SUMMER INTERNSHIP REPORT ON COST REDUCTION STRATEGIES IN IMPORT LOGISTICS

BY GEET CHAUHAN A1808711013 MBA-3C(2011-13) Under the supervision of COL.SHARAD KHATTAR (L ecturer-AIBS) In Partial Fulfilment of Award of MASTER OF BUSINESS ADMINISTRATION (3 CONTINENT-INTERNATIONAL BUSINESS AND OPERATIONS) AMITY INTERNTIONAL BUSINESS SCHOOL,AMITY UNIVERSITY,UTTAR PRADESH,SECTOR-125,NOIDA-201301.UTTAR PRADESH,INDIA.2012-13 1

AMITY UNIVERSITY UTTAR PRADESH

DECLARATION
I solemly declare that this report on COST REDUCTION STRATEGIES IN IMPORT-EXPORT LOGISTICS has been compiled by me and has not been copied from any student/researcher/employee in any university/ institution/ organization or any other pace of distance learning under my knowledge .I have duly acknowledged the sources of data given to me by my industry guide wherever they have been used in the project. I further declare that the information presented in this project is true and original to the best of my knowledge.

DATE:

GEET CHAUHAN A1808711013 MBA-3C

AMITY UNIVERSITY UTTAR PRADESH AMITY INTERNATIONAL BUSINESS SCHOOL

CERTIFICATE OF APPROVAL
This is to certify that GEET CHAUHAN,a student of MBA(3C),Class of 2011,Amity International Business School,Amity University ( Bearing AUUP Enroll.no A1808711013) has undertaken the Summer Internship Training at INDIA YAMAHA MOTOR PVT. LTD ,during 14th may2012 to 29th june2012 .He has worked under my guidance for the project titled ,COST REDUCTION STRATEGIES IN IMPORT LOGISTICS. This project report is prepared in partial fulfilment of MBA(3 CONTINENTINTERNATIONAL BUSINESS AND OPERATIONS) to be awarded by AMITY UNIVERSITY,UTTAR PRADESH. To the bet of my knowledge ,this piece of work is original and no part of this report has been submitted by the student to any other institute/university earlier.

COL. SHARAD KHATTAR (Faculty,AIBS)

ACKNOWLEDGEMENT
The Summer Internship Program undertaken by me at the SURAJPUR,GR.NOIDA corporate office of INDIA YAMAHA MOTOR PVT. LTD. ,was an extremely rewarding experience for me in terms of learning and industry exposure.

I would like to extend my deep gratitude towards my industry guide Mr. Vinay Gupta(Sr. Manager-IMPORT LOGISTICS) and Ms.Shilpa Tiwari(Astt. Manager) , INDIA YAMAHA MOTOR PVT. LTD ,who always motivated me and helped me during the internship. I am extremely thankful to them for giving me their valuable time and guidance in every step of my process.

I would like to thank my faculty guide COL.SHARAD KHATTAR who gave his valuable inputs in suggesting and helping me to decided the topic and preparation of the report.He gave valuable time from his busy schedule to help me in the analysis and interpretation of my findings.

Students name and signature Enroll.no-A1808711013 Program :MBA (3C) 2011-13

TABLE OF CONTENTS
CHAPTER 1 2 3 4 5 6 7 8 9 CONTENTS EXECUTIVE SUMMARY IMPORTANCE OF STUDY INDUSTRY PROFILE COMPANY PROFILE FOREIGN TRADE POLICY( 2009-14) INCOTERMS 2010 FOB-FREE ON BOARD INDIA AND ASEAN-FREE TRADE AGREEMENT IMPORT LOGISTICS REQUIREMENT FOR IMPORT STEP BY STEP PROCESS OF IMPORT LOGISTICS RISK FACTORS IN IMPORT PROCESS IMPORT DOCUMENTATION IMPORT DUTIES COSTS INVOLVED IN IMPORT PROCESS CUSTOM CLEARANCE PROCESS OTHER IMPORT PROCEDURES CONCLUSIONS BIBLIOGRAPHY ANNEXURE PAGE NO. 6 7 8 12 16 17 19 22 24 25 27 30 34 35 37 39 41 42 43

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1.EXECUTIVE SUMMARY
This project was undertaken to understand the IMPORT and EXPORT LOGISTICS system of India Yamaha Motor Pvt.Ltd. The main purpose of this project was to analyze those strategies which were instrumental in the phenomenal success,and helps in cost reduction in the entire process of logistics.Yamaha imports various machine parts,autoparts,components,chemicals and other necessary items that are required for the final assembly and production of the bikes ,usually from south-east asian countries (so as to take benefits from ASEAN-FREE TRADE AGREEMENT) like Thailand, Singapore, Malaysia, Indonesia etc.It exports its finished bikes to various countries like Sri lanka,Phillipinnes,South africa, Maldives alongwith latin american countries like Brazil,Argentina,Equador etc. OBJECTIVES: The primary objective of this project was to see how the logistics department works ,processes the order ,carries out the entire documentation till final delivery of goods and how it coordinates with factory ,head-office and C/F agents for the respective functions. The secondary objective was to find and analyze such strategies that would help the company to reduce cost in both import as well as export logistics process. The project would also includes: Growth of exports in last few years and future scope for the same. Provisions from FTP(Foreign trade policy,2009-14) used in EXPORT-IMPORT process Various agreements that benefits the company like ASEAN-FREE TRADE AGREEMENT Study of INCOTERMS-2010 that are used by the company Costs calculation(freight ,insurance and custom duty) Risk factors in both export and import process

DATA COLLECTION: To serve the purpose mainly secondary data was collected.The population sample comprised of respondents who were already associated with the import and export department and the factory.My industry guides were the main source of data collection who provided me entire information of the process and also made me to learn how documentation is done and various costs are calculated.

2.IMPORTANCE OF STUDY
The importance of the study is to see the flow of goods and documentation till the completion of import or export by India Yamaha Motor Pvt.Ltd.Managers try to choose the best path,practices and methods in order to carry out the logistics-process and give best results in terms of time as well as cost efficiency. It chooses its best strategy to dispatch final products after manufacturing, for their delivery to destination on time and also to receive imported goods after custom clearance and delivery of the consignment at its own factory.Management of successful logistics system requires accurate and timely information.It requires efficient planning ,implementation and controlling over the entire procedure whether in import or the export logistics department.Their are many aspects that are supposed to be considered and given priority during the process execution such as: Quality inspection ,both before dispatch of consignment for export and custom clearance in import. On-time delivery of goods to the importer and also custom clearance on time at the port. . List of requirements sent by the buyer as well as that sent by Yamaha to the seller. Filling of details in the ERP system of the company. Loading and unloading of goods at port and the factory. Making and receiving the payment (perfect mode and on time). Selection of the mode of transport and shipping line. Selection of the best route to be followed for shipment. Interaction with Clearing and forwarding agents. Selection of the best supplier for efficient results.

