Three features of SEZ :
1. It is a duty free enclose which is treated as foreign territory.
2. Units of SEZ are exempted from routine examination of import and export by custom authorities.
3. Sub-contracting of production is allowed.

The various incentives and schemes provided by India are as follows :

1. Export Processing Zones : Export Processing Zones (EPZs) have been set up to provide an internationally competitive duty free environment for export production. Infrastructural facilities are created in the zones to manufacture the products at lower cost. Customs clearance and facilities needed for financial transactions are also provided inside the zones. Import licence is not needed for import of capital goods, raw materials etc. The units located in the zones are expempted from payment of excise duty on capital goods and raw materials bought from the domestic market. 50% produce has been permitted for domestic sale at concessional rate of duty. There are 8 EPZs in India.

2. 100% Export Oriented Units : Export Oriented Units have been set up for the export of entire product expect those which are specially permitted to be sold in the domestic market. These units can be established any where in the country. They can avail of all benefits provided to the units in the EPZ.

3. Special Economic Zones : Special Economic Zones (SEZ) has been created to encourage free trade. It is a specially delineated duty free enclave. It is deemed to be foreign territory for the purpose of trade operations and duties and tariffs. Goods going into the SEZ area from Domestic Tariff Area (DTA) are treated as deemed exports. Goods coming from the SEZ area into DTA are treated as imported goods.

4. Export Houses, Trading Houses, Star Trading Houses and Super Star Trading Houses : Various categories of export houses have been recognized with a view to building marketing infrastructure and expertise required for export promotion. These houses are given national recognition so that they could make greater efforts for export promotion. They are required to operate as highly professional and dynamic institutions and act as an important instrument of export growth. The recognition is granted on the basis of the export performance of the firm.

5. Export of Services : In order to boost the export of services, various categories of service houses have been recognised. These houses are recognised on the basis of the export performance of the service providers. They are named as Service Export House, International Service Export House, International Star Service Export House, International Super Star Service Export House based on their export performance.

6. Export Promotion Capital Goods (EPCG) Scheme : The main objective of this scheme is to encourage the import of capital goods for export promotion. New capital goods including computer software systems may be imported under this scheme. Under this provision, the capital goods may be imported at 5% customs duty. The import is subject to an export obligation equivalent to 5 times CIF value of capital goods on FOB basis or 4 times the CIF value of capital goods on net foreign exchange basis. This obligation may be fulfilled over a period of 8 years from the date of issuance of license.

It is a guarantee letter issued by the importer’s bank stating that it will honour the export bills to the bank of the exporter upto a certain amount.

Commercial Letter of Credit

This is a standard letter of credit that’s commonly used in international trade, and may also be referred to as a documentary credit or an import/export letter of credit. A bank acts as a neutral third party to release funds when all the conditions of the agreement have been met.

Standby Letter of Credit

This type of letter of credit is different: It provides payment if something fails to happen. Instead of facilitating a transaction, a standby letter of credit provides compensation when something goes wrong.

Back-to-Back Letters of Credit

A back to back letter of credit allows intermediaries to connect buyers and sellers

Bill of lading is a document wherein the shipping company gives its official receipt of the goods put on board its vessel and at the same time gives the undertaking to carry them to the port of destination. It is also a document of title of the goods and as such is freely transferable by the
endorsement and delivery.
Bill of entry contains information such as name and address of the importer, name of the ship, number of packages, marks on the package, description of goods, quantity and value of goods, name and address of the exporter, port of destination and customs duty payable.

Following steps are taken to export goods from one country to another :

1. Receipt of enquiry and sending quotations.

2. Receipt or order of indent.

3. Assessing importer’s credit-worthiness.

4. Obtaining export license.

5. Obtaining pre-shipment finance.

6. Production or procurement of goods.

7. Pre-shipment inspection.

8. Excise clearance.

9. Obtaining certificate of origin.

10. Reservation of shipping space.

11. Packing and forwarding.

(1) Trade Enquiry and Sending Quotations

• The domestic buyer who wishes to buy the goods from the other country sends an inquiry relating to price, desired quality, terms, and conditions for the export of goods.
• The exporter sends a reply to the inquiry in the form of ‘Quotation’.
• The quotation is also known as ‘Proforma Invoice’ which contains information about the selling price, quantity, quality, mode of delivery, etc.

