What are the types of insurances exporters should get done?

When it comes to Export Business it is always a risk. Especially international business, so to work peacefully ones needs to have certain surety in times of crisis. Insurances are important if you are doing export business globally. Here are 5 types of insurances which can help you secure your business to some extent.

1. Go for Trade Credit

Foreign clients can be fussy when it comes to payment of goods especially with countries or companies who are new to international business and they might not pay the full amount of goods proposed in such cases this type of insurance protects the company from such incidents and covers the amount for that. This is one of the problems which is faced by every company when they enter into international business.

This cover also gives you information about your buyer and his/her previous records of finance and their reputation in the market. From this, he can get to know that the buyer has enough capability to pay the supplier or not. And in the worst-case scenario, the insurer promises to pay 80-90% of the cover.

2. Marine Cargo Insurance

Marine Cargo insurance covers not just goods which are being transported over the seas but all types of delivery. From the point supplier sends goods to a point buyer gets it there is so much risk involved because the mode of transport plays a major role in it.

Covering any kind of misshapen between delivering is Marine Cargo insurance. This insurance takes care of transport security of goods.

3. Risks involved with Political Issues.

Some countries are strictly governed by the government and so are the goods coming into their country this may lead to confiscation of the goods and incomplete payment for the goods. Such governments can pass laws which change the mode of money transfer to other countries.

This Insurance Exporters also protects the company from uncertain circumstances like political issues or war or riots such incidents can lead to damage of the goods and loss. There are certain risks involved in your own country like trading license getting canceled, and the foreign governments which give preference to their local bodies or governments which do not entertain the contracts with them when political rush takes place.

4. International Product Liability

There is always a possibility that goods sent for the delivery into another country might not reach there because of legal issues or they are declared faulty. In such a case, the tour company suffers loss or you can protect yourself with international product liability.

But in insurance is not granted because of lack of knowledge of the company. This insurance is only paid when the transaction is done with all possibilities taken care of and now there has been some change in the initial agreement because of which your goods are not able to reach the destined country.

It is important that you were through with everything before and the incident occurring was just accidental. You should have proof to claim this type of insurance, no doubt should be there, should be able to show yourself that after the transaction took place after that only thing went off and you were aware of everything before.

5. Currency Exchange Insurance.

There is a big risk involved in currency exchange when dealing with international traders. This usually takes place during the payment as the rate of currencies are not stable. This may lead to huge losses, which is why this insurance covers the company from any loss related to currency exchange.

This type of insurance is extremely important as currency can change any point of time and slight change leads to huge losses which are difficult to cover with insurance, especially for an international trader.     

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Do you know how can you expand your export business on social media platforms?

Media is changing the world it used to be. Be it anything, from pencil to television media has everything today. With one click you get what you want. Even if it is a new world for Exporters too. Now trump calls are converted into skypes. You can find the right customer on social media today. But being on social media is just not enough you need to keep yourself updated and work every single day to build your image and avoid frauds. Here are a few steps which can help you in expanding your export and business and make customers.

Choose social media platform right for you.

First of all, the biggest misconception people have is that need to be present on every social media platform which is wrong. It is not a matter of quantity but a matter of quality. 

Every social media platform is slightly different from the other and covers a slightly different crowd as well. You need to understand which platforms will help you to sell your ideology, the purpose of social media platforms is the same, it makes you visible in the market. For example, you would not be on Snapchat to promote your products. 

Social media sites like Linkedin, Facebook, Youtube can help you in expanding your business. All of them have a great network and influence people of all ages. 

Understanding your type of Marketing.

When you are ready which platforms you are going to work on now you need to make it interactive. It is of no use that you have a presence on social media but you are not active. Being active on social media is really important and participating.

Just as in earlier days word of mouth was more popular nowadays the number of people sharing and liking a post does the same thing. Once you have a few customers, they will create your image on social media. The # nowadays used creates a huge impact appearance can help customers to find you and then interact with you too. 

Also, many people till date don’t take risks and they go by something recognized which further helps in making an image. 

Be Engaging.

