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International business denotes all those business activities which take place beyond the geographical limits of the country.

Free On Board (FOB) indicates that the supplier pays the shipping costs that usually include the insurance costs from the point of production to a specified destination, at which point the buyer takes responsibility.

Mate Receipt is a receipt issued by the commanding officer of the ship when the cargo is loaded on the board.

Letter of Credit is used for ensuring timely payment. 

(c) Bill of entry 

Documents required for an international sale can vary significantly from transaction to transaction, depending on the destination and the product being shipped. At a minimum, there will be two documents: the invoice and the transport document. The buyer will usually provide the seller with a list of documents needed to get the goods into his country as expeditiously and inexpensively as possible. Some documentary requirements are not open to negotiation, as they are needed by the importer to clear customs at the port of destination. International market involves various types of trade documents that need to be produced while making transactions. Each trade document is different from other and present the various aspects of the trade like description, quality, number, transportation medium, indemnity, inspection and so on. So, it becomes important for the importers and exporters to make sure that their documents support the guidelines as per international trade transactions. A small mistake could prove costly for any of the parties. For example, a Trade Document about the Bill of Lading is a proof that goods have been shipped on board, while Inspection Certificate, certifies that the goods have been inspected and meet quality standards. So, depending on these necessary documents, a seller can assure a buyer that he has fulfilled his responsibility whilst the buyer is assured of his request being carried out by the seller. 

The following is a list of documents often used in international trade:

1. Air Waybill;

2. Bill of Lading;

3. Certificate of Origin;

4. Draft (or Bill of Exchange);

5. Insurance Policy (or Certificate);

6. Packing List/Specification;

7. Inspection Certificate.

1. Air Waybills: Air Waybills make sure that goods have been received for shipment by air. A typical air waybill sample consists of of three originals and nine copies. The first original is for the carrier and is signed by a export agent; the second original, the consignee’s copy, is signed by an export agent; the third original is signed by the carrier and is handed to the export agent as a receipt for the goods. safety reasons which ensure that the document never comes into the hands of an unauthorised person. Only one original is sufficient to take possession of goods at port of discharge so, a bank which finances a trade transaction will need to control the complete set. The Bill of Lading must be signed by the shipping company or its agent, and must show how many signed originals were issued. To be acceptable to the buyer, the B/L should: 1. Carry an “On Board” notation to showing the actual date of shipment, (Sometimes however, the “on board” wording is in small print at the bottom of the B/L, in which cases there is no need for a dated “on board” notation to be shown separately with date and signature.) 2. Be “clean” have no notation by the shipping company to the effect that goods/ packaging are damaged.

2. Bill of Lading (B/L): Bill of Lading is a document given by the shipping agency for the goods shipped for transportation form one destination to another and is signed by the representatives of the carrying vessel. Bill of lading is issued in the set of two, three or more. The number in the set will be indicated on each bill of lading and all must be accounted for. This is done due to thesafety reasons which ensure that the document never comes into the hands of an unauthorised person. Only one original is sufficient to take possession of goods at port of discharge so, a bank which finances a trade transaction will need to control the complete set. The Bill of Lading must be signed by the shipping company or its agent, and must show how many signed originals were issued. To be acceptable to the buyer, the B/L should: 

1. Carry an “On Board” notation to showing the actual date of shipment, (Sometimes however, the “on board” wording is in small print at the bottom of the B/L, in which cases there is no need for a dated “on board” notation to be shown separately with date and signature.) 

2. Be “clean” have no notation by the shipping company to the effect that goods/ packaging are damaged.

3. Certificate of Origin: The Certificate of Origin is required by the custom authority of the importing country for the purpose of imposing import duty. It is usually issued by the Chambers of Commerce and contains information like seal of the chamber, details of the good to be transported and so on. The certificate must provide that the information required by the credit and be consistent with all other document. It would normally include : 1. The name of the company and address as exporter. 2. The name of the importer. 3. Package numbers, shipping marks and description of goods to agree with that on other documents. 4. Any weight or measurements must agree with those shown on other documents. 5. It should be signed and stamped by the Chambers of Commerce. 

