PRESENTATION ON EXPORT HOUSESSTATE TRADING AND EXPORT

HOUSES

PRESENTED BY-

HARSHIT MALHOTRADEEPSHIKHA AGARWAL

HISTORICAL BACKGROUND

•1947 Indian achieves independence; highly protected economy because of colonial rule•1956 Founding of State Trading Corporation of India Ltd. under the Indian Companies Act•1960 Setting up of Export Houses•1981 Setting up of Trade Houses•1992 Establishment of Super Trading Houses•1994 Start of Super Star Trading Houses

They are large international trading companies that specialize in the long-term development of exporting, importing, countertrading and third-country trading in goods and services which are generally supplied by, or sourced from, other parties.

Export trading houses export large volumes of products from many sources of lower unit costs through established networks of overseas offices.

OVERVIEW OF EXPORT AND TRADING HOUSES

OBJECTIVES OF TRADING HOUSE

1. To make available supplies of essential commodities to consumers at reasonable prices on a regular basis.

2. To ensure a fair price of the produce to the farmers so that there may be an adequate incentive to increase production.

3. To minimize violent price fluctuations occurring as a result of seasonal variations in supply and demand.

4. To arrange for supply of fertilizers and insecticides.

5. To undertake the procurement and maintenance of buffer stock and their distribution whenever and wherever necessary.

6. To arrange for storage, transportation, packaging and processing.

WHAT IS STATE TRADING?

There are several ways to define state trading.

Early definitions focused on state conduct (or operation) of foreign trade, on governments monopolizing foreign trade and on government ownership of an enterprise.

A functional definition gradually replaced these approaches with Kostecki (1982) arguing that state trading occurs when a government or a government-backed agency determines the essential conditions (including prices or quantities) on which exports and imports have to take place. One of the responsibilities of government is to ensure the supply of essential commodities to the people. This may require direct intervention on its part in trading of agricultural commodities.

TYPES OF TRADING

Partial State Trading

Here private traders and government coexist.

Traders are free to buy and sell in the market .

The government may place some restrictions on them such as declaration of stocks, limits on stocks, which can be held at a point of time and submission of regular accounts.

The government enters the market for purchase of commodities directly from producers at notified procurement price. It undertakes the distribution of commodities to consumers through a network of shops.

Complete shops

The purchase and sale of commodities is undertaken entirely by the government or its agencies. Private traders are not allowed to enter the market for purchase or sale.

In India complete wholesale trade in wheat was taken over by the government in 1973; but it had to be given very soon.

In Jan 1965, the FCI was set up to undertake the purchase, storage movement, transport, distribution and sale of food grains.

INDIAN STATE TRADING ORGANISATIONS

1. MMTC Limited

2. India Trade Promotion Organisation Limited

3. Export credit and Guarantee Corporation Limited

4. The MICA Trading Corporation of India Limited (MITCO)

5. The Projects and Equipments corporation of India Limited

6. Spices Trading corporation of India Limited

7. Tea Trading Corporation Limited

Adani Group Diversified group with interests in commodities trading, edible oil manufacturing, port operations (Mundra) & natural gas distribution; headquartered in Ahmedabad; companies: Adani Enterprises Ltd, Gujarat Adani Port, Adani Wilmar, Mundra SEZ etc

Vishal Exports Overseas Limited Trading company based in Ahmedabad, Gujarat; has the status of a star trading house; exports rice, wheat, sugar & imports edible oil, pulses, plywood etc

Frontline Corporation Ltd Flagship company of the Agarwal Group; engaged in the business of bulk transportation, trading of auto components & coke, manufacturing of refractory items and wind energy generation; located in Ahmedabad

Gujarat

Jaguar International Limited

Institutional Sector 44, Gurgaon 122002, Haryana, India Map

ISO certified star export house set up by D.P. Jindal Group engaged in the export and import of steel products; products include pipe fittings, auto spares, scaffolding, granite & marbles, steel products and cotton; based in Gurgaon, Haryana

Haryana

Sakuma Exports Ltd

Company in Mumbai, engaged in the trading and export of agro-based commodities to South East Asia, Middle East, Europe, Africa, and USA; items: lentils, sugar, onions, peanuts, brass, wheat flour, soya bean meal, rape seed meal, chilly, jaggery etc

