. Capital flight at unprecedented levels, mainly due to speculative pressure on the local currency, fear, and extremely low confidence levels. ii. A marked decline in exports resulting in a Balance of Payments (BOP) deficit iii. Adverse shifts in terms of trade iv. War/conflict budgeting. The BOP may be in disequilibrium due to war, drought, etc. v. Economic development and reconstruction  Exchange Control Provisions by the Indian Government i. Restore the balance of payments equilibrium The main objective of introducing exchange control regulations is to correct the balance of payments equilibrium. The BOP needs realignment when it is sliding to the deficit side due to greater imports than exports. Hence, controls are put in place to manage the dwindling foreign exchange reserves by limiting imports to essentials items and encouraging exports through currency devaluation. ii. Protect the Importance of National Currency Governments may defend their currency’s value at a certain desired level through participating in the foreign exchange market. The control of foreign exchange trading is the government’s way to manage the exchange rate at the desired level, which can be at an overvalued or undervalued rate. The government can create a fund to defend currency volatility to stay in the desired range or get it fixed at a certain rate to meet its objectives. An example is an import-dependent country that may choose to maintain an overvalued exchange rate to make imports cheaper and ensure price stability. iii. Prevent Capital Flight The government may observe increased trends of capital flight as residents and non- residents start making amplified foreign currency transfers out of the country. It can be due to changes in economic and political policies in the country, such as high taxes, low interest rates, increased political risk, pandemics, and so on. The government may resort to an exchange control regime where restrictions on outside payments are introduced to mitigate capital flight. 208 CU IDOL SELF LEARNING MATERIAL (SLM)

iv. Protect Local Industry The government may resort to exchange control to protect the domestic industry from competition by foreign players that may be more efficient in terms of cost and production. It is usually done by encouraging exports from the local industry, import substitution, and restricting imports from foreign companies through import quotas and tariff duties. v. Build Foreign Exchange Reserves The government may intend to increase foreign exchange reserves to meet several objectives, such as stabilize local currency whenever needed, paying off foreign liabilities, and providing import cover. vi. Consequences of Exchange Controls Exchange controls can be effective in some instances, but they can also come with negative consequences. Often, they lead to the emergence of black markets or parallel markets in currencies. The black markets develop due to higher demand for foreign currencies that is greater than the supply in the official market. It leads to an ongoing debate about whether exchange controls are effective or not. In short, there are various exchange control methods at the government’s disposal, including a mixture of direct and indirect methods. Each method comes with its own advantages and drawbacks. Governments can use various forms of exchange control strategies, but they must carefully consider each one and its effectiveness, given its economic and political landscape. However, the IMF encourages the removal of exchange controls as they usually discourage international trade, inhibit the expansion of world trade, and distort the functioning of an efficient global trade market. 11.4 RETIREMENT OF EXPORT DOCUMENTS  Loading of Goods and Receipt of Shipment Advice On loading of goods, the overseas supplier dispatches the shipment advice to related shipper informing him about the shipment of goods. The shipment advice contains invoice number, landing bill, airways bill number and date, name of the vessel with date, the port of export, description of goods and quantity and the date of sailing of the vessel.  Retirement of Import Documents After shipping the goods, the overseas supplier prepares the necessary documents as per the rules and conditions of contract and description of credit and hands them over to his bank for their onward negotiation to importer in the manner as specified in the VC. The set normally contains bill of exchange, commercial invoice, bill of landing, packing list, certificate to recognise the origin, marine insurance policy, etc. For the retirement of documents, the importer is required to submit the following documents to his bank: A letter authorising his bank to debit the equivalent Indian rupees to the assessment of documents including bank charges. Exchange control Copy of the Import Licence, if applicable Form Al duly completed for the remittance in foreign 209 CU IDOL SELF LEARNING MATERIAL (SLM)

exchange. Acceptance of Bill of Exchange Bill of Exchange accompanied by the above documents is known as the Documentary Bill of Exchange. It is of two types i. Documents Against Payment (Sight Drafts) In view of sight draft, the drawer instructs the bank to hand over the relevant documents to the concerned importer only against payment. ii. Documents Against Acceptance (Usance Draft) By looking towards usance draft, the drawer instructs the bank to hand over the relevant documents to concerned authority i.e., importer against his 'acceptance' of the bill of exchange.  Scrutiny of Documents Received under UC After receipt of import documents from the exporter's bank, the importer's bank will scrutinise the papers as to their correctness as per the terms and conditions of UC and hands over them to the shipper (importer) after payment. The importer should also scrutinise the relevant papers and ensure that there are no discrepancies.  Appointment of C&F Agent In India, the procedure for clearance of imported goods is very lengthy, time consuming and involves many legal formalities. Therefore, it is advisable to hire the services of C&F agents who are well versed with such formalities. The C&F Agent prepares the bill of entry containing details of goods to be cleared from the customs. In case, the C&F agent does not have relevant information about the goods to be cleared, he prepares a bill of sight in order to enable himself to physically check the goods imported and prepare bill of entry on that basis. 210 CU IDOL SELF LEARNING MATERIAL (SLM)

211 CU IDOL SELF LEARNING MATERIAL (SLM)

Figure 11.2: The Flow of Retirement of Import Documents 11.5 SUMMARY  Similar to exports, imports are also the backbone of foreign trade.  Every country import goods and services that the domestic country cannot manufacture, maybe because the country cannot produce effectively or cheaply like another exporting country. Few countries sometimes also import commodities and raw materials which are not available on their premises.  The import is useful to speed up industrialization, to meet domestic demand, to overcome natural disasters etc.  The imports enable consumers in the home country to enjoy a wide variety of products of high quality. It helps in improving the standard of living of masses. The role of warehouses plays an important role in the import activities.  The facility of warehousing of imported goods in Customs Bonded Warehouses, without payment of Customs duty, is permitted under the Customs Act, 1962. In addition to that, the provision of the Warehoused Goods (Removal) Regulations, 1963 and Manufacture and Other Operations in Warehoused Regulations, 1966 are also applicable. Basically, goods after landing are permitted to be removed to a warehouse without payment of duty and duty is collected at the time of clearance from the warehouse. 212 CU IDOL SELF LEARNING MATERIAL (SLM)

 The Warehousing Development and Regulatory Authority (WDRA) were constituted on 26.10.2010 under the Warehousing (Development and Regulation) Act, 2007. In addition, there are Exchange Controls Provisions made for the importers.  In modern times various devices have been adopted to control international trade and regulate international indebtedness arising out of international workings and dealings. The spirit of economic nationalism induces every country to look primarily to its own economic interests.  There are various exchange control methods at the government’s disposal, including a mixture of direct and indirect methods. Each method comes with its own advantages and drawbacks.  Governments can use various forms of exchange control strategies, but they must carefully consider each one and its effectiveness, given its economic and political landscape.  The IMF encourages the removal of exchange controls as they usually discourage international trade, inhibit the expansion of world trade, and distort the functioning of an efficient global trade market. 11.6 KEYWORDS  Procurement: The overall process related to final purchasing decisions to obtain the goods or services.  Order or Indent: The order placed by the buyer to purchase the goods and services from the company / third party.  Warehousing Stations: The places to deposit the goods.  Bonded Goods: The imported or Bonded goods are those which are kept in warehouses under the control of Customs authority.  Capital Flight: The large outflow of money/ assets out of a country due to economic uncertainties. 11.7 LEARNING ACTIVITY 1. Enumerate the list of authorities who give clearance of imported goods in India. ___________________________________________________________________________ ___________________________________________________________________________ 2) Explain the key objective/s to set up The Warehousing Development and Regulatory Authority (WDRA). ___________________________________________________________________________ ___________________________________________________________________________ 213 CU IDOL SELF LEARNING MATERIAL (SLM)

