FOREIGN TRADE:-
It is also known as international or global trade. it referred to an exchange of capital and good and services among the different nations.
Economic Development:-
It is the growth of the standard of living of a nation people from a low income (poor) to a high-income economy.
ROLE OF FOREIGN TRADE IN ECONOMY:-
1. Increase in nation income:-Foreign trade plays a very important role in the economic development of any country. Pakistan also exports a lot of agricultural products to other countries and imports capital goods from other countries. Therefore, it is not wrong to say that the economic development of a country depends on foreign trade.
2. Decrease in unemployment:-With the rise in the demand for goods domestic resources are fully utilized and it increases the rate of development in the country and reduces unemployment in the world.
3. Agricultural development:-Agricultural development is the backbone in our economy. Foreign trade has played a very important role in the development of our agriculture sector. Every year we export rice, cotton, fruits, and vegetables to other countries. The export of goods makes our farmers more prosperous. It inspires the spirit of development in them.
4. Import of capital:-Foreign trade helps to improve the quality of local products and extends the market through changes in demand and supply as foreign trade can create competition with the rest of the world.
5. a Better understanding of global trade:-Foreign trade provides an opportunity to the people of different countries to meet, discuss, and exchange views and ideas related to their social, economic and political problems.
6.Interperdence:-Foreign trade is responsible for creating economic depending and establishing economic interest in the economy of the countries having trade relations.
7. Useful for world peace:-Today all the countries are tied in trade relations with each other. So foreign trade also contributes to peace and prosperity in the world.
8. Foreign exchange earning:- Foreign trade provides foreign exchange which can be used to remove poverty and other productive purposes.
Important of foreign trade development:-
1. Forced Dynamism:– Currently the foreign trade is changing continuously. All the factors like political, economical, cultural, legal, etc are continuously shifting to operate the international trade in a dynamic environment.
2. Cooperation among countries:– countries cooperate through treaties, consultations, removing restrictions, trade organizations, etc to boost foreign trade.
3. Liberalization of cross-border movement- To foster the need for open economies the Government today remove the restrictions so as to allow companies to take international opportunities.
4. Transfer of Technology:-It is the technology by which commercial technology is disseminated across the borders. It is also relevant for non-commercial technology as well like in the field of research, education, employment, and transport.
• Growth in Emerging markets- The emerging markets like India, Brazil, and other parts of Asia and South America have increased the potential size and worth of current major international trade through innovative goods and services across.
India’s Foreign Trade Problems:-
• Primary Exporting
• Unfavorable Terms of Trade.
• Long procedures and documentation.
• Large developmental and Maintenance imports.
• BOP crisis.
• Lack of Coordination.
• Corruption.
• Depleting Foreign Exchange Reserves and Import cover.
• Steep Depreciation.
• International Liquidity issues.
• Higher/Rising prices of POL imports. (Petroleum)
India’s Balance of Payments and Trade Policy:-
• Balance of Payments – It is a statement of all transactions made between entities in one country and the rest of the world over a period of time. It reflects the performance of our country in relation to the rest of the world.
It includes the :
• Current Account (not give rise to future claims)
• Capital Account (rise to future claims)
• Official Reserves Account (RBI reserves with other
countries)
Recent Developments in India’s Foreign Trade
• The foreign trade of India is quite bright despite the growing trade gap.
• It depends on the external economic climate and competitive edge of the export market.
• Continuous WTO negotiations and integration into regional trade groupings are taking place.
• More focus is provided to agricultural goods and labor incentives exports.
WTO – Economic Self Reliance
• The World Trade Organization came into being in1995 as the successor of the General Agreement on Trade and Tariffs (GATT) established in the wake of the second world war. It is a multilateral framework for the conduct of international trade in goods and services and also for the protection of IPR’s and for discussion of trade-related issues. The WTO has a set of multilateral agreements primarily on the rights and obligations that prescribes for Governments in the formulation of rules, procedures, and practices related to international trade. It is an organization to promote trade and economic self-reliance
Benefits of WTO:-
India is one of the members of WTO since 1995. Major advantages/benefits of WTO are as follows:
• Promoting free trade through a gradual reduction in tariffs.
• Provide a legal framework for negotiation of trade disputes.
• Provides greater stability and predictability in world trade.
• To foster the trade without discrimination.
• Avoids preferential trade agreements.
• Protection against ‘dumping’ of cheap surplus goods.
• Commitment to protect fair competition among trading countries.
• Developing a common platform for the countries to trade.
• Commitment for economic development.
• Creating pressure on developed countries to accelerate restrictions on imports from the least developing countries.
• Developing trade advantages like lower prices for consumers, greater competitiveness, comparative
advantage, and economies of scale.
Achievements/Importance of WTO
• Cutting the living costs by boosting trades
among nations.
• Raise the living standards of the nations
especially underdeveloped countries.
• Settle trade disputes among the nations.
• Reduce the trade tensions among the nations.
• Stimulate Economic growth and development
among the nations.
Achievements/Importance of WTO:-
• Cutting the cost of doing business internationally.
• Encourage better relations among the nations.
• Encourage good governance in the world.
• Help the countries to develop themselves by making them self-reliant.
• Provide weak countries a stronger voice or a platform to speak out.
Major highlights of India’s Foreign Trade Policy:-
• The FTP 2015-2020 determines our country's foreign policies concerning commerce, business, and trade. The last two decades have seen an exponential rise in the international trade of India.
The objective here is to promote the export and import of goods and services and also to make it easier for manufacturers to access hidden and untapped global markets. Through this policy, the Government is trying to provide security, support, and technical help to manufacturers by facilitating ease of doing business.
Major highlights of India’s FTP:-
• Increasing exports – improve employment generation – value addition within the country –‘Make in India’ program.
• Improved country’s response to facing external economic environmental challenges –understanding latest trade architecture.
• Merchandise exports from India and Services exports from India.
• EPCG scheme to export directly from indigenous manufactures.
• The ‘Niryant Bandhu Scheme’ has been
established to promote the ‘Skill India’ campaign.
• FTP focuses on creating a paperless environment in the years to come.
• A new logistics division will also be set up by the Department of Commerce.
• The Authorized Export policy which aims to double farmers’ income via providing long-term opportunities in exports.
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