(2) Procurement of Import License

• Goods can be imported only upon the license, the importer requires to obtain an import license.

(3) Obtaining Foreign Exchange

• The overseas supplier asks payment in a foreign currency.
• Payment requires the exchange of Indian currency into foreign currency.
• In India, transaction related to foreign exchange are governed by Reserve Bank of India (RBI) under the Exchange Control Department.

(4) Placing Order or Indent

• After the receipt of the ‘Quotation’, if the prospective buyer finds the information suitable to him, he places the ‘Order/Indent’ for the import of goods.

(5) Obtaining Letter of Credit

• The importer must get the receipt of credit from his concerned bank and send it to the foreign supplier.

(6) Arrangement of Finance

• The importer makes the finance settlements in advance to remunerate to the exporter when the shipment arrives at the destination.

(7) Receipt of Shipment Advice

• After storing the consignment on the ship, the foreign supplier sends the shipment advice to the importer.
• The shipment advice includes data about the shipment of products such as:
  • Invoice number
  • The landing or airways bill date and number
  • Name of the ship with date
  • Port or Destination of export
  • Classification of goods and quantity
  • Date of the sailing of the vessel.

(8) Arrival of Goods

• The overseas supplier dispatches the Goods as per the contract.

(9) Customs Clearance and Release of Goods

• In India, all the imported goods have to have a clearance from customs after they pass the Indian borders.
• When the ship arrives at the port, the importer has to obtain a delivery order/endorsement for delivery on the back of the bill of lading from the concerned shipping company.

(a) Difference in languages and problem of distance : Each country has its own language in which its traders wish to prepare their trade documents right from trade enquiry or the letter of quotation to the payment documents. This works as a serious barrier between the traders of the different countries. Moreover, the distance between the trading countries increases the cost of transportation of goods, making the price high and also creating risk of fraud, etc. as the traders may not have face to face contact between them.
(b) Import-export restrictions: At times many countries put certain restrictions on their foreign trade to make their B.O.P. (balance of payment) favourable. They impose heavy tariffs or import duties, volume restrictions on both of their imports as well as their exports. This hampers the smooth conduct of IT.
© Lack of proper information about foreign market: In most of the cases new traders do not have adequate information about foreign markets what ever information is provided by different agencies are either unadequate or does not fulfil their requirements. Thus, they fail to have clarity about the opportunities available to them for exports and imports.
(d) Heavy documentation : IT requires so many legal formalities and many documents, which makes the trade procedure very cumbersome as well as complex. That’s why most of the small traders trade only through third parties rather than going directly and have to pay commissions to them which reduces their profit margins, increases the cost of transactions.
(e) Payment problems : IT, traders of an importing
country wish to make payment in their own currency and the traders of exporting country want payments in their legal tender. In both the situations there may come the problem of foreign exchange. The fluctuations in the exchange rates may create problems and risk to the traders of both the countries.

nature of International Business.

(i) Exchange of Goods : It involves purchase of goods and sale of goods. Purchase of goods, from a foreign country is known as import trade and sale of goods to another country is known as ‘export trade’. But when the goods are imported from a country with the objective of exporting them to some other country is known as ‘entrepot trade’.

(ii) Involvement of two countries : International trade is carried on mostly in large quantities both on government to government account and on private account involving individuals and business houses.

(iii) Foreign Currency : Payment for imported goods is made in foreign currency. Similarly, payment for export of goods is received in foreign currency. In India conversion of money is regulated by RBI.

(iv) Restrictions : International business is not as free as international trade. In case of several items, license is also required for import or export many goods are subject to import and export duties.

(v) Lengthy procedure : Because of geographical distance and physical barriers, transport of goods between nations is a difficult and time consuming process. Moreover, permission of appropriate authorities for import and export of goods also take time.

(vi) Language Barrier : Each country has its own language. Because of differences in languages of two countries there may be problem in entering into import and export transactions.

(vii) Risks : International business is exposed to several risks such as fluctuations in the relative price of two currencies, perils of sea, fear of obsolescence etc.

