"FOREIGN EXCHANGE RATE"

                         The foreign exchange rate is the rate at which the currency of a country is exchanged against the currency of another country. It is the price of one currency in terms of another currency. the exchange between rupee and dollar refers to the number of rupees exchanged or are required to be given to obtain one dollar. When we say the exchange rate is Rs. 60 = 1$, it expresses the price of one dollar in terms of rupees. Like the price of any other commodity, it is the price of a currency which we would like to purchase. The difference is that in the commodity market there is one currency in terms of which the value of all other goods and services is expressed, where as in the foreign currency for one unit of domestic currency- e.g. Rs. 1 = 2C. For all practical purposes the expression is in terms of price of an internationally accepted currency i.e. a vehicle currency.

Vehicle Currency :-
                           It is a widely accepted currency in international market. US dollar, Euro and Pound Sterling are some of the vehicle currencies. Many countries express their foreign exchange rates in these currencies.
                           Since August 1991, the US dollar is used as vehicle currency for the Indian rupee. Exchange rate in India is quoted in USD/INR, for example 1 $ = Rs. 60 or INR/USD Rs. 60 = $ 1.
                           Exchange rate is determined by demand for and supply of foreign exchange. Let us discuss the factors that influence the demand and supply.

*  DEMAND FOR FOREIGN EXCHANGE :-

1. Import of Goods :-
                       Import of goods contribute a major part of total imports. Consumer as well as capita goods are imported from other countries. Raw material and intermediate goods too may be required to be imported. Foreign exchange is demanded by people who import these goods. Demand for foreign exchange for this purpose depends on the price of the imports. Higher the prices of imports lesser is the demand for foreign exchange.
   
2. Import of Services :-
                          Import of services have been increasing in recent years. Services rendered by other countries which include banking, insurance, transport, communication, tourist services, educational services etc. are required to be paid in foreign exchange.
   
3. Unilateral Payments :-
                          Donations, gifts, reparations are all one sided payments without corresponding returns. Such payments create demand for foreign exchange.
   
4. Export of Capital :-
                          Repayment of debt, purchase of assets in foreign countries, investment in financial assets or direct investment, all require foreign money.

                            All the above categories of demand add up to the aggregate demand for foreign exchange. The total demand is inversely related to the price i.e. the exchange rate. At a higher price (Rs.60 = 1$) the demand is less than say at Rs.50 = 1$. Figure 10.1 explains the demand for foreign exchange.
                       

"PROCEDURE FOR OBTAINING ISO CERTIFICATION"

          An Indian company can obtain ISO 9001 : 2008 certification from accredited agency recognized by International Organisation for Standardization. Indian exporters normally obtain ISO 9001 certification from a foreign accredited agency because of their professional approach in certification.

The following is the procedure to obtain ISO 9001 certification :

1. Evaluation of Existing Quality Procedures :-
   
   
                           The company wishing to obtain ISO 9001 certification should evaluate its existing quality procedures. This is because; a company cannot expect to get itself ISO certified, if is does not fulfill certain minimum standards of quality.
                           The company can appoint an ISO steering team to evaluate the existing quality procedures prevailing withing the firm.
   
   
2. Initiating Corrective Action :-
   
   
                           If  the company (ISO steering team) finds deficiencies in the exsting quality procedures, then there is a need to correct or overcome such deficiencies. Such correnction is required so as to conform to ISO series standards.
   The corrective action may include :
   *  Investigating causes of non-conforming products and identifying corrective action to prevent    recurrence.
   *  Analyzing processes, records, customer complaint, etc., to detect and to eliminate potential causes   of non-conforming products.
   *  Applying controls to ensure that corrective actions are taken and their effective implementation.
   *  Implementing changes in procedures, as corrective actions require.
   *  Initiate preventive action to eliminate potential problems.
   
   
3. Preparation of Quality Assurance Programme :-
   
   
                            Company should prepare a quality assurance programme. This programme would involve details regarding the various areas, departments, or products that require observance of quality control, training to be provided to the employees and other activities, which are required to maintain high quality standards.
   
   
4. Preparation of Quality Manual :-
   
   
                            Company must also prepare a quality manual. The quality manual would provide guidelines to the employees of the firm so as to maintain quality standards.
   The quality manual may include details in respect of:
   *  Purchase procedures.
   *  Quality control procedures.
   *  Maintenance and repairs of plant and machinery.
   *  Procedures relating to handling and storage of inventory.
   *  Procedures relating to packaging and delivery.
   *  Procedures relating to servicing of product, etc.
   
