An import is
a good or service bought in one country that was produced in another.
Export refers to a product or service produced in one country
but sold to a buyer abroad.
Imports and exports are the components of international trade.
What is Import and Export Code (IEC)?
An Importer -Exporter Code (IEC) is a key business
identification number which mandatory for export from India or Import to India. IEC is a 10-digit alphanumeric registration
number issued by DGFT (Directorate General of Foreign Trade). No export or import shall be made by any person without
obtaining an IEC unless specifically exempted. For services exports however,
IEC shall be not be necessary except when the service provider is taking
benefits under the Foreign Trade Policy.
Consequent upon introduction of GST, IEC being issued is the
same as the PAN of the firm. However, the IEC will still be separately issued
by DGFT based on an application. The nature of the firm obtaining an IEC may be
any of the follows- Proprietorship, Partnership, LLP, Limited Company, Trust,
Requirement of IEC.
IEC is required for various purposes, following are
some key purposes where is required:
Import and export – No importer/exporter can import/export any goods or services in
course of his or its business. In easy words we can say that IEC is a
prerequisite for import and export.
Shipment clearance –Shipment is the final step to export goods; one needs to show IEC
in order to succeed in shipment clearance
Custom clearance-it is a verification check process of the goods imported. Custom
department is sole authority to conduct custom clearance. The person importing
the goods has to furnish IEC for successful custom clearance.
Payments in respect of import and export-An importer needs to furnish IEC while making payments, on the other
hand exporter needs to furnish IEC while receiving payments.
Benefits of IEC
Practically IEC is a bouquet of benefits to its
holders, especially for exporters, some of the benefits are specified as
Global Competitiveness- A person holding IEC is free to import and export subject to
compliance of other terms and conditions, he can compete in global market with others,
so in this manner IEC provides global competitiveness to its holders
Benefits of government schemes- Export plays an important role in development of economy of a
nation, that’s why government of India always provides various benefits in
order to promote more and more export from India. Government of India provides
benefits in form of custom duty exemption, GST exemption, Duty drawback, Rebate
and deduction under income tax and through various other means.
Zero maintenance– A person holding IEC feels very convenient in such a way that IEC do
not require any periodic maintenance like annual compliances or annual filing.
Life time validity– unlike other registrations, IEC is valid for
life time. There is no requirement of periodic renewal at all.
Worldwide market reach– IEC enables the businesses to reach worldwide market and to grab
opportunities to establish business in international markets by way of export
of their products globally.
How to Apply for Import Export Code — Know the
Process Step by Step
Export (IEC) Code is a 10-digit
number given to that person who do import or export goods and services from
abroad which provided by Director General of Foreign Trade (DGFT).
is a code allotted on Individual PAN Number or company PAN number for
importing/exporting any product goods/services and also to avail several
benefits from Export development Council or DGFT.
getting an IEC Code one you have to submit valid documents and follow relevant
procedure so that the Government of India can ensure your identification as any
person or as a business company
Step 3: Enter
your PAN number (A Person/if any Company PAN Card)
Step 4: Enter
the your details (As Mentioned on PAN Card)
Step 5: Enter
your mobile number to get (OTP) verification process.
Step 6: Fill
and Update Application Entity Details
Step 7: Add
Step 8: Fill
and update the Director/Partner details.
Step 9: Upload
Documents Scanned Copies of Essential Documents.
Step 10: Fee
Preview & Print Application
Step 12: Final
Submission You have to do in the last step
Documents required to apply IEC online are as follows:
ID proof of
individual Aadhar card, voter ID, passport
Mobile No. and
directors in case company applicant
of business premises i.e. Rent agreement, sale deed, lease deed or
electricity bill with NOC from owner.
Cases where Export Import Code (EIC) is not
According to the latest
circular issued by the government, IEC is not
mandatory for all traders who are registered under GST. In all such cases,
the PAN of the trader shall be construed as new IEC code for the purpose
of import and export.
Import Export Code (IEC) isn’t required to be taken
in case the goods exported or imported is for personal purposes and isn’t used
for any commercial purpose.