Images for Sarika is running a organic store under the brand name, 'Earth' in a popular market in Dehradun. She acknowledges that risks in her business cannot be predicted with utmost accuracy as business environment is dynamic in nature. Therefore, it is not possible to predict future events with accuracy like, change in consumer preferences, increase in competition, natural calamities etc. Also, she feels that the risks in business can be minimised, but cannot be eliminated all together. As her business is operated at a small scale she feels her quantum of risk is relatively low At the same time she truely believes in the saying that 'no risk, no gain' is applicable to all the business organisations. Identify and explain the various characteristics of business risk being described in the above paragraph.Images for Sarika is running a organic store under the brand name, 'Earth' in a popular market in Dehradun. She acknowledges that risks in her business cannot be predicted with utmost accuracy as business environment is dynamic in nature. Therefore, it is not possible to predict future events with accuracy like, change in consumer preferences, increase in competition, natural calamities etc. Also, she feels that the risks in business can be minimised, but cannot be eliminated all together. As her business is operated at a small scale she feels her quantum of risk is relatively low At the same time she truely believes in the saying that 'no risk, no gain' is applicable to all the business organisations. Identify and explain the various characteristics of business risk being described in the above paragraph.

Below are the reasons given for non popularity of departmental stores in Inida:

1. High cost:

One of the major disadvantages of such stores is that the cost of doing business is very high. Due to excessive departmentalisation and additional facilities offered, cost of such business remains high. In order to cover such costs, goods are generally sold at a high price. As a result, only rich customers who care for quality and services take the advantages of departmental stores.

2. Local inconvenience:

Since departmental stores are situated at central shopping areas, people living at distant places can not avail the services of such stores. For buying daily use goods and frequently purchased items, such stores are of little use since the customer cannot go to a long distance to purchase daily use items. Rather, customers prefer purchases from nearby shops.

3. Higher rent for premises:

As departmental stores are located at central shopping areas, the rents of such premises are usually very high. This also adds to the overhead expenses.

4. Lack of personal touch in selling:

In departmental stores, there is always absence of personal touch in selling because of hired salesmen, managers and supervisors. These hired personnel with different likings and temperaments cannot provide personal attention to the customers. On the other hand, a small retailer can pay personal attention to the needs of the customers.

5. Lack of proper supervision:

There is always a lack of proper supervision in the departmental store operations because of the expenses of the business. Management has to depend upon managers and supervisors who may lack interest in the business.

6. Large capital:

Departmental store requires large amount of capital for establishment and operation. In fact, a departmental store cannot be started with small capital.

Advantages are as follows :

1. Attract large number of customers :As these stores are usually located at central places, they attract large number of customers during the best part of the day.
2. Convenience of buying : By offering large variety of goods under one roof, the department stores provide great convenience to customers in buying almost all goods of their requirements at one place. As a result, they do not have to run from one place to the other, to complete their shopping.
3. Attractive services : A department store aims at providing maximum services to the customers. Some of the services offered by it include home delivery of goods, execution of telephone order, grant of credit facilities and provision for rest-room, etc.
4. Economy of large-scale operations : As they stores are organized on a very large scale, the benefits of large-scale operations, particularly, in respect of purchase of goods, are available to them.

5. Promotion of sales : The department stores are in a position to spend considerable amount of money on advertising and other promotional activities, which help in boosting their sales.
Limitations :
1. Lack of personal attention : Because of the large-scale operations, it is very difficult to provide adequate personal attention to the customers in a departmental store.

2. High operating cost : As the departmental stores give more emphasis on providing services, their operating costs tend to be on the higher side. These costs, in turn, make the prices of the goods high. They are, therefore, not attractive to the lower-income group of people.

3. High possibility of loss : As a result of high operating costs and large-scale operations, the chances of incurring losses in a departmental store are high. For example, if there is any change in the tastes of customers or latest fashions, it necessitates selling of such out-of-fashion articles in clearance sale, to reduce the huge inventory of goods built up.

4. Inconvenient location : As a department store is generally situated at a central location, it is not convenient for the purchase of goods that are needed at short notice.