   
5. Selection of certification Agency :-
   
   
                               The Company must select an agency to provide  ISO 9001 certification. The company may select BIS or a foreign accredited agency. Normally, most Indian exporters prefer to appoint a foreign agency (although the expenses are more), as a certification by a reputed foreign agency carries more weight in the international markets.
                                 The company should make an application to the accredited agency along with necessary documents which includes quality manual, undertaking to pay the required fees, etc.
   
   
6. Pre-assessment Meeting :-
   
   
                              Company's representative would hold a pre-assessment (pre-inspectin) meeting with the registrar of the agency. The pre-assessment meeting is required to analyse the quality manual of fthe firm and to appraise the quality standards being adopted by the firem. The firm may also come to know of any specific arrangements required by the agency before certification. 
   
   
7. Preliminary Visit :-
   
   
                              The accredited agency, normally, arranges for a preliminary visit to the firm and notifies the company of any significant omissions or deviations from the prescribed requirements, so that any suitable modifications or changes can be made prior to the assessment visit.
   
   
8. Actual Assessment Visit :-
   
   
                              The Actual Assessment visit is a practical evaluation to check that the company's systems are functioning effectively. If there are any discrepancies, which indicate a systems failure, the company is given a period to rectify the deficiencies. Corrective action programmes are also agreed upon for rectifying any discrepancies detected. 
   
   
   
   
9. Certification :-
   
   
                              If the assessment agency is satisfied with the quality systems of the company, then it would certify or grant ISO 9001 : 2008 certification to the firm. The firm can use the ISO 9001 : 2008 in their advertisements, products packages, letterheads, etc.
   
   
10. Surveillance :-
    
    
                               The accredited agency's registrar normally performs periodic surveillance to assure that the certified company's qualilty system is being maintained. Many agencies may undertake a complete review of the firm's quality systems of teh certified firms. If the firm fails to maintain the quality system, the agency's registrar will suspend or cancel the registration or certification. 

"P. Chidambaram calls for probity in capital market"

                                   Finance Minister P. Chidambaram on Saturday said Indian capital markets are facing many concerns, including low level of retail participators, which needed to be addressed urgently.

                                   “It is important that all our institutions maintain the highest ethics and highest standards of probity. An ethics deficit can bring down the entire financial system as we have seen in the past.

                                   “Some recent incidents have alerted us and we must never take such chances again. We must demand the highest standards of probity from the owners and managers of financial markets infrastructure institutions,” he said at the 20th anniversary of National Stock Exchange (NSE) in Mumbai.

                                  Mr. Chidambaram further said rising volumes of rupee trade in NDF (non-deliverable forward) market abroad is a major concern.

                                    NDF is a Forex derivative instrument, traded over the counter and operated in currencies that are freely convertible unlike the rupee. The rising volumes of rupee trade in the NDF abroad could adversely affect value of the domestic currency.

                                  Listing out other concerns like low retail participation, lack of financial literacy and financial inclusion, Mr. Chidambaram said such issues need to be addressed urgently.

                                  Improvement of financial sector competitiveness and optimal use of exchange infrastructure for investment classes are other areas which need urgent attention, he added.

                                  Referring to the recommendations of the Financial Sector Legislative Reforms Council (FSLRC), he said as passing legislation on the suggestions will take time; it has been decided to implement the non-legislative ones first.

                                      On the ordinance giving more powers to SEBI, Mr. Chidambaram said if the Standing Committee does not submit its report by end of the current session, the government will have to promulgate the ordinance for the third time.

India’s trade deficit with China nears record $30 b

* Causes for the slump in trade are more structural :-

                          India’s trade deficit with China after 11 months of this year has reached a record $29.5 billion, exceeding last year’s annual figure, according to newly released trade data.
The numbers underline the sharp decline in once-burgeoning trade, which reached $74 billion in 2011 when China became India’s biggest trading partner.
                          The following year, a 20 per cent slump in India’s exports, largely on account of iron ore mining bans, coupled with the global slowdown, resulted in a 10 per cent decline as trade fell to $66.50 billion, even as both countries announced an ambitious $100 billion target for 2015.

