The international sales contracts - Free Essay Example

Sample details Pages: 19 Words: 5745 Downloads: 6 Date added: 2017/06/26 Category Statistics Essay Did you like this example? Since 1936, the International Chamber of Commerce of Paris has published successive editions of a given set of delivery clauses with international scope, known as INCOTERMS rules. (International Commercial Terms). These were reviewed periodically in the years 1953, 1967, 1976, 1980, 1990 and last edition in 2000. Don’t waste time! Our writers will create an original "The international sales contracts" essay for you Create order Their mission is to interpret and regulate in a uniform way the negotiation of the international sales contracts. INCOTERMS 2000 edition is the result of the work of a group of 40 members of the Working Committee of the trading practices of the International Chamber of Commerce in Paris. For the first time, have participated representatives of U.S.A and Japan, which increased the degree of universality of the rules. INCOTERMS 2000 rules have been validated by the Executive Committee of CIC Paris and published in Publication 560 from January 1, 2000 of the same NGOs. INCOTERMS 2000 rules do not bring significant changes to the INCOTERMS 1990, but cover some shortcomings, contains a more concise, more precise and give more certainty for exporters and importers from anywhere in the world. The interventions made are meant to clarify several issues aimed starting with the stage of negotiation and conclusion of the international sales contract. They provide a common language for business on any market and in almost any country. Are accepted as such in EU countries, other countries of free trade areas and basically entered into current use in China, the Middle East, the African and South American countries. There is however one major exception to the universality of INCOTERMS 2000 and it rules the rules RAFTD 1941 (Revised American Foreign Trade Definition 1941) still applied by many U.S. retailers. Fo r the main contrast to the INCOTERMS FOB (which has 6 variants in the American) is recommended attention to the threat of the Americans FOB contracts with partners in USA. The last INCOTERMS version was published in 2000. In any international sales contract we have the problem of establishing procedures for the delivery, the transfer of risk and the division between seller and buyer of the expenses with the transport of goods (insurance of the goods, the value of transportation). INCOTERMS are internationally accepted commercial terms defining the state and the buyers and sellers operating role in the transport of goods, ownership of goods, ensuring goods. In legal terms INCOTERMS rules are optional and dependent on the will of the parties, the partners may include in the contract other specific requirements. In a contract, the action of INCOTERMS is limited to specific rights and obligations imposed on parties for the delivery of goods sold. The realities from the international trade have shown that the implementation of each term regarding the different means of delivery, represent costs that can not be neglected, their inclusion in the contract requires clarification, is particularly important to determine who and what paid, any omission or any mentioning in this regard may diminish or even null -the benefits expected by the seller or buyer in the transaction. The delivery terms shall be regulated according to the stipulation of the contract, the commercial rules and practices. From the general terms the most important for the foreign trade are those related to the delivery conditions and the international parties. The scope and area of interest of the INCOTERMS rules: INCOTERMS represent a codification of rules or customary practice in the field of international sale of goods, customary practice which are applicable within Europe. As a juridical force, these rules are voluntary, applying only if the parties have made express reference in their contract to INCOTERMS rules. INCOTERMS rules were created to avoid any disputes that may arise from the fact that contracting parties are aware of different business practices in force in the countries of the partners. The area of action of the INCOTERMS is limited to the issues related to rights and obligations of parties to the contract of sale, regarding the delivery of goods sold. Thus, INCOTERMS relate to a number of specific obligations imposed on parties. There are 13 INCOTERMS rules, each rule is expressed by a three-letter abbreviation, which is a type of international sale of goods. The advantage of using them is that: They allow contractual time and space savings the parties, rather than negotiating the content of the sale-purchase contract obligations of the seller and the buyer, negotiating only the type of sale, meaning the INCOTERMS rule which intends to apply . The safety, security of the transaction, however as well as the parties negotiate such a contract can not remove the risk of inconsistency between the different terms, the INCOTERMS rules, being the work of specialists, eliminate completely this risks. The structure of INCOTERMS: In the set of rules, INCOTERMS 2000, the merchants can negotiate a total of 13 clauses, of which they choose a single one , which they enter into a contract for complying to it. Each delivery condition of INCOTERMS has a name and an abbreviation of its standard, a logo consisting of three capital letters. Basically, the international sales purchase contract, the delivery condition choosed is indicated by the logo (abbreviation) thereof, supplemented by the place name (critical point) at which the parties agreed to transfer costs, risk and ownership. In 1990, the conditions were grouped into four categories, grouping which has been preserved and after the changes and additions from 2000. Group E departure- conprises one condition: EXW Ex Works Ex works means that the seller fullfils its delivery obligation in the moment in which he puts the merchandise at the buyers disposal in its premises or in other place named( factory,plant,warehouse), without accomplishing the export formalities and without loading the goods in a vehicle sent to pick them up. The condition E is the condition in which the sellers obligations are minimum so that this only has to put the goods at the selers disposal at the convened place. Group F main carriage not paid by the seleer- comprises 3 conditions: FCA Free carrier- Free Carrier means that the seller fullfils its delivery obligation in the moment he has turned in the goods at the named place, with the export formalities accomplished, to the carrier named by the buyer. The buyer can put the seller to deliver the good to other person than the carrier. FAS Free Alongside Ship the seller fulfills its delivery obligation when the goods have been placed alongside the vessel in the expedition port named. The buyer will support all costs and risks of loss and waste of the goods at that moment. The seller has the obligation to accomplish the formalities for export. FOB Free On Board the seller fulfills its delivery obligation when the goods have crossed the shipstrails in the expedition port named. From that moment on the buyer will support all costs and risks of loss