11.8 UNIT END QUESTIONS A. Descriptive Short Questions 1. Illustrate the key objectives of import trade. 2. Enlist the step involved in standard import transaction. 3. Explain the Section 53 of The Customs Act, 1962. 4. Define the concept of ‘Warehousing Stations.’ 5. Describe the ‘Warehouse Developing and Regulatory Authority Act.’ Long Questions 1. Discuss the powers and functions of Warehouse Developing and Regulatory Authority. 2. Analyse the provisions of Exchange Control for Imports applicable to agriculture, service industries. 3. Explain the procedure of the Retirement of Export Documents in detail. 4. Prepare the flow chart of Export Document Procedure end-to-end covering all stages. 5. Comment on the different provisions of The Customs Act, 1962 with respect to import procedures. B. Multiple Choice Questions 1. _______________refers to buying goods and services from another country. a) Export trade b) Import trade c) Bilateral trade d) None of these 2. Which of the following highlights the objectives of export trade? a) To speed up industrialization b) To meet domestic demand c) To improve the standard of living d) All of these 3. Ideally, the country’s __________________ should be more than ____________. a) Import, Export. b) Export, Import c) Both of the these d) Both should be parallel 4. The quotation is also known as _________________. a) Proforma Invoice b) Commercial Invoice 214 CU IDOL SELF LEARNING MATERIAL (SLM)

c) License d) Document or letter related to Credit 5. The Receipt of Shipment Advice includes ___________________. a) Invoice Number b) Bill Date c) Destination d) All of these Answers: 1-(b), 2-(d); 3-(a); 4-(a); 5-(d). 11.9 REFERENCES Textbooks  Johnson, T. E., & Bade, D. (2010). Export/Import Procedures and Documentation. AMACOM.  Paul, J., & Aserkar, R. (2013). Export Import Management. OUP India.  Kaur, R. &. (2012). Trade Openness, Exports and Economic Growth Relationship in India: An Econometric Analysis, DIAS Technology Review, Mumbai.  Ghauri, P.N. and Usunier, J.-C., (1996), International Business Negotiations, Oxford, Pergamonl/Elsevier. Reference Books  Helpman, Elhanan. (2011). Understanding Global Trade, Belknap Press, New York.  Datt, Ruddar; Sundharam, K.P.M. (2009). Indian Economy. New Delhi: S. Chand Group.  Panagariya, Arvind (2008). India: The Emerging Giant. Oxford University Press.  Porter, M., (1980), Competitive Strategy: Techniques for analysing Industries and Competitors, New York, The Free Press Websites  https://wdra.gov.in/web/wdra/annual-reports  https://www.maersk.com/  www.enterpreneur.com  www.shippinsolutions.com  www.economicsdiscussions.net 215 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT 12: IMPORT PROCEDURE & DOCUMENTATION Structure 12.0 Learning Objectives 12.1 Introduction 12.2 Import Documents 12.3 Transport Documents 12.4 Bill to Entry 12.5 Certificate of Inspection 12.6 Certificate of Measurements 12.7 Freight Declaration 12.8 Summary 12.9 Keywords 12.10 Learning Activity 12.11 Unit End Questions 12.12 References 12.0 LEARNING OBJECTIVES After studying this unit, student will be able to:  Classify the import documents.  Categorize the transport documents.  Evaluate the bill to entry.  Evaluate the certificate of inspection & measurement.  Explain the concept of ‘Freight Declaration’. 12.1 INTRODUCTION The globalization, liberalization and privatizations have transformed the world economy into the global village in order to meet the demands of new age, hyper-markets and government reforms. No one country can produce all the goods and provide the services being independent. The world is the family in a true sense. We need to help each other to survive and grow from time to time. The COVID-19 outbreak has sensitized the need of staying and growing together unlike never before. In addition, the natural resources are limited whereas the needs and wants are unlimited. In order to cope up with the present condition and fulfil the requirements, the countries opt for import trade activities. The present unit explains the various concepts, ideas related to the import documentation and procedures to meet the domestic demand of India. 216 CU IDOL SELF LEARNING MATERIAL (SLM)

Import is explained as bringing products into own country from a place outside national border. It can be said that Import trade refers to the purchase of goods from a foreign country. The procedure for import trade varies from country to country relies on the import policy, statutory requirements and customs policies of different countries. In almost all countries of the world import trade is controlled by the government. The aims of these controls are appropriate use of foreign exchange restrictions, protection of indigenous industries etc. The imports of goods have to follow a procedure. A manufacturer's import department often grows out of the purchase department, whose personnel have been assigned the responsibility of procuring raw material or components for the manufacturing process. For importers or trading companies that deal in finished goods, the import department may begin as a result of being appointed as the distributor for a foreign manufacturer. A fundamental shift is occurring in the world economy. The world is getting closer in view of cross border trade and investment, by distance, time zones, languages and by national differences in government regulation, culture and business systems and toward a world in which national economies are merging into one huge interdependent global economic system. Globalization is affecting firms that previously operated in a nice, easy, protected national market. It also illustrates the increasing importance of thinking globally. 12.2 IMPORT DOCUMENTS The import documentation procedure starts with the Registration Certificate to be gained by the Government of respective country. It is necessary and sufficient too. In addition, it serves as an official document, proof of identity in the international trade activities from time to time. The registration number is one time reference that is shared for joining hands with the traders, consultancies, agents, customs and other concerned authorities during the transaction process. Before making the list of import documents, the importer party has to apply and register officially with the Government of India through SUGAM portal. He or she (company representative) has to follow the given guidelines over there and submit the documents. Upon successful registration, the registration number would be generated that is used for future trade-related transactions. Below is the procedure to apply for Register Certificate as an importer. 217 CU IDOL SELF LEARNING MATERIAL (SLM)

Figure 12.1: Register Certificate Process After registration, the documents that are essential for import trade are as follows:  Importer Exporter Code (IEC) Number: No person can import or export goods without obtaining an Importer-Exporter Code (IEC) Number unless he has been specifically exempted. The IEC Number is taken from the Regional Licensing Authority.  Bill of Entry: This is a relevant document on which clearance of imported goods is affected. All goods discharged from a vessel, from foreign or coastal ports are cleared.  Bill of Entry in the Prescribed Form: The Bill of Entry form has been standardized by the Central Board of Excise and Customs. Four copies of bill of entry are submitted original and duplicate for customer departments, triplicate is owner's copy, and the fourth copy is for the purpose of foreign exchange which is deposited to the bank. There are three types of Bill of Entry as discussed below: i. Bill of Entry for home consumption (white in colour): where an importer wants to get his goods cleared in one lot, he has to present the Bill of Entry for home consumption. ii. Bill of Entry for warehousing (into bond, yellow in colour): Where an importer wants to shift goods to a warehouse and thereafter gets his goods cleared in small 218 CU IDOL SELF LEARNING MATERIAL (SLM)

lots, he has to present ` into bond' bill of entry. Reason maybe that he is, unable to pay duty leviable on all goods at one instance or may be because of storage problem. iii. Ex-Bond Bill of Entry (Green in Colour): When an importer wants to remove goods from the warehouse, he has to present an Ex-Bond Bill of Entry which is green in colour. For imports through the medium of post bill of entry is unavailable. Instead, another “waybill” is prepared by the foreign post office for assessment of duty.  Export Bill: The export invoice is published by the trader (supplier). It must include all of your and supplier’s tax information, in addition to a descriptive detail of the merchandise, agreed INCOTERMS (FOB, CIF, etc.), product sale price and breakdown of freight. In case the sale includes freight and insurance (CIF), it is usual that the supplier (we frequently observe it on purchases via Alibaba) does not specify the price of freight as well as insurance. In these cases, the customs officer can request the freight invoice, which generates delays during customs approval and additional costs.  Content List (List of Packaging): A list of content is a detailed list of packages, weights, measures, individual explanation of the merchandise, references, etc. Depending on the shipment and quantities, it is usual that the invoice already records this information, which means that these documents to import merchandise are not absolutely necessary.  Certificate (Document) of Origin (FORM A): Countries negotiate reciprocal agreements that grant certain tariff advantages for the entry of goods into the country (reduced tariffs or exemption). To benefit, you must prove the origin / country regarding product, with the original of this document to import merchandise. Your freight forwarder can inform you if your product enjoys these advantages.  Bill of Lading (B / L): This one is a document or documents to import merchandise provided by the concerned shipping company or its agent. It is defined as a transport contract and accredits ownership of the merchandise. Bill of lading is issued in three originals and three or furthermore copies. This is especially relevant since the shipping company will require the delivery of the three originals to deliver the merchandise and during loss it may require bank guarantees for two or more times the costing of the merchandise and for more than two years. You can use other B / L modes, such as Telex relay or Sea waybill, in which the presentation of original documents is not necessary. Ask your freight forwarder in which cases it is convenient.  Aerial Knowledge (AWB): Air knowledge is equivalent to B / L, but for air shipments, it represents the transport contract and proves ownership of the merchandise. The airline delivers the merchandise to the consignee or its authorized freight forwarder. 12.3 TRANSPORT DOCUMENTS The transport documents are contracts for carriage of goods exchanged between different actors. They differ depending on the mode of carriage used. Transport documents lie at the heart of international trade transactions. These documents are generated by concerned 219 CU IDOL SELF LEARNING MATERIAL (SLM)

