CANALISATION

GUIDED BY ~ PRESENTED BY ~PROF. SHAKUNTALA JAIN ISHA JOSHI BFT – VI SEMESTER

INTRODUCTION

• Means the establishment of trade monopoly in Foreign Trade• “Canalisation” of import or export means Import or Export

only through the agencies designated by the Central Government.• Emphhasizes on Foreign Trade flow rather than ownership of

agency conducting it.• Examples – NAFED (National Agricultural Cooperative

Marketing Federation), MMTC , etc.

CANALISATION OF EXPORTS• Petroleum products• Gum karaya• Mica waste (including factory cuttings) and scrap which is

obtained by processing mica• Mineral ores , concentrates and compounds thereof• Niger seeds• Onions

BENEFITS

Eliminate under invoicing – Objective of canalisation was to eleminate under invoicing. It

was found that sometimes the Indian exporters were quoting lower prices in their invoices while the world prices for such products were considerably higher. This led to the suspicion that the country had been losing foreign exchange because of the malpractices adopted by certain exporters.

Improve Bargaining Power – Canalisation was also thought of as an instrument to improve

the bargaining power of Indian exporters. It was found that the principal buyers in Western Europe and United States were large corporations and too negotiate contracts with them would require the existence of an equally large counterpart in India which would be able to supply exportable products in bulk quantities. Specially for products which originate in the small scale sector, a coordinating agency like this would be helpful in promoting export of such products.

To Boost Exports – It was observed in the case of certain products that there

was substantial decline in the total value of export. It was thought that government trading organizations would be able to reverse this trend by concentrated action. By continuous supply and fulfilling demands, exports can boost.

Improve Unit Value Realization –In some cases the inter competition among the Indian exporter

was resulting in lower unit value realization. Entry of State Trading Organizations in the International market, through which exports were to be canalized, resulted in the improvement of unit value realization.

CANALISATION OF IMPORTS• Arms/Ammunitions• Live or used cartridges• Minerals and Metals (MMTC)• Crude Oil

INTRODUCTION

The effect of canalisation of import through state agencies has resulted in savings in Foreign Exchange on imports on account of bulk purchases as also on account of bulk shipments and in supply of raw materials to consumers in the country at reasonable rates.

BENEFITSImport and Distribution in a Planned and Phased Manner –

- Import through proper channels- Systematic import schedule- Timely delivery- Best Quality- Load on & load off facility- Proper Warehousing

Long – Term Supply Arrangements –- Un-interrupted supply- Reliable source- Buyer – Seller relationship- Lasts for long years

Equitable Distribution in India –- No partiality/discrimination- Fair treatment- No bargaining- Easy availability of required items- Reach is throughout India, to every corner

Bulk Buying –- More Quantity and at concessional prices- Saves Foreign Exchange of the country- Stocking becomes easier- Businesses run smoothly- Economy will boost