Pre-Shipment Finace

The company expects to deal in both import and export transactions, in a combination of documentary letter of credit and open account transactions. Its primary markets will be the United States, China, India and possibly a foray into the European Union through Ireland.

Loans including export express, export working capital and international trade loans are available with the specific purpose of supporting businesses struggling with exporting goods. Businesses who employee reservists who are called to active duty services might be eligible for a Military Reservist Economic Injury Disaster loans.

b. The firm is required to make a cash payment for the goods or services.

Forward contract. Lock in an exchange rate with the bank until a certain future date, with currency projections against the spot rate though.  In this case had an option to have Forward contracts, which allow Nodal fixed exchange rates in the future at no charge, the bank may impose a fee

The core idea of the Chapter 4 is to make “whithholdable payments” to foreign financial

2. The importer applies to his bank requesting and authorizing the bank to open a L/C in favour of the exporter and pay bills drawn by the exporter under the L/C.

Price is FCA “Free Carrier” ,the seller delivers the goods that are released for export to the carrier that has been identified by the buyer. It will also be (DDU) “Delivered Duty Unpaid” the selling cost of goods includes all charges to deliver goods up to the door of the consignee except duty or tax of the importing country.

Thirdly, to provide other service delivered collection and post option. There are the other options that offer the satisfaction of the customer, who might chance his/her mind and situation about the unused foreign currency, which does not matter for someone. If the customers are interested, we will give collection box and deliver to keep every 6-12 month or made an appointment about one week before to collect it.

With the primary objective of incentivizing exports, various schemes like Export Oriented Units (EOUs), Special Economic Zones (SEZs), Duty Exemption Entitlement Schemes (DEECs), Manufacture under Bond etc. have been made available by the government to obtain inputs without the payment of customs duty/excise duty or to obtain refund of duty paid on inputs. In case of central excise, manufacturers can avail Cenvat Credit of duty paid on inputs and utilize the same for payment of duty on other goods

• Financial management effort: To minimize the risk of exchange-rate fluctuation and transactions processes of export activity the financial management needs more capacity to cope the major effort

Cash in advance is the risk free payment methods except the potential consequences about non delivery of the goods by the seller. Exporter can avoid the risk of non payment since payment is recieved prior to shipment. This payment method is not favorable for buyer because buyer is concerned about the non delivery of goods when the payments made in advance. Accordingly it is not an competitive option for if customer has other vendors who offer more attractive payment methods.

Such financing instrument has gained its strategic importance as more economies view exports as a vital national objective and lead to increase in number of established ECAs and volumes of export credit transactions. During the 1990s, the annual volume of export credit provided by Organisation for Economic Cooperation and Development (OECD) countries averaged roughly $80-100 billion per annum (Maurer and Nakhood, 2003). Since then, volumes have grown, reaching a record of $514 billion in 2010 (Berne Union 2011).

This partial convertibility of rupee on current account was adopted so that essential imports could be made available at lower exchange rate to ensure that their prices do not rise much. Further, full convertibility of rupees at that stage was considered to be risky in view of large deficit in balance of payments on current account.

For our team project, we will be exporting LED light bulbs from India. This country has initiated an Indians Customs EDI System to facilitate trade and to exchange documents electronically. Vijay Anand, customs manager for India with Expediters International describes the export processes to be very simple, “If all the documentation are perfect, you can even clear customs on an export within three to four hours subject to the documentation” (new.export.gov) First, it is mandatory for an exporter to register their business with the Directorate General Foreign Trade (DGFT) or regional import export licensing authority. An Importer Exporter Code (IEC) is also mandatory, it is a 10-digit code which is issued by DGFT. (portology.com) The IEC code serves as an export license, a customs copy of this document needs to presented to the customs authority for clearing the goods and to prevent penalties and/or possible confiscation of the good (indolegal.com).Along with the IEC, Anand labels the Authorized Dealer (AD) code as a basic requirement for exporting from India, “Every exporter who’s involved in a foreign transaction should have a bank account, and this account should be informed to Indian customs and through the Bank of India, which is a federal bank”, an AD code is allotted to each bank (new.export.gov). Moreover, a Business Identification Number (BIN) is required to file a shipping bill for clearance of exports. Further documents that may be necessary in the

At first, an importer will request banker to open L/C along with the following documents.