shipping line, airline, international trucking company, railroad, freight forwarder or Logistics Company.  Bill of Lading (Waybill): The waybill (B/L) is a contract for maritime carriage that specifies the taking of responsibility, or the loading, of goods by the carrier. It contains detailed information on the goods, the boat and the port of destination. Waybill is the document of title to the goods that gives right to their ownership. The carrier commits to delivering the carriage to the person who holds the bill of lading and who will come and collect the goods. As a transferable title: the originals may be transferred by endorsement.  Sea Waybill: The Sea Waybill documents only the carriage contract signed by the shipper and the maritime transport line and represents the slip of the goods. It contains detailed information on the port of embarkation, the port of destination, the identity of the ship, the details of the shipper, the name and the address of the recipient. Different from the Maritime B/ L (Bill of Lading), the Sea Waybill is not a document of title to the goods and is non-transferable.  Consignment Note (CMR): The CMR consignment note certifies the carrier's taking of responsibility for the merchandise and shipping upon signature by the carrier. It documents a carriage contract of the goods that exists independently of them. It must be established in a type specified by the \"Convention on the Contract for the International Carriage of Goods by Road\" (CMR).  Air Waybill (AWB): The Air Waybill constitutes the proof of the carriage contract, the taking of responsibility for the goods and the documentation of the prices. It certifies the effective shipment once the carrier has entered the date and number of the flight. It is standardized by the IATA (International Air Transport Association). Moreover, it develops solutions for the dematerialization of AWB's. In the case of grouping, when goods are gathered with other goods to complete a load for the same destination, the forwarder that groups the goods becomes legally, with respect to the carrier, the shipper and thus the drafter of the parent air waybill, referred to as the Master Air Waybill (MAWB). A \"daughter\" air waybill referred to as the House Air Waybill (HAWB) documents the contract between the forwarder and every shipper included in a grouping.  Rail Consignment Note (CIM): The Rail Consignment Note (CIM) or International Consignment Note is a document governed by the 1980 Convention concerning International Carriage by Rail (COTIF-CIM). It is issued by the carrier and is counted as the rail carriage contract. This document is non-transferable and is not requested upon arrival. Regardless of the Inco term agreed-upon with the buyer, the seller must keep a duplicate of the transport document to demonstrate, in the case of a tax audit, the VAT exemption. 220 CU IDOL SELF LEARNING MATERIAL (SLM)

12.4 BILL TO ENTRY The acronym of Bill of Entry is BOE which is a document that is legally that is acceptable in terms of law. BOE is filed by exporters or importers on or before the arrival of the shipment of the imported goods. BOE plays important in the clearance of the shipment as it has to be submitted to the Customs department. BOE shall be raised for both household consumption goods and bond clearance. Customs Clearance Procedure: The authorized officer will examine the shipment after the Bill of Entry (BOE) is furnished. Afterwards, for glade the shipment from customs the importer or exporter has to pay the customs duty, IGST and CESS applicable. The importer or exporter can claim a refund of GST and CESS paid but custom duty cannot be claimed back.  Content of Bill of Entry (BOE) Port Code and License Number i. IEC (Import Export Code), Customs House Agent Code and Import/exporter identity (name and address). ii. The importers or exporters address will get auto filled in case if the taxpayer is registered. iii. Details of the Vessel, country of origin and its code, country of consignment and is code, shipment court, landing bill date. iv. Details of goods a. Quantity of goods b. Goods description, serial number and unit code of goods c. Package weight and value d. For every class, there should be a different goods description e. Tariff of custom consisting exemption notification and year v. Customs duty: a. Duty code nature b. Landing and handling charges including the assessable goods costing c. Basic customs duty applicable vi. Tax Levied a. IGST along with code, rate and amount b. Amount of CESS c. Exemption notification for claiming exemption from IGST and compensation CESS d. The total amount of duty in words and the sum of packages in words vii. Two declarations and signatures for Customs officer and importer/exporter  Bill of Entry (BOE) Format: According to the guidelines of the government, here is how the BOE look like under the GST regime: 221 CU IDOL SELF LEARNING MATERIAL (SLM)

Figure 12.2: Bills of Entry Sample Bill of entry can normally be filed to clear the goods after the Import General Manifest (IGM) is presented to concern Customs Officers by the Steamer Agents / Airlines, as the case may be. In uniquely treated cases the customs authorities may note the Bill of entry before the Manifest is filed. In addition to the goods entered in the vessels manifest Bills of Entry are also needed for the clearance of: i. Ship’s Stores, if in considerable quantities ii. Ship’s ballast such as stone, sand Shingla etc. iii. Salvaged goods iv. “Sweepings” of Import Cargo. 12.4 CERTIFICATE OF INSPECTION The Certificate of Inspection is required usually for import of consumer goods such as soft- lines, hard-lines, electronic goods, luxury goods; commodities such as bulk oil shipments and bulk scraps shipments, inspection certificate is counted as the most important trade documents. The inspection certificate, sometimes called as certificate of inspection or pre- shipment inspection certificate is a trade document used in worldwide trade transactions, issued generally by an independent inspection company after conducting a related inspection, certifying whether or not the goods are in question are in conformity with the specifications stated on the sales contract. An inspection certificate, which is generated by an independent trustable company, verifies whether or not the goods are in conformity with the sales contract in regard to quality, quantity, tariff classification, import eligibility and price of the goods for customs purposes.  The Types of Inspection Certificates Inspection certificates can be divided under two main categories: i. Commercial Inspection Certificates ii. Official Inspection Certificates 222 CU IDOL SELF LEARNING MATERIAL (SLM)

In some instances, buyers could not trust the sellers' production quality or else conditions may dictate that the quality of the goods must be approved before they will be dispatched from the exporter's factory. In such a circumstance, an independent company, which is trustable by both traders (buyer and seller), must be checking the goods and verifies its findings with a certificate specifying whether or not the goods are in conformity with the sales contract. In addition to commercial inspection certificates, it is possible to talk about some form of official inspection certificates, which are requested by the custom offices of some importing countries during the import procedures.  The List of Countries Demands Official Pre-Shipment Inspection Certificates Angola, Bangladesh, Benin, Burkina Faso, Burundi, Cambodia, Cameroon, Central African Republic, Comoros, Republic of Congo (Brazzaville), Democratic Republic of Congo (Kinshasa), Cote d’Ivoire, Ecuador, Ethiopia, Guinea, India , Indonesia, Iran, Kenya , Kuwait, Liberia, Madagascar, Malawi, Mali, Mauritania, Mexico, Mozambique, Niger, Senegal, Sierra Leone, Togo, Uzbekistan.  The Interest of An Inspection Certificate for Exporters and Importers i. Inspection certificate clears doubts about quality of the goods and assists in achieving desired level of quality. ii. Inspection certificate evidences the quality of the goods by a 3rd party. In case importer receives poor quality goods despite a positive inspection certificate, it is possible to claim compensation from the inspection company. iii. Inspection certificate may function as documentary evidence under credit slip “letter of credit” transactions.  The Content of Certificate of Inspection i. Applicant :(The buyer`s name on whose regards company has opened the LC) ii. Consigned to the Order of :( The LC identity that opened bank or buyer bank’s) iii. Beneficiary: (The seller`s identity) iv. LC No. and LC Date v. Customs Tariff Code No. vi. Proforma Invoice No. and Date vii. Purchase Order No. and Date viii. Insurance Policy No. ix. Country of Origin x. Place of Inspection xi. Date of Inspection xii. Scope of Inspection xiii. Port of Discharge xiv. Type of Packing xv. Number of Packages xvi. Details of Goods (with reference to the packing list number and Date) 223 CU IDOL SELF LEARNING MATERIAL (SLM)

xvii. Bill of Lading No. and Date xviii. Gross weight Conclusion (as per LC, 46.A clause , if even there is syntax error in the LC xix. must not be corrected) Name and Signature of Authorized Person xx. Place and Date of Issue xxi. 12.6 CERTIFICATE OF MEASUREMENTS Freight can be charged either on the foundation of weight or measurement. When it is charged on weight basis, the weight declared by exporter is accepted. However, certificate of measurement from the approved organisation may be obtained by the exporter and supplied to the shipping company for calculation of necessary freight. This certificate contains the identification of vessel, the port of destination, description of goods, quantity, length, breadth, depth etc. of packages. Importers are obligatory to submit accurate weight information about cargo in document form, such as for \"the amount of the trade transaction\" and \"Declaration for the customs\". The certificates should have been recognized for many years as reputable and credible among international traders, forwarders and authorities concerned with international trading. 224 CU IDOL SELF LEARNING MATERIAL (SLM)

Figure 12.3: Certificate of Measurement: Sample 225 CU IDOL SELF LEARNING MATERIAL (SLM)

12.7 FREIGHT DECLARATION An export declaration is a type of form submitted at the port, providing details about the supplies that are bound for export. The export declaration is required each time goods are exported to a country outside the EU, and the document is used by the customs authority to control exports. Goods can be declared by means of electronic, verbal and conclusive customs declaration. The standard is the electronic registration if the invoice cost of the goods is 1000 Euro or more, or the weight is 1000 kg or more. Depending on the type of trading material and the price range of the goods, the application might be made verbally. Gerlach can declare by means of electronic and conclusive customs declaration. These are the lists that contain the supply details that are being imported or exported when a citizen or visitor enters a customs territory (country's borders). Most countries require travellers to complete a customs declaration form when bringing notified goods (alcoholic drinks, tobacco products, animals, fresh food, plant material, seeds, soils, meats, and animal products) across international borders. Posting items via international mail also requires the sending party to complete a customs declaration form. The declaration form helps the customs to control the goods that entered the country, which can affect the country's economy, security or environment. A levy duty may be applied. Travellers have to declare everything they acquired abroad and possibly pay customs duty tax on goods. Some countries offer a duty-free allowance of certain products which may not need to be declared explicitly. The Central Board of Indirect Taxes and Customs handles the customs imports and exports of India.  Items prohibited for import:  Maps and literature where Indian external boundaries have been shown incorrectly  Narcotic drugs and psychotropic substances  Goods violating any of the legally enforceable intellectual property rights  Wildlife products  Counterfeit currency notes/coin or fake currency notes  Specified Live Birds and animals 226 CU IDOL SELF LEARNING MATERIAL (SLM)

