Unit-4

INTERNATIONAL TRADE

India‘s Trade Policy: India‘s Trade policy, export assistance, marketing

plan for exports.

India’s Trade policy

The Commerce Ministry had released a product specific draft export

policy and the EXIM Policy 2020 – 2025 is awaited.
 Updated draft comprises of all existing policy conditions, all
notifications and public notices issued after January 2018 and
also includes non-tariff regulations imposed by different
government agencies.

o Draft export policy, aimed at consolidating export norms for

each product, has accorded eight-digit HS codes to every
product.
ITC (HS) codes are better known as Indian Trade Clarification (ITC) and
are based on Harmonized System (HS) of Coding.
 It was adopted in India for import-export operations. Indian custom
uses an eight-digit ITC (HS) code to suit the national trade
requirements.
 ITC-HS codes are divided into two schedules. Schedule I describe
the rules and Exim guidelines related to import policies.
 Export Policy Schedule II describe the rules and regulation
related to export policies.
 This compendium will help an exporter know all the applicable
norms pertaining to a particular product, helping them understand
policy conditions for that item.
About Export Import Policy of India
 Exim Policy or Foreign Trade Policy is a set of guidelines and
instructions established by the DGFT in matters related to the
import and export of goods in India.
 Foreign trade in India is guided by the EXIM Policy of the Indian
Government and is regulated by the Foreign Trade Development
and Regulation Act, 1992.
DGFT (Directorate General of Foreign Trade) is the main
governing body in matters related to Exim Policy. The main objective
of the Foreign Trade (Development and Regulation) Act is to
provide the development and regulation of foreign trade by
facilitating imports into, and augmenting exports from India. Foreign
Trade Act has replaced the earlier law known as the Imports and
Exports (Control) Act 1947

EXIM Policy 2015 – ‘20

FTP 2015-20 provides a framework for increasing exports of goods
and services as well as generation of employment and increasing
value addition in the country, in line with the ‗Make in India‘
programme. Government aims to increase India‘s exports of
merchandise and services from USD 465.9 billion in 2013-14 to
approximately USD 900 billion by 2019-20 and to raise India‘s share
in world exports from 2 percent to 3.5 percent.
The FTP for 2015-2020 seeks to provide a stable and sustainable
policy environment for foreign trade in merchandise and services;
 link rules, procedures and incentives for exports and imports with
other initiatives such as Make in India, ―Digital India‖ and ―Skills
India‖ to create an ―Export Promotion Mission; promote the
diversification of India‘s export basket by helping various sectors of
the Indian economy to gain global competitiveness; create an
architecture for India‘s global trade engagement with a view to
expanding its markets and better integrating with major regions,
thereby increasing the demand for India‘s products and contributing
to the ―Make in India‖ initiative; and to provide a mechanism for
regular appraisal in order to rationalise imports and reduce the trade
imbalance.
Objectives
 Exim policy or Foreign Trade Policy for the years 2015-20,
aims at doubling the overseas sales to $900 billion by 2019-20 and
making India global, while integrating the foreign trade with
―Make in India‖ and ―Digital India Programme‖.
Features
 MEIS scheme: Five existing schemes to promote merchandize
exports have been merged into a single Merchandise Exports from
India Scheme (MEIS). o The incentives are to be provided in the
form of duty scrips as % of FOB (free on board) value of exports.
 Service Exports from India Scheme (SEIS) will be only for India
based service providers and will be based on net foreign exchange
earned.

o Both SEIS and MEIS schemes are applicable to SEZ units.

 Paperless Trade and Online filling of forms will ensure trade
facilitation and ease of doing business.
 E-commerce export is applicable to items of worth up to 25,000.
Provision for Export oriented units, Export hardware
technology park and software technology park.
 The Duty-free scrips (form of credits) are provided to the
exporters under various export promotion schemes of the
government. The scrips may be transferable or non-transferable.

 Approach & Role of State/UT Governments - A major path

breaking initiative is to mainstream State and Union Territory (UT)
Governments and various Departments and Ministries of the
Government of India in the process of international trade. State/UT
Governments can play a crucial role in promoting exports and
rationalising nonessential imports. Many of the State Governments
have nominated Export Commissioners. The Department of
Commerce is also helping State Governments to prepare export
strategies. An Export Promotion Mission will be constituted to
provide an institutional framework to work with State
Governments to boost India‘s exports.

 Addressing In-House Challenges - The biggest challenge,

however, is to address constraints within the country such as
infrastructure bottlenecks, high transaction costs, and complex
procedures, constraints in manufacturing and inadequate
diversification in our services exports.