4. Bill of Exchange: Bill of Exchange is a special type of written document under which an exporter ask importer a certain amount of money in future and the importer also agrees to pay the importer that amount of money on or before the future date. This document has special importance in wholesale trade where large amount of money is involved. On the basis of the due date there are two types of Bill of Exchange: Bill of Exchange after Date: In this case the due date is counted from the date of drawing and is also called bill after date. Bill of Exchange after Sight: In this case the due date is counted from the date of acceptance of the bill and is also called bill of exchange after sight. 

5. Insurance Certificate: Also known as Insurance Policy, it certifies that goods transported have been insured under an open policy and is not actionable with little details about the risk covered. It is necessary that the date on which the insurance becomes effective is same or earlier than the date of issuance of the transport documents. Also, if submitted under a LC, the insured amount must be in the same currency as the credit and usually for the bill amount plus 10 per cent. The requirements for completion of an insurance policy are as follows: 

(а) The name of the party in favour of which the documents has been issued. 

(b) The name of the vessel or flight details. 

(c) The place from where insurance is to commerce typically the sellers warehouse or the port of loading and the place where insurance cases usually the buyer’s warehouse or the port of destination. 

(d) Insurance value that is specified in the credit. 

(e) Marks and numbers to agree with those on other documents. 

(f) The description of the goods, which must be consistent with that in the credit and on the invoice.

(g) The name and address of the claims settling agent together with the place where claims are payable. 

(h) Countersigned where necessary. 

(i) Date of issue to be no later than the date of transport documents unless cover is shown to be effective prior to that date. 

6. Packing List: Also known as packing specification, it contains details about the packing materials used in the shipping of goods. It also includes details like measurement and weight of goods. The Packing List must: 

(i) have a description of the goods (“A”) consistent with the other documents. 

(ii) have details of shipping marks (“B”) and numbers consistent with other documents. 

7. Inspection Certificate: Certificate of Inspection is a document prepared on the request of seller when he wants the consignment to be checked by a third party at the port of shipment before the goods are sealed for final transportation.

Contract manufacturing refers to type of international business where a firm enters into contract with some local manufactures in foreign countries to get certain components of goods produced as per their specifications. It is also called outsourcing. It can take three forms: Getting produced certain parts of final products which will be used for the production of final products later; assembly of components into final products; and complete manufacture of the products like garments. 

Merits of Contract manufacturing 

1. Less investment: It helps international firms in production of goods at massive scale without making any investment in setting up production facilities. Therefore, it is more suitable for small and medium size manufacturers who can’t undertake 100% or even 50% investment. 

2. Less risky: It is less risky as there is little investment involved. Moreover, local manufacturers who have been given specific product design and quality standards do not deviate from them. 

3. Low cost: If goods are contracted in low labour and material cost country, then it also gives benefit of low cost. For example, in India labour is very cheap and therefore it has become a favorite destination for contract manufacturing. 

4. Better capacity utilization: Local producers benefit get from contract manufacturing because it allows them to make better use of their idle production capacity. 

5. An opportunity for local producers to become international: Local producer also gets an opportunity to get involved in international business. 

Disadvantages of Contract Manufacturing 

1. Deviations from Product design and quality Specifications: Local firms might not follow product design and quality standards causing serious product quality problems for international firm.

2. Loses control over Manufacturing Process: Local manufacturer in the foreign country loses control over manufacturing process. 

3. No authority to sell output: The local firm cannot sell the output according to his will. It has to sell the goods to international firm at pre-determined prices.

International business

1. Merchandise exports and imports: Merchandise means which are tangible. That can be seen and touched. It is also known as trading goods. It excludes trading services. 

2. Exports and Imports of Services: Service exports and imports involve trade in intangibles. It is because of the intangible aspect of services that trade in services is termed as intangible trade. 

3. Licensing and Franchising: Permitting another party in a foreign country to produce and sell goods under a firm’s trademarks, patents or copyright for which a payment is made which is called royalty is another way of entering into international business. For example, McDonalds’. 

4. Foreign Investments: Foreign investment is another way to operate internationally. It involves investment of funds abroad in exchange for financial return. It may take two forms: 

5. Direct Investment: It takes place when a company directly invests in property like plant and machinery in foreign countries with a view to undertaking production and marketing of goods and services in these companies. 

6. Portfolio Investment: It is an investment that a company makes into another company by way of acquiring shares or providing loans to the latter.

The benefits of international business to nations are as follows: 

1. Earning of Foreign exchange: International business helps a country to earn foreign exchange. It can use it for meeting its payments abroad. 

