Month: September 2022

ITR-1 Form

This form is also known as the Sahaj form. Individual taxpayers should go for ITR 1 filing. Any other taxpayer is not eligible to choose this form for ITR returns.

Applicable for:

The following individuals can apply for this form:

• An individual who draws income from salary or pension.
• An individual whose income is solely dependent on single housing property.
• A person without any income from capital gains and other business.
• An individual who is not an owner of any foreign asset or does not have any foreign source of income.
• An individual whose agricultural income is up to Rs. 5000.
• A person with additional sources of income likes other investments, fixed deposits, etc.
• Any individual without having any income from winning lotteries, horse racing, and other windfalls.
• Individuals who want to club their spouses’ or underage children’s income with theirs.

Not eligible:

Any other assessee belonging to the following category is not eligible to file ITR 1 for tax returns.

• One whose income exceeds Rs.50 lakhs.
• Individuals having agricultural income above Rs.5000.
• Applicants with income from capital gains and businesses.
• In case a person is having income from many house properties.
• If an individual is a director in a company, he cannot apply for ITR 1.
• One investing in unlisted equity shares at any point of time during the fiscal year is not eligible to choose this form.
• Owners of foreign assets being a resident and having income from foreign sources.
• Individuals who are non-residents and RNOR (residents not ordinarily residents).
• A person who is assessable for another person’s income cannot file IT returns using this form. In such a case, tax deduction takes place in terms of the other person.

ITR-2 Form

ITR 2 income tax is eligible for those individuals who have their income by selling assets or properties. Individuals having incomes from outside of India can also use this form. Furthermore, HUFs can also apply for ITR 2 form to file income tax returns.

Eligibility criteria to file tax returns by using ITR 2 form

Individuals belonging to the following categories can apply for ITR 2 forms:

• Individuals who accrue income by means of salary or pension.
• One whose income source depends on capital gains, that is, from the sale of an asset or property.
• In case a person’s income is possibly coming from more than one house property.
• Owner of foreign assets and one whose income source is outside India.
• A person whose agricultural income is more than Rs.5000.
• People with incomes from winning a lottery etc.
• If an individual is a director in a company.
• Non-residents and RNOR.

Categories not eligible to apply for this form:

Not all taxpayers should avail of this form for income tax returns. We have categorised such people in the following section for your better understanding.

• Individuals whose total income is inclusive of any profits or gains of a business venture or other profession cannot opt for this form.
• Ones with total income lower than Rs.50 lakhs.

ITR-3 Form

Individual taxpayers or HUFs operating as partners in a firm without conducting any business under the firm are eligible to apply for ITR 3. Taxpayers looking in search of the meaning of ITR 3 should be thorough with the eligibility criteria of the said form.

Applicable for:

Applicants having the following income sources are eligible to file ITR 3.

• Incomes from investments on unlisted equity shares.
• Individuals continuing a business or profession are eligible.
• Company director.
• Incomes coming from house property, pension, salary, or other sources.
• A person having income by being a partner in a firm.

Not Applicable for:

Taxpayers eligible for ITR 1 and ITR 2 belong to a certain category. Similarly, some taxpayers should not file this form for IT returns. Given below are some of the individuals who are not eligible for this form.

• Any individual with a business turnover below Rs.2 crores.
• The ones who do not earn income from a business conducted by a firm cannot apply for ITR 3.
• Taxpayers can file ITR 3 if the taxable income from the business comes in the form of salary, bonus, commission, remuneration and interest. Other than this, any other source of income from the business is not eligible.

ITR-4S Form

Also known by the name Sugam, ITR 4 means that individuals who run a business and accrue income from it or other professions can file for IT returns by using this form. With this income, they can club the earning from any windfall and apply for this form. Additionally, taxpayers from professions like doctors, shopkeepers, designers, retailers, agents, contractors, etc., can file their ITR using this form.