 The Services Sector - The Services sector is an area of great

potential. Efforts will be made to gain effective market access
abroad through comprehensive economic partnership agreements
with important markets. A Global Exhibition on Services will be
 held annually, which will provide a forum for showcasing India‘s
strengths in the Services sector.
 Building the India Brand - A long term branding strategy has
been conceptualised to enable India to hold its own in a highly
competitive global environment and to ensure that Brand India
becomes synonymous with high quality. Further, a programme to
promote the branding and commercialisation of products registered
as Geographical Indications and to promote their exports will be
initiated.
 Institutional Mechanisms for Trade Promotion - Market Access
Initiative (MAI) Scheme and the Market Development Assistance
Scheme will continue. The present allocation for the MAI scheme
is inadequate; efforts will be made to augment resources for the
scheme.
 Export Promotion Councils are being strengthened, both in
terms of technical capabilities and management structures. Project
exports will be encouraged in a big way, especially in the emerging
markets with high infrastructure needs, through special lines of
credit offered by the Ministry of External Affairs and the Buyers
Credit Scheme of the Department of Commerce through EXIM
Bank of India. This will, inter alia, enable Indian businesses to
develop long term business relationships, facilitate easier
acceptance of India‘s exports and build visibility for Indian
products.
Two institutional mechanisms are being put in place for regular
communication with stakeholders, namely, a Board of Trade which
will have an advisory role and a Council for Trade Development
and Promotion which will have representation from State and UT
Governments.
Trade Ecosystem - Several initiatives are underway or in the
pipeline for the simplification of procedures and digitization of
various processes involved in trade transactions. Steps are being
taken by various Ministries and Departments to simplify
administrative procedures and reduce transaction costs based on
the recommendations of two Task Forces constituted by the
Directorate General of Foreign Trade.
Specific measures will be taken to facilitate the entry of new
entrepreneurs and manufacturers in global trade through extensive
training programmes. The Niryat Bandhu scheme will be
revamped to achieve these objectives and also further dovetailed
with the ongoing outreach programmes.
The Multilateral Trading System and India - The current WTO
rules as well as those under negotiation envisage the eventual
phasing out of export subsidies. This is a pointer to the direction
that export promotion efforts will have to take in future, i.e.
towards more fundamental systemic measures rather than
incentives and subsidies alone.
The three mega agreements that are currently being negotiated
namely the Trans Pacific Partnership, Trans-Atlantic Trade and
Investment Partnership and the Regional Comprehensive
Economic Partnership (RCEP) add a completely new dimension to
the global trading system. India is a party to the RCEP
negotiations. The mega agreements are bound to challenge India‘s
industry in many ways, for instance, by eroding existing
preferences for Indian products in established traditional markets
such as the US and EU and establishing a more stringent and
demanding framework of rules. Indian industry needs to gear up to
meet these challenges for which the Government will have to
create an enabling environment.
 Product Strategy
The focus will be on promoting exports of high value products
with a strong domestic manufacturing base, including engineering
goods, electronics, drugs and pharmaceuticals. The challenges
posed to the pharmaceuticals sector by NTBs in Japan and
regulatory hurdles in China have to be addressed. A composite
programme for promotion of healthcare products and services will
be conducted in various regions to showcase and market India‘s
unique strengths.
Other sectors which require special attention, in light of India‘s
strengths and their contribution to employment generation, are
leather, textiles, gems and jewellery and the sectors based on
natural resources, which include agriculture, plantation crops,
marine products and iron ore exports. Revitalizing plantations,
enabling a less controlled regime for agriculture and aiming at
greater value addition and processing would help to increase the
value of exports from these sectors. The North-Eastern States are a
special focus area for organic product exports.
Export Assistance

Export assistance and incentives is a financial help given by the

government to the Indian exporters to improve their ability to compete in
foreign markets. Common assistance and incentives include duty
drawback, exemption from income tax, exemption from excise duty,
marketing development assistance, etc.
Export incentives are regulatory, legal, monetary, or tax programs that
are designed to encourage businesses to export certain types of goods or
services. Exports are goods that are produced in one country and are
then transported to another country for sale or trade.
Export incentives are a form of economic assistance that governments
provide to firms or industries within the national economy, in order to
help them secure foreign markets. A government providing export
incentives often does so in order to keep domestic products competitive
in the global market.
Types
Types of export incentives include export subsidies, direct payments,
lowcost loans, tax exemption on profits made from exports and
governmentfinanced international advertising. While less concerning
than import protections such as tariffs, export incentives are still
discouraged by economists who claim that they artificially create
barriers to free trade and thus can lead to market instability.
How Export Incentives Work
Export incentives make domestic exports competitive by providing a
sort of kickback to the exporter. The government collects less tax in
order to deflate the exported good's price, so the increased
competitiveness of the product in the global market ensures that
domestic goods have a wider reach. Generally, this means that domestic
consumers pay more than foreign consumers.
Sometimes, governments will encourage export when internal price
supports (measures used to keep the price of a good higher than the
equilibrium level) generate surplus production of a good. Instead of
wasting that good, governments will often offer export incentives.
Export Incentives and the World Trade Organization
This level of government involvement can also lead to international
disputes that may be settled by the World Trade Organization (WTO). As
a broad policy, the WTO prohibits most subsidies, except for those
implemented by lesser-developed countries (LDCs). The idea is that
export protections create market inefficiencies, but that developing
countries may need to protect certain key industries in order to promote
economic growth and prosperity.

Developing countries have started manufacturing industries only

recently. As a result, their cost of production generally tends to be high
because of the following reasons:
(i) Total market availability within the country is small with the result
that the economies of large-scale production cannot be reaped.
(ii) Productivity of labour is low because the level of mechanization as
compared to that in the developed countries is low.
(iii) The cost of production is generally a function of experience, i.e.
Learning by Doing. This can be reaped only when the labor employed in
manufacturing operations acquires experience over a period of time.
(iv) Manufacturing units in developing countries, being small and new,
have considerably less expertise in the field of international marketing
and because the volume of exports is low, the per unit cost of trade
promotion expenditure tends to be high.

India has to raise higher resources for development which has to be done
through a number of indirect levies which tend to push up the overall
cost of production.

Most developing countries have, therefore, resorted to a number of

export promotion measures. India has also been providing export
assistance to Indian exporters.
However, the WTO Agreement on Subsidies and countervailing duties
does not allow specific types of export subsidies. The Government of
India is, therefore, removing those export incentives which are not WTO
compatible.
New System of Export Assistance:
From 1992, export incentive system in India has been made simple.
There are essentially three major incentives. These are:
(1) Market-based Exchange Rate;
(2) Fiscal Concessions, and
(3) Facilities under the Export-Import Policy.

