How to Export Pharmaceutical Products?

 

Growing significantly over the years, it was between 1980 and 1990 that Indian pharmaceutical industry stepped into exports. Pharmaceutical exports stood at $ 17.27 billion for the year 2017 -2018 in comparison to $16.80 billion in the year 2016-2017. It shows a remarkable rise with a further expected growth of 30% to reach almost $20billion by the year 2020.

Why are Exports of Pharmaceutical Products from India a lucrative option?
➢ India is volume exporter in API (Active pharmaceutical ingredients) to treat acute or chronic diseases.
➢When it comes to production, India stands on the sixth position among the countries of the world and exports Indian vaccines to more than 150 countries.
➢ Several international NGOs like the UNCTAD, the Clinton Foundation, Bill & Melinda Gates Foundation, etc. look up to Indian pharmaceutical products to meet 70% of the medicine requirement of the developing countries.
➢ India has more than 3000 pharmacy companies and nearly 10,500 manufacturing units presently out of which WHO GMP has approved 1400 units.
➢ Manufacturing costs of pharmaceutical products in India are 35-40% less than the US.
➢ India is among the top countries to export generic formulations.
➢ 584 sites in India are approved by the USFDA (United States Food & Drug Administration).


Procedure for Export of Pharmaceutical Products from India

Export of pharmaceutical products is one of the most thriving options (over the edge concessions and facilities extended by the government) though it may be a bit difficult, as it involves stringent processes and documentation.
Pharmaceutical manufacturers who have an interest in exporting products from India must comply with all the norms as per ‘The Pharmaceutical Export Promotion Council (PHARMEXCIL)’. The introduction of PHARMEXCIL was by the Ministry of Commerce and the Government of India in 2004. The aim was to promote exports related to the pharmaceutical industry as a separate wing.


How to initiate the export process for pharmaceutical products?

To initiate exports of pharmaceutical products to another country, it is essential to carry out the following:

  • Register as an exporter and obtain an IEC number. Once an applicant submits all the important documents and completes all the necessary norms, he shall receive an IEC number. Once the application has approval, one is permissible to export pharmaceutical products from India.
  • Register an office in the importing country.
    • Register the pharmaceutical product in the importing country.
    • Complete the necessary details pertaining to shipping, payment, and delivery.
    • On receiving a purchase order, complete the domestic formalities and have the products sent for customs clearance. Customs clearance is a mandatory document without which products export from the country is not possible. (Applicable to all export products).
    • After customs clearance, ship the products and wait for the customs clearance in the importing country.


Mandatory Requirements for Exporting Pharmaceutical Products from India

It is vital that with each consignment to be exported, the exporter mentions the name of the drug, the dosage form, the composition, the date of manufacturing and expiry, and the quantity along with the name of the country the products are to be exported to. The authorized signatory should duly sign it.

The exporter must submit the purchase order with clear indications. Thus, it must show the name of the drug, the dosage form, the composition, the date of manufacturing and expiry. Also, it must include the quantity and name of the country (import). The authorized signatory must duly sign it. It should not be more than six months old than the application submitted by the exporter.

The exporter has to be precise in the labeling and packing of the pharmaceutical products. It will evade rejection both on the domestic front and the country importing it.

Each importing country has its norms and specifications related to the quality of imported pharmaceutical products. It is crucial that the exporter complies with the mandatory requirements laid down by the importing country.

If the targeted country of export is the USA, the exporter has to attain approval by the USFDA. Also, in the case of European countries, the exporter has to act in accordance with the specifications laid down under EMA requirements.

 

 

Defining the challenges and complexities faced by exporters

Export business is quite the drag for a country’s economy but tackling it on a fair scale is not everyone’s cup of tea. If there is a list, which we can create to point out the hardship that follows in this sector, it would be long and complicated. What one must realize though is that mastering over those factors can be overwhelming in the longer run.

An exporter can experience a significant rise in sales and profit margins, which will eventually bring success for businesses in a short time span. Thus, if the product has a high demand in the international market and can generate good quantity orders in return, investing time in understanding the whole export process is worth.

What are the significant challenges in the export business?

Before exporters steps into international trading, they must make themselves aware of different factors that cause an impact overall. From norms in your country to the regulations followed in the country you aim, the exporter must be well informed. Other aspects that come in a wider picture are legal reforms, geography, product identification, and market share, etc.

Thus, let’s cover each one in detail so that the exporters are well aware of the challenges that will come their way and are ready with a solution to avoid any delays:

General Challenges

1. Difficulty in identifying and understanding overseas markets

Which geography will respond the best to your product is a question that can be answered only when different culture, traditions, and markets are explored. Watch out your competitors, as they might be a good place to start with. Identify their markets and do a thorough analysis. While some might risk it with their opinion, others may look up to a consultant.

2. Exploring the culture of the foreign market.

The export-import market works best when researched in-depth. There are many countries, which restrict certain products that might hurt their belief or interfere with their sentiment or cultural value. For instance, the kind of meat that gets exported in Muslim countries or women apparels. Thus, have a subtle understanding of the market before jumping onto the conclusion of exporting a product into a particular market.

