Module 6 -Business Development Functions by InfocusRx ZeebraCross

Module 6 Business Development Functions 6.1 In-licensing & Out-licensing In-licensing In-licensing is a partnership arrangement of intentions, goals or interests. In Pharma companies the shared interests could be products, R&D, marketing, including sales and distribution. Globally licensing is governed by agreements under World Trade Organization (WTO) and Trade-Related Aspects of Intellectual Property Rights (TRIPS). TRIPS are binding on all member countries of WTO. In the Indian Pharma industry the following three periods are of importance: 1. Before 1972 India effectively had a product patent regime in drugs. 2. After 1972, when the Patent and Designs Act, 1911 was replaced by the Patents act 1970,drug product patent protection was abolished and India became a major producer and a source of low cost but high quality drugs for the entire world’. 3. From 1 January 2005, drug product patent protection has again been introduced in India. In-licensing activities: 1. SMART Objectives 2. 3. Your W Company’s Analysis analysis – Apply suitable techniques 4. Your Partner’s analysis-Apply suitable techniques 5. Combined analysis 6. Discuss the proposal internally 7. Approach your partner 8. Send the proposal 9. Answer the queries or send counter proposal 10. Discuss the proposal and details in person 11. Finalize the deal 12. Sign agreement 13. Plan, Organize, Execute and Control the deal 14. Evaluate and modify W W

The given information is compiled from various offline / online sources, towards the sole purpose of knowledge sharing.

Out-licensing A company which is the Licensor and reaches agreement with another company termed as Licensee to produce and market Licensor’s products, under Licensor’s brand names or use Licensor’s patented technology. The Licensor and the Licensee could be in different countries. This sort of arrangement can help Licensor to underwrite its research and development costs, increase its visibility as well as that of its products, spread its marketing costs across more items, and add volume to its manufacturing operations. The out-licensing activity mainly governed by the regulations of the Licensee’s country. Following are the Out-licensing activities: 1. SMART Objectives 2. 3. Your W Company’s Analysis analysis – Apply suitable techniques 4. Your Partner’s analysis-Apply suitable techniques 5. Combined analysis 6. Discuss the proposal internally 7. Approach your partner 8. Send the proposal 9. Answer the queries or send counter proposal 10. Discuss the proposal and details in person 11. Finalize the deal 12. Sign agreement 13. Plan, Organize, Execute and Control the deal 14. Evaluate and modify W W

The given information is compiled from various offline / online sources, towards the sole purpose of knowledge sharing.

Licensing-In What are the gaps? How can we fill?

What are our needs? How can we fulfill?

Licensing-Out Strategy

Opportunity

What are our needs & limitations?

What we can offer? Who needs themt?

What value? How can we benefit?

Valuations

What are our objectives, risks, returns and responsibilities?

Agreements

What are our objectives, risks, returns and responsibilities?

How can we do better?

Post-deal analysis

How can we do better?

6.2 Merger & Acquisition Merger and acquisition is a complex process of corporate strategies adopted by companies in buying / selling or combining of business entities, to grow faster.

Difference Between Mergers and Acquisitions Though the two words mergers and acquisitions are often spoken in synonymous terms, there are certain differences between mergers and acquisitions. Merger

Acquisition

Two companies are combined into one.

One company takes over another and establishes itself as the new owner of the business.

The given information is compiled from various offline / online sources, towards the sole purpose of knowledge sharing.

New stocks are issued afresh. The old stocks of both the companies are surrendered.

The buyer company acquires the business of the target company.

For example, Glaxo Wellcome and SmithKline Beehcam ceased to exist and merged to become a new company, known as Glaxo SmithKline.

Dr. Reddy’s Labs acquired Betapharm through an agreement amounting $597 million.

Mergers and Acquisitions in India Following are the factors responsible for making the merger and acquisition deals favourable in India:    

Favorable government policies Enhanced corporate investments Stable economy Risk taking inclination of Indian industrialists

Ten biggest Mergers and Acquisitions deals in India          

In January 30, 2007 Tata Steel acquired 100% stake in Corus Group for $12.2 billion. In February 11, 2007 Vodafone purchased administering interest of 67% owned by Hutch-Essar for $11.1 billion. In February 2007 India Aluminum and copper giant Hindalco Industries purchased Canada-based firm Novelis Inc. for $6-billion. In 2008 Indian Pharma industry registered its first biggest M&A deal. Japanese pharmaceutical company Daiichi Sankyo acquired Indian major Ranbaxy for $4.5 billion. In January 2009 The Oil and Natural Gas Corp purchased Imperial Energy Plc. For $2.8 billion In November 2008 Japan based telecom firm NTT DoCoMo, the acquired 26% stake in Tata Teleservices for USD 2.7 billion. In February 2008 HDFC Bank and Centurion Bank of Punjab merged. The deal took place for $2.4 billion. In March 2008 Tata Motors acquired Jaguar and Land Rover brands from Ford Motor for $2.3 billion. In 2009 Sterlite Industries Ltd’s acquired Asarco LLC by for $1.8 billion making it ninth biggest-ever M&A agreement involving an Indian company. In May 2007, Suzlon Energy obtained the Germany-based wind turbine producer Repower. The 10th largest in India, the M&A deal amounted to $1.7 billion.

Types of Corporate Mergers 

Horizontal Merger: Two companies which direct competitors, which represent the same market and also sell the same products/services merge.  Conglomeration Merger: The participating companies are from different industries. The given information is compiled from various offline / online sources, towards the sole purpose of knowledge sharing.

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Product-Extension Merger: Same category of Industry but different products Market-Extension Merger: Same products but in different markets.

Merger and Acquisition Strategy Process The merger and acquisition is a process based on the following strategies.

Determine Business Plan Drivers Business plans of the organizations involved which take the following into consideration:     

Markets Products and technologies Geographic locations Skills and resources Financial targets to be achieved

Determine Acquisition Financing Constraints Source of Funds such as cash, debt, public and private equities, PIPEs, minority investments, earn outs etc. To consider the availability of untapped credit facilities, surplus cash, or untapped equity, the amount of new equity and new debt the organization need to raise etc. Also the ROI.

Develop Acquisition Candidate List Profile acquisition candidates list based on market research, public stock research, referrals from board members, investment bankers, investors and attorneys, and even recommendations from your employees.

Build Preliminary Valuation Models Build valuation models taking into consideration the initial estimated acquisition cost, the estimated returns etc.

Rate/Rank Acquisition Candidates Formulate relative attractiveness model of candidates and develop a matrix for rational evaluation.

Review and Approval All the critical stakeholders like board members, investors etc. to agree and approve the acquisition strategy and proposal

Steps of Mergers and Acquisition Process The given information is compiled from various offline / online sources, towards the sole purpose of knowledge sharing.

Market Valuation Find out the market value of the organization as well as its estimated future financial performance. Collect all the information about organization, its history, products/services, sales & marketing, facilities and ownerships from reliable and verifiable sources and carry out professional evaluation. Exit Planning Plan the exit based on decisions such as the future plan of the organization – Achievement target and how is it going to handle the wealth etc. Consider various issues like estate planning, continuing business involvement, debt resolution etc. as well as tax issues and business issues. The form of compensation such as cash, secured notes, stock, convertible bonds, royalties, future earnings share, consulting agreements, or buy back opportunities etc., to be determined to plan for exit.. Structured Marketing Process Marketing of the business entity is crucial. Never divulge the selling price. Identify and encourage serious buyers. Following are the features of this phase.      

Sign a Non-Disclosure Agreement (NDA).Agree for the materials to be shared in advance. Present the Memorandum and Profiles, which factually showcases the business. Search the databases of the prospective buyers. Carry out the assessment and screening of the buyers. Focus on the special needs of the seller during structuring of the deals. Develop the final letter of intent after a phase of negotiation.

Letter of Intent The scope of Letter of intent covers issues like price and terms, deciding on due diligence period, deal structure, purchase price adjustments, earn out provisions liability obligations, ISRA and ERISA issues, Non-solicitation agreement, Breakup fees and no shop provisions, pre closing tax liabilities, product liability issues, post closing insurance policies, representations and warranties, and indemnification issues etc. Respective legal authorities of the buyer and seller to find out whether there is any scope of further negotiation left or not in the Letter of Intent. After reviewing, a Definitive Purchase Agreement is prepared. Buyer Due Diligence The seller makes its business process open for the prospective buyer, so that it can make an indepth investigation on the business as well as its attorneys, bankers, accountants, tad advisors etc. Definitive Purchase Agreement The given information is compiled from various offline / online sources, towards the sole purpose of knowledge sharing.

7 Finally Definitive Purchase Agreement are made, which states the transaction details including regulatory approvals, financing sources and other conditions of sale. .Valuation Models in Mergers and Acquisitions Following are some of the methods used for valuation. Replacement Cost Method In Replacement Cost Method, cost of replacing the target company is calculated and acquisitions are based on the value of all the equipments and staffing costs. The acquiring company offers to buy all these from the target company at the given cost. Replacement cost method isn’t applied to the service industry, where key assets such as people and ideas are difficult to value. Discounted Cash Flow (DCF) Method Discounted Cash Flow (DCF) is a major valuation method used in mergers and acquisitions. The current value of the organization is calculated according to the estimated future cash flows. Estimated Cash Flow = Net Income + Depreciation/Amortization - Capital Expenditures Change in Working Capital These estimated cash flows are discounted to a present value. Here, organization’s Weighted Average Costs of Capital (WACC) is used for the calculation. DCF method is one of the strongest methods of valuation. Economic Profit Model In this model, the value of the organization is calculated by summing up the amount of capital invested and a premium equal to the current value of the value created every year moving forward. Economic Profit = Invested Capital x (Return on Invested Capital - Weighted Average Cost of Capital) Economic Profit = Net Operating Profit Less Adjusted Taxes - (Invested Capital x Weighted Average Cost of Capital) Value = Invested Capital + Current Value of Estimated Economic Profit Price-Earnings Ratios (P/E Ratio) Acquiring company offers multiple of the target company’s earnings. The given information is compiled from various offline / online sources, towards the sole purpose of knowledge sharing.