Market based Exchange Rate:

For long, external value of the rupee was managed by the Reserve bank
of India (RBI) by pegging the value of the rupee to a basket of
currencies. RBI used to keep the value of the rupee at a level which was
higher than the real value. In the post-Economic Reforms period, the
Government of India decided to abolish all direct incentives to exports
and promote exports through the exchange rate mechanism. Accordingly,
the Liberalized Exchange Rate Management System (LERMS) was
introduced.
Under this system, there were two exchange rates: one official rate
which was determined by the RBI as was the practice earlier; and
second, a rate which was quoted by the banks based on the demand-
supply position. Exporters had to surrender 40 per cent of their foreign
exchange earnings to banks and could sell the residual 60 percent at the
market rate which was normally expected to be more attractive than the
official rate.
Through this mechanism the Government hoped to achieve two
objectives: First the difference between the market rate and the official
rate would provide enough incentives to the exporters. Second, this
would introduce a self-balancing mechanism for the balance of trade,
because only that much imports could be made which could be financed
through the market i.e. the resources available through the 60 percent
account.

One year‘s experience revealed that rupee remained stable in the

international market. This gave to the Government for full convertibility
on the trade account. Accordingly, rupee was made fully convertible for
export-import transactions in March 1993.This would provide more
financial benefit to the exporters as under the LERMS, they had to
surrender 40 per cent of their receivables at a discount which averaged
about 15 per cent when LERMS was in operation. Since March 1993,
the exchange rate of the rupees is fully determined by the demand supply
conditions in the market. Under such a system, exporters will get benefit
when rupee depreciates while importers will lose. When rupee
appreciates, the balance of benefits will be just the reverse.
Tax Concessions:
(a) In the computation of total income, Section 80-HHC allows a
deduction of the whole of the profit derived from the export of goods or
merchandise. The requirements of minimum tax contained in Section
115J does not apply to exporting corporate assesses. This benefit is also
available to supporting manufacturers exporting through Export/ Trading
Houses provided that the amount of deduction claimed is retained as a
reserve for the purpose of the business of the assesses. However, the
budget for the year 2000-2001 has reduced this exemption by 20 per cent
every year to be phased out in five years.
(b) Exemption from taxation of the profits from overseas projects to
the extent of 50 per cent.
(c) Exemption from taxation of 50 per cent of royalty, commission,
fees or any similar payment obtained from the exports of technical know-
how and technical services.
(d) A 10-year tax holiday for 100 per cent export-oriented units and for
units located in Free Trade/Export Processing Zones.
(e) Discounted rates of customs duty on imports of selected items of
machinery for export production.

Types of Export Incentive Schemes & Benefits in India

1 Advance Authorization Scheme
2 Advance Authorization for Annual Requirement
3 Export Duty Drawback for Customs, Central Excise, and Service Tax
4 Service Tax Rebate
5 Duty-Free Import Authorization
6 Zero duty EPCG (Export Promotion Capital Goods) Scheme
7 Post Export EPCG Duty Credit Scrip Scheme
8 Towns of Export Excellence (TEE)
9 Market Access Initiative (MAI) Scheme
10 Marketing Development Assistance (MDA) Scheme
11 Merchandise Exports from India Scheme (MEIS)
India‘s economy is one of the fastest growing economies in the world.
As a part of economic reforms, the government has formulated many
economic policies which have led to the country‘s gradual economic
development. Under the changes, there has been an initiative to improve
the condition of exports to other countries. With this regard, the
government has taken up a few actions to benefit businesses in the
export trade. The primary objective of these benefits is to simplify the
whole export process and make it more flexible. On a broader scale,
these reforms have been a blend of both social democratic and
liberalization policies.
Since the initiation of the liberalization plan in the 1990s, the economic
reforms have emphasized the open market economic policies. Foreign
investments have come in various sectors, and there has been good
growth in the standard of living, per capita income and Gross Domestic
Product. Moreover, there has been a greater emphasis on flexible
business and doing away with excessive red tapism and government
regulations.

Some of the different types of export incentive schemes and benefits that
the government has initiated are:

Advance Authorization Scheme

As part of this scheme, businesses are allowed to import input in the
country without having to pay duty payment, if this input is for the
production of an export item. Moreover, the licensing authority has fixed
the value of the additional export products to not below than 15%. The
scheme has the validity period of 12 months for imports and 18 months
for carrying out the Export Obligation (EO) from the date of issue
typically.

Advance Authorization for Annual Requirement

Exporters who have a previous export performance for at least two
financial years can avail the Advance Authorization for Annual
requirement scheme or more benefits.
Export Duty Drawback for Customs, Central Excise, and Service Tax
Under these schemes, the duty or tax paid for inputs against the exported
products is refunded to the exporters. This refund is carried out in the
form of Duty Drawback. In case the duty drawback scheme is not
mentioned in the export schedule, exporters can approach the tax
authorities for getting a brand rate under the duty drawback scheme.

Service Tax Rebate

In the case of specified output services for export goods, the government
provides rebates on service tax to exporters.

Duty-Free Import Authorization

This is another benefit the government has introduced by combining the
DEEC (Advance License) and DFRC to help exporters get free imports
on certain products.
Zero duty EPCG (Export Promotion Capital Goods) Scheme
In this scheme, which applies to exporters of electronic products, import
of capital goods for production, pre-production, and post-production is
allowed at zero percent customs duty if the export value is at least six
times the duty saved on capital goods imported. The exporter needs to
verify this value (Export Obligation) within six years of issuing date.

