International Business Environment and Trade: Export to India Report

This report examines the international business environment and trade, specifically focusing on the UK's export of automotive parts to India. It delves into the advantages of international business, highlighting the expansion of markets and customer base. The report analyzes the UK's trade regulations, including the 'UK Trade Tariff,' VAT, and export restrictions, with a focus on the automotive sector. It outlines the logistics of exporting to India, including carrier options, legal requirements such as licenses (SIELs, OIELs, OGELs), and essential documentation like Certificates of Origin, commercial invoices, and bills of lading. The report discusses payment methods, double taxation agreements, and the role of the UK's Department of International Trade. It emphasizes the importance of export planning, risk management, and compliance with Indian regulations. The report also provides information on insurance options like credit and overseas investment insurance and highlights the significance of the UK Trade Tariff for businesses.

International Business
Environment & Trade

Contents
INTRODUCTION.....................................................................................................................................3
MAIN BODY.............................................................................................................................................3
REFERENCES..........................................................................................................................................8

INTRODUCTION
International Business Environment includes various risks, differences in culture,
exchange risks, issues relating to legal and taxation etc. It is also impacted by various other
factors such as economic conditions, culture and so on (Barbier and et. al., 2019). There are
many advantages of international business environment and trade such as they help in expanding
and growing a particular business. The organizations also get a chance to explore new market
and increase their customer base. Organization that is chosen for this report exports automotive
parts to India as many UK automotive companies have their operations in the nation. UK has
many trade laws that protect the customers who may purchase faulty products from a particular
position. The report talks about the practical working of the UK Trade Law.
MAIN BODY
The United Kingdom has been a one of the key players in the global import and export
business. In order to fulfil and satisfy the needs of citizens, the nation imports a lot of products
besides exporting a variety of goods to other countries around the world. The
organization/business that is chosen in this report exports automotive parts to India. This is
because a lot of UK automobile companies like Jaguar Land Rover, JCB, Ricardo etc. operate in
India. Also, respective sector ensures growth apart from having the full support from the
government. India is among the most promising markets for UK exporters because the market
size of the automobile industry is huge and thus there are various opportunities available to UK
companies. In the UK, the HMRC or Her Majesty’s Revenue and Customs lays out all the
necessary information for both importers as well as exporters in one single document that is
titled “UK Trade Tariff” (UK: Import & Export Regulations In The United Kingdom, 2020). It
talks about various rules and regulations such as VAT, Duties, Suspensions, Reliefs, Restrictions
etc.
Value Added Tax or VAT is applicable to all the goods that are either imported into or
exported out of the United Kingdom. This regulation is governed by Value Added Tax Act,
1994. As per the UK Trade Tariff, there are certain rules that are imposed on goods that are
exported from the nation (Aman and Greenhouse, 2017). The restrictions are primarily placed on
three categories namely- cultural goods, strategic goods, controlled drugs as well as precursor

chemicals. In context to this report, the UK is exporting automotive parts to India which means
that UK is the home country or exporter whereas India is the host country. There are many
options of carriers available for the shipment of goods and the choice of that depends on the size
of shipment. The organization that is chosen in this report will ship goods via sea and not by air
because it is comparatively cheaper and secure as well. Goods that are shipped through the sea
can be sent in bulk which is not possible with the ones that are sent by air.
There are various legal requirements including documents that have to be fulfilled while
exporting goods to India (Heydon, 2016). To facilitate the export of goods, the Department for
Culture, Media, and Sport, which is one of the departments within the UK government has to
issue one of the following licenses, namely- Standard Individual Export Licenses (SIELs), Open
Individual Export Licenses (OIELs) and Open Export General Licenses (OEGLs). India has a
special bank for imports as well as exports with the name “EXIM Bank” i.e., Export-Import
Bank of India. Since India has removed all trade barriers in order to improve the environment in
which businesses operate, UK has a great opportunity to doing business in the nation. But it is
important for the exporter to have a complete knowledge of the various logistics that are
involved in the process as well as the documentation that is required, licensing and other
regulations. But before exporting the goods, respective organization will have to obtain the
OGEL, OIEL, CGEA as well as SIEL. A Standard Individual Export License will grant the
respective company an authority to export its goods to specific countries and in particular
amounts.
There are various legal documents that are required when goods are exported to a country
such as when and where will be the goods delivered, who will arrange the transport and insure
the goods, currency payment and what method will be used for payment etc. The UK and India
have signed an agreement of double taxation which means that the same income will not be
taxed twice (Exporting to India, 2020). The UK’s department of International Trade has the
responsibility of promoting UK trade across various countries and attracting foreign investment.
Although most of the goods that are shipped or exported to India do not require an export
license. When the goods are exported, they should be labelled in either English or Hindi and also
must show standard units of weight as well as management (Villena Manzanares, 2019). This is
one of the major requirements that all exporters including UK should adhere to. If the company