When it comes to social media it is a big platform and can help in building a good clientage or network. If you want to build connections then you have to be a good listener as every good relationship starts with listening and understanding the other. By hearing them out you will firstly get to know what the customer wants and secondly, you will be able to tell them that you will be able to give them what they desire. 

Provide more than Product.

Where social media is a great tool for expanding the business, on the other hand, it is access to unlimited information. Giving information people also helps to connect with them as if they are interested in the information you are sharing they will come back for more. This tool helps in seeking the attention of your customers, they might not be interested in your product but they will be interested in information which will help in networking.

Be Regular.

Being regular is really important. Every day posting something is important as it makes people interested. Also posting in a related manner as it helps people to know what’s gonna come next.

Consistency in writing is important. It is good to have experienced writers as long as the message is the same on every social media platform. As people who are experienced or new customers who are smart will understand the inconsistency.
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How can Indian exporters boost their exports?

Exporting is a great way especially for developing countries who are finding ways to increase the economic growth of their country as exporting leads to sustainable development. 

The economic growth from the year 2012 to 2016 has increased by just 3% according to the International Monetary Fund (IMF) data. In comparison to this other countries had good economic growth in comparison to India. But the IMF believes that India’s is going to have an average increase of 8% from 2017 to 2021 the rapid increase in growth rate is gonna make India fastest developing nation. But the question then arises is what was India doing all this time? Also what India needs to do to build a better nation with the help of exports.

1. Spreading Information all the levels

When information is not reached to everyone it creates a lack of awareness, small and medium scale Exporters have been facing this problem for a long time. Now, an initiative by the central government has been taken in which they are making sure that every piece of information goes public for exporters. This has now a trade-analytic portal which has data about a lot of products and in how much quantity. This information is being shared to every level and all types of information like foreign trade policies introduced and promotional activities where exporters can participate. even documents related to foreign trade policy are being shared. This is also helping to bring a change in understanding the standard and quality of our products. 

2. Not Just Supply but Supply with Demand.  

There are certain things which should be taken care of like what is the need of the customer and where is the demand more. Like countries like Africa needs help in developing sectors like – education, healthcare, etc, exporting in countries like that can open the doors of exporting to further extent. India is always trying to identify where it can export its product where their products actually will be useful and secondly it is also working on making the existing products a little better so that they don’t lose its importance in coming time. 

3. Working on Infrastructure and logistical services.

In the inter-states reduction of GST, and working on a transport system like the Delhi-Mumbai corridor can help export process better. Need for direct Business to customer(B2C) is also important. With the introduction of e-business platforms, medium and small scale exporters can grow well. With an increase in demand and e-market online these platforms need to be worked up further up. 

Working upon infrastructure is also very important in order to maintain a good status. Our leading export in Jewelry and gem needs its own convention center for which the government has been asked. Also, we need to move towards more firm contract-based deals rather than protectionism.

4. Right Exporter Needs Right Market

We should always be through what are our strengths and work on them. In the same way, Indian exporters need to see in which market their products fit right off. Understanding that wherein its nearby area India can deliver or export its products. 

5. Reduce the Gaps

The connection between skill-supply and industry demand go hand in hand. As our industry is moving towards demand-based exporting the skills required for it is a challenging task, skill enhancement is not easy but NSDC has been working towards this. We need to work on resource and development too as it may help small scale exporters to grow further.

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What are the key components that need to be considered while completing an invoice proforma?

Proforma invoice is an important document in overall shipping process as it acts like gum between you and your international customers. proforma invoice is basically a kind of quote or you can a document which actually has the details of the deal. Proforma invoice not only has details but it used further when you’ll be filling more Export Forms then information on it will be used. Some of the key components that need to be considered while filling proforma invoice are:

1. Pricing

The most important factor to be considered for the proforma invoice is pricing. Accuracy in pricing should also be there. It is important to know that the cost of the product should be higher than what you will be quoting. The terms which you are going to set for the sale along with that you need to keep a check on other expenses like how much will the cost of transportation, then insurance, how much it is going to cost taxes and duties considering them as well is important too. Also, you need to make sure that you an expiration date mentioned on your proforma invoice.