Post Export EPCG Duty Credit Scrip Scheme

Under this export scheme, exporters who aren‘t sure about paying the
export obligation can obtain an EPCG license and pay the duties to the
customs officials. Once they fulfil the export obligation, they can claim a
refund of the taxes paid.

Towns of Export Excellence (TEE)

Towns that produce and export goods above a particular value in the
identified sectors would be known as towns of export status. Towns will
be given this status based on their performance and potential in exports
to help them reach new markets.

Market Access Initiative (MAI) Scheme

An effort to provide financial guidance to eligible agencies for
undertaking direct and indirect marketing activities like market research,
capacity building, branding, and compliances in importing markets.

Marketing Development Assistance (MDA) Scheme

This scheme aims to promote export activities abroad, assist export
promotion councils to develop their products and other initiatives to
carry out marketing activities abroad.
Merchandise Exports from India Scheme (MEIS)
This scheme applies to the export of certain goods to specific markets.
Rewards for exports under MEIS will be payable as a percentage of
realized FOB value.

Due to all these schemes, exports have increased by a right margin, and
there is a favourable atmosphere among the business community.
The government is also upcoming with many other benefits to strengthen
the export sector of the country further.

Marketing Plan for Exports

Doing business is increasingly global in extent today. There are several

reasons for this. One significant reason is technological – because
of improved transportation and communication opportunities today,
trade is now more practical.
Increasingly rapid technology lifecycles also increase the competition
among countries as to who can produce the newest technological
product. Trade between countries is beneficial because these countries
differ in their relative economic strengths-some have more advanced
technology and some have lower costs. On the basis of these realities,
business need to proper international marketing plan for distribute the
product through globally.
1.0 Introduction
Planning is a systematized way of relating to the future. It is an attempt
to manage the effects of external, uncontrollable factors on the firm‘s
strengths, weaknesses, objectives, and goals to attain a desired end.
Further, it is a commitment of resources to a country market to achieve
specific goals. In other words, planning is the jobs of making things
happen that may not otherwise occur.
Planning relates to the formulation of goals and methods of
accomplishing them, so it is both a process and a philosophy.
Structurally, planning may be viewed as corporate, strategic, and/or
tactical. International corporate planning is essentially long-term,
incorporating generalized goals for the enterprise as a whole. Strategic
planning is conducted at the highest levels of management and deals
with products, capital, and research, and longand short-term goals of the
company. Tactical planning, or market planning, pertains to specific
actions and to the allocation of resources used to implement strategic
planning goals in specific markets. Tactical plans are made at the local
level and address marketing and advertising questions.
2.0 Evolution to global marketing
Global marketing is not a revolutionary shift, it is an evolutionary
process. While the following does not apply to all companies, it does
apply to most companies that begin as domestic-only companies.
2.1 Domestic marketing
A marketing restricted to the political boundaries of a country, is called
―Domestic Marketing‖. A company marketing only within its national
boundaries only has to consider domestic competition. Even if that
competition includes companies from foreign markets, it still only has to
focus on the competition that exists in its home market. Products and
services are developed for customers in the home market without
thought of how the product or service could be used in other markets.
All marketing decisions are made at headquarters.
The biggest obstacle these marketers face is being blindsided by
emerging global marketers. Because domestic marketers do not
generally focus on the changes in the global marketplace, they may not
be aware of a potential competitor who is a market leader on three
continents until they simultaneously open 20 stores in the North-eastern
U.S. These marketers can be considered ethnocentric as they are most
concerned with how they are perceived in their home country.
2.2 Export marketing
Generally, companies began exporting, reluctantly, to the occasional
foreign customer who sought them out. At the beginning of this stage,
filling these orders was considered a burden, not an opportunity. If there
was enough interest, some companies became passive or secondary
exporters by hiring an export management company to deal with all the
customs paperwork and language barriers. Others became direct
exporters, creating exporting departments at headquarters. Product
development at this stage is still focused on the needs of domestic
customers. Thus, these marketers are also considered ethnocentric.
2.3 International marketing
If the exporting departments are becoming successful but the costs of
doing business from headquarters plus time differences, language
barriers, and cultural ignorance are hindering the company‘s
competitiveness in the foreign market, then offices could be built in the
foreign countries. Sometimes companies buy firms in the foreign
countries to take advantage of relationships, storefronts, factories, and
personnel already in place. These offices still report to headquarters in
the home market but most of the marketing mix decisions are made in
the individual countries since that staff is the most knowledgeable about
the target markets. Local product development is based on the needs of
local customers. These marketers are considered polycentric because
they acknowledge that each market/country has different needs.
2.4 Multinational marketing
At the multi-national stage, the company is marketing its products and
services in many countries around the world and wants to benefit from
economies of scale. Consolidation of research, development, production,
and marketing on a regional level is the next step. An example of a
region is Western Europe with the US. But, at the multinational stage,
consolidation, and thus product planning, does not take place across
regions; a Regio-centric approach.
2.5 Global marketing
When a company becomes a global marketer, it views the world as one
market and creates products that will only require weeks to fit into any
regional marketplace. Marketing decisions are made by consulting with
marketers in all the countries that will be affected. The goal is to sell the
same thing the same way everywhere.
3.0 International marketing planning process