and waste of the goods. This condition asks the seller to clear customs at export and can be used only for the transportation of goods on sea or internal waterway. The conditions from F group oblige the seller to deliver the good for transportation according to the decision of the buyer. Group C Main carriage paid by seller- comprises 4 conditions: CFR Cost and Freight- it means that the buyer has fulfilled its delivery obligation when the goods cross the ship rail in the expedition port. The seller has the obligation to pay the costs and the freight necessary for taking the goods in the destination port named. The CFR condition obliges the seller to clear customs for export. This condition can be used only for transportation on seal or on internal waterway. CIF Cost,Insurance and Freight it means that the seller fulfills its delivery obligation in the moment in which the goods cross the ship rail in the port of expedition. The seller is obliged to pay costs and freight necessary to bringing the goods in the destination port, and the risks of loss or waste of goods, other additional costs due to future events to the delivery are transferred from the seller to the buyer. According to this condition, the seller has the obligation to purchase the marine insurance against the buyers risk of loss or deterioration of the goods during transportation. CPT Carriage Paid TO the buyer has to support all the risks and any other costs after the goods have been delivered. CIP Carriage and Insurance Paid To this condition can be used for any mean of transportation, inclusively multimodal transport. The condition transport and insurance paid until.. means the buyer delivers the goods to the named carrier having the obligation to pay the transportation cost for bringing the goods to the named destination. The buyer will support all risk and any additional costs after the goods have been delivered. Conditions contained in the group C require the seller to contract carriage as is customary, and at its own expense. Group D Arrival includes 5 conditions: DAF Delivered At Frontier means that the seller fulfills his delivery obligation when the goods have been supplied to the buyer on the arrival of the means of transport unloaded, with export formalities completed, but before the import customs formalities are completed in the place called the border point. This condition can be used irrespective to the mean of transport when goods are delivered at a land border. If the delivery is made at the port of destination, on board or on key is indicated for use the condition DES or DEQ. DES Delivered Ex Ship means the seller fulfills his delivery obligation when the goods are placed at the disposal of the buyer on board of the ship, at the port of destination named, without clearing customs at import. This condition can be used only if the goods are to be delivered by sea, by waterway or multimodal transport on a vessel in the port of destination. DEQ Delivered Ex Quay means the seller fulfills his delivery obligation when the goods are put at the buyers disposal, without clearing customs for import for import, on the quay at the port of destination named. The seller has to bear costs and risks involved in bringing the goods in the named port of destination and unloading the goods on the quay (pontoon). Provided DEQ requires the buyer to fulfill customs formalities for the import of goods and pay all formalities, taxes and fees and other expenses related to the import of goods. This condition can be used only if the goods are to be delivered by sea or by waterway or multimodal transport by downloading from the ship on the quay at the port of destination. DDP Delivered Duty Paid If you use this condition, the seller will deliver the goods to the buyer by fulfilling import formalities and unloaded on arrival in any mean of transportation, at the appointed destination. The seller will bear all the costs that are involved in bringing the goods there, including, where applicable, any duty for import in the destination country. DDP is provided with maximum obligation for the seller. This condition should not be used if the seller can not directly or indirectly obtain the import licenses. DDU Delivery Duty Unpaid means the seller delivers the goods to the buyer, without the formalities for import and not unloaded from arriving in any means of transport at the named destination. The seller supports costs and risks involved in bringing the goods there, other than, where applicable, any duty for import in the destination country. The conditions from group D establish the sellers responsibility for the arrival of goods at the point of destination agreed at the border or within the territory of the importing country. The seller has to bear all the risks and costs of transportation of goods at destination. Conditions D are contracts of arrival, unlike the terms C which are contracts of departure (shipment). For an easier distinction between the extent of obligations undertaken by the contracting parties in the INCOTERMS rules 2000 it has been introduced a new concept regarding the time and place of sale. Thus, a notice of the type Sale to departure indicates that, during the main transportation, the risk is assumed by the buyer, while the notice sale on arrival requires that the same risk will fall to the seller. In the category Sale to departure have been assigned the following INCOTERMS 2000 conditions: EXW, FCA, FOB, CFR, CIF, CPT and CIP. The category Sale on arrival included conditions: DAF, DES, DEQ, DDU and DDP. In some cases, the preamble INCOTERMS rules recommend the use or non use of a certain condition, which is particularly important in particular with reference to the choice between FCA and FOB. The rights and obligations of parties in the sale-purchase contract: As stated, the area of action of the INCOTERMS is limited to issues related to rights and obligations of the parties to sale-purchase contract with regard to the delivery of goods sold. Thus, INCOTERMS refer to a series of specific obligations imposed on parties. The sellers obligations relate to: the supply of goods under the contract, the obligation for obtaining licenses, permits and carrying out other formalities, the obligation regarding the conclusion of contracts of transportation and insurance, the obligation to deliver goods, transfer risks, sharing costs, the obligation to notice the buyer, the obligation to prove delivery, the obligation to check, pack and mark goods, other obligations. The buyers obligations relate to: the obligation to pay the price, the obligation to obtain the import licenses or other official authorization and to meet, where appropriate, the customs formalities required to import goods, the obligation to terminate the contract of carriage and insurance ; the obligation of taking over the goods, transfer risks, sharing costs, the obligation to warn the seller, the obligation to accept the proof of delivery, transportation document or the electronic message, the obligation to examine the goods, other obligations. As apparent in figure no. 1 in the EXW case, this is a price without the inclusion of transportation and other expenses related to delivery, for the price to increase progressively with costs related to