Q1- Enumerate the various steps involved in processing of an export order.

Discuss them in brief Answer- Various steps involved in processing of an export order are discussed below: Step I The exporter should write a simple letter to the overseas buyer acknowledging the receipt of the export order and stating that the confirmation of the same would be sent soon. It may be mentioned here that acknowledgement is different from confirmation. Step II The export (purchase) order should be examined carefully and its contents scrutinized in terms of the following aspects before sending its confirmation. i) Item (product). The order has been received for the product for which quotation/offer was sent and the exporter is still in a position to supply the product. The exporter should reconfirm the source(s) of the supply of the product. ii) Sizes & specifications should be same as per your offer/quotation. Even slightest variation could create problems for the purchaser and supplier at a later stage. iii) Pre-shipment inspection should be either by exporter himself or an agency easily available. If the buyer desires the inspection to be done by an agent/agency of his choice, financial and physical aspects of inspection should be examined and communicated to the buyer. iv) Payment conditions are same as stipulated. If the payment is through letter of credit (L/C), check that an irrevocable L/C has been opened and preferably confirmed by a bank in India. Step III If the exporter is satisfied with various aspects referred to above, a formal confirmation of the export order should be sent to the buyer. Step IV If the exporter is not completely satisfied with the terms of the export order, clarifications should be sought from the buyer before its confirmation. The clarifications could be in terms of quantity, delivery schedule, terms of payment etc. Step V The exporter should make reservation of cargo space for air freighting or sea freighting of the export consignment as per the delivery period commitments made to the buyer. The services of clearing and forwarding agents can be obtained for this purpose. Step VI In case the exporter himself is a manufacturer of the item to be exported, a delivery note (in duplicate) containing details of the product, specifications, quantity etc. should be sent to the Production Department. Step VII In case the exporter needs to procure from outside all or part of the quantity to be exported, purchase order with complete specifications etc. should be placed with the supplier(s). It would be a good idea to discuss special requirements and production schedule with the supplier(s). Step VIII The exporter should apply for the grant of export authorization if the item is mentioned as Restricted in the ITC (H.S.) Classification of Import-Export items. The application is to be made in the prescribed Form to the Director General of Foreign Trade for a license.

Q2- What do you understand by SEZ? Explain the special features of SEZ units. Answer- Special Economic Zones are duty free enclaves which are set up separately from the Domestic Tariff Area (DTA) for the purpose of production of goods at low cost, meant for export, provided with facilities like infrastructure, machinery, customs, expertise, etc. Goods and services coming from DTA to SEZ area are treated as exports and goods and services coming from SEZ area to DTA are considered imports. In view of the growing importance and great potentials for exports an Act called SEZ Act, 2005 was enacted in India. The policy relating to Special Economic Zones is governed by SEZ Act, 2005 and the Rules framed there under. The special features of SEZ units are as under:i) SEZ units may import/procure from DTA units without payment of duty all types of inputs and capital goods. ii) Gems and Jewellery units of SEZ may source gold/silver/platinum through nominated agencies. iii) SEZ units may also procure goods from bonded warehouses in the DTA and International Exhibitions held in India, without payment of duty. iv) SEZ units may procure without payment of duty and services from DTA units, for setting up, operation and maintenance of units in the SEZ. v) SEZ units may import/procure, from DTA, without payment of duty, all types of goods for creating a central facility for use by units in SEZ. vi) SEZ units may also source capital goods from a domestic or foreign leasing company, without payment of duty.

Q3- What is Bill of entry and what are its features? List the documents to be filed with B/B. Answer- Bill of Entry The documents involved in Import trade in India are discussed below: There are three types of Bill of Entry: White Bill of Entry or Home Consumption B/E. Yellow Bill of Entry or Warehouse B/E. Green Bill of Entry or Ex-bond B/E. B/E must be presented to the customs for Noting in the Import Deptt. Of Customs House after the item-wise document called Import General Manifest (IGM) is filed by the steamer agent. The facility to file B/E prior to Import Manifest 30 days before the arrival of vessel is permitted Under Section 46(3) of Customs Act, but the custom department applies prior entry stamp on the B/E. Documents to be filed with B/E Invoice. Packing list. Insurance policy. Original Bill of Lading or Airway Bill (Delivery Order) Copy of L/C or contract. Certificate of Origin. Product Details. Custom Copy of Import Authorization or Customs Clearance Permit in Original. Features of B/E: The salient features of Bill of Entry are as follows: Assessable Value: The value is arrived at as provided under the Customs Act, insurance and freight (if not included in the invoice), loading and local agency commission, miscellaneous charge and landing charges. The rate of exchange (conversion) should be the one applicable for the currency fixed by the customs. Codes: For statistical purposes the codes should be mentioned for following information: Port, Custom House Agent (CHA), and IE Code, Country of Origin / Consignment, Unit Code and Currency Code. Description of Goods: The information about the goods must include no & marks of packages, weight, volume etc. and total no of packages. The description of goods should be product wise for the assessment of duties. Origin: The origin of goods is given to assess the value of duty as there may be duty concession for some countries etc. or antidumping duties may be levied on import of goods of certain origin. Vessel Details: The shipment details like B/L No., Date, Port of Shipment, Vessel name, and Rotation No. and line No. are to be given.