8 Enterprise-Value-to-Sales Ratio (EV/Sales) The acquiring company offers multiple of the revenues. It also keeps a tab on the price-tosales ratio of other companies.

Mergers and Acquisitions Laws in India 

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Mergers and Acquisitions in India are governed by the Indian Companies Act, 1956, under Sections 391 to 394. The approval of the High Court is highly desirable for the commencement of any such process and the proposal for any merger or acquisition should be sanctioned by a 3/4th of the shareholders or creditors present at the General Board Meetings of the concerned firm. Indian antagonism law permits the utmost time period of 210 days for the companies for going ahead with the process of merger or acquisition. The entry limits for companies merging under the Indian law are considerably high. The entry limits are allocated in context of asset worth or in context of the company’s annual incomes. The Indian M&A laws also permit the combination of any Indian firm with its international counterparts, providing the cross-border firm has its set up in India.

Provisions under Mergers and Acquisitions Laws in India  Provision for tax allowances for mergers or de-mergers between two business identities is allocated under the Indian Income tax Act. To qualify the allocation, these mergers or de-mergers are required to full the requirements related to section 2(19AA) and section 2(1B) of the Indian Income Tax Act as per the pertinent state of affairs.  Under the “Indian I-T tax Act”, the firm, either Indian or foreign, qualifies for certain tax exemptions from the capital profits during the transfers of shares.  In case of “foreign company mergers”, a situation where two foreign firms are merged and the new formed identity is owned by an Indian firm, a different set of guidelines are allotted. Hence the share allocation in the targeted foreign business identity would be acknowledged as a transfer and would be chargeable under the Indian tax law.  As per the clauses mentioned under section 5(1) of the Indian Income Tax Act, the international earnings by an Indian firm would fall under the category of ‘scope of income’ for the Indian firm.

History of Mergers and Acquisitions Activity in United States  The First Wave 1897-1904 - After 1883 depression - Horizontal mergers - Create monopolies  The Second Wave 1916-1929 - Oligopolies - The Clayton Act of 1914  The Third Wave 1965-1969 The given information is compiled from various offline / online sources, towards the sole purpose of knowledge sharing.

9 - Conglomerate Mergers - Booming Economy  The Fourth Wave 1981-1989 - Hostile Takeovers - Mega-mergers  Mergers of 1990’s - Strategic mega-mergers

Important Terminology Related to Mergers and Acquisitions            

Asset Stripping – A firm takes over another firm and sells its asset in fractions in order to come up with a cost that would match the total takeover expenditure. Demerger or Spin off –The firm breaks up and establish itself as a new business identity. Black Knight – The firm which takes over the target firm in a hostile manner. Carve - out – Trading a small part of the firm as an Initial Public Offering is known as carve-out. Poison Pill or Suicide Pill Defense – An approach adopted by the target firm to present itself as less likable for an unfriendly subjugation. Greenmail – The target firm buys back its own assets or shares from the bidding firm at a greater cost. Dawn Raid – Purchasing shares of the target firm anticipating the decline in market costs till the completion of the takeover is known as Dawn Raid. Grey Knight – A firm that acquires another under ambiguous conditions or without any comprehensible intentions is known as a grey knight. Macaroni Defense – Is an approach that is implemented by the firms to protect them from any hostile subjugation. Management Buy In – The process where a firm buys and invests in another and employs their managers and officials to administer the new established business identity. Hostile Takeover – Unfriendly or Hostile acquisitions takes place when the management of the target firm does not have any prior knowledge about it or does not mutually agree for the proposal. Management Buy Out – The process in which the management buys a firm in collaboration with its undertaking entrepreneurs.

The given information is compiled from various offline / online sources, towards the sole purpose of knowledge sharing.

6.3 Joint Ventures A joint venture is an entity formed between two or more parties to undertake economic activity together. The parties agree to create a new entity by both contributing equity, and then they share in the revenues, expenses, and control of the enterprise.

REASON FOR JV’s       

JV provides a lower risk option of entering into a new country. It also provides an opportunity for both the partners to leverage their core strengths and increase the profits. It also provides a learning opportunity for both the partners. Technology. Lower Risk of Geographical Location. Government Regulations. Access to Capital.

Types Of JV’s   

Jointly controlled operations: Operations are jointly controlled Jointly controlled assets: Only assets are jointly managed Jointly controlled entities: All the entities of business are jointly controlled

Need for setting up a Joint Venture Internal Reasons 1. Building on company’s strength. 2. Spreading costs and risks. 3. Improving access to financial resources. 4. Economies of scale and advantages of size. 5. Access to new technologies and customers. 6. Access to innovative managerial practices.

Competitive Goals 1. 2. 3. 4. 5. 6.

Influencing structural evolution of the industry. Pre-empting competition. Defensive response to blurring industry boundaries. Creation of stronger competitive units. Speed to market. Improved agility.

The given information is compiled from various offline / online sources, towards the sole purpose of knowledge sharing.

Strategic Goals 1. Synergies. 2. Transfer of technology/skills. 3. Diversification.

Problems of JVâ&#x20AC;&#x2122;s 1. 2. 3. 4. 5. 6. 7. 8. 9.

Valuation Problems. Transparency. Conflict Resolution. Division of management responsibility and degree of management independence Changes in ownership shares. Dividend Policy. Marketing and Staffing Issue. Cultural Problems. Multinationality problems.

Before entering a Joint Venture.. 1. 2. 3. 4. 5. 6.

Both partners should appreciate the need for the joint venture. The partners should clearly agree on the way the joint venture will be managed. Take measures to be sure that the partner has a compatible work culture. Be sure about the organizational behavior of the partner to ensure synergies. It is important that both partners work towards a system based on trust and transparency. To make for the long term success of the joint venture, it is also important that both partners are equally able to service its growing need for capital as the business expands. 7. Need to have a clear long term goal and set the terms and conditions of the JV. 8. Clearly define the role and responsibility of each partner.

The applications for joint ventures are approved by the: 1. Inter-ministerial Committee under the Ministry of Commerce. 2. IJVs is covered by the Foreign Exchange Regulation Act, 1973 (FERA). 3. To facilitate and encourage IJVs, the Government of India has established economic divisions in the a. Ministries of Commerce, b. External Affairs, c. Industry, and Indian Embassies outside, d. Indian Investment Centre (IIC) 4. The Federation of Indian Chamber of Commerce and Industry (FICCI) is also active in promoting the idea of joint ventures with other developing countries.

The given information is compiled from various offline / online sources, towards the sole purpose of knowledge sharing.

Successful joint venture require:      

Each participant has something of value to bring to the venture. The participants should engage in careful preplanning. The agreement or contract should provide for flexibility in the future. There should be provision in the agreement for termination including buyout by one of the participants. Key executives must be assigned to implement the joint ventures. A distinct unit be created in the organizational structure which has the authority for negotiating and making decisions

Reasons for failure of a joint venture     

Inadequate preplanning for the joint venture. The hoped-for technology never developed. Agreements could not be reached on alternative approaches to solving the basic objectives of the joint venture. People with expertise in one company refused to share knowledge with their counterparts in the joint venture. Parent companies are unable to share control or compromise on difficult issues

Future of JV   

The number of joint ventures will continue to increase in the near future More and more companies are adopting the JV approach as a part of their growth strategies. Foreign companies can benefit mutually by combining their technological and monetary resources and taking advantage of respective market conditions.

Important clauses of a joint venture agreement: Selection of a good local partner is the key to the success of any joint venture. Once a partner is selected generally a memorandum of understanding or a letter of intent is signed by the parties highlighting the basis of the future joint venture agreement. A Joint venture Agreement requires dexterous legal drafting and should incorporate clearly the relevant clauses that specify the mutual understanding arrived at between both parties as to the formation and operations of the Joint venture Company. A brief checklist of important clauses is as follows:  The proportion of shareholding in the joint venture company  Specify nature of shares, indicate their transferability conditions. The given information is compiled from various offline / online sources, towards the sole purpose of knowledge sharing.

13                  

Composition of the Board of Directors, Appointment of Chairman ,Quorum of Board meetings ,Casting vote provisions. General meeting. Appointment of CEO/MD. Appointment of Management Committee. Important decisions with mutual consent of partners. Dividend policy. Funding provisions. Access conditions. Change of control/exit clauses. Anti-compete clauses Maintaining Confidentiality Indemnity clauses. Assignment. Break of deadlock. Dispute Resolution. Applicable law. Force Majeure. Termination provisions.

http://www.sethassociates.com/setting_up_a_joint_venture_in_india.php Indian JVs 1. India : Novavax, CPL complete Indian vax facility, Jun 16, 2010 2. India: Russia invites Indian pharma cos for joint ventures, Feb 16, 2010 3. India : Ranbaxy exits Nihon JV, sells out to partner, Dec 9, 2009 4. Ranbaxy calls off JV with Japan’s Nippon Chemiphar, Nov 8, 2009 5. India : Cipla to produce biotech drugs, Sep 8, 2009

6.4 Exports The term “export” is derived from the conceptual meaning as to ship the goods and services out of the port of a country. The seller of such goods and services is referred to as an “exporter” who is based in the country of export whereas the overseas based buyer is referred to as an “importer”. In International Trade, “exports” refers to selling goods and services produced in home country to other markets.

Why to export? 

To earn foreign exchange. The foreign exchange not only brings profit for the exporter but also improves the economic condition of the country. To enhance the credibility

The given information is compiled from various offline / online sources, towards the sole purpose of knowledge sharing.