internal transport (FOB), international sea shipping (CIF / CAF), etc.. In the same position are increasing the seller obligations to pay costs of delivery and risk. Also, for meeting with the contractual obligations by the two parties it is important to clearly establish the delivery term. This is the moment of achieving the delivery, handing all the merchandise from the seller to the buyer. The date or period expressing the delivery term has to be always formulated in accordance with the specificity of the delivery and negotiated delivery condition. When establishing this term the sellers needs and buyers possibilities are taken into consideration. Usually, contracting takes place before the merchandise are produced, which means that the delivery term has to take into consideration the specificity of the production process. In practice more types of delivery terms are used: determined delivery term, which can be cert or indicative; the cert delivery term is established with maximum of precision; it is used in all the situations where the seller can establish the period of time of all the activities accompanying the delivery, up to the moment wh en the merchandise has to be handed to the buyer; determinable delivery term it cannot be established when signing the contract, and it will establish only the conditions that have to be achieved or in accordance with the delivery term. The obligation of the seller to deliver goods under the contract the seller is obliged to deliver the goods and once with them the commercial invoice or an equivalent electronic message in accordance with the sale-purchase contract. The seller shall provide any other evidence of conformity which may be required in the contract. The INCOTERMS delivery conditions play a vital role in concluding contracts between parties from different countries, having an important role in the ongoing international transactions. They allow rigorous determination of the responsibilities of seller and buyer in conducting the operations involved in delivery: packaging goods, warehousing for export, loading on transport vehicle, customs formalities for export, mainly transport, insurance during transport mainly, import customs formalities, unloading at factory or warehouse of destination, in the table below are listed the obligations relating to operations, the obligation transpose in the costs incurred and which are reflected in the contract price. Licenses, authorizations and formalities the seller is obliged to pay the buyer on his request all the assistance to obtain, where appropriate, any export license or other official permits, required for export goods. The only rule Icoterms where the costs of such work is borne by the buyer is EXW. This rule expresses the buyers obligation of providing to the seller an adequate proof of acquisition of goods. Proof of delivery, transportation document or equivalent electronic message at its expense, the seller must provide the buyer, the document used to prove delivery of goods. If it is the transport document, the seller has the obligation to provide the customer, upon his request, at the his risk and expense, all the assistance in obtaining a transport document. Email replaces the document provided if the seller and buyer have agreed to communicate electronically. In the case of EXW condition is not mandatory this proof, but the parties may stipulate in the concluded contract the sellerobligation to make this proof. In the case of DAF condition, if the parties agree to continue transportation beyond the border, the seller has the obligation to provide the buyer, upon his request, at the his risk and expense, a transportation document directly, normally obtained in the country of dispatch, covering in normal way the transportation of goods from the dispatch point in that country at the final destination of the importing country, named by the buyer. Checking, packaging, marking The seller is obliged to pay all costs of those checking operations, quality checking, measuring, weighing, counting. These operations are necessary for making the goods available to the buyer. The seller has also the obligation to pack the goods in a proper transportation, but only to the extent to which the circumstances regarding the transportation reached his attention before the contract of sale-purchase has been concluded. Inspection of goods If the contract does not provide otherwise, the costs of inspections of goods, made before shipment will be borne by the buyer, unless the inspection mandated by the authorities of the exporting country. If the inspection was done in order to allow the retailer to comply with mandatory provisions applicable to export goods in his own country, he will be required to pay for that inspection of goods, if the condition used is EXW the buyer will bear the costs of inspection in this case. In the case of EXW condition it is providedthe buyers obligation the condition to bear the costs of inspection also when it is mandated by the authorities of the exporting country. Other obligations The seller must give the buyer, upon his request, at the his risk and expense, every assistance to obtain any documents or equivalent electronic messages issued or transmitted in the country of delivery and / or origin which the buyer could claim for export and / or import of goods and, if necessary, for their transit through another country. At the request of the buyer, the seller is obliged to provide him with information necessary to ensure procurement. Correspondingly, the obligation of the seller, the buyer must pay all costs and expenses incurred in obtaining the documents or equivalent electronic messages mentioned above and to reimburse expenses incurred by the vendor in providing assistance. In the case of DDP condition, the seller is the one that bears all costs and charges resulting from obtaining documents and electronic messages equivalent of the kind mentioned, while the buyer is obliged to pay the seller at his request, assistance in obtaining the documents. The seller will reimburse expenses incurred by the buyer when giving assistance. Innovations brought by incoterms 2000: INCOTERMS 2000 regulations are mainly a compromise between the positions of the representatives of the two main currents in the international commerce: the new current, the reformatting one following the integration of world commercial practices for a broad opening that would allow the participation in international trades, under advantageous conditions, of all the states on the planet, and the conservatory current supported by very developed countries like the USA and Japan, who are trying to maintain some advantageous practices for them, coming from the economic supremacy position that they have earned in time. Although in comparison with INCOTERMS 1990 rules, the new technologies and international commercial practices have not changed, although the existence of some lacks and imprecision appeared and received by experts lately, have caused the drawing-up of new editions of respective regulations, with a more precise content, facilitating the success of international commercial operations with more safety for exporters and importers in all the countries in the world. INCOTERMS 2000 include 13 