UNIT -12
PROCEDURE FOR IMPORT AND EXPORT TRADE
12.2 WHAT IS FORETGN TRADE ? :-
→ The foreing trade take place beyond the national boundaries of two or more countries.
→ There are other differeness which may be stated as follows :-
(1) In case of foreign trade the restrictions are numerous.
→ A firm requires permission from government authorities before goods can be imported or exported.
(2) In foregin trade, what the importer pays in his national currency has to be converted into foregin currency acceptable to the exporter.
(3) Payment can be made only through bank in the case of foreign trade.
• Types of foreing trade :-
(1) Import trade :-
→ When goods are purchases from another country.
(2) Export trade :-
→ When goods are sold to another country.
(3) Entrepot trade :-
→ When goods are imported from one country with the objective of exporting them to some other country or countries.
• Importance of Foreign Trade :-
(1) Specialisation and efficiency of production.
(2) Utilisation of resources.
(3) Facilitates economices development
(4) Equalisation of prices.
(5) Employment apportunities.
(6) Harmonious relationship between countries.
• Problems in Foreign Trade :-
(1) Suitability of the product for the market.
(2) Changes in supply and demand conditions.
(3) Frequent price changes.
(4) Credit risk.
(5) Changes in exchange rate.
(6) Rules, regulations and procedures
(7) Credit worthiness of importer and reliability of exporters.
(8) Transporatation adn cargo risks.
(9) Time gap.
(10) Political and legal problems.
12.4 REGULATIONS GOVERNING FOREIGN TRADE :-
(1) Reserve Bank Code Number.
(2) Registration with Export promotion council
(3) Import Export Code Number.
12.5 Export Trade Procedure :-
(1) Receives enquiry.
(2) Receives and scrutinises the order from imorter.
(3) Obtains export licence.
(4) Manufactures/ Procedures goods
(5) Fulfils exchanges regulations.
(6) Books shipping space.
(7) Gets excise clearance and pre-shipment inspection.
(8) Packing and Marking.
(9) Appoints clearing and forewarding agents.
(10) Customs formalities.
(11) Insurance of goods.
(12) Places the goods on board the ship.
(13) Obtains bill of loding.
(14) Collects necessary doucment and despatches shipment advice to the importer.
(15) Secures payment.
(16) Claims the incentives.
12.6 IMPORT TRADE PROCEDURE :-
(1) Trade enquiry.
(2) Obtins an import licence.
(3) Obtins foreing exchange.
(4) Places the order/ indent.
(5) Arranges letter of credit.
(6) Gets shipping doucment.
(7) Clears the goods.
(8) Makes Payment.