* Doubts over achieving target :-

                       The latest figures have cast doubt on whether that target may be achieved. During the period under reference, even as China’s trade with the rest of Asia as well as with its major Western trading partners has picked up, trade with India has remained in a slump, suggesting that causes were more structural rather than a reflection of global trends.
                          After 11 months of this year, India’s exports to China reached only $14.87 billion out of total bilateral trade of $59.24 billion, according to data released this week by the China’s General Administration of Customs.
                         Trade between the two countries was down by 2.7 per cent year-on-year, even as China’s overall global trade rose 7.7 per cent. This was driven by an export sector that has continued to show signs of revival, growing 12.7 per cent and marking the second straight month of rising exports.
                          Among China’s biggest trading partners, trade with the U.S. was up by 7.6 per cent. China’s trade with Southeast Asian countries showed the biggest growth, growing 10.9 per cent.
                           Border trade up 23 per cent, still minuscule India’s border trade with China, while still at a minuscule $14 million, grew 23.3 per cent last year, local authorities in the Tibet Autonomous Region (TAR) were quoted as saying by the official Xinhua news agency this week.
                          Trade has grown more than 50 times since 2006, when the Nathu La pass, between Sikkim and the Shigatse prefecture in Tibet, was reopened. Most of the trade is made up of imports of Indian goods into Tibet, which reached $12 million last year. Authorities said the border market is open for only six months of the year — opening on May 1 and closing on November 30.

"INDIAN TRADE SERVICE"

                      The Indian Trade Service (ITS), Group ‘A’ Civil Service, was created as a specialized cadre to handle India's international trade & commerce on the basis of the recommendations of the Mathur Committee (Study Team on the Import and Export Trade Control Organization headed by Sri H.C. Mathur, Member of Parliament) in 1965. At present Directorate General of Foreign Trade (DGFT), Ministry of Commerce is the cadre controlling authority of the ITS, has many regional offices across India, and plays a significant role in India's foreign trade with its policy formulation and implementation.

                   

                  The Department is headed by a Secretary who is assisted by a Special Secretary & Financial Adviser, three Additional Secretaries, thirteen Joint Secretaries and Joint Secretary level officers and a number of other senior officers. Keeping in view the large increase in workload in matters related to World Trade Organization (WTO), Regional Trade Agreements (RTAs), free trade agreements (FTAs), Special Economic Zones (SEZs), joint study groups (JSGs) etc., two posts each of Joint Secretaries and Directors were created in the Department during 2008-09.

The Department is functionally organized into the following eight Divisions:

• Administration and General Division
• Finance Division
• Economic Division
• Trade Policy Division
• Foreign Trade Territorial Division
• State Trading & Infrastructure Division
• Supply Division
• Plantation Division.

* Work Profit :-

• Formulating the foreign trade policy which looks at the gamut of trade promotion and facilitation activities intended to streamline the chain of economic activities which would boost India's external trade.
• Implementing of the foreign trade policy through the regional offices of the Directorate General of Foreign Trade which include cognate activities such as remission of the duties levied on exports, issuance of permissions for imports/ exports, trade facilitation, interface with various trade agencies and apex chambers of commerce, interaction with Customs and State governments, interaction with SEZs, grievance redressal etc.  
• Trade policy negotiations for India at the multilateral forum of the World Trade Organization. These negotiations call for a deft balancing of the needs of the domestic industry for ensuring adequate protection and those intended to boost exports not merely for earning foreign exchange but also to invigorate economic growth and ensure wider employment opportunities.
• Negotiating bilateral and multilateral trade agreements with trading partners including the formulation and implementation of FTAs, PTAs, TTTs[disambiguation needed], EHPs[disambiguation needed] etc.
• Investigating dumping by trading nations and computation of the anti dumping duties. Officers of the Indian Trade Service manning the Directorate General of Anti Dumping (DGAD) have been effectively controlling dumping by the trading nations and India is the second largest imposer of anti-dumping duties.
• Export promotion activities under the purview of the Export Promotion Councils and the apex chambers of export promotion like FIEO, FICCI etc. These include expertise in organizing the Buyer-Seller meets, Open Houses, Exhibitions, Participation in Fairs, providing policy inputs to the government etc.
• Creating an effective interface mechanism between the government and the primary stakeholders through institutions such as the Board of Trade.
• Laying the framework for Electronic Data Interchange (EDI) in trade transactions in order to impart transparency, save time and ensure economy.
• Quality management and quality assurance though effective inspection and risk assessment of export consignments.

* The Service has been utilized in the following areas also :-

• Ministries and departments having significant trade related activities.
• Foreign commercial missions
• Special Economic Zones