Figure 12.4: Sample of Freight Declaration 12.8 SUMMARY  International trade is a vital part of development strategy and it can be an effective instrument of economic growth, employment generation and poverty alleviation. Market conditions change, almost daily, requiring quick response and more importantly, anticipation of the future requirements is the need of the hour.  Imports in addition to Exports deals, documentation show a crucial role. Especially during imports, the accessibility of right and relevant documents, the rightful information within the documents including the timeliness while submitting the proper documents and the filing of prerequisite applications for Clearance of custom authorities will determine the proficiency of the authorities dealing with clearance process. Any kind of holed up in the filing or unavailability of requisite documents can hinder the process. Thereby, 227 CU IDOL SELF LEARNING MATERIAL (SLM)

importer has to incur demurrage present on imported cargo but also rise to lose few business opportunities.  Customs Clearance requires documentation that is going to be deposited by the importer, airline, the shipping line or hired Freight Forwarder and Customs documentation is prepared and given by the Clearing Agent on the name of the importer.  Some documents are responsibility of Importer side: i. Commercial Invoice - It is the primary document that will certifies the deal, gives the detailed description of the items and reflects the pricing of the cargo. ii. Customs valuation depends on the value shown on the CI (Commercial Invoice). Customs verifies the charges fixed in the document of commercial invoice and it can question about the rates that are applied to check if it has a doubt over the rates setting is not as per the international market or the presented invoice is either undervalued for duties. iii. Packing List - It is a must to put the desired shipping marks on each cargo cover having every individual parcel. The full description about the number of packed parcels within the consignment, related dimension, shipping marks, the net weights of all the parcels with the number of their units mentioned in each and every parcel is designed in the shape of packing list. iv. Packing List is available to identify the details of parcels as a belonging for the particular consignment in the given Invoice. v. Certificate of Origin - some bilateral and few multi-lateral deals would have enjoyed the favourable tariffs for import duties. In those cases, in which the consignments are to be exported from member countries, the designated agency for export issues the Certificate of Origin to the shipper for custom use. Based on the certificate, the Custom Department of shipping country distribute the cargo within specific schedule. vi. Certificate of Origin (C/O) helps to refrain third party sites from giving passages to imports through its member countries and it will be affecting the third-party deals/ exports to shun duty, its quantity or the license restrictions. vii. Bill of Lading (B/L) or Airway Bill (Waybill) - Bill of Lading (B/L) is an adjustable multi transport document generated by the cargo line certifying the carriage of said cargo with the specific invoice in concern of traders (exporter or importer) depending upon the conditions of sale. ‘On Board Bill of Lading’ is generally considered as the apt bill that will signifies that the cargo is ready for dispatch, ‘On Board’, the loaded vessel or the ship. This is single documents which is required for dialogue of payment from traders i.e., importer to the respective exporter.  The Certificate of Inspection (C/I) is required for importing consumer goods like soft- lines, hard-lines, electronic goods, luxury goods; commodities such as bulk oil shipments and bulk scraps shipments, inspection certificate is one of the most important trade documents. 228 CU IDOL SELF LEARNING MATERIAL (SLM)

 An export declaration is a type of form submitted at the port, providing details about the goods that are bound for export. The export declaration is required each time goods are exported to a country outside the EU, and the document is used by the customs authority to control exports.  Goods can be declared by means of electronic, verbal and conclusive customs declaration. 12.9 KEYWORDS  Air Waybill- The flexible transport document is given by an Airline or the Freight Forwarder which can consolidate the airfreight shipment.  Conformity – The process whereby people change their beliefs, attitudes, actions, or perceptions to match more closely those held by groups to that they belong.  Counterfeit Currency Notes- The illegal/ fake currency notes produced  Wildlife Products- Products that are derived from non-domesticated animals or plants, usually extracted (Ex. elephant tusks).  SUGAM- The online portal designed and developed by the Government of India to apply and register as a firm or an individual for import-export trading activities. 12.9 LEARNING ACTIVITY 1. Fill the blanks in the table with the list of compulsory documents needed for import trade. Sr. No. Documents 1] 2] 3] 4] 5] 6] 7] 8] 9] 10] 2. Complete the activity by filling the items to be included on Content of Bill of Entry (BOE). ___________________________________________________________________________ ___________________________________________________________________________ 12.11 UNIT END QUESTIONS A. Descriptive 229 CU IDOL SELF LEARNING MATERIAL (SLM)

Short Questions 1. Differentiate between the internal and international trade. 2. State the relationship in between customs authorities and import trade. 3. Explain the procedure of import documents with examples. 4. Comment on ‘Transport Documents.’ 5. Discuss about ‘Freight Declaration.’ Long Questions 1. Differentiate amongst three different types of bills of entries and explain their use in various situations. 2. “The content list is also called as Packing List.” Justify your answer with examples. 3. Prepare the Bill of Entry sample depends on the key elements you studied in the unit. 4. Analyse the scope and significance the Certificate of Inspection from import trade point of view. 5. Explain the difference between Certificate of Inspection and Certificate of Measurement with examples. B. Multiple Choice-Based Questions 1. The import documentation procedure starts with __________________ to be gathered by the Government of respective country. a) The Registration Certificate b) Certificate of Inspection c) Certificate of Measurement d) All of these 2. The IEC Number is taken from the ______________________ authority. a) Customs b) Central government c) State government d) Regional Licensing 3. The export invoice is issued by _______________. a) The supplier b) Customs authority c) Government d) None of these 4. __________________ is issued in three originals and three or more than three copies. a) Export Bill 230 CU IDOL SELF LEARNING MATERIAL (SLM)

b) Bill of Lading c) Bill of Entry d) None of these 5. No person can import or export goods without obtaining ________________ number. a) IEC b) NEC c) Trade Account d) All of these Answers: 1-d; 2-d; 3-a; 4-b; 5-a. 12.12 REFERENCES Textbooks  Janardhan, N. (2018). Electronic Commerce. Indian Institute of Foreign Trade, New Delhi.  Ram Paras (2016). Export-What? Where? How? Anupam Publication, Delhi.  Ghauri, P.N. and Usunier, J.-C., (1996), International Business Negotiations, Oxford, Pergamonl/Elsevier.  Gopal, C. (2007). Export Import Procedures - Documentation and logistics. New Age International. Reference Books  Seyoum, B. (2009). Export-Import Theory, Practices, and Procedures. Taylor & Francis Publication.  Paul, J., & Aserkar, R. (2013). Export Import Management. OUP India.  Kumar, Dharma (2005). The Cambridge Economic History of India, Volume II : 1757–2003. New Delhi: Orient Longman.  Ford, D., (1997). Understanding Business Markets: Interactions, Relationships and Networks, The International Marketing and Purchasing Group (IMP), The Dryden Press. Websites  http://www.bizeurope.com/  https://www.impgroup.org/  www.morethanshipping.com  www.howtoexportimport.com 231 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT 13 : TRADE POLICIES Structure 13.0 Objectives 13.1 Introduction 13.2 EXIM Policy 13.3 Foreign Trade Policy 2004-09 13.4 Provisions Negative List 13.5 Restricted List 13.6 Shipment of Export Cargo: By Sea,-Air-ICD Courier- land- Customs Station and by Post 13.7 Summary 13.8 Keywords 13.9 Learning Activity 13.10 Unit End Questions 13.11 References 13.0 LEARNING OBJECTIVES After studying this unit, student will be able to:  Explain the different trade policies in India and world.  Develop a comprehensive approach for trade policies.  Compare and contrast National and International trade policies. 13.1 INTRODUCTION The interaction between international trade and development is a subject of such complexity and importance that it has rarely ceased to attract the attention of economic theorists, analysts of the world economy, and designers of the international economic system. Inevitably, therefore, it has drawn into its fold and its many controversies of the best minds of each generation of economists: dating from Adam Smith, David Ricardo, and John Stuart Mill, down to Alfred Marshall and, in our own times, to Dennis Robertson, Ragnar Nurkse, Jacob Viner, Gottfried Haberler, and Arthur Lewis. Trade policy can constitute a key tool for the achievement of the MDGs. Using trade policy as an instrument of industrial diversification and the creation of value added remains key. Moreover, exports of supplies and services can provide increased incomes for poor people, government revenue, opportunities for employment, including high paid jobs abroad, particularly for women and young jobseekers. Exports can thus chip into the achievement of MDGs, by lifting people from scarcity (MDG1) and empowering women (MDG3), while supporting MDG8, whose target 12 aims at a trading system in which developing countries 232 CU IDOL SELF LEARNING MATERIAL (SLM)