Export/ Import done by the Government of India
Departments and Ministries; Notified Charitable institutions need not require
getting Import Export Code.
Outsourcing is a business practice in which services or job
functions are farmed out to a third party. or
an external supplier for providing part or all business processes or functions.’
What is Finance & Accounting (F
& A) Outsourcing?
Finance and accounting (F&A) business process outsourcing (BPO) consists of support for multiple business processes in the F&A domain through a single BPO contract.
Companies choose to outsource F & A services either
onshore (within their own country), nearshore (to a neighbouring country or one
in the same time zone), or offshore (to a more distant country). Nearshore and
offshore outsourcing have traditionally been pursued to save costs.
First and Foremost, Beginning of F & A Accounting
The use of modern
multi-process FAO began with a 1990 meeting in a London hotel between a British
Petroleum (BP) CFO and a partner at the consulting firm now known as Accenture.
The two men discussed the severe challenges the oil company confronted:
plummeting oil prices, new, highly agile competition, and a burdensome cost
structure. The discussion produced an innovative idea: rather than simply
providing advice on how to make the CFO’s function more efficient, Accenture
would take over the CFO’s entire accounting function, with the exception of
control and financial policy. The following year, more than 300 BP employees
from numerous locations transferred to Accenture’s outsourcing centre in
Aberdeen, Scotland. There they performed forecasting, payment processing, joint
venture accounting, and other processes that Accenture designed and managed.
BP reduced the
costs of the outsourced processes by an estimated 50% over the term of the
agreement, which then was renewed several times and still continues today, a
time when the oil giant spends an estimated $1 billion annually in outsourced
services of all types with various vendors.
outsourcing (BPO) is an overarching term for outsourcing of a specific business
process task, such as payroll etc. BPO is often divided into two categories:
back-office BPO, which includes internal business functions such as billing or
purchasing, and front-office BPO, which includes customer-related services such
as marketing or tech support. Finance & Accounting outsourcing (FAO),
therefore, is a subset of business process outsourcing.
While most business
process outsourcing involves executing standardized processes for a company,
knowledge process outsourcing (KPO) involves processes that demand advanced
research and analytical, technical and decision-making skills such as
pharmaceutical R&D or patent research.
F&A outsourcing clearly falls under the domain of FAO. However, FAOs often are involved in — or even oversee — non-FAO business process and knowledge prcess.O
Outsourcing Trends and Statistics for 2019-2020 and Beyond
The BPO industry offers its service across various end use industries such as BFSI (Banking, Financial Services and Insurance), healthcare, manufacturing, IT and telecommunications, retail, and others. The other segments include travel and transportation, government, education, construction, and utilities. The BFSI segment secured a market share exceeding 30.0% of the global business process outsourcing market in 2019 and is anticipated to grow at the rate of 8% CAGR from 2019 to 2027.
The European market for business process outsourcing
accounted for more than 26.0% of the global market share in 2019.
Because of the benefits of outsourcing, many companies find
that it’s an attractive option that allows their businesses to grow. In
fact, 37% of small businesses currently outsource a business process.
Among this number, 24% choose to outsource primarily to increase efficiency,
while 18% are looking to receive assistance from an expert.
About 60% of companies
outsource their various functions to reduce the cost of processing.
that around 80% of businesses are feeling very positive about their outsourcing
Around 40% of
businesses outsourced their Finance & Accounts function to outsourcing
India is most
lucrative destination for the global outsourcing destination in terms of
financial attractiveness, people skills & availability and business
Key Companies & Market Share Insights
The major global
players in this field are such as Accenture, Infosys Limited, HCL, Wipro,
Capgemini, and Amdocs. A diverse range of services allow these companies to
gain a competitive edge in the market. For instance, Capgemini, one of
the pioneers in the BPO industry is engaged in offering multiple BPO services
such as financial services, supply chain and procurement, and business
At times these
market players particularly focus on entering into mergers & acquisitions
and joint ventures/collaborations in order to enhance their market presence.
