Foreign Trade Regime
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Introduction
Also known as international trade. It is business across international borders. It is high in recent centuries , mainly because of Industrialization, advanced transportation, Globalization, MNCs, and outsourcing.....
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Definition
Foreign trade also called International trade is the exchange of goods and services across international borders.
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Import Vs Export
Import: commodities (goods or services) bought from a foreign country Export: commodities (goods or services) sold to a foreign country
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Foreign Trade and Economic Development
For Developing Nations 1. Provides plant, machinery & raw materials in the initial stage of development. 2. Provides technology 3. Provides consumer goods while industrialisation 4. Import for controlling prices of essential goods at home…..
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Significance of Exports
To finance our imports To increase forex reserve For economies of scale To pay foreign debts….
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Students’ Activity
Why Indian exports lagging behind?
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Why Indian exports lagging behind?
1.
2.
3.
We’ve Shortage of almost all products Problem of quality of our goods We’ve not been able to create image as a supplier of quality goods. e.g. our tea which holds a
large market share, was found adulterated with cow dung.
4. 5.
6.
Lack of transportation/shipping facilities M.C.P.U. is high. Goods not up to international standards..
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Regulation of Foreign Trade
The government has enormous powers to regulate our exports. Foreign Trade (Development and Regulation) Act, 1992 empowers the govt. to regulate imports and augment exports.
contd.
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Powers Of Central Government
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2. 3.
Powers to make provisions relating to imports and exports To design Foreign ( EXIM) policy Appointment of DGFT (Director General Foreign Trade) and his functions ….
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Balance of Trade Vs Balance of Payments
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Balance of Trade (BoT)
The difference between the total amount of exports and imports for a country in one year.
If Export > Import : favourable BoT If Import > Export : unfavourable BoT
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Balance of Payments (BoP)
BoP is broader in its scope and include both goods and services. It is a systematic record of all international economic transactions, visible or invisible, of a nation during a given period generally one year. Hence presents a better picture between one nation and the rest of the world over a specific period of time….
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Export Processing Zones (EPZs)
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A designated area where the entire production of such a zone is for exports. Created by govt. & provided with well developed infrastructural facilities. Objective is to earn foreign exchange. They can import capital goods etc., for export production without paying duty. E.g. Santa Cruz Electronics EPZ, Mumbai…
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Free Trade Zone (FTZ)
A FTZ is a part of a country where tariffs and quotas are eliminated and bureaucratic requirements lowered to attract companies raise the incentives of doing business there. (tax free area) For Example: Kandla Free Trade Zone…
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Special Economy Zones (SEZ)
A SEZ is a geographical region that has economic laws different from a country's typical economic laws to increase export or attract FDI. No Inspector Raj and once commodities go in, no body will ask any question till they come out. Only labour & Banking laws operate in these zones. E.g. Positra in Gujrat & Nangunery in Tamil Nadu….
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Now What?
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Start Exporting
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