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To explore immense business and trade opportunities for a company. To offset lack of domestic demand. To be more competitive and less vulnerable to limited domestic market opportunities To avail economies of scale/global volumes To leverage the competencies of the firm To meet stake holders’ expectations

Identifying Export Product: Key Factors in Product Selection         

Detail knowledge of products to be exported. Demand for the products in the countries of export including seasonal variations. Regulatory policies and registration and importing status of the product in the country of export Competition for the product in the country of export Quality of the products compared to the competitors’ Source and supplies of the product on time. Price and profitability of the product Import regulations such as tariffs, duties, etc., of the importing country Packaging, labeling, storage, distribution and transportation requirements

Market Selection: Markets may be selected based on the following factors:

Geographical Factors    

Country, state, region, Time zones, Urban/rural location logistical considerations e.g. freight and distribution channels Basic country profile such as GDP, healthcare status etc.

Economic, Political, and Legal Environmental Factors    

Regulations including quarantine, Labeling standards, Standards and consumer protection rules, Duties and taxes

Demographic Factors  Population  Economic  Social The given information is compiled from various offline / online sources, towards the sole purpose of knowledge sharing.

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Cultural Competitors profiles Competitor products’ details such as prices, packing, promotion, marketing etc.

Market Characteristics  Market size, growth and main trends  Local manufacturers  Agents, distributors and suppliers. Foreign Market Research  Primary data  Secondary data  Primary data can be gathered from Internet, service organizations, Ministries of Health etc.  Secondary research, such as periodicals, studies, market reports and surveys, can be found through government websites, international organizations, and commercial market intelligence firms.  Analysis of the data should be carried, interpreted and presented using some of the techniques explained above. Foreign Market Selection Process Step 1: Gather Information on a Broad Range of Markets Market selection process requires a broad range of information depending upon the products or services to be exported, which includes:  Market and sales demand potentials for the target product  Feasibility of Product positioning  Regulatory issues .  Ease of access to the market, distribution channels  The business environment in the country  Financial viability of exports  Information from various sources:  Colleagues and other exporters.  Trade enterprises, web sites, publications, library etc. Step 2: Research a Selection of Markets In-Depth  Similar products  Competitor research  USPs of products  Modalities of acquisition  Major importers/ stockiest / distributors / agencies or suppliers  Modes of marketing and promotion The given information is compiled from various offline / online sources, towards the sole purpose of knowledge sharing.

16       

Prices, discounts, free goods, various schemes etc. Price structures at various levels of distribution. Import regulations, duties or taxes etc. Basic marketing plan, product positioning, product life cycle etc. How will you promote your product or service if there is a lot of competition? Packaging requirements Branding requirements

Step 3: Foreign Market Selection Entry  Direct exports  Agents  Distributors  Co-marketing  Out-licensing  Under Licensing  JVs  FDIs

Registration of Exporters. Once all the research and analysis is done its time to get registered with the various government authorities. Registration with Reserve Bank of India (RBI)

Prior to 1997, it was necessary for every first time exporter to obtain IEC number from Reserve Bank of India (RBI) before engaging in any kind of export operations. But now this job is being done by DGFT. Registration with Director General of Foreign Trade (DGFT) For every first time exporter, it is necessary to get registered with the DGFT (Director General of Foreign Trade), Ministry of Commerce, Government of India. DGFT provide exporter a unique IEC Number. IEC Number is a ten digits code required for the purpose of export as well as import. No exporter is allowed to export his good abroad without IEC number. However, if the goods are exported to Nepal, or to Myanmar through Indo-Myanmar boarder or to China through Gunji, Namgaya, Shipkila or Nathula ports then it is not necessary to obtain IEC number provided the CIF value of a single consignment does not exceed Indian amount of Rs. 25, 000 /-. Registration with Export Promotion Council The given information is compiled from various offline / online sources, towards the sole purpose of knowledge sharing.

17 Registered under the Indian Company Act, Export Promotion Councils or EPC is a non-profit organisation for the promotion of various goods exported from India in international market. EPC works in close association with the Ministry of Commerce and Industry, Government of India and act as a platform for interaction between the exporting community and the government. So, it becomes important for an exporter to obtain a registration cum membership certificate (RCMC) from the EPC. An application for registration should be accompanied by a self certified copy of the IEC number. Registration with CHEMEXCIL / PHARMEXCIL

For Pharma exports register with CHEXCIL/PHARMEXCIL for various benefits. Please visit the respective websites at http://www.chemexcil.gov.in and http://www.pharmexcil.org/. Registration with Income Tax Authorities

Goods exported out of the country are eligible for exemption from both Value Added Tax and Central Sales Tax. So, to get the benefit of tax exemption it is important for an exporter to get registered with the Tax Authorities.

Export Pricing and Costing: Price is what an exporter offers to a customer and the cost is what an exporter pay for manufacturing the same product.

Export Pricing can be determined by the following factors:       

Products offered. Orders and supplies Promotional and marketing support Product image Quality specifications Credit offered. Source of the product

Export Costing  COG: Cost of Goods  RM: Raw Materials cost with overheads  PM: Packing Material Cost  CC: Conversion Cost

Understanding of Foreign Exchange Rates: The given information is compiled from various offline / online sources, towards the sole purpose of knowledge sharing.

18 Introduction It is very important for the exporter to gain some knowledge about the foreign exchange rates, quoting of exchange rates and various factors determining the exchange rates. Spot Exchange Rate Also known as “benchmark rates”, “straightforward rates” or “outright rates”, spot rates represent the price that a buyer expects to pay for a foreign currency in another currency. Settlement in case of spot rate is normally done within one or two working days. Forward Exchange Rate The forward exchange rate refers to an exchange rate that is quoted and traded today but for delivery and payment on a specific future date. Method of Quoting Exchange Rates There are two methods of quoting exchange rates: Direct Quotation: In this system, variable units of home currency equivalent to a fixed unit of foreign currency are quoted. For example: US $ 1= Rs. 42.75 Indirect Quotation: In this system, variable units of foreign currency as equivalent to a fixed unit of home currency are quoted. For example: US $ 2.392= Rs. 100 Fixed Exchange Rate A fixed exchange rate is a type of exchange rate regime in which a currency’s value is matched to the value of another single currency or any another measure of value, such as gold. A fixed exchange rate is also known as pegged exchange rate. A currency that uses a fixed exchange rate is known as a fixed currency. The opposite of a fixed exchange rate is a floating exchange rate. Floating Exchange Rate A Floating Exchange Rate is a type of exchange rate regime wherein a currency’s value is allowed to fluctuate according to the foreign exchange market. A currency that uses a floating exchange rate is known as a floating currency. A Floating Exchange Rate or a flexible exchange rate and is opposite to the fixed exchange rate. Linked Exchange Rate A linked exchange rate system is used to equlise the exchange rate of a currency to another. Linked Exchange Rate system is implemented in Hong Kong to stabilize the exchange rate between the Hong Kong dollar (HKD) and the United States dollar (USD).

The given information is compiled from various offline / online sources, towards the sole purpose of knowledge sharing.

19 Forward Exchange Contracts A Forward Exchange Contract is a contract between two parties (the Bank and the customer). One party contract to sell and the other party contracts to buy, one currency for another, at an agreed future date, at a rate of exchange which is fixed at the time the contract is entered into.

Appointing a Sales Agent: Introduction A successful strategy which involves commission to the agent. The agent has extensive knowledge of the target market. Merits of Appointing a Sales Agent  HR costs are avoided.  Marketing and Distribution network.  Price controls Demerits of Appointing a Sales Agent Lack of after sales service Loss of control over marketing and brand image.

Important Points While Appointing a Sales Agent:             

Turnover Experience Nature of company Company’s capital, funds, available and liabilities. Organization structure Marketing and sales department structure Products sold Agencies handled Network Balance sheet of last three years if possible Warehousing, Distribution and Transportation details. Terms of operation References

Some source of Information on Agents is:  Government Departments Trade Associations.  Chambers of Commerce.  Banks.  Independent Consultants.  Export Promotion Councils.  Advertisement Abroad. The given information is compiled from various offline / online sources, towards the sole purpose of knowledge sharing.

Agent Vs Distributor  An agent does not have the title of the goods. Agent may not be the importer. The title of the goods passes to the Distributor. A distributor buys goods on its own account from exporter and resells those products to customers.  In the case of distributor, an exporter is free from any kinds of risks associated with the finance.

Export Risk Management: Following are the risks involved in the international business. Credit Risk: Creditworthiness and reputation of an importer or buyer. Poor Quality Risk: Exported goods can be rejected by an importer on the basis of poor quality. A proper mechanism to be implemented. Transportation Risks: Goods may face many hazards such as risk of theft, damage and loss. Logistic Risk: Must resort to proper transportation to cover risks due to logistics. Political Risk: Must take the cover of ECGC. Unforeseen Risks: Must be covered under force majeure clause in the export contract. Exchange Rate Risks: To be avoided by adopting Hedging scheme. Export Risk Management Plan: Following are the six basic elements of the risk management process:      

Establishing the context Identifying the risks Assessing probability and possible consequences of risks Developing strategies to mitigate these risks Monitoring and reviewing the outcomes Communicating and consulting with the parties involved

A risk management plan helps an exporter to broaden the risk profile for foreign market. For a small export business, an exporter must keep his risk management analysis clear and simple.

The given information is compiled from various offline / online sources, towards the sole purpose of knowledge sharing.

21 Export Risk Mitigation: Following various strategies can be adopted. Direct Credit: Export Credit Agencies support exports through the provision of direct credits to either the importer or the exporter. Importer: A buyer credit is provided to the importer to purchase goods. Exporter: Makes a deferred payment sale; insurance is used to protect the seller or bank.

Guarantees Bid bond (tender guarantee): protects against exporterâ&#x20AC;&#x2122;s unrealistic bid or failure to execute the contract after winning the bid. Performance bond: guarantees exporterâ&#x20AC;&#x2122;s performance after a contract is signed. Advance payment guarantee (letter of indemnity): in the case where an importer advances funds, guarantees a refund if exporter does not perform. Standby letter of credit: issuing bank promises to pay exporter on behalf of importer.

