Global Business Environment

Presented By,Shweta Patil THA2016MBA3P007Kavita Suvarna THA2016MBA3P007MBA – 3 Batch

Foreign Trade & Policies

Foreign Trade

• What is Foreign Trade

• Significant share of gross domestic product (GDP)

• High economic, social, and political importance

• Regulated by laws, rules and regulations of the concerned countries.

Policies for Foreign Trade

• Policies enacted by the government sector

• To discourage imports and encourage exports

• Goal - to increase a country's balance of trade surplus - increase net exports.

Tariffs

Import quotas

Export subsidies

FTDR Act 1992Foreign Trade Development & regulation Act

• 19th June 1992 - As a replacement to the Import and Exports (Control) Act, 1947.

• Government of India enormous powers to control

• Objectives:

- To provide framework

- Development, Standardization & Regulation

on Facilitating Imports – Augmenting Exports from India

• Provisions:

1) Development & Regulation2) Prohibition and Restriction3) Exim Policy4) DGFT – Director General of foreign trade5) IEC – Importer Exporter Code no.6) Issues & Suspension/Cancellation of Licenses7) Search, Inspection & Seizure8) Penalty and Contravention

FTDR Act 1992Foreign Trade Development & regulation Act

Foreign Trade Policy (FTP)

• Five year Exim policy – FTP since 2004

• Objectives – 2015-2020- A bigger player in global trade- Boosting India’s Export- Improving business environment - Simplifying trade transactions- Trade facilitation agreement with WTO –

- Stable and sustainable policy environment- Promote Diversification of India’s export basket

- Make in India, Digital India

• Key Features:

1) Export Growth Targets –

- $466 billions in 2013-2014 to $900 by 2019-2020

- Raising India’s share from 2% to 3.5%

2) Restructuring Reward Schemes –

- MEIS: Merchandise Export from India Scheme – no condionality attached to the scrips

- (SEIS): Services Export from India Scheme – service providers

3) Status Holders –

- Nomenclature

- The criteria for export performance for recognition of status holder - Rupees to US dollar earnings

Foreign Trade Policy (FTP)

Direction of India’s FTP

• Countries to which India exports and the countries from which it imports

OECD - Organization for Economic Co-operation & Development

USA, Canada, European Union (EU), Australia and Japan

OPEC - Organization of Petroleum Exporting Countries

Kuwait, Iran, Iraq, Saudi Arabia and others

Eastern Europe Romania, Russia and others.

Developing Nations China, Hong Kong, South Korea, Singapore and Malaysia.

Direction of India’s FTP

- Germany and Japan, OPEC buy Indian goods. (iii) Vast requirements of industrialization. - Imports from U.K., USA, and from many other countries.

(i) In 1947, U.K. was the main partner.

(ii) India has diversified exports- USA also has become the biggest buyer of Indian goods.

What is export promotion:

“Public policy measures which actually or potentially enhance

exporting activity at the company, industry, or national level”.

Export development is important to the firm and to the economy as a whole.

Goal of export promotion :

General benefits of the economy

Potential industries for competition with the foreign rivals

Opportunity to acheive economies of scale and growth

Export Promotion Measures

Objectives of Export Promotion

Compensate the exporters for the hihg domestic cost of production

Assistance to new and infant exporters to develop export business

Increase profits of the export business

Improve in technologies and quality to compete

Organisational Set UP: Government has established number of organisations to provide different types of assistance to exporters

Ministry of Commerce :

Most important organ concerned with the promotion and regulation of foreign trade

Department of Commerce Divisions

Administrative and General Divisions

Finance division

Economic division

Trade Policy Division

Foreign Trade Territorial Division

Exports Products Division

Service Division

Industries Division

Measures taken by Government to improve production efficiency and quality

Raw material and other input at reasonable price

Establish and expand production capacity

Import of capital goods and technology

modernise production Facilties

Provision of infrastructure for growth

Marketing Assistance:Market Development Assistance: Market and commodity research, trade delegations, trade fairs

Foreign Exchange

Production & Marketing Assistance

Marketing assistance

Trade Fair and Exhibitions

Export Risk Insurance

Finance

Quality Control and Preshipment Inspection

Institutional Assistance

India Brand Equity fund

Export Promotion Schemes

Export Promotion Zones(EPZ's): Industrial estates form enclaves from national custom territory ,situated near sea ports or airports

Objective of EPZ :

To earn foreign exchange

To generate employment opportunity

Transfer of technology by foreign investment and other means

To contribute overall development of the country

Hundred per cent Export Oriented Industrial Units:

Export promotion ad export targets considered by Export promotion Council

Objectives of EOUs:

To create additional export capacity

Special Economic Zones:

Introduced in 2000-01,to boost country's export Virtually industrial township provide infrastructure

In India First SEZ was set up in Gujurat ,Positra

Inspired by success of SEZ in China contribute about 40 % of her exports

Export Promotion Schemes

Thank You..!!Presented By,Shweta Patil THA2016MBA3P007Kavita Suvarna THA2016MBA3P007MBA – 3 Batch