CBSE Class 11 Business Studies Notes : International Buisness – II

1. Export Procedure The main steps involved in export procedure are

(i) Receipt of enquiry and sending quotations
(ii) Receipt of order or indent
(iii) Assessing importer’s credit guarantee for payment worthiness and securing
(iv) Obtaining export licence

According to the customs law, a firm must acquire an export licence before exporting goods

The pre-requisites of export licences are

(i) Obtaining IEC Number (Import-Export Code)
(ii) Obtaining RCMC (Registration Cum Membership Certificate)
(iii) Registration with ECGC (Export Credit Guarantee Corporation)
(iv) Obtaining Pre-shipment Finance
(v) Production and Procurement of goods
(vi) Pre-shipment inspection

There are three methods of pre-shipment inspection

(i) Consignment-wise inspection
(ii) In-process quality control
(iii) Self certification
(iv) Excise clearance
(v) Obtaining certificate of origin
(vi) Reservation of shipping space
(vii) Packing and forwarding
(viii) Insurance of goods
(ix) Custom clearance
(x) Obtaining Mate’s receipts
(xi) Payment of freight and Insurance of Bill of Landing
(xii) Preparation of Invoice
(xiii) Securing Payment

The importer may accept a bill of exchange of two types

(i) Documents against right
(ii) Documents acceptance

2. Import Procedure Steps involved in import procedure are

(i) Trade enquiry
(ii) Procurement of import licence
(iii) Obtaining foreign exchange
(iv) Placing order or indent
(v) Obtaining letter of credit
(vi) Arranging for finance
(vii) Receipt of shipment advice
(viii) Retirements of import documents
(ix) Arrival of goods
(x) Custom clearance

3. Export-Import Documents

(i) Principal Export Documents

(a) Commercial invoice
(b) Packing list
(c) Bill of lading The bill of lading is considered an important document due to the following reason

• A receipt of goods
• A document of Title to goods
• A contract of affreightment

(d) Airway bill
(e) Certification of inspection
(f) Certificate of origin
(g) Bill of exchange

4. Auxiliary Export Documents

(i) Proforma invoice
(ii) Intimation of inspection
(iii) Shipping instruction
(iv) Insurance declaration
(v) Shipping order
(vi) Mate’s receipt
(vii) Application for certificate of origin
(viii) Letter to banks for collection of documents

5. Import Documents The important documents used in import procedure is

6. Bill of Entry There are three types of bill of entry

(i) Bill of entry for home consumption
(ii) Bill of entry
for warehousing
(iii) Ex-bond bill of entry

7. Important Terms Used in External Trade

(i) Free on Boards (FOB)
(ii) Cost and Freight (CFR)
(iii) Cost Insurance and Freight (CIF)

8. International Trade Institution and Agreements

(i) World Bank The World Bank was established in 1944, in Buttonwoods. It was setup with a purpose to provide loans to countries whose infrastructure was destroyed by the war.

(a) Nature of World Bank

• It was set-up to rebuild post World War -II Europe.
• It offers loan advice and training to private and public sector of poor countries.

(ii) United Nation Conferences on Trade and Development (UNCTAD)
(iii) International Development Association
(iv) International Finance Corporation (IFC)
(v) The Multinational Guarantee Agency (MIGA)

(vi) World Trade Organisation (WTO) The world trade organisation is the only global international organisation which deals with the rules and regulations of trade between different nations.

(a) Nature of WTO

• WTO deals with sales of trade between nations at global level.
• It operates with a purpose liberalising trade and free flow of goods and services in trade policy within agreed limits.
• WTO settles disputes through some neutral procedures.

(b) Role of WTO

• Promotes international peace
• Settles disputes among member nations
• Makes international trades very smooth by framing common rules and regulations.
• Helps in economic growth of developing countries by giving them preferential treatment.

(c) Agreements of WTO

• General Agreements on Tariffs and Trade (GATT)
• Agreement of Textile and Clothing (ATC)
• Agreement on Agriculture
• General Agreements in Trade in Services (GATS)
• Agreements on Trade Related Aspects of Intellectual Property Rights (TRIPS)

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