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BBA 1st Year Business Environment FEMA Short Question Answer

12. SEZ’s have been declared as the “best of one dream projects” Bank branches in these zones as overseas branches free of CRR, SLR and priority sector lending requirements.

Q. 6. Define export promotion. What is the rationale of exports promotion? Discuss the need of export promotion. What are the causes of slow rate of export growth? Why should exports increase?

Ans. Meaning and Rationale of Export Promotion

Meaning of Export Promotion : In a narrower sense, the term ‘export promotion, is considered to be limited to market research, advertising, packaging trade mission and fairs and other elements related to demand side.

In a wider sense, however it would embrace all the economic, social and political stimuli, that would have direct or indirect effect in increasing a country’s export.

Rationale of Export Promotion : The rationale of export promotion scheme can be better appreciated if we can analyse the causes that are responsible for slow growth of export. On the other hand the factors that make an expansion in exports necessary for the Indian economy.

Causes Responsible for SlowGrowth of Exports.: Various causes for slow growth of exports are:

(i) Inadequate exportable surplus.

(ii) Incompetitive price.

(iii) Attraction of domestic market.

(iv) Transportation and shipping problem.

Need to Increase in the Level of Exports

Need to in’èrease level of exports can be described as follows:

1. Import needs of the country are likely to increase in future unless, we are ready to slow down our progress of growth; on account of direct oil purchase and the investment induced imports of foreign technology and capital.

2. Our debt servicing burden has already assumed serious problem and is projected to grow more serious.

3. Th type of technôlogy available which favour large production units by bringing economies of scale, our production structure, at least in a few important sectors, may outrun our domestic requirement. If this structure is to expand and reap economies of scale, it may become necessary to widen the market base by exploring new markets abroad.

4. Export is also needed to increase earning capacitys for import of essential consumer goods, whose domestic shortage have very often in the part, created serious instabilities in economy.

5. Existence of highly diversified industry, with a large entrepreneurial base experienced in assimilating technology, is providing the on-going reform process with the opportunity to generate rapid epansion in manufactured export.

‘IrIshort, export is to growth what oxygen is to human organism, and therefore, the export sector is being regarded second only to defence. This expressed the need for a vigorous export drive.

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