Insurance Transportation insurance: Covers goods during transport; degree of coverage varies. Credit Insurance: Protects against buyer insolvency or protracted defaults and/or political risks.

Seller non-compliance (credit insurance): Covers advance payment risk. Foreign exchange risk insurance: Provides a hedge against foreign exchange risk.

Packing and Labeling of Goods: Proper packaging and labeling not only makes the final product look attractive but also saves the product from wrong handling. The primary role of packaging is to contain, protect and preserve a product as well as aid in its handling and final presentation. Packaging also refers to the process of design, evaluation, and production of packages. The packaging can be done within the export company or the job can be assigned to an outside packaging company. Packaging provides following benefits to the goods to be exported: The given information is compiled from various offline / online sources, towards the sole purpose of knowledge sharing.

22 Physical Protection: Packaging provides protection against shock, vibration, temperature, moisture and dust. Containment or agglomeration: Packaging provides agglomeration of small objects into one package for reason of efficiency and cost factor. Marketing: Proper and attractive packaging play an important role in encouraging a potential buyer. Convenience: Packages can have features which add convenience in distribution, handling, display, sale, opening, use, and reuse. Security: Packaging can play an important role in reducing the security risks of shipment. It also provides authentication seals to indicate that the package and contents are not counterfeit. Packages also can include anti-theft devices, such as dye-packs, RFID tags, or electronic article surveillance tags, that can be activated or detected by devices at exit points and require specialized tools to deactivate. Using packaging in this way is a means of loss prevention. Primary & Secondary Labeling: Must follow the regulatory restrictions of the country importing. Must contains various aspects such as the Form, Active ingredients, Recipients, Strengths, Shelf life, Date of Manufacturing, Date of expiry, Indications, Storage conditions, Contra indications, Adverse reactions, Registration No., Manufacturer’s details, Importer’s details etc. Tertiary Labeling: Shipper’s mark, Country of origin, Weight marking (in pounds and in kilograms), Number of packages and size of cases (in inches and centimeters),Handling marks (international pictorial symbols), Cautionary markings, such as “This Side Up”, Port of entry, Labels for hazardous materials and marks as required by the Governments.

Export Documents: The following documents are required for exports from India. Bill of lading: 



A bill of lading (sometimes referred to as a BOL,or B/L) is a document issued by a carrier, or its agent, to the shipper as a contract of carriage of goods. It is also a receipt for cargo accepted for transportation, and must be presented for taking delivery at the destination. It serves as a proof of ownership (title) of the cargo, and may be issued either in a negotiable or non-negotiable form. In negotiable form, it is commonly used in letter

The given information is compiled from various offline / online sources, towards the sole purpose of knowledge sharing.

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of credit transactions, and may be bought, sold, or traded; or used as security for borrowing money. A B/L is required in all claims for compensation for any damage, delay, or loss; and for the resolution of disputes regarding ownership of the cargo. The rights, responsibilities, and liabilities of the carrier and the shipper under a B/L (often printed on its back) are governed generally either by the older Hague rules, or by the more recent Hague-Visby rules.

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Bill of Lading A contract between the owner of the goods and the carrier (as with domestic shipments). For vessels, there are two types: a straight bill of lading, which is non-negotiable, and a negotiable or shipperâ&#x20AC;&#x2122;s order bill of lading. The latter can be bought, sold, or traded while the goods are in transit. The customer usually needs an original as proof of ownership to take possession of the goods (see Sample Short Form Bill of Lading and Sample Liner Bill of Lading).

1. SHIPPER (From) - Enter the company name and address of the shipper (Consignor). 2. POINT OF ORIGIN (At) - Enter the city and state of the actual shipping point. 3. DATE OF SHIPMENT - Enter the date of the shipment; that is, the date the Carrier took control of the merchandise. 4. TRUCK/FREIGHT - Check the truck block if the shipment is to move by truck, or the Freight The given information is compiled from various offline / online sources, towards the sole purpose of knowledge sharing.

block if the shipment is to move by rail. 5. SHIPPER’S NUMBER - Enter a unique control number to reference the shipment with the Carrier. 6. CARRIER - Enter the name of the company which will take initial control of the shipment and cause its delivery to the consignee. 7. AGENT’S NUMBER - Enter Carrier’s control number, if known or required. 8. CONSIGNED TO - Enter the full of the final recipient of the shipment, the ultimate consignee, if different than destination, for Carrier notification purposes. 9. DESTINATION - Enter the street address, city, and zip code where the Carrier will make delivery to the Consignee in Field 8. 10. ROUTE - If applicable, enter the route the Carrier will take to the consignee. This Field may also be used to specify docks, warehouses, etc., and to specify any intermediate Carriers. 11. DELIVERING CARRIER - If applicable, specify the carrier which will deliver the shipment to the ultimate consignee at the Destination, but only if different than the Carrier entered in Field 6. 12. VEHICLE/CAR NO. - Enter any vehicle identifying numbers or initials, if applicable. 13. NO. PACKAGES - Enter the total number of packages per line item; if the packages are consolidated on a pallet or in an outer container, note this information on a second line. Ex: 112 PKGS 3 Pall. 14. DESCRIPTION OF SHIPMENT - Enter the description of each line item, noting the type of package (carton, barrel, etc.) and the quantity per package. Since the correct freight classification is essential in describing an item, there must be a separate line item for each different freight classification description. If more than one type of packaging is used per freight classification, a separate entry must be used for each type of package. Enter any special package markings, special handling requirements, and delivery instructions. Note: For hazardous material items, special provisions must be met in completing this field. 15. WEIGHT - Enter the total gross weight, in pounds, for each line item. For Bulk shipments, the TARE and Net weights should also be referenced in the description field. For package shipments, include the weights of pallets and skids. The total weight of the merchandise should be shown after the last line item, with pallet and tonnage weights shown separately. 16. CLASS OR RATE - Enter the 5-digit class (per the Uniform Freight Classification or the National Motor Freight Classification) or a two digit Class Rate (a percentage of the First class 100 rate) per line item. This information may be determined with the Carrier. 17. WITHOUT RECOURSE - Per standard Bill of Lading terms, the shipper is ultimately liable for freight charges, even when the shipment is sent on a collect basis to the consignee. By signing this statement, the shipper is released from the liability of freight charges for collect shipments delivered by the Carrier to the consignee without the Carrier’s collecting the freight charges. For prepaid shipments, leave blank. 18. PREPAID SHIPMENTS - Enter “Prepaid” if shipment is to be paid by the Shipper. If this field is left blank, the Carrier will seek to collect the freight charges from the consignee (see field The given information is compiled from various offline / online sources, towards the sole purpose of knowledge sharing.

17). 19. PREPAYMENTS RECEIVED - Carrier enters any payments received in advance from the Shipper for the shipment. 20. CHARGES ADVANCED - Carrier enters any advanced charges for the shipment, if applicable. 21. C.O.D. SHIPMENT - First, check whether the freight charges are prepaid (the Carrier bills the shipper) or collect (the Carrier deducts the freight charges from the amount collected from the Consignee). Second, enter the amount to be collected for the merchandise itself - be sure to include the freight charges. Third, enter any collection fees, if applicable. Enter total charges to be collected by the Carrier. 22. SHIPMENT DECLARED VALUE - When the weight charged by the Carrier is dependent upon the value of the shipment, the dollar value per unit of measure (ex: $100/pound) must be stated by the Shipper - enter this information in field 14. 23. SHIPPER - Enter the company name of the shipper. 24. SHIPPER’S AGENT - Enter the signature of the individual preparing the shipment for the shipper. 25. CARRIER’S AGENT - The Carrier’s agent will sign here prior to taking control of the shipment. 26. PERMANENT ADDRESS - Enter the permanent (business) address of the shipper. This may be the same as for field 1. 27. CERTIFICATION - A signature is required by the Department of Transportation after this statement for all shipments of hazardous material. Air Way Bill It is a type of bill of lading that serves as a (1) Receipt of goods by an airline (carrier) and (2) As a contract of carriage between the shipper and the carrier. It includes (a) Conditions of carriage that define (among other terms and conditions) the carrier’s limits of liability and claims procedures, (b) A description of the goods, and (c) Applicable charges. The airline industry has adopted a standard format for AWB which is used throughout the world for both domestic and international traffic. Unlike a bill of lading, an AWB is a non-negotiable instrument, does not specify on which flight the shipment will be sent, or when it will reach its destination.

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28  BLUE - Original 1 - For Shipper  GREEN - Original 1 - For Issuing Carrier  WHITE - Invoice  WHITE - Remittance Copy  PINK - Original 2 - For Consignee  GOLDENROD - Delivery Receipt  WHITE - For Destination Agent's Copy  WHITE - Extra Copy  WHITE - Extra Copy  WHITE - Extra Copy

Commercial Invoice A bill for the goods from the seller to the buyer. These invoices are often used by governments to determine the true value of goods when assessing customs duties. Governments that use the commercial invoice to control imports will often specify its form, content, number of copies, language to be used, and other characteristics (see Sample).

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1. EXPORTER - The name and address of the principal party responsible for effecting export from the United States. The exporter as named on the Export License. 2. CONSIGNEE - The name and address of the person/company to whom the goods are shipped for the designated end use, or the party so designated on the Export License. 3. INTERMEDIATE CONSIGNEE - The name and address of the party who effects delivery of the merchandise to the ultimate consignee, or the party so named on the Export License. 4. FORWARDING AGENT - The name and address of the duly authorized forwarder acting as agent for the exporter. 5. COMMERCIAL INVOICE NO. - Commercial Invoice number assigned by the exporter. 6. CUSTOMER PURCHASE ORDER NO. - Overseas customerâ&#x20AC;&#x2122;s reference of order number. 7. B/L, AWB NO. - Bill of Lading, or Air Waybill number, if known. 8. COUNTRY OF ORIGIN - Country of origin of shipment. 9. DATE OF EXPORT - Actual date of export of merchandise.

