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7/30/2019 Eco Envt of Business VI
1/8
Economic Environment
of Business
Indias Trade Policy
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: PGM, 2011
Trends & Structural Changes in
Foreign Trade
Trade has increased over the period 1950-2010
Commodity Wise
Initially imports consisted basically capitalgoods
Now they consist of Petroleum, Oil &Lubricants; Machinery; Gems & Jewellery;
Edible oil; Iron & steel; Fertilizers; etc. Initially raw materials were exported
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: PGM, 2011
Trends & Structural Changes in
Foreign Trade Now we still export Jute but its share is
decreasing; Tea; Engineering goods; POL;Chemicals; Gems & Jewellery; Ready madeGarments; Rice; Fish; Leather; etc.
Recently exports of Electronic & Computergoods; Services & Projects have increased
Country Wise
In 2007-08 we mainly imported from China;USA; Saudi Arabia; UAE; Iran; Germany;Switzerland & Singapore
In 2007-08 we mainly exported to USA; UAE;China; Singapore; UK; Hong Kong & Germany
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: PGM, 2011
Balance of Payments
Balance of Payments of a country is a systematicrecord of all economic transactions between theresidents of a country & the rest of the worldcarried out in a specified period of time
It is a broader term then Balance of Trade To ensure the balancing sometimes there is a
surplus or a deficit India had a heavy deficit during the period 1956-
76; it came down during 1976-1980 for sometime; but during 1980-1991 it became severe;1993-94 there was a turnaround & during 2001-04 for three consecutive years we had surplus oncurrent account but the situation changed againin 2008-09 due to the global recession
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1991 New Trade Policy
1991 was a watershed year in tradepolicy
Massive trade liberalization measureswere adopted
Major departure from earlierprotectionist trade policies
Before 1991 Import Substitution
Post 1991 Export Promotion
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1991 New Trade Policy
Freer Export & Import; Decanalisation
Rationalization of Tariff Structure
Convertibility of rupee on current account
Trading Houses; SEZs; EOU scheme Agricultural Export Zones; Setting up of FTWZs
Market Access Initiative Scheme
Focus on service exports; Served from India
Five Thrust sectors-agriculture, handicrafts;handloom; Gems & Jewellery; Leather & footwear
Reducing transactional costs & simplifyingprocedure
Concessions & Exemptions
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: PGM, 2011
IMF
Objectives: International Monetary Co-operation Promotion of International Trade Exchange Rate Stability Establish a multilateral system of payments Correct disequilibrium in BOP by providing
financial assistance
Conditionalities: Carry out a programme of Balance of Payments
adjustment
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World Bank
Objectives: Reconstruction & Development of its member
countries Promote Foreign Private Investment
Growth & development of International Trade Encourage loans
Conditionalities: Liberalization; Privatization & Globalization
Problems: Dominated by developed countries