Applicable for:

ITR 4 meaning is simple for those who are accustomed to the eligibility. Here are some of the eligibility criteria.

• Individuals earning income from businesses.
• One who has a single house property and earns income through it.
• Taxpayers not having income via capital gains or selling of assets.
• If the agricultural income of a person is below Rs. 5000, he can file ITR 4.
• Individuals not owning properties or assets outside India.
• An applicant whose source of income is within India.
• This form is also applicable to businesses where the income earned depends on a presumptive scheme under Section 44AD, Section 44ADA and Section 44AE of the Income Tax Act.

Not Applicable for:

Some individuals do not qualify for an application of the ITR-4S form to file tax returns. Such categories are mentioned below.

• Owners of a foreign asset.
• Company directors.
• A person with a foreign source of income.
• Total income of a taxpayer exceeding Rs. 50 lakhs.
• If an applicant carries forward loss under any income head, he cannot utilise this form.
• Investors of unlisted equity shares.
• A non-resident and a resident not ordinarily resident.
• Individuals generating income from more than one housing property.
• Having a signing authority in any account outside India.
• If a taxpayer is an assessee with respect to another person’s income where tax deduction takes place in the hands of another person.
• Limited Liability Partnerships (LLPs) cannot avail of this form.

ITR-5 Form

Business trusts, firms, etc., must opt for this form to file ITR. ITR 5 means forms that are eligible for partnership firms or LLPs. To understand the meaning of ITR 5 in detail, one should know in-depth about the taxpayers eligible under this form and those who are not.

Eligible taxpayers:

The following bodies can file IT returns using this form.

• LLPs (Limited Liability Partnerships).
• Co-operative societies.
• Local authorities.
• BOIs (Body of Individuals).
• Artificial judicial persons.
• AOPs (Association of Persons).
• Estate of the deceased and insolvent.
• Investment funds.
• Business trusts.

Not Eligible taxpayers:

Here is a list of persons not eligible to file ITR 5.

• Any individual filing for ITR 1.
• Hindu Undivided Families (HUFs).
• Any company.
• The ones filing for ITR 7 cannot file for this form.
• Applicants with income from capital gains.

ITR-6 Form

ITR 6 means an income tax return form eligible for companies to file tax returns. Companies can file income tax by this form only electronically.

Eligible for:

Given below are the bodies and the income sources eligible for this form.

• All companies except the ones claiming exemption under Section 11.
• Incomes earned from housing property.
• Business incomes.
• Incomes from multiple sources.

Not Eligible for:

In the following section, we enlisted a few organisations and income sources not eligible to file IT returns using ITR 6 form.

• Organisations under Section 11 can claim tax exemptions because the income accrued from these bodies is used for religious or charitable purposes.
• Incomes coming from capital gains.
• Any individual or HUFs.

ITR 7 Form

Individuals and firms that have furnished returns related to Section 139(4A), Section 139(4B), Section 139(4C), Section 139(4D), Section 139(4E) and Section 139(4F) must choose this ITR form.

Listed below are the details of the returns that should be filed section-wise:

 Section 139(4A): The ITR forms must be submitted by individuals who gain an income from a property that belongs to a charity/trust or other legal obligations and the income that is produced is solely used for charitable or religious purposes

Section 139(4B): ITR forms must be filed under this section by a political party if the gross income that has been generated is more than the maximum sum

Section 139(4C): ITR forms must be submitted under this section if it is a Scientific Research association, hospitals, medical institutions, universities, funds, News agencies and other educational institutions

Section 139(4D): Any educational institution such as a college or university that are not required to furnish any income or loss must submit ITR forms under this section

Section 139(4E): Business trusts that do not need to furnish any kind of income or loss must file ITR forms under this section

Section 139(4F): Investment funds present under Section 115UB and do not need to furnish any income or losses must also submit ITR forms under this section

The concept of Arm’s length derives its meaning from the independent relation shared between independent parties. Unlike business transactions between related parties, the transactions between unrelated parties are done at an open market price and accordingly, Arm’s Length Price (‘ALP’) demonstrates the price that should have been charged between related parties had those parties were not related to each other.  