3.INDUSTRY OVERVIEW - INDIAN AUTOMOBILE INDUSTRY

Two-wheeler segment is one of the most important components of the automobile sector that has undergone significant changes due to shift in policy environment. The two-wheeler industry has been in existence in the country since 1955. It consists of three segments viz. scooters, motorcycles and mopeds. According to the figures published by SIAM, the share of twowheelers in automobile sector in terms of units sold was about 80 per cent during 2003-04. This high figure itself is suggestive of the importance of the sector. In the initial years, entry of firms, capacity expansion, choice of products including capacity mix and technology, all critical areas of functioning of an industry, were effectively controlled by the State machinery. The lapses in the system had invited fresh policy options that came into being in late sixties. Amongst these policies, Monopolies and Restrictive Trade Practices (MRTP) and Foreign Exchange Regulation Act (FERA) were aimed at regulating monopoly and foreign investment respectively. This controlling mechanism over the industry resulted in: (a) several firms operating below minimum scale of efficiency; (b) under-utilisation of capacity; and (c) usage of outdated technology. Recognition of the damaging effects of licensing and fettering policies led to initiation of reforms, which ultimately took a more prominent shape with the introduction of the New Economic Policy (NEP) in 1985. However, the major set of reforms was launched in the year 1991 in response to the major macroeconomic crisis faced by the economy. The industrial policies shifted from a regime of regulation and tight control to a more liberalised and competitive era. Two major results of policy changes during these years in two-wheeler industry were that the, weaker players died out giving way to the new entrants and superior products and a sizeable increase in number of brands entered the market that compelled the firms to compete on the basis of product attributes. Finally, the two-wheeler industry in the country has been able to witness a proliferation of brands with introduction of new technology as well as increase in number of players. However, with various policy measures undertaken in order to increase the competition, though the degree of concentration has been lessened over time, deregulation of the industry has not really resulted in higher level of competition.

National Council of Applied Economic Research (NCAER) had forecast two-wheeler demand during the period 2002-03 through 2011-12. The forecasts had been made using econometric technique along with inputs obtained from a primary survey conducted at 14 prime cities in the country. Estimations were based on Panel Regression, which takes into account both time series and cross section variation in data. A panel data of 16 major states over a period of 5 years ending 1999 was used for the estimation of parameters. The models considered a large number of macro-economic, demographic and socio-economic variables to arrive at the best estimations for different two-wheeler segments. The projections have been made at all India and regional levels. Different scenarios have been presented based on different assumptions regarding the demand drivers of the two-wheeler industry. The most likely scenario assumed annual growth rate of Gross Domestic Product (GDP) to be 5.5 per cent during 2002-03 and was anticipated to increase gradually to 6.5 per cent during 2011-12. The all-India and region-wise projected growth trends for the motorcycles and scooters are presented in Table 1. The demand for mopeds is not presented in this analysis due to its already shrinking status compared to' motorcycles and scooters. It is important to remember that the above-mentioned forecast presents a long-term growth for a period of 10 years. The high growth rate in motorcycle segment at present will stabilise after a certain point beyond which a condition of equilibrium will set the growth path. Another important thing to keep in mind while interpreting these growth rates is that the forecast could consider the trend till 1999 and the model could not capture the recent developments that have taken place in last few years. However, this will not alter the regional distribution to a significant extent. Following Table suggests two important dimensions for the two-wheeler industry. The regionwise numbers of motorcycle and scooter suggest the future market for these segments. At the all India level, the demand for motorcycles will be almost 10 times of that of the scooters. The same in the western region will be almost 20 times. It is also evident from the table that motorcycle will find its major market in the western region of the country, which will account for more than 40 per cent of its total demand. The south and the north-central region will follow this. The demand for scooters will be the maximum in the northern region, which will account for more than 50 per cent of the demand for scooters in 2011-12.

Table : Demand Forecast for Motorcycles and Scooters for 2011-12

2-Wheeler Segment Regions

South 2835 (12.9) 203 (2.6)

West 4327 (16.8) 219 (3.5)

North-Central 2624 (12.5) 602 (2.8)

East & North-East 883 (11.1) 99 (2.0)

All India 10669 (14.0) 1124 (2.08)

Motorcycle

Scooter

Note: Compound Annual Rate of Growth during 2002-03 and 2011-12 is presented in parenthesis Source: Indian Automobile Industry: Optimism in the Air, Industry Insight, NCAER

The present economic situation of the country makes the scenario brighter for short-term demand. Real GDP growth was at a high level of 7.4 per cent during the first quarter of 2004. Both industry and the service sectors have shown high growth during this period at the rates of 8.0 and 9.5 per cent respectively. However, poor rainfall last year will pull down the GDP growth to some extent. Taking into account all these factors along with other leading indicators including government spending, foreign investment, inflation and export growth, NCAER has projected an average growth of GDP at 6.7 per cent during the tenth five-year plan. Its mid-term forecast suggests an expected growth of 7.4 per cent in GDP during 2004-05 to 2008-09. Very recently, IMF has portrayed a sustained global recovery in World Economic Outlook. A significant shift has also been observed in Indian households from the lower income group to the middle income group in recent years. The finance companies are also more aggressive in their marketing compared to previous years.Combining all these factors, one may visualise a higher growth rate in two-wheeler demand than presented in Table 1, particularly for the motorcycle segment. There is a large untapped market in semi-urban and rural areas of the country. Any strategic planning for the two-wheeler industry needs to identify these markets with the help of available statistical techniques. Potential markets can be identified as well as prioritised using these techniques with the help of secondary data on socio-economic parameters. For the twowheeler industry, it is also important to identify the target groups for various categories of motorcycles and scooters. With the formal introduction of secondhand car market by the reputed car manufacturers and easy loan availability for new as well as used cars, the twowheeler industry needs to upgrade its market information system to capture the new market and to maintain its already existing markets. Availability of easy credit for two-wheelers in rural and smaller urban areas also requires more focussed attention. It is also imperative to initiate measures to make the presence of Indian two-wheeler industry felt in the global market.

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The market shares of the segments of the automobile industry

The automobile industry had a growth of 15.4 % during April-January 2007, with the average annual growth of 10-15% over the last decade or so. With the incremental investment of $35-40 billion, the growth is expected to double in the next 10 years. Consistent growth and dedication have made the Indian automobile industry the second- largest tractor and two-wheeler manufacturer in the world. It is also the fifth-largest commercial vehicle manufacturein the world. The Indian automobile market is among the largest in Asia.

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4.INDIA YAMAHA MOTOR PVT. LTD.HISTORY

Yamaha's history goes back over a hundred years to 1887 when Torakusu Yamaha founded the company, which began producing reed organs. The Yamaha Corporation in Japan (then Nippon Gakki Co., Ltd.) has grown to become the world's largest manufacturer of a full line of musical instruments, and a leading producer of audio/visual products, semiconductors and other computer related products, sporting goods, home appliances and furniture, specialty metals, machine tools, and industrial robots. The Yamaha Motor Corporation, Ltd., begun on July 1, 1955, is a major part of the entire Yamaha group, but is a separately managed business entity from the Yamaha Corporation. The Yamaha Motor Corporation is the second largest manufacturer of motorcycles in the world. Yamaha Motor Corporation owns its wholly-owned subsidiary in the U.S. called Yamaha Motor Corporation, USA, that is handling not only motorcycles, but also snow mobiles, golf carts, outboard engines, and water vehicles, under the brand name of Yamaha as well. In 1954 production of the first motorcycles began, a simple 125cc single-cylinder two-stroke. It was a copy of the German DKW design, which the British BSA Company had also copied in the post-war era and manufactured as the Bantam. The first Yamaha, the YAI, known to Japanese enthusiasts as Akatombo, the "Red Dragonfly", established a reputation as a well-built and reliable machine. Racing successes helped boost its popularity and a second machine, the 175cc YCI was soon in production. The first Yamaha-designed motorcycle was the twin-cylinder YDI produced in 1957. The racing version, producing 20bhp, won the Mount Asama race that year. Production was still modest at 15,811 motorcycles, far less than Honda or Suzuki. The company grew rapidly over the next three years and in 1959 introduced the first sports model to be offered by a Japanese factory, the twin-cylinder YDSI with five-speed gearbox. Owners who wanted to compete in road racing or motocross could buy kits to convert the machine for both road and motocross racing. By 1960 production had increased 600% to 138,000 motorcycles. In Japan a period of recession followed during which Yamaha, and the other major Japanese manufacturers, increased their exports so that they would not be so dependent on the home market. To help boost export sales, Yamaha sent a team to the European Grand Prix in 1961, but it was not until the 1963 season that results were achieved.

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After the Korean War the American economy was booming and Japanese exports were increasing. In 1962 Yamaha exported 12,000 motorcycles. The next year it was 36,000 and in 1964 production rose to 87,000. The first overseas factory was opened in Siam in 1966 to supply Southeast Asia. In 1967 Yamaha production surpassed that of Suzuki by 4,000 at 406,000 units. Yamaha established a lead with the introduction of the first true trail bike "the 250cc single-cylinder DTI". The company also developed a two-liter, six-cylinder, double overhead-camshaft sports car unit for Toyota Motor. This proved helpful when Yamaha produced their own high-performance four-stroke motorcycles.In 1969 Yamaha built a full size road racing circuit near their main factory at Iwata. By 1970 the number of models had expanded to 20 ranging from 50cc to 350cc, with production up to 574,000 machines, 60% of which were for export. That year Yamaha broke their two-stroke tradition by launching their first four-stroke motorcycle, the 650cc XSI vertical twin modeled on the famous Triumph twins. In 1973 production topped one million (1,000,000) motorcycles per year for the first time, leaving Suzuki way behind at 642,000 and catching up on Honda's 1,836,000. During the 1970's Yamaha technicians concentrated on development of four-stroke models that were designed to pass the everincreasing exhaust emission laws and to be more economical than the two-strokes that had made Yamaha's fortune.

About India Yamaha Motor Pvt. Ltd.

Yamaha made its initial foray into India in 1 985. Subsequently, it entered into a 50:50 joint-venture with the Escorts Group in 1996. However, in August 2001, Yamaha acquired its remaining stake becoming a 100% subsidiary of Yamaha Motor Co., Ltd, Japan (YMC). In 2008, Mitsui & Co., Ltd. entered into an agreement with YMC to become a joint inve stor in the motorcycle manufacturing company "India Yamaha Motor Private Limited (IYM)". IYM operates from its state -of-the-art-manufacturing units at Surajpur in Uttar Pradesh and Faridabad in Hary ana and pro duces motorcycles both for domestic and export markets. With a strong workforce of more than 2,000 employees, IYM is highly customer-driven and has a countrywide network of over 400 dealers. Presently, its product portfo lio includes VMAX (1,679cc), MT01 (1,670cc), YZF -R1 (998cc), Fazer (153cc), FZ-S (153cc), FZ16 (153cc), YZF -R15 (150cc), Gladiator Type SS & RS (125cc), Gladiator Graffiti (125 cc), G5 (106cc), Alba (106cc) and Crux (106cc).

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VISION----------------------------------------------------------------------:

We will establish YAMAHA as the "exclusive & trusted brand" of customers by "creating Kando" (touching their hearts) - the first time and every time with world class products & services delivered by people having "passion for customers".

MISSION-------------------------------------------------------------------We are committed to: Be the Exclusive & Trusted Brand renowned for marketing and manufacturing of YAMAHA products, focusing on serving our customer where we can build long term relationships by raising their lifestyle through performance excellence, proactive design & innovative technology. Our innovative solutions will always exceed the changing needs of our customers and provide value added vehicles. Build the Winning Team with capabilities for success, thriving in a climate for action and delivering results. Our employees are the most valuable assets and we intend to develop them to achieve international level of professionalism with progressive career development. As a good corporate citizen, we will conduct our business ethically and socially in a responsible manner with concerns for the environment. Grow through continuously innovating our business processes for creating value and knowledge across our customers thereby earning the loyalty of our partners & increasing our stakeholder value.

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CORE COMPETENCIES----------------------------------------------Customer #1

We put customers first in everything we do. We take decisions keeping the customer in mind. Challenging Spirit We strive for excellence in everything we do and in the quality of goods & services we provide. We work hard to achieve what we commit & achieve results faster than our competitors and we never give up. Team-work We work cohesively with our colleagues as a multi-cultural team built on trust, respect, understanding & mutual co-operation. Everyone's contribution is equally important for our success. Frank & Fair Organization We are honest, sincere, open minded, fair & transparent in our dealings. We actively listen to others and participate in healthy & frank discussions to achieve the organization's goals.

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5.FTP - FOREIGN TRADE POLICY (2009-14)

The foreign trade policy 2009-14,incorporating provisions relating to export and import of goods and services came into force from 27th august,2009 and shall remain in force upto 31st march,2014 .Thus it is the sum total of a countrys relationship with internal and external actors while pursuing its goals and objectives.This five year policy is issued by Ministry of Commerce for five years .It includes number of policies ,initiatives,frameworks and regulations to control and regulate exports as well as imports of the country.Some of them which are used by Indian firms for their imports are as follows: 1).GENERAL PROVISIONS REGARDING EXPORTS AND IMPORTS:The itemwise export and import policy shall be ,as specified in ITC(HS)notified by DGFT,as amended from time to time.Every importer or exporter shall comply with the provisions of FT(D&R) Act,the rules and orders made under FTP. DGFT may specify the procedure to be followed for an exporter or importer for the purpose of implementing provisions of FT(D&R) Act.Restricted goods are mentioned in the list of ITC(HS).Various committes involved are: Norms committe for fixation/modificationof product norms under all schemes. EPCG committe nexus with capital goods and benefits under EPCG schemes. Policy relaxation committe all other issues.

2).DUTY EXEMPTION AND REMISSION SCHEMES:These schemes enable duty free imports of inputs required for export production .Duty exemption schemes consist of (a)Advance Authorisation scheme and (b) Duty Free Import Authorisation scheme.On other hand Duty Remission scheme enables post export replenishment/remission of duty on inputs used in export product.Duty Remission schemes consist of (a)Duty entitlement passbook scheme and (b)Duty Drawback scheme. An Advance authorisation is issued to allow duty free import of inputs,which are physically incorporated in the export products.It can be issued either to a manufacturer exporter or merchant exporter tied to supporting manufacturer. DFIA is issued to allow duty free import of inputs,fuel,oil,energy sources and catalyst which are required for production of export product. DEPB scheme is not in use,but Duty drawback scheme is used in applicable cases. 3).EXPORT PROMOTION CAPITAL GOODS (EPCG) SCHEME:Concessional 3% duty EPCG scheme allows import of capital goods for pre production,post production and production at 3% customs duty,subject to an export obligation equivalent to 8 times of duty on capital goods imported under EPCG scheme ,to be fulfilled in 8 years reckoned from authorisation issue-date.

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6.INCOTERMS 2010
The INTERNATIONAL COMMERCIAL TERMS,are the set of rules which defines the responsibilities of the sellers and buyers for the delivery of goods under sales contracts for domestic as well as international trade.They are published by the ICC and are widely used in international commercial transactions.First incoterms were published in 1936 after which they have been revised time to time.The most latest and recent version of INCOTERMS,2010 were launched in september,2010 and became effective from january 1,2011. These terms provide a common set of rules to clarify responsibilities of seller and buyers for the delivery of goods under sales contracts.They significantly reduces the misunderstamdings among traders and thereby minimize trade disputes and litigation. 1).FAS-FREE ALONGSIDE SHIP(named port of shipment) The seller place the goods alongside the ship at the named port.The seller must clear the goods for export.It is suitable only for the maritime transport but NO for multimodal sea transport incontainers.It is usually used for heavy-lift or ulk cargo. 2).FOB-FREE ON BOARD(named port of shipment) The seller must load the goods on board the vessel nominated by the buyer.Cost and risk are divided when the goods are actually on board of the vessel.The seller must clear the goods for export.The buyer must instruct the seller the details of the vessel and the port where the goods are to be loaded. 3).CFR-COST AND FREIGHT(named port of destination) Seller must pay the cost anfd freight to bring the goods to the port of destination.However ,risk is transferred to the buyer once the goods are loaded on the vessel.It is used only for maritime transport only insurance for goods is not included. 4).CIF-COST ,INSURANCE AND FREIGHT(named port of destination) It is exactly same as CFR except that the seller must in addition procure and pay for the insurance maritime transport only.

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5).EXW-EX WORKS(named place ofdelivery) The seller makes the goods available at its premises.It places the maximum obligations on the buyer and minimum obligations on the seller.It means that the seller has the goods ready for the collection at his premises on the date agreed upon.The buyer pays all transportation costs and also bears the risks for bringing the goods to their final destination. 6).FCA-FREE CARRIER(named place of delivery) The seller hands over the goods ,cleared for export ,into the disposal of the first carrier(named by the buyer0,at the named place.The seller pays for carriage to the named point of delivery and risk passes when goods are handed over to the first carrier. 7).CPT-CARRIAGE PAID TO(named place of destination) The seller pays for carriage.Risk transfers to buyer upon handling goods over to the first carrier. 8).CIP-CARRIAGE AND INSURANCE PAID TO(named place of destination) The containerized transport/multimodal equivalent of CIF.Seller pays for carriage and insurance to the named destination point ,but risk passes when the goods are handed over to the first carrier. 9).DAT DELIVERED AT TERMINAL(named terminal at port or place of destination) Seller pays for change to the terminal,except for costs related to import clearance and assumes all risks upto to the point that goods are unloaded at the terminal. 10).DAP-DELIVERED AT PLACE(named place of destination) Seller pays for the carriage to the named place,except for costs related to import clearance,and assumes all risks prior to the point that good are ready for unloading by the buyer.

11).DDP-DELIVERED DUTY PAID(named place of destination) Seller is responsible for delivering the goods to the named place inthe country of the buyer and pays all costs in bringing the goods to the destination including import duties and taxes.It places maximum obligations on the seller and minimum obligations on the buyer.

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7.FOB FREE ON BOARD

This term is used usually for the sea or the inland waterway transport.FOB means that seller will deliver the goods on board the vessel nominated by the buyer at the named port of shipment or procures the goods already so delivered.The risk of loss or damage to the goods passes when the goods are on board the vessel ,and buyer bears all costs from that moment onwards.FOB may not be appropriate where goods are handed over to the carrier before they are on board the vessel,for example goods in containers,which are typically delivered at the terminal.FOB requires the seller to clear the goods for export,where applicable.The seller has no obligations to clear the goods for import ,pay any import duty or carry out any import customs formalities.

THE SELLERS OBLIGATIONS-The seller must provide the goods and the commercial invoice in conformity with the contract of sale of contract of sale and any other evidence of conformity that may be reaquired by the contract. 1).Licences,authorizations,security clearances and other formalities-Where applicable the seller must obtain at its own risk and expense any export licence or other official authorization and carry out all customs formalities necessary for the export of goods. Contract of carriage:The seller has no obligations to the buyer to make a contract of carriage. Contract of insurance:The seller has no obligations to the buyer to make a contract of insurance.

2).Delivery-The seller is suppose to deliver the goods either by placing them on board the vessel nominated by the buyer at the loading point or by procuring the goods so delivered.In either case the seller must deliver the goods on agrred date or within the agreed period and in manner customary at the port.If no specific loading point has been indicated by the buyer,the seller may select the point within the named port of shipment that best suits its purpose.

3).Tranfer of risks-The seller bears all risks of loss or damage to the goods until they have been delivered in with exception of loss or damage in the circumstances.The seller must pay :

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All costs relating to the goods until they have been delivered other than those payable by the buyer, The costs of customs formalities necessary for export as well as all duties , taxes and other charges payable upon export.

4).Notice to buyer-The seller must ,at the buyers risk and expense ,give the buyer sufficient notice either that goods have been delivered or that the vessel has failed to take the goods within the time agreed.There need to be presence of the usual proof that goods have been delivered. 5).Checking-packaging-marking-The seller must pay : The costs for checking operations (checking quality,measuring,weighing and counting) that are necessary for the purpose of delivering the goods Costs of any pre-shipment inspection mandated by the authority of the country of export. Costs of packaging the goods appropriately for their transport (marked properly).

THE BUYERS OBLIGATIONS-The buyer must pay the price of the goods as provided in the contract of sale. 1).Licenses,authorisations,security clearances and other formalities-It is upto the buyer to obtain at its own risk and expense,any import license or other official authorisation and carry out all custom formalities for the import of the goods and for their transport through any countries. Contract of carriage:The buyer must contract at its own expense for the carriage of the goods from the named port of shipment. Contract of insurance:The buyer has no obligation to the seller to make a contact of insurance.

2).Taking delivery-The buyer must take delivery of the goods when they have been delivered.

3)Transfers of risks-The buyer bears all the risks of loss or damage to the goods from time they have been delivered.The buyer bears all risks of loss of or damage to the goods: From the agreed date ,or in the absence of an agreed date From the date notified by the seller within the agreed period ,or ,if no such date has been notified. From the expiry date of any agreed period for delivery ,provided that the goods have been clearly identified as the contract goods.

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3).Allocation of costs-The buyer must all of the following costs: All costs relating to the goods from time they have been delivered Any additional cost if buyer fails to give appropriate notice or the vessel nominated fails to arrive on time. All duties,taxes,charges as well as costs of carrying out customs formalities payable upon import of the goods and the costs for their transport through any country.

4).Notices to the seller-The buyer must give the seller sufficient notice of the vessel time ,loading point and where necessary the delivery time within the agreed period.The buyer must accept the proof of the delivery provided. 5).Inspection of goods-The buyer must pay the costs of any mandatory pre-shipment inspection .

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8.INDIA AND ASEAN-FREE TRADE AGREEMENT

Its now more than 10 years ,the partnership between INDIA and the ASSOCIATION OF SOUTH EAST ASIAN NATIONS(ASEAN) comprising Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Phillippines, Singapore, Thailand and Vietnam has been developing at quite a fast pace. India became a sectoral dialogue partner of ASEAN in 1992.Mutual interest led ASEAN to invite India to become its full dialouge partner during fifth ASEAN summit in Bangkok in 1995.India also became a member of ASEAN Regional forum (ARF) in 1996.India and ASEAN have been holding summit level meetings on an annual basis since 2002. In August 2010,Singapore,Thailand and Malaysia accepted the FTA on goods .The other seven ASEAN countries are expected to operationalise the FTA by August ,2010. India and ASEAN are currently negotiating agreements on trade in services and investment .The services negotiations are taking place on a request offer basis,wherein both sides make request for the openings they seek and offers are made by the receiving country based on the requests. The deepening of ties between India and ASEAN is reflected in the continued buoyancy in trade figures. Indias trade with ASEAN countries has increased from US$ 30.7 billion in 2006-07,to US$ 39.08 billion in 2007-08 and to US$ 45.34 billion in 2008-09. At the second ASEAN - India summit in 2003,the ASEAN-India framework agreement on comprehensive economic cooperation was signed by the leaders of ASEAN and India.The framework agreement laid a sound basis for the eventual establishment of an ASEAN India regional trade and investment area(RTIA),which includes FTA in goods ,services and investment. The 7th ASEAN India summit in CHA-AM HUA HIN,Thailand on 24th october 2009 agreed to revise the bilateral trade target to 70 billion USD to be achieved in next two years,noting that the initial target of USD 50 billion set in 2007 may soon be surpassed. In august 2009,India signed a free trade agreement (FTA) with the ASEAN members in Thailand.Under the ASEAN India FTA,ASEAN member countries and INDIA will lift import tariffs on more than 80 percent of traded products between 2013-16.India and ASEAN are currently negotiating agreements on trade in services and investments.

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BENEFITS OF FTA(FREE TRADE AREA) TO INDIA:

The FTA liberalized tariffs on about 4,000 items accounting for nearly 80% of trade between INDIA and ASEAN.It includes long list of electronics,chemicals,spare and machine parts. The agreement became effective from Jan,1 2010, tariffs on products covered will sink to zero between 2013 and 2016. Now,its one of the members of large integrated market of ASEAN with low product cost,high market competion and lowered tariffs.

Indias imported goods worth US$ 26.3 billion in 2008-09 from ASEAN ,during the period april-december 2009-10,Indias imports from ASEAN totalled US$ 18.09 billion,according to data released by the minstry of commerce and industry. SOME MAJOR SUPPLIERSTO INDIA: SINGAPORE-It continues to be the single largest investor in India among the ASEAN countries .The total bilateral trade during 2008-09 was US$ 16.1 billion,an increase of 3.86 percent over US$ 15.5 billion in 2007-08.Also, the FDI inflows from Singapore during 2000 and 2010 were US$ 10.2 billion,according to data released by the department of industrial policy and promotion(DIPP). MALAYSIA-The bilateral economic relationship between India and Malaysia has been steadily moving ahead.Bilateral trade among the two countries amounted to US$ 10,604.75 million during 200809,(increase of 23.48%) according to data released by the ministry of commerce. THAILAND- The bilateral trade betweenthe two countries touched US$ 4.6 billion in 200809,registering a growth of 12.9 percent ,according to data released by ministry ofcommerce.Also,Total FDI inflow during the period april 2000-march2010 from Thailand was US$ 77.97 million. INDONESIA-The bilateral trade between Indonesia and India totalled US$ 9.3 billion in 2008-09 ,an increase of 32.08 percent after 2007-08.They both are targeting bilateral trade worth US$ 20 billion by 2020,according to Indonesian ambassador to India. MYANMAR,VIETNAM,PHILIPPINES AND CAMBODIA-Indias trade with these countries have also shown progress with time in last few years and is increasing continuously.As far as imports are considered, there is small list of items that India imports from these countries.

23

9.1.REQUIREMENT FOR IMPORT:

Yamaha ,at its Surajpur plant produces only some of the components such as fuel tank,body cover etc.Most of the components are locally purchased from other states of India such as Maharashtra,Karnataka,Haryana etc.They constitute the local purchase and rest of the parts are imported from other countries.The ratio goes as : OWM MADE PARTS-5-10% BOUGHT OUT PARTS(Locally purchased)-70-80% IMPORTED-5-10%

Major Suppliers:

Thailand Singapore China Japan Indonesia Taiwan Malaysia

Imports mainly includes:

Components- like Ignition Coil, CDI unit, Rotor, Stator, Starting Motor etc. Hardware- like Nuts, Bolts, Screws, Pins, Circlips etc. Raw materials- like Paints, Welding Wire, Grease, Hot rolled sheets etc. Machinery parts- like spare parts of CNCmachine, testing machine etc.

24

9.2.STEP BY STEP PROCESS OF IMPORT LOGISTICS:

PARTICIPANTS IN IMPORT PROCESS: BUYER SELLER FORWARDER SHIPPER CUSTOM HOUSE AGENT CUSTOM OFFICIALS BANK

1).PLACING OF ORDER:
The final placing of order by the buyer to the supplier involves number of steps: Buyer would ask for QUOTATION i.e mainly the price details for the required consignment from the supplier. It includes: ITEM DESCRIPTION, PRICE, INCOTERMS,PAYMENT TERMS,LEAD TIME & VALIDITY etc. Supplier then sends the quotation for consideration to the buyer. On the basis of Quotation, Buyer finally send PO (Purchase order),alongwith the details of FORWARDER to the supplier.

2).ROLE OF LOGISTICS Department: Selection of the forwarding agent. Selection of CHA(CUSTOM HOUSE AGENT). Tracking of the entire shipment process on behalf of the company. Timely payment of custom duty. ROLE OF FORWARDER: Arrangement of vessel / flight booking for the consignment. Arrangement of Transportation from Origin Port to Destination Port Other necessary arrangements for receiving order at port. Constant coordination with the shipping line,buyer as well as supplier. Giving timely information to the logistics department regarding shipping process and proceedings.

25

3).SUPPLIER DELIVERS THE ORDER:

Supplier then makes all necessary arrangements as per the buyers conditions,for the execution of the order from dispatch of order from its own port to its delivery at the Buyers port.

4).SHIPPING DOCUMENTS TO BUYER:

Supplier sends the shipping documents to buyer, which are sent by buyer to their CHA(CUSTOM HOUSE AGENT),for the purpose of custom clearance.

5).ROLE OF CHA OR C/F AGENTS:

The CHA on receiving the shipping documents and details,file the BILL OF ENTRY as per details in the documents and then confirm the CUSTOM DUTY to the buyer.CHA may also be responsible for following activities: Arrangement of warehousing at the port. Arrangement of containers at the port. Arranging the marine/cargo insurance of the shipment. Arrangement for assessment of damage to the goods to file claim with the insurance company. Arrangement for handling goods if rejected by the importer or not collected on time. Arrangment for transport of goods to the factory after custom clearance.

6).PAYMENT OF CUSTOM DUTY:

The buyer would make the payment for the custom duty ,usually through e-payment and then send the bank-receipt to the CHA.

7).CLEARING OF CONSIGNMENT:
After the bank-receipt is being received , the CHA clears the consignment from the custom and gives the shipping arrival information to the buyer.CHA will arrange for the domestic transport of order from the port to the buyers location or factory.On final delivery of goods the CHA sends the original bill of entry to the BUYER.

26

IMPORT LOGISTICS PROCESS CHART ACTIVITIES

RESPONSIBILITY DURATION REFERENCE DOCUMENTS

1).Buyer ask for quotation to supplier. 2).Supplier sends quotation and forwarder details with full details of item to buyer. 3).Buyer places final order in form of Purchase order. 4).Forwarder regulates entire shipment from origin port to destination port. 5).Supplier sends the shipping documents to buyer. 6).Buyer sends the shipping documents to CHA. 7).CHA files BILL OF ENTRY and sends the B/E number to appraising group. 8).Appraising group carries out examination and verification of the consignment. 9).CHA calculates the custom duty and informs it to buyer. 10).Payment of custom duty by the Buyer. 11).Final clearing of consignment from the port.

BUYER SUPPLIER WITHIN 1 WEEK QUOTATION

BUYER FORWARDER AT THE TIME OF SHIPMENT

PURCHASE ORDER

SUPPLIER BUYER CHA

INVOICE,PACKING LIST,COA,B/L,AIRWAYBILL BILL OF ENTRY

NEXT DAY OF STEP-6

CUSTOM OFFICIALS CHA WITHIN 3 DAYS OF SHIPMENT

BUYER WITHIN 5 DAYS (AFTER STEP-9)

27

9.3.RISK FACTORS IN IMPORT PROCESS

There are various kinds of risks involved while importing goods .They are mainly classified under following categories: 1).TRANSPORT RISK:This involves the risk associated with loss of goods during transportation. First of all the importer need to ensure that the goods supplied by the exporter is insured. It is always advisable to set out the agreement betwen the parties as to the type of cover to be obtained in the contract of sale. Importer preferably wish to obtain insurance cover from their own insurance company under open policy thus taking advantage of bulk billing and other relationships.

2).QUALITY RISK:This involves the quality of the final received goods. It is important for the importer to ensure that the final products are as good as sample.importer must take necessary protective measures in advance. Importer must investigate the reputation and standing of the supplier. Inspection must be done from the importer side and the exporter side or by the third party agency. Importer is able to inspect the goods before payment is made to the supplier at the maturity date in case of Bill of exchange,with documents released against acceptance. It is found better that the importer can have the agent in the suppliers country for closer supervision to be maintained over the shipments.

3).DELIVERY RISK:This is the risk that arises on when goods are not delivered on time.Delivery on time is the important factor for importer to reach the target market. Importer must make the import-contract very specific,so that importer always has an option of refusing the payment if goods are not delivered on time. The latest date if shipment is included by the issuing bank in the terms of credit.(when payment is through documentary credit) Also,very import the importer need to collect the consignment from the port on time other wise charges are ready to be paid.

4).EXCHANGE RATE RISK:This involves the risk that arises due to change in the value of currency. The importer must determine the value of the product in domestic currency because there is always a gap between the time of entering into the contract and actual payment for the goods is received.

28

It must enter into foreign exchange contract(HEDGING is most commonly used where rate of exchange is pre-fixed by both the parties to prevent future risk of high rate) through bank.

29

9.4.IMPORT DOCUMENTATION
The availability of right documents,the correctness of the information available in the documents as well as the timeliness in submitting the documents and filling the necessary applications for the customs clearance determines the efficiency of the customs clearance process.Any delay in filling or nonavailability of documents can delay the process and thereby importers stands not only to incur demurrage on the imported cargo but also stand to loose business opportunities.Custom clearance process requires the set of documents to be submitted by the importer .By the airline,shippingline or the freight forwarder as well as the customs documentation prepared and submitted by the clearing agent on behalf of the importer.Some major documents required in import logistics are as follows: 1).COMMERCIAL INVOICE:This document certifies the sales as well as gives the description of the items as well as reflects the pricing or the value of the cargo.Custom valuation is based on the value reflected on the commercial invoice.Some major entries in commercial invoice are as follows: Customer code Invoice no. Date Shipped by From to/via Payment Currency Mark and number No. of packages Description Quantity Unit-price Total

2).PACKING LIST:It is mandatory to put the shipping marks on all the cargo covering each and every individual piece or parcel.The details of the number of parcels in the consignment ,their dimension ,the shipping marks,the gross and net weights of each of the parcels along with the number of units contained in each parcel is catalogued in form of the packing list.It is used to identify the parcels as belonging to the particular consignment under the said invoice.Major entries: Customer code Invoice no. Date Shipped by From to/via Payment 30

Mark and number No.of packages Description Quantity Gross weight Net weight Measurement

3)BILL OF LADING(NON-NEGOTIABLE OCEAN-SEA TRANSPORT):This is issued by the shipping line certifying carriage of the said cargo under the specific invoice on behalf of the exporter or importer depending upon terms of sale.In FOB,ON BOARD BILL OF LADING is usually considered to be the apt bil of lading that signifies that the cargo has been loaded on board.This is also required for negotiations of payment from importer to the exporter.Major entries: Consignee Notify party Pre-carriage by Place of receipt Ocean vessel Port of loading Port of discharge Place of delivery Number of original B/L Carriers receipt Particulars furnished by shipper carrier not responsible Container no./seal no. Marks and numbers No. of containers packages Kinds of packages ,description of goods Gross weight Measurements Total no. containers or packages in words Freight and charges Prepaid Collect(freight collect) Declared value charges Declared value of US $ Prepaid at Payable at Ex rate Place of issue 31

Date

4).AIRWAY BILL (IN CASE OF AIR TRANSPORT):This is issued by the airline or a freight forwarder who consolidates the air freight cargo.It includes: Shippers name and address Shipper a/c no. Consignee name and address Issuing carrier agent name and city Agent tata code Account no. Airport of departure and requested routing Airport of destination Flight /date Accounting information Amount of insurance Gross weight Chargeable weight Total Nature and quantity of goods Charges at destination Total collect charges Signature of shiper or his agent 5)CERTIFICATE OF ORIGIN:Certain bilateral agreements and multilateral agreements would enjoy favorable tariffs for import duties.In such cases when the consignments are exported from such member countries,the designated export agency issues certificate of origin to the importer for submission to customs.Based on this the custom department classifies the cargo under specific schedule.It avoids the third party countries from routing imports through member countries and effecting third party export to avoid duty ,quantity or license restrictions.It includes: Goods consigned from Goods consigned to Reference to Means of transport and route-departure date ,vessels name/aircraft,port of discharge For official use: 1.preferential tariff treatment given under ASEAN India free trade area preferential tariff. 2.preferential tariff treatment not given. Item number Marks and number of packages Description of goods 32

Origin criterion Gross weight or other quantity and value Number and date of invoices Declaration of exporter Certification

6).SOME OTHER IMPORTANT DOCUMENTS:Besides above ,there are various other documents that are necessary to be filled as per terms and conditions: Insurance certificate(in case CIF incoterm) Catalouge(in case of machinery items) Fumigation(document for wooden palletisation) Test report/MSDS certificate (in case of chemicals) Material safety date-sheet(in case of chemicals and hazardous goods)

33

9.5.IMPORT DUTIES
The concept of import duty is applicable to each and every product or item whether its any equipment ,raw material ,machine or auto parts.Import duties form a significant source of revenue for the country and are levied on the goods and at the rates specified in the schedules to the customs tariff act,1975.Territorial water extends upto 12 nautical miles into the sea from the coast of india and so the liability to pay import duty commences as soon as goods enter the territorial waters of india. BASIC DUTY:It is type of duty or tax imposed under the customs act(1962).Basic custom duties varies for different items from 5% to 40%.The duty rates in the first schedule of the customs tariff act,1975 and have been amended from time to time under the finance act.The central government has the power to reduce or exempt any good from these duties. COUNTERVAILING DUTY:It is also known as countervailing duty and is equal to excise duty imposed on a like product manufactured or produced in india.It is implemented under the section3(1),of the indian custom tariff act. ADDITIONAL DUTY:This duty is imposed at the rate of 4% in order to provide a level playing field to indigenous goods which have to bear sales tax.This is to computed on the aggregate of the: Assessable value+Basic duty of customs+Surcharge + Additional duty of customs leviable ,under section 3 of the customs tariff act,1975. ANTI-DUMPING DUTY:Dumping means exporting goods in a foreign market at a price which is less than their cost of production or below their fairmarket value.Thus to counteract this dumping,the indian government has formulated certain guidelines and policies.Imposing duty on imported goods is also one of them and is known as anti-dumping duty.All laws related to anti-dumping duties are mentioned in section 9A,9B and 9C of the indian custom tariff act(1975),and the indian customs tariff rules(1995).These laws are based on the agreement on anti-dumping which is in pursuance of the article VI of GATT 1994.

34

9.6.COSTS INVOLVED IN IMPORT LOGISTICS:

1).FREIGHT COST:This is the cost incurred in moving goods.It includes packing , palletizing , documentation and loading unloading charges ,carriage costs and marine insurance costs.The freight rate is a price at which a cerain cargo is delivered from one point to another.It depends upon: Mode of transport(ship,air,rail,truck) Weight of cargo Distance to delivery Volumetric weight of the cargo

Calculating freight cost: FOB(FREE ON BOARD)=PRODUCTION COST+PROFIT+EXPENSES+TRANSPORT TO THE PORT OF ORIGIN CIF(COST INSURANCE FREIGHT)=FOB+FREIGHT FROM PORT OF ORIGIN TO THE PORT OF DESTINY + INSURANCE It also includes SURCHARGES . 2).CUSTOM DUTY:This is the tax or tariff being imposed on the importation(usually) and exportation (unusually) of goods.To calculate the final landing cost of the imported goods to the factory,following method is used for calculation. Calculation of the custom duty begins after the calculation of the CIF value of the goods i.e COST+FREIGHT+INSURANCE. STEP1. CALCULATING ACCESIBLE VALUE: CIF(VALUE OF GOODS)+ 1%HANDLING CHARGES = ACCESIBLE VALUE STEP2. BASIC CUSTOM DUTY As per the commodity / item-Decided by the CENTRAL BOARD OF EXCISE AND CUSTOMS STEP3: CVD-COUNTER VAILING DUTY 12% on Accessible value as well as Basic duty. STEP4: EDUCATION CESS-CUSTOM DUTY 3% on Basic duty and CVD. STEP5: SAD-SPECIAL ADDITIONAL DUTY 4% Accessible as well as all three kinds af duties(BASIC + EDUCATION CESS + CVD).

35

3).Insurance costs :The incoterm CIF includes all of the freight cost,custom duty as well as cost of insurance.It first ofall, depends upon the consignment i.e item,type,weight,quantity and country from which it is imported.Obviously ,critical items such as chemicals and petroleum products are imposed with high insurance costs.Their are various policies for the purpose of insurance which are adopted as per the conditions,requirements and their benefits.There are mainly two kinds of policies: OPEN POLICY In this,yearly premium is paid by the company depending upon its overall turnover.Rates vary as per the output and turnover. SHIPMENT TO SHIPMENT POLICY-In this ,insurance cost is paid as per the individual shipment is done depending upon the consignment ,its type and quantity.

4).Port charges:These are the charges that are imposed by the port administration as per their fixed norms and conditions.These are charged for processing the entire proceedings at the port for clearance of the imported consignment. 5).Custom clearance charges and Inland transport charges:These charges may include costs for CHA/Forwarding agent and the costs for inland transport to carry the goods from domestic port to final destination factory. 6).Total landing costs: CIF + Total custom duty Recoverable MODVAT(CVD and SAD are recoverable)= Total landing cost to factory(IMPORTER).

7).Some other irregular costs: a).Detention costs:This is the costs imposed by the shipping line against per container/per day. b).Demurrage costs:After 3 free days,it is charged by the custom to the buyer whenthe consignment is not collected by the time.

36

9.7.CUSTOM CLEARANCE
The custom clearance formalities have to be compiled with by the importer after arrival of the goods at the other customs station.There could also be cases of transhipment of the goods after unloading to a port outside INDIA.Latestly followed is the EDI system as follows: For the goods which are offloaded , importers have the option to clear the goods for home consumption after payment of the duties leviable or to clear them for warehousing without immediate discharge of the duties .

STEP 1.BILL OF ENTRY:

In the case of EDI system,no formal Bill of Entry is filed as it is generated in the computer system ,but the importer is required to file a cargo declaration having prescribed particulars required for processing of the entry for customs clearance.

STEP 2.TYPES OF BILL OF ENTRY Bill of Entry ,where filed is to be submitted in a set different
copies meant for different purposes and also given different colour scheme ,and on the body of the bill of entry the purpose for which it will be used is generally mentioned in the non-EDI system.For the purpose of domestic consumption ,bill of entry has to be filed in 4 copies: Original for customs Duplicate for customs One for importer Last for bank for making remittances.

STEP 3.THE EDI SYSTEM:

Under EDI system,the importer does not submit documents as such for assessment but submits declarations in the electronic format containing all the relevant information to the service centre.A checklist is generated for the verification of data by the importer/CHA.After verification the data is to be submitted to the system by the service centre operator and system then generates a B/E number ,which is endorsed on the printed checklist and returned to the importer/CHA.

STEP 4.BILL OF ENTRY NUMBER:

For processing of bill of entry in the EDI system ,the streamer agents get the manifest filed through EDI or by using the service centre of the custom house which also generates bill of entry number.

37

STEP 5.APPRAISING GROUP:

After noting or registration of the bill of entry ,it is forwarded manually or electronically to the concerned appraising group in the custom house dealing with commodity sought to be cleared.

STEP 6.ASSESSMENT:The basic function of assessing officer in the appraising groups is to

determine the duty liability taking due note of any exemptions or benefits claimed under different export promotion schemes.They also check that there are any restrictions or prohibitions on the goods imported and if they require any permission/license/permit etc.Also if not satisfied then the appeal can be made to appropriate appellate authority within the time limits and in manner prescribed.

STEP 7.CALCULATION OF DUTY:On the receipt of examination report the appraising officers in
the group assesses the bill of entry .He indicates the final classification and valuation in the bill of entry indicating separately the various duties such as basic,countervailing,anti-dumping,safeguard etc.All calculations are done by the system itself.

STEP 8.DUTY PAYMENT:After the assessment and calculation of the duty liability the importers
representative has to deposit the duty calculated with the treasury or the nominated banks,whereafter he can go and seek delivery of the goods from custodians.

STEP 9.FINAL DELIVERY:Where the goods have already been examined for finalization of
classification or valuation no further examination/checking by the dock appraising staff is required at the time of giving delivery and the goods can be taken delivery after taking appropriate orders and payments of dues to the custodians,if any.

38

9.8.OTHER IMPORT PROCEDURES

(1).IMPORT OF GOODS BY POST: When the goods are imported by post parcel,the postal authorities transfer such goods on the receipt of custom office attached to the foreign post office.A demand-cum-show cause notice is issued to the importer to file requisite documents,namely: Commercial invoice Packing list Copy of registered post parcel receipt Certificate of origin Customs purpose copy of import license in original An other registeration certificate in support of eligibility of importer to import such goods.

On the basis of these documents ,goods are examined and assesed for the duties payable in the presence of importer or agent.Finally,custom duties are paid and goods are received. This method is used only for small consignments with less quantity/weight/volume.

(2).WAREHOUSING OF IMPORTED GOODS: If the importer faces any problem while clearing the goods or payment of duty,then it can deposit the goods in private or public bonded wrehouse.It allows the facility of deferring payment of duty on imported goods,pending actual clearance for home consumption on payment of duty.Followng are the essential steps to be taken: The importer are required to file a set of yellow coloured bill of entry commonly known as warehousing or Intobond bill of entry if they want facility of warehousing.The procedure for this bill of entry is same as normal bill of entry except that the payment of duty is deferred. After the assesment of goods for the levy of the import duty is completed,the scutinising appraiser debits the import license where necessary,and the set of warehousing bill of entry (WR B/E)undergoes usual counterchecks by the assistance collector of customs.

39

The formalities of calculation,license,registration and its pre-audit are also gone through as in the case of a home consumption B/E. The W.R Bill of entry,is thereafter audited by the internal audit department and then sent to import bond department,where the importers file the requisite warehousing bond,under section 59 of custom act,1962.

The bond after scrutiny is accepted by A.C (bond) and registered in the bond department and WR number is impressed on all copies of B.E.The original copy is kept in the bond dpartment ,while the others are handed over to importers/clearing agent. The goods are thereafter examined by the dock appraising staff on the basis of orders of scrutinising appraiser on duplicate copy,and if found in order,the same are allowed to be physically warehoused by the dock appraiser under the escort of a preventive officer.

In order to clear the dutiable imported goods from the warehouse,the importer is required to present an ex-bond bill ofentry,printed on green paper in the imported bond department. The importer after getting the ex-bond B/E registered in the import bond department submits it to the appraising department alongwith triplicate copy of related Into bond B/E and invoice packing list,for verification of the particulars furnished on the B/E .

The concerned group appraiser classifies and reassesses,if necessary.The assessed B/E is thereafter handed over to the importer/clearing agents for payment of duty and taking delivery of the goods after the usual counter check,by concerned group A.C and calculation of import duty.

40

9.9.CONCLUSIONS:
First of all,selection of mode of transport is the critical issue.Sea tranport results in less ocean freight and port charges while air transport have high freight charges.However,air transport is beneficiary in faster delivery,minimised breakage and loss of consignment.Thus air transport,is used when time constraint is strict and considering the factors of weight,volume and value. Prominently ,Sea transport is used due to huge difference in frieght charges as compared to air transport. Secondly,it is better to have a single insurance company ,preferably on the regular basis due to inherent advantages and convenience.If insurance is arranged continuously with the same insurance company ,it would bring in a considerable amount of savings in the long run which may be in the range of lakhs It is found better to use Open policy instead of Shipment to Shipment policy for payment of insurance costs.Shipment to shipment policy results in much more higher costs as it involves payment of insurance on individual shipments.

In the case,when air transport is used,it could be made more economical by using Consolidators for which the air freight charges are very less.This involves combining of various shipments for delivery to the carrier in full container load shipment. Special attention to be paid to approach and timings for negotiations with the counterparts with foreign countries.This requires to provide your counterpart with appropriate future business plans and proposals to gain their understanding and full cooperation.

Selection of optimal mode of payment is the another important aspect to be considered in terms of cost.EX-WORKS,CFR and CIF results in higher cost while FOB results in less cost as well as less risk factors,thus most efficient as compared to other incoterms. Integrating and simpifying the import clearance process with brokers at the port reduces any kind of delay in the clearance process at the port.It ensures timely delivery of the consignment with documentation,inspection and payment also on time avoiding any kind of demurrage or detention charges.Also,their should be maintenance of a complete audit trail for each shipment.

41

10.BIBLIOGRAPHY
1).Website links: http://www.dgft.org/ www.eximguru.com/indian-customs-duty/Default.asp www.yamaha-motor-india.com/ www.eximpolicy.com pib.nic.in/archieve/ForeignTradePolicy/ForeignTradePolicy.pdf www.iccwbo.org/incoterms www.aseansec.org www.india-aseanbusinessfair.com commerce.nic.in/eidb/default.asp www.cybex.in/Indian-Customs/India-Imports-Data.asp jp.yamaha.com/about_yamaha/ir/publications/pdf/an-2011e.pdf www.yamaha.com/about_yamaha/ir/publications/pdf.../an-2010e.pdf www.shippersdocs.com www.cbec.gov.in www.custom-duty.com www.exportimportstatistics.com www.infodriveindia.com/ www.eximguru.com/indian-customs-duty/Default.aspx

2).Other sources: Companys annual reports Companys brouchers Companys catalogues

42

11.ANNEXURE
A-1:INCOTERMS

43

INVOICE Exporter ADI SPAREPARTS PVT.LTD 6D-87 STREET,MONG PATHOM BANGKOK 341109 THAILAND Invoice No & Date 83670 Exporter's reference

22/05/2012
Buyer's Order No & Date-S6980 Other reference(s) IECNo-59083219 RBI No

Consignee INDIA YAMAHA MOTORS PVT.LTD SURAJPUR,GR.NOIDA UTTAR PRADESH-201301 INDIA

Buyer (if other than Consignee) Same

Pre-carriage by

Place of Receipt

Country of Origin of Goods Thailand

Country

of

final

Truck
Vessel: IYM-5300

Nhava sheva-India
Port of loadingLaem chabang-Thailand

destination-India

Payment termFOB

Port of discharge- Final destinationNoida Marks & Nos Container No Mode of Packing Corrugated Box No of pkg Description of goods Qty

Gross weight

Net Unit weight price 20 $5 tonnes

Total price $200000

IYM-5300 83670

BRAKEPADS 10

40000 16000kgs

Sign & Stamp

44

PACKING LIST Exporter ADI SPAREPARTS PVT.LTD 6D-87 STREET,MONG PATHOM BANGKOK 341109 THAILAND Invoice No & Date-83670 22/05/2012 Buyer's Order No & Date-S6980 Other reference(s) IECNo-59083219 RBI No: Consignee INDIA YAMAHA MOTORS PVT.LTD SURAJPUR,GR.NOIDA UTTAR PRADESH-201301 INDIA Buyer (if other than Consignee) Same Exporter's reference

Pre-carriage by

Place of Receipt

Country of Origin of Goods Thailand

Country of final destinationIndia

Truck
Vessel: IYM-4870 Port dischargeNhavasheva

Nhava sheva-India
Port of loadingLaem chabang of Final destinationNoida

Marks & Nos Mode of Container No Packing

No of pkg

Description of goods

Qty

Size of pkg LxWxH (inch)

Net wt in kgs

Gr wt kgs

Remark

IYM-5300 83670 Madein Thailand

Corrugated Box

BRAKEPADS 10

40000 ONE 20 FT. 16000kgs 20000kgs. CONTAINER.

Sign & Stamp

45

INDIA YAMAHA MOTORS PVT.LTD SURAJPUR ,GR.NOIDA UTTAR PRADESH-201301 INDIA PURCHASE ORDER
Serial No73409 Vendors Name & Address ADI SPAREPARTS PVT.LTD. 6D-87 STREET,MONG PATHOM BANGKOK-341109 PR REF: IC2013-0126785 Mode of transport:SEA Delivery Date : 20/06/2012 Terms of Payment : FOB Delivery Point : Nhavasheva Order Date: 16/05/2012

This document constitutes an agreement between the vendor and the buyer. See terms and conditions of this purchase listed on the reverse side Item No. Specification IYM5300 40000 BREAKPADS Unit Quantity 40000 Unit Price $5 Total Value $200000

Tax Amount in Words: TWENTY FIVE THOUSAND DOLLARS Sign: _________________________ Date:7/06/2012 Supplier Acceptance/Stamp Approval _____________________ Currency: Total Value American dollars

Prepared by: ____Date_______ A/C Code:

Sign: ________________________ Date____________ Financial Review: _________ Procurement Manager Approval 46 Sign: ______________________ Date____________ Country Director: _________ Program Manager/Director/Head of Dept (Approval for Capital Items)

CERTIFICATE OF ORIGIN
Exporter(name and address) Reference number:

ADI SPAREPARTS PVT.LTD 6D-87 STREET,MONG PATHOM BANGKOK 341109 THAILAND

IC2013-0126785

Consignee (name and address):

INDIA YAMAHA MOTORS PVT.LTD SURAJPUR,GR.NOIDA UTTAR PRADESH-201301 INDIA

CERTIFICATE OF ORIGIN

MINISTRY OF COMMERCE-THAILAND
Date of shipment: 20/06/2012 Country of destination of goods:

INDIA
Mode of transport: SEA Supplementary details:

Pre-carriage by:

Place of receipt:

TRUCK
Vessel/flight no: Jota sabas-3567w
Shipping marks: Number of Packages:

Nhava-sheva
Port of loading/export: Place of departure:

Laem chabang

Thailand

Description of commodities, Model/Serial number, harmonized number

Gross weight (kg):

Invoice no. and date:

IYM-5300 83670 Made in Thailand

10

(Component parts for YAMAHA MOTORCYCLE): 40000 BRAKEPADS

20000 kgs. 83670 22/05/2012

It is hereby certified that the above mentioned goods originate in Thailand. DEPARTMENT OF FOREIGN TRADE 47 Place and date:

48