10. TERMS OF PAYMENT - Describe the terms, conditions, and currency of settlement as agreed upon by the vendor and purchaser per the Pro Forma Invoice, customer Purchase Order, and/or Letter of Credit. 11. EXPORT REFERENCES - May be used to record other useful information, e.g. - other reference numbers, special handling requirements, routing requirements, etc. 12. AIR/OCEAN PORT OF EMBARKATION - Ocean port/pier, or airport to be used for embarkation of merchandise. 13. EXPORTING CARRIER/ROUTE - Record airline carrier/flight number or vessel name/shipping line to be used for the shipment of merchandise. 14. PACKAGES - Record number of packages, cartons, or containers per description line. 15. QUANTITY - Record total number of units per description line. 16. NET WEIGHT/GROSS WEIGHT - Record total net weight and total gross weight (includes weight of container) in kilograms per description line. 17. DESCRIPTION OF MERCHANDISE - Provide a full description of items shipped, the type of container (carton, box, pack, etc.), the gross weight per container, and the quantity and unit of measure of the merchandise. 18. UNIT PRICE/TOTAL VALUE - Record the unit price of the merchandise per the unit of measure, compute the extended total value of the line. 19. PACKAGE MARKS - Record in this Field, as well as on each package, the package number (e.g. - 1 of 7, 3 of 7, etc.), shippers company name, country of origin (e.g. - made in USA), destination port of entry, package weight in kilograms, package size (length x width x height), and shipperâ&#x20AC;&#x2122;s control number (e.g. - C/I number; optional). 20. MISC. CHARGES - Record any miscellaneous charges which are to be paid for by the customer - export transportation, insurance, export packaging, inland freight to pier, etc. 21. CERTIFICATIONS - any certifications or declarations required of the shipper regarding any information recorded on the commercial invoice.

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Export Packing List Considerably more detailed and informative than a standard domestic packing list, it lists seller, buyer, shipper, invoice number, date of shipment, mode of transport, carrier, and itemizes quantity, description, the type of package, such as a box, crate, drum, or carton, the quantity of packages, total net and gross weight (in kilograms), package marks, and dimensions, if appropriate. Both commercial stationers and freight forwarders carry packing list forms. A packing list may serve as conforming document. It is not a substitute for a commercial invoice.

CERTIFICATE OF ORGIN The given information is compiled from various offline / online sources, towards the sole purpose of knowledge sharing.

32 The Certificate of Origin (CO) is required by some countries for all or only certain products. In many cases, a statement of origin printed on company letterhead will suffice. The exporter should verify whether a CO is required with the buyer and/or an experienced shipper/freight forwarder or the Trade Information center.

1. THE UNDERSIGNED - Name of the individual completing and signing the certificate (see Block 13); may be the Exporter or Agent of the Exporter. 2. FOR - The Company name and address of the Exporter (Distributor or Manufacturer) effecting the shipment of merchandise. 3. SHIPPED ON - Name of the vessel, aircraft, rail, or trucking company. May also include vessel number and flag, flight number and flag, rail car number, and truck Pro number. 4. DATE - The date the carrier left the port/terminal for the destination.

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33 5. CONSIGNED TO - The Consignee, as it appears on the Commercial Invoice; may be “To Order of Shipper,” or “To Order of (Customer’s) Bank, or to any other entity, on the Conditions of Sale and/or the letter of credit. 6. MARKS AND NUMBERS - The marks recorded on each package, including Shipper’s Company Name, Country of Origin (i.e. - Made in USA), Destination Port of Entry, and Customer’s Company Name; may also include a Shipper’s Control Number (i.e. - C/I No.) and the Customer’s Import license Number. “Number” refers to the numbering of the packages in the shipment (i.e. - 1 of 30, 2 of 30, etc.). 7. NO. OF PACKAGES - The total number of packages, cartons, boxes, skids, etc. per description line, including outer packaging, in kilograms. 8. GROSS WEIGHT - Total weight of packages per description line, including outer packaging, in kilograms. 9. NET WEIGHT - Total weight of all packages per description line, excluding outer packaging, but including inner packaging, in kilograms. 10. DESCRIPTION - Full description of items being shipped, the type of containers, the gross weight per container, and the quantity and unit of measure of the merchandise. May also include cross references to Purchase Order or Commercial Invoice number. 11. SWORN BEFORE - Notary Republic seal/signature, and date notarized. 12. DATE - Date Certificate of Origin was prepared and signed. 13. SIGNATURE - The signature of the owner, employee, or agent appearing in Block 1 above. 14. CHAMBER OF COMMERCE - Name of local Chamber of Commerce (and State) certifying the origin of the merchandise. 15. SECRETARY - Authorized signature of the local Chamber of Commerce Secretary and that organization’s seal. Certificate of Analysis (COA):  The Analysis Report of the drug is an indicator of the quality of the drug.  It is the documented evidence of the Quality Control Testings carried out on the Drug or Formulation.  Analysis Report or the Certificate of Analysis (COA) of Drug or Formulation gives the exact details about the Compliance and the Quality of the same.  The Certificate of Analysis (COA) is defined as a document relating specifically to the result of testing a representative sample drawn from the batch of material to be delivered.  This being the such an important document or Paper Evidence of the Quality of the drug it must be maintained in the Standard Format covering all the aspects of the Quality in detail.

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Inspection Certificate Weight and Quality certificates should be provided in accordance with governing country regulations for loading at port and loading at source. This certificate is provided by the organization which carries out the inspection at the time of shipment. Insurance Certificate Used to assure the consignee that insurance will cover the loss of or damage to the cargo during transit. These can be obtained from your freight forwarder or publishing house.

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37 Pre-shipment inspection Certificate, also called preshipment inspection or PSI, is an important and reliable quality control method for checking goods’ quality while clients buy from the suppliers. The pre-shipment inspection is normally agreed between a buyer, a supplier, and a bank, and it can be used to initiate payment for a letter of credit. A PSI can be performed at different stages:   

Checking the total amount of goods and packing Controlling the quality and/or consistency of goods Verifying compliance with the standards of the destination country (e.g. ASME or CE mark)

PSI Agencies  Bureau Veritas - 305/593-7878, http://www.bivac.com  Cotecna - 703/814-4000, http://www.cotecna.com  Societe Generale Surveillance - SGS - 212/482-8700, http://www.sgs.com  Intertek Testing Service - 305/513-3000, http://www.intertek.com  Inspectorate America Corp. - 305/599-1124, http://www.inspectorate.com  Control Union Inspection Inc. - 504/227-2025, http://www.controlunion.com

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Methods of Payment Listed in order from most secure for the exporter to the least secure, the basic methods of payment are: 1. Cash in advance; 2. Documentary letter of credit; 3. Documentary collection or draft; 4. Open account; and 5. Other payment mechanisms, such as consignment sales. Cash in Advance The most ideal mode of payment is receiving cash in advance. This is beneficial to the Seller but risky for the buyer. Sometimes the cash in advance could be 50-50%. A wire transfer is commonly used and has the advantage of being almost immediate. Letters of Credit A letter of credit is a bank’s promise to pay the exporter on behalf of the foreign buyer provided that the exporter complies with all the terms and conditions of the letter of credit. The foreign buyer applies for issuance of a letter of credit from the buyer’s bank to the exporter’s bank and therefore is called the applicant; the exporter is called the beneficiary. Payment under a documentary letter of credit is based on documents, not on the terms of sale or the physical condition of the goods. The letter of credit specifies the documents that are required to be presented by the exporter, such as an ocean bill of lading (original and several copies), consular invoice, draft, insurance policy etc. A letter of credit may either be irrevocable and thus, unable to be changed unless both parties agree; or revocable where either party may unilaterally make changes. A revocable letter of credit is inadvisable as it carries many risks for the exporter. Change made to a letter of credit after it has been issued is called an amendment. A Typical Letter of Credit Transaction Here are the typical steps for the issue of an irrevocable letter of credit 1. Based on the terms of sale, the buyer arranges from its bank to open a letter of credit in favor of the seller that specifies the documents needed for payment. The buyer determines which documents will be required. 2. The buyer’s bank issues, its irrevocable letter of credit includes all instructions to the seller relating to the shipment. 3. The buyer’s bank sends its irrevocable letter of credit to a respective bank and requests confirmation. The given information is compiled from various offline / online sources, towards the sole purpose of knowledge sharing.

39 4. 5. 6. 7. 8. 9. 10. 11.

The confirming bank prepares a letter of confirmation to forward to the exporter along with the irrevocable letter of credit. The exporter reviews carefully all conditions in the letter of credit. If the exporter cannot comply with one or more of the conditions, the customer is alerted at once. The exporter ships the goods and arranges with the freight forwarder to deliver the goods to the appropriate port or airport. When the goods are loaded, the freight forwarder completes the necessary documentation. The exporter (or the freight forwarder) presents the documents, evidencing full compliance with the letter of credit terms, to the corresponding bank. The bank reviews the documents. If they are in order, the documents are sent to the buyer’s bank for review and then transmitted to the buyer. The buyer (or the buyer’s agent) uses the documents to claim the goods. A draft, which accompanies the letter of credit, is paid by the buyer’s bank at the time specified or, if a time draft, may be discounted to the exporter’s bank at an earlier date.

Example of a Confirmed Irrevocable Letter of Credit

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Documentary Drafts A draft, sometimes also called a bill of exchange, is analogous to a foreign buyerâ&#x20AC;&#x2122;s check. Like checks used in domestic commerce, drafts carry the risk that they will be dishonored. However, in international commerce, title does not transfer to the buyer until he pays the draft. Sight Drafts A sight draft is used when the exporter wishes to retain title to the shipment until it reaches its destination and payment is made. Before the shipment can be released to the buyer, the original ocean bill of lading (the document that evidences title) must be properly endorsed by The given information is compiled from various offline / online sources, towards the sole purpose of knowledge sharing.