2. Better utilization of resources: It is based on the principle of comparative cost advantage. It implies that produces what your country can produce more efficiently, and trade the surplus production so generated with other countries to procure what they can produce more efficiently. When countries produce on these principles, it increases their resource utilization. 

3. Improving Growth Prospects and Employment Potentials: Producing solely for the purpose of domestic consumption severely restricts a country’s prospects for growth and employment. 

4. Increased Standard of Living: In the absence of international trade of goods and services, it would not have been possible to enjoy the standard of living it is enjoying now.

The benefits of international business to firms are as follows:

1. Prospects for higher profits: International business proves more profitable as compared to domestic business. When prices in domestic market are lower, business firms can earn higher profits by selling their products in foreign countries.

2. Increased Capacity Utilization: Many firms set up production capacities for their products which are in excess of demand in the domestic market by planning overseas expansion and procuring orders from foreign customers. It allows them to make better use of their surplus capacity. 

3. Prospects for growth: Business firms find it very irritating when there is fall in demand or saturation point comes in domestic market. Such firms can grow considerable prospects of their growth by entering into international business. 

4. Way out to intense competition in domestic market: When competition in domestic market is very intense, internationalization seems to be the only way for significant growth. Highly competitive domestic market motivates many firms to enter into international business. 

5. Improved Business Vision: The growth of international business of many companies is important for their survival and goodwill. Vision to become international is expression of urge to grow and the need to diversify and to take benefit of strategic advantages of internationalisation.

Firms derive the following benefits by entering into international business:

(i) Prospects for Higher Profits: International business can be more profitable than the domestic business as business firms can earn more profits by selling their products in countries where price are high when the domestic prices are lower.

(ii) Increased Capacity Utilization: Firms can make use of their surplus production capacities and also improving the profitability of their operations by going for overseas expansion and procuring orders from foreign customers. Production on a larger scale often leads to economies of scale, which in turn lowers production cost and improves per unit profit margin.

(iii) Prospects for Growth: Business firms can improve prospects of their growth by entering into overseas markets » when demand for their products starts getting saturated in the domestic market.

(iv) Way out from Intense Competition in Domestic Market: Internationalization is the only way to achieve significant growth when competition in the domestic market is very intense. A highly competitive domestic market induces many companies to go international in search of markets for their products.

(v) Improved Business Vision: The growth of international- business of many companies is essentially a part of their business policies or strategic management. The vision to become international comes from the urge to grow, the need to become more competitive, the need to diversify and to gain strategic advantages of internationalization.

Contract manufacturing.

To encourage flow of direct flow of investment in less developed member countries.

WTO was established with an intention of expanding the scope of the organisation by including services, investment and intellectual property rights. 

Main objectives of WTO: 

1. Improving living standards of people, ensuring full employment of resources, increase in world trade and production, optimizing use of economic resources. 

2. Ensuring equitable division of the benefits of international trade 

3. Optimizing the resources of world resources so as to attain sustainable development.

Correct Answer is: c. Dubai

b. The theory of absolute advantage.

Following are the major countries with whom India trades: 

1. USA 

2. UK 

3. Belgium 

4. Germany 

5. Japan 

6. Switzerland 

7. Hong Kong 

8. UAE 

9. China 

10. Singapore 

11. Malaysia

India’s major items of exports include textiles, garments, gems and jewellery, engineering products and chemicals, agriculture and allied products.

The major reason behind international business is that the countries cannot produce equally well or cheaply all the commodities. This is called theory of comparative cost advantage. It is so because resources are unequally distributed in natural resources. Some countries are abundant in one commodity and scarce in others while opposite is true for some other country. It makes a case for international trade and exchanging abundant commodity with scarce commodity by nations. Different nations are endowed with different factors of production which includes land, labour, capital and entrepreneurship. For example, India is a labour abundant country. Therefore, it is advisable for India to produce such commodities which use labour intensive methods and exchange it for those which use capital intensive methods. USA is a capital abundant country. Therefore, nations need to trade. Due to these reasons one country has a comparative advantage in production of particular goods as compared to other countries. Consequently, each country fins it advantageous to produce those selected goods and services that it can produce more effectively at home and importing those goods in which other nations have a comparative cost advantage.