3.1 Preliminary analysis and screening

At this stage one takes a more serious look at those countries remaining
after undergoing preliminary screening. Now you begin to score, weight
and rank nations based upon macro-economic factors such as currency
stability, exchange rates, level of domestic consumption and so on. Now
you have the basis to start calculating the nature of market entry costs.
Some countries such as China require that some fraction of the company
entering the market is owned domestically – this would need to be taken
into account. There are some nations that are experiencing political
instability and any company entering such a market would need to be
rewarded for the risk that they would take. At this point the marketing
manager could decide upon a shorter list of countries that he or she
would wish to enter. Now in-depth screening can begin.
3.1.1 Company character
The next step is to identify the company‘s character. These criteria are
ascertained by an analysis of company objectives, resources, and other
corporate capabilities and limitations. A company‘s commitment to
international business and its objective for going international are
important is establishing evaluation criteria. Minimum market potential,
minimum profit, return on investment, acceptable competitive levels,
standards of political stability.
3.1.2 Home-Country constraints
In this step the marketing plan need to classify the home country
restraints. They are like, political and legal forces, economic climate,
completive structure. These include home-country restraints can have a
direct effect on the success of a international business.
3.1.3 Host-country(s) constraints
In this step the marketing plan require to classify the host-country(s)
limitations as like the home countries. Host-country(s) constraints are
more that the home country‘s. They are: Political/legal forces, cultural
forces, geography and infrastructure, structure of distribution, level of
technology, competitive forces, economic forces.
3.3 Developing the marketing plan
At this stage of the planning process, a marketing plan is developed for
the target market – whether it is a single country or a global market set.
3.3.1 Situation analysis
The marketing plan begins with a situation analysis. A situation analysis
is the foundation of the strategic planning process for international
marketing plan. It includes an examination of both the internal factors
(to identify strengths and weaknesses) and external factors (to identify
opportunities and threats).
3.3.2 Objective and goals
At this section the marketing plan need to select their objective, like
what is to be done, by whom, how it is to be done, and when. . A
company‘s commitment to international business and its objective for
going international are important is establishing evaluation criteria.
Minimum market potential, minimum profit, return on investment,
acceptable competitive levels, standards of political stability.
Goal-setting ideally involves establishing specific, measurable and
timetargeted objectives. Work on the theory of goal-setting suggests that
it can serve as an effective tool for making progress by ensuring that
participants have a clear awareness of what they must do to achieve or
help achieve an objective. On a personal level, the process of setting
goals allows people to specify and then work towards their own
objectives — most commonly financial or career-based goals. Goal-
setting comprises a major component of Personal development.
3.3.3 Strategy and tactics
The marketer needs to determine possibilities for applying marketing
tactics across national markets. The search for similar segments across
countries can often lead to opportunities for economies of in marketing
programs.
3.3.4 Selecting mode of entry
Selecting the mode of entry with rare exceptions, products just don‘t
emerge in foreign markets overnight—a firm has to build up a market
over time. Several strategies, which differ in aggressiveness, risk, and
the amount of control that the firm is able to maintain.
3.3.5 Budgets
Budgeting is the main formal control methods. The budget spells out the
objectives and necessary expenditures to achieve these objectives.
Included are budgets and sales and profit expectations. Control consists
of measuring actual sales against expenditures. If there is tolerable
variance then no action is usually taken.
3.3.6 Action programs
After the completing the phase 3, a decision not to enter a specific
market may be made if it is determined that company marketing
objectives and goals cannot be met. Performance is evaluated by
measuring actual against planned performance. The problem is setting a
performance standard. Finally, when marketers are see the plan would be
success then they apply the plan for international business. Otherwise
they stop the plan at this phase 3.
4.4 Implementation and control
At this stage when Phase 3 decision will be ―go‖ then Phase 3 actives
implementation of specific plans and anticipation of successful
marketing. However, the planning process does not end at this point. All
marketing plans need coordination and control during the period of
implementation. Many businesses don‘t control marketing plans as
thoroughly as they could even though continuous monitoring and control
could increase their success.
4.4.1 Objectives
The evaluation and control system require performance – objective
action, that is, bringing the plan back on track should standards of
performance fall short.
4.4.2 Standards
In the global orientation the marketer need to maintain the internationally
standard to stable in the international market.
4.4.3 Assign responsibility
As a company expands in to more foreign markets with several
products, it becomes more difficult to efficiently manage all products
across all markets. Therefore, they need to allocate liability for their
international business.
4.4.4 Measure performance 4.4.5 Correct for error
Consumers and businesses now have access to the very best products
from many different countries. Increasingly rapid tech
nology lifecycles also increase the competition
among countries as to who can produce the newest in technology. In
part to accommodate these realities, countries in the last several decades
have taken increasing steps to promote global trade through agreements
such as the General Treaty on Trade and
Tariffs, and trade organizations such as the World Trade
Organization (WTO), North American Free Trade Agreement (NAFTA),
and the European Union (EU).
4.2 Adapting the marketing mix to target markets
The ―Four P‘s‖ of marketing: product, price, placement, and promotion
are all affected as a company moves through the five evolutionary
phases to become a global company. Ultimately, at the global marketing
level, a company trying to speak with one voice is faced with many
challenges when creating a worldwide marketing plan. Unless a
company holds the same position against its competition in all markets
(market leader, low cost, etc.) it is impossible to launch identical
marketing plans worldwide. 4.2.1 Product
A global company is one that can create a single product and only have
to tweak elements for different markets. For example, Coca-Cola uses
two formulas (one with sugar, one with corn syrup) for all markets. The