Maharashtra

Tamil NaduEltex Group of Companies

Group with diverse business interests in wheat flour milling, cotton yarn, ferrous castings, sheet metal fabrication, machine building & trading; based in Coimbatore; companies: Eltex Super Castings, McKinnon India, Prokop Eltex etc

Amit International

Manufacturers of acrylic mink blankets, blended yarn & knitted fabrics based in Ludhiana, Punjab; also imports & exports BOPP film, pulses & spices, baby clinical dipper, chemicals, shoes, sandals, ball bearings, aerated water, yarn etc

Heena International

Exporter of automotive components, fasteners, forgings & castings, machinery supplies, bicycles & parts, wrought iron components, 2 & 3 wheeler components, tractor & JVC components, moped parts, etc; based in Ludhiana with a division in China

Punjab

The objective is to recognise established

exporters as Export House, Trading House, Star

Trading House and Super Star Trading House with

a view to build marketing infrastructure and

expertise required for export promotion.

Such Houses should operate as highly

professional and dynamic institutions and act as

important instruments of export growth.

OBJECTIVE

Merchant as well as Manufacturer exporters,

Export Oriented Units (EOUs)/units located in

Export Processing Zones (EPZs)/ Electronic

Hardware Technology Parks (EHTPs)/ Software

Technology Parks (STPs) shall be eligible for

such recognition.

ELIGIBILITY

Export Performance Level For being a status holder exporter, an

applicant is required to achieve the following prescribed export

Performance (including deemed exports) exceeding the level given below, level during the current licensing year plus the preceding three years (taken together).

 

CRITERION OF RECOGNISITION

Status Category Export Performance FOB / FOR Value(Rupees in Crores)

Export House(EH) 20

Star Export House(SEH) 100

Trading House(TH) 500

Star Trading House(STH) 2500

Premier Trading House(PTH) 7500

Following exports are eligible for double weightage for the Export House/Trading House status, i.e. exports by specified category units or exporters are entitled for double weightage.

(i) SSI/tiny/cottage sector units  (ii) Units registered with the KVIC (Khadi & Village Industries

Commission) or KVIBs (Khadi & Village Industries Board)  (iii) Units located in: (a) North-Eastern States (b) Sikkim (c) Jammu & Kashmir  (iv) Units exporting handloom, handicrafts, hand knotted

carpets, or silk carpets   (v) Exporters exporting to countries in: (a) Latin America (b) CIS (Commonwealth of Independent States) (c) Sub-Saharan Africa

Weight age given to exports

(vi)Units having ISO 9000 (Series), ISO 14000 (Series)/WHOGMP/HACCP/SEI CMM level-II and above status granted by agencies listed in Appendix-6 of the HB '09-14 edn.

(vii) Shvices(specified) exporters (viii) Exports of agro products The Double Weightage shall be admissible to Merchants as

well as Manufacturer Exporters. However, a shipment can get double weightage only once in anyone of the above categories.

o Export House/ Trading House/ Star Trading House/

Super Star Trading House Certificate shall be valid for

a period of 3 years starting from 1st April of the

licensing year ,unless otherwise specified. On the

expiry of such certificate, application for renewal of

status certificate shall be required to be made within

a period of six months.

During the said period, the status holders shall be

eligible to claim the usual facilities and benefits..

Validity period

Exemption from furnishing of bank gurantee in

schemes

100% retention of foreign exchange in EEFC account

2 star export houses and above shall be permitted

to establish export warehouses

Authorization/Licence/certification and custom

clearances for both exports and imports on self

declaration basis.

BENEFITS TO EXPORTERS

Exporters who have attained Export

House, Trading House, Star Trading

Houses and Super Star Trading Houses

status for three terms or more and

continue to export shall be eligible for

golden status certificate which would

enable them to enjoy the benefits of

status certificate.

Golden Status Certificate

EXPORT HOUSES IN CHANDIGARH

A. Kumar Cloth House Export

House

B. Punjab Small Inds

& Export Corporation

C. Golden Laminates Limited

D. Shiv Export House

E. Akarshan Cloth House And

Readymade

MANUFACTURERS FOREIGN CUSTOMERS

Goods are collected and payments made at door step

Proven record of reliability for quality, prices and delivery

Better price realizations because of overseas marketing organization

Lower cost thanks to a network of procurement facilities

All risks and hassles of exporting avoided

One stop shopping facility

Global network for techno-commercial information

After sale services assured

Market entry at lower cost Lower transportation and handling costs

Long term business perspective Long term business perspective

TRADING HOUSES HELP MANUFACTURERS AND FOREIGN CUSTOMERS

Scheme for status holder1. Additional Duty Credit Scrips shall be given to Status Holders @

1% of the FOB value of past exports accelerate exports and encourage technological up gradation.