Major limitations of contract manufacturing are discussed below: 

1. Non adherence to quality standards: Local firms may not adhere to quality standards or product design. It may cause serious quality problems for international firm. . 

2. No control on production by local producer: Local producer has no control on manufacturing as goods are manufactured strictly as per the terms and specifications by international firm. 

3. Zero control over sales: Local producer can’t sell the output to customers directly. He needs to sell to the international firm at a pre-determined price. It reduces profits of local firm.

The major reason behind international business is that the countries have unequal distribution of natural resources among them or have differences in their productivity levels because of which they cannot produce all that they need equally well or at equal ‘ costs. Trade between nations allows a country to produce what a country can produce more efficiently, and trade the surplus production so generated with other countries to procure what they can produce more efficiently.

For Nations: Three advantages of international business to the nations are:

1. International business helps a country to earn foreign exchange which it can later use for meeting its imports of capital goods, technology, petroleum products, etc. 

2. International trade allows a country to produce what a country can produce more efficiently, and trade the surplus production so generated with other countries to procure what they can produce more efficiently. 

3. International business helps the countries in improving their growth prospects and creates employment opportunities.

For Firms: Three advantages of international business to the firms are:

1. International business can be more profitable than the domestic business, as business firms can earn more profits by selling their products in countries where prices are high. 

2. International business leads to fuller utilization of production capacity as a result these firms get benefits of large economies of scale and reduction in the cost of production. 

3. Companies get strategic and technical advantages by going international.

India’s major trading partners are USA, UK, Germany, Japan, Belgium, Hong Kong, UAE, China, Switzerland, Singapore and Malaysia.

Internal trade takes place between the geographical boundaries of a nation, whereas international trade takes place between different nations. 

1. In the trade of any nation, the volume of its internal trade will be more than that of external trade. Internal trade accounts for about 95% of the total volume of the trade of a country, whereas foreign trade accounts for only about 5% of the total volume of the trade of a country. 

2. Though both internal trade and international trade are based on the principle of specialization or division of labour, regional specialization within a country leads to internal trade or inter-regional trade, whereas country wise specialization leads to international trade. 

3. In the case of home trade, there is much scope for the operation of forces of demand and supply. But, in the case of foreign trade, there is not much scope for the full operation of the forces of demand and supply. 

4. The number of documents of trade required for home trade is less than the required for foreign trade. 

5. Home trade is subject to regulations and laws of only one country, whereas foreign trade is subject to regulations and laws of two or more countries. 

6. Home trade is, generally, free from restrictions, whereas foreign trade is subject to a number of restrictions. 

7. The cost of transport in home trade is much less than that in foreign trade. 

8. The interval between the dispatch of goods by the seller and the receipt of the same by the buyer in home trade is not much. 

9. Goods are subject to greater risk in foreign trade than in home trade. 

10. As goods are subject to more risks in foreign trade, in the case of international trader, goods are, generally, insured against the risks. 

11. Home trade involves the currency of only one country whereas foreign trade involves the currencies of two or more countries.

When the business firm of a country purchases goods from the firm of another country it is called import trade. Importing means purchase of foreign products and bringing them into one’s home country.

No doubt, trade benefits both the parties involved. These gains can be categorised as static and dynamic.

Static gains from trade:

1. If a country has an absolute or relative advantage in the production of some goods, it can specialize in those goods and can trade it for others. It will increase total productivity. 

2. Increase in imports will increase country’s ability to satisfy consumer needs. Imports of capital goods may also increase the economic growth rate in the initial stages. It may also shift economy closer to its production possibility curve indicating relatively fuller utilization of resources. 

3. Specialization based on comparative advantage will result more efficient utilization of resources. Hence, a labour abundant country will expand those industries which use more of labour. It will stimulate employment and wage rates will go up. 

4. According to Myint, international trade can provide a larger market for developing countries that will help these countries to increase their output and employment and hence, they will shift closer to PPC and real output will increase. 

5. Trade brings various nations closer and interlinks the economies of the world. It helps to learn from each other’s experience and sharing of capital, technology and knowhow also increases.

Negative static effects of trade:

1. An economy which specialises in labour intensive industries at the cost of modern sector may face problems. It is so because the products of these industries have low price elasticities of demand and supply of agriculture and primary goods is quite instable. 

