Eco Envt of Business VI

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    Economic Environment

    of Business

    Indias Trade Policy

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    Trends & Structural Changes in

    Foreign Trade

    Trade has increased over the period 1950-2010

    Commodity Wise

    Initially imports consisted basically capitalgoods

    Now they consist of Petroleum, Oil &Lubricants; Machinery; Gems & Jewellery;

    Edible oil; Iron & steel; Fertilizers; etc. Initially raw materials were exported

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    Trends & Structural Changes in

    Foreign Trade Now we still export Jute but its share is

    decreasing; Tea; Engineering goods; POL;Chemicals; Gems & Jewellery; Ready madeGarments; Rice; Fish; Leather; etc.

    Recently exports of Electronic & Computergoods; Services & Projects have increased

    Country Wise

    In 2007-08 we mainly imported from China;USA; Saudi Arabia; UAE; Iran; Germany;Switzerland & Singapore

    In 2007-08 we mainly exported to USA; UAE;China; Singapore; UK; Hong Kong & Germany

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    Balance of Payments

    Balance of Payments of a country is a systematicrecord of all economic transactions between theresidents of a country & the rest of the worldcarried out in a specified period of time

    It is a broader term then Balance of Trade To ensure the balancing sometimes there is a

    surplus or a deficit India had a heavy deficit during the period 1956-

    76; it came down during 1976-1980 for sometime; but during 1980-1991 it became severe;1993-94 there was a turnaround & during 2001-04 for three consecutive years we had surplus oncurrent account but the situation changed againin 2008-09 due to the global recession

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    1991 New Trade Policy

    1991 was a watershed year in tradepolicy

    Massive trade liberalization measureswere adopted

    Major departure from earlierprotectionist trade policies

    Before 1991 Import Substitution

    Post 1991 Export Promotion

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    1991 New Trade Policy

    Freer Export & Import; Decanalisation

    Rationalization of Tariff Structure

    Convertibility of rupee on current account

    Trading Houses; SEZs; EOU scheme Agricultural Export Zones; Setting up of FTWZs

    Market Access Initiative Scheme

    Focus on service exports; Served from India

    Five Thrust sectors-agriculture, handicrafts;handloom; Gems & Jewellery; Leather & footwear

    Reducing transactional costs & simplifyingprocedure

    Concessions & Exemptions

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    IMF

    Objectives: International Monetary Co-operation Promotion of International Trade Exchange Rate Stability Establish a multilateral system of payments Correct disequilibrium in BOP by providing

    financial assistance

    Conditionalities: Carry out a programme of Balance of Payments

    adjustment

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    World Bank

    Objectives: Reconstruction & Development of its member

    countries Promote Foreign Private Investment

    Growth & development of International Trade Encourage loans

    Conditionalities: Liberalization; Privatization & Globalization

    Problems: Dominated by developed countries