41 the buyer and surrendered to the carrier. It is important to note that air waybills of lading, on the other hand, do not need to be presented in order for the buyer to claim the goods. Hence, risk increases when a sight draft is being used with an air shipment. In actual practice, the ocean bill of lading is endorsed by the exporter and sent via the exporter’s bank to the buyer’s bank. It is accompanied by the sight draft, invoices, and other supporting documents that are specified by either the buyer or the buyer’s country (e.g., packing lists, consular invoices, insurance certificates). The foreign bank notifies the buyer when it has received these documents. As soon as the draft is paid, the foreign bank turns over the bill of lading thereby enabling the buyer to obtain the shipment. There is still some risk when a sight draft is used to control transferring the title of a shipment. The buyer’s ability or willingness to pay might change from the time the goods are shipped until the time the drafts are presented for payment; there is no bank promise to pay standing behind the buyer’s obligation. Time Drafts and Date Drafts A time draft is used when the exporter extends credit to the buyer. The draft states that payment is due by a specific time after the buyer accepts the time draft and receives the goods (e.g., 30 days after acceptance). By signing and writing “accepted” on the draft, the buyer is formally obligated to pay within the stated time. When this is done the time draft is then called a trade acceptance. It can be kept by the exporter until maturity or sold to a bank at a discount for immediate payment. A date draft differs slightly from a time draft in that it specifies a date on which payment is due, rather than a time period after the draft is accepted. When either a sight draft or time draft is used, a buyer can delay payment by delaying acceptance of the draft. A date draft can prevent this delay in payment though it still must be accepted. When a bank accepts a draft, it becomes an obligation of the bank and thus, a negotiable investment known as a banker’s acceptance. A banker’s acceptance can also be sold to a bank at a discount for immediate payment.

The given information is compiled from various offline / online sources, towards the sole purpose of knowledge sharing.

1. 2. 3.

5. 6.

7. 8.

U.S. DOLLARS - Enter the entire amount to be collected; if not in U.S. dollars, specify currency. DATE - Enter the date the Draft is issued. OF THIS FIRST EXCHANGE (SECOND UNPAID) - Enter the terms of payment (also called the Tenor of the draft): at 45 Days, at Sight, At 30 days B/L, etc. “Second Unpaid” refers to the duplicate copy of the draft (OF THIS SECOND EXCHANGE, FIRST UNPAID); once payment has been made against either copy, the other becomes void. PAY TO THE ORDER OF - Enter the name of the party to be paid (Seller, “Payee”); this may be the Seller of the Seller’s bank, and will be the party to whom the foreign Buyer’s bank will remit payment. UNITED STATES DOLLARS - Enter the amount from Field 1 in words; if payment is not to be made in U.S. Dollars, block out “United States Dollar” and enter correct currency. CHARGE TO ACCOUNT OF - Enter the name and address of the paying party (Buyer, “Drawee”). For Letter of Credit payments, enter the name and address of the Buyer’s opening bank as well as the L/C number and issue date. NUMBER - Enter an identification, or Draft, number, as assigned by the Seller to reference the transaction. AUTHORIZED SIGNATURE - The signature of the authorized individual for the Seller or the

The given information is compiled from various offline / online sources, towards the sole purpose of knowledge sharing.

10. 11. 12. 13.

14. 15.

16.

17.

18. 19.

20.

21.

22.

23.

seller’s agents (“Drawer”). FORWARD DRAFT TO - Enter the name and address to whom the Draft is being sent. Unless this is a letter of credit being negotiated in the U.S., this should be the name and address of a foreign bank. FORWARDING DATE - Enter the date the Draft is being sent to the bank in Field 9. DRAFT NUMBER - Enter the Seller’s Draft number, as noted in Field 7 above. PURPOSE OF DRAFT - Check the applicable box if the draft is part of letter of credit negotiation, a collection, or an acceptance. LIST OF DOCUMENTS - Enter the number and type of each original and duplicate document to be included with this Transmittal Letter. Any document attached will eventually be released to the Buyer. DELIVER ALL DOCUMENTS - Check either “Deliver all documents in one mailing” or “Deliver documents in two mailings.” Generally, documents are delivered in one mailing. DELIVER DOCUMENTS AGAINST - Ensure that the type of Draft attached (Block 3) is compatible with the “deliver against” instructions. Sight Drafts should accompany “Deliver against Payment” instructions, while Time Drafts should accompany “Deliver against Acceptance” instructions. BANK CHARGES - The correspondent bank will not pay unless all charges are collected. Based on your agreement with the Buyer, indicate which party is responsible for both the remitting and presenting bank’s charges. By checking “all charges for Account of Drawee,” the Buyer is responsible for these charges; if the Buyer does not pay (or is not to pay) these charges, and id “Do Not Waive Charges” has not been checked, the Seller will be billed for expenses incurred. PROTEST - Check “Protest” (specify “for nonpayment” or for “non-acceptance,” depending on the type of draft attached - see instruction, Field 15) if you wish the correspondent bank to process written, notarized documentation in event that the Buyer refuses to pay or accept the Draft. Additional Bank expenses associated with a protest are usually charged to the Seller. PRESENT ON ARRIVAL - Check if you wish the Draft to be presented on the arrival of the goods to the Buyer. ADVISE - Check the appropriate blocks, and block-out the non-applicable terms, if you wish to be advised of payment/acceptance or non-payment or non-payment/nonacceptance. IN CASE OF NEED - Enter the representative of the Seller in the country to which the Draft and documents are going, if one exists; check the block which describes the representative’s authority. OTHER INSTRUCTIONS - Enter any instructions to either the remitting or correspondent banks, such as remittance instructions, clarification of protest procedures, multiple-draft instructions, etc. REFER ALL QUESTIONS - Enter the name of the contact, and his/her address & telephone number, in the Seller’s country; specify if this contact is employed by the Shipper (Seller) or the Seller’s agent (Freight Forwarder). AUTHORIZATION - Enter the person authorized to sign the Transmittal Letter (see Field 8

The given information is compiled from various offline / online sources, towards the sole purpose of knowledge sharing.

44 above), the date prepared, and the authorized personâ&#x20AC;&#x2122;s signature. Open Account In a foreign transaction, an open account can be a convenient method of payment if the buyer is well established, has a long and favorable payment record, or has been thoroughly checked for creditworthiness. With an open account, the exporter simply bills the customer, who is expected to pay under agreed terms at a future date. Some of the largest firms abroad make purchases only on open account. However, there are risks to open account sales. The absence of documents and banking channels might make it difficult to pursue the legal enforcement of claims. The exporter might also have to pursue collection abroad, which can be difficult and costly. Another problem is that receivables may be harder to finance, since drafts or other evidence of indebtedness are unavailable. Exporters contemplating a sale on open account terms should thoroughly examine the political, economic, and commercial risks. They should also consult with their bankers if financing will be needed for the transaction before issuing a pro forma invoice to a buyer. Other Payment Mechanisms Consignment sales International consignment sales follow the same basic procedures. The goods are shipped to a foreign distributor who sells them on behalf of the exporter. The exporter retains title to the goods until they are sold, at which point payment is sent to the exporter. The exporter has the greatest risk and least control over the goods with this method. Additionally, receiving payment may take quite a while. It is wise to consider risk insurance with international consignment sales. The contract should clarify who is responsible for property risk insurance that will cover the merchandise until it is sold and payment is received. In addition, it may be necessary to conduct a credit check on the foreign distributor. Countertrade International countertrade is a trade practice whereby one party accepts goods, services, or other instruments of trade in partial or whole payment for its products. This type of trade fulfills financial, marketing, or public policy objectives of the trading parties. There are several types of countertrade, including counter purchase and barter. Counter purchase is quite common. In this situation, exporters agree to purchase a quantity of goods from a country in exchange for that countryâ&#x20AC;&#x2122;s purchase of the exporterâ&#x20AC;&#x2122;s product. Payment Problems In international trade, problems involving bad debts are more easily avoided than rectified The given information is compiled from various offline / online sources, towards the sole purpose of knowledge sharing.

45 after they occur. The simplest (and least costly) solution to a payment problem is to contact and negotiate with the customer. With patience, understanding, and flexibility, an exporter can often resolve conflicts to the satisfaction of both sides. This point is especially true when a simple misunderstanding or technical problem is to blame and there is no question of bad faith. Even though the exporter may be required to compromise on certain points - perhaps even on the price of the committed goods - the company may save a valuable customer and profit in the long run. However, if negotiations fail and the sum involved is large enough to warrant the effort, a company should obtain the assistance and advice of its bank, legal counsel, and other qualified experts. Since arbitration is often faster and less costly, this step is preferable to legal action if both parties can agree to take their dispute to an arbitration agency.

Customs Procedure for Export: For clearance of export goods, the exporter or export agent has to undertake the following formalities: Registration To obtain PAN based Business Identification Number (BIN) from the Directorate General of Foreign Trade prior to filing of shipping bill for clearance of export goods. The exporters must also register themselves to the authorized foreign exchange dealer code and open a current account in the designated bank for credit of any drawback incentive. Registration in the case of export under export promotion schemes: All the exporters intending to export under the export promotion scheme need to get their licenses / DEEC book etc. Processing of Shipping Bill - Non-EDI: In case of Non-EDI, the shipping bills or bills of export are required to be filled in the format as prescribed in the Shipping Bill and Bill of Export (Form) regulations, 1991. Processing of Shipping Bill - EDI: Under EDI System, declarations in prescribed format are to be filed through the Service Centers of Customs. A checklist is generated for verification of data by the exporter/CHA. After verification, the data is submitted to the System by the Service Center operator and the System generates a Shipping Bill Number, which is endorsed on the printed checklist and returned to the exporter/CHA. For export items which are subject to export cess, the TR-6 challans for cess is printed and given by the Service Center to the exporter/CHA immediately after submission of The given information is compiled from various offline / online sources, towards the sole purpose of knowledge sharing.