2. Large chunks of stock will lead to unfavorable terms of trade for the country. It may reduce the benefits expected from trade. 

3. Specializing in labour intensive industries and relying on developed nations for modern machinery and commodities is not advisable on the principle of prudence. 

4. Since there is huge unemployment in developing countries, increased demand for labour will not increase wage rate so much. 

5. Since there are inflexibilities in traditional economies, the expected gains from trade do not get realized. Rather trade benefits developed countries more and thereby increases the inequalities of income amongst nations. Dynamic gains from trade:

Dynamic positive effects:

1. When economy operates at a larger scale with access to the markets of other countries, it can avail of economies of scale which otherwise will not be available. Economies of large scale will make these countries more competitive in international market. 

2. International trade gives*an exposure to world market and international technology of production which a closed economy can not have. It helps an under developed country to grow at a fast pace and become more competitive. 

3. There are many other dynamic changes that occur in the economy via trade like increased investment due to better economic environment, approach to world class technology, institutional changes, exposure to new and different products.

Dynamic negative effects:

1. Market imperfections may increase social costs. Hence, trade that considers only private costs may not be consistent with the long term development goals. 

2. The overall effect of exports will vary from industry to industry; sector to sector. Some industries may get benefit more than others. 

3. If increasing returns to scale are available for some commodity, it may lead to higher profits through exports rather than one in which decreasing returns to scale are expected. Hence, returns to scale may complicate the judgment whether exports are benefiting or not. 

4. Existence of imperfection in markets and government policies may adversely affect the expected dynamic gains. 

5. Many a time, trade benefits developed countries more than developing ones. In such a situation, it may worsen the relative economic strength of developing nations.

Nations trade because of following reasons: 

1. Unequal distribution of natural resources: Resources are unequally distributed in natural resources. Some countries are abundant in one commodity and scarce in other while opposite is true for some other country. It makes a case for international trade and exchanging abundant commodity with scarce commodity by nations. 

2. Unequal availability of factors of production: Different nations are endowed with different factors of production which includes land, labour, capital and entrepreneurship. For example, India is a labour abundant country. Therefore, it is advisable for India to produce such commodities which use labour intensive methods and exchange it for those which use capital intensive methods. USA is a capital abundant country. Therefore, nations need to trade. 

3. Theory of Comparative Cost Advantage: Due to these factors, some countries are in an advantageous position in producing selected goods and services which other countries cannot produce that effectively and efficiently and vice-versa. Consequently, each country finds it advantageous to produce those selected goods and services that it can produce more effectively at home and importing those goods in which other nations have a comparative cost advantage. 

4. Geographical Specialisation: The international business as it exists today is the result of geographical specialisation. Even within a country each state specialises in those goods for which it is geographically more suitable. Similarly, each nation specialises in those goods in which it is specialised as per availability of resources and exchanges it for other goods and services in foreign market. 5. Cost minimization principle of firms: Firms get involved in international business to minimise their costs and maximise their profits.

International trade comprises of exports and imports of goods and forms an important component of international business. But the scope of international business is substantially wider than that of international trade. International business includes international exchange of services such as international travel and tourism, transportation, communication, banking, warehousing, distribution and advertising.

It also covers foreign investments and overseas production of goods and services. Multinational companies have started making investments into foreign countries and undertaking production of goods and services in foreign countries to explore foreign markets and produce at lower costs. All these activities form part of international business. To conclude, we can say that international business is a much broader term and is comprised of both the trade and production of goods and services across frontiers.

International trade is done through exporting of goods while international business modes include licensing, franchising, contract manufacturing, joint ventures and establishment of wholly owned subsidiaries apart from exporting.

Every country is interested in promoting its foreign trade, particularly exports. The government of India has introduced the following schemes for the promotion of India’s foreign trade.

1. Advance license Scheme: Under this scheme, an exporter is allowed duty free supply of domestic as well as imported inputs required for the manufacture of export goods. This scheme is available to both exporters who export on a regular basis and also to those who export on adhoc basis.

2. Export Promotion Capital Goods Scheme: This scheme is intended to encourage the import of capital goods for producing export goods. Under this scheme, export firms are allowed to import capital goods at negligible or lower rates of customs duties subject o actual user conditions and fulfillment of specified export obligations.