Under Indian Transfer Pricing regulations, the entire transfer Pricing Mechanism is based on computation of income arising out of cross-border transactions having regard to the arm’s length price. The definition of ALP as defined under Organisation for Economic Co-operation and Development (‘OECD’) Transfer Pricing Guidelines means a price, at which transactions between persons other than associated enterprises are carried out in uncontrolled circumstances.

In general, the Indian Transfer Pricing Regulations provide exhaustive definitions of terms Associated Enterprise (‘AE’) and International Transactions on which the transfer pricing procedure is based. In other words, for the purpose of computing Arm’s length price, it is pertinent to understand the concept of AE and International transactions.

The term Associated Enterprises has been defined under the Income Tax Act, 1961 under section 92A(1). The concept of Deemed Associated Enterprises has been defined under section 92A(2) of the Act. Further, certain parties are defined as AE under Indian Domestic Transfer Pricing provisions.

Under Income Tax Act, 1961 Section 92F define Arm’s Length Price is the price applied (or proposed to be applied) when two unrelated persons enter into a transaction in uncontrolled conditions. Unrelated Persons;

Section 92A, the persons said to be unrelated if they are not associated or deemed to be associated enterprise.

Uncontrolled Conditions; are that conditions which are not controlled or suppressed or moulded for achievement of a predetermined results.

1. Comparable Uncontrolled Price Method(CUP) Under this method;

i) Determined the price charged or paid for the property transferred or services provided in a comparable uncontrolled transaction.

ii) Such price is adjusted to account for differences, if any, between the International transaction and comparable uncontrolled controlled transactions or between the parties entering into such transactions, which could materially affect the price in the open market.

iii) The adjusted price arrived at under ii) is taken to be Arm’s Length Price in respect of the property transferred or services provided in international transaction.

2. Resale Price Method Under this method

i) The price at which property purchased or services obtained by the enterprise from an associated enterprise are resold or are provided to an unrelated enterprise, is identified.

ii) Such resale price is reduced by the amount of normal gross profit margin accruing to the enterprise or to an unrelated enterprise from the purchase and resale of the same or similar property or from obtaining and providing the same or similar services in a comparable uncontrolled transaction, or a number of such transactions;

iii) The price so arrived at is further reduced by the expenses incurred by the enterprise in connection with the purchase of the property or obtaining the services.

iv) The price so arrived at is adjusted to take into account the functional and other differences including differences in accounting practices , if any , between the international transaction and the comparable uncontrolled transactions, or between the enterprises entering into such transactions, which could materially affect the amount of gross profit margin in the open market;

v) The adjusted price arrived at iv) is taken to be arm’s length price in respect of the purchase of property or obtaining of the services by the enterprise from the associated enterprise.

Cost Plus Method Rule 10B prescribes the manner in which CPM can be applied. The text reads as follows:

(i) The direct and indirect costs of production incurred by the enterprise in respect of property transferred or services provided to an associated enterprise, are determined;

(ii) The amount of a normal gross profit mark-up to such costs (computed according to the same accounting norms) arising from the transfer or provision of the same or similar property or services by the enterprise, or by an unrelated enterprise, in a comparable uncontrolled transaction, or a number of such transactions, is determined;

(iii) The normal gross profit mark-up referred to in sub clause (ii) Is adjusted to take into account the functional and other differences, if any, between the international transaction or the specified domestic transaction and the comparable uncontrolled transactions, or between the enterprises entering into such transactions, which could materially affect such profit mark-up in the open market;

(iv) The costs referred to in sub-clause (i) Are increased by the adjusted profit mark-up arrived at under sub-clause (iii);

(v) The sum so arrived at is taken to be an Arm’s Length Price in relation to the supply of the property or provision of services by the enterprise;”

