MBA admission entrance tests do test General awareness of aspirants hence; it is must for you to be abreast of current affairs.
Today you will read General awareness topic: Export Import Policies and Impact on Indian Economy
None of the country of this world is endowed with all the resources to grow on its own and therefore every country in this world is engaged in foreign trade. Practically, whether a country is open or closed depends on its relative openness to foreign trade and not in absolute manner.
Foreign trade affects the domestic trade and markets of a country and India is not an exception in this scenario. India is a part of the globalization and any effect, positive or negative, on the global trade is bound to affect the Indian markets. The global economic downturn and the recent Economic crisis are two examples to understand this fact.
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India has been hit by falling demand from its traditional export markets such as the United States, which is struggling to bring down unemployment and Europe, where a sovereign debt crisis tipped many economies back into recession.
The foreign trade affects almost every citizen of India either directly or indirectly. For instance, since India has to import three fourth of its crude oil requirements, international crude prices are likely to affect every citizen either directly or indirectly.
Moreover, free trade in agriculture can flood the Indian markets with cheap food grain produced in foreign territory adversely effecting the Indian farming community. On the other hand, it can also result in outflow of food grains in case international food grain prices are higher.
It may cause artificial famine in the country. Although, the aforesaid examples are of extreme scenario, nevertheless, they are sufficient to explain the impact of foreign trade on domestic economy. However, in general, while an export led growth enhances the income of the country, imports induce the consumer surplus. The concept that ‘in foreign trade, a country can gain only at the cost of the other’ has long been discarded.
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Exim Policy or Foreign Trade Policy is a set of guidelines and instructions established by the DGFT in matters related to the import and export of goods in India.
The Foreign Trade Policy of India is guided by the Export Import in known as in short EXIM Policy of the Indian Government and is regulated by the Foreign Trade Development and Regulation Act, 1992. DGFT (Directorate General of Foreign Trade) is the main governing body in matters related to Exim Policy.
India's Export Import Policy also know as Foreign Trade Policy, in general, aims at developing export potential, improving export performance, encouraging foreign trade and creating favorable balance of payments position.
The entry of the foreigners into the Indian markets was initially criticized but the scene is not the same anymore. The Indian Foreign Trade Policy of 2009-2014 has added 26 new markets to its aim of achieving the export target of US$ 200 billion and export growth target of 15 percent for the first two years.
Other aims of the policy are to double India’s export of goods and services by 2014 and to double India’s share in global merchandise trade by 2020. The upcoming decade will play a significant role in fortifying the country’s trading capabilities.
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As of now (in 2012), UAE accounts for $36b of Indian exports followed by USA and China accounting for $34b and $18b respectively. On the import side, maximum imports are sourced from China followed by UAE and Switzerland. Commodity wise, Petroleum products account for $56b of export revenue followed by gems and jewellery accounting for $47b. On the import side, crude oil accounts for imports worth $155b followed by Gold and silver worth $62b.
According to Prime Minister's Economic Advisory Council, India's exports are unlikely to achieve the $ 360 billion target for this fiscal and will be about $ 334 billion and the imports would touch $ 515 billion, leaving a trade deficit of $ 181 billion or 9.7 per cent of expected GDP.
In today’s world, globalization is a reality. There is no element of doubt that threats from globalization exists which may harm the domestic industries but from the past experience, it can also be concluded that in the absence of competition, quality of production deteriorates and complacency hampers the economy.
Thus in order to increase the efficiency of the nation’s economy and tom assure the increasing consumer surplus and producer’s income, one must endeavor to formulate the foreign trade policy in such a manner which raises the country’s productivity and not merely aimed at increasing exports and decreasing imports.