International Trade
When we decide to buy a commodity we have the freedom to choose between goods produced in many regions than in our country. For example, when we decide to buy a car we have the freedom to choose between Indian made Tata and Japan made Toyota. This is the effect of International trade.Global exchange permits us to grow our business sectors for both products and administrations that generally might not have been accessible to us.As an aftereffect of global exchange, the business sector contains more noteworthy rivalry and in this manner more focused costs, which conveys a less expensive item home to the shopper.International trade is the exchange of goods and services between countries. This type of trade gives rise to a world economy, in which prices, or supply and demand, affect and are affected by global events.Political change in Asia, for instance, could bring about an expansion in the expense of work, in this way expanding the assembling costs for an American tennis shoe organization situated in Malaysia, which would then result in an increment in the value that you need to pay to purchase the sneakers at your nearby shopping center.A decrease in the cost of labor, on the other hand, would result in you having to pay less for your new shoes. Trading all around gives buyers and nations the chance to be presented to products and administrations not accessible in their own nations.Almost every kind of product can be found on the international market: food, clothes, spare parts, oil, jewelry, wine, stocks, currencies and water. Administrations are likewise exchanged: tourism, saving money, counseling and transportation.An item that is sold to the worldwide business sector is an export, and an item that is purchased from the worldwide business sector is an import.Imports and exports are represented in a nation’s present record in a critical position of installments.
Import
An import is a good brought into a jurisdiction, particularly over a national outskirt, from an outside source.The party bringing in the good is called an importer. An import in the receiving country is an export from the sending country.
Types of Import
- Industrial and consumer goods
- Intermediate goods and services
Why do Nations Import?
The motivation for a country to import goods and services from other countries,perhaps more subtle than its motivation for selling exports. Likewise, with exports, the reasons served by imports fluctuate from nation to nation.All countries need to-or choose to-import at least some goods and services for the following reasons:
- Goods or services that are either
- vital to financial prosperity or
- very appealing to buyers however are not accessible in the residential business sector
- Goods or services that satisfy domestic needs or wants can be produced more inexpensively or efficiently by other countries, and therefore sold at lower prices.
Procedure and Steps Involved in Import of Goods
- Trade Enquiry
- Procurement of Import License and Quota
- Obtaining Foreign Exchange
- Placing the Indent or Order
- Dispatching a Letter of Credit
- Obtaining Necessary Documents
- Customs Formalities and Clearing of Goods
- Making the Payment
- Closing the Transactions
Impacts of Importing Goods
On a national level, in most countries international trade and importing goodsrepresents a significant share.International trade has a significant economic, social, and political importance in many countries.Imports provide countries with access to goods and services from other nations.Without imports, a nation would be restricted to goods and services inside of its own outskirts.Global exchange is for the most part less costly than local exchange regardless of furthermore forced costs, taxes, and tariffs.However,the factors of production are usuallymore versatile locally than globally.For example, the U.S. imports labor-intensive goods from China. Instead of importing Chinese labor, the U.S. imports goods that were produced in China by Chinese labor.
On a business level, organizations join in direct-imports, which happen when a noteworthy retailer imports merchandise that are composed locally from an abroad producer. The immediate import program permits the retailer to sidestep the neighborhood supplier and buy the last item specifically from the maker. Direct imports spare retailers cash by killing the neighborhood supplier.
Export
The term export means shipping the goods and services out of the port of a country. Exporter is referred to the selling ofsuch goods and services and is based in the country where the export takes place where the overseas buyer is referred to as an importer. In the terms if international trade exports are generally referred to selling goods and services produced in the home country to other markets globally.
During the export of commercial quantities of goods, we generally require involvement of the customs authorities in both the country of export and the country of import. Because of low individual values of trades, the small trades over the internet like amazon and eBay have huge bypassed involvement of the customs. However, these small exports are subject to legal restrictions applied by the country of export. Export’s counterpart is an import.
Why do nations export?
- Trading widens the showcasing base.
- It’s a great approach to expand the life of an item.
- You need to set up vicinity in the world wide business sectors
- Contenders have gone worldwide so you have to go global to stay focused.
- Additional stock that isn’t offering in your household business sector can acquire a benefit in the global business sector.
- It can improve the organization picture to be seen as more dynamic.