Transactional Net Margin Method (TNMM)

Under this method;

i) The net profit margin realised by the enterprise from an international transaction entered into with an associate enterprise is computed in relation to costs incurred or sales effected or assets employed or to be employed by the enterprise or having regard to any other relevant base;

ii) The net profit margin realised by the enterprise or by an unrelated enterprise from a comparable uncontrolled transaction or a number of such transactions is computed having regard to the same basis;

iii) The net profit margin referred to in ii) arising in comparable uncontrolled transactions is adjusted to take into account the differences , if any between the international transaction and the comparable , uncontrolled transactions, or between the enterprises entering into such transactions , which could materially affect the amount of net profit margin in the open market;

iv) The net profit margin realised by the enterprise and referred in i) is established to be the same as the net profit margin referred in iii);

v) The net profit margin thus established is then taken into account to arrive at an arm’s length price in relation to the international transaction.

Profit Split Method Under this method;

i) The combined net profit of the associated enterprises arising from the international transaction in which they are engaged, are determined;

ii) The relative contribution made by each of the associated enterprises to the earning of such combined net profit, is then evaluated on the basis of the functions performed, assets employed or to be employed and risks assumed by each enterprise and on the basis of reliable external market data which indicates how such contribution would be evaluated by unrelated enterprises performing comparable functions in similar circumstances.

iii) The combined net profit is then split among the enterprises in proportion to their relative contributions, as evaluated under ii);

iv) The profit thus apportioned to the assessee is taken into account to arrive at arm’s length price in relation to the international transaction.

Countries around the world have huge differences in tax rates. These differences give incentive to the multinational enterprises to shift profits from high tax countries to ones with lower tax rates. This shifting of profits can be easily achieved via internal transactions, a holding company providing financing or consultancy services to its subsidiaries, a manufacturing branch supplying finished product to a distributing branch, one associated enterprise supplying provision of services to another. The MNEs can set the price and control the terms and conditions of these transactions and thereby influence the amount of profit and resultant amount of tax due. To prevent this from happening, tax administrations (organized in the OECD) invented the arm’s length principle (Article 9 of the OECD Model Convention) which requires that controlled transactions are done at market rates.

Objective of Transfer Pricing

“Associated Enterprise” means an enterprise that participates or in respect of which one or more persons who participate, directly or indirectly, or through one or more intermediaries, in the management, control, or capital of the other enterprise.

“Arm’s Length Price” refers to the price that should have been charged between related parties had those parties been not related to each other.

“Constituent Entity” means:

• Any entity of the international group that is included in consolidated financial statements for financial reporting purpose or included if equity share of any entity of the group were to be listed; or
• Any entity of the group which is excluded from consolidated financial statements on the basis of size or materiality; or
• Any permanent establishment of an entity of the group if separate financial statements are prepared for financial reporting, regulatory, tax reporting, or internal management control purposes.

Risks

• There can be disagreements within the divisions of an organization regarding the policies on pricing and transfer.
• Lots of additional costs are incurred in terms of time and manpower required in executing transfer prices and maintaining a proper accounting system to support them. Transfer pricing is a very complicated and time-consuming methodology.
• It gets difficult to establish prices for intangible items such as services rendered, which are not sold externally.
• Sellers and buyers perform different functions and, thus, assume different types of risks. For instance, the seller may refuse to provide a warranty for the product. But the price paid by the buyer would be affected by the difference.

Import and export of goods into and outside a country should undergo a customs clearance process. The importer and exporter of the goods should submit valid documents to clear this process. In this article, we look at some of the major steps and processes in clearing customs in India.

Calling of Vessels

Once the vessels carrying the goods reaches the country, the person who carried the vessels should make sure that the calling of vessels is done at the customs port. For instance, if goods are imported via aircraft, the pilot is responsible for call of the vessels at the customs airport. There is no requirement for the importer to get involved in this process and will be done by the airline or shipping line.

