What do you mean by ‘aids to trade’?

Aids to Trade are the activities which are necessary for smooth flow of goods from produc­ers to consumers. These activities facilitate trade by removing various barriers in the buy­ing and selling of goods. The main aids to trade are given below:

1. Transport:

Transport refers to the conveyance of goods and passengers from one place to another. It facilitates trade by assembling and distributing goods. Goods are pro­duced at one place and consumed at another place.

Transport brings the goods from the place of production to all the far and distant places of consumption.

It helps the con­sumers in getting a wide variety of goods at reasonable prices. It promotes specialisation of business activities. Trade overcomes the barrier of distance and creates place utility.

Transport widens the market and helps to equalize prices at different places. It results in the equitable distribution of goods among far flung areas. Quick and economical means of transport such as railways, roadways, airways and shipping have widened the scope of trade to include international transactions.

Transport helps to increase the size and scale of business. Well-developed facilities of transport help industrial units to locate at the most economical places and grow to their optimum size.

Transport facilitates mutual cooperation and unity among people and nations. Thus, transport has become the lifeline of modern industry and trade.

2. Warehousing:

Now-a-days goods are produced in anticipation of demand. It is, there­fore, necessary to store the goods until they are sold. Many products such as wheat, sugar, rice, etc. are produced in a particular season but they are needed throughout the year. Proper storage arrangements must be made in order to make the goods available throughout the year.

Besides, it is necessary to store commodities such as woollen garments and umbrellas to meet the desired seasonal demand. Warehousing removes the hindrance of time and thereby creates time utility.

It helps to stabilise prices through equal distribution of surpluses over different time periods. Warehouses are of three types, namely, private, public and bonded.

Private warehouses are owned by merchants and producers for their own storage needs. Public Warehouses are owned by harbingers, port trusts, etc. Bonded warehouses are set up by customs authorities to store goods which are liable to custom duty.

3. Insurance:

Business involves several types of risk e.g. risks arising from price fluctua­tion, dishonesty of employees, bad debts, exchange rate fluctuations, loss of goods in transit, fire, floods, etc. Insurance removes the hindrance of risk.

With the help of insurance, a businessman can protect himself from several types of risks. Insurance is based on the “principle of pooling of risks”.

A large number people who are subject to a particular risk contribute to common fund, out of which compensation is paid to those few who actually suffer the loss.

In this way the amount of risk borne by an individual businessman is reduced by distributing the burden of loss over a large number of persons.

There are various types of insurance, e.g., fire insurance, marine insurance, workmen’s compensation insurance, life insurance, etc. Insurance facilitates expansion of trade by providing security against heavy risks.

It helps businessmen to develop sense of security and freedom from anxiety. Businessmen can carry on their business with confidence and peace of mind.

4. Banking and finance:

There is usually a time gap between production or purchase and sale of goods. It takes time to collect money after sale of goods on credit. During this period, businessmen need finance to carry on their business activities.

Banks and other financial institutions provide funds and credit to businessmen. Production and distri­bution of goods and services on a large scale requires a huge amount of money at low rates of interest.

Banks facilitate large scale and efficient business operations by pro­viding cash and security. Banks also provide safe, quick and economical means for remittance of money from one place to another.

They collect money from those who do not need it and make the same available to businessmen. Banks provide funds in various forms e.g. loan, overdraft, cash credit, discounting of bills, etc.

5. Advertising:

Advertising brings goods and services to the knowledge of prospective buyers. It helps to highlight the distinctive features and utility of different products. With the help of such knowledge, consumers can obtain better value for their money. Marketing research helps to know and understand the requirements of consumers.

6. Communication:

Quick and reliable means of communication are essential for effi­cient operation of commercials acclivities ; Posts and Telegraph, Telephone Nigams, Fax, E-mail, Internet, etc. provide vital means of communication for commerce and industry.