international marketing unit 4

7/31/2019 International Marketing Unit 4

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Export Processing Zones (EPZs)can be summarized as a unitbearing clusters of specially designed zones of aggressiveeconomic activity for the promotion of export. The main conceptof Export Processing Zones was conceived in the early 1970s to promotethe growth of the sickening export business of India. Further, themeaning of Export Processing Zones (EPZs) can be broadly defined asan area enjoying special government of India support with respect tofiscal incentives, tax rebates and other exclusive benefits for the growthof export.

Export Processing Zones (EPZs) also encompasses pre-definedinfrastructural facilities and regulations pertaining to establishment ofsuch zones and environmental stipulations, respectively. These ExportProcessing Zones of India were established to help the growth of Indianexport commodities, especially from the fast growing sectors.

Meaning of EPZs


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Objectives of setting up of EPZs

Encourage and generate the economic development Encourage Foreign Direct Investments (FDI) To channel the sources of foreign exchange within the

system in a phased manner Foster the establishment and development of industrial

enterprises within the said zones Encourage and generate wider economic activities by

encouraging foreign investments for the development of

the zones To channel the foreign exchange earnings for the further

development of these zones and explore new areas for thedevelopment of Indian exports

Encourage establishment and development of Indian

industries and business enterprises and facilitate withproper infrastructure Generate employment opportunity


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Threetier Management System in

EPZs Tier one is headed by the Ministry of Commerce headed by the Commerce

Secretary, which drafts and implements policies and reviews the performanceof each such zones

Tier two is headed by the Board of Approval (BOA), which is responsible forexamination of proposals for opening up of new enterprises in the zone andwhich is headed by a person of the level of Additional Secretary

The Development Commissioner, who is the chief executive of the ExportProcessing Zone, heads the three tiers. The Development Commissioner is

vested with the power for the day-to-day function of the zone. Further, he is thehead of functions relating to administration, approval of investment, and healso enforces various regulatory provisions.


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Special Economic Zone- Definition

Designated areas in countries that possess specialeconomic regulations that are different from other areas inthe same country. Moreover, these regulations tend tocontain measures that are conducive to foreign direct

investment. Conducting business in a SEZ usually meansthat a company will receive tax incentives and theopportunity to pay lower tariffs.


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Role of SEZs Special economic zone is a particular area inside a state which acts as foreign territory for tariff and

trade operations. Govt. provides tax exemption (IT, Excise, customs, sales etc.), subsidised water andelectricity etc.

SEZ can be sector specific or multi product sez. It helps in the development of infrastructure of thearea around the SEZ, provides employment to ppl, makes the exports more viable. All this will helps

the country's products to become mor competitive vis-a-vis providing all round development ofregion.

It should be noted that if 100 acres are alloted for SEZ, then only 30-35% of area is used for setting upplants. rest of the area is used to provide housing facilities, malls, multiplexes etc.Also Tax exemption is for specific period say for 10 yrs or so.

The central government has approves 237 SEZs in 19 states (occupying 86,107 hectares).63 of these SEZs have already been notified.23 SEZs are operational, 18 in the IT sector.Ultimately there will be 500 SEZs.

Total amount of land to be acquired across India:150,000 hectares (the area of the national capitalregion). This land - predominantly agricultural and typically multi-cropped -- is capable ofproducing close to 1 million tonnes of foodgrain. If SEZs are seen to be successful in the future andmore cultivated land is acquired, they will endanger the countrys food security.


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What is ECGC?Export Credit Guarantee Corporation of India Limited, wasestablished in the year 1957 by the Government of India tostrengthen the export promotion drive by covering the riskof exporting on credit. Being essentially an exportpromotion organization, it functions under theadministrative control of the Ministry of Commerce &Industry, Department of Commerce, Government of India.It is managed by a Board of Directors comprisingrepresentatives of the Government, Reserve Bank of India,

banking, insurance and exporting community. ECGC is thefifth largest credit insurer of the world in terms of coverageof national exports. The present paid-up capital of thecompany is Rs.800 crores and authorized capital Rs.1000crores.


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What does ECGC do?1.Provides a range of credit risk insurance covers to exporters

against loss in export of goods and services

2.Offers guarantees to banks and financial institutions toenable exporters to obtain better facilities from them

3 .Provides Overseas Investment Insurance to Indiancompanies investing in joint ventures abroad in the form ofequity or loan


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How does ECGC help exporters? ECGC Offers insurance protection to exporters against

payment risks

Provides guidance in export-related activities

Makes available information on different countrieswith its own credit ratings

Makes it easy to obtain export finance frombanks/financial institutions

Assists exporters in recovering bad debts Provides information on credit-worthiness of overseas

buyers Need


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ROLE OF EXIM BANK OF INDIA

Objectives:

The Export-Import Bank of India was set up by theGovernment of India in 1982 as a public sectorfinancial institution under an Act passed in theparliament for the purpose of financing, facilitating

and promoting foreign trade of India. The board ofdirectors manages the EXIM BANK withrepresentation from government financial institutions,banks and business community.


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FUNCTIONS: Suppliers credit: This enables the exporters to extend

credit to overseas importers of eligible Indian goods.

Finance for consultancy and technology services: Thisenables Indian exporters of consultancy and technologyservices to extend term credit to overseas importers.

Pre-shipment credit: This enables Indian exporters tobuy raw materials and other inputs for fulfilling exportcontracts involving cycle time exceeding six months.

Finance for EPZ Units

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Other activities:

The bank helps Indian companies go global by setting up

subsidiaries and joint ventures abroad. It provides information to potential exporters about projects

abroad specially about multilaterally agencies.

It also helps companies in preparing bids according to strictcondition prescribed by the multilateral agencies.

It also entertains proposals for various facilities under heEuropean Community Investment Partners like feasibilitystudies for setting up export units.

The bank introduced the "cluster of Excellence" programme forup gradation of quality standards and obtaining ISO certification


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erv ces ere o n anExporters:

Underwriting: This enables the Indian exporters toraise finance from capital markets with the backing ofEXIM Bank's underwriting commitment.

Forfeiting: This Indian exporters to convert sale tocash on without recourse basis.

Guarantee Facility: To execute export contracts and

import transactions. Business Advisory and Technical assistance

international marketing unit 4

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