3. Finding qualified and credible importers.

You don’t want to be a part of a scam or deal with one thus it is better to work with an importer that is genuine and established. The best way to go about this situation is to cross-check their background by asking around and contacting other exporters or work with importers that are recommended or referred within the export community.

4. Dealing with language barriers.

Even though your product has great potential, the language barrier can be a serious issue. When humungous investment is at stake, no business would be in a space to accept any misunderstanding. Translators could be one of the options that can bring smooth communication between both the parties. You must try to keep it brief and to the point if such a situation arises.

Advanced Problems

1. Payment delays and bad debts

You must understand that funds invested will get a return but in a longer time frame. The best way to avoid bad debts and delays is to do proper research whether it is about the currency difference or the international forms. With exchange rate fluctuations on an everyday basis, time is a crucial factor in exports. An importer with whom you work regularly will ease this pressure and avoid any unexpected outcomes.

2. Geography-specific import rules.

Foreign import rules may vary from place to place and may have additional regulations for licensing testing, and labeling. Since time frame is a big factor when it comes to export, the exporter must keep himself aware of any such rules /regulations beforehand.

3. Preferential treatment given to FTA partners by importing nations

FTA reduces or eliminates the tariffs between two or more countries. Thus importing nations prefer FTA partners. For Instance, the FTA partner for India is JICEPA, i.e. the Foreign Trade Agreement signed between India and Japan.

4. Volatility in attitudes of new governments and the impact of political factors

Trade may face a challenge whenever a new government is on the roll. Thus, tracking the status of a country’s government is essential. In the unavoidable circumstances, if an exporter is well aware, it can save a lot of time and money investment.

How to deal with these factors and turn the table towards profit?

Export can enhance the growth of any business that no other process can but then there is a regular way of dealing with it, and then there is a smarter way. Expose your business to The Dollar Business today. A platform like TDB can resolve and answer many questions through its unique range of products that are specific to an import-export sector.

TDB’s most crucial tool, EXIMPAS performs a precise competitor analysis. It works on big data to find specific markets for a product and provide period wise information. Another intriguing feature is the World Map Analysis (WMA). The analysis provides details like Opportunity index, consumption pattern, etc. which defines the potential of a product. Last but not the least, the TDB user can use ‘Ask a Question feature’. It will clear any queries regarding the entire export process to an exporter.

A Final Say

Export business shall bring a greater challenge in near future. Thus, using a platform like The Dollar Business will only make things simpler and effective.

 

 

 

Exports of Automotive Components

Indian automotive component sector has been observing a sturdy growth over the past few years. The industry already generates about 2.3% of India’s GDP and is responsible of 4% of India’s total exports. The industry has also shown robust double-digit growth over the last couple of years and chances are that by the year 2026 exports from this industry alone will be in the region of $80 to $100 billion.

Indian auto components are exported to more than 160 countries including spark ignitions, gearboxes, hydraulic power steering systems, parts of diesel engines, and crank shift for engines, etc. Presently, India has emerged as one of the most sought-after countries for sourcing auto parts, owing to several contingent factors. While being close to key automotive markets such as Japan and Korea have worked in India’s favor, other factors like credibility in the OEM sector in Europe and its cost-competitiveness has also contributed towards making the country a global hub for automotive parts.

Way to Consistent Market Growth

Indian auto parts have always found lucrative markets in Latin America, Europe, and Africa in the past. In FY 2018 Europe was the largest Indian auto components importer contributing 34%, closely followed by North America at 28% and Asia at 25%.

Latin America, almost 15000 km away from Indian sub-continent has always been a key market for India, but with the continent losing its economic sheen it now makes for only 6% of India’s auto component exports.

Indian auto industry is known for its engineering prowess in both OEM and after-market products. This has allowed Indian auto-component manufacturers and exporters to hold forte in the international markets with a competitive price range. But the lack of consistent growth and the prevalence of risk factors in the major automobile component importing economies have become a cause of concern for the thriving Indian auto industry. In recent years, exports to Africa and the Latin America have been witnessing slow and gradual downtrend owing to macro-economic factors.

A transition towards a flourishing future

Being threatened by the unstable and risky markets of Latin America and Africa, India has been seriously contemplating on the measures to undertake a paradigm shift in its exports of automotive components to more sustainable and developed economies. The USA standing as the topmost importer of Indian automotive parts in the first quarter of FY 2019, with an almost 24% growth in auto part exports to the country, at an aggregated $ 290 million signals a positive momentum towards this shift.

Turkey following closely at imports worth $100 million with Bangladesh at $80 million, and Germany at $61 million respectively. It indicates the gradual shift of Indian auto components towards more secure economies. Expanding their horizons to the markets of Romania, Japan, Vietnam, and Colombia, though low-key at present, Indian auto part exporters, it appears, have taken on the challenge to explore global markets steadfastly.

