IMT-18: Export Finance & Documentation

IMT - 18: EXPORT FINANCE & DOCUMENTATION

PART - A

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Q1. What are the functions performed by commercial banks with regard to export credit?

Q2. Explain current account convertibility.

Q3. State some of the policy measures initiated by the government towards capital liberalization and CAC.

Q4. Discuss the different types of letters of credit.

Q5. Differentiate between marine and cargo insurance. Why is marine insurance needed? How can cargo be insured?

PART - B

Q1. Explain the format and contents of an export sales contract.

Q2. List some of the regulations relating to current account transactions and capital account transactions as per FEMA, 2000.

Q3. Analyse the factors affecting exchange rates.

Q4. Examine the role of financial institutions in determining the exchange rate of the Indian rupee.

Q5. Elaborate two methods by which an exporter can obtain finance at the pre-shipment stage.

PART - C

Q1. Discuss the need for export documentation.

Q2. Outline the steps involved in the process of loading of goods for customs clearance.

Q3. What role do C&F agents play in international trade? What services do they offer?

Q4. Examine the advantages and disadvantages of different modes of transport used in sending a shipment of goods.

Q5. Explain the following:

a. Delivered ex-quay (duty paid) (--- named port of destination)

b. Cost insurance and freight (--- named place of destination)

c. Free carrier (--- named place)

CASE STUDY - 1

Inspection Rights

A buyer is entitled to inspect or to have its agent inspect the goods at the seller's place of business or point of shipping. The seller will pay return freight charges and will replace goods that the buyer or its agent rejects with goods that meet the description and specifications set forth in the agreement. On completion of the inspection and acceptance of the goods, the buyer or its agent will execute a certificate of inspection and acceptance. The buyer's failure to inspect the goods will constitute a waiver of the right of inspection, and the buyer will be deemed to have accepted the goods as delivered.

Questions:

1. Should the buyer insist on a right of inspection of goods before taking delivery to determine whether goods meet contract specifications?

2. Who will do the inspection - the buyer, an agent, a neutral third party or a licensed inspector?

3. Where will the inspection occur - at the seller's plant, the buyer's workhouse or at a receiving deck?

CASE STUDY - 2

XYZ has been engaged in the business of plastic toys for the last five years in Delhi. X, the managing director of the company, had conducted a study to understand the export potential of his range of toys. After a detailed study of the market report on toys, he came to the conclusion that there was a lot of potential for the export of toys to countries in the Middle East and western Europe. He has his own manufacturing unit at Okhla in Delhi and commands a 23 per cent share of the market for toys in India. The value of production, sales and earnings before interest and taxes (EBIT) for the last five years are as follows:

Year	Production (Rs. in Lakhs)	Sales (Rs. in Lakhs)	EBIT (Rs. in Lakhs)
1995	50	60	5
1996	95	104	9
1997	135	162	15
1998	180	216	20
1999	230	276	25

He now plans to diversify into exports but does not know how to begin. He has engaged you as his export trade consultant and desires to know the initial formalities to start an export business and how to plan for marketing of the toys. You are required to prepare a detailed note advising him the initial steps that he should take to diversify into the area of exports and a complete export marketing plan for execution.

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