terms, in 4 categories. Every term is coded with three letters; the first designates the category it is a part of. While passing from the E terms to the D terms, in the order presented below, the point where risks and expenses pass from the seller to the buyer, from the producers enterprise (the EXW condition) to the receivers headquarters (DDP condition). INCOTERMS is not the only uses group in the field of international delivery terms. Thus the RAFD uses (Revised American Foreign Trade Definitions-1941), for the USA exterior commerce, speaks about the following usual terms: Ex Point of Origin and according to this delivery condition, the price is understood at the origin place, the seller is obliged to make the merchandise available for the buyer, at the agreed place and date or within the established period; FOB (named inland carrier at named inland point of departure), according to which the price is established at the inland carrier point, the seller being obliged to load the merchandise in wagons, trucks, barges, planes or other vehicles established in the contract. FAS and FAS Vessel (named port of shipment), according to which the price includes merchandise delivery expenses at the maritime ship board by or for a buyer in the harbor; C and F according to which the established price includes the transportation cost up to the destination point; CIF (cost insurance freight named point of destination), according to which the merchandise price includes the maritime insurance and other expenses up to the established destination point; Ex Dock, the selling price includes any additional expenses for delivering the merchandise on the dock, in the import harbor, with paid customs taxes. The option of applying for one or other of the delivery conditions or practices known worldwide should consider a number of criteria, such as the following: the ratio of currency and foreign currency contract for payment of transportation, insurance and other charges related to delivery; market situation and the charges of air and land transport, participation in international conventions on transport, which involves preferential rates of transport, customs outlets in markets or supplies. In the case of a saturated market, that there is a strong competition, the exporter can draw a segment of this market, providing certain conditions and importer of favor in the sense of risk and minimum expenditure that the latter must bear. In this situation, the exporter will deliver the merchandise in the DEQ or DDP conditions. There are situations in which an exporter which sells goods on a regular basis and in large quantity is a position that gives the opportunity to obtain more favorable conditions in the companys freight and insurance, to an occasional importer. Then, the exporter can accept conditions as CFR, CIF, CPT or CIP. Exporter can assume the risk during transport, choosing a delivery in which to take responsibility to a point of destination of merchandise (DAF, DES, DEQ, DDP), only to the extent that the transport system on the route chosen is well organized, the countries that it is to pass have recorded a number of relatively low labor conflicts in this area, and the danger of agglomerations in other areas or ports of destination is limited. If the exporter believes that risks to the importing country are great, they are transferred integration to importer (FAS, FOB, CFR). The government authorities can give instructions directly or indirectly, to the economic agents in the country to sell on CIF or CIP conditions, and to buy on FOB or FCA conditions. Thirdly, while not govern the transfer of ownership, INCOTERMS gives a clear solution for the problem of transfer of risk in delivering the goods in international traffic from seller to buyer. Basically, with two exceptions, the time / place of transfer of expenditure corresponds to the time / place of transfer risk. The exceptions are the CFR and CIF conditions where costs are transferred to destination (as in other conditions in Group C), while the risks are transferred to the port of shipment, for example the dispatch (as in group F). The fact that INCOTERMS are not relate to the transfer of ownership is the need to find a solution of operational rights / obligations related to goods in international traffic, according to the inability so far to establish a standard for the transfer of ownership. In fact on this issue were the different views and give different solutions. The needs of international trade require a single solution, accurate, unambiguous and easy to apply the obligations of the parties relating to the goods. The appropriate use of INCOTERMS involving from contract partners not only knowing the terms of respective conditions, but also their insertion in the contract with all necessary details, namely: Specifying geographic point where the expense and risk transfer, therefore, will be inserted in the contract not FOB, but, for example, FOB Constanta; Indication of responsibilities for handling (eg, multiple modalities of transport). INCOTERMS conditions must also be properly correlated with other rules or practices which affect the enforcement of international contract of sale, such as: the regular transmission lines (Liner Terms), port usages, specific professional rules, etc. For example we have the next case. Roblux Company delivers valves and fittings to a customer in Fes. We study the compliance with various INCOTERMS. Calculation elements: CASABLANCA CIF value: 18 440 EURO. Customs clearance: 570 EURO. Customs fees: 15% of the CIF. Local taxes: 22% of duty paid CIF. Delivery to FES: 2 210 EURO. We determine the DEQ value of the delivery and then the DDU and DDP values. What is the difference between DES and CIF INCOTERMS? The DEQ Incoterm includes overseas shipment cost, insurance costs and commodities unloading, formalities and fees. Difference between CIF and DES: the first one is a sale Incoterm at shipment, the transfer of risks being in the sellers country. The latter is a sale Incoterm at arrival, the transfer of risk being on the ship, at the destination harbour. But, the costs paid by the seller are identical: overseas shipment and insurance to the destination harbour. The two INCOTERMS are used exclusively for overseas shipment. EX and FREE group. E group. EXW EX Works ( named place). All shipment ways VD The only liability of the seller is to deliver the commodities to the buyer at its location. The seller shall not be liable for loading the commodities in the vehicle provided by the buyer, except for a contrary agreement. The buyer shall pay all the commodities delivery related fees and risks, from this point to destination. This is the minimal liability for the seller. F Group. FCA Free Carrier ( named place). All shipment ways VD. Recommendations for choosing the delivery terms: General recommendations: The state wants to save foreign currency and stimulate development of its own overseas or air shipment companies; The exporter and importer have the opportunity to conclude long-term agreements with various shipment and insurance services providers; The trader has to follow the choice of the term depending on costs minimization and providing of the best quality for its services; The choice of the term has to allow