Filing Import General Manifest (IGM)

The person-in-charge of the vehicle should file an Import General Manifest electronically before the goods arrive. This file would include the details of all the goods imported by the vessel.

Post Verification Operations

On review of the Import General Manifest and post verification of documents, the customs authorities will grant entry inwards to the vessel, assign an IGM number to the manifest and permit the master of the vessel to land and unload the cargo.

Custody of Custodian

On arrival of the vessel, the goods would remain in the custody of the Custodian until it clears the customs process. A custodian may be a person approved by Principal Commissioner or Commissioner of Customs for this purpose. Imported goods can be unloaded subject to the following conditions:

• A note to unload the goods should be mentioned on the manifest report.
• Could be unloaded only at the approved places in the customs port.
• Under the supervision of the approved authorities.
• Should be unloaded only during working hours.

Filing Bill of Entry

The importer of the goods should file a bill of entry (customs copy) electronically for the clearance of the goods, before or on arrival of the goods. In the bill of entry, the duty and taxes to be paid is assessed by the importer himself and this is called self- assessment. The importer will self-assess the duty after considering the applicable rate of exchange and the rate of import duty. On approval of the Bill of Entry, the importer has to pay the GST and duty which will be entered in the Indian Customs Electronic Date Interchange System (ICEDIS). Once it is entered in ICEDIS, a bill of entry number will be generated.

The importer should then submit the bill of entry (customs copy), the duty-paid challan and other supporting documents to the port authorities for making an order permitting clearance. After making an order permitting clearance, the port officer would generate duplicate bill of entry (importer’s copy)  and triplicate bill of entry (exchange control copy). Both the copies will be handed over to the authorized person later.

Delivery of Goods

On showing the customs clearances to the port authorities, the importer can take the delivery of his goods. In case of cargo deposited in a warehouse, the importer would another bill of entry called the ex-bond bill of entry to clear the whole or part of the warehoused cargo.

There are a few exemptions from Customs duty, and they are as follows.

• The Central Government can grant exemptions by issuing a notification. Capital goods and spares can be imported under “project imports” at concessional/ Nil rate of customs duty.
• Section 25 of the Customs Act authorises the Central Government to issue notification granting exemption from customs duty partially or wholly on any goods.
• The exemptions may be in respect of primary duty or auxiliary duty.
• General or specific exemptions may be granted. While general exemptions are in respect to the user of goods, specific exemptions are in respect of various products.
• The exemptions are also granted subject to fulfilment of certain conditions.

Types of Exemptions

The following are the types of exemptions from Customs Duty.

• By notification
• By particular order on the Adhoc basis
• General exemptions
• Exemptions to Oil and Natural Gas Corporations Limited (ONGC)/ Oil India Limited (OIL)
• Other exemptions

“Customs Duty Drawbacks”

“Drawbacks” about any goods manufactured in India and exported has either of the following meanings.

• Rebate of duty chargeable.
• Rebate of duty of excise.
• A drawback is equal to the Customs duty paid on imported inputs and the Excise duty paid on indigenous inputs.

Value of the Customs Act

Customs Duty is an amount that is payable as a percentage of ‘value’ often called as ‘Assessable Value’ or Customs Value. Sections 14(1) provide the following criteria for deciding ‘value’ for Customs Duty.

• Price at which such or like goods are ordinarily sold or offered for sale.
• Price for the delivery at the time and place for importation or exportation.
• Price should be in the course of International Trade.
• Seller and buyer have absolutely no interest in the business of each other, or one of them has no interest in the other.
• Price should be sole considerations for sale or offer for sale.
• The rate of exchange as appropriate on the date of presentation of Bill of Entry as fixed by CBE&C (Board) by Notification should be considered. This criterion is entirely appropriate for valuing export goods. However, in the case of import goods valuation is required to be done according to valuation rules as stated in Chapter 6 Para 5 of the CBE & C’s Customs Manual, 2001.