- Trading can ensure your organization against residential business sector swings and business cycles
- Infiltrating exchange obstructions can enter markets you wouldn’t have the capacity to enter something else.
Methods of Export
- a product or good or information being mailed
- hand delivered
- shipped by air
- shipped by vessel
- uploaded on the internet
However, the exports include the distribution of information that can also be sent in the form of email, or an email attachment, it can be shared during a telephone conversation or even through fax.
Barrier
Trade barriers are generally defined as government laws, regulations, policy, or practices that either protect domestic products from foreign competition or artificially stimulate exports of particular domestic products. Restrictive business, most of the time have similar effect, and they are mostly not considered as trade barriers. Government imposed measures and policies that restrict, prevent, or impede the international trade of goods and services are most of the foreign trade barriers.
Tariffs
Tariff is a tax placed on a specific good or set of goods exported from or imported to a country, creating an economic barrier to trade.A country’s domestic output of the good is falling and imports from foreign competitors are rising, particularly if there exist strategic reasons for retaining a domestic production capability. Some industries that are failing receive a protection with an effect that is similar to the subsidies that by placing the tariff on the industry, the industry becomes less enticed to produce goods quickly and in a cheaper way. Other reasons for tariff includes the issue of dumping. Dumping includes a country producing highly excessive amounts of goods and dumping the goods on another foreign country, producing the effect of prices that are “too low”. Too low can mean either the pricing from the foreign market at a cost lower than charged in the domestic market of the country it originated,
Outline of Export Procedures
- Registration procedures
- Pre-shipment procedure
- Shipment procedures
- Realizing export incentives
- Post shipment procedures
1.Registration Procedures
Exporter is required to register his organization with number of institution and authorities
The registration stages include
- Registration of the organization
- Opening bank account
- Registration with export promotion council
- Obtaining membership of chamber of commerce
- Obtaining GIR Number or PAN
- Registration for the code number from DGFT
2.Pre-Shipment stage
It includes the following steps
- Approaching foreign buyers
- Inquiry and offer
- Confirmation of order
- Opening of letter of credit
- Arrangement of pre-shipment finance
- Production or procurement of goods
- Packing and marking
- Pre-shipment inspection
- Central excise clearance
- Obtaining insurance cover
- Appointment of C&F agent
3.Shipment procedure
It consists of the following steps
- Reservation of space in ship
- Arrangement of internal transport from factory/warehouse to the port of shipment
- Preparation and processing of shipment documents
- Shipping bill
- Commercial invoice
- Letter of credit together with the export contract
- Certificate of origin
- GR form
- ARE-1 form
- Packing list or packing note
- Excise invoice etc.
Customs clearance
It consists of the following steps
- Carting order
- Storing the goods in the shed
- Examination of goods
- Ship order
- Loading of goods
- Payment of port dues
- Obtaining bill of lading
4.Realizing export incentives
Incentive is an expectation that encourages people to behave in a certain way
The government of India has framed several schemes to promote exports and to obtain foreign exchange. These scheme grants incentive and other benefits. The few important incentives are
- Registration with excise authorities
- Obtaining PAN
- Registration with sales tax authorities
- Registration with VAT authority
- Registration with Export Credit Guarantee Corporation of India
5.Post shipment procedures
- Submission of documents by the agent to the exporter
- Presentation of documents to the bank for the purpose of negotiation
- Dispatch of documents
- Documentary bill of exchange
- Letter of Indemnity
- Realization of export proceeds
- Processing GR form
Impacts of exporting goods
Exporting goods and services has both favorable circumstances and inconveniences for nations included in global exchange.
Exporting allows some countries producers to gain ownership advantages and develop low cost and differentiated products. It is seen as a generally safe method of production and exchange.
Exporters likewise encounter internationalization preferences which are the advantages off holding a core competence within an organization and threading it through a value chain as opposed to getting a permit to outsource or offer the goods and services.
Disadvantages of exporting are mainly the result of producers having to sell their goods to the importers. In domestic sales makers offer directly to wholesalers or even specifically to the retailer or client. For exports, makers face an additional layer in the chain of distribution which crushes the margin. As a result, manufacturers may have to offer lesser prices to the shippers than to domestic wholesalers in order to move the product and produce business.
By
Dharani 1523554
Megghana 1523559
Akhil 1523517