a good long-term collaboration with the partner. Use depending on the shipment way: EXW, FAC, CPT, CIP, DAF, DDU and DDP can be used for any type of shipment; FCA, CPT and CIP are used only for air and railway transport. FAS, FOB, CFR, CIF, DES, DEQ are used for overseas shipment especially for bulk commodities; FCA, CPT and CIP are used for tank shipment and Ro-Ro shipment. Depending on the shipment place: E, F, and C groups the seller complies with its shipment obligation in its country. D group, except for the DAF term the seller complies with its shipment obligation in the destination country. Best methods: Combined shipment (multimodal) the exporter wanting to improve the global cost of shipment and control multimodal transit has to use CIP, DAF, DDU or DDP term. The importer who normally wants to minimize costs and risks within the entire shipment chain, shall choose EXW or FCA terms. Conventional shipment (from harbour to harbour) the exporter shall choose the CIF term, which gives it the opportunity to ship the load with a ship or plane under national pavilion, benefiting from certain advantages from the state and arrange insurance with its own brokers. The importer shall choose the FOB term from similar reasons. Conclusions: We have noticed lately a generalization trend of, usage code that has undergone significant improvements lately. In a specialty paper published in the USA, American companies are even recommended to replace RAFTD by INCOTERMS, in order to provide greater clarity to the definition of contractual terms and for a better protection of their trade interests. INCOTERMS regulations are extending their effects upon all the stages and operations involved by commodities transfer from the supplier to the beneficiary, by expressly referring to the following elements: Sellerss obligation to deliver and purchasers obligation to receive and pay the commodities. In this way, the seller has to deliver the commodity in compliance with the agreement from the point of view of quality, quantity, delivery term and delivery spot and submit the delivery related proofs (documents), and the purchaser has to receive the commodity at the due term and pat the commodity price according to the agreement; paying the packing expenses, usually due to the seller, except for the case in which commodities are delivered without packing; quantitative and qualitative control the seller has to develop all the operations (and pay all the costs) for the control, in order to make the commodity available to the purchaser, complying with the contracting terms; establishing the passing point of the expenses and risks from the seller to the purchaser; the sellers obligation to inform the purchaser that the commodity has been placed at its disposal (or the conveyors) and if the conveyance has to be provided by the purchaser, its obligation to inform the seller upon the terms of delivering the commodity to the assigned conveyor; concluding the transport contract and acquiring the delivery related documents; acquiring other export (import) related documents: permit, origin certificate, consular invoice etc.; organization of customs clearance and paying customs tax. In conclusion, the use of INCOTERMS has various advantages for its contractual partners like: they allow to accurately establish the seller and purchasers responsibilities in developing the operations related to delivery: packing, storage for export, loading in the conveyance means, export customs formalities, import customs formalities, unloading at the destination enterprise or warehouse; establishes the parties obligations regarding the delivery documents acquiring: invoice, packing list, export licence, commodity inspection certificate, origin certificate, consular invoice, delivery document, transport document, insurance policy import licence; although it does not regulate the transfer of the ownership right, INCOTERMS gives a clear solution to the problem of risks transfer regarding the commodity delivery in international trade from the seller to the purchaser. INCOTERMS conditions have to be adequately correlated at the same time with other regulations and uses of the international sale contract, like: transport regulated lines terms (Liner Terms), harbours regulations, specific professional rules, etc. BIBLIOGRAPHY: Alexa C., Transporturi InternaÃ…Â £ionale, Editura ASE, BucureÃ…Å ¸ti, 2003; Baicu M., TranzacÃ…Â £ii economice internaÃ…Â £ionale. Fundamentarea Ã…Å ¸i contractarea unei operaÃ…Â £iuni de comerÃ…Â £ exterior, Editura FundaÃ…Â £iei RomÃÆ'Â ¢nia de MÃÆ'Â ¢ine, BucureÃ…Å ¸ti, 2000; FUTRELL M.C., Principiile vÃÆ'Â ¢nzărilor, Ed. Rosetti Educational, BucureÃ…Å ¸ti, 2008; Ciobanu G., Contractarea ÃÆ'Â ®n comerÃ…Â £ul internaÃ…Â £ional, Ed.Universitaria, Craiova, 2008; iÃ…Å ¸an v., TranzacÃ…Â £ii comerciale internaÃ…Â £ionale, vol.I, ed. Sedcom Libris, IaÃ…Å ¸i, 2005; PRISECAREU P.,politici comeune ale Uniunii Europene, Ed. Economică, BucureÃ…Å ¸ti, 2004; Ralph F. H., Wallace G.M. Spanogle J., Fitzgerald, P. L., International Business Transactions, Ed. West Group, 2009; ROÃ…Å ¾U-HAMZESCU I., Tratat privind tranzacÃ…Â £ii internaÃ…Â £ionale, Vol. II, Editura Universitaria, Craiova, 2006; ROTARU I. Ã…Å ¸i colab., Managementul tranzacÃ…Â £iilor economice internaÃ…Â £ionale, manual practic pentru oamenii de afaceri, Editura Mirton, TimiÃ…Å ¸oara, 2002; Schadewald, M. S.,Misey, Robert J., Practical Guide to U.s. Taxation of International Transactions, Ed. Cch Inc, 2009; Reguli Ã…Å ¸i uzanÃ…Â £e comerciale Incoterms 2000, ediÃ…Â £ia a doua, Ed. Percomex, 2001. COMPLEX ISSUES REGARDING THE ROLE AND IMPORTANCE OF RULES AND INCOTERMS CODIFIED INTERNATIONALLY: Abstract: The economy and trade of the 21st century reflects truly a global market, a market where the delivery is one of the essential clauses of a contract established between international partners through this regulating in fact the transfer of goods and risk from the seller to the buyer, including general economic and legal consequences. Even if buyers and sellers often are on different continents, in different parts of the world, they have used a set of international rules for interpreting trade terms. These are used in international trade to contribute in particular to simplify the negotiating operations of the sale of goods and concluding commercial contracts. The complexity of the issues involved in guiding and directing the parties to negotiate and conclude a commercial external contract for the sale of goods requires a thorough knowledge of the technique of negotiations, legislation and practice of foreign trade of International Settlements, of the international shipment and insurance customs, of the calculations of profitability and more. In this context, choosing and including in the commercial contracts the most favorable terms, at a time, for both seller and the buyer having a special significance, the relations between them being managed by the amount of terms stipulated in the contract concluded, some of them being convened in a special way, and other being those used in practice, in the international trade. IOAN POPA, TranzacÃ…Â £ii de comerÃ…Â £ exterior, Ed. Economică, BucureÃ…Å ¸ti, 2002.

Personal Experience with Gangs and FedEx in County Downs,...