3. Export of services: Under this scheme, to boost the export of services, various ’ categories of service houses have been recognized on the basis of their export performance. They are referred to as service export house, International Service Export house and International Star service Export House on the basis of their export performance.

4. Export Finance: Exporters require finance not only for producing goods for export but also after the shipment of the goods, because it may take some time to receive payment from the importers. Therefore, two types of export finances are made available to exporters by authorized banks.

5. Duty Drawback Scheme: Under this scheme, goods meant, for exports are exempted from payment of excise and customs duty. Therefore, and such duty paid on export goods are refunded to exporters on the production of proof of export of goods, to the concerned authorities, such refunds are called customs drawbacks.

6. Export Manufacturing under Bond Scheme: Under this scheme, Business firms can produce goods without payment of excise and other duties. But the firms desirous of getting such a facility have to give an undertaking that they are manufacturing goods for exports purposes and will export such products on their production.

7. Exemption from Payment of sales Taxes and Income-Tax: Under this scheme, goods meant for export purposes are exempted from payment pf sales tax. Further, the income derived from export operations have exempted from payment of income tax a long time. However, at present, exemption from income- tax is available only to 100% export -oriented units and units set up in Export processing Zones/special Economic Zones for select years.

8. Scheme of Recognizing export firm as Export house, Trading House and Star Trading House: This scheme is intended to promote established exporters and help them in marketing their products in international markets. Under this scheme, the Government grants the status of Export House, Trading House and Star Trading House to select export firms. This status is granted to firms only on their achieving prescribed average export performance in the past select years and also on their fulfillment of other conditions as laid down in the import-export policy.

Export Processing Zones: These are industrial estates which firms enclaves from the domestic tariff area. They aim at providing an internationally competitive duty free environment for export production at low cost. Recently these have been converted into Special Economic Zones.

When the firm of country sells goods and services to a firm of another country it is called export trade. Export trade indicates selling of goods and services from the home country to a foreign country.

Important formalities in getting an export license are as follows:

1. Opening a bank account in any bank authorized by the Reserve Bank of India (RBI) and getting an account number. 

2. Obtaining Import Export Code (IEC) number from the Directorate General Foreign Trade (DGFT) or Regional Import Export Licensing Authority. 

3. Registering with appropriate export promotion council. 

4. Registering with Export Credit and Guarantee Corporation (ECGC) in order to safeguard against risks of non-payments.

b. North has a comparative advantage in the production of cloth.

The dements of international business are:

1. Excessive Dependence on other countries: International business, by making a country concentrate on the production of only those goods for which it is best suited, makes a county depend on other-countries even for essential products. Such dependence creates serious difficulties for a country, especially in times of war when international business becomes impossible.

2. Foreign competition: International business gives rise to foreign competition to a country. Foreign competition may ruin domestic industries, especially small and cottage industries which are unable to face such competition.

3. One-side development: International business may lead to onesided development of a nation’s economy. Because of the specialisation resulting from international business, a country may develop a certain sector of her economy, neglecting other sectors. This dependence on one sector is not good for the overall growth of a country.

4. Balance of Payment Problem: International business may cause serious balance of payment problem. The balance payment problem may force a country to borrow from international sources. Huge foreign debt may impair a country’s capacity to import goods.

5. Import of Luxury and Other Unwanted Goods: International business may encourage the import of luxury and other unwanted goods which are not necessary for the masses. Such imports may ruin the economy of country.

b. Letter of credit 

(i) Trade Enquiry: A trade enquiry is a written request by an importing firm to the exporter for supply of information regarding the price and various terms and conditions on which the latter is ready to exports goods. 

(ii) Import License: License which permits the import of goods that cannot be imported freely is called an import license. The importer needs to consult the Export Import (IZXIM) policy in force to know whether the goods that he or she wants import are subject to import licensing. Iji case goods can be imported only the license the importer needs to procure an import license. 

(iii) Shipment of Advice: Shipment advice contains information about the shipment of goods. The information provided in the shipment advice includes details such as invoice number, bill of lading/airways bill number and date, name of the vessel with date,the port of export, description of goods and quantity, and the date sailing of vessel. The overseas supplier dispatches the shipment advice to the importer after loading the goods on the vessel.

(iv) Import General Manifest: Import general manifest is a document that contains the details of the imported goods. It is a document on the basis of which unloading of cargo takes place. It is provided by the person in charge of the carrier (ship or airway) to the officer in charge at the dock.