For Instance, in July 2018, Wipro Limited announced the acquisition of Alight
HR Services in India for a total deal value of USD 1.5 billion. The company
offered human resource outsourcing, IT outsourcing, and finance process
outsourcing. These days companies are focusing on setting up new BPO centres
across the globe to expand their market presence and augment their existing
customer base. For instance, in September 2017, Infosys Limited, India announced
the establishment of a new service centre in the Netherlands. This office is
engaged in providing finance and accounting and other end-to-end outsourcing
Business Process Outsourcing Market Report Scope
Market size value in 2020
USD 237.0 billion
Revenue forecast in 2027
USD 405.5 billion
CAGR of 8.0% from 2020 to 2027
Base year for estimation
Finance and Accounting
Outsourcing Life Cycle.
In this decision
tree, the consulting firm breaks down the finance and accounting processes a
company is likely to decide to outsource or keep in-house after working through
Outsourcing benefits and costs
The business case
for outsourcing varies with situation, but the benefits of outsourcing often
include one or more of the following:
Lower costs (due to economies of scale or
lower labour rates)
Increased focus on strategy/core
Increased access to skills or resources
Increased flexibility to meet changing
business and commercial conditions
Accelerated marketing in less time
Lower ongoing investment in internal
Access to innovation, intellectual
property, and thought provoked leadership
on outsourcing benefits suggests that cost reduction remains FAO’s primary
motivation. By far the most important criteria for selecting a finance and
accounting outsourcing provider among North American companies are price and
the deal’s overall economic proposition; the FAO provider’s “transformational
capability” represented only the 12th (out of 18) most important
provider-selection criteria (CFO Research Services).The most frequently
outsourced finance and accounting processes are (in priority) accounts payable
(A/P), accounts receivable (A/R) and payroll. Turning over these processes to
an outside vendor rarely delivers transformational benefits; rather, the primary
objective is cost reduction. This may reflect the number of years that FAO
outsourcing has been occurring; other criteria may evolve as the process
matures, as has happened to some degree with IT outsourcing. The benefits
associated with finance and accounting outsourcing are similar to those
associated with both HR and IT outsourcing:
Some of the risks of outsourcing include:
Slower turnaround time
Lack of business or
Language and cultural
Time zone differences
Lack of control
Outsourcing is sometimes
difficult to implement, & hence the failure rate of outsourcing
relationships remains high. Depending on outsourcing partner, it can be
anywhere from 20 to 30 percent. The heart of this problem is the inherent
conflict of interest in an outsourcing arrangement. The client seeks better
service, often at lower costs, than they would incur doing the work inhouse.
The vendor, however, wants to make more & more profit. That tension must be
managed closely to ensure a successful outcome for both client and vendor.
Another cause of
outsourcing failure is the rush to outsource in the absence of a good or
logical business case. Outsourcing pursued as a “quick fix”
cost-cutting manoeuvre rather than an investment designed to enhance capabilities,
expand globally, increase agility and profitability, or bolster competitive
advantage, is more likely to disappoint.
risks increase as the boundaries between client and vendor responsibilities
blur and the scope of responsibilities expand. Whatever be the type of
outsourcing, the relationship will succeed only if both the vendor and the
client achieve expected benefits.
Service levels agreements
A service levels arrangement is a contract between an F&A services provider and a customer that specifies, usually in measurable terms, what services the vendor will furnish. Service levels are determined at the beginning of any outsourcing relationship and are used to measure and monitor a supplier’s performance.
Often, a customer
charges a penalty fee from vendor, if certain SLAs are not met. Used
judiciously, that’s an effective way to keep a vendor on the track. But no FAO
wants to go into the business of penalty-charging and collecting. Bad service
from an outsourcing vendor, even at a deep discount, is still bad service, and
can lead to greater problems. It’s best to expend energy in finding out why the
SLAs are being missed in the first place and work together to solve the well
within time. Strong SLAs alone will not guarantee success when outsourcing
F&A services. They’re one of many tools to manage an F&A outsourcing relationship.
Outsourcing deal lengths
What’s the best
length for a skirt? While the outsourcing industry is not quite as fickle as
fashion, the prevailing wisdom about the best length for an outsourcing
contract has changed over the years. When outsourcing first emerged as a viable
option, long contracts — as many as 10 years in length — were the norm. As some
of those initial deals lost their shine, clients and vendors moved to shorter
As with most questions
about outsourcing, the optimal answer depends on what’s being outsourced and
why. While decade-long deals have largely gone by the wayside, a
transformational outsourcing deal may require more time to reap benefits for
both client and vendor.