46 shipping bill. The cess can be paid on the strength of the challan at the designated bank. No copy of shipping bill is made available to exporter/CHA at this stage. Arrival of Goods at Docks: On the basis of examination and inspection goods are allowed enter into the Dock. At this stage the port authorities check the quantity of the goods with the documents. System Appraisal of Shipping Bills: In most of the cases, a Shipping Bill is processed by the system on the basis of declarations made by the exporters without any human intervention. Sometimes the Shipping Bill is also processed on screen by the Customs Officer. Customs Examination of Export Cargo: Customs Officer may verify the quantity of the goods actually received and enter into the system and thereafter mark the Electronic Shipping Bill. The Customs Officer may inspect/examine the shipment along with the Dock Appraiser. The Customs Officer enters the examination report in the system. He then marks the Electronic Bill along with all original documents and check list to the Dock Appraiser. Stuffing / Loading of Goods in Containers The exporter or export agent hand over the exporter’s copy of the shipping bill signed by the Appraiser “Let Export” to the steamer agent. The agent then approaches the proper officer for allowing the shipment. The Customs Preventive Officer supervising the loading of container and general cargo in to the vessel may give “Shipped on Board” approval on the exporter’s copy of the shipping bill. Drawal of Samples: Where the Appraiser Dock (export) orders for samples to be drawn and tested, the Customs Officer may proceed to draw two samples from the consignment and enter the particulars thereof along with details of the testing agency in the ICES/E system. The Assistant Commissioner/Deputy Commissioner if he considers necessary, may also order for sample to be drawn for purpose other than testing such as visual inspection and verification of description, market value inquiry, etc. Amendments: Any correction/amendments in the check list generated after filing of declaration can be made at the service center, if the documents have not yet been submitted in the system and the shipping bill number has not been generated. In situations, where corrections are required to be made after the generation of the shipping bill number or after the goods have been brought into the Export Dock, amendments is carried out in the following manners.

The given information is compiled from various offline / online sources, towards the sole purpose of knowledge sharing.

47 The goods have not yet been allowed “let export” amendments may be permitted by the Assistant Commissioner (Exports). Where the “Let Export” order has already been given, amendments may be permitted only by the Additional/Joint Commissioner, Custom House, in charge of export section. In both the cases, after the permission for amendments has been granted, the Assistant Commissioner / Deputy Commissioner (Export) may approve the amendments on the system on behalf of the Additional /Joint Commissioner. Where the print out of the Shipping Bill has already been generated, the exporter may first surrender all copies of the shipping bill to the Dock Appraiser for cancellation before amendment is approved on the system. Export of Goods under Claim for Drawback: After actual export of the goods, the Drawback claim is processed through EDI system by the officers of Drawback Branch on first come first served basis without feeling any separate form. Generation of Shipping Bills: The Shipping Bill is generated by the system in two copies- one as Custom copy and one as exporter copy. Both the copies are then signed by the Custom officer and the Custom House Agent.

Organizations Supporting to Exporters: Export Promotion Councils (EPC) Export Promotion Councils are registered as non -profit organizations under the Indian Companies Act. At present there are eleven Export Promotion Councils under the administrative control of the Department of Commerce and nine export promotion councils related to textile sector under the administrative control of Ministry of Textiles. Commodity Boards Commodity Board is registered agency designated by the Ministry of Commerce, Government of India for purposes of export-promotion and has offices in India and abroad. There are five statutory Commodity Boards, which are responsible for production, development and export of tea, coffee, rubber, spices and tobacco. Federation of Indian Export Organizations (FIEO) FIEO was set up jointly by the Ministry of Commerce, Government of India and private trade and industry in the year 1965. FIEO is thus a partner of the Government of India in promoting India’s exports. Indian Institute of Foreign Trade (IIFT) The Indian Institute of Foreign Trade (IIFT) was set up in 1963 by the Government of India as an autonomous organization to help Indian exporters in foreign trade management and increase exports by developing human resources, generating, analyzing and disseminating data and The given information is compiled from various offline / online sources, towards the sole purpose of knowledge sharing.

48 conducting research. Indian Institution of Packaging (IIP) The Indian Institute of Packaging or IIP in short was established in 1966 under the Societies Registration Act (1860). Headquartered in Mumbai, IIP also has testing and development laboratories at Calcutta, New Delhi and Chennai. The Institute is closely linked with international organizations and is recognized by the UNIDO (United Nations Industrial Development Organization) and the ITC (International Trading Centre) for consultancy and training. The IIP is a member of the Asian Packaging Federation (APF), the Institute of Packaging Professionals (IOPP) USA, the Institute of Packaging (IOP) UK, Technical Association of PULP AND Paper Industry (TAPPI), USA and the World Packaging Organization (WPO). Export Inspection Council (EIC) The Export Inspection Council or EIC in short, was set up by the Government of India under Section 3 of the Export (Quality Control and Inspection) Act, 1963 in order to ensure sound development of export trade of India through Quality Control and Inspection. Indian Council of Arbitration (ICA) The Indian Council for Arbitration (ICA) was established on April 15, 1965. ICA provides arbitration facilities for all types of Indian and international commercial disputes through its international panel of arbitrators with eminent and experienced persons from different lines of trade and professions. India Trade Promotion Organization (ITPO) ITPO is a government organization for promoting the countryâ&#x20AC;&#x2122;s external trade. Its promotional tools include organizing of fairs and exhibitions in India and abroad, Buyer-Seller Meets, Contact Promotion Programmes, Product Promotion Programmes, Promotion through Overseas Department Stores, Market Surveys and Information Dissemination. Chamber of Commerce & Industry (CII) CII play an active role in issuing certificate of origin and taking up specific cases of exporters to the Govt. Federation of Indian Chamber of Commerce & Industry (FICCI) Federation of Indian Chambers of Commerce and Industry or FICCI is an association of business organizations in India. FICCI acts as the proactive business solution provider through research, interactions at the highest political level and global networking. Bureau of Indian Standards (BIS) The Bureau of Indian Standards (BIS), the National Standards Body of India, is a statutory body set up under the Bureau of Indian Standards Act, 1986. BIS is engaged in standard formulation, certification marking and laboratory testing.

The given information is compiled from various offline / online sources, towards the sole purpose of knowledge sharing.

49 India Investment Centre (IIC) Indian Investment Center (IIC) was set up in 1960 as an independent organization, which is under the Ministry of Finance, Government of India. The main objective behind the setting up of IIC was to encourage foreign private investment in the country. IIC also assist Indian Businessmen for setting up of Industrial or other Joint ventures abroad. Directorate General of Foreign Trade (DGFT) DGFT or Directorate General of Foreign Trade is a government organization in India responsible for the formulation of guidelines and principles for importers and exporters of country. Director General of Commercial Intelligence Statistics (DGCIS) DGCIS is the Primary agency for the collection, compilation and the publication of the foreign inland and ancillary trade statistics and dissemination of various types of commercial information’s.

INTERNATIONAL INCOTERMS Incoterms or International commercial terms make trade between different countries easier. International Commercial Terms are a series of international trade terms that are used are used worldwide to divide he transaction costs and responsibilities between the seller and the buyer and reflect state-of-the-art transportation practices. The 13 International Incoterms are: Departure of goods by international transport with the risks and dangers to the Seller (Exporter) and Buyers (Importers)

“EXW”- Ex Works Title and risk pass to buyer including payment of all transportation and insurance cost from the seller’s door. Used for any mode of transportation. Seller : In EXW shipment terms the Seller (Exporter) provides the goods for collection by the Buyer (Importer) on the seller or exporter’s promise. Responsibility for the seller is to put the goods, in a good package which is adaptable and disposable by the transport. Buyer : The buyer or Importer arranges insurance for damage transit goods. The Buyer or importer has to bear all costs and risks involved in shipment transactions. (However, if the parties wish the seller to be responsible for the loading of the goods on departure and to bear the risks and all the costs of such loading, this should be made clear by adding explicit wording to this effect in the contract of sale. ) The given information is compiled from various offline / online sources, towards the sole purpose of knowledge sharing.

“FCA”- Free Carrier named point “FCA”- Free Carrier named point: Title and risk pass to buyer including transportation and insurance cost when the seller delivers goods cleared for export to the carrier. Seller is obligated to load the goods on the Buyer’s collecting vehicle; it is the Buyer’s obligation to receive the Seller’s arriving vehicle unloaded. Seller: The Seller’s responsibility is to deliver the goods into the custody of the transporters at defined points. It is important for the chosen place of delivery to have an impact on the obligations of loading and unloading the goods. Buyer: The Buyer nominates the means of transport or shipping mode and pays the shipment charges. The seller and the buyer agree upon the place for delivery of goods. If the buyer nominates a person other than a carrier or transporter to receive the goods, the seller is deemed to fulfill his obligation to deliver the goods when they are delivered to that person.

“FAS”- Free Alongside Ship FAS- Free Alongside ship: Title and risk pass to buyer including payment of all transportation and insurance cost once delivered alongside ship by the seller. Used for sea or inland waterway transportation. The export clearance obligation rests with the seller. In FAS has price includes all the costs incurred in delivering the goods alongside the vessel at the port or nominated place of the buyer but there is not applicable charges to the seller for loading the goods on board of vessel and no ocean freight charges and marine insurance. Seller: The responsibility of the seller is fulfilled when the goods are placed cleared along the ship. Buyer: Buyer or Importer bear all the expenses and risks of loss or damage of transit goods which are delivered along the ship.

“FOB” - Free On Board The FOB (Free on Board) price is inclusive of Ex-Works price, packing charges, transportation charges up to the place of shipment., Seller also responsible for o clear customs dues, quality inspection charges, weight measurement charges and other export related dues. It is important that the shipment term in the Bill of Lading must carry the wording “Shipped on Board’ it must The given information is compiled from various offline / online sources, towards the sole purpose of knowledge sharing.

