Trade Defficiate

7/29/2019 Trade Defficiate

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Net Exports (Trade Deficit)

Exports are domestic goods and services that are sold tobuyers in other nations.

Net exports are the difference between a country's total valueof exports and total value of imports.

Depending on whether a country imports more goods orexports more goods, net exports can be a positive or negativevalue.

A trade deficit occurs when one country buys more foreign

goods than it sells to other countries. When imports exceed exports, the result is a trade deficit.

An individual firm or industry will benefit when its exportsincrease, and suffer when competitive imports increase.


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From January of this year India have experienced a rise in their trade deficit.

i.e increase in their imports as compared to their exports.

Indias trade deficit increased up to $184.9 billion, almost 10.6 percent of

GDP which is higher than the expected

The exports rose up to 21 percent but the imports went up to 32.15 percent.

So the gap between the imports and exports grew to 56 percent

Current situation in India


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The country is aiming to boost production of domestic oil and gas. But existingfields are ageing and recent exploration has been disappointing.

Private refiner Essar Oil Ltd. and state-run Mangalore Refinery &Petrochemicals Ltd. expanded refining capacities last year.

The refinery capacity expansions meant fuel product imports fell 14% to 14.92million tons in the year to March 31, while product exports rose 2.4% to 60.52million tons, the data showed. But those exports were small compared to the

massive amount of crude imports needed to fuel the refineries.

The refinery capacity expansions meant fuel product imports fell

Congress recently passed legislation to decrease our dependence on oil byincreasing Corporate Average Fuel Economy (CAFE) standards on new cars andtrucks models by year 2020. This could reduce our petroleum use by 25 billiongallons by 2030.

Developing advanced vehicle Technologies that use energy more efficiently

Creating new energy sources that can replace petroleum cleanly and cost-effectively.

How to control import


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Reining in Import Growth Through Domestic Policy

Complimentary Measures to Rein the Import Growth throughDomestic Policy

Crude Oil : production of domestic oil and gas.

Agriculture : We are importer of Pulses Edible oils & otherCommodities, Need to Increase yield & domestic Production

Electronics & Engineering : Need to focus on Semi- conductorindustry

Gold : Increase on import duty on Gold (standard & non Standard)but might lead to imports through illegal Channels

Coal : Acquire of coal mine in abroad, Private Enterprises canimport rather than Government led

Petroleum : Need to developed sufficient Processing capacity

Fertilizers :


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Reduce the Import & Increase the Exports

Government should increase the import duty on Crude Oil

For example, the inability to raise domestic fuel pricesonly acts as an incentive to increase consumption of

hydrocarbon products, most of which are imported. Thedifficulties in getting green clearances for new coal minesis forcing domestic power companies to buy from abroad


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Focus on higher Export Growth

The deficit could be bridged with increasing exports

Devise strategy for rapidly increasing merchandise export(Goods & Services)

Provide marketing support to micro and small enterprisesthrough Export Development Fund.

Provide Additional support to those sectors that had beenface slow down for past 2 year

In actual high growth of Import is

unavoidable


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Product Strategy Market Strategy

Technologies & R &D Reining in Import Growth Through Domestic

Policy

Essential Support

Strategy to Increase the Exports in India in next 2 years


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India is leading exporter of below goods, so first we will try to increase theExport for the current products which have high market share in internationalmarket

Engineering Goods : Export is continuously increasing , Government shouldhave arrange for Industrial Park

Chemicals : Organic & Inorganic chemicals, should support to small Chemicalcompanies, India Government should have own Chemical Inventory.

Pharmaceutical : Dominated by Generic Products, India can becomePharmacy of World

Electronic Goods : Joint Venture with Chinese companies as they have mfgstrength & also market share

Agricultural & Marine Products : Good Agricultural Practices, Goodstorage/cold storage condition

Leather Products & Textiles : High value added products, instead of exportingfinished leather should export leather shoes means high value added productGems & Jwellery :

Product Strategy


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Market Strategy : Explore new Market

Demand in the Traditional Markets of the developed western world North

America & Europe is slowed down

Core of the market strategy

i) Retain Presence & market Share in our Old Developed country

Marketsii) Move up the value chain in providing products in these old developed

country Market

iii) Open up New Vistas both in terms of New Market & New Products in

these new markets. Focus on Market in Asia ( Including ASEAN), Africa & Latin America

South America and Southeast Asia. These were increasingly emerging as

attractive destinations for Indian exports.


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Thrust for quality up gradation.

Expanded certification of export products encouraged, whereneeded.

Brand India promotion campaign for key export products

Buildinga Brand Image

Technologies and R & D Rapidly changing Technology

Areas that hold out promise for high technology exportsPharmaceuticals , Electronics, Automobiles

Computer and software based smart engineering. Environmental products; green technology and high-value

engineering products. High end areas in electronics, aerospace, and engineering

products.


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Essential Support From Government Stable Policy Environment

Access to New Market

Reduce Transaction cost

Better Infrastructure

Speedy Clearance

Quality Education Facilities

Trade barriers Procedural bottle necks

Infrastructure

so the government should provide lower rate of credit to exporter

Essential policy support needed to realize the ambitious export targets for 2013-14 and

beyond is: Stable policy environment: Continuation of existing incentive schemes

Preferential access to new markets: putting in place conducive trading arrangementsReduction in transaction costs: Implementation of recommendations of Task ForceSubstantial step up in overall Plan support .

Priority strengthening of trade related infrastructure


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Government should go for all out domestic policy reforms. Whether it

is GST or DTC or banking sector reforms Speed up the Trade agreement with the European Union. Exports of

merchandise will get a boost in terms of getting improved marketaccess in products like textiles, engineering, gems & jewellery

Give concessional credit to exporters

Reduce the steps getting the export License

Improve the drawback rates so that taxes on raw material are notexported

Improve trade & political relation with neighboring countries like

Pakistan & Bangladesh. India can get increased market access at a lessercost in terms of Proximity of destinations

Support Industry initiatives for aggressive marketing & organizing of

Trade & Industrial exhibition abroad.

Preventive actions


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Summary Its is very difficult to control on Import, so if India Focus

on the increase of Export can help to balance the Trade.

Improvement in Infrastructure related to exports, reducingTransaction cost & providing full refund for all indirectTaxes & Levies

Government should provide all possible support to increase

the Export


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Thank You

Documents

Trade Defficiate