The use of
finance and accounting outsourcing is increasing throughout the world. FAO
arrangements offer companies opportunities to significantly reduce costs,
access better skills and technologies, and achieve allied benefits. These
include sharpening the organization’s focus on core competencies, or moving
finance and accounting professionals away from transactional duties towards
more strategic responsibilities. To capitalised on these opportunities,
companies pursuing FAO arrangements must avoid problems that damage
relationships with service providers and lower the returns on their FAO
FAO is of significant interest to finance and
accounting professionals due to the discipline’s growing use, its risks and
benefits, and its growing importance to a finance and accounting department. As
the CFO of a $2 billion U.S. manufacturing company notes, outsourcing is
practically a “ticket to the game” for finance executives and their
organization. “We have to be competitive on every front,” she says, “and
outsourcing is one way to get there,” (CFO Publishing Corp.)
Sources Use grandviewresearch.com, cio.com superstaff.com & Google search
IFSCA stands for “INTERNATIONAL
FINANCIAL SERVICES CENTRES AUTHORITY”.
A unified authority to regulate all
financial services in International Financial Services Centres (IFSCs) in the
stands for international Financial service centre
IFSC are centre that cater to customer
outside their own jurisdiction. Such centres deal with flows of finance, financial products
and services across borders.
Therefore, they provide world class financial services to Resident
and Non-residents in Currency other than the domestic currency of the location
where the IFSC is located.
Global IFSC———-Which serve the client all over the
world e.g. London, New York, Singapore.
Regional IFSC —— Which serve regional economies rather
than world economies e.g. Dubai & Hong Kong.
It was way back in 2005 the concept of IFSC has been notified in
the special Economic Zone Act 2005. Where it has been specified that The IFSC
can be established in SEZ. But only one IFSC is allowed in one SEZ, it means in
India many IFSC can be established but only one IFSC in one SEZ.
On 10th 2007 in chair of ex Financial Minister Mr P
Chidambaram The High-Powered Expert Committee (HPEC) form to introduce
IFSC in Mumbai. This committee elaborates the following reason for India should
have the IFSC
World leadership in Information technology.
Location is far from nearby International
Strong securities market and trading platform.
Rule of law.
Indian Economic growth and globalisation drives Indian demand for
IFSC, but there was no further endeavour from India to develop IFSC till 2015
when then Finance Minister Late Mr Arun Jaitley announced GIFT City the Indian
first IFSC and also pronounced to notify all the necessary guidelines for IFSC.
In 2017 during the vibrant Gujarat Summit PM N. Modi inaugurates
the GIFT City the First Indian IFSC.
Financial Activities in IFSC
flow of financial products/services across border.With
resident deployment of funds and with non-residents entities for both raising
of resources and deployment of funds.Provide
banking/financial services to the units of the IFSC.
and commodity exchange.Depository.Clearing
such as Merchant banker, broker, mutual funds etc.Investment
Key reliefs/benefits to IFSC Units
Relief under companies Act
companies have to suffix IFSC in their names.Time
limit relaxation for filling for various forms to ROC.Exemption
from the standard prescribed by The Institute of Company secretaries of
Companies need Internal Audit if their AOA provide for the same.
Regulatory relief to units in IFSC
financial unit in IFSC shall be treated as non-resident Indian located
outside India.The IBU
(International Banking Unit) are exempt from CRR and SLR requirements.IBU can
be trading member of stock exchange in the IFSC.IBU Can
become a professional clearing member of the exchange in the IFSC.
Direct Tax Benefit
holiday for 10 years.Income
and Dividend distribution tax exemption.Security
transaction tax not leviable.Capital
gains exemption for sale of specified securities on the stock exchange in
on Interest income.
Indirect Tax Benefit
Exemption for Customs payment for imports of
goods for setting up of the IBU.Exemption for GST in case of imports of
service from HO or other branches located across the globe.