product packaging in every country incorporates the contour bottle
design and the dynamic ribbons in some way, shape, or form. However,
the bottle or can also include the country‘s native language and is the
same size as other beverage bottles or cans in that country.
4.2.2 Price
Price will always vary from market to market. Price is affected by many
variables: cost of product development (produced locally or imported),
cost of ingredients, cost of delivery (transportation, tariffs, etc.), and
much more. Additionally, the product‘s position in relation to the
competition influences the ultimate profit margin. Whether this product
is considered the high-end, expensive choice, the economical, low-cost
choice, or something in-between helps determine the price point.
4.2.3 Promotion
After product research, development and creation, promotion
(specifically advertising) is generally the largest line item in a global
company‘s marketing budget. At this stage of a company‘s development,
integrated marketing is the goal. The global corporation seeks to reduce
costs, minimize redundancies in personnel and work, maximize speed of
implementation, and to speak with one voice. If the goal of a global
company is to send the same message worldwide, then delivering that
message in a relevant, engaging, and cost-effective way is the challenge.
Effective global advertising techniques do exist. The key is testing
advertising ideas using a marketing research system proven to provide
results that can be compared across countries. The ability to identify
which elements or moments of an ad are contributing to that success is
how economies of scale are maximized. Market research measures such
as Flow of Attention, Flow of Emotion and branding moments provide
insights into what is working in an ad in any country because the
measures are based on visual, not verbal, elements of the ad.
4.2.4 Distribution
How the product is distributed is also a country-by-country decision
influenced by how the competition is being offered to the target market.
Using Coca-Cola as an example again, not all cultures use vending
machines. In the United States, beverages are sold by the pallet via
warehouse stores. In India, this is not an option. Placement decisions
must also consider the product‘s position in the market place. For
example, a high-end product would not want to be distributed via a
―dollar store‖ in the United States. Conversely, a product promoted as
the low-cost option in France would find limited success in a pricey
boutique.
International Distribution
Promotional tools. Numerous tools can be used to influence consumer
purchases:
• Advertising—in or on newspapers, radio, television, billboards,
busses, taxis, or the Internet.
• Price promotions—products are being made available temporarily
as at a lower price, or some premium (e.g., toothbrush with a
package of toothpaste) is being offered for free.
• Sponsorships
• Point-of-purchase—the manufacturer pays for extra display space
in the store or puts a coupon right by the product
• Other method of getting the consumer’s attention—all the Gap
stores in France may benefit from the prominence of the new store
located on the Champs-Elysees.
Promotional objectives. Promotional objectives involve the question of
what the firm hopes to achieve with a campaign—―increasing profits‖ is
too vague an objective, since this has to be achieved through some
intermediate outcome (such as increasing market share, which in turn is
achieved by some change in consumers which cause them to buy more).
Some common objectives that firms may hold:
• Awareness. Many French consumers do not know that the Gap
even exists, so they cannot decide to go shopping there. This
objective is often achieved through advertising, but could also be
achieved through favorable point-of-purchase displays. Note that
since advertising and promotional stimuli are often afforded very
little attention by consumers, potential buyers may have to be
exposed to the promotional stimulus numerous times before it
―registers.‖
• Trial. Even when consumers know that a product exists and could
possibly satisfy some of their desires, it may take a while before
they get around to trying the product—especially when there are so
many other products that compete for their attention and wallets.
Thus, the next step is often to try get consumer to try the product at
least once, with the hope that they will make repeat purchases.
Coupons are often an effective way of achieving trial, but these are
illegal in some countries and in some others, the infrastructure to
readily accept coupons (e.g., clearing houses) does not exist.
Continued advertising and point-of-purchase displays may be
effective. Although Coca Cola is widely known in China, a large
part of the population has not yet tried the product.
 Attitude toward the product. A high percentage of people in the
U.S. and Europe has tried Coca Cola, so a more reasonable
objective is to get people to believe positive things about the
product—e.g., that it has a superior taste and is better than generics
or store brands. This is often achieved through advertising.
• Temporary sales increases. For mature products and categories,
attitudes may be fairly well established and not subject to
costeffective change. Thus, it may be more useful to work on
getting temporary increases in sales (which are likely to go away
the incentives are removed). In the U.S. and Japan, for example,
fast food restaurants may run temporary price promotions to get
people to eat out more or switch from competitors, but when these
promotions end, sales are likely to move back down again (in
developing countries, in contrast, trial may be a more appropriate
objective in this category).
Note that in new or emerging markets, the first objectives are more
likely to be useful while, for established products, the latter objectives
may be more useful in mature markets such as Japan, the U.S., and
Western Europe.
Entry Strategies
Methods of entry. With rare exceptions, products just don‘t emerge in
foreign markets overnight—a firm has to build up a market over time.
Several strategies, which differ in aggressiveness, risk, and the amount
of control that the firm is able to maintain, are available:
• Exporting is a relatively low risk strategy in which few
investments are made in the new country. A drawback is that,
because the firm makes few if any marketing investments in the
new country, market share may be below potential. Further, the
firm, by not operating in the country, learns less about the market
 (What do consumers really want? Which kinds of advertising
campaigns are most successful?
What are the most effective methods of distribution?) If an
importer is willing to do a good job of marketing, this arrangement
may represent a ―win-win‖ situation, but it may be more difficult
for the firm to enter on its own later if it decides that larger profits
can be made within the country.
• Licensing and franchising are also low exposure methods of
entry— you allow someone else to use your trademarks and
accumulated expertise. Your partner puts up the money and
assumes the risk. Problems here involve the fact that you are
training a potential competitor and that you have little control over
how the business is operated. For example, American fast food