“Coastal goods” means goods, other than imported goods, transported in a vessel from one port in India to another [Section 2(7)];

“Dutiable goods” means any goods which are chargeable to duty and on which duty has not been paid [Section 2(14)];

“entry” in relation to goods means an entry made in a bill of entry, shipping bill or bill of export and includes the entry made under the regulations made under section 84; [Section 2(16)];

“Export”, with its grammatical variations and cognate expressions, means taking out of India to a place outside India [Section 2(18)];

“Export goods” means any goods which are to be taken out of India to a place outside India [Section 2(19)];

“Foreign-going vessel or aircraft” means any vessel or aircraft for the time being engaged in the carriage of goods or passengers between any port or airport in India and any port or airport outside India, whether touching any intermediate port or airport in India or not, and includes –

(i) Any naval vessel of a foreign Government taking part in any naval exercises;

(ii) Any vessel engaged in fishing or any other operations outside the territorial waters of India;

(iii) Any vessel or aircraft proceeding to a place outside India for any purpose whatsoever [Section 2(21)];

“Goods” includes:

(a) Vessels, aircrafts and vehicles;

(b) Stores;

(c) Baggage;

(d) Currency and negotiable instruments; and

(e) Any other kind of movable property [Section 2(22)].

“Prohibited goods” means any goods the import or export of which is subject to any prohibition under this Act or any other law for the time being in force but does not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported have been complied with [Section 2(33)];

“Stores” means goods for use in a vessel or aircraft and includes fuel and spare parts and other articles of equipment, whether or not for immediate fitting; [Section 2(38)];

Levy and Collection of Customs duty

There are four stages in any tax structure, viz., levy, assessment, collection and postponement. The basis of levy of tax is specified in Section 12, charging section of the Customs Act. It identifies the person or properties in respect of which tax or duty is to be levied or charged. Under assessment, the liability for payment of duty is quantified and the last stage is the collection of duty which is may be postponed for administrative convenience.

As per Section 12, customs duty is imposed on goods imported into or exported out of India as per the rates specified under the Customs Tariff Act, 1975 or any other law. On analysis of Section 12, we derive the following points:

(i) Customs duty is imposed on goods when such goods are imported into or exported out of India;

(ii) The levy is subject to other provisions of this Act or any other law;

(iii) The rates of Basic Custom Duty are as specified under the Tariff Act, 1975 or any other law;

(iv) Even goods belonging to Government are subject to levy, though they may be exempted by notification(s) under Section 25.

Custom Tariff Act, 1975 has two schedules. Schedule I prescribes tariff rates for imported goods, known as Import Tariff‖ and Schedule II contains tariff for export goods known as Export Tariff.

Sample size Variables Based on Target Population

Before you can calculate a sample size, you need to determine a few things about the target population and the sample you need:

Population Size: How many total people fit your demographic? For instance, if you want to know about mothers living in the US, your population size would be the total number of mothers living in the US. Not all populations’ sizes need to be this large. Even if your population size is small, just know who fits into your demographics. Don’t worry if you are unsure about this exact number. It is common for the population to be unknown or approximated between two educated guesses.

Margin of Error (Confidence Interval): No sample will be perfect, so you must decide how much error to allow. The confidence interval determines how much higher or lower than the population mean you are willing to let your sample mean fall. If you’ve ever seen a political poll on the news, you’ve seen a confidence interval. For example, it will look something like this: “68% of voters said yes to Proposition Z, with a margin of error of +/- 5%.”

Confidence Level: How confident do you want to be that the actual mean falls within your confidence interval? The most common confidence intervals are 90% confident, 95% confident, and 99% confident.

Standard of Deviation: How much variance do you expect in your responses? Since we haven’t actually administered our survey yet, the safe decision is to use .5; This is the most forgiving number and ensures that your sample will be large enough.