2. This facility shall be available for sectors of leather (excluding finished leather), textiles and jute, handicrafts, engineering (excluding Iron & steel & non-ferrous metals in primary and intermediate form, automobiles & two wheelers, nuclear reactors & parts, and ships, boats and floating structures), plastics and basic chemicals (excluding pharma products). �

3. This facility shall be available up to 31 March, 2011.4. Transferability for the Duty Credit scrips being issued to status

holders under VKGUY Scheme permitted only for the procurement of cold chain equipments.

Announcement for marine product Fisheries exempted from maintenance of �

average EO under EPCG Scheme (along with 7 sectors) however Fishing Trawlers, boats, ships and other similar items shall not be allowed for this exemption.

Additional flexibility under Target Plus Scheme (TPS) / Duty Free Certificate of Entitlement (DFCE) Scheme for the marine sector.

Announcement for Gems and Jewellery sector

Duty Drawback is allowed on Gold Jewellery exports to �neutralize duty incidence.

Plan to establish "Diamond Bourse (s) with an aim to make India and International Trading Hub announced.

Introduction of a new facility to allow import on consignment basis of cut & polished diamonds for the purpose of grading/ certification. ��

EPCG Scheme:1. Obligation under EPCG scheme relaxed. 2. To aid technological up gradation of export sector, EPCG

Scheme at Zero Duty has been introduced. 3. Export obligation on import of spares, moulds etc.

under EPCG Scheme has been reduced by 50%.

Scheme for Agro exports

Introduction of a single window system to facilitate export of �perishable agricultural produce with an aim to reduce transaction and handling cost.

This system will involve creation of multi-functional nodal agencies. These agencies will be accredited by APEDA.

Scheme for leatherOn the payment of 50 % applicable export duty, Leather �sector shall be allowed re-export of unsold imported raw hides and skins and semi finished leather from public bonded ware houses.

Scheme for tea product

The existing Minimum value addition under advance authorisation scheme for export of tea is 100 %. It has been reduced from the existing 100% to 50%.

DTA (Domestic Tarriff Area) sale limit of instant tea by EOU units increased from 30% to 50%.

Export of tea has been included under VKGUY Scheme benefits. � �

Scheme for pharma exports

Export Obligation Period for advance authorizations issued �increased from existing 6 months to 36 months.

Pharma sector included under MLFPS for countries in Africa and Latin America & some countries in Oceania and Far East.

Scheme for handloom exportsThe claims under Focus Product Scheme, the requirement of " Handloom mark" was required earlier. This has been removed.

Scheme for Exports Oriented Units

EOUs have been allowed to sell products manufactured by them in DTA (Domestic Tariff Area) upto a limit of 90% instead of existing 75%, without changing the criteria of similar goods , within the overall entitlement of 50% for DTA sale. (This means that instead of 75% these units can sell up to 90 % of their products in the domestic markets)

EOU allowed to procure finished goods for consolidation along with their manufactured goods, subject to certain safeguards.

Extension of block period by one year for calculation of Net Foreign Exchange earning of EOUs kept under consideration.

EOU allowed CENVAT Credit Facility.

Support for Market and Product Diversification 26 new markets have been added under Focus Market

Scheme. The incentive available under Focus Market Scheme (FMS)

has been raised from 2.5% to 3%. The incentive available under Focus Product Scheme (FPS) has

been raised from 1.25% to 2%. Extra products have been included in the scope of benefits

under FMS.

Announcements for MDA & MAI:

Higher allocation for Market Development Assistance (MDA) and Market Access Initiative (MAI) has been announced.

Towns of Export Excellence (TEE)

The following cities have been recognized as towns of export excellence (TEE)Handicrafts : Jaipur, Srinagar and Anantnag Leather Products : Kanpur, Dewas and Ambur Horticultural Products: Malihabad