EID/U1 Topic 10 Categories of Export, Physical-Direct and Indirect
On the basis of direct and indirect methods of exporting, export market organisations in India are classified into the following categories:
(a) Manufacturer Exporters: Manufacturer exporters are the manufacturers who export goods directly to foreign buyers without any intervention from intermediaries. The manufacturer may also appoint agents abroad for selling products. They enjoy several advantages:
- First hand information about foreign markets.
- Exercise a direct control over marketing activities.
- Enjoy full benefit of export incentives.
- Enjoy greater profits and goodwill in the market.
(b) Merchant Exporters: Merchant exporters are the exporters who purchase goods from the domestic market and sell them in foreign countries. They enjoy several advantages:
- Limited capital.
- Specialization in marketing.
- Large market share.
(c) Status Holders: The Government of India introduced the concept of status holders in the in the year 1960. Export House (EH) was the first category introduced by the Government with the objective of promoting exports by providing assistance for building marketing infrastructure and expertise required for export promotion. Thereafter in the year 1981, Trading Houses were introduced in order to develop new products and new markets, particularly for the products of SSls and Cottage industries. The categorisation, their eligibility and nomenclatures have changed since then. As per the new Foreign Trade Policy 2009-2014, status holders have been categorised as follows on the basis of their export performance:
(d) Service Export House: Considering the increasing share of services in the total export from India, the government introduced the concept of Service Export House in the EXIM policy 2002-07. As per this policy, the service providers who have achieved a stipulated level of export performance are eligible for recognition of status holder. Accordingly they are eligible for all the facilities and incentives, hitherto given to the export and trading houses. These facilities include import of capital goods under EPCG scheme, passenger baggage, import of restricted items, etc. The above categorisation also applies to the service providers.
(e) Canalising Agencies: Canalisation of import and export means import and export of commodities through specified government agencies such as State Trading Corporation of India (STC), Metals and Minerals Corporation (MMTC). The items specified in the canalised list can be canalised only through specified canalising agency.
(f) Export Consortia: In this case, a number of economically independent manufacturers, voluntarily or under the direction of the government, set up a joint organisation for co-ordination of their export activities. This has several advantages, such as;
- Price stabilisation;
- Saves unproductive expenditures such as advertising;
- Economies of scale.