gets an OIE License, it will get an authority to export an unlimited amount of goods to specific
destinations.
There are certain restrictions that are imposed from time to time on the goods that are
exported from the UK to other countries. When it comes to getting paid, there are various
schemes that are available to the UK companies when they export goods to India. This makes it
easier to fulfil the export contract and grow their business. If an organization needs advice on the
availability of financial options, it can contact the UK Export Finance anytime for assistance. UK
companies need to use payment terms that are secure which can be done through a letter of credit
or documentary collection that is done through the bank. The other option for payment available
is full payment or partial payment in advance (Jensen, 2016). This is because the system of
having an open account is not allowed in India. It should be made sure that the company’s
contract states all the terms of delivery as well as payment of the goods and services clearly. This
is also because the Indian Law does not regulate payments that are made late. Also, if in any
case, a payment is made late, the settlement process through the courts can prove out to be
expensive and might take a long time.
There are some “key documents” that usually come up during a particular trading
scenario. For example, one of them is Certificate of Origin which will be prepared by the
respective company that will export automotive parts to India. The certificate will be certified by
an entity of the government. It is basically used to identify the country where the goods were
manufactured. Another document is a commercial invoice which is used to explain an entire
transaction of export from the beginning to the end whenever an international sale is made and
the finished goods are ready to be shipped. It is one of the most important documents that comes
up in a trading scenario. This is because it provides important information to all the parties that
are involved in the complete export process such as banks, carriers, brokers etc. Bill of Lading is
generally the most common document that is used in a shipment that is made to an international
country. It is basically a contract between that owner of the goods and the one who carries the
same.
Some other key documents include the Inspection Certificate which is generally required
if any industrial equipment is being shipped. It certifies that all the goods were initially received
in a good condition and that the shipment contains the correct quantity (Nwankwo and Okafor,

2018). Export shipments are required to have an insurance certificate that explains that an
organization has bought an insurance policy. An export checklist is a document that a trader is
required to follow if it wants to gain success while shipping the products, getting paid or dealing
with any kind of disputes. An export checklist will allow the respective organization to assess the
overall progress of its exporting process or to get an idea of how the complete process is
performing. It is important that before exporting, the organization evaluates the various
advantages and disadvantages of exporting its products to another country. An export plan
should be developed that can help in planning out the complete process in a much more effective
as well as efficient way.
The checklist can also include ordering any supplies and in order to export, the respective
company should make arrangements for the shipment of products. It should also submit any
permits if required and also track shipment from time to time (Shah, 2017). There can be chances
of having a dispute during the process as many parties are a part of the process. Also, there may
be other risks associated with the process that should be handled in a proper way. Therefore, it is
recommended that the respective company makes a checklist so that all the major activities and
even the smallest tasks are carried out in an effective manner. Based on the assumption and the
situation, it is recommended that the company follows all the rules, legislations and makes
payment on time as India does not regulate payments that are made late. Credit Insurance,
Overseas Investment Insurance are examples of some insurances that can made use of by
submitting an application to the UK Export Finance.
Credit Insurance will insure the exporter against any political and commercial risks of not
getting paid under a contract of export. The UK Export Finance can also provide insurance
against any unfair contract bonds. On the other hand, the overseas investment insurance covers
investors against any kind of losses that are made in an overseas investment that may arise as a
result of political risks. The UK Trade Tariff is a toll that is easy to use and gives an organization
free and direct access to the current trading information relating to preferences, rebates,
restrictions etc. The information is supplied by Her Majesty Revenue and Customs on all kinds
of imports as well as exports that are made in/from the European Union. Organizations in the UK
can also export goods by directly contacting the customers (Yoo and Kim, 2016). It is important

that before looking out for an agent, the company looks closely to the reputation of the customer
business, its financial resources, ability to market itself as well as its regional coverage.
It is also recommended that before initiating the process of export, the company speaks to
an Intellectual Property lawyer if there is any requirement of protection of the patent. This is
because if in any case any kind of sudden situation arises, the IP lawyer will have its back.
Respective organization can implement the UK Trade Tariff to classify its various goods and
also find all the detailed descriptions regarding duty rates, commodities, VAT, restrictions made
on goods, licenses etc. The law is important because it provides necessary information about the
progress in the export process as well as duty rates which is important (Shin and Kim, 2019).
Also, International trades that fall under the preference category allow the goods to be imported
or exported at lower rates. Agreements relating to trade preferences are designed in order to help
various developing countries to have an increased access to various export markets including the
European Union. Therefore, if a company is exporting goods, it should ensure that it has all the
up to date information about the same.
It is also important to look out for the various carrier options available and choosing one.
This can help in saving costs and also, it is recommended that the company opts for exporting
goods via sea. This will not only save costs relating to shipment as compared to when the exports
are done through air. Also, the company should keep in mind all the rules and regulations so that
the complete process gets completed in the most effective as well as efficient way.

REFERENCES
Books & Journals
Barbier, E.B. and et. al., 2019. The economics of the tropical timber trade. Routledge.
Aman, A. C. and Greenhouse, C. J., 2017. Transnational Law: Cases and Problems in an
Interconnected World. Carolina Academic Press.
Heydon, K., 2016. The Ashgate research companion to international trade policy. Routledge.
Villena Manzanares, F., 2019. Export performance of SMEs: an empirical analysis of the
mediating role of corporate image. Journal of Small Business Management. 57(2).
pp.386-399.
Jensen, S., 2016. Motivating the study of international trade: A classroom activity. The Journal
of Economic Education. 47(4). pp.311-316.
Nwankwo, C. F. and Okafor, U. P., 2018. Impediments and Desirability of Complete Ban on
International Movement of Toxic Waste. Open Political Science. 1(1). pp.131-135.
Shah, N. H., 2017. Three-layered integrated inventory model for deteriorating items with
quadratic demand and two-level trade credit financing. International Journal of Systems
Science: Operations & Logistics. 4(2). pp.85-91.
Yoo, I. T. and Kim, I., 2016. Free trade agreements for the environment? Regional economic
integration and environmental cooperation in East Asia. International environmental
agreements: Politics, law and economics. 16(5). pp.721-738.
Shin, S. Y. and Kim, J. K., 2019. Networking through International Energy Organizations:
Comparison by Trade Type. Strategic Planning for Energy and the Environment. 38(3).
pp.37-51.
Online
Exporting to India. 2020. [Online]. Available through:<
https://www.great.gov.uk/markets/India/>.
UK: Import & Export Regulations In The United Kingdom. 2020. Available through:<
https://www.mondaq.com/uk/international-trade-investment/883672/import-export-
regulations-in-the-united-kingdom>.