(v) Bill of Entry: Bill of entry is a form filled by the importer for assessment of customs import duty. One appraiser examines the document carefully and gives the examination order. The importer procures the said document prepared by the appraiser and pays the duty, if any. After payment of the import duty, the bill of entry has to „ be presented to the dock superintendent. The examiner gives his report on the bill of entry which is then presented to the port authority which issues the release order after receiving necessary charges.

(d) Refund of income dock charges at the port of shipment

Before the final loading of goods for export, it is necessary for the exporter to get the goods cleared by customs. This is known as Securing Customs Clearance. In this regard, an exporter first requires to submit the following documents to the customs appraiser at the Customs House:

1. Shipping bill

2. Export order

3. Letter of credit

4. Commercial invoice

5. Certificate of origin

6. Certificate of inspection, if necessary

7. Marine insurance policy.

After the submission of the documents, a carting order is obtained from the superintendent of the port concerned. The carting order acts as a gate pass for the cargo to enter the dock as it gives the necessary instructions to the staff. The physical movement of cargo then takes place from the dock to the port area and finally the goods are stored in an appropriate storage. It may not be possible for the exporter to be present at all times for performing these formalities, and therefore the task is assigned to a Clearing and Forwarding (C and F) agent.

It is a scheme under which an exporter is allowed duty free supply of domestic as well as imported inputs required for the manufacture of exports goods.

Excise duty is the amount payable on raw materials used in the manufacture of goods.Exporters are required to pay excise duty and get excise clearance. In order to get excise clearance, a manufacturer must first submit an invoice to the Regional Excise Commissioner. The Excise Commissioner then examines the invoice and, if satisfied, issues the excise clearance to the manufacturer. However, in many cases, the government may either exempt a manufacturer from payment of excise duty or refund it after payment in case the manufactured goods are meant for export. The basic objective of such exemptions is to promote the export of goods and provide a competitive market for Indian exports in the world market.

Bill of Lading is an essential document required at the time of an export transaction. It is issued by the shipping company as a token of acceptance that the goods have been put on board in its vessel. A Bill of Lading is an undertaking from the shipping company to transfer the goods to the port of destination. Bills of Lading are freely transferable. In contrast, a Bill of Entry is required at the time of an import transaction. It is a form supplied by the customs office and filled by the importer once the goods are received. A Bill of Entry is submitted at the customs office with information such as the name and address of the importer, name of the ship in which the goods were transported, number of packages, marks on the package, description of imported goods, quantity and value of the imported goods, name and address of the exporter, port of destination and customs duty payable.

The exporter has to apply, to the concerned Excise Commissioner in the region with an invoice because according to the Central Excise Tariff Act, excise duty is payable on the materials used in manufacturing goods. If the Excise Commissioner is satisfied, he may issue the excise clearance. But in many cases the government exempts payment of excise duty or later on refunds it if the goods so manufactured are meant for exports. This is done to provide an incentive to the exporters to export more and also to make the export products more competitive in the world markets.

Bill of lading is issued by the shipping company after the receipt of freight; it serves as evidence that the shipping company has accepted the goods for carrying to the designated destination. In case the goods are being sent by air, this document is referred to as airway bill. On the other hand “Bill of entry” is filled by the importer for assessment of customs import duty.

One appraiser examines the document carefully and gives the examination order. The importer procures the said document prepared by the appraiser and pays the duty, if any After payment of the import duty, the bill of entry has to be presented to the dock superintendent. The examiner gives his report on the bili of entry which is then presented to the port authority which issues the release order after receiving necessary charges.

The goods must be cleared from the customs before these can be loaded on the ship. For obtaining customs clearance, the exporter prepares the shipping bill which contains particulars of the goods being exported, the name of the vessel, the port at which goods are to be discharged, country of final destination, exporter’s name and address, etc. 

Five copies of the shipping bill along with the following documents are then submitted to the Customs Appraiser at the Customs House for clearance:

1. Export Contract or Export Order 

2. Letter of Credit 

3. Commercial Invoice 

4. Certificate of Origin 

5. Certificate of Inspection, where necessary 

6. Marine Insurance Policy

After submission of these documents the superintendent of the concerned port trust is approached for carting order and after obtaining it, the Cargo is physically moved into the port area and stored in shed.