A Presentation on International Marketing

Presented by: Shivayogi C Pujar

Reg.No: 17MBA040
 Contents

1. Foreign trade controls

 Definition
 Tariffs and protectionism
 Export subsidies and Dumping
 Quantitative restrictions and Quotas
 Trade Agreement and state trading
2. EXIM Policy
 Objectives

1. To understand the concept of foreign trade

control
2. To study the underlying concepts of foreign
trade control
3. To understand the EXIM policy
 International trade
• International trade is the exchange
of capital, goods,and services across internatio
nal borders or territories. In most countries,
such trade represents a significant share
of gross domestic product (GDP).
• Ex: International trade between India and
south Korea
 Trade control
• Describe the ways in which governments and
international bodies promote and regulate global
trade.
• Ex: Automobile industry
Maybe you’ll increase the prices of imported
goods by adding a tax to them; you might even
make the tax so high that they’re more expensive
than your homemade goods.
 I. TARIFFS AND PROTECTIONISM

• In international economic usage, protection usually

refers to acts of government policy which protect
an industry from foreign competition, thus
enabling the industry to earn higher incomes than it
otherwise would. 
•  It can also be interpreted more broadly to include
all government policies which assist industries that
are either competing with imports or are actual or
potential exporters.
 Continued
The four main protective devices are
1. subsidies to domestic producers,
2. taxes on imports,
3. quantitative restrictions on imports, and
4. state trading. 
 Tariffs
•  Taxes on imports are historically the principal
device. These taxes are usually called tariffs or
customs duties, though sometimes other terms,
such as import surcharges or equalizing duties,
are used. Tariffs may be classified by motive
and by form.
• Since a tariff will normally produce customs
revenue, protect domestic output, reduce
consumption of the protected product, and
reduce imports, in motive it may be a revenue
tariff, a protective tariff, a tariff designed to
reduce consumption of a product, or a tariff to
improve the balance of payments. 
• A tariff schedule is a complicated document
consisting often of several thousand different
items. Not only may there be a separate tariff
rate for each item, but in addition a tariff
schedule may have several columns, so that
there is more than one duty for each item
 continued
• Historically, most countries have had at least two
columns in their tariff schedules, the distinction being
usually between a conventional and a general column, the
conventional tariff applying to some or all imports from
countries with which a tariff agreement has been
concluded and the general tariff to the remaining im-
ports. Most trade agreements include the so-called most-
favored-nation clause, which provides that (when
countries A and B sign an agreement) country A will not
discriminate in any tariff item against imports from
country B.
 II. EXPORT SUBSIDIES AND DUMPING

• Subsidies on exports are any payments, direct

or indirect, to producers resulting in export
prices that are below domestic prices. 
• Used in this sense we can say that exports of a
number of Indian farm commodities are
subsidized. The same is true whenever an
exported good is freed from domestic indirect
taxes.
• An export subsidy has much in common with
an ordinary subsidy placed on the production
of an exportable good. Both tend to increase
the production of the good in question and to
raise its volume of export, but the former
generally reduces domestic consumption
(unless there are important economies of
scale), while the latter increases both exports
and home consumption.
• Dumping refers to any reduction of foreign
price below domestic price where such
difference is not due to actual differences in
cost of selling, production, or transportation.
A firm may sell the same good abroad at a
lower price than at home because foreign
competition is more intense or its market
position is less well established.
• Such price behavior has been explained in terms of the
discriminating monopolist, who maximizes profit by adjusting
markup in each market to the elasticity of demand. But there is
no precise theory to describe the behavior of firms attempting
to break into new markets, or to defend existing markets
against aggressive newcomers. 
• These price reductions may be hidden in quality differentials,
spurious quantity discounts, or favorable credit terms.
Governments may support lower prices for exports by means of
special freight rates, tax rebates, direct subsidies, or even
special treatment of business combinations entered into for
foreign trade purposes.
III. QUANTITATIVE RESTRICTIONS AND QUOTAS

• Quantitative restrictions represent one of

several policy instruments for dealing with
problems of international trade and payments.
Other instruments include tariffs on exports
and imports, variations in the exchange rate,
and monetary and fiscal policies.
 continued
• Quantitative restrictions represent the
method of controlling foreign trade through
quantitative specification of permissible
imports (or exports). Hence these restrictions
differ from tariff duties, which aim to control
imports (or exports) by operating directly on
the price at which commodities are imported
(or exported).
• Quantitative trade restrictions are imposed, in practice, on both
exports and imports. However, those on exports are relatively
rare. Recent examples are the quotas on exports (e.g., of cotton
textiles) that Japan has applied to avoid the opprobrium of
dumping and the quotas on certain agricultural exports (e.g., of
oilseeds) that India has used to preserve internal supplies.
• Import restrictions are imposed in a large number of ways.
Where government purchases are involved, imports may be
restricted without the need for any explicit licensing procedure.
With private-sector imports, however, an import licensing
system becomes inevitable.
 IV. TRADE AGREEMENTS

• Trade agreements broadly refer to commercial

treaties and agreements between countries that
deal mainly with customs duties and other
treatment accorded by each party to goods
originating in the other. They may be distinguished
from treaties of friendship, commerce, and
navigation, which deal more generally with
economic relations among nations—such as the
treatment of foreign investments, the rights of
foreign nationals, and foreign shipping.
 V. STATE TRADING

•  International agreements entered into by

governments or government agencies for the
sale or purchase of commodities
Ex: The State Trading Corporation Of India
Limited
The corporation handles the import of items
such as edible oil, fertilizers on behalf of
government of India
 The Pros and Cons of Trade Controls

• They restrict trade to protect specific industries

and their workers from foreign competition—
agriculture, for example, or steel making.
• At other times, they restrict imports to give
new or struggling industries a chance to get
established. Finally, some countries use
protectionism to shield industries that are vital
to their national defense, such as shipbuilding
and military hardware.
 EXIM Policy
• 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. The main
objective of the Foreign Trade (Development and Regulation)
Act is to provide the development and regulation of foreign
trade by facilitating imports into, and augmenting exports
from India. Foreign Trade Act has replaced the earlier law
known as the imports and Exports (Control) Act 1947.
 continued
• The EXIM Policy of 2002-2007 emphasized the
importance of agricultural exports and
announced measures like the setting up of agri
export zones, removal of procedural
restrictions and marketing cost assistance.
Agri Export Zones are considered the most
important creation of this policy -
• These zones are meant to promote agricultural exports
from the country and provide remunerative returns to the
farming community regularly.
• They are to be identified by the State Government, which
would evolve a comprehensive package of services to be
provided by all State Government agencies, State
Agriculture Universities and all institutions and agencies of
the Union Government for intensive delivery in these
zones. Corporate sector companies with proven credentials
would be encouraged to sponsor new agri export zones or
take over already notified agri export zones.
• Indian EXIM Policy contains various policy related
decisions taken by the government in the sphere of
Foreign Trade, i.e., with respect to imports and exports
from the country and more especially
export promotion measures, policies and procedures
related thereto. Trade Policy is prepared and announced
by the Central Government (Ministry of Commerce).
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. 
• History of Exim Policy of India
In the year 1962, the Government of India appointed a
special Exim Policy Committee to review the
government previous export import policies. The
committee was later on approved by the Government
of India. Mr. V. P. Singh, the then Commerce Minister
and announced the Exim Policy on the 12th of April,
1985. Initially the EXIM Policy was introduced for the
period of three years with main objective to boost
the export business in India
 Objectives Of The Exim Policy
•  There are two aspects of Exim Policy; the import policy
which is concerned with regulation and management of
imports and the export policy which is concerned with
exports not only promotion but also regulation.
• The main objective of the Government's EXIM Policy is
to promote exports to the maximum extent. Exports
should be promoted in such a manner that the economy
of the country is not affected by unregulated exportable
items specially needed within the country. 
• To accelerate the economy from low level of economic
activities to high level of economic activities by making
it a globally oriented vibrant economy and to derive
maximum benefits from expanding global market
opportunities.
• To generate new employment.
• Opportunities and encourage the attainment of
internationally accepted standards of quality.
• To provide quality consumer products at reasonable
prices.
 Governing Body of Exim Policy
• The Government of India notifies the Exim Policy for a period
of five years (1997-2002) under Section 5 of the Foreign
Trade (Development and Regulation Act), 1992. The current
Export Import Policy covers the period 2015-2020. The
Exim Policy is updated every year on the 31st of March and
the modifications, improvements and new schemes became
effective from 1st April of every year. 
• All types of changes or modifications related to the EXIM
Policy is normally announced by the Union Minister of
Commerce and Industry who co-ordinates with the Ministry of
Finance, the Directorate General of Foreign Trade and
network of Dgft Regional Offices.
 EXIM Policy 2015-2020
• The Foreign Trade Policy (FTP) 2015-20 was
unveiled by Ms Nirmala Sitharaman, Minister of
State for Commerce & Industry(Independent
Charge), Government of India on April 1, 2015. 
Highlights
1.FTP 2015-20 provides a framework for increasing
exports of goods and services as well as generation
of employment and increasing value addition in the
country, in line with the ‘Make in India’ programme.
 continued
• The Policy aims to enable India to respond to the
challenges of the external environment, keeping in
step with a rapidly evolving international trading
architecture and make trade a major contributor to
the country’s economic growth and development.
• FTP 2015-20 introduces two new schemes, namely
‘Merchandise Exports from India Scheme (MEIS)’ for
export of specified goods to specified markets and
‘Services Exports from India Scheme (SEIS)’ for
increasing exports of notified services.
• E-Commerce exports of handloom products, books/periodicals,
leather footwear, toys and customized fashion garments
through courier or foreign post office would also be able to get
benefit of MEIS (for values up to INR 25,000).
• Manufacturers, who are also status holders, will now be able to
self-certify their manufactured goods in phases, as originating
from India with a view to qualifying for preferential treatment
under various forms of bilateral and regional trade agreements.
This ‘Approved Exporter System’ will help manufacturer
exporters considerably in getting fast access to international
markets.
• 108 MSME clusters have been identified for focused
interventions to boost exports. Accordingly, ‘Niryat
Bandhu Scheme’ has been galvanised and
repositioned to achieve the objectives of ‘Skill India’.
• Trade facilitation and enhancing the ease of doing
business are the other major focus areas in this new
FTP. One of the major objective of new FTP is to
move towards paperless working in 24x7
environment.
 Conclusion
From the above discussion it becomes clear that
the foreign trade controls are used in order to
protect the domestic industries from the global
companies by using various trade control
instruments like subsidies, Tariffs, state trading etc.
Exim policy is a set of instructions related export-
import of goods in India, Its main objective is to
promote the exports to the maximum extent.
 References
• https://
www.encyclopedia.com/social-sciences/applie
d-and-social-sciences-magazines/international
-trade-controls
• http://www.exim-policy.com/#top
• https://
www.ibef.org/pages/foreign-trade-policy-2015
-20-key-highlights