Stamp Duty Exemption
Exemption of payment of stamp duty on registration
of properties in IFSC.
Establishment of IFSCA
ministry has established the International Financial Services Centres Authority
(IFSCA) through a notification last month in April 2020. The body will be
headquartered in Gandhinagar in Gujarat, as per the notification.
the government has established a unified authority to regulate all financial
services in International Financial Services Centres (IFSCs) in the country.
the banking, capital markets and insurance sectors in IFSC are regulated by
multiple regulators such as Reserve Bank of India (RBI), Securities and
Exchange Board of India (SEBI) and Insurance Regulatory and Development
Authority of India (IRDAI).
notification brings into effect certain provisions of the IFSCA Act, 2019,
related to its functioning, however, the Centre refrained from fully enabling
the authority with all its powers as envisaged in the Act.
allowing for the appointment of its members and other employees, setting up of
funds and exemption from taxes, the government has not affected provisions
pertaining to the regulation of financial products, financial services and
financial institutions in IFSCs.
Main function of IFSCA.
The Authority shall regulate financial products such as Securities
Deposits of contract of Insurance
Earlier all such financial products were regulating by their
respective regulating authority.
It will follow the all processes which are applicable to such
financial products under their respective laws.
Table: – Representation
of various regulating authorities in India.
Total member IFSCA will consist of 9 members.
One-member Representative from each RBI SEBI
IRDA and PFRDA.
Two-member representative from ministry of
Two members on recommendation of search
(i) Lender is a person who deposits the securities
registered in his name or in the name of any other person duly authorised on
his behalf with an approved intermediary for the purpose of lending under the
(ii) Borrower is a person who borrows the securities
under the scheme through an approved intermediary.
(iii) Approved intermediary is a person duly registered by
the SEBI under the guidelines/scheme through whom the lender will deposit the
securities for lending and the borrower will borrow the securities;
SLB– Securities Lending and Borrowing
is a mechanism through which investors can borrow or lend shares to other
market participants. The platform provides a viable alternative to derivatives
market for purposes of hedging. Borrowers in SLB are usually short-sellers i.e.
traders who want to sell shares that they don’t own. Lenders on the other hand
are those investors who have bought shares for long-term purposes and such
shares are lying idle in their demat accounts. This
mechanism provides liquidity to the equity market and thereby increases the
you avail from a bank, if you have borrowed the shares from another investor,
an interest/ fee has to be paid for the lender. The interest rate varies from
stock to stock and also depends on tenure of such borrowings. As per SEBI
rules, stocks can be borrowed for a maximum period of 12 months. The interest
rate for such lending is not fixed but is determined by the market conditions.
Globally, long-term investors such as mutual funds or insurance
companies are key lenders in SLB.
in India Market regulator SEBI has announced transition of Indian derivatives
market from cash settlement to physical settlement. Until now, investors
largely used SLB for reverse arbitrage opportunities i.e. those situations
where future contracts of company are trading at a discount to the cash market
prices. In such scenario, traders sell stocks and buy futures contracts.
SEBI’s decision to move to physical settlement will bring more short-sellers to
an F&O (Future and Options) trader has three courses of action available
for him. Either he can square-off his position before expiry and pay the cash
differential, or he can roll-over the contract for next month. If the investor
doesn’t choose any one of these two options, the contract gets expired and
under physical settlement, shorts will have to offer shares to cover the open
In India Market
regulator SEBI has placed several safeguards for the platform including
reliable settlement system. Unlike many other countries, SLB is an
exchange-traded product in India, settled by the clearing corporations, which
means there is no counterparty risk.
SLB is a popular mechanics in financial market
globally, yet very few people are aware full length and breath of this concept.
Small and retail investors don’t have the expertise of financial markets hence
seldom know SLB benefits.
There are numerous benefit to lenders which are given
Protection of all rights as owner.
Settlement Guaranteed market
Potential to improve the portfolio
Tax Implication in India
Indirect tax– The supply of lending of securities
under the scheme is leviable to GST@ 18%.
Direct Tax – income
from business of lending/borrowing or income from other sources of income and
will be taxable at applicable rates.