A few Initiatives: Backbone of Indian auto-component exports

Some sound initiatives undertaken by the government in collaboration with the auto component manufacturers have already begun to strike chords with some global tier-I suppliers. The new initiatives seek to bring revolutionary changes in the design, technology, research, and testing in the auto parts sector through technology transfer and joint ventures.

We believe it will not be long before the Indian auto component sector climbs up the value chain and becomes the preferred sourcing destination for auto-majors across the globe. The route has already been charted!

 

 

 

How will tariff hikes on Chinese products and the trade war rhetoric by Donald Trump impact India’s exports?

The trade war between the world’s two most dominant economies has subtly yet steadfastly begun to influence global trade. This trade war imposed on China by President Trump may prove to be a winning bet for the Indian trade if India can play its cards right and maneuver deals in its favor.
With US exports forced to relinquish their hold on the Chinese market, owing to higher import duties levied on them, exploring Chinese markets could now be a bit easier for India. As suggested by the Ministry of Commerce, more than 100 products worth around $130 billion, that was being exported by US to China in the year 2017 can easily be substituted by Indian products. This may be an optimal opportunity for India to cover the trade deficit of over Rs.4 lakh crore (last year) with China.


Retaliatory tariff hikes by China and US may work in India’s 
favor
India has always faced tough competition from the US while exporting certain products such as chemicals, grapes, corn, lubricants, etc. to China. Even though both countries exported these products to China, it has always been the US who has dominated the China markets in these products.

Now, with the US being sidelined, having to bear the brunt of around 15-25% increase in import duties by China on these products, India can possibly take its place by leveraging its position as a member of the Asia Pacific Trade Agreement (APTA).
There are several products such as oranges, almonds, etc., which are exported by India to several countries, except China. Even though the demand for these products is high in China, Indian products have failed to capture the Chinese market as emphatically as the US. With the onset of a trade war between US and China, India should now gear up to garner a large market share of these products in China.


Higher tariffs on Chinese goods in the US market may open new opportunities for Indian goods to enter the US

India became less active in the US market regarding exports of certain products because China, the manufacturing hub of the world, was able to supply these products at a significantly lower price. Now that the retaliatory tariff hike game between USA and China is in full swing, India may find this to be an opportune time to enter the US market.

China and the US have been fighting their own battles in terms of tariff hikes, but other countries including India have also been drawn into this unfortunate affair, with US imposing tariffs on certain products imported from India. India has also taken due action against the US tariff hikes and has reportedly notified the World Trade Organization (WTO) about its plans to increase tariffs by over 50% on more than 30 product lines imported from US including motorcycles, chocolates, almonds, etc.


Long-term trade war is bad news

Donald Trump’s insistent efforts to prove the US economy as one of the most empowering, and considering all nations as potential threats have caused disruption among its several trading partners. Trump’s announcement of a tariff increases of 25% on steel and 10% on aluminum has shaken the European markets. They have retaliated by increasing the tariff against several US products. But in the long-term this retaliatory warfare doesn’t bode well for global trade. Professor Dani Rodrik, of the John F. Kennedy School of Government at Harvard University says, “If Europe, China, and other trade partners were to retaliate in response to Trump’s tariffs they would simply reduce their own gains from trade without reaping any of the advantages of protectionism. And they would be doing Trump a favor by lending surface plausibility to his complaints about the “unfairness” of other countries’ trade policies vis-à-vis the US. For the rest of the world, raising trade barriers would be a case of cutting off one’s nose to spite one’s face.”

India may get the benefit on the export front in the short-term,but if this war continues for a long time, its impact may seep in the Indian trade and affect it adversely. Indian markets incorporate imported goods majorly in their production. Thus, the tariff war is bound to be financially discomforting for the Indian producers.

And even though major economies may be able to face Trump’s decisions and its impact on the import-export front, retaliation from India may not go well with Trump. India may have to suffer on deals related to defense. Thus, India needs to tread on these grounds with steady steps.


The Dollar Business: Changing the trade game

If Indian businesses are looking to strengthen their exports, then they must diversify their product basket. Importers might prefer working with businesses that have a diversified product basket, as it will give more convenience to them. Working with multiple exporters will only demand more resources and manpower, which eventually adds cost.

The next area that an exporter must analyse is identifying the correct geography. Every product has a demand but in a specific market. Thus, to address such challenges exporter can now look up to The Dollar Business (TDB).
TDB is a multi-featured platform that is specific for foreign trade in India. One of its most powerful tools is EXIMAPS, which helps in buyer discovery and competition analysis. EXIMAPS is can conduct a product basket analysis, which will give an exporter a direction it needs. Another intriguing feature of TDB is World Market Analysis (WMA).

Using WMA, an exporter can select the country and can get in-depth insights into consumption patterns around the world. The business can also know the focus market and the opportunity and competition that lie in it. Thus, TDB is a complete package that a business can use to its maximum advantage for exports.