can extract greater benefit from the international trading system. However, the gains from exports may accrue to the richer segments of the population, and export industries can damage the environment and otherwise undermine the livelihoods of poor people. The imports of supplies and functional services can crowd out domestic producers, undermine livelihoods, exacerbate inequalities and push people into poverty. At the same time, trade liberalization can bring vital capital and technology, including essential inputs for improving infrastructures and increasing productivity, including that of poor people. All WTO members are taking part in the Doha Round of multilateral trade negotiations, and most are actively engaged in the negotiation of Free Trade Agreements (FTAs). In designing and pursuing a trade policy to achieve the MDGs, developing countries face the constraints posed by the trade agreements that they have accepted. The WTO Multilateral Trade Agreements (MTAs) are both extensive, i.e., they discipline a vast range of policy areas central to development strategies, and intrusive, i.e., they impose a detailed legal framework on national economic and social policies. In addition, many developing countries have entered into regional and bilateral, often extra-regional, FTAs which go beyond the WTO (“WTO plus”) in view of their scope and intrusiveness. This new international trading system thus has the disadvantage of constricting the policy space available for countries to pursue a development oriented national trade policy. Nevertheless, this presents the opportunity for developing countries to press for international trade rules and seek commitments on the behalf of their trading partners that are supportive of their development goals - which is precisely what MDG8 is intended to achieve. However, this requires that developing countries are able (a) to define such goals in their national policies, and (b) effectively pursue these goals in global trade negotiations. Trade negotiations are aimed at achieving the mutual reduction of tariffs and other barriers to trade in goods among the participants. However, they also deal with measures affecting trade in services (e.g., communications, finance, transportation, energy, immigration, even health and education and sanitation), the stream of investment and the enforcement of intellectual property rights. The prevailing underlying view is that this will lead to improved access to markets and a more efficient allocation of resources, stimulating economic growth and development. Trade policy should be focused on achieving specific development goals such as the eradication of poverty and the achievement of the MDGs. It should aim at (a) enabling poorer people to compete in a globalized world market, by increasing their productivity. It should also (b) ensure the most equitable sharing of benefits of business, so that poor people, women and other disadvantaged groups can draw benefits from exports and equality within the country and between social groups, regions and genders can be promoted. Such policies should (c) shield vulnerable groups from the impact of trade liberalization when this threatens their livelihoods and (d) ensure that the liberalization of cargo and services effectively contributes to these objectives. Keep in mind that some MDGs, such as access to energy, water and health services, are now the subject of international trade negotiations. Governments must ensure that the international commitments they enter are supportive of 233 CU IDOL SELF LEARNING MATERIAL (SLM)

these goals. International trade negotiations must aim at providing free access to markets for the goods and related services of developing countries, while committing stronger trading partners to measures supportive of these goals. 13.2 EXIM POLICY Export Import Policy or better known as Exim Policy is a set of guidelines and instructions related to the import and export of goods. The Export Import Policy is updated every year on the 31st of March and the modifications, improvements and new schemes become effective from 1st April of every year. Export Import Policy or better known as Exim Policy is a set of guidelines and instructions related to the import and export of goods. The Government of India notifies the Exim Policy for duration of five years (1997-2002) under Section 5 of the Foreign Trade (Development and Regulation Act), 1992. The Export Import Policy is updated every year on the 31st of March and the modifications, improvements and new schemes become effective from 1st April of every year. All types of changes or modifications related to the Exim Policy is normally announced by the Union Minister of Commerce and Industry who coordinates with the Ministry of Finance, the Directorate General of Foreign Trade and its network of regional offices. Duty free import facility for service sector having a minimum foreign exchange earning of Rs. 10 lakhs. The duty-free entitlement shall be 10 percent of the average foreign exchange earned in the preceding three licensing years. However, for hotels the same shall be 5 % of the average foreign exchange earned in the preceding three licensing years. Imports of agriculture and dairy products shall not be allowed for imports against the entitlement. The entitlement and the goods imported against such entitlement shall be non- transferable. 13.3 FOREIGN TRADE POLICY 2004-09 PROVISIONS Following are the highlights of the new Foreign Trade Policy (2004-09), announced by Commerce and Industry Minister Kamal Nath.  Simplifying procedures and bringing down transaction costs.  Adopting the fundamental principle that duties and levies must not be exported.  Identifying and nurturing different special focus areas to facilitate development of India as a global hub for manufacturing, trading and services.Special Focus Initiatives have been prepared for Agriculture, Handicrafts, Handlooms, Gems & Jewellery and Leather & Footwear sectors.  The threshold limit of designated Towns of Export Excellence is reduced from Rs 1000 crore to Rs 250 crore in these thrust sectors.  A new scheme called Vishesh Krishi Upaj Yojana has been introduced to boost exports of fruits, vegetables, flowers, minor forest produce and their value-added products. 234 CU IDOL SELF LEARNING MATERIAL (SLM)

 Duty free import of consumables for metals other than gold and platinum allowed up to 2 per cent of FOB value of exports.  Duty free re-import entitlement for rejected jewellery allowed up to 2 per cent of FOB value of exports.  Duty free import of commercial samples of jewellery increased to Rs 1 lakh.  Import of gold of 18 carat and above shall be allowed under the replenishment scheme.  Duty free import of trimmings and embellishments for Handlooms & Handicrafts sectors increased to 5 per cent of FOB value of exports.  A new Handicraft Special Economic Zone shall be established.  Duty free entitlements of import trimmings, embellishments and footwear components for leather industry increased to 3 per cent of FOB value of exports.  A new scheme to accelerate growth of exports called Target Plus has been introduced.  Another new scheme called Vishesh Krishi Upaj Yojana (Special Agricultural Produce Scheme) has been introduced to boost exports of fruits, vegetables, flowers, minor forest produce and their value-added products. Export of these products shall qualify for duty free credit entitlement equivalent to 5 per cent of FOB value of exports.  To accelerate growth in export of services so as to develop a powerful and unique Served from India brand instantly recognised and respected the world over, the earlier DFEC scheme for services has been revamped and re-cast into the Served from India scheme.  Additional flexibility for fulfilment of export obligation under EPCG scheme in order to reduce difficulties of exporters of merchandise and their services.  Technological up gradation under EPCG scheme has been facilitated and incentivised.  Transfer of capital goods to group companies and managed hotels now permitted under EPCG.  In the scenario of movable capital goods in the service sector, the requirement of installation certificate from Central Excise has been done away with.  Export obligation for specified projects shall be calculated based on concessional duty permitted to them. This would improve the viability of such projects.  Import of fuel under DFRC entitlement shall be allowed to be transferred to marketing agencies authorised by the Ministry of Petroleum and Natural Gas.  The DEPB scheme would be continued until replaced by a new scheme to be drawn up in consultation with exporters.  A new rationalised scheme of categorisation of status holders as Star Export Houses has been introduced.  EOUs shall be exempted from Service Tax in proportion to their exported shipment.  Import of capital goods shall be on self-certification basis for EOUs. 235 CU IDOL SELF LEARNING MATERIAL (SLM)

 For EOUs engaged in Textile and Garments manufacture leftover materials and fabrics up to 2 per cent of CIF value or quantity of import shall be allowed to be disposed of on payment of duty on transaction value only.  Import of second-hand capital goods shall be permitted without any age restrictions.  Minimum depreciated value for plant and machinery to be re- located into India has been reduced from Rs 50 crores to Rs 25 crores.  An exclusive Services Export Promotion Council shall be set up in order to map opportunities for key services in key markets, and develop strategic market access programmes, including brand building, in co-ordination with sectorial players and recognized nodal bodies of the services industry.  Government shall promote the establishment of Common Facility Centres for use by home-based service providers, particularly in areas like Engineering and Architectural design, Multi-media operations, software developers etc., in State and District-level towns, to draw in a vast multitude of home-based professionals into the services export arena.  Validity of all licenses/entitlements issued under various schemes has been increased to a uniform 24 months.  Number of returns and forms to be filed has been reduced. This process shall be continued in consultation with Customs and Excise.  Enhanced delegation of powers to Zonal and Regional offices of DGFT for speedy and less cumbersome disposal of matters.  Time bound introduction of Electronic Data Interface (EDI) for export transactions. 75 per cent of all export transactions to be on EDI within six months.  Financial assistance would be provided to deserving exporters, on the recommendation of Export Promotion Councils, for meeting the costs of legal expenses connected with trade-related matters.  A new mechanism for grievance solution has been formulated and put into place by a Government Resolution to facilitate speedy solution of grievances of trade and industry.  The new Foreign Trade Policy of the Union Government was unveiled by the commerce Minister Shri. Kamal Nath on August 31, 2004. With foreign trade largely freed and import duties falling progressively, the policy has necessarily restricted itself to a facilitating role rather. This policy stated, “Trade is not an end in itself, but a means to economic growth. 13.4 PROVISIONS NEGATIVE LIST The negative list for imports consists of:  Freely Importable Items: Import of all items, except those included in the Prohibited List, is permissible free of duty for export production under a Duty Exemption Scheme. 236 CU IDOL SELF LEARNING MATERIAL (SLM)

