Foreign Trade: Trends in

Indian Foreign Trade

What is Foreign Trade?

• International trade in goods and services is the oldest and most prominent
type of international division of labour.
• The flow of services or capital created outside of national borders is known
as foreign trade.
• The concept of trade refers to the purchase and sale transactions that enable
manufactured commodities and services to be provided to consumers.
• The concept of overseas trade is represented by these purchases and sales
transactions with foreign countries.
• In terms of delivery of buying and selling transactions, foreign trade takes
the shape of import and export.
Trends in Foreign Trade

• On a global scale, intense competition between countries, industries,

and enterprises is a new development owing to the convergence of
numerous main developments.
• These are some of the current trends post covid:
Forced Dynamism
• Trends that shape the global political, cultural, and economic
environment push international trade to adjust.
• Since the context in which it operates is always changing, international
trade is a complicated topic.
• First, corporations are continually pushing the boundaries of economic
growth, technology, culture, and politics, changing the global social
and economic context in the process.
• Second, external causes (for example, advances in science and
information technology) are continually pressuring international trade
to adapt how it operates.
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• https://youtu.be/A2IOW93ENys
Cooperation among Countries
• Through international organizations, treaties, and dialogues, countries
cooperate in thousands of ways.
• In general, such collaboration promotes economic globalization by
removing barriers and laying forth rules that lessen uncertainty about
what corporations will and will not be allowed to do.
• Countries collaborate for a variety of reasons:
• To achieve mutual benefits
• To take on challenges they can't solve on their own
• To deal with issues that aren't within anyone's purview.
• Agreements on a variety of commercially connected activities, such as
transportation and trade, enable countries to benefit from reciprocal
benefits.
• Furthermore, governments work together to solve problems they can't
handle on their own.
• Groups of countries have also agreed to protect the assets of foreign-owned
businesses and to ease the entry of foreign-made goods and services into
their borders.
• Finally, countries agree on how to commercially exploit places that are not
within their borders.
• These include outer space (for example, television transmission), non-
coastal portions of oceans and seas (for example, mineral mining), and
Antarctica (for example, limits on fishing within its coastal waters).
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• https://youtu.be/Fj3XWLofeYA
Liberalization of Cross-border Movements​
• Every country imposes restrictions on the movement of goods and
services, as well as the resources needed to generate them, such as
employees and capital.
• These limits make international trade difficult; additionally, because
the restrictions can change at any time, the capacity to sustain
international trade is always in doubt.
• Governments now, on the other hand, place less limitations on cross-
border movements than they did a decade or two ago, allowing
businesses to better take advantage of global opportunities.
• Governments have loosened regulations because they believe:
• Consumers will have better access to a wider variety of goods and
services at lower prices in so-called open economies (which have few
international restrictions).
• Producers will become more efficient by competing against foreign
companies.
• If they reduce their own restrictions, other countries will do the same.
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• https://youtu.be/7C-ZL0W6AQ0
Technology Transfer​
• The process of distributing commercial technology is known as
technology transfer.
• This will take the form of a technology transfer transaction, which
may or may not be a legally binding contract but will involve the
transferor communicating the relevant knowledge to the recipient.
• Non-commercial technology transfers, such as those found in
international cooperation agreements between industrialized and
developing countries, are also included.
• These agreements could cover infrastructure or agricultural
development, as well as international cooperation in domains
including research, education, employment, and transportation.
• https://youtu.be/GJm3CalNg1g
Growth in Emerging Markets​
• The rise of emerging markets (particularly India, China,
Brazil, and other portions of Asia and South America) has
had a significant impact on international trade.
• Emerging markets have boosted the potential size and value
of present significant international trade while also allowing
for the formation of a new generation of innovative
businesses.
• https://youtu.be/RJDVtDSmAlc
Benefits of Trends in Foreign Trade
• Companies gain extra markets, expand their turnover, and
create more jobs as a result of their trade links with other
countries.
• These trends enhance cooperation among nations and thus
promote economic globalization by removing barriers.
• It increases the size and value of current significant
international trade.
• They make it possible for a new generation of innovative
enterprises to emerge.
Trends in Indian Foreign Trade
• India's total exports (Merchandise and Services combined)
are expected to reach USD 61.41 billion in January 2022*,
representing a positive growth of 36.76% over the same
period last year and 38.90% over January 2020.
• Overall imports are expected to reach USD 67.76 billion in
January 2022*, representing a 30.54% increase over the same
time last year and a 30.19% increase over January 2020.
Impact of WTO on India's Foreign Trade
• The WTO and its role
• The World Trade Organization is an international organisation that was established
on 1 January 1995 to help its members uplift their living standards, create
employment, and improve people’s lives by using trade. It forms the rules and
regulations regarding trading across the nations and ensures that the rules are
correctly followed to avoid any kind of harm and violence.

• The primary role of the WTO is as follows:

• WTO trade agreement administration.
• Providing a trade negotiation forum.
• Resolving trade disputes.
• Monitoring national trade policies.
• Helping technical support and training to developing countries.
• It allows open communication between its members regarding trade.
Effect of the WTO on India
• Trading is an excellent weapon for any developing country, and one
who uses it rightly wins prosperity and wealth for their country. India,
as a developing nation, does the same. India is an agricultural country,
and most of its GDP depends upon agriculture, as it exports agrarian
products across the world.
• Trading can play a huge role in developing any nation, if adequately
used, because it also has harmful impacts. So, let’s take a look at the
good and bad impacts of the WTO on India.
Positive impacts of the WTO on India
• India is a developing country and has a vast geographical area and population. That’s why
it needs more capital to feed its citizens. India is good in agriculture, as its geographical
condition is very good for crops, so they are self-sufficient in feeding their people and
exporting edible products, but some things are imported. So, it has a perfect balance of
imports and exports, and India, as one of the founding members of the WTO, has a very
positive impact on it. There are some points listed below that helped in the development
of India through the World Trade Organization:

• India’s export competitiveness has been improved by the WTO.

• The lower tariff has helped integrate with the global economy more efficiently.
• India’s growth and development have been pursued by transferring and exchanging
technology and ideas.
• There is a reduction in cost and time due to market access.
• The WTO helped better settle trade disputes in a well-defined and structured manner.
Negative impacts of the WTO on India
• Every positive impact carries a negative with it. Even after so many positive
things, the WTO has also harmed India in some ways, which are listed below:

• The TRIPs agreement went against the Indian Patents Act (1970).
• The introduction of product patents in India by MNCs caused a hike in drug
prices, which left no generic option for the poor.
• India and its research institutions have been negatively affected by the extension
of intellectual property rights to agriculture.
• The MFN (most favoured nations )clause proved detrimental to India’s interests
and provided grounds for the Chinese invasion of the Indian market through
dumping.
• India’s service sectors are backward compared to those in developed countries.
• The World Trade Organization is an international organisation that
deals with the rules and regulations of trading worldwide. Currently, it
has a total of 159 countries, including India. India has been the
founding member of this organisation since 1995.
• This organisation has helped many countries to develop with the help
of trade. It also helped India and still does toward making it a
developed country. Trading has a significant impact on any nation’s
economy, and it is a part of globalisation. It also has negative impacts,
but they are overshadowed by the positive impacts. So, for India, the
WTO seems like a life-uplifting organisation.