51 bear with signature of transporter or carrier or his authorized representative with the date on which goods were “Boarded”. Seller: Seller responsible for clear customs dues, quality inspection charges, weight measurement charges and other export related dues. It is important that the shipment term in the Bill of Lading must carry the wording “Shipped on Board’ it must bear with signature of transporter or carrier or his authorized representative with the date on which goods were “Boarded”. Buyer : The buyer indicates the ship and pays freight, transfer expenses and risks is done when the goods passes or forwarding to the buyers warehouse by rail or ship.

“CFR”- Cost and Freight In this term the exporter bears the cost of carriage or transport to the selected destination port, in this term the risk transferable to the buyers at the port of shipment. Seller: The chooses the carrier, concludes and bears the expenses by paying freight to the agreed port of destination, unloading not included. The loading of the duty-paid goods on the ship falls on him as well as the formalities of forwarding. On the other hand, the transfer of risks is the same one as in FOB. Buyer: The buyers supports all the risk of transport, when the goods are delivered aboard by ship at the loading port, buyer receives it from the carrier and takes delivery of the goods from nominated destination port.

“CIF”- Cost, Insurance And Freight CIF- Cost, Insurance and Freight: Title and risk pass to buyer when delivered on board the ship by seller who pays transportation and insurance cost to destination port. Used for sea or inland waterway transportation. This Term involves insurance with FOB price and ocean freight. The marine insurance is obtained by the exporter at his cost against the risk of loss or damage to the goods during the carriage. Seller: The CFR extends additional obligation to the seller for providing a maritime So insurance against the risk of loss or damage to the goods. The seller pays the insurance premium. Buyer: He supports the risk of transportation, when the goods have been delivered aboard the The given information is compiled from various offline / online sources, towards the sole purpose of knowledge sharing.

52 ship at the loading port. He takes delivery of the goods from the carrier to the appointed port or destination.

“CPT”- Carriage Paid To CPT- Carriage Paid To: Title, risk and insurance cost pass to buyer when delivered to carrier by seller who pays transportation cost to destination. Used for any mode of transportation. This term uses land transport by rail, road and inland waterways. The seller and exporter are responsible for the carriage of goods to the nominated destination and have to pay freight up the first carrier. Seller: The seller or exporter controls the supply chain after paying customs clearance for export. Seller or Exporter select the carrier and pay the expenses up to the destination. Buyer: The risks of goods damages or loss are supported by the buyer as goods are given by the first carrier. The buyer or importer has to pay importation customs clearance and the unloading costs.

“CIP”- Carriage And Insurance Paid To CIP- Carriage and Insurance Paid To: Title and risk pass to buyer when delivered to carrier by seller who pays transportation and insurance cost to destination. Used for any mode of transportation. This term is similar to Carriage Paid To but the seller has to arrange and pay for the insurance against the risk or loss or damage of the goods during the shipment. Seller: The seller or buyer has to provide insurance and seller pays the freight and insurance premium. Buyer: The buyer or importer supports the risks of damages or loss, as goods are given to the first carrier. The buyer has to pay customs clearance and unloading charges.

“DAF”- Delivered At Frontier DAF- Delivered At Frontier: Title, risk and responsibility for import clearance pass to buyer when delivered to named border point by seller. Used for any mode of transportation. This term is used when the goods are to be carried by rail or road. Seller : The seller is responsible to make the goods available to the buyer by the carrier till the customs border as defined in sales contract.

The given information is compiled from various offline / online sources, towards the sole purpose of knowledge sharing.

53 Buyer : The buyer takes delivery of the goods at the contract agreed point border and he is responsible for bearing all customs formalities.

DES”- Delivered Ex-Ship DES- Delivered Ex-Ship: Title, risk, responsibility for vessel discharge and import clearance pass to buyer when seller delivers goods on board the ship to destination port. Used for sea or inland waterway transportation. Seller: The seller is responsible to make the goods available to the buyer up to the named quay or after crossing the customs border. Buyer: The buyer takes delivery of the goods from ship at destination port and pays the expenses of unloading.

DEQ”- Delivered Ex-Quay DEQ- Delivered Ex-Quay: Title and risk pass to buyer when delivered on board the ship at the destination point by the seller who delivers goods on dock at destination point cleared for import. Used for sea or inland waterway transportation.

“DDU”- Delivered Duty Unpaid DDU- Delivered Duty Unpaid: Seller fulfills his obligation when goods have been made available at the named place in the country of importation. Seller: The seller is responsible for all transportation cost and accept the customs duty and taxes as per defined in customs procedures. Buyer: The buyer is responsible of the importation customs formalities.

“DDP”- Delivered Duty Paid DDP- Delivered Duty Paid: Title and risk pass to buyer when seller delivers goods to the named destination point cleared for import. Used for any mode of transportation. Seller: The seller is responsible to make the goods available to the buyer at his risk and cost as promised by the buyer. All the Taxes and duty on importation is promised by the buyer to the seller. Buyer: The buyer is responsible to take delivery at a nominated place and pays the expenses for unloading of goods. The given information is compiled from various offline / online sources, towards the sole purpose of knowledge sharing.

Export Incentives available from Govt. of India       

Advance License DEPB (Duty Entitlement Pass Book) DFRC (Duty Free Replenishment Certificate) Duty Draw Back Focus Markets Focus Products Target Plus

Special Schemes for Exporters Some of the most important incentives available to Indian Exporters are:

  

    

  

 Market Development Assistance (MDA) Scheme  Market Access Initiative (MAI) Scheme The Objectives of the MDA Scheme is basically to assist the SMEs to promote exports of their products and Explore new markets for their product Focus areas have been identified by the Government of India via:  Focus CIS  Focus Africa  Focus Asean +2 (i.e. Australia & New Zealand.)  Focus LAC Exporting companies with an FOB value of exports of up to Rs.15.00 crores in the preceding year are eligible for MAI scheme. Assistance for Travel (economy excursion class) + built up furnished stall in Focus Areas (Assistance Amount subject to ceiling – Show in separate slide). Assistance available for participation through Council sponsored activities. Assistance permissible to one regular employee/director/ partner/proprietor of the company. Exporter of foreign nationality or holding foreign passport will not be eligible. Intimation application must be received in any of the offices of Pharmexcil with a minimum of 14 days advance notice excluding the date of receipt of application in Pharmexcil & the date of departure from the Country. (Application available for download from our Website. Maximum no. of permissible participations is 5(five) in a financial year i.e. one each in Focus Areas + one in General area. Company applying for MDA shall not be under investigation/charged / prosecuted / debarred / black listed under the Foreign Trade Policy of India or any other law relating to export and import business. Maximum MDA assistance shall be inclusive of MDA assistance received from all Govt. bodies / EPCs/ FIEO / ITPO etc.

The given information is compiled from various offline / online sources, towards the sole purpose of knowledge sharing.

55 

 

Member exporters of EPCs etc would also be eligible for MDA assistance for participation in events organized by ITPO abroad. Their applications / claims would be routed / reimbursed through the concerned EPC etc. A maximum of 3(three) participations in a particular trade fair / exhibition would be eligible for MDA assistance. Companies participating for more than 3 times including past cases for a particular fair/exhibition have to participate in that fair on self financing basis.

MDA Amount Ceilings & Visits in each areas permitted S. No.

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      

Area / Sector

No. of Visits

Maximum financial Ceiling per event

Focus LAC

Rs.1,80,000

Focus Africa (including WANA Countries)

Rs.1,50,000

Focus CIS

Rs.1,50,000

Focus ASEAN + 2

Rs.1,50,000

General Areas

Rs. 80,000

Total Visits

MDA Scheme – Claim Procedures & Documentation for Reimbursement: After completion of the activity, the exporters have to file their claims with Pharmexcil along with the following simple documents:  Claim form as per Annexure – VII (downloadable from our website) duly signed by the Chartered Account  Claims must be filed immediately upon return to India after completion of activity but positively within 45 days from their return to India. Market Access Initiatives (MAI) Scheme is an Export Promotion Scheme envisaged to act as a catalyst to promote India’s export on a sustained basis. The scheme is formulated on focus product – focus country approach to evolve specific market and specific product through market studies / survey. Assistance provided to EPCs / TPOs etc for enhancement of export through accessing new markets or through increasing the share in the existing markets. Level of assistance for each eligible activity is fixed. Schemes available from Deptt of Ayush, NMPB, APEDA, VKUY, Backward Region Grant Fund etc Export Incentives available from Govt. of India (through Pharmexcil) Reimbursement of Product Registration cost @ 50% and up to Rs 50 Lacs pa Deptt of Ayush: Centrally Sponsored Scheme for Ayurveda, Siddha, Unani and Homeopathy

The given information is compiled from various offline / online sources, towards the sole purpose of knowledge sharing.

56 Scheme No: 4: Rs 30 lakhs or 30% of expenditure for in house QC Lab or Scheme No: 5: Assistance of Rs 30 lakhs or 30% of expenditure for up gradation of facilities to US FDA / EU Good Mfg Practices certification standards 

Some of the eligible activities for financial assistance under the scheme are as under:

Marketing Projects abroad:          

Capacity Building     

Imparting training for Indian exporters Up gradation/improvements in Laboratories Quality up gradation of select products for export markets Developing Common facility centers, design centers, packing Hiring consultants in the buyer/prospective country

Statutory Compliances  

Opening of Showrooms/Warehouses Organizing ‘Trade Festival of India Promotion of Brand India National level participation in major international Fairs Display in International departmental stores Publication of World class Catalogues Publicity campaign and brand promotion Research and Product Development Industrial clusters for marketing abroad Reverse BSMs in India

Charges for statutory compliances in the buyer country like registration charges For contesting litigation in the buyer country on anti dumping duties etc.

Studies   

Market studies/export potential studies WTO related studies Trade related studies like FDA, RDA etc.

(Source: Pharmexcil, 2008)

The given information is compiled from various offline / online sources, towards the sole purpose of knowledge sharing.