Most capital goods fall into this category. Items in this category may not need import licences and may be freely imported by any individual or entity.  Prohibited List: The import of four items in India those has been completely banned are as follows: i. Tallow, Fat and/or Oils, rendered, un-rendered or otherwise, of any animal origin including the following: a. Lard stearine, oleo stearine, tallow stearine, lard oil, oleo oil and tallow oil not emulsified b. mixed or prepared in any way c. Meat's-foot oil and fats from bone or waste d. Poultry fats, rendered or solvent extracted e. Fats and oils of fish/marine origin, whether or not refined, excluding cod liver oil, squid liver f. Oil or a mixture thereof and Fish Lipid oil containing Eicospentaenic acid g. Decosahexaenoic acid h. Margarine, imitation lard and other prepared edible fats of animal origin i. Animal rennet. j. Wild Animals including their parts and products and ivory. India has recently announced that it will procure 101 items used by its armed forces - the Army, the Navy, the Air Force and the Coast Guard - only from domestic manufacturers either in the private sector or in the public sector. Indian Defence Minister Rajnath Singh recently announced a negative list of these 101 items whose imports will progressively be banned from between this year and 2025. These include an array of weapon systems and Defence platforms including artillery guns, helicopters, assault rifles, corvettes, sonar systems, transport aircraft, ammunition, radars, conventional diesel-electric submarines, communication satellites and ship borne cruise missiles, among others. Defence Minister Rajnath Singh during the launch of the Department of Defence Production, MoD's portal SRIJAN. The minister has stated that the Make in India mantra would meet the wishes of the country's armed forces. India has held on to the dubious distinction of being among the world's three largest importers of Defence equipment despite being the world's fifth largest economy and the country having the third-largest Defence budget after the US and China in 2019, as per the Stockholm International Peace Research Institute (SIPRI), which tracks the global Defence trade and the spending by individual countries. The signing of these MoUs & contracts will give impetus to Self-reliance in the technologies related to Defence Manufacturing. Self-reliance in Defence manufacturing has not been envisioned only as domestic requirement but also with the perspective to build export capabilities. In addition to announcing that the Defence Ministry would soon come out with a negative list of imports, she had, in a massive push to the Make in India campaign, said the 237 CU IDOL SELF LEARNING MATERIAL (SLM)

FDI limit in Defence units was being increased from 49 per cent to 74 per cent. But some analysts have pointed out that previous attempts at trying to build a viable Defence -industrial base in India have been unsuccessful. They mention to the negligible amount of foreign direct investment (FDI) that has flowed into newly arrived Rafale Aircraft of the Indian Air Force at the Air Force Station in Ambala. Foreign arms production companies will set up base in India buoyed by a bigger stake in order to control management and decision making. Following the announcement of the negative list, the Indian armed forces will, perforce, have to buy whatever equipment is designed, developed and manufactured in India by these JVs,” he added. Foreign arms makers want management control. There's another reason why the new Defence procurement policy is expected to lead to the building of a vibrant Defence - industrial base in India: The government had made provisions for a separate procurement budget for sourcing Defence platforms from Indian companies or India-based joint ventures. 13.5 RESTRICTED LIST All goods other than the entries in the export licensing schedule along with its appendices are freely exportable. The free exportability is however subject to any other law for the time being in force. Goods not mentioned in the Schedule are deemed to be freely exportable without conditions under the Foreign Trade (Development and Regulations) Act, 1992 and the rules, notifications and other public notices and circulars issued there under from time to time. The export licensing policy in the schedule and its appendices does not preclude control by way of a Public Notice Notification under the Foreign Trade (Development and Regulations) Act, 1992. Export of Arms and related material to Iraq is prohibited. However, export of Arms and related material to Government of Iraq shall be permitted subject to “No Objection Certificate‟ from the Department of Defence Production. [S. No. 3D (i) Substituted by Notification 67(RE)/12.02.2014]. (ii) Direct or indirect export of all items, materials, equipment’s, goods and technology which could contribute to Iran’s enrichment related, reprocessing or heavy water related activities, or to development of nuclear weapon delivery systems including those listed in INFCIRC/254/Rev.9/Part 1 and INFCIRC/254/Rev.7/Part 2 (IAEA Documents) and items listed in S/2010/263 (UN Security Council Document) or any items related to nuclear and missile development programmes is prohibited. All the UN Security Council Resolutions/Documents and IAEA Documents referred to above are available on the UN Security Council website (www.un.org/Docs/sc) and IAEA website (www.iaea.org). (iii) Direct or indirect export of following items, whether or not originating in Democratic People’s Republic of Korea (DPRK), to DPRK is prohibited: All items, materials equipment, goods and technology including as set out in lists in documents S/2006/814, S/2006/815 (including S/2009/205), S/2009/364 and S/2006/853 (United Nations Security Council Documents) INFCIRC/254/Rev.9/Part 1a and INFCIRC/254/Rev.7/Part 2a (IAEA documents) which could contribute to DPRK‟s nuclear- related, ballistic missile-related or other weapons of mass destruction-related programmes. 238 CU IDOL SELF LEARNING MATERIAL (SLM)

(iv) Export of rough diamonds to Cote devoir is prohibited in compliance to Paragraph 6 of UN Security Council Resolution(UNSCR) 1643 (2005). (v) Export of rough diamond [ITC (HS) Code 710210, 710221 or 710231) to Venezuela shall be Prohibited in view of voluntary separation of Venezuela from the Kimberley Process Certification Scheme (KPCS). No Kimberley Process Certificate shall be accepted / endorsed / issued for export of rough diamond to Venezuela. (vi) In addition to above, export to other countries will be subject to conditions as specified in Para 2.1 of the Foreign Trade Policy 2009-14 and Para 2.2 of the Handbook of Procedures 2009-2014 (Vol. I) and other conditions mentioned in the title ITC (HS) Classification of Export and Import items. 13.6 SHIPMENT OF EXPORT CARGO: BY SEA,-AIR-ICD COURIER- LAND- CUSTOMS STATION AND BY POST Export cargo can be exported to the overseas buyer by sea, air or land. However, shipment by sea is the famous and generally resorted to, as it is comparatively cheaper. Besides, the ship's capacity is far greater than other modes of transportation. Nevertheless, transportation by air is utilized for export of expensive items like, diamonds, gold, etc. The shipment stage includes the following steps:  Reservation of Shipping Space: Once the export contract is finalised, the exporter reserves the required space in the vessel for shipment. On accepting the exporter's request, the shipping company issues a shipping Order. The original copy of the shipping order is provided to the exporter and the duplicate is forwarded to the commanding officer of the ship. The shipping order is an instruction by the shipping company to the commanding officer of the ship that the goods according to the details given should be received on board.  Arrangement of Internal Transportation till the Port of Shipment: The exporter makes necessary arrangements for transportation of goods to the port either by road or railways. On loading goods into the railway wagon, the railway authorities issue a 'Railway Receipt', that is either 'freight paid' or freight to pay'. It serves as a title to the goods. The exporter endorses the railway receipt in favour of his agent to enable him to take delivery of the goods at the port of shipment.  Preparation and Processing of Shipping Documents: As the goods reach the port of shipment, the exporter should issue detailed instructions to the C&F agent for the shipment of cargo along with complete documents listed below: Letter of Credit next to the export contract or export order. Commercial Invoice (2 copies) Packing List or Packing Note. Certificate of Origin (C/O). GR Form (original and duplicate) ARE-1 Form. Certificate of Inspection, where necessary (original copy) Marine Insurance Policy. 239 CU IDOL SELF LEARNING MATERIAL (SLM)

