D.D.N.

Bhole College, Bhusawal

2015-16

NAME :- Rahul Suresh Patil

CLASS :- T.Y.B.com
ROLL NO :- 05
SUBJECT :- PRESENTATION ON
INTERNATIONAL TRADING
INTERNATIONAL TRADING
WHAT IS HOME/DOMESTIC TRADE?

 Buying and selling of goods & services in our own

country.
WHAT IS INTERNATIONAL TRADE?

 Importing: buying goods & services from other

countries.

 Exporting: selling goods & services to other

countries.
 WHO ARE OUR MAIN TRADING PARTNERS?
COUNTRY CURRENCY LANGUAGE

USA Dollar English

India Rupees Hindi

Europe Euro + others Various

Japan Yen Japanese

(importing)
WHAT ARE IMPORTS?
 Goods and services that we buy from other
countries.

 Money leaves India.

 WHY DO WE IMPORT?

 To obtain natural resources that are not available in India.

E.g.. natural oil, gas, gold

 We have an unsuitable climate for certain foods such as

coffee ,dry fruits, almonds …..

 To avail of services not in India. E.g.. pop groups, foreign

holidays, mobile making.

 To have variety and choice of goods & services.

VISIBLE IMPORTS
 Goods which are bought from other countries.

 Money leaves the country

 E.g.. natural oil, wine, cars……..

 INVISIBLE IMPORTS

 Services that are bought from other countries.

 Money leaves the country.

 E.g.. Software's, facebook app

 Indian person on holiday in USA

WHAT ARE EXPORTS?

 Indian goods and services that we sell to foreign

countries.

 Money comes into the country.

WHY DO WE EXPORT?

 To obtain foreign currency needed to buy our imports.

 India is a small country so we need a wider market such

as EU, USA etc.

 Diversification means less dependency on one market if

a country is in recession.

 Selling more means more jobs are created.

 VISIBLE EXPORTS

 Indian goods that are sold to foreign countries.

 Money comes into the country.

E.g..
 Indian food products sold abroad.
 Silk sold to UK

 quarts Crystal sold to US.

INVISIBLE EXPORTS

 Indian services that are sold to foreign countries.

 Money comes into the country.

E.g..
 US citizen on holiday on India.
 Indian horse winning the English Grand
National.
WHAT IS THE BALANCE OF TRADE? (TV)

 Visible Exports – Visible Imports

 Invisible Exports – Invisible Imports

WHAT IS THE BALANCE OF PAYMENTS?

 Total Exports – Total Imports

BALANCE OF TRADE/PAYMENTS CAN
BE…….

 Surplus: Exports greater than Imports

 Deficit: Imports greater than Exports

 Balanced: Exports = Imports

BENEFITS OF A BALANCE OF PAYMENTS
SURPLUS

 More money coming into the country.

 This money can be used to pay off some of our debt or

reduce tax.

 More money and jobs and a better standard of living

for Indian people.
WHAT PROBLEMS WILL A BALANCE OF
PAYMENTS DEFICIT CAUSE?

 Too much money leaving the country.

 Government will have to raise taxes of borrow.

 Indian people will loose their jobs.

HOW CAN A BALANCE OF PAYMENTS
DEFICIT BE REDUCED?

 Import substiution: Buy Indian!

 Government Agencies such as IIFT can promote Indian

exports.
FREE TRADE

 Countries can buy and sell without any trade barriers or

restrictions e.g.. customs duties being imposed.

 The 27 countries of the EU enjoy free trade.

PROTECTIONISM

 Countries try to stop foreign imports.

 Countries try to help their own businesses export.

 They do this by using trade barriers.

 E.g.. Tariff, quota, embargo, subsidy.

TRADE BARRIERS

1. Tariff
2. Quota
3. Embargo
4. Subsidy
IMPACT OF THE CHANGES IN THE
INTERNATIONAL ECONOMY

A. Globalisation
B. Improved ICT
C. Increase number of trading blocs
D. Deregulation
E. New/Emerging Markets
F. Global recession
OPPORTUNITIES

 1. Increased Sales:

 India is a member of the WTO with access to over 500

million consumers.

 Deregulation due to the WTO has also allowed India to

export all around the world with fewer barriers and
regulations.
CHALLENGES

 Competition from low wage economies

 TNC’s will locate in the most cost effective countries.

 Emerging former eastern bloc countries such as Poland

have lower wage rates & are attracting TNC’s.

 There is also more competition…………….

2. ECONOMIES OF SCALE

 Indian exporters must mass produce to satisfy

international demand.

 The more they produce the cheaper the cost per unit.

 International trade helps Indian business become more

efficient & competitive.
3. EXCHANGE RATES:

 If the Rupees increases in value exports become dearer

and imports become cheaper.

 If the value of the Rupees decreases in value then exports

become cheaper and imports become dearer. This will
make raw materials such as oil more expensive.
OTHER PROBLEMS CONNECTED WITH
FOREIGN TRADE.

 Transport

 Insurance

 Safety standards

 Payment

 Cultural differences
 GOVERNMENT HELP FOR EXPORTERS

 Enterprise India provide:

 Market research in foreign countries.

 Low cost loans to exporters.

 Grants to exporters.

 Training & advice on international trade such as labelling,

documents & payment.