2. Detailed Goods Description

A detailed description of products and goods needs to be provided, and other information about the products like the weight of the product, products classified in order, dimensions of the product and from which country it has been coming. A harmonized system code can be used which contains a six-digit number this code actually helps buyer to know how much they need to pay from their side for duties and taxes whereas dimensions like weight and measure help the buyer in calculating the delivery costs that they are liable to pay. 

3. Sale Terms

There are a set of terms called Incoterms which are accepted universally in international trade. The official publishing of the International Chamber of Commerce has published Incoterms. They are not the same as the shipping terms, but they are delivering terms in international trade and not like domestic but the major thing about incoterms is during the whole export process it clearly defines the responsibilities of buyer and seller.  

4. Terms of Payment

The proforma invoice should have relevant information about how you are going to perform all your payments and how you will be making payments. Proforma invoices can help a lot in arranging payments-especially if a buyer wants to open a letter of credit with the bank, and if he/she wish to Apply for an Import as well.

5. Delivery on time

The delivery of goods is a major factor to be considered when we talk about profit or loss because even if buyer agrees on the terms mentioned proforma invoice there many things about the delivery that still remain unstated and this lack of information creates uncertainty. This uncertainty may impact cost and profits. 

6. Controlled export

Proforma Invoice basically helps you to know whether you can do business with a particular country or company. There are certain U.S regulations which help exports to know which companies are worth doing business with and there are certain countries and companies with whom you cannot work and they even have control over which goods and information can be shared with people of any country. So before doing business, you need to make sure that you have checked for this.

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How to obtain IEC code in order to start the import/export business?

If you are thinking to put up your import/ export business and have everything in order to set up an import/export business then you just need IEC code to get started. IEC code- Importer Exporter Code is a 10 digit code issued to anyone who is willing to start his/her import/export business and Director General of Foreign Trade(DGFT), Department of Commerce, Government of India of regional office issues it. You need IEC in trading of all kinds of products and you can apply for it on the DGFT website anytime. 

Things have changed with time and the Import/ Export process has also become easy to some extent, with everything online people don’t need to do much of paperwork or forms.

Here is how you can get your IEC code or license : 

  1. Collection of all the important documents

There are 4 major important documents that you will be needed in getting an IEC code and you should get them aligned with you at first step. The four documents you need are as follows :

  • You require one copy of PAN Card
  • You’ll be needing passport size photograph of the person who wants to start.
  • One canceled cheque will also be needed
  • And you need a copy of your any identity proof like Voter ID, passport or Adhar card, these are most accepted ID proofs.

2. Going Digital

The world is becoming digital, so we are. Also, for filing IEC code online you need to go digital, you need to get class 2 digital signatures along with you, however, a digital signature is not required for filing IEC code according to 2018 data. But if you wish to apply online then you need to Digital code from website of Director General Of Foreign Trade. Anyway Digital Signature is also important or you can mandatory for filing GST and in its registration as well. Charges for digital signature for 2 years is approximately 1000/-

3. Make an Account

Now, you need to create an account on the official website of Director General of Foreign Trade. With your details, like email Id, contact number and more information regarding you, you can create your account, after you have made your account then you need to proceed further and fill the ANF(Aayat Niryaat Form), there are many categories to this form from ANF 1 to ANF 8A you have all the forms. 

4. Be Careful While Filling Details

You need to be precise with your work when you are preparing your documents, and make sure that it is error-free when you think you are ready to file the documents so that there is no chance of rejection. Chances of rejection in IEC application is more than any other Registration which is why utmost care should be taken in its application.

5. Documents Uploading 

Once you are done with filling details of an application now, you need to proceed towards uploading of documents. You need to take care that scanned copy or softcopy of the documents are needed and the format of documents also matter, onlyGIF and PDF forms of documents are accepted if you upload your documents other than this format it won’t be uploaded as they are not allowed. You need to take care of these things to avoid the rejection of documents.

6. Pay the fees

Once you are done with the above procedure, the next step is paying the required government fees per 500/- per submission. The chances of rejection of IEC file are pretty high. Once after rejection, you need to file a new file and for every new submission, you need to pay the fees as well so it is best that you seek some professional guidance and avoid rejection again and again.