Q4- Explain the meaning of exchange risk. What can be done to mitigate this risk? Discuss. Answer- Any person who has dealings in foreign currency is exposed to exchange risks. For an exporter the exchange risk is that the foreign currency in which the transaction is conducted may depreciate in future and the exporter may realize less than the expected in local currency. Similarly, an importer also faces exchange risk. The foreign currency in which the transaction is designated, may appreciate in terms of local currency resulting in payment of higher amount in local currency than what was contemplated originally. The above risk arises because of the fact that exchange rate is constantly changing and no one can be certain about the exchange rate that will prevail on the future date. This uncertainty about the exchange rate that would prevail on a future date is exchange risk. Forward Contracts: Forward exchange contract is used by exporters and importers to get adequate protection against exchange risk. In a forward exchange contract a banker and a customer or two banks enter into a contract to buy or sell a fixed amount of foreign currency on a specified future date at a predetermined rate of exchange. Under forward contracts, date of delivery will be as under: i) For export documents negotiated, purchased or discounted; date of negotiation, purchase or discount. ii) In case of export documents sent on collection; date of payment of Indian Rupees to the exporter. iii) In case of retirement/crystallization of import bills; date of retirement or crystallization of the bill whichever is earlier. Exchange Control Regulations Governing Forward Contracts: Forward contracts in India are governed by Foreign Exchange Control Regulations Governing Forward Contracts: Forward contracts in India are governed by Foreign Exchange Management (Foreign Exchange Derivatives Contracts) Regulations, 2000. The regulations are as under: A person resident in India may enter into a forward contract with an authorized dealer in India to hedge an exposure to exchange risk in respect of a transaction for which sale and/or purchase of foreign exchange is permitted under the Act, or rules or regulations or directions or orders made or issued there under, subject to following terms and conditions. (a) The authorized dealer through verification of documentary evidence is satisfied about the genuineness of the underlying exposure or as otherwise permitted by the Reserve Bank from time to time, (b) The maturity of the hedge does not exceed the maturity of the underlying transaction, (c) The currency of hedge and tenor are left to the choice of the customer, (d) Where the exact amount of the underlying transaction is not ascertainable, the contract is booked on the basis of a reasonable estimate (e) Foreign currency loans/bonds will be eligible for hedge only after final approval is accorded by the Reserve Bank where such approval is necessary, (f) In case of Global Depository Receipts (GDRs) the issue price has been finalized,

Q5- What is custom duty and what are its types? Explain with example how custom duties are levied. Answer- Customs Duty is a type of indirect tax levied on goods imported into India as well as on goods exported from India. Taxable event is import into or export from India. In India, the basic law for levy and collection of customs duty is Customs Act, 1962. It provides for levy and collection of duty on imports and exports, import/export procedures, prohibitions on importation and exportation of goods, penalties, offences, etc. The Constitutional provisions have given to the Union, the right to legislate and collect duties on imports and exports. The Central Board of Excise & Customs (CBEC) is the apex body for customs matters. It is a part of the Department of Revenue under the Ministry of Finance, Government of India. It deals with the task of formulation of policy concerning levy and collection of customs duties, prevention of smuggling and evasion of duties and all administrative matters relating to customs formations. Type of Custom Duties Various types of custom duties are as follows: i. Basic Duty: All goods are chargeable to duty as prescribed in First Schedule of Custom Tariff Act. The duty could either be levied on percentage or value terms. ii. Additional Duty: The rate of duty is equal to excise duty on goods produced in India. iii. Special Additional Duty: It is levied at present at the rate of 4%. iv. Antidumping Duty: Duties levied to check dumping of goods in India. For example, citric acid from China. v. Safeguard Duty: Levied to safeguard Indian Industry. vi. Excise Education Cess vii. Customs Education Cess Modes of Levy of Duty Custom duties are levied in 3 ways: Specific Rate of Duty: At the rate prescribed per unit of item. Ad- Valorem Duty: Levied on value. Specific and Ad Valorem: Applied together Illustration The custom / CHA are required to calculate the custom duty properly before presenting the B/E to custom. The duties are applied as applicable on the date of noting of Bill of Entry. In case of Prior Entry System, the duties are levied as applicable on the date of final entry of vessel in India.

Q6- Write short notes on:

a) ECGC b)Packing credit Answera) Payments for exports are open to risks even at the best of times. The commercial risk of the foreign buyer going bankrupt or losing his capacity to pay is heightened due to the political and economic uncertainties. Export credit insurance is designed to protect exporters from the consequences of the payment risk, both political and commercial, and to enable them to expand their overseas business without fear of loss. Thus export credit insurance support to Indian exporters is provided by Export Credit and Guarantee Corporation. Functions of Export Credit Guarantee Corporation (ECGC) Two main functions of ECGC are: 1. It covers the risk of non-payment due to commercial and political risks arising in respect of exports on credit terms. 2. It issues guarantees to banks underwriting a major part of the loss that may arise in respect of advance or other support they extend to exporters in connection with their export business. b) Packing credit finance is concerned primarily with the grant of packing credit to enable the eligible exporters to procure raw materials and for processing, manufacturing, packing, transportation and all such expenditure to enable them to prepare the export consignment and ship it.