I lived in a huge neighborhood in Montgomery Alabama called County Downs, in a large brick two-story house with a patch of fresh green grass in the front yard where two trees strongly stood. My dog was kept in the backyard surrounded by a metal fence with a metal gate. When the gate opened, the bolts made an obnoxious loud squeak, which could be heard from all the way upstairs inside of the house. The neighborhood was located right next to some unpleasant, dark, and crime filled apartments. Those apartments were most likely where the local gangs hid because restaurants and stores located right next to the apartments such as Hardees and Dollar General often gave reports of break-ins and theft. The gangs tended to target families mostly in the month of December because, of course, Christmas is in that month, and Christmas means presents, spending a lot of money, and most importantly vacation. A perfect time for criminals to strike. The gangs would often try to break in someone’s house at least four to six times a week during the month of December. The neighborhood watch program would send at least one, if not more emails everyday, notifying my family about recent crime in the area. Most of the crimes were theft. As a young teenager I often struggled with the questions of, why do people steal? Is it worth the risk of being caught? I would watch stories on the news of criminals being caught and sentenced to several years in prison, or criminals robbing homes and managing toShow MoreRelatedStephen P. Robbins Timothy A. Judge (2011) Organizational Behaviour 15th Edition New Jersey: Prentice Hall393164 Words   |  1573 PagesLeaders 399 Case Incident 1 Leadership Mettle Forged in Battle 400 Case Incident 2 Leadership Factories 400 13 Power and Politics 411 A Definition of Power 412 Contrasting Leadership and Power 413 Bases of Power 414 Formal Power 414 †¢ Personal Power 415 †¢ Which Bases of Power Are Most Effective? 416 †¢ Power and Perceived Justice 416 Dependence: The Key to Power 416 The General Dependence Postulate 416 †¢ What Creates Dependence? 417 Power Tactics 418 Sexual Harassment: Unequal Power inRead MoreManaging Information Technology (7th Edition)239873 Words   |  960 PagesImplementation CASE STUDY III-6 BAT Taiwan: Implementing SAP for a Strategic Transition CASE STUDY III-7 A Troubled Project at Modern Materials, Inc. CASE STUDY III-8 Purchasing and Implementing a Student Management System at Jefferson County School System CASE STUDY IV-1 The Clarion School for Boys, Inc.– Milwaukee Division: Making Information Systems Investments CASE STUDY IV-2 FastTrack IT Integration for the Sallie Mae Merger CASE STUDY IV-3 IT Infrastructure Outsourcing

Indian Textile Industry Free Essays

string(47) " face competition in the international market\." Indian Textile IndustryStructure, Problems and Solutions Subject: Term Paper of Organization Management Under Guidance of Dr. Vinayshil Gautam Written By Jaimeen Rana Entry# 2012SMF6890 1 INDEX a) Introduction 3 b) History 3 c) Structure of Indian Textile Industry 3 d) Communication and Effectiveness 4 e) Problems faced by Textile Industry in India 5 f) Steps taken by government till now 7 g) Strategies for growth 8 h) Conclusion 9 i) References 10 2 a) Introduction Indian Textile and Apparel Industry is second largest manufacturer in the world with an estimated export value of US$ 34 billion and domestic consumption of US$ 57 billion. It stands at number two position in generating huge employment for both educated and uneducated labor in India. We will write a custom essay sample on Indian Textile Industry or any similar topic only for you Order Now Over 350 lakh people are employed in this industry in India. 14% of total industrial production is done by this sector. 4% of India’s GDP is obtained by this sector. It contributes 17% to the India’s total export earnings. Top companies in Textile industry in India: Bombay Dyeing Fabindia JCT Limited Welspun India ltd Lakshmi Mills Mysore Silk Factory Arvind Mills Raymonds Reliance Textiles Grasim Industries ) History India’s textile industry evolved and developed at a very early stage and its manufacturing technology was one of the best ones. India’s manually operated textile machines were among the best in the world, and served as a model for production of the first textile machines in newly industrialized countries like England. Marco Polo’s records show that Indian textiles used to be exported to many Asian countries. Textiles have also comprised a significant portion of the Portuguese trade with India. These included embroidered bedspreads, wall hangings and quits of embroidered wild silk on a cotton or jute ground. A big success of Indian textile industry led to the foundation of the London East India Company in 1600, followed by Dutch and French companies. By 1670, there was serious demand for their governments to ban the import of these cottons from India. The legacy of the Indian textile industry stemmed from its wealth in natural resources cotton, jute and silk. The technology used was superior and the skills of the weavers gave the finished product a most beautiful and ethnic look. ) Structure of Indian Textile Industry The structure of this industry is very complex with the modern, automated and highly mechanized mill sector on one side and hand spinning and hand weaving (handloom sector) on the other side. The small scale power loom sector, which is decentralized, lies in between of the two. 3 Indian Textile Industry is divided into major 3 segments: 1) Cotton Textiles 2) S ynthetic Textiles 3) Others (wool, jute, silk etc) Till today cotton textiles are on top with 73% share in total Indian textiles. Coexistence of old technologies of hand working (spinning, weaving, and knitting) with the advanced automatic spindles and loom makes the structure of cotton textile industry very complex. Indian textile industry consists of small scale, non integrated spinning, weaving, knitting, fabric finishing and clothing enterprises, which is not the case in other countries. This unique structure is because of government policies that have promoted labor intensive small scale operations and discriminated against big scale organizations. d) Communication and effectiveness: The study regarding this was conducted within city of Coimbatore, which is considered â€Å"Manchester of South India†. Six textile organizations (3 small and 3 large) were selected within the city. The objective of the study was to examine the difference between small and large organizations in terms of structure, communication and effectiveness. The difference based on structure, communication and effectiveness between large and small organizations show that the two organizations differ significantly with respect to all dimensions except participation in decision making. Large organizations are more centralized, formalized and employees experience highly routine tasks. With regard to communication pattern, small organizations have more open communication while in large organizations communication is more accurate. With regard to effectiveness, large organizations