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| Tips to exporters for 2009 | | EXIM MATTERS |
| TNC Rajagopalan / New Delhi Jan 05, 2009, 00:41 IST |
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LOOK AT FREE/PREFERENTIAL TRADE AGREEMENTS
India has entered into trade agreements with neighbouring countries, Thailand, Singapore, China, Korea, Chile, and Afghanistan besides being part of Global System of Trade Preferences that covers 52 developing countries. The agreements cover select items that attract concessional rate of import duties provided origin criterion is met.
USE EXIM BANK LINES OF CREDIT
Exim bank has lined up a number of lines of credit mostly with least developed countries that enable Indian exporters give longer credits to the buyers.
LEVERAGE LOWER FREIGHT COSTS
With ocean freight at historic lows, the disadvantage of high shipping costs to countries in Latin America, East Europe and West Africa has diminished considerably. The government also gives 2.5 per cent duty credit under the Focus Market Scheme for export to these countries.
LOOK AT ALL INCOTERMS
Most exporters do not probe beyond FOB, CFR and CIF contracts. Sometimes, it is worthwhile trying out other Incoterms. For example, offering DDU or DDP terms might help win orders if you can manage the post importation expenses better.
TRY STANDBY LCS
For repeated shipments to same party, standby LC might be better than asking for LC for every shipment. With Standby LC acting as a guarantee, documents can be sent to the buyer directly cutting down costs and delay involved in routing documents through banks.
REVIEW PAYMENT TERMS
Taking calculated risk with suitable cover from ECGC is better than not taking any risk. Use D/A terms, if you intend to sue. Otherwise, just stipulate deferred payment and due date and tackle any problem through obligations under the contract. Try to get payment against fax of Bill of Lading. In any case, review the payment terms and give precise routing instructions to get your money fast.
OPTIMISE BENEFITS UNDER THE EXPORT PROMOTION SCHEMES
Quite often getting the right combination of schemes is the key. Don't accumulate useless Cenvat Credit. Instead try to get your local inputs under deemed exports scheme and without excise duty payment. Use EPCG scheme to buy machines even from local sources unless you have strong reasons to not do so.
GET YOUR DOCUMENTATION RIGHT
Plan your documentation and make error free documents. Write a documentation manual and use it to ensure that you get zero-defect documents every time. Use checklists to ensure that no defective data/document enters your stream and no defective document goes out.
IMPROVE QUALITY
Improve quality, even if the customer does not demand better quality. He will more readily stick with you and be ready to pay better prices when he can.
MAINTAIN DELIVERY SCHEDULES
This is obvious but worth saying again because the customer appreciation is out of proportion to the efforts involved.
BE TRANSPARENT
Tell the customer, if you have a problem. He is more likely to appreciate and help than be harsh on you.
MANAGE RISKS
Identify risks, assess probability and impact of risk occurrence and quantify risks, evolve risk mitigation strategies and manage risks that you cannot transfer to a third party. Take a structured approach.
These tips are useful even when the going is good but in difficult times, your team is more likely to be receptive to the ideas.
tncr@sify.com
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