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BBA 3rd Year Recent Trends In India Foreign Trade Long Question Answer Paper

Project Goods : During 2011-12 (April-October), the export of project goods were estimated at US $ 29.05 million compared with US $ 38.18 million during the corresponding period of last year registering a negative growth of 23.91 per cent.

Petroleum Products: Export of petroleum products increased to US $ 34667.02 million during 2011-12 (April- October), as compared with US $ 21135.13 million during the same period of last year recording a growth of 64.03 per cent.

Cotton Raw Including Waste: There was a growth in the exports of cotton raw including waste by 178.63 per cent from US $ 389.52 million in 2010-11 (April-October) to US $ 1085.30 million during 2011-12 (April- October).

Imports by Principal Commodities: Disaggregated data on imports by principal commodities. both in rupee and dollar terms, available for the period 2011-12 (April- October), as compared to the corresponding period of the previous year are given in Table 5 and Table 6 respectively. Imports of the top five commodities during the period 2011-12 (April-October) registered a share of 62.8 per cent mainly due to significant imports of petroleum (crude and products), gold, electronic goods, pearls, precious and semi-precious stones and machinery except electrical and electronic.

The share of top five principal commodity in India’s total imports during 2011-12 (AprilOctober) is given below:

Table 5. Share of top principal commodities in India’s imports 2011-12 (April-October).

BBA 3rd Year Recent Trends In India Foreign Trade Long Question Answer Paper

The import performance by growth of top five principal commodities during 2011-12 (April October) vis-a-vis the corresponding period of the previous year is shown at table 6.

BBA 3rd Year Recent Trends In India Foreign Trade Long Question Answer Paper

Table 6. Top five commodities of import by growth 2009-11 and 2010-11.

Fertilizers: During 2011-12 (April-October), import of fertilizers (manufactured) decreased to US $ 4413.85 million from US $ 4695.51 million in April-October 2011 recording a negative growth of 6.00 per cent.

Petroleum Crude and Products : The import of petroleum crude & products stood at US $ 85002.32 million during 2011-12 (April – October) as against US $ 58175.62 million during the same period of the previous year registering a growth of 46.11 per cent.

Pearls, Precious and Semi-Precious Stones : Import of pearls and precious and semi-precious stones during 2011-12 (April- October) increased to US $ 17187.45 million from US $ 16907.33 million during the corresponding period of the previous year registering a marginal growth of 1.66 per cent.

Capital Goods : Import of capital goods, largely comprises of machinery, including transport equipment and electrical machinery. Import of machine tools, non-electrical machinery, electrical machinery and transport equipment registered a growth of 43.24 per cent, 26.87 per cent, 26.39 per cent, and (-) 8.74 per cent respectively.

– Organic and Inorganic Chemicals : During 2011-12 (April- October), import of organic and inorganic chemicals increased to US $ 10884.61 million from US $ 8847.19 million during the same period of last year, registering a growth of 23.03 per cent. Import of medicinal and pharmaceutical products increased to US $ 1615.63 million from US $ 1425.68 million during the corresponding period of last year registering a growth of 13.32 per cent.

Coal, Coke and Briquettes: During 2011-12 (April- October), import of coal.coke & briquettes increased to US $ 9870.14 million from US $ 6570.07 million during the same period of last year, registering a growth of 50.23 per cent.

Gold & Silver : During 2011-12 (April-October) import of gold and silver increased to US $38817.81 million from US $23320.39 million during the corresponding period of the previous year registering a growth of 66.45 per cent.

Direction of India’s Foreign Trade : As far as the direction of trade in terms of imports is concerned during the period 2013-14, Asia accounts for the highest percentage share in India’s total imports with the share of 60.78 per cent, followed by Europe (15.62 per cent) and America (12.79 per cent). Among the individual countries, the share of China was the highest (11.39 per cent) followed by Saudi Arabia (8.12 per cent), United Arab Emirates (6.41 per cent), USA (4.99 per cent) and Switzerland (4.14 per cent).