are more effective with regard to all dimensions except job involvement and job performance which are better in small organizations. The effect of structure and communication variables on organizational commitment, job satisfaction, organizational performance and adaptability are more pronounced in large organizations while moderate in small ones. Participation in decision making process has a strong positive effect on job satisfaction, commitment, organization performance and moderate positive effect on job performance. Task routineness and formalization have low positive effect on job involvement and performance in large firms. In small organizations, centralization has a moderate negative effect on job satisfaction. Centralization has a low negative, task routineness has a low positive and formalization has a moderate negative effect on group processes. The effect of communication openness is pronounced on job satisfaction and performance. The negative effect of communication accuracy is high on job involvement and group processes and moderate on organizational performance. 4 e) Problems faced by Textile Industry in India (1) Shortage of raw materials: Raw material determines 35 per cent of the total production cost. The country is short of cotton, particularly long- staple cotton which is imported from Pakistan, Kenya, Uganda, Sudan, Egypt, Tanzania, U. S. A. and Peru. It is pity that despite largest area under cotton (26 per cent of the world acreage) the country accounts for only 9 percent of the world output of cotton. Fluctuating prices and uncertainties in the availability of raw material cause low production. (2) Obsolete machinery: In India most of the cotton textile mills are working with old and obsolete machinery. According to one estimate in India over 60 per cent of the spindles are more than 25 years old. The automatic looms account for only 18 per cent of the total number of looms in the country against the world average of 62 per cent and 100 per cent in the United States. Obsolete machinery leads to low output and poor quality of goods as a result of which Indian textile goods are not able to face competition in the international market. You read "Indian Textile Industry" in category "Essay examples" (3) Power shortage-Textile mills are facing acute shortage of power. Supplies of coal are difficult to obtain and frequent cuts in electricity and load shedding affect the industry badly. This leads to loss of man hours, low production and loss in the mills. (4) Low productivity of labour: Low productivity is another major problem of cotton textile industry. On an verage an Indian factory worker only handles 380 spindles and 2 looms as compared to 1,500-2,000 spindles and 30 looms in Japan. If the productivity of an American worker is taken as 100, the corresponding figure for U. K. is 51 and for India only 13. Also industrial relations are not very good in the country. Strikes, layoffs, retrenchments are the common features of many cotton mills in the co untry. (5) Competition in foreign market: The Indian cotton textile goods are facing stiff competition in foreign markets from Taiwan, South Korea and Japan whose goods are cheaper and better in quality. It is really paradoxical that in a country where wages are low and cotton is internally available, production costs should be so high. While certain traditional buyers of Indian textile goods like Myanmar, Indonesia, Sri Lanka, Ethiopia, Aden etc. are facing severe balance of trade problem some European countries like France, Germany, U. K. and Austria etc. have imposed quota limitations over the Indian textile imports. Acute world recession has badly affected the export prospects. (6) Competition from the decentralized sector: An important factor for the rowing sickness of the mill sector is the growth of the decentralized sector. Being a small-scale sector, the Government allowed excise concessions and other privileges. These accompanied with low wages have led to low cost of production in the decentralized sector. 5 As a result of which the share of mill sector is decreasing, while the share of decentralized sector is increasing. So much so that the share of mill sector in the pro duction of cotton fabrics has gone down from 7. 9 per cent in 1994-95 (cf. power looms 69% and handlooms 21. 6%) to 4. 4per cent in 1999-2000 (cf. ower looms 76. 3% and handlooms 19. 3%). (7) Government controls and heavy excise duties: the cotton textile industry has greatly suffered due to wrong and faulty policies of the Government. In the past the Government has sought control of price, distribution of yarn, pattern of production, etc. At one time the price of the cloth was fixed by the Government below the cost of production. Similarly under the yarn distribution scheme of 1972, the Government made it obligatory on all mills to supply 50 per cent of the production of yarn to the decentralized sector at reduced rates. The high import duty on imported cotton, upward revision of the price of the indigenous cotton and heavy excise duty on cotton cloths are other detrimental factors. Another problem of the mill sector is related to the production of controlled cloths wherein mills are incurring huge loss. (8) Sick mills-In India about 130 cotton mills are sick and incurring constant losses. The Government has set up the National Textile Corporation (NTC) to run these sick mills. Although the government has invested huge money to rehabilitate and modernize these mills, but these mills are yet to become profitable. The NTC is facing dual problems of the obsolete machine, y and excess labour in these mills. According to a working group of the Planning Commission the industry needs Rs. 180. 55 crores for rehabilitation and Rs. 630 crores for the modernization of sick mills. The cotton textile industry of the country is thus facing both short-term and longterm problems. Former includes problems of high prices, shortage of raw materials, liquidity problems due to poor sales and accumulation of huge stocks due to poor demand in the market. The long term problems of the industry include the slow pace of modernization, outdated technology resulting into low productivity, high cost of production, low profitability and increasing sickness of mills. Other small problems are inadequate training facilities in textile sector, fragmented garment industry, structural weaknesses in weaving and processing, rigid labor laws, infrastructural bottlenecks in terms of power, utility, road transport etc 6 f) Steps taken by government till now The Government has undertaken a series of progressive measures like introduction of Technology Mission on Cotton (TMC), Technology Up gradation (sp) fund Scheme (TUFS), Scheme for Integrated Textile Park (SITP), reduction in customs duty on import of state-of-the-art machinery, Debt Restructuring Scheme, setting up of Apparel Training and Design Centers (ATDCs), 100% Foreign Direct Investment in the textile sector under automatic route, setting up of National Institute of Fashion Technology (NIFT) etc, for upgrading and strengthening the textile sector in India. From