7. Signatures and wait for acceptance or disapproval

Once you have all the documents in order with details and you have uploaded your documents in the right manner, do the signatures after that and submit them to the government authority. Once you are through with your work now you just need to keep track of your application.
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How does export shipping process take place?

Exporting is not an easy process. It is an intricate process which requires a lot of planning and extensive documentation. Documentation requires the help of specialists. Here are steps which tell how documentation take place: 

  1. Wait for an Enquiry

The initial step in Export Shipping Documentation is when anybody inquires about your product or shows their interest in your product. When any buyer likes your product, he/she is going to proceed with a letter of inquiry which will be stating the interests and expectations of the buyer and along with this, you will receive an official or unofficial quote from the buyer’s side.  

2. Checking the reliability and credibility of the buyer in the market

It is important to check on the buyer, you should be aware of your buyer and about his reputation in the market. there are lists named denied and restricted party list you can check for your buyer in this list. You can put the name of the company, the address of the company listed in various list updated by the US government, there are some few software like Shipping Solutions, this software is automatic and checks in the latest version of the lists updated.

If you find your buyer in these lists, then it is not an idea to proceed further with his/her company.

3. Proceed with a Proforma Invoice

After you have checked on your buyer it is now time to provide a proforma invoice to proceed with the deal. the proforma invoice is an important document and through it, you will create an impression on your buyer so you should be careful with it. It is like a quotation and it can be said to be a commercial invoice too, on the basis of this document you can arrange the funds needed for the purchase.  

The similarity between the proforma invoice and the Commercial Document will decide the final deal where the quoted figures will be decided and no further change can be done beyond that.

4. Close the deal

Once your proforma has reached the buyer, now it’s up to the buyer whether he wants to close the deal or not. If the parts accept the deal, the next step which is going to be is negotiation, this will take place either verbally or through written sales contract. In this negotiation, not just the price is included but many things more like 

  • how you will be paying through cash in advance or through an open account or any other mode 
  • How shipping of the goods are gonna take place
  • who is going to take responsibility for the shipping of goods?
  • Which party will be involved in what type of documentation. 

there are many requirements that you need to cater too. If you are able to take care of these details before shipping of goods then you will be at a safe place because shipping can be a cumbersome process. 

5. Preparation of goods and order shipping documents

  • Commercial Invoice
  • Packing List
  • Certificate of origin
  • Shipper’s Letter of Instruction
  • Bills of lading

6. Check for the Buyer again through restricted party screening

Before you ship your goods, you should again check for the buyer just to make sure that their company name is not screened in the restricted party list and neither yours. If you are using software like shipping Solutions then automatically you will get a proper list with a detailed picture of your work.

7. Last few documentation and shipping of goods

There might be a few more documents before shipping of goods. Documents can be related to negotiation related or they can be payment-related or they can be related to freight forwarder requests. 

Once your documentation gets completed and further small steps in documents are also completed you are good to ship your documents.

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What is the difference between foreign trade and foreign investment?

  • Meaning of Foreign Trade

Foreign trade is the selling and purchasing of goods in the global market. It helps in fulfillment of goods and services from one country to another. As every country has an abundance of different resources. No country is abundant in all resources so there is a need to trade resources across every side of the globe.  Also, Foreign Trade creates competition as two people might be selling the same product. Foreign trade is processed with the help of import and export in other countries. 

  • Meaning of Foreign Direct Investment. 

Foreign invest is when investment occurs between nations of two different countries through assets or services. As the advancement is increasing people are investing more and more on a global level. Many companies are putting up plants of different machinery and technology in other countries because of the relatively lower cost of labor and less payment of taxes are a few reasons. Foreign investment creates an economically stable environment and leads to better development.