restaurants have found that foreign franchisers often fail to
maintain American standards of cleanliness. Similarly, a foreign
manufacturer may use lower quality ingredients in manufacturing a
brand based on premium contents in the home country.
• Turnkey Projects. A firm uses knowledge and expertise it has
gained in one or more markets to provide a working project—e.g.,
a factory, building, bridge, or other structure—to a buyer in a new
country. The firm can take advantage of investments already made
in technology and/or development and may be able to receive
greater profits since these investments do not have to be started
from scratch again. However, getting the technology to work in a
new country may be challenging for a firm that does not have
experience with the infrastructure, culture, and legal environment.
• Management Contracts. A firm agrees to manage a facility—e.g., a
factory, port, or airport—in a foreign country, using knowledge
gained in other markets. Again, one thing is to be able to transfer
 technology—another is to be able to work in a new country with a
different infrastructure, culture, and political/legal environment.
Contract manufacturing involves having someone else manufacture
products while you take on some of the marketing efforts yourself.
This saves investment, but again you may be training a competitor.
• Direct entry strategies, where the firm either acquires a firm or
builds operations ―from scratch‖ involve the highest exposure, but
also the greatest opportunities for profits. The firm gains more
knowledge about the local market and maintains greater control,
but now has a huge investment. In some countries, the government
may expropriate assets without compensation, so direct investment
entails an additional risk. A variation involves a joint venture,
where a local firm puts up some of the money and knowledge
about the local market.
5.0 Conclusion
Utilizing the planning process encourages the decision maker to consider
all variables that affect the success of a company‘s plan. Furthermore, it
provides the basis for viewing all country markets and their
interrelationships and as an integrated global unit.
Planning permits for rapid growth of the international function, changing
markets, increasing competition, and the ever-varying challenges of
different national markets. The plan must blend the changing parameters
of external country environments with corporate objectives and
capabilities to develop a sound, workable marketing program. A strategic
plan commits corporate resources to products and markets to increase
competitiveness and profit.
  INSTITUTIONAL INFRASTRUCTURE FOR
EXPORT PROMOTION IN INDIA
Institutions engaged in export effort fall in six distinct tiers. At the top is
the Department of Commerce of the Ministry of Commerce and
industry. This is the main organization to formulate and guide India‘s
trade policy. At the second tier, there are deliberative and consultative
organizations to ensure that export problems are comprehensively dealt
with after mutual discussions between the Government and the Industry.
At the third tier are the commodity specific organizations which deal
with problems relating to individual commodities and/or groups of
commodities. The fourth tier consists of service institutions which
facilitate and assist the exporters to expand their operations and reach
out more effectively to the World Markets. The fifth tier consists of
Government trading organizations specifically set up to handle
export/import of specified commodities and to supplement the efforts of
the private enterprise in the field of export promotion and import
management. Agencies for export promotion at the State level constitute
the Sixth tier.
The Department of Commerce is the primary government agency
responsible for evolving and directing foreign trade policy ad program,
including commercial relations with other countries, Various trade
promotional measures and development and regulation of certain
exportoriented industries.
Apart from the Finance and Administrative Divisions, the principal
functional divisions of the Department of Commerce are Economic
Divisions, Trade policy Division, Export Products Division, Export
Services Division and Export Industries Division.
The main task of the Trade Policy Division is to keep abreast of the
developments in the international organizations like UNCTAD, WTO,
the Economic Commission for Europe, Africa, Latin America and Asia
and Far East (ESCAP). It is also responsible for India‘s relations with
the European Economic Community, European Free trade Association
Latin
American Free Trade Area, other regional groupings and the
Commonwealth. It also looks after the generalized system of preferences
and non-tariffs barriers.
The Foreign Trade Territorial Division is entrusted with the work
relating to the development of trade with different countries and regions
of the world. This Division also handles matters pertaining to State
trading a barter deals, organization of trade fairs and exhibitions,
commercial publicity abroad, etc. It also maintains contacts with Indian
Trade Missions abroad and attends to the connected administrative work
including the protocol functions.
The Export Products Division pays attention to the problem connected
with production, generation of surplus and development of markets for
the various products under its jurisdiction. These products include
plantations, marine products, chemicals, plastics, leather and leather
goods, sports goods, films, steel, metals, engineering products, minerals
and ores, coal, petroleum products, mica, salt, etc. Although in
administrative terms the responsibility for these product remains with
ministries concerned, this Division keeps itself in close touch with them
to ensure that production is sufficient to realize the full export potential
besides meeting the home consumption. This Division is also
responsible for the working of export organizations and corporations
dealing with above commodities and products.
The Export Industries Division is responsible for development and
regulation of rubber, tobacco and cardamom. The division is also
responsible for handling export promotion activities relating to textiles,
woolens, handlooms, readymade garments, silk and cellulose fibers, jute
ad jute products, handicrafts, coir and coir products.
The Export Services Division deals with the problem of export
assistance including import replenishment licensing, cash assistance,
export credit, export houses, Marketing Development Assistance and
grants, transport, free trade zones, dry ports, quality control and pre-
shipment inspection, joint ventures abroad and capacity creation in
export-oriented industries including assistance to import capital goods
and essential raw materials.
The Economic Divisions, headed by the Economic Adviser, is
responsible for the formulation of export strategies, export planning,
periodic appraisal and review of policies and also for maintaining
coordination and constant contacts with the other Divisions as well as
with various organizations which have been set up under the commerce
Department to assist the export drive. This Division also monitors work
relating to technical assistance, management services for export and
overseas investments by Indian entrepreneurs.

