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Business Environment-Unit-VI FEB-2014

Indias Trade Policy: Policy changes and Issues- sector wise trade policies: recent developments-

GATT- WTO- agreements and implications.

Case :- Case ! Water Thie"# $%. Aswathappa# page no.&'(

What is Trade? Meaning

Trade refers to buying and selling of goods and services for money or money's worth. It involves

transfer or exchange of goods and services for money or money's worth. The manufacturers orproducer produces the goods, then moves on to the wholesaler, then to retailer and finally to the

ultimate consumer.

Indian Trade Policy

Lawsrelated to the exchangeof goodsorservicesinvolved ininternational tradeincluding taxes,subsidies, and import/export regulations.

Sector wise Trade Policies: Recent Developments

Agricultural sector

The agricultural sector has remained relatively untouched by the reforms programmes except the

thrust given in the export-Import olicy !""!-!""#.$ome progress has also been made in termsof the removal of%

&i (ontrols on the inter-state movement of certain grains and

&ii )dministered prices.*owever, controls on the export and import of certain products

reamain.the government of india has identified potential commodities in various states

and )ggricultural +xport ones &)+ have been set up in order to promote exports.

Food Processing Sector

In the food processing sector, tariff reforms have resulted in the average duties being halved

since &currently, ranging between 0 and !0 per cent.Import licensing restrictions havealso been removes. The food processing sector has witnessed increased foreign investment,

wherein up to 0and "" per cent of participation is allowed automatically for foreigners and non

1resident Indians respectively

Mining and Petroleum Sector

India heavily depends on the import of petroleum. rices,until recently,were administered but thegovernment has recently placed an emphasis on increased oil exploration domestically to reduce

import dependence and is encouraging new explorations by offering investment incentivies li2e

tax holidays to companies.

3a4or policy changes since include automatic permission for foreign e5uity

participation in the mining activity of minerals.*owever, the 6oreign Investment romotion

1| P a g e * L a q s h y a c o l l e g e o f M g m t s t u d i e s * S a h a d e v aA s s t . P r o f e s s o r
http://www.businessdictionary.com/definition/law.htmlhttp://www.businessdictionary.com/definition/exchange.htmlhttp://www.businessdictionary.com/definition/goods.htmlhttp://www.businessdictionary.com/definition/services.htmlhttp://www.businessdictionary.com/definition/services.htmlhttp://www.businessdictionary.com/definition/services.htmlhttp://www.businessdictionary.com/definition/international-trade.htmlhttp://www.businessdictionary.com/definition/international-trade.htmlhttp://www.businessdictionary.com/definition/international-trade.htmlhttp://www.businessdictionary.com/definition/subsidy.htmlhttp://www.businessdictionary.com/definition/regulation.htmlhttp://www.businessdictionary.com/definition/exchange.htmlhttp://www.businessdictionary.com/definition/goods.htmlhttp://www.businessdictionary.com/definition/services.htmlhttp://www.businessdictionary.com/definition/international-trade.htmlhttp://www.businessdictionary.com/definition/subsidy.htmlhttp://www.businessdictionary.com/definition/regulation.htmlhttp://www.businessdictionary.com/definition/law.html


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7oard&6I7 must approve foreign e5uity participation in case of over 0" per cent share of

participation.

Manufacturing Sector

8eforms have been implemented in the manufacturing sector, including

&i 8eductions in average tariff rates.

&ii 8emoval of import licensing restrictions,

&iii 8elaxations in compulsory industrial licensing, and

&iv Liberali9ation of foreign investment policies.

The rules governing foreign investment have also been considerably simplified with an enlarged

list of industries, including the automobile sector.

Services Sector

$ervices sector contributes more than 0": of India;s national income. Its overall growth has

been fueled by rapid expansion of activities in the area of finance, information technology,commerce and tourism. The software, 7< &Business process outsourcing) P!"

#no$ledge process outsourcing)sectors have contributed to the growth of the Indian

economy in the recent past.

India has large pool of well 5ualified professionals capable of providing services abroad.=)T$&=eneral agreement on Trade in $ervices 8ecogni9es >3ovements of natural persons? as one of

the modes for supply of services. *owever, the commitments shown by the developed countries

have very little to offer to the developing countries.

GATT!T" Agreements and Implications#

Introduction to GATT

$igned in @#, the =eneral )greement on Trade and Tariffs &=)TT was enacted to reduce the

number of tariffs and trade barriers and to promote international trade. Ander the =)TT, the

member countries have engaged in trade negotiations on a variety of issues. 7etween BC and@, the Aruguay 8ound negotiations included the areas of tariffs, services and intellectual

property. The Aruguay 8ound concluded with numerous agreements to reduce trade barriers and

institute more enforceable world trade rules.


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&v Dith a view to achieving greater coherence in global economic policy ma2ing, the DT< shall

cooperate, as appropriate, with the International Monetary Fund &I36 and with the

International .an2 for Reconstruction and Development &I78K and its affiliated agencies.

"&+ectives of !T"

Important ob4ectives of DT< are mentioned below%

&i To implement the new world trade system as visuali9ed in the )greementJ

&ii To promote Dorld Trade in a manner that benefits every countryJ&iii To ensure that developing countries secure a better balance in the sharing of the advantages

resulting from the expansion of international trade corresponding to their developmental needsJ

&iv To demolish all hurdles to an open world trading system and usher in international economicrenaissance because the world trade is an effective instrument to foster economic growthJ

&v To enhance competitiveness among all trading partners so as to benefit consumers and help in

global integrationJ

&vi To increase the level of production and productivity with a view to ensuring level of

employment in the worldJ&vii To expand and utili9e world resources to the bestJ

&viii To improve the level of living for the global population and speed up economicdevelopment of the member nations.

India/s role in !T"

Founder mem&er - India is a founder member of the =eneral )greement on Tariffs and

Trade &=)TT @# and its successor, the Dorld Trade


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