IB0015 - Foreign Trade of India

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Summer 2013

Master of Business Administration- MBA Semester 4

IB0015 - Foreign Trade of India- 4 Credits

(Book ID: B1144)

Assignment- 60 marks

Note: Answer all questions. Kindly note that answers for 10 marks questions should be approximately of 400 words. Each question is followed by evaluation scheme.

Q1. Discuss the changes in the composition of India’s export and import since 1991. How has this affected Balance of payment situation of India?

( composition of export-import- 6 marks, effect on BOP- 4 marks) 10 marks

Answer:  Changes in the composition of India’s export and import since 1991:

A. Changes in the composition of India's export :

1. Agricultural and Allied Products:

The share of agriculture items in the total exports of India has declined between 1990-91 to 2005-06. The share of agriculture exports was 19.5% in 1990-91. It came down to about 10.2% in 2005-06.

2. Ores and Minerals:

The overall export performance of ores and minerals is not satisfactory. In percentage terms, the export performance of ores and mineral has increased from 4.4% in 199091 to 5.2% in 2005-06.

Q2. Trading blocks play an important role in shaping world’s trade. List any five major trading blocks and explain any two of them.

( Listing- 2 marks, explanation- 8 marks) 10 marks

Answer : Five Major trading blocks :

A regional trading bloc is a group of countries within a geographical region that protect themselves from imports from non-members. Trading blocs are a form of economic integration, and increasingly shape the pattern of world trade. There are several levels of regional trade blocs. Some trade blocs liberalize more economic transactions than others. Five major categories of trade blocs are:

Q3. Discuss the various laws governing India’s export and import trade.

( 5 laws - 10 marks) 10 marks

Answer : Laws governing India’s export and import trade :

1. Foreign Trade (Development and Regulation) Act, 1992:

In India, exports and imports are regulated by the Foreign Trade (Development and Regulation) Act, 1992, which replaced the Imports and Exports(Control) Act, 1947, and gave the Government of India enormous powers to control it. It authorizes the Central Government to formulate and announce an Export and Import (EXIM) Policy and also amend the same from time to time, by notification in the Official Gazette

Q4. Trade policy governs export and import of a country. What are the objectives of Foreign Trade Policy 2009-2014? Discuss in brief the Duty Drawback scheme.

( objectives- 8 marks, duty drawback- 2 marks) 10 marks

Answer :  Objectives of Foreign Trade Policy 2009-2014:

The policy aims at developing export potential, improving export performance, boosting foreign trade and earning valuable foreign exchange. FTP assumes great significance this year as India's exports have been battered by the global recession. A fall in exports has led to the closure of several small- and medium-scale export-oriented units, resulting in large-scale unemployment.

Q5. Define the service providers under Foreign Trade Policy. Discuss the salient features of served from India scheme.

( service providers- 5 marks, SFIS- 5 marks) 10 marks

Answer : Service providers :

Service Provider means a person providing

i. Supply of a ‘service’ from India to any other country; Eg: Supply of architecture service from India to France.

ii. Supply of a ‘service’ from India to service consumer of any other country in India; Eg: Providing hospitality service to a foreigner who visits India.

iii. Supply of a ‘service’ from India through commercial or physical presence in territory of any other country; Eg: Providing services from a Branch Office, Joint Venture etc established outside India.

Q6. Write a short note on EEFC a/c. Discuss the RBI regulations relating to advance remittance for imports into India.

( EEFC- 5 marks, RBI regulations- 5 marks) 10 marks

Answer :  EEFC a/c :

The EEFC account is a special type of current account aimed at exporters / individual professionals who receive eligible remittances in foreign currency as per FEMA regulations. The account is maintained in foreign currency, shielding accountholders from exchange rate fluctuations. EEFC accountholders are required to open a current account in INR for crediting the INR leg of the transaction / converting the balance held in the EEFC account into INR as well as for paying the applicable charges.

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