Rank Country Apr-Mar Apr-Mar %Growth %share
1. China PRP 2,84,384,59 3,09,234.96 8.74 11.39
2. Saudi Arabia 1,84,684.80 2,20,515.49 19.4 8.12
3. United Arab Emirates 2,12,923.33 1,35,613.46 -1.18 4.99
4. USA 1,37,238.59 1,12,338.18 -1.18 4.99
5. Switzerland 1,74,511.85 1,12,338.18 -35.63 4.14

India has trading relations with all the major trading blocks and all the geographical regions of the world. Region-wise and sub-region-wise spread of India’s trade during 2012-13 and 2013-14. (in Rupee terms) is given in Table 2. During the period 2013-14, the share of Asia region comprising East Asia, ASEAN, West Asia-Golf Cooperation Council (GCC), other West Asia, NE Asia, and South Asia accounted for 49.45 percent of India’s total exports. The share of Europe in India’s exports stood at 18.57 percent of which EU countries (27) comprises 16.44 percent. Both North and Latin America stand third together as a region with a share of 17.23 per cent in India’s total exports. During the same period, in the top destinations (Table 2) USA (12.42 per cent) has been the most important country of export destination followed by United Arab Emirates (9.7 per cent), China (4.77 per cent), Hong Kong (4.05 per cent), and Singapore (3.94 per cent).

Q.9. Give a description of efforts made by government for export promotion in India. (2014)

Ans. Governments’ Policies for Export Promotion

Governments have many different policies, programs, and activities to help develop competitive products and increase export sales. Export promotion has been defined as “those public policy measures which actually or potentially enhance exporting activity at the company, industry, or national level.” Although many forces determine the international flow of goods and services, export promotion is one of the principal opportunities that governments have to influence the volume and types of goods and services exported from their areas of jurisdiction.

Government of India, like in almost all other nations, has been endeavouring to develop exports. Export development is important to the firm and to the economy as a whole. Government measures aim, normally, at an overall improvement of the export performance of the nation for the general benefit of the economy. Such measures help exporting firms in several ways.

Export promotion strategy promotes only the industries that have potential for developing and competing with foreign rivals. Since the goal is to trade abroad, there becomes competition, which in turn remedies the returns to scale. The main goal of the export promotion is to prepare the “potential industries for competition with the foreign rivals. So the industries at their childhood must be protected for a while.

Export Promotion Schemes by Indian Government

After the economic reforms of 1991-92, liberalisation of external trade, elimination of duties on imports of information technology products, relaxation of controls on both inward and outward investments and foreign exchange and the fiscal measures taken by the government of India and the individual state governments specifically for IT and ITES have been major contributory factors for the sector to flourish in India and for the country to be able to acquire a dominant position in offshore services in the world. The major fiscal incentives provided by the government of India have been for the Export Oriented Units (EOU), Software Technology Parks (STP), and Special Economic Zones (SEZ).

Software Technology Parks (STPs) : For the promotion of software exports from the country, the software technology parks of India was set-up in 1991 as an autonomous society under the department of electronics and information technology. The services rendered by TP for the software exporting community have been statutory services, data communications servers, incubation facilities, training and value added services. STPI has played a key development the promotion of software exports with a special focus on SMEs and start up units. The me which is a 100% export oriented scheme has been successful in fostering the growth one ano industry. The exports made by STP units have grown over the years.

The STP scheme allows software companies to set-up operations in convenient anima n locations and plans their investment and growth driven by business needs. Ove v

me registered under STP scheme.

Various Benefits under STP Scheme: These are as follows: (a) Customs duty exemption in full on imports. (b) Central excise duty exemption in full on indigenous procurement. (c) Central sales tax reimbursement on indigenous purchase against form C. (d) All relevant equipment/goods including second hand equipment can be imported (except

prohibited items). (e) Equipment can also be imported on loan basis/lease. (f) 100% FDI is permitted through automatic route. (8) Sales in the DTA up to 50% of the FOB value of exports permissible. (h) Use of computer imported for training permissible subject to certain conditions.

(1) Depreciation on computers at accelerated rates up to 100% over 5 years is permissible.