 PROJECTS & CONSULLTANCY EXPORTS

There has been a substantial transformation of India‘s export structure in

the recent years. India has now emerged as a major exporter of capital
equipment and other sophisticated items, including projects and
consultancy services.
Projects exports are regarded as a key indicator of technological maturity
and industrial capabilities of a country. In fact, the future of India‘s
export trade depends on how far performance in these sectors can be
further improved.
Projects exports:
 1. Turnkey projects namely those which involve the rendering of
services like design, civil construction, erection and
commissioning of plant or supervision thereof along with the
supply of equipment.
2. Engineering services contracts, involving the supply of services
alone, such as design erection commissioning or supervision of
erection and commissioning.
3. Consultancy services contracts, which may include the preparation
of feasibility studies, project reports, preparation of designs and
advice to the project authority on specification for plant and
equipment, preparation of tender documents, evaluation of tenders
and purchase of plant and equipment.
4. Civil construction contracts with or without preparation of designs
or drawings for the civil work to be undertaken.
The categories mentioned above are not to be treated as mutually
exclusive. A project contract includes supply of service or equipment,
coming under more than one of the categories.
Project Export Profile:
During the last 26 years, India has achieved a moderate success in the
export of capital goods, projects and civil engineering jobs. On an
average these categories account for about 40 per cent of India‘s total
engineering exports.
The success achieved by Indian companies in the field of construction
contracts is, however, much more spectacular. The Middle Eastern
countries because of their oil revenue emerged as very important
markets for infrastructural projects.
Till the year 1981, the construction projects worth Rs 5,170 crores
approximately were secured. About 80 per cent of these contracts were
secured by the Indian construction companies in Iraq and Libya.
These contracts were mainly for the constructions of (1) Townships, (2)
Airports, (3) High Rise Buildings, (4) Water & Sewerage Treatment
plants, (5) Flyovers and (6) New Railway lines. The year 1981 which is
considered to be the peak year provided contracts worth Rs 1,594 crores
to Indian construction companies. Since 1981 however a decline has set
in construction project exports. However, there has been a consistent
increase in recent years.
Civil Construction Turnkey projects and consultancy won by Indian
Firms:
In the year 1982 Civil Constructions Project value was Rs 451 crores. In
the years 2000-01 (Apr-Dec) Civil Construction Project value was Re
1,225 crores and Turnkey Projects was 1,833 and Consultancy services
was 4,241 crores.
The decline was basically due to two factors:
1. The fall in oil prices has dramatically reduced the purchasing
power of the Middle Eastern countries
2. Most of the basic infrastructural projects have since been
completed. Demand is now shifting away from construction to
industrial projects.
The contracts secured in the recent years have been quite diverse in
nature indicating the growing versatility and technological capabilities of
Indian project exporters. The West Asian region still continues to be the
major market accounting for half of the total project export contracts.
The markets in South East Asia and sub-Saharan African account for the
remaining half.

 CONSULTANCY EXPORTS
Indian has just made an entry in the field of consultancy exports. Until
recently, export of consultancy services was dominated by the developed
countries. India which reportedly has the third largest engineering
manpower is now in a position to enter this highly sophisticated and
expanding segment of world trade. Indian has over 200 consultancy and
design organizations. Foreign exchange earned from consultancy exports
stood at Rs 1,369 crores during 1993-94 as against only Rs 1 crore in
1974-75. The major areas in which Indian consultancy has achieved
considerable success are technical management (O & M) of cement
plants, agricultural research services, setting up of molasses based
distilleries, sugar projects, petrochemicals industries, design
programming, computer software cooling tower systems, fuel firing
systems, architectural, structural, electrical and air-conditioning
engineering designs, transport and communication management,
economic feasibility reports market surveys etc. The major countries
where exports of consultancy services were made are France, Japan,
Norway, the UK, the USA Russia, Holland, Switzerland, Sweden,
Kuwait, Muscat, UAE, Saudi Arabia, Iraq, Algeria, Oman, Ethiopia,
Cameroon, Tanzania Singapore, Hong Kong, Sri Lanka, Korea,
Indonesia, Pakistan, Malaysia and Laos.
Incentives Available:
The following incentives and facilities are available to Indian
consultancy organizations:

1. Consultancy services: exporters whose annual foreign

exchange earnings by way of export of services are not less than
Rs 5 lakhs, are eligible for foreign exchange facilities for business
development, purchase of tender documents, payment of
commission bid bonds etc.

2. In order to cover risks, ECGC has designed policies to cover

specific transactions services exports.
 3. Marketing Development Assistance is provided to
consultancy organizations which are registered with FIEO for
undertaking market studies opening of foreign offices, publicity
campaigns and feasibility studies.

5. Under Section 80-O of the Income Tax Act, consultancy

organizations are entitled to a deduction of up 50 per cent of the
net foreign exchange earnings in computing total income.

5. EWIM bank has introduced a scheme under which deferred

payment facilities are available from EXIM bank in respect of
consultancy jobs to be undertaken from India.

6. Facilities are also available for bid preparation as per the

details given above projects exports.

7. 100 percent income tax exemption on export profits from

computer software.

8. Setting up a ―Consultancy Trust Fund‖ of US $ 0.5 million

with the World Bank to be utilized for engaging Indian consultants
for World Bank financed projects.
RBI gas simplified the export procedures to promote project exports as
follows:
1. Limit for clearance of proposals by the authorized dealers as
well as Exim Bank has been revised upward.

2. Need for obtaining Pre-Bid clearance from authorized dealers/

Exim Bank for overseas Projects has been dispensed with.
3. Authorization to Authorized dealers/ Exim bank to clear the
proposals involving bridge finance up to 25 per cent of the
contract value.

4. Allowing exporters to maintain a single foreign currency

account for more than one contract being executed abroad in the
same country subject to conditions stipulated by authorized
dealer/Exim Bank.

5. In case of third country purchases, it has now been decided that

letters of credit may be established by any authorized dealer on
back-to-back basis, subject to same terms and conditions.

6. Authorized dealers/Exim Bank Working Group may now

consider and approve project export proposals/serve contracts
abroad involving all types of guarantees required to be furnished in
connection with execution of projects/contracts abroad.