Introduction to Foreign Trade Chapter 1.1 Introduction to Foreign Trade

Aim To equip the students on the basics of foreign trade and the history, state and direction of foreign trade in India

Instructional Objectives After completing this chapter, you should be able to: Explain the concept of Foreign Trade Discuss International Business and Foreign Trade Explain India’s Foreign Trade

Concept of Foreign Trade

Introduction to Foreign Trade Trade is the lifeline of a nation. Carried out by individuals, a group of people, companies and by the Government It comprises of the exchange of: goods, resources and services across international borders.

Need for Foreign Trade Importance of Foreign trade It facilitates the even distribution of resources and human capital. It increases the skills and knowledge level of the people. It paves for economic development and helps in acquiring capital goods and natural/economic resources at better prices. Importance of Foreign trade A nation can attract foreign direct investment through the means of trade, by showcasing itself as a ‘favorable economy’ for doing business in the world.

Importance of Foreign Trade Manage natural and economic resources Attract foreign investment Increases the nation's goodwill Acquire vital resources in times of emergency Creates new jobs Importance of Foreign Trade: Foreign trade is an important economic activity for any country because, it creates new jobs and helps a country in managing its natural and economic resources. Trade increases the nation's goodwill in the world and can help it in attracting foreign investment. By trade, a nation can acquire vital resources in times of emergency.

Three categories of Foreign Trade Import Export Entrepot Purchase Sell Purchase & Resell Three categories of Foreign Trade: Import: It is the economic activity of purchasing goods, services, resources and information from another country, in exchange for money or with other goods/resources of similar value. Ex: India buys oil from Saudi Arabia. Export: In export, countries sell or barter goods, services, resources and information to other countries in exchange for money or with other resources. Ex: India sells mica to the United States of America. Entrepot: In this activity, a country buys goods, services, resources and information from another country, and sells a portion of its purchases to a third country. Ex: India imports oil from Kuwait and exports a portion of it to Nepal.

Quiz / Assessment ____________ increases the nation's goodwill in the world and can help it in attracting foreign investment. Trade Purchase Inter state Sell Correct answer is : a) Trade

Quiz / Assessment What is the need for foreign trade? Economic Development Non standard of living Increases investments Non division of labour Correct answer is: a) Economic Development

Quiz / Assessment 3) In ___________ activity, a country buys goods, services, resources and information from another country, and sells a portion of its purchases to a third country. Entrepot Import Export Purchase Correct answer is: a) Entrepot

Activity Choose any one country and research India’s trade Online Activity (60 min) Choose any one country and research India’s trade relations with that country in the following areas: Export Import Financial Investments Cultural exchange Prepare a 2-3 slides presentation on this topic. Online Activity (60 min Description: Choose any one country and research India’s trade relations with that country in the following areas: Export Import Financial Investments Cultural exchange Prepare a 2-3 slides presentation on this topic.

Summary Foreign trade is an exchange of capital, goods and services across international borders. Foreign trade is an important because- It creates new jobs, manages natural and economic resources, increases the nation's goodwill in the world, attracts foreign investment. Import, Export and Entrepot are three categories of Foreign Trade. International Business includes business transactions conducted all over the world. It includes the transfer of goods, services, capital, technology and skills. The government of India is taking various steps to revive India’s foreign trade by increasing the competitiveness of Indian industry, opened up various sectors for foreign direct investment (FDI).

e-References Top India Exports. (2016). Worldsrichestcountries.com. Retrieved 7 July 2016, from http://www.worldsrichestcountries.com/top-india-exports.html India Imports | 1957-2016 | Data | Chart | Calendar | Forecast | News. (2016). Tradingeconomics.com. Retrieved 7 July 2016, from http://www.tradingeconomics.com/india/imports TRADING ECONOMICS | 300.000 INDICATORS FROM 196 COUNTRIES. (2016). Cdn.tradingeconomics.com. Retrieved 7 July 2016, from http://cdn.tradingeconomics.com

External Resources Raj, Agarwal. (2005). International Trade Excel Books. New Delhