Solutions to Assignments
IBO-03 - India’s Foreign Trade
Master of Commerce (M.Com) - 1st Year
Question No. 5 Comment briefly on the following statements:
(a) Electronic commerce is re-creating the worlds economy;
E-commerce is part of economics and traditional commerce, and it has a close relationship to other sciences such as administration and law. It requires an administrative and regulatory environment that is suitable for its management and legal for the protection of its clients. E-commerce, or electronic commerce, is the transmission of funds or data through the internet to facilitate the purchase and sales of goods and services.
Economists confirm that the third industrial revolution focused on the software industry, the Internet and open satellite channels began with the advent of the computer. This has brought about tremendous developments in all areas of life, especially economic and commercial ones. The markets have been crowded with companies and multiple products, and competition has intensified among them then E-commerce emerged as a tool for modern commerce which has contributed significantly to changing the future of global business.
One of the advantages of e-commerce is that it provides time and effort, facilitates access to foreign markets, helps economic growth and improves exports and production. However, it presents a range of challenges, especially in terms of competition in local markets where the capabilities of supra-national and multinational companies may lead to the inability of national companies to compete it and continue in the markets .
Examples of global e-commerce markets include :
– The Amazon Market, founded by Jeff Bezos in Seattle, Washington, DC on July 5, 1994 he , is the world’s largest online retailer in terms of gross sales and market value.
The site began as an online library, then started selling DVDs, Blu-ray discs, CDs, download and broadcast video , MP3 download and broadcast, and the company is producing consumer electronics, the world’s largest provider of cloud infrastructure services.
– And the market of Alibaba Group Holding limited of China . it belongs to the Chinese private sector , the group was established in 1999 and headquartered in Hangzhou, People’s Republic of China, and its founder, Jack Ma, wanted to create an online portal called Ali Baba.com for business to link Chinese manufacturers and traders to the consumers and buyers from all over the world, earning most of its revenues from its business activities over the Internet , and then Jack Ma created aTaobai site similar to eBay’s website directed from consumer-to-consumer , one of the 20 most visited sites in the world with nearly a billion Product, and sites of Ali Baba Group Holdings represent more than 60% of parcels delivered to China.
The impact of e-commerce on the following:
– Market structure:
E-commerce affects the structure of markets, whether goods or services, or the markets of production elements noting that the economic growth depends not only on the supply of production elements or on the increase in the supply of goods and services, but on how to take advantage of all these factors to achieve the highest possible revenue whether it was economic Or socially, depending on the optimal utilization of the available resources in the society and the nature of the market in which it is operating , which plays a crucial role in achieving the optimizing allocation of the resources , as the closer the market to full competition, the more it can be achieved ,and the e-commerce affects the structure of markets that it brings us closer to access to the market of full competition.
– Economic growth:
E-commerce affects economic variables and growth rates. It leads to higher wages, higher standards of living for individuals, structuring markets and expanding marketing, increasing sales and exports and thus increasing production and growth rates. The use of modern technological means of trade by states increases the strength of its economy and its growth, and this is beneficial to the social , health and education sectors , because of the use of modern technological means in the dealings, and iunder the electronic commerce , it is possible to develop production in accordance with its electronic nature , which increases sales, and Increases corporate profits.
E-commerce provides the right climate for the increase of production and efficiency by supporting the computer and software industries, the technological industry and other associated industries, such as electronic storage media, networks and communications, which are the infrastructure for e-commerce.
The spread of e-commerce requires more of these products, which increases its production. In particular, the use of electronic means in trade increases the level of management and organization within the institution and the development of its productivity activities, such as searching in the Internet for new sources of funding abroad and producing new types of Goods fit for the nature of e-commerce, which works to support the economies of countries.
– Exports:
E-commerce helps to increase foreign trade, especially exports, by facilitating access to global markets, making business deals easily and quickly without any administrative or commercial restrictions, responding to changes in consumer demand and marketing local products in these markets, increasing the exports of these countries.
E-commerce is increasing trade in services between countries. This sector accounts for 60% of the world’s total production. With the emergence of modern ICT, making the e-commerce to facilitate the process of convergence between consumers and producers and eliminates geographical distances.
– Investment:
E-commerce creates new investment opportunities, especially in the ICT sector, because they play an important role in the infrastructure of e-commerce. The spread of e-commerce requires increasing production in this sector and directing capital to invest in it to develop the infrastructure of e-commerce and then increase the investment in ICT sector which works to support the national economy.
– Capital Market:
E-commerce affects the capital market as capital flows are exchanged between surplus units, “savings” and “deficit” units “the investors”, through the issuance of long-term stocks and bonds, which plays a major role in stimulating investment and economic growth noting that the e0commerce increases the effectiveness of stock exchanges, where the contracts of purchase and sale of the securities traded in the stock exchange are concluded , and the possibility of obtaining information on these traded securities quickly, and the issuance of orders for the sale and purchase for brokers, all are done electronically, electronic commerce gives great flexibility through the availability of contracts or orders for sale or purchase, through e-mail or modern electronic means used in circulation, and provide quick information on the market for investors, noting that the brokers can not provide these information about securities traded in the market quickly in some times .
– Work’s strength
Most of the developing and developed countries suffer from unemployment problems and the lack of jobs that accommodate the labor force, and e-commerce can bring advantages to the national economy of the state in the field of employment in two ways:
• The first is that it is creating new opportunities for employment, by setting up small and medium-sized businesses and connecting them to the international markets at the lowest investment costs, especially the trade in services where e-commerce provides a mechanism for specialized individuals to provide their services at the regional and global levels without the need to move, tha matter that opens the space for them to work in free business.
• Second, e-commerce offers career opportunities in several areas related to e-commerce applications, such as specialists in e-commerce sites , employees, administrators and technicians in e-shops, as well as providing jobs in the ICT sector in which the e-commerce depends on of the engineers of Networks and software needed for e-commerce applications and others.
The use of e-commerce would lead to the removal of traditional jobs and the replacement of new jobs with a new skill, which required the training of workers to use technology so that they could enter the competition and win jobs.
This means that e-commerce negatively affects manual jobs and unqualified labor, but it has a positive impact on technically trained labor where it can easily find jobs and help to create job titles and disciplines that were not previously required or known.
(b) The government of India announced sweeping changes in the trade policy in the year 1991;
The current trade policy reforms seem to have been guided mainly by the concerns over globalisation of the Indian economy, improving competitiveness of its industry, and adverse balance of payments situation. Main features of trade policies (trade reforms) since 1991 are as follows:
1. Freer Imports and Exports:
Substantial simplification and liberalisation has been carried out in the reform period. The tariff line wise import policy was first announced on March 31, 1996 and at that time itself 6,161 tariff lines were made free.
Till March 2000, this total had gone up to 8,066. The Exim Policy 2000-01 removed quantitative restrictions on 714 items and the Exim Policy 2001- 02 removed quantitative restrictions on the balance 715 items. Thus, in line with India’s commitment to the WTO, quantitative restrictions on all import items have been withdrawn.
2. Rationalisation of Tariff Structure:
Acting on the recommendations of the Chelliah Committee, the government has, over the years, reduced the maximum rate of duty. The 1993-94, Budget had reduced it from 110 per cent to 85 per cent. The successive Budgets have reduced it further in stages. The peak import duty on non-agricultural goods is now only 12.5 per cent.
3. Decanalisation:
A large number of exports and imports used to be canalised through the public sector agencies in India. The supplementary trade policy announced on August 13, 1991 reviewed these canalised items and decanalised 16 export items and 20 import items. The 1992-97 policy decanalised imports of a number of items including newsprint, non-ferrous metals, natural rubber, intermediates and raw materials for fertilisers.
4. Devaluation and Convertibility of Rupee on Current Account:
The government made a two- step downward adjustment of 18-19 per cent in the exchange rate of the rupee on July 1 and July 3, 1991. This was followed by the introduction of LERMS i.e., partial convertibility of rupee in 1992-93, full convertibility on the trade account in 1993-94 and full convertibility on the current account in August 1994.
Substantial capital account liberalisation measures have also been announced. The exchange rate of the rupee is now market-determined. Thus, exchange rate policy in India has evolved from the rupee being pegged to a market related system (since March 1993).
5. Trading Houses:
The 1991 policy allowed export houses and trading houses to import a wide range of items. The government also permitted the setting up of trading houses with 51 per cent foreign equity for the purpose of promoting exports.
The 1994-95 policy introduced a new category of trading houses called Super Star Trading Houses. These houses are entitled to membership of apex consultative bodies concerned with trade policy and promotion, representation in important business delegations, special permission for overseas trading and special import licences at enhanced rate.
6. Special Economic Zones:
A scheme for setting up Special Economic Zones (SEZs) in the country to promote exports was announced by the government in the Export and Import Policy of March 31, 2000. The SEZs are to provide an internationally competitive and hassle-free environment for exports and are expected to give a boost to the country’s exports.
The Policy has provided provisions for setting up SEZs in the public sector, joint sector or by State governments. It was also announced that some of the existing Export Processing Zones (EPZs) would be converted into Special Economic Zones.
7. EOU Scheme:
The Export Oriented Units (EOUs) scheme introduced in early 1981 is complementary to the SEZ scheme. It offers a wide option in locations with reference to factors like source of raw materials, ports of export, hinterland facilities, and availability of technological skills, existence of an industrial base and the need for a larger area of land for the project. The EOUs have put up their own infrastructure.
8. Agriculture Export Zones:
The Exim Policy 2001 introduced the concept of Agri- Export Zones (AEZs) to give primacy to promotion of agricultural exports and effect a reorganisation of our export efforts on the basis of specific products and specific geographical areas.
The scheme is centered on the cluster approach of identifying the potential products, the geographical region in which these products are grown and adopting an end-to-end approach of integrating the entire process right from the stage of production till it reaches the market.
The AEZs would have the state-of-the-art services such as pre-post harvest treatment and operations, plant protection, processing, packaging, storage and related research and development. The exporters in these zones can avail of the various export promotion schemes under the Exim Policy including recognition as a status holder.
9. Market Access Initiative Scheme:
Market Access Initiative Scheme was launched in 2001- 02 for undertaking marketing promotion efforts abroad. The key features of the scheme are in- depth market studies for select products in chosen countries to generate data for promotion of exports from India, assist in promotion of India, Indian products and Indian brands in the international market by display through showrooms and warehouses set up in rental premises by identified exporters, display in identified leading departmental stores total exhibitions trade fairs, etc. The scheme shall also assist quality upgradation of products as per requirements of overseas markets, intensive publicity campaigns, etc.
10. Focus on Service Exports:
The amended Export-Import Policy, 2002-07, announced on March 31, 2003, specifically emphasized service exports as an engine of growth. It, accordingly, announced a number of measures for the promotion of exports of services. For instance, import of consumables, office and professional equipment, spares and furniture upto 10 per cent of the average foreign exchange export earning has been allowed.
The advance licence system has been extended to the tourism sector. Under this, firms will be allowed duty-free import of consumables and spares upto 5 per cent of their average foreign exchange earnings of the previous three years, subject to actual user condition.
11. Concessions and Exemptions:
A large number of tax benefits and exemptions have been granted during the 1990s to liberalise imports and promote exports with the five year Exim Policy 1992-97 and Exim Policy 1997-2002 serving as the basis for such concessions.
(c) The most remarkable aspect of Indian agriculture is its diversified nature;
While agriculture’s share in India’s economy has more and more declined to but 15 August 1945 thanks to the high growth rates of the commercial and services sectors, the sector’s importance in India’s economic and social material goes well on the far side this indicator. First, nearly three-quarters of India’s families depend upon rural incomes. Second, the bulk of India’s poor (some 770 million folks or concerning seventy percent) ar found in rural areas. The most remarkable aspect of Indian agriculture is its diversified nature. And third, India’s food security depends on manufacturing cereal crops, likewise as increasing its production of fruits, vegetables and milk to fulfil the stress of a growing population with rising incomes. To do so, a productive, competitive, wide-ranging Associate in Nursing's property agricultural sector can ought to emerge at an accelerated pace.
India may be a world agricultural powerhouse. it's the world’s largest producer of milk, pulses, and spices, and has the world’s largest oxen herd (buffaloes), likewise because the largest space underneath wheat, rice and cotton. it's the second largest producer of rice, wheat, cotton, sugarcane, farmed fish, sheep & goat meat, fruit, vegetables and tea. The most remarkable aspect of Indian agriculture is its diversified nature. The country HAs some 195 m ha underneath cultivation of that some sixty three % ar rainfed (roughly 125m ha) whereas thirty seven % ar irrigated (70m ha). additionally, forests cowl some 65m HA of India’s land.
Raising agricultural productivity per unit of land: Raising productivity per unit of land can ought to be the most engine of agricultural growth as nearly all productive land is farmed. Water resources also are restricted and water for irrigation should subsume increasing industrial and concrete wants. All measures to extend productivity can would like exploiting, amongst them: increasing yields, diversification to higher price crops, and developing price chains to cut back promoting prices.
Reducing rural impoverishment through a socially comprehensive strategy that contains each agriculture likewise as non-farm employment: Rural development should conjointly profit the poor, landless, women, regular castes and tribes. Moreover, there ar sturdy regional disparities: the bulk of India’s poor ar in rain-fed areas or within the japanese Indo-Gangetic plains. Reaching such teams has not been straightforward. whereas progress has been created - the agricultural population classified as poor fell from nearly four-hundredth within the early Nineteen The most remarkable aspect of Indian agriculture is its diversified nature. Nineties to below half-hour by the mid-2000s (about a tenth fall per year) – there's a transparent would like for a quicker reduction. Hence, impoverishment alleviation may be a central pillar of the agricultural development efforts of the govt and therefore the UN agency.
Ensuring that agricultural growth responds to food security needs: The sharp rise in food-grain production throughout India’s revolution of the Nineteen Seventies enabled the country to realize self-reliance in food-grains and obviate the threat of famine. Agricultural intensification within the Nineteen Seventies to Nineteen Eighties saw Associate in Nursing inflated demand for rural labor that raised rural wages and, at the side of declining food costs, reduced rural impoverishment. but agricultural growth within the Nineteen Nineties and 2000s stalled, averaging concerning three.5% every year, and cereal yields have inflated by only one.4% every year within the 2000s. The slow-down in agricultural growth has become a significant cause for concern. India’s rice yields ar simple fraction of China’s and concerning 1/2 those in Vietnam and land. identical is true for many alternative agricultural commodities.
Policy manufacturers can therefore ought to initiate and/or conclude policy actions and public programs to shift the world far from the present policy and institutional regime that seems to be now not viable and build a solid foundation for a way additional productive, internationally competitive, and wide-ranging agricultural sector.
Promoting new technologies and reforming agricultural analysis and extension: Major reform and strengthening of India’s agricultural analysis and extension systems is one in every of the foremost necessary wants for agricultural growth. The most remarkable aspect of Indian agriculture is its diversified nature. These services have declined over time thanks to chronic underfunding of infrastructure and operations, no replacement of aging researchers or broad access to progressive technologies. analysis currently has very little to supply on the far side the time-worn packages of the past. Public extension services ar troubled and supply very little new information to farmers. there's deficient affiliation between analysis and extension, or between these services and therefore the personal sector.
Facilitating agricultural diversification to higher-value commodities: Encouraging farmers todiversify to higher price commodities are a big issue for higher agricultural growth, notably in rain-fed areas wherever impoverishment is high. Moreover, hefty potential exists for increasing agro-processing and building competitive price chains from producers to urban centers and export markets. whereas diversification initiatives ought to be left to farmers and entrepreneurs, the govt will, initial and foremost, liberalize constraints to promoting, transport, export and process. The most remarkable aspect of Indian agriculture is its diversified nature. It also can play alittle regulative role, taking ordinary care that this doesn't become Associate in Nursing impediment.
Promoting high growth commodities: Some agricultural sub-sectors have notably high potential for growth, notably dairy farm. The farm animal sector, primarily thanks to dairy farm, contributes over 1 / 4 of agricultural gross domestic product and may be a supply of financial gain for seventieth of India’s rural families, largely people who ar poor and headed by ladies. Growth in milk production, at concerning four-dimensional every year, has been brisk, however future domestic demand is anticipated to grow by a minimum of five-hitter every year. The most remarkable aspect of Indian agriculture is its diversified nature. Milk production is affected , however, by the poor genetic quality of cows, inadequate nutrients, inaccessible veterinary care, and alternative factors. A targeted program to tackle these constraints might boost production and have smart impact on impoverishment.
Developing markets, agricultural credit and public expenditures: India’s heritage of intensive government involvement in agricultural promoting has created restrictions in internal and external trade, leading to cumbersome and high-cost promoting and transport choices for agricultural commodities. Even so, personal sector investment in promoting, price chains and agro-processing is growing, however a lot of slower than potential. The most remarkable aspect of Indian agriculture is its diversified nature. whereas some restrictions ar being raised, significantly additional must be done to modify diversification and minimize client costs. up access to rural finance for farmers is another would like because it remains troublesome for farmers to urge credit. Moreover, subsidies on power, fertilizers and irrigation have more and more return to dominate Government expenditures on the world, and ar currently fourfold larger than investment expenditures, situation out high priorities like agricultural analysis and extension.
(d) The ASEAN region is important to India for several reasons.
ASEAN has worked tirelessly for 50 years as a regional body founded on consensus to help secure peace, growth, and prosperity in the region. As a result, India prioritises ASEAN in its Indo-Pacific vision of regional security and growth for all. The ASEAN Regional Venue is the principal forum for ASEAN security dialogue (ARF). Since 1996, India has attended this forum’s yearly sessions and has actively engaged in its varied activities. The ASEAN Defence Ministers’ Meeting (ADMM) is ASEAN’s highest level of defence consultation and cooperation. The ADMM+ brings together Defence Ministers from the ten ASEAN countries, as well as Australia, China, India, Japan, New Zealand, the Republic of Korea, Russia, and the United States of America.
The ASEAN Multilateral Division provides ASEAN countries with project-based financial support. The funds have provided financial support to ASEAN countries.
India announced a US$ 50 million contribution to the ASEAN-India Fund at the 7th ASEAN-India Summit in 2009, to support the implementation of the ASEAN-India Plans of Action, which include cooperation in a variety of sectors as well as capacity building programmes in the political, economic, and socio-cultural spheres to deepen and intensify ASEAN-India cooperation. At the 14th ASEAN-India Summit in Vietnam in September 2016, PM recommended expanding the ASEAN-India Fund with an extra grant of US$ 50 million to advance development and capacity building activities.
India has worked with ASEAN on several projects in the areas of agriculture, science and technology, space, environment and climate change, human resource development, capacity building, new and renewable energy, tourism, people-to-people connections and connectivity, and so on.
The establishment of tracking, data reception/processing station in Ho Chi Minh City, Vietnam, as well as the upgrade of the Telemetry Tracking and Command Station in Biak, Indonesia, are part of a space project. E-Network for the provision of telemedicine and tele-education in CLMV countries (Cambodia, Laos, Myanmar and Vietnam); Quick Impact Projects in CLMV network for the provision of telemedicine and tele-education in CLMV countries. Aside from the above projects, India has also been supporting ASEAN, particularly CLMV nations under the initiatives for ASEAN Integration, which focuses on the training of English language for Law Enforcement Officers in CLMV nations and training of experts managing capital business sectors in CLMV by the National Institute of Securities Management, Mumbai, which also provide grants for ASEAN understudies for advanced education at Nalanda University, training of ASEAN Civil Servants.
The heads of Government recommended the establishment of the ASEAN-India Centre (AIC) at the Commemorative Summit in 2012, intending to promote the ASEAN-India Strategic Partnership through policy research, advocacy, and networking activities with organisations and think-tanks in India and ASEAN. The AIC, which was established in 2013, and has served as a resource centre for the ASEAN Member States and India to develop the ASEAN-India strategic partnership and promote India-ASEAN engagement and collaboration in areas of mutual interest. By organising seminars, roundtables, and other events, the AIC has provided advice to policymakers in India and ASEAN on the execution of ASEAN-India connectivity programmes. Workshops, seminars, and conferences on various topics related to the ASEAN-India strategic partnership are also held by the AIC. It engages in regular networking activities with relevant public/private agencies, organisations, and think tanks in India, ASEAN, and EAS (East Asia Summit) countries, intending to provide up-to-date information, data resources, and sustained interaction in order to promote the ASEAN-India Strategic Partnership.
In November 2007, India announced the establishment of an ASEAN-India Science and Technology Development Fund with a US$ 1 million commitment from India to support joint collaborative R&D projects in Science and Technology at the 6th ASEAN-India Summit in Singapore. The fund was established in 2009-10, and expenditures commenced in the fiscal year 2010-11. This fund has been increased to US$ 5 million from 2016 and 2017.
On November 21, 2007, at the 6th ASEAN-India Summit in Singapore, India announced the establishment of an ASEAN-India Green Fund, with a US$ 5 million initial commitment from India, to promote cooperative activities in the areas of environment and climate change. Climate change, energy efficiency, clean technologies, renewable energy, biodiversity conservation, environmental education, and other sectors have been highlighted for partnership under the Fund.