13.7 SUMMARY  The Union Minster of Commerce and Industry Shir Kamal Nath announced the annual supplement of Foreign Trade Policy 2009-10 on February 26, 2009. DGFT issued Public notice no. 151(RE-2008)/2004-09 dated February 26, 2009 to amend the Foreign Trade Policy 2004-09 and Handbook of Procedure (Vol-I) accordingly.  The major amendments and their impact are as follows: Amendments in Chapter 3 of the Handbook of Procedures (Vol-I) i.e., Promotional schemes: i. Prior to amendment in the Policy, DEPB was available on FOB value declared on the shipping bill provided the said amount received by the company. The commission and discounts payable by the exporter were reduced from FOB value to arrive at the net FOB value on which DEPB was available. ii. Now it is provided that the quantity of commission and discounts will not be deducted for arriving FOB value.  DEPB issued prior to realization of export proceeds was not transferable. However, W.E.F. 1-4-09, the same has been made transferable. The FOB value will be determined as by converting the foreign currency amount into rupee on the date of let export order by adopting the customs exchange rate. Any excess/short realization will lead to adjustment as discussed in Para (II) below. However, if the short realization is on account of any expenditure authorized by RBI, DEPB will be granted on the amount which is used for the said expenditure provided approval from RBI is obtained for setting off of such amount. For example, the exporter has billed US$5000 for supply of cargo and the exporter is required to pay a sum of US$250 as commission. The exporter has option either to get US$ 5000 from the importer and pay back US$250 to agent. If he does so, the exporter will get BRC for US$5000, there will be no issues in obtaining the DEPB for gross amount. However, if the importer deducted the cost of US$250 and remits the total of only US$ 4750, the exporter shall get approval from RBI for permitting deduction of US$250 by the importer. In case such deduction is permitted by RBI the DEPB will be issued for the entire amount of US5000. 13.8 KEYWORDS  Rebate of Central Excise: The scheme under which the central excise exemptions or refund is provided.  Average: A tariff average measures the average level of nominal tariff protection. Here the two types of tariff averages are as follows: a simple average and a trade weighted average. The example below illustrates how those two types of tariff averages are calculated. 240 CU IDOL SELF LEARNING MATERIAL (SLM)

 Breakdown: Used in WITS when a region (group of countries) is present to produce individual information for every single country belonging to that region.  Clusters: In WITS, refers to all product categories for a given level of details (or Tier). Cluster selection is used in WITS in order to select many same level product categories in one click.  GTAP: The Global Trade Analysis Project, based at Purdue University in the United States. It provides data and models for computable general equilibrium modelling. See Computable general equilibrium. 13.9 LEARNING ACTIVITY International Trade Problems and India: A Case Study The liberalization of international trade in services will put them at an even greater disadvantage in sight of their government sovereignty and of developing their domestic service industries. However, just as there are vastly different levels of development among Third World countries, especially in India there are also differing views on the costs and the magnitude of these costs of freeing-up the trade in services. For instance, India had led many developing countries in opposing the inclusion of discussions on the trade in services in the Uruguay Round. Broadly speaking both developed and developing countries benefit from a liberalisation of trade in services in view of efficiency and competitiveness. The industrial countries would accrue large trade benefits from more liberal trade in services, since services constitute a large portion of their total exports. The paper emphasizes on modern international trade, began with the industrial revolution and the decline of mercantilism. As the industrialised nations, became richer due to their control over manufacturing commodities and trade, they began demanding and producing more sophisticated and expensive products. They found that the only feasible sources of the goods they wanted were from other countries and were also the only countries rich enough to buy the new manufactured goods they were producing. Thus, India has had a major challenge in the changing composition of imports and exports when effects of independent India economic polices started becoming clear. 1. Analyse the merits and demerits of liberalization for the Indian economy, being a developing nation in 2021. ------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------ 2. What would be the impact of COVID-19 on liberalization for developing and developed nations in the world? ------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------ 3. Examine the industry revolution 4.0 from Indian perspective. ---------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- 241 CU IDOL SELF LEARNING MATERIAL (SLM)

13.10 UNIT END QUESTIONS A. Descriptive Short Questions 1. How Trade Policy can be an instrument for the industrial diversification of India? Justify. 2. Describe the Multilateral Trade Agreements in short. 3. Elaborate the meaning of ‘Trade Negotiations’ with examples. 4. Enlist the guidelines of Indian EXIM policy for the financial year 2020-21. 5. Prepare the list of items/products covered in the Negative List announced by Hon. Defence Minister of India, Mr. Rajnath Singh until 2020-25. Long Questions 1. Examine the Foreign Trade Policy 2004-09 Provisions of India with specific reference to IT, Agriculture and Defence areas. 2. State the connection between India’s Import-Export Policy and Self-Reliant India (Aatmanirbhar Bharat) for Defence sector. Express your views on the scope and application of the same. 3. Examine the pros and cons of Rafael Aircraft deal for India? How crucial the deal is? Why? 4. Prepare the flow-chart indicating the various stages of shipment process with the examples. 5. Describe the impact of E-Governance on the import-export policy of India in future with examples. B. Multiple Choice Questions 1. India has witnessed many acute problems immediately prior to the implementation of economic reforms in the early 1990s. Among the following, which one was severe and unmanageable? a) Industrial backwardness b) Balance of payments crisis c) Backwardness of agriculture d) Shortage of food grains 2. During 2016-17, which of the items mentioned below under manufacturing goods sector had the highest share in India’s exports? a) Gems and jewellery b) Engineering goods c) Chemical and related products d) Handicrafts 3. The margin for a currency future should be maintained with the clearing house by _________________. 242 CU IDOL SELF LEARNING MATERIAL (SLM)

a) The seller b) The buyer c) Either the buyer or the seller as per the agreement between them d) Both the buyer and the seller 4. Which of the following are the major reason for India’s recent sluggish export performance? a) Slowdown in demand from some major importers b) The appreciation of US dollars c) Labour laws in India d) High cost of power in India 5. Select the correct answer using the codes given below: a) 1, 3, and 4 only b) 1, 2, 3, and 4 c) 1 and 2 only d) 3 and 4 only Answers: 1-(b); 2-(a); 3-(d);4-(a); 5-(d) 13.11 REFERENCES Textbooks  Basu, Bharati. (2002). Strategic Interaction, Trade Policy and National Welfare. Entry in EOLSS Encyclopedia published by UNESCO, Paris.  Gujarati, D. (1995). Basic Econometrics. New York, Tata McGraw-Hill  Sudalaimuthu, S.; Raj, S.A. (2009). Logistics Management for International Business: Text and Cases. PHI Learning, Delhi.  Ghauri, P.N. and Usunier, J.-C., (1996), International Business Negotiations, Oxford, Pergamonl/Elsevier. Reference Books  Bacon, T.R. (1999) Selling to Major Accounts: Tools, Techniques, and Practical Solutions for the Sales Management, New York  Davidson, C., Matusz, S. J. (2009). International Trade with Equilibrium Unemployment. Princeton, NJ: Princeton University Press.  Keegan, W.J., (1995), Global Marketing Management, Englewoods Cliffs, N.J., Prentice-Hall  Sangeetha, G. N. (2010). Basic Econometrics, New York, Tata McGraw Hill Websites 243 CU IDOL SELF LEARNING MATERIAL (SLM)

 https://www.waterstones.com  http://www.etcweb.net/  http://www.worldstopexports.com  https://www.maersk.com/ 244 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT 14: TRADE POLICIES Structure 14.0 Learning Objectives 14.1 Introduction 14.2 Procedure and Documents Required for Shipment of Cargo 14.2.1 Types of Shipment 14.3 Multimodal Transport 14.4 Procedure and Documentation 14.5 Central Excise and Customs Clearance of Export Cargo 14.6 Summary 14.7 Keywords 14.8 Learning Activity 14.9 Unit End Questions 14.10 References 14.0 LEARNING OBJECTIVES After studying this unit, student will be able to:  Analyse the trade policies over the globe.  Create a case study to get knowledge of the concept.  Describe, synthesize and quantify trade policies.  Develop a comprehensive approach for trade policies.  Compare and contrast national and international trade policies. 14.1 INTRODUCTION India is known as one of the significant and emerging player in the global economy. Its foreign trade policies and government reforms have made it a significant destination for foreign investments around the world. Also, technological and infrastructural developments being carried out all over the country enable efficient trade and economic practices. For the successful economic development of a country, a vigorous foreign trade policy is of great importance. Therefore, India adopted a foreign trade policy known as the EXIM Policy or the Export-Import policy. 245 CU IDOL SELF LEARNING MATERIAL (SLM)

