UNDERSTANDING EXPORT-IMPORT
OPERATIONS
- Dr. Charu Grover
charu@iift.edu
INTRODUCTION

Exporting and Importing are most established form of international involvement
for firms – both goods and services for increased global business opportunities.

To increase economic integration countries sign preferential and free trade
agreements (FTA) --- FTA with SAARC (South Asian Association of Regional
Cooperation's), FTA with ASEAN Countries (Association of South East Asian
Countries)

India has adopted a foreign trade policy (FTP) 2023
INDIA’S KEY EXPORT PARAMETERS
Rank-wise Leading Rank-wise Leading List of Countries
Exporter (2021)
Importers (2021)
by FDI (2017)
1. China
2. United States
1. United States
2. China
1. Netherlands
2. United States
3. Germany
4. Japan
3. Germany
4. Japan
3. United Kingdom
4. China
5. Netherlands
18. India
5. United Kingdom
6. India
5. Ireland
19. India
Source: United Nations
CUSTOM WATER OF INDIA
BALANCE OF TRADE
Export
Import
Balance of Trade
Favorable Balance of Trade
Types of Balance of
Trade
Unfavorable Balance of Trade
Equilibrium in Balance of Trade
DOMESTIC VERSUS EXIM BUSINESS
1.
Higher Distance Involved in EXIM Transactions than in domestic Transactions.
No restrictions on movement of goods to any place in India. However, for EXIM
transactions, the permission of Indian customs is required.
2.
Difference in rules and regulations governing EXIM and domestic transactions –
Only GST is applicable for supply of goods and services in India from 1st July
2017. Exports are free from taxes, even taxes imposed on imports used to
manufacture the exportable goods are refunded as duty drawback. On imports,
there is Integrated GST (IGST)
3.
Dissimilarity in currencies used for payment in EXIM and domestic transactions
4.
Difference in legal system – In EXIM transactions, need to adjust their practices
DOMESTIC VERSUS EXIM BUSINESS
5.
Difference in availability of Resources – Eg. India has trained pool of manpower
but lacks capital- In EXIM transactions trade focus on factor advantages, which is
not much in domestic transactions
6.
Level of competition is higher in EXIM transactions as compared to domestic
transactions
7.
Access to information is easier in domestic transactions as compared to EXIM
transactions
8.
Business Infrastructure required for EXIM transactions will be at different levels
of development than required for domestic transactions
WHAT ARE THE RISKS?
CARRIER
BUYER
(Importer)
WHAT ARE THE RISKS ?
PAYMENT
BANK
GOODS
SELLER
(Exporter)
MANAGING RISKS IN EXIM OPERATIONS
1. Credit Risk
2. Foreign Exchange Fluctuation Risk
3. Importer’s Country Risk
4. Quality Risks
5. Cargo Risks
6. Cultural and Language Risks
RULES
MAKERS AND RULE MAKERS
WATCHDOGS
 International banking
transactions
in IndiaIN
are
Rule ARE
based
& highly
regulated
by
INTERNATIONAL
TRADE
TRANSACTIONS
INDIA
RULE
BASED
&
multiple
agencies.
HIGHLY
REGULATED
BY MULTIPLE AGENCIES.
Reserve bank of India – Responsible for efficient management of forex reserve – Master directions and AP
(Dir) Circulars for Ads
Customs Department – Monitors the movement of goods and the value the same.
FEDAI (Foreign Exchange Dealers Association of India)
DGFT - Nodal agency controlling country’s foreign trade & rules for export promotion and import
rationalization through Foreign trade policy (FTP).
EPCs/EIC/CBs
ICC (International Chamber of Commerce )
ECGC- Political and commercial risk coverage
 International Chamber of Commerce




Established in 1919
Private International Organisation
Not a governmental body
Paris based.
 Main business partner of the United Nations and its agencies.
 ICC’s Primary Objectives
 Facilitating the flow of international trade at a time when nationalism and
protectionism posed threats to the world trading system
 Set rules and standards that would establish uniformity in practice, universal
acceptance
RULES…..
UCPDC 600 (2007 Revision)
ISBP 745 (2013 Revision)
INCOTERMS (2020 Revision)
URC 522 (1995 Revision)
ISP 98(1998 Revision)
ELEMENTS OF SUCCESS IN EXIM
OPERATIONS
1. Export Planning of Firm
2. Understanding Foreign Cultures, Business Etiquettes and Practices
3. Hard work, Dedication, Devotion and Reliability
4. Product Adaptation and Labelling Requirements
5. Identifying Customers’ Wants and Needs
6. Managing Financial Resources
7. Positive Attitude and Futuristic Thinking
8. Effective Coordination and Communication
9. Documentation Knowledge Essential
LABELLING - VIABLE SOURCE OF
INFORMATION
INTERNATIONAL CARRIAGE SYMBOLS
THE WORLD OF LABELLING
Blue
Angel Eco Label for Eco
label Eco
1977
Textiles 1995 Netherland Canada
Germany
Germany
1992
Label Eco label South
Korea
INDIA’S RANK VIS-À-VIS MAJOR
EXPORTERS IN WORLD (2019)
Rank
Country
Billion $ of Exports
1
2
China
2498
United States 1645
3
4
Germany
Netherlands
1486
709
5
18
Japan
India
705
334
Source: UN Comtrade
IMPORTANCE OF EXIM TRADE TO
NATION
1. To Meet Imports of Industrial Needs
2. Debt Servicing
3. Rapid Economic Growth
4. Profitable Use of Natural Resources
5. Dealing with Competition Successfully
6. Increase in Employment Opportunities
7. Role of Exports in National Income
8. Increase in Standard of Living
RISING % OF IMPORT CONTENTS OF
INDIA’S EXPORT
Year
% of Import Contents
1995
2000
9.33
11.27
2005
2010
17.45
22.25
2015
2019
24.03
24.73
Source: World Bank
TOTAL DEBT SERVICE (% OF EXPORTS
OF GOODS, SERVICES)
Country
2001
2011
2012
2013
2014
2015
2019
India
17.92
6.41
6.70
8.07
18.51
10.91
14.01
Source: World Bank
COUNTRIES GIFTED WITH NATURAL
RESOURCES
Country
Russia
United States
Saudi Arabia
Iran
China
Brazil
Australia
Iraq
Main Natural Resources
Coal, Oil, Gold, Gas
Natural Gas, Gold, Copper
Gas, Timber, Oil
Natural Gas and Oil
Coal and Timber
Gold and Uranium
Coal, Iron Ore, Timber, Copper
Oil and Natural Gas
IMPORTANCE OF EXIM TRADE TO
INDUSTRY
1. Lack of Domestic Demand
2. Legal Restrictions
3. Higher Productivity and Profitability
4. Social Responsibility
5. Technological Improvements
6. Managing Seasonal Ups and Downs
7. Greater Opportunities for International Collaboration
THANK YOU