Indian Policy on Foreign Trade Collaborations

& Counter Trade Arrangements

Collaboration is working with each other to do a task. It is a recursive process where two or more people or organizations work together to realize shared goals

Collaboration

Arrangement between two or more business entities so as to gain from the added advantage of shared manpower, technology and finance.

Trade Collaboration

“Foreign collaboration is an alliance incorporated to carry on the agreed task collectively with the participation (role) of resident and non-resident entities.”

Foreign Trade Collaboration

Pre Liberalization

Era

Post Liberalization

Era

India & Foreign Collaborations

Highly Restrictive Trade PolicyProtecting Market from foreign competitionImport Substitution IndustrialisationExport Pessimism backed by Swadeshi PrincipleComparative Advantage is not-at-all consideredDeep inward oriented approachOur bilateral trade policy was heavily skewed

toward the former communist countriesKept out of emerging trade blocks

Pre Liberalization Era

India was a founding member of the General Agreement on Tariffs and Trade (GATT) in 1947

It was always influenced by its policy of non-alignment

Promoted the idea of a Special and Differential Treatment (SDT), allowing developing countries to exempt themselves from the central commitments made by developed countries.

INDIA & GAAT

Liberalized foreign PolicyCapital and Technology flowExport oriented policyCollaborations, both in number and value

took pace in the growth rateFree trade agreements emerged

Post Liberalization Era

The unrestricted purchase and sale of goods and services between countries without the imposition of constraints such as tariffs, duties and quotas.

Free trade is a win-win proposition because it enables nations to focus on their core competitive advantage(s), thereby maximizing economic output and fostering income growth for their citizens.

Free Trade

India Afghanistan Free Trade AgreementIndia Bangladesh Free Trade AgreementIndia Bhutan Free Trade AgreementIndia Ceylon Free Trade AgreementIndia Chile Free Trade AgreementAgreement on South Asia Free Trade Area

(SAFTA)India Maldives Free Trade Agreement

India’s Trade Agreements

Asia Pacific Economic Cooperation (APEC)Association of South-East Asian Nations

(ASEAN)Gulf Cooperative Countries (GCC) August

2004With US & EUSouthern African Customs Union (SACU)

India’s relation with Trade Associations

fall of the Soviet Union

Asian financial crisis of 1997-98

India’s Balance of Payment crisis in 1990

Driving forces of the shift

Countertrade means exchanging goods or services which are paid for, in whole or part, with other goods or services, rather than with money.

A monetary valuation can however be used in counter trade for accounting purposes. In dealings between sovereign states, the term bilateral trade is used. OR "Any transaction involving exchange of goods or service for something of equal value."

Counter Trade Arrangements

BarterSwitch TradingCounter PurchaseBuy BackOffsetCompensation Trade

Types of counter trade

WheatTobaccoTeaCoffeeJuteEngineeringElectronic goodsMinerals including iron ore

What we offer?

Crude oilPetroleum productsChemicals Steel and Machinery

What we Demand?

BHEL-MMTC countertrade arrangement with Malaysia

Palm Oil – Hydro Power Project4510 Cr worth deal

Example

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