Difference between Foreign Trade and Foreign Investment

  • Foreign trade implies to exchange of goods and services across different countries which also promotes not just assets but the individuality of a country too whereas foreign investment implies to investment that a company makes from one country into the shares of another country and when it comes to individuality of a country there is not much scope to explore.  
  • Foreign trade helps to fulfill a gap of resources across the globe as no country possesses all the resources to meet the individual needs of every person in any country. Here foreign trade fills that gap of resources and creates availability everywhere of all the resources. On the other hand, foreign investment helps in completing the capital investment of any company, from different countries. 
  • Foreign trade helps in creating a good global market where every country can showcase what they possess in the form of goods and services. Whereas foreign investment helps any company with the required money, assets and new machinery and resources needed.
  • Foreign trade is an opportunity to many Exporters across the globe and especially to those who are willing to expand their network but there is no surety that once a company comes into the global market they will sustain too as the global market can be uncertain. On the contrary foreign investment is little safe as it will last for a long time and will bring more and more capital in the company which will be in different currencies.  
  • Foreign trade is profit-based meaning till the time you have a product to sell and any other person is willing to pay, you are in the game but as soon popularity decreases or market goes down, your company goes down too. Foreign investment works differently from foreign trade as it is involved in long term investment and has a future which clearly has long term profits as one country has ownership in another country which is a more reliable and safe investment. 

But the major similarity between foreign trade and foreign investment is both helps in increasing the Gross Domestic Product(GDP) of any country. This is best for the countries which are still developing.

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What are the benefits of exporting for small businesses?

There is a misconception that small businesses often do not get involved in exporting because we have a notion in our minds that only big and popular companies only get involved in exporting which is not true. Exporting depends on a company’s capacity that how much can it produce or the availability of the product, how good is the quality of the product, and what is the price of the product as international market is highly competitive. The companies who are not able to produce enough or they produce occasionally are the actual companies who 000on’t get involved in Exporting Business. Exporting can actually bring great benefits to small businesses. Here are a few key points which can help you get a better idea of how exporting is actually good for small businesses:

  1. Increases the capacity

There is always a point which is unique to every country and here you can take advantage of this point to increase a higher demand for your product. If you consider India, it is famous for a lot of things, India’s culture is itself heritage and people actually like the way Indians have preserved their culture through the ages in the form of textiles like Khadi, Madhubani, Bhagu and many more, also the jewelry and gems found here there is no comparison in any other place, and the intricate handwork in many other things is USP of India. These few things create uniqueness and make a product unique too, leading to an increase in demand because what you have here, you won’t find any other place. 

2.  Demand Creates Profit.

A market is a place where once you start selling your product and your product outstands then profits and demand increases to many folds. For a small business more profit leads to more employment and more employment means growth. Also, higher profits open the gates for creating a better reputation of the company as well. 

3. Increases safety and prevents risks.

Exporting is a risky and uncertain business. For a small scale business, it is even riskier because it is dependent only domestically. If for any reason the market goes down then sale and demand go down and profit margin on the product also goes down drastically and with no backup in hand, the company suffers loss for a good period of time. But if the company is involved in exporting at multiple places then if at one place crisis occur then you will at least have a backup from another place. 

4. Innovation of Technology

When a small scale business expands it is exposed to new technology and new machinery and better ways of how they can create a product, the quality and quantity of the product get better too. Working with new techniques will also boost the name of the company as when you will use new unique technology in your own unique product then your product will become unique too and when you will have a USP in your product you will be able to progress in better markets. (like the global market)

5. Improvement in Production cost.

Small scale businesses often are involved in limited production and selling. Production cost is more when the quantity is less and the same production cost improves with bulk production. Exporting can actually create a big difference in small businesses to a great extent.

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Are you aware of the problems faced by Indian exporters?

Currently exporting has become a really difficult affair for Indians. Difficulties and challenges, again and again, demotivates the exporters and hinder the growth of Exporting Business. Here are a few challenges faced by Indian exporters. 

  1. Economic Decline in International Market

The international market addressed the economic decline in 2008 and a half year of 2009. In 2008, when the United States faced a major subprime crisis of giving loans to borrowers who didn’t have the capacity to payback the economic decline or recession got worse. Due to this drastic decline, the demand for gems and jewelry, clothing and textiles decreased to many folds. With the decrease in decline, the demand decreased too. Exporters started quoting lesser amounts and leading to fewer profits and even loses. 

2. The Difference in Well Equipped Machinery

Well developed countries used their high-class technology and machinery to produce goods and services at a faster and better rate. On the other hand, still developing or underdeveloped countries still used old-fashioned and out of date machinery because of the lack of enhanced equipment and technology. This led to slow and lower development in the global market.