time to time, in consultation with all stakeholders, Government modifies these schemes so as to achieve better results through improved delivery of programs/schemes. These progressive measures have helped the textile sector to achieve improved growth in production; enhanced productivity and a larger share of textile export market in the world. (1) Technology Upgrading Fund Scheme To facilitate technological upgrading in the sector, the Government launched TUFS with effect from 1 April 1999 for five years initially, and which is extended up to 2011/12. The scheme provides for reimbursement of 5 per cent interest paid on term loans for technological upgrading of textile machinery. In this way, the Government has assisted the Indian textile companies by ensuring that they are not over-burdened by the high interest rate prevailing in the country. (2) Integrated textile parks scheme In order to a world-class infrastructure for textile units as well as facilitate the need for them to meet international social and environmental standards, this scheme envisages the creation of textile parks in the public-private partnership mode. Currently, 30 parks are in various stages of implementation, and 50 more are planned for the next five years. (3) Fiscal rationalization In the 2006 budget, the excise duty on all manmade fibers and yarns was reduced from 16 per cent to 8 per cent. The 2007 budget carried it forward by reducing the customs duty on polyester fibers and yarns from 10 per cent to 7. 5 per cent. The customs duty on polyester raw materials such as DMT, PTA and MEG were also reduced from 10 per cent to 7. 5 per cent. These measures are expected to make manmade fibers and yarn cheaper and thus increase the competitiveness of fabric and apparel manufacturers. 4) Technology Mission on Cotton In February 2000, the Government launched the Technology Mission on Cotton with the objective of addressing the issues of raising productivity, improving quality and reduction of contamination in cotton. Indeed, cotton 7 production in the past three years has increased substantially and contamination has been reduced, as assessed by independent agencies. (5) Other steps taken to increase competitiveness Earlier, only small-scale manufacturers were allowed to make woven RMG, knitted and hosiery products. While the initial aim was to boost employment opportunities and promote entrepreneurship at the smaller enterprise levels, in practice it rendered the small manufacturers uncompetitive globally. By 2003/04, the sector had been totally freed. In addition, FDI up to 100 per cent through the automatic route has now been allowed. So that textile industry will have higher amount of foreign investment. And new technology machinery can be used in India by foreign players which can cause local players also to use the new technology. g) Strategies for growth 1) Improving labour laws: One of the main requirements for growth in the apparel subsector is the relaxation/amendment of the labour laws, to ensure an equal chance of success for the country’s exporters and manufacturers in the present global environment. Outdated labour laws have induced inflexibility in the clothing industry, leading both to fragmented operations in order to circumvent these laws and to lost export orders due to industry’s hesitation over expanding when there is an upsurge. Most of the countries competing with India have labour laws that are more flexible. For example, the Chinese apparel industry has highly flexible labour laws that allow for lay-offs during the non-peak season, hiring of contract labour, and a flexible hiring and firing system in SEZ-based units. The Mexican apparel industry allows layoffs during the slack business season. The industry in India is proposing the provision of flexibility to textile exporting units in hiring labour, subject to ensuring 100 days employment to cater to variations in demand. An increase in daily working hours from 9 hours a day to 12 hours a day, and in weekly working hours from 48 hours a week to 60 hours a week, is also being proposed. 2) Decreasing transaction costs: Various studies have established that the transaction costs faced by the Indian industry are very high, which adversely affects its competitiveness. A study undertaken by the EXIM Bank of India clearly showed that although transaction costs in India had declined because of declining procedural complexities, they were still substantially higher if compared with competitors. Transaction costs vary from sector to sector, and are very high in the textiles and garment subsector, ranging from 3 per cent to 10 per cent of export revenue in 2002. These costs, inter alia, are shown in table 2. 3) Improving the general infrastructural conditions: This improvement includes roads, transportation etc. , so that the costs of reaching the nearest port as well as turnaround time at the port are globally comparable, to ensure that Indian exporters are not placed at a disadvantage vis-a-vis global competitors. 8 h) Conclusion Indian textile industry is a huge source of employment for both skilled and unskilled labor of India so it is very important industry as per economic perspective. This industry faces many problems some of which have been overcome thanks to government policies. But, still some problems are yet to be solved. Different strategies have to be implemented for that purpose. Large sections of the textile value-chain still need to be fully modernized, while the export sector has yet to take full advantage of its existing production strength. There are many areas around the world and many product lines where India is very weakly represented. Thus, while the private sector will need to continue its heavy investment in this industry during the next several years, building on the recent positive trends, India also needs to integrate more fully into the global textile and apparel value chain in order to reap the full benefits from its strengths. Only a coordinated effort by all – the Government, industry and individual units – can enable India to achieve its apparently high and stretched targets of the 12th FiveYear Plan. 9 i) References 1) Sharma Milan, â€Å"Textile Industry of India and Pakistan†, A. P. H. Publishing Corporation, New Delhi, 2006 2) Research paper: Organizational structure, communication and effectiveness in Textile industry (January, 2000) Authors: T Chandramohan Reddy and S Gayathri Journal: Indian Journal of Industrial Relations http://www. jstor. org/stable/27767666 ) Article: Indian Textile Industry by Dr. P Chellasamy and N Sumathi http://www. fibre2fashion. com/industry-article/market-research-industry-reports/indian-textileindustry/indian-textile-industry1. asp 4) Article: Indian textile and clothing sector poised for a leap by J. N. Singh http://www. unescap. org/tid/publication/tipub2500_pt1chap6. pdf 5) Article: Indian Textile and apparel sector : An analysis of aspects rela ted to domestic supply and Demand by Badri Narayan G http://www. unescap. org/tid/publication/tipub2500_pt1chap5. pdf 10 How to cite Indian Textile Industry, Essay examples