Mail Order Houses : Mail order houses are retail concerns which carry on business through mail. Mail order business is known as "selling through post" for the retailer and "shopping by post" for the consumer.
Usefulness or advantages of Mail Order Houses :
Mail order business is beneficial to both sellers and buyers in the following ways :
1. Convenience : The customer can buy the goods without spending his time and money in travelling to the seller’s place. He gets home delivery of goods and can arrange for payment after giving the order. He can easily buy goods not available in the local market. He often gets a money back guarantee and can return the goods which are not up to the mark. Customers get an opportunity to select goods from a large range.
2. Low operating costs : A mail order house can be located at any place. It is not necessary to maintain showrooms, well-decorated and furnished shops, or a large sales force. There are no bad debts. Thus, the overhead costs of mail order business are low. Risk is also very low. Cross-freights are eliminated because goods can be despatched directly from the manufacturers to customers.

3. Small investment : The seller need not keep stocks as he can procure the goods after receiving orders. Therefore, mail order business can be operated with a small investment and with little risk.

4. Elimination of middlemen : Through mail order business, a manufacturer can directly sell goods to his customers. He need not depend upon middlemen. Direct contact with customers provides control over distribution channel and helps him in understanding customers preferences.

5. Country-wide market : Sales are not limited to local population. A businessman can sell goods to a large number of customers scattered throughout the country. Far off markets can be exploited with the help of postal facilities. The post office acts as the carrier of goods and the collector of sale proceeds. Temporary depressions in local markets do not result in complete loss of business.

6. Flexibility : The type of goods and the media of advertising can be adjusted easily to suit changing fashions. The mailing list can also be changed with shifts in population, etc. Sales are not dependent on the capacity of salemen as sales appeals are designed by experts.

Goods handled by mail order business : Mail order business is not possible in all types of goods. In order to be handled by mail order house, goods must satisfy the following conditions :

1. They should not be easily perishable, i.e., they must not get easily spoiled or deteriorated during the course of transit by post or rail parcel. Goods should be durable.

2. Goods should be standardised or gradable in quality.

3. They should be identified by a brand name or trade mark.

4. They should not be too heavy or bulky to be sent by mail.

A departmental store is a large establishment offering a wide variety of products, classified into well-defined departments, aimed at satisfying practically every customer’s need under one roof. It has a number of departments, each one confining its activities to one kind of product, e.g., there may be separate departments for toiletries, medicines, furniture, groceries, electronics, clothing and dress material. Thus, they satisfy diverse market segments with a wide variety of goods and services.
Some of the important features of a departmental store are as follows
(i) A modem departmental store may provide all facilities such as restaurant, restrooms, etc. In this way they try to provide maximum service to higher class of customers for whom price is of secondary importance.
(ii) These stores are generally located at a central place in the city, which caters to a large number of customers.
(iii) They are generally formed as a joint stock company managed by a board of directors as the size
of these stores is very large.
(iv) A departmental store combines both the functions of retailing as well as warehousing. They purchase directly from manufacturers and operate separate warehouses thereby eliminating undesirable middlemen between the producers and the customers.
Chain stores or multiple shops are networks of retail shops that are owned and operated by manufacturers or intermediaries. Under this type of arrangement, a number of shops with similar appearance are established in localities, spread over different parts of the country in contrast to departmental stores which are established at a central place in the city. These different types of shops normally deal in standardized and branded consumer products, which have rapid sales . turnover. These shops are run by the same organisation and have identical merchandising strategies, with identical products and displays.

Retailer renders following services to the wholesalers
(i) Help in Distribution of Goods Wholesalers provide help in the distribution of goods and making them available to final consumers.
(ii) Personal Selling In this the retailers relieve the producers of this activity and help them in actualising the sale of the products.
(iii) Enabling Large Scale Operations It enables them to operate at large scale and fully concentrate on activities.
(iv) Collecting Market Information Retailers remain in touch with the buyers they know about the tastes, attitudes, preference, etc. Such information is very useful in taking marketing decisions in an organisation.
Some of the important services of retailers from the point of view of consumers are as follows
(i) Regular Availability of Products In order to buy products as and when needed retailer maintains the regular availability of the product.
(ii) New Products Information By arranging effective display of products and personal selling retailers, provide important information about their products.
(iii) Convenience in Buying Retailers are situated very near to the residential areas and remain open for long hours which enables customer to buy products of their requirement.
(iv) After Sales Service Retailers provide after sales services to the customers in the form of
home delivery, supply of spare parts, etc.