3. Extreme competition in International market

When it comes to competing in the global market Indian Exporters face a lot of problems. The competition is of cost, quality of products, high tech machinery, and margins on sales. Indian exporters not just face problems in the global market but in their own country as well like problems faced by neighboring state exporters, local producers who remain where the goods are being exported. These problems create exporting challenging.

4. High-Quality Standards 

India is a developing country and faces a lot of challenges when it comes to quality products. As developed countries expect standard quality products and when they import products from developing countries like India, they perform safety tests to ensure the quality of the product. Many times the products especially degradable or perishable products get rejected due to poor quality or high level of toxicity. Because of these reasons exporting of India loses the global market.

5. Rise and fall in different currencies

Just like India has rupee as its currency in the same way other countries have their own currency like Australia has Australian dollar, United States has the dollar as currency, the United Kingdom has pound as currency and many more can be added in this. Just as every country as individual currency the same way they have different value too. The value of the currency fluctuates from time to time which is a threat to Indian exporters. Indian rupee faces making problems while making payments in order to pay for imports Indian currency is converted to the international currency which costs a lot while paying. 

6. Risks and Dilemma 

Exporting is a business which involves a lot of risk and threat. Risks can be of any type it can be political as well as commercial. If we talk about political risks they can lack the support of the government, environmental risks exposed to exporters due to misuse of resources and many more. Commercial risks involved in exporting are currency-related issues, rejection on quality by international importers and so on.

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What are the opportunities India is dealing with, in today’s time in exporting and importing?

India’s export goods and services are increasing at a rapid rate and will continue to grow even more in the coming years. If the pace of growth remains in the same shape India will reach approximately  330 billion USD. India is currently in really good shape with other countries in terms of exporting. Here is a glimpse of India’s current Export Business relation with few countries:

  1. India with China

Currently, China has a slow growth rate and the economy has experienced such kind of rate after a long period of time. There are a lot of reasons behind the slowdown of the economy of China like US-China trade war, rising costs and better cost-effective trade practices adopted and used by the neighboring countries is making China behind the others. 

So you might be thinking that if China is facing problems in their economy then how come India comes into play? After getting a fair idea of China’s condition, Mr. Ajay Sahai Director General and CEO, Federation of Indian Export Organisations (FIEO) say that China has always been interested in a man of the products of India like carpets, leather and spinning and many more. Currently what China needs is people who will work for them and they are short of it. So what they are trying to do is looking for the high and medium technology sector and also looking for the service sectors. We can say that India has a chance into this. right now China is struggling and they might need more manpower to support their country at this point India can come into play. 

2. India and the United States 

According to 2018, India has been the 12th biggest exporter for US goods and services. United States remains the biggest partner of India both in importing and exporting, according to 2018 U.S. has exported goods and services worth of $58.9 billion and India has imported goods and services worth of $83.2 billion. 

The United States is the biggest foreign investors and have provided employment to around 1.3 million Indians and continue to give more. The United States fast-growing pace has been impacting everyone worldwide and expanding and changing technology, fashion and food all around. 

India’s been doing well from the previous year, with a seven percent increase in GDP, a relatively low inflation position and stability in the currency. 

A few years back the U.S. announced India as ‘Major Defense Partner’ which opened a way for trading in technology closely with the United States. Also, last year in 2018 United States shared that India would be at level 1 Department’s Strategic Trade Authorization (STA) license, meaning military exporting will be easier for Indian as they won’t need an individual license. 

3. India and Australia 

Currently, India is one of the most developing and fast-growing countries in exporting business and has also started coming up too. 

‘In the last few years India has reduced greatly the custom duty and in coming near future government promises to decrease the import duties just like they reduced to 40 percent from 20 percent.’ says Ian Bennett Senior Manager, International Trade at Australian Business. He adds more ‘Indian government is providing a lot of opportunities in almost all sectors for the foreign investors to work. they are promising real good incentives for building all types of infrastructure and many more. 

These opportunities are making a better way for the Australian exporters to expand in India.

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