Foreign trade can be defined as an exchange of services, goods, or capital across international territories or borders on the basis of the needs of demands of services. The study is going to focus on the importance of foreign trade as well as foreign trade policy. Every country has different trade policies and the authority of firms needs to maintain the factors of trade policies in terms of developing their services in the foreign market. The “foreign trade policy (FTP)” was effectively introduced through the government of India in terms of developing the export of services and goods as well as generating employment.
Importance of foreign trade
Globalisation has assisted to expand services in the foreign market. The remarkable features of foreign trade in India are maritime trade, diversity in exports, state trading, and change in imports, unfavourable or negative trade. There are mainly three types of foreign trade for instance entrepot trade, import trade as well as export trade. Most export commodities of India are Ready-made garments (RMG), linoleum, marine products and engineering goods. Foreign trade in India plays an important role in the growth of the agriculture sector. Every year, India effectively exports vegetables, fruits, cotton, and rice to different countries and this export of goods assists in making farmers prosperous.
There are multiple advantages of foreign trade as it promotes efficiency in the field of production, more employment, reduces trade fluctuations, increases revenues, and longer product lifespan. India exported goods worth almost USD 279 billion in 2020. Foreign trade plays a critical role in the economy of every country as well as it effectively contributes to a country’s GDP. International trade assists in the expansion of goods or services in the foreign market as well as increasing the rate of revenue. It encourages the innovation of products and the effective availability of services and goods.
Foreign trade assists in inspiring the farmers of India for their development as well as assists in economic prosperity. It has assisted in reducing the rate of unemployment in India and developing the GDP of the country. The government of India focuses on the development of export and import in other countries. The major export partners of India are United Arab Emirates, Hong Kong, China, Bangladesh and Singapore.
The import partners of India are Iraq, United Arab Emirates, Saudi Arabia, the United States, as well as China. Foreign trade or International trade can also be described as a significant tool in terms of maintaining diplomatic relations among countries. For instance, India stopped the exports of services or goods to Pakistan due to the Pulwama attack. In the present scenario, foreign trade became an essential part of the policies of the government. Import-export tax and charges assist in the development of revenue.
Foreign trade policies
Every country has a different foreign trade policy that assists in maintaining the practices of export as well as import. Foreign trade policy can be defined as instructions or guidelines created by the “Directorate General of Foreign Trade” on the practices of export and import of services and goods in India. “The Ministry of Commerce and Industry, as well as the Government of India, announces the policies of export and import every five years. The latest foreign trade policy (2015-20) came effectively in India from April 2015. However, the foreign trade policy (2015-20) became invalid in April 2021.
The new “Foreign trade policy (2021-2026)” focuses on targeting the almost $5 trillion economies, establishments of the initiatives of “District Export Hubs” and correcting Trade imbalance. Foreign trade policy plays a critical role in balancing the practices of exports as well as imports. The improvement of trade policy can assist in increasing the rate of revenue as well as the development of GDP. The pandemic of COVID 19 has hugely affected the economy of the country as well as the activities of imports and exports.
The expectations of “Foreign trade policy (2021-2026)” relies on World Trade Organisation compliant policies, effective awareness in export, tax breaks, access to credits, digitalization and improvement of infrastructure. Effective implementation of policies can help the government of India in achieving the target of an almost $5 trillion economy. Foreign trade in India plays a critical role in inspiring farmers as well as reducing the rate of unemployment. Efficient schemes in the field of foreign trade assist in the development of the practices of export and imports. The improvement of schemes, efficient strategic planning as well as policies can help the government of India in improving the losses of foreign trade in India caused by the pandemic.
Conclusion
Based on the above discussion it can be concluded that every country has different policies in the field of foreign trade in terms of improving the services of export and import. Foreign trade in India assists in the improvement of the practices of farmers and inspires them in improving their services. The study has discussed foreign trade policy as well as the importance of foreign trade. Moreover, it can be stated that the governments of every country focus on the development of GDP and overcoming the losses of trade due to the pandemic. There is a requirement for efficient strategic planning to achieve the expectations of “Foreign trade policy (2021-2026)”.