In 2005, the department of commerce, ministry of commerce & industry, the government of India has enacted the Special Economic Zone (SEZ) Act, with an objective of providing an internationally competitive and hassle free environment for exports. An SEZ is defined as a “specifically demarked duty-free enclave and shall be deemed to be foreign territory (out of customs jurisdiction) for the purpose of trade operations and duties and tariffs”. The SEZ Act, 2005, supported by SEZ rules, came into effect on 10th February 2006. It provides drastic simplification of procedures and a single window clearance policy on matters relating to central and state governments. The scheme is ideal for bigger industries and has a significant impact on future exports and employment.

The SEZ policy aims at creating competitive, convenient and integrated zones offering world class infrastructure, utilities and services for globally oriented businesses. The SEZ act 2005 envisages key role for the state governments in export promotion and creation of related infrastructure. Salient features of SEZ scheme are as under:

(1) Duty free import/domestic procurement of goods for development, operation and

maintenance of SEZ units. (ii) 100% income tax exemption on export profits available to SEZ units for 5 years. 50% for

next 5 years and 50% of plowed back profits for 5 years thereafter. (iii) Exemption from central sales tax. (iv) Exemption from service tax. (v) Single window clearance for central and state level approval.

Indian Government’s Policy for Global Merchandise Trade

To achieve the objective laid down under the foreign trade policy and double India’s percentage share of global merchandise trade the government is committed to provide a stimulus to exports through various export promotion schemes as follows:

(a) Advance Licensing Scheme.

(b) Duty Free Replenishment Certificate (DFRC) Scheme.

(c) Duty Drawback Scheme.

(d) Export Promotion Capital Goods (EPCG) Scheme.

(e) Export Oriented Units (EOUS), Electronics Hardware Technology Parks (EHTPs), Software

Technology Parks (STPs) Scheme.

(f) Served from Indian Scheme.

(g) Target Plus Scheme.

(h) Duty Entitlement Pass Book (DEPB) Scheme.

(i) Vishesh Krishi Upaj Yojana.

Besides, there are other schemes in operation which are basically in the nature of rewar schemes to reward high performing exporters. Target plus, served from India and Vishesh Krishi pas Yojana are reward schemes. Rewards are given on the basis of incremental exports/export turnover and such rewards have no linkage whatsoever with the duties and taxes borne on export goods.

Improving Export Infrastructure: Many policy measures have been announced in the budget to improve infrastructure. For example, corporatization of ports in a phased manner and a package of concessions to private sector entry in greenfield airport projects announced in the budget are expected to help the export sector.

Agricultural Exports: These are as follows:

(a) The corporate sector with proven credentials are encouraged to sponsor Agro Export

Zone for boosting agro exports. They may provide for pre/post harvest treatment and operations, plant protection, processing, packaging, storage and related research and


(b) Duty Entitlement PassBook (DEPB) rate for selected agro products would factor in the

cost of pre-production inputs such as fertiliser, pesticides and seeds.

Gems & Jewellery Sector : These are as follows:

(a) Diamond & jewellery dollar account for exporters have been allowed for dealing in

purchase/sale of diamonds and diamond studded jewellery.

(b) Nominated agencies can accept payment in dollars for cost of import of precious metals

from EEFC account of exporter.

(c) Gems and jewellery units in SEZ and EOUs can now receive precious metal, i.e. gold/

silver/platinum prior to exports or post exports equivalent to the value of jewelry exported. This means that they can bring export proceeds in kind against the present provision of

bringing in cash only.

(d) The import of gold and silver in various forms such as powder, unwrought sheets, plates

strips, tubes, pipes has been made free.

BBA 3rd Year Recent Trends In India Foreign Trade Long Question  Answer Paper
BBA 3rd Year Recent Trends In India Foreign Trade Long Question Answer Paper

FDI in Export Sector and SEZ Policy: SEZ policy has been strengthened. Besides the tax incentive and permission for setting up Overseas Banking Units (OBUS) in SEZs, many other facilities have been extended to SEZs in the Exim policy.

The BJP led central government is working hard to bestow new height to export promotion. Now the turn is of industrialists and mercantile groups to prove themselves for ‘Good mind, Good Find’ and ‘Handsome is that Handsome Does.

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