GST stands for "Goods and Services Tax", and is proposed to be a comprehensive indirect tax levy on the manufacture, sale and consumption of goods as well as services at the national level. It will replace all indirect taxes levied on goods and services by the Indian Central and State governments. The Goods and Services Tax, or GST is a major indirect tax reform introduced in India by integrating the major indirect taxes of the centre and states. It is a comprehensive tax levied on the manufacture, sale, and consumption of goods and services. The GST is a destination based consumption tax made on value addition.

The terms of trade (TOT) is the relative price of exports in terms of imports and is defined as the ratio of export prices to import prices. It can be interpreted as the amount of import goods an economy can purchase per unit of export goods. Terms of trade (TOT) is a measure of how much imports an economy can get for a unit of exported goods. • Since, economies typically export and import many goods, measuring the TOT requires defining price indices for exported and imported goods and comparing the two.

Main Documents Used In Internal Trade
The following are the main documents used in the Internal trade.
1. Invoice – In case of credit purchases, a statement is supplied by the seller of goods in which he gives particulars of goods purchased by buyer such as quantity, quality, rate, total value, sales tax, trade discount, etc. It is also called a Bill or Memo. Buyer gets information all about the amount he has to pay to the seller from Invoice only.

2. Pro-Forma Invoice – The statement (or forwarding letter) containing the details of goods consigned from consigner to consignee is known as aPro-forma Invoice. It gives the particulars as regards quantity, quality, price and expenses incurred on the goods consigned. In case of consignment, consignee is an agent of consigner who is supposed to sell goods on behalf of consigner and this statement/proforma invoice is only for his information. It is also known as interim invoice.

3. Debit Note – It refers to a letter or note which is sent by the buyer to the seller stating that his (seller’s) account has been debited by the amount mentioned in note on account of goods returned herewith. It states the quantity, rate, value and the reasons for the return of goods.

4. Credit Note – It refers to a letter or note which is sent by the seller to the buyer stating that his account has been credited by the mentioned amount on account of acceptance of his claim about the goods returned by him.

5. Lorry Receipt – It refers to a receipt issued by the Transport Company for goods accepted by it for sending from one place to another. It is also known as Transport Receipt (TR) and Bilty.

6. Railway Receipt – It refers to a receipt issued by the Railways for goods accepted for sending from one station to another.

A chain store is a group of similar retail shops that sell the same type of goods. All these shops or branches are under the control of the head office. Branches are opened in different parts of the city or even in different parts of the country.

Advantages of Chain Stores

1. Chain stores specialize in a particular product.

2. Such stores can cater to the needs of people in different localities.

3. Central location and luxurious premises are not required for chain stores.

Disadvantages of Chain Stores

1. As chain stores deal only in a particular item, they may not attract many customers.

2. The head office may find it difficult to exercise control over a number of retail outlets/branches established throughout the city/country.

3. The central office also has to maintain the relevant accounts in respect of every shop and this again is a tedious process.

4. The product quality, price etc., are decided by the controlling office. The retail shops have to sell what is supplied to them.

Sole proprietorship means a business owned, financed and controlled by a single person who is recipient of all profit and bearer of all risks.

It is SUITABLE IN AREAS OF PERSONALISED SERVICE like beauty parlour, hair cutting saloons & small scale activities like retail shops.

Features

1. Single ownership: It is wholly owned by one individual.
2. Control: Sole proprietor has full power of decision making.
3. No separate legal entity: Legally there is no difference between business& businessmen.
4. Unlimited liability: The liability of owner is unlimited. In case the assets of business are not sufficient to meet its debts, the personal property of owner can be used for paying debts
5. No legal formalities: Not required to start, manage and dissolve such business organization.
6. Sole risk bearer and profit recipient: He bears the complete risk and there is no body to share profit/loss with him.