Essay on import export business in India

Structure of export helps us to know the different types of goods that a country exports. The export of India is divided into two types. They are traditional and non-traditional (modern).

Jute products, tea, cotton garments, metal ore, raw skin, cashew nuts, tobacco leaves and other spices have been exported by India for a long time. As these have been exported for a long time, it is known as traditional export commodities.

On the other hand, there are some other goods which are now being included more in export, generally known as non-traditional goods. These non-traditional goods include engineering goods, iron and steel, chemical fertilizers, skin products etc. The importance of non-traditional goods in export is gradually getting importance.

Eight agro-based goods like coffee, tea, cashew nuts, raw cotton, fertilizers, rice, sugar, tobacco and spices occupied third place. The importance of iron and steel, metallic goods, transport equipments, machineries and engineering goods is also more among other exported goods. Except these above stated goods, skin and skin products, tea, petroleum products, iron ore, fish and fish products, cotton garments, cottage industries products etc. were also exported.

Direction of Export:

Among the different countries to which our country exported before independence, the share of England was the largest. Due to our export to other countries and availability of substitutes in England, the importance of England as importer of our products declined.

The countries to which we exported our goods in the year 1987-88 were European Economic Union including West Germany. Except these countries, there was also an increase in the export of our country to the U.S.S.R. Japan, England, organisation of petroleum exporting countries and east European communist countries. Developing countries were also the importers of our products. The export of India to the U.S.A. and European Economic Union is the largest.

Foreign Trade Policy of India:

The value of export of India is less than the value of import of India. The aim of our foreign trade policy is to reduce the difference between the value of import and the value of export. The different steps which are taken to overcome this gap are divided into three types. These are Import Control, Import Substitution and Export Promotion.

Import Control:

Our country has adopted import policy since the beginning of Five Year Plan. A developing country like India needs a restrictive import policy unless which the produced goods of developed countries will capture the market of India because the new industry of India cannot compete with the established industries of developed countries.

Import restriction policy helps to control our market from foreign competition which helps economic development. Due importance is given to defence and other area. It is not possible to reduce the import of those goods which are necessary to build our defence strong.

Liberal policy is adopted to import capital goods and technical knowledge for rapid industrialization. It means the structure of import is channeled by adopting different restrictions on import. The commodities which are necessary are imported and other commodities imports are strictly regulated.

Import Substitution:

The production of imported commodities inside a country to reduce import is known as import substitution. More is in the production of the substitute of import, the Jess in dependence on foreign market and import.

Different incentives have been provided by the Government to establish import substitute industries for import substitution. Due to different measures of our Government, we have achieved a lot in the field of import substitution. For example, we are not now depending upon foreign markets in the field of iron and steel, aluminum, machineries for textile industries and an innumerable consumer’ goods.

Export Promotion:

Foreign trade policy of India gives importance to export promotion. Different steps have been taken to increase the export of both traditional and non-traditional goods. Increase in export needs means an increase in the demand for our goods in the foreign market. To achieve this, Government has given importance to market related research and survey.

Trade fairs and exhibitions are organised by our Government in the foreign countries to develop and generate interest for our products. Representatives are sent to foreign countries to create market for our products. Bilateral trade agreement is also signed and improved among different countries.

Generation of interest for our produced goods is not enough to boost export but it needs to fix an accepted price to the foreigners. It needs modernization of export units and use of new techniques to make it more competitive. Keeping these things in mind our Government has given importance to modernize export units.

Different steps have been taken for export promotion. In some sectors, subsidy is given to the export units. In other sectors, permission is granted to import raw materials and machineries etc. against exported goods. Except these, taxes are also reduced on the commodities which are used by export units for producing their goods.

In some cases export duties are reduced or exempted on exported goods. Credit is granted at a cheaper rate to exporter through Reserve Bank of India, State Bank of India, Industrial Development Bank of India and Export-Import Bank. Except these facilities, different organizations are established. Important among them are Export Advisory Council, Export Promotion Council, Foreign Trade Board, Directorate of Export Promotion etc. to boost export.

It means different steps like creation of market for our goods, increasing competitiveness among export units and inspiring the exporters to export more are taken to boost exports.