India has implemented several measures to facilitate trade, such as simplification of procedures and customs clearances for imports and exports, according to WTO. Geneva- based World Trade Organisation (WTO) said that the other trade-facilitation initiatives introduced by India since 2015 include introduction of Indian Customs Electronic Gateway (ICEGATE); Single Window Interface for Facilitation of Trade (SWIFT); the Direct Port Delivery and the Direct Port Entry facilities; and the increased us e of the Risk Management System (RMS). To support both domestic production and exports, it said, India continues to provide a number of incentives, in the appearance of direct subsidies and price support schemes, tariff concessions or exemptions, or preferential rates of interest. With an eye on the rapidly expanding size of the Indian market, leading industrialised and developed countries sought greater liberalisation of India's trade policy, especially in the area of agriculture, harmonising its standards regime with international standards along with reducing anti-dumping and other trade-remedy measures. Foreign Trade Policy of India The Foreign Trade Policy (FTP) was introduced by the Government to grow the Indian export of cargo, generating employment and increasing value addition in the country. The Government, through the implementation of the policy, seeks to develop the manufacturing and essential service sectors. The Government, through the policy, primarily focuses on adopting a twin strategy of promoting traditional and sunrise sectors of exports including services. Further, it intends to simplify the business ethics. Indian Government Initiatives under the Foreign Trade Policy  Niryat Bandhu Scheme DGFT has come up with the Niryat Bandhu Scheme for mentoring budding exporters on the intricacies of foreign trade by means of counselling, training and outreach programmes. Given the rise of small and medium scale enterprises and their role in employing people, MSME clusters have been identified for focused interventions to increase exports. To achieve the purpose of the scheme, outreach activities will be organized in a structured manner with the assistance of Export Promotion Councils and other willing knowledge partners in academia and research community. Besides, for the optimal utilization of resources, all the stakeholders will be attempted to be associated, including Customs, ECGC, Banks and concerned Ministries.  Electronic IEC Import exporter code, or in casual terms, export permit is mandatory for carrying out exports and imports from/to another country. DGFT has facilitated the online filing of IEC application.  E-BRC The initiative of Electronic Bank Certificate (e-BRC) enables DGFT to capture essential details of realization of export proceeds directly from the banks by means of secured 246 CU IDOL SELF LEARNING MATERIAL (SLM)

electronic mode. This paves the way for implementation of various export promotion schemes without any physical interface with the stake holders. A Memorandum of Understanding (MOU) has been signed with 14 State Governments for sharing e-BRC data to benefit the exporters with GST refunds. Moreover, MOU has been signed with Enforcement Directorate, Agricultural Directorate, Agricultural Processed Food Products Export Development Authority and Goods and Services Tax Network (GSTN).  Exporter Importer Profile Exporter importer profile is created to upload various documents, and to minimize the transaction cost and time. Special featured advantages of the system are that after the documents are uploaded, it isn’t necessary to submit the documents or copies of the same to Regional Authority repeatedly with each application.  Online Filing of Applications Thanks to digitization, filing of applications has been made easier than ever before. The DGFT has facilitated the online filing of applications to obtain IEC and various Authorizations/scrip. The entity has introduced a web interface for online filing of application. The application can be paid online, and the fees can be remitted through the banking facilities provided. The furnished applications are digitally signed and submitted electronically to the concerned Regional Authority of DGFT, post which it is electronically processed by the Regional Authority and Authorization/scrip’s are issued.  Online Inter-Ministerial Consultation In a recent development, the exporters are provided with a facility to upload copies of all the required documents including technical specifications, literature, and the likes of it in PDF, JPG, JPEG or GIF format in the online filing system regarding: i. Fixation of norms under Advance Authorization by Norms Committees. ii. Export of restricted items. iii. Import of restricted items. iv. SCOMET items. v. The exporters are not anymore required to submit the hard copy of application other than agricultural drawings, machine drawings, etc., which is difficult to scan and upload. The applications will be processed online.  Facility for CA/CS/Cost Accountant Charted Accountants, Company Secretaries and Cost Accountants can now upload their digitally signed documents through an electronic procedure. By using this facility, the exporter shall link digitally uploaded annexure with his/her online application.  Round-the-Clock Customs Clearance 24*7 customs clearance has been made available at 19 seaports and 17 air cargo complexes. The round-the clock Customs clearance facility has been extended to all Bills of Entry at 19 seaports and 17 Air Cargo Complexes. In addition to it, Merchant Overtime Charges (MOT) need not be collected for the services provided by the Customs officers at 24*7 Customs Ports and Airports. 247 CU IDOL SELF LEARNING MATERIAL (SLM)

 Single Window Interface Single Window Interface for Facilitating Trade (SWIFT) has been launched to facilitate the easier perusal of business. The system enables the importers to electronically lodge Integrated Declaration at a single point only with Customs. The necessary permissions are received from other regulatory agencies without physically approaching them.  National Committee on Trade Facilitation (NCTF) National Committee on Trade Facilitation (NCTE) has been constituted in consequence to India’s ratification of the WTO agreement on Trade Facilitation (TFA). The committee is established to facilitate domestic co-ordination and implementation of TFA provisions. Figure 14.1: Foreign Trade Policy in India 248 CU IDOL SELF LEARNING MATERIAL (SLM)

14.2 PROCEDURE AND DOCUMENTS NECESSARY FOR SHIPMENT OF CARGO Export cargo can be exported to the overseas buyer by sea, air or land. However, shipment by sea is quite popular and generally resorted to, as it is comparatively cheaper. Besides, the ship's capacity is far greater than other modes of transportation. Nevertheless, transportation by air is utilized for export of expensive items like, diamonds, gold, etc. The shipment stage includes the following steps:  Reservation of Shipping Space: Once the export contract is finalised, the exporter reserves the required space in the vessel for shipment. On accepting the exporter's request, the shipping company issues a shipping Order. The original copy of the shipping order is provided to the exporter and the duplicate is deposited to the commanding officer of the ship. The shipping order is an instruction by the shipping company to the commanding officer of the ship that the goods according to the details given should be received on board.  Arrangement of Internal Transportation towards the Port of Shipment: The exporter makes necessary arrangements for transportation of goods to the port either by road or railways. On loading goods into the railway wagon, the railway authorities issue a 'Railway Receipt', which is either 'freight paid' or freight to pay'. It serves as a title to the goods. The exporter endorses the railway receipt in favour of his agent to enable him to take delivery of the goods at the port of shipment.  Preparation and Processing of Shipping Documents: As the goods reach the port of shipment, the exporter should issue detailed instructions to the C&F agent for the shipment of cargo along with a complete package of documents listed below: Letter of Credit including the export contract or export order. Commercial Invoice (2 copies) Packing List or Packing Note. (C/O) Certificate of Origin. GR Form (original and duplicate) ARE-1 Form. Certificate of Inspection, where necessary (original copy) Marine Insurance Policy. 14.2.1 Types of Shipment The global shipping industry transports goods all over the world, connecting commerce and businesses across continents. In today’s fast-paced world, the speed and capacity of ships have increased. Transporting goods through seaborne vessels has becomes the cheapest means of transporting goods, as per the price range per ton, and the fuel per ton transported from machinery and equipment to foodstuff and vehicles, ships are modified to handle diverse types of goods. The danger of transporting cargo through non-optimized means i.e., vessels not built to handle that articular cargo, includes volatile behaviour, fire, spoilage of foods, bacterial and fungal growths etc. Thus, care must be taken when hiring or leasing vessels for transportation to ensure that the appropriate type of vessel is chosen. In this article, we will take a look at the various goods and cargo commonly transported through shipping. We focus on the goods, 249 CU IDOL SELF LEARNING MATERIAL (SLM)

their inherent restrictions or transportation conditions, and the types of ships specifically built to handle the shipping of such the main cargo and goods that we will look at in this article include- Foodstuff, livestock, crude oil and derivative products, cars and other vehicles, machinery and equipment, dry bulk cargo, liquid bulk cargo, and chemical products.  Shipping of Food Stuff Foodstuff includes various categories such as fresh, packaged, frozen, partially processed, and other varieties. Foods present the most challenging goods to transport, due to their short life and high probability of spoilage. Most other types of goods can spend several months on-board a vessel while being transported between ports. However, foods are counted as those few goods that must reach their destinations as a matter of urgency. For this reason, a large proportion of the food transportation industry is voted for air freight. However, ship and other vessels allow for large amounts of foods to be simultaneously shipped through a single voyage. The factors which are to be known while leasing or foodstuff shipment are- short lifespan, high chance of spoilage, and the probability of mid-journey shifting. The temperature may vary depending on the type of the foodstuff being shipped, but it is generally maintained at temperatures below 0⁰C. This helps to extend the lifespan of the goods. It also ensures that moist conditions that usually enable bacteria and other agents of spoilage to grow are not present due to the low temperatures. Spoilage can also occur if the goods are incorrectly packed. In such scenarios, goods may get crushed when placed under heavier cargo. This renders the entire cargo unusable due to the state in which it is. Thus, appropriate packing must be processed to keep the cargo separated on the issue of weight, and also stacked at suitable levels. This also eliminates the problem posed by mid-journey shifting. In addition to the units, there are also longitudinal bulkheads built to minimize the FSE brought out about by the loose nature of the shipped goods. Such goods are loaded and unloaded using suction and vacuum devices that can transfer large quantities of cargo.  Transportation of Livestock and Animals Livestock and animals are another commonly transported cargo between several countries. This might be taken for the purpose of breeding, for meat, or for animal biproducts. Transporting them present’s challenges by idea of ensuring that the animals survive the long journey. To allow for this, there must be mechanisms by which they are provided with nutrition as would normally be consumed. In addition, there must be provisions to regularly clean the living holds and the livestock. Lastly, proper ventilation is a must. These vessels have decks within the storage holds that compartmentalize the cargo. There is adequate lighting provided by artificial means in the case of multi-deck vessels. However, it is preferable to use a split deck system to ensure that the animals reach the destination in the best possible condition. This system entails keeping several decks below the main deck primarily as resting areas. 250 CU IDOL SELF LEARNING MATERIAL (SLM)