Calculating Sample Size

Okay, now that we have these values defined, we can calculate our needed sample size. This can be done using an online sample size calculator or with paper and pencil.

Your confidence level corresponds to a Z-score. This is a constant value needed for this equation. Here are the z-scores for the most common confidence levels:

90% – Z Score = 1.645

95% – Z Score = 1.96

99% – Z Score = 2.576

If you choose a different confidence level, use this Z-score table* to find your score.

Next, plug in your Z-score, Standard of Deviation, and confidence interval into the sample size calculator or into this equation:**

Necessary Sample Size = (Z-score)2 * StdDev*(1-StdDev) / (margin of error)2

Here is an example of how the math works assuming you chose a 95% confidence level, .5 standard deviation, and a margin of error (confidence interval) of +/- 5%.

((1.96)2 x .5(.5)) / (.05)2

(3.8416 x .25) / .0025

.9604 / .0025

384.16

385 respondents are needed

The potential for international marketing is enormous for Indian firms. The fast expansion of the international business, as indicated by the current statistics available from appropriate sources is an indication of this. The scope of international business for developing countries is amply demonstrated by the rapid strides made by several developing countries like South Korea, Taiwan, Hong Kong, Singapore and Peoples Republic of China. Indias performance, in comparison with these countries has been very poor. Developing countries like South Korea with very good economic performance has such well known multinationals like Hyundai, Daewoo, Samsung, LG, which are making inroads into India whereas India with its massive size and diverse resource base and which has a longer history of industrialization can hardly boast anything of that sort.

The rapid strides made by several other developing countries in the international market, and trends of the growing economic power of the developing countries described earlier are indication of the enormous global business opportunities which Indian firms could exploit.

A look at some of the successful Indian example, covering products ranging from bullock cart technology to high-tech would indicate the strategies Indian firms may employ to seize the various opportunities.

Product modification to suit the requirements of the foreign markets will enable international marketing of many products by Indian firms. Examples include TI cycles. Hero cycles, TTK pressure cookers etc.

Another international marketing opportunity which a number of Indian firms may avail of is the one provided by the vocation of certain industries / segments of the market in the developed countries by the large players as they become unattractive for them. For example, several dominant firms have vacated the ply tire segment in the developed markets as this segment has shrunk due to the popularity of radial tires. Similarly developed country firms have given up several chemical products due to various reasons.

Indian firms with products of acceptable quality may explore the foreign markets. The Pricol, supplier of dashboard instruments to Maruti, thus entered the US market in a small way and today it is an international player. The Sundaram Fastners, which was adjudged as one of the 20 best Asian companies, is a highly reputed global supplier of automobile parts like radiator caps to dominant players like General Motors. There is enormous opportunity to take advantage of the growing global sourcing. The growing foreign investment in India and development of quality consciousness in Indian firms will encourage the growth of an ancillary sector of quality products and thus enlarge the Indian base for global sourcing.

Firms which are suppliers to foreign firms or whose products are sold under foreign brand names may explore the possibility of selling their own products under their own brand names.

There are a number of products in which the developing countries have advantage like textiles, leather, gems, and jewellery, seafood etc. Although these are among Indians important export items, the nation has not been very successful, when compared with several other developing countries, in exploiting these opportunities.

Many products, which become off patent, provide international marketing opportunities for firms of developing countries like India because of the low cost advantage. A number of them pose technical challenges. The Technocrat Industries, an Indian firm set up in 1972 by two fresh graduates from IIT, succeeded in mastering the technology of drum closures, precision products used to seal drums in which oil and chemicals are stored, competed with the MNC in the Indian market and entered foreign markets . Several Indian pharmaceutical firms are globalizing using generics and bulk drugs as their mainstay.

India is an important exporter of many products like spices and seafood. They are, however, mostly commodity exports. A lot of potential exists for developing their value added exports. There is also considerable scope for quality improvement, product development and value addition in respect of several other categories like leather, textiles, etc.