No country in this world is self sufficient.
Every country is dependent on other country.
Foreign trade has two parts:
1 Import
2 Export
IMPORT
The import refers to buying from foreign countries. It denotes that the importing country is facing the lack or shortage of goods which is being met by buying from abroad. Import are financed by foreign exchange.
In importing the goods from a foreign country the following steps are taken:
1 Registration
2 Obtaining an Import license
3 Correspondence with the Exporter
4 Proforma Invoice
5 Appointing Indenters
6 Insurance Cover
7 Opening Letter of Credit
8 Exporter's Shipment of Goods
9 Preparation of Bill of Exchange
10 Payment of Bill
11 Clearing the Forwarding Agent
12 Payment of Custom Duty and Sales Tax.
DOCUMENTS USED IN IMPORTING THE GOODS:
1 Import licence
2 Proforma Invoice
3 Insurance cover notes
4 Letter of credit
5 Bill of Exchange
6 Certificate of Origin
7 Certificate of Management and Weight
8 Bill of Lading
9 Mate of Receipt
10 Packing list
11 Registration Certificate as Importer
12 Certificate From the Chambers of Commerce
13 Income Tax Certificate showing GIR.
Import has some advantages and as well as some disadvantages.
ADVANTAGES OF IMPORT
1 Availability of Goods
2 Reduction in Prices
3 Competition and Quality
4 Political Reasons
5 Infusion of New Ideas and Technology etc.
DISADVANTAGES OF IMPORT
1 Setback to Local Industry
2 Consumption of Foreign Exchange
3 Public Taste and Culture
4 Cultural Divide etc.
EXPORT
Export refers to selling locally available goods on foreign markets. It denotes that the country has a surplus of goods and need foreign exchange.
In exporting the goods to a foreign country the following steps are taken:
1 Receiving Inquiries
2 Obtaining Order
3 Obtaining Letter of Credit
4 Determination of Export Quota
5 Obtaining Export License
6 Compliance of Foreign Exchange Rate
7 Fixation of Foreign Exchange Rate
8 Arranging for Goods
9 Packing of Marketing
10 Appointment of Forwarding Agent
11 Obtaining Shipping Order
12 Preparing Invoice
13 Obtaining Consular Invoice
14 Obtaining Custom Permit
15 Payment of Dock Charges
16 Insurance of Goods
17 Obtaining Certificate of Origin
18 Loading the Goods on Board the Ship
19 Issuance of Bill of Lading
20 Bill of Exchange
21 Receiving Export Incentives.
DOCUMENTS USED IN EXPORTING THE GOODS
1 Indent
2 Letter of Credit
3 Bill of Exchange
4 Bill of Lading
5 Shipping Order
6 Proforma Invoice
7 Insurance Receipt
8 Dock Receipt
9 Mate Receipt
10 Export Invoice
11 Consular Invoice
12 Certificate of Origin
13 Shipping Bill
Export has also some advantages and some disadvantage
ADVANTAGES OF EXPORT
1 Foreign Exchange Earnings
2 Economic Development
3 Identity of the Country etc.
DISADVANTAGES OF EXPORT
Exports are heavily on the upside in mostly all respect and in societies. Its downside is very little and limited to only undeveloped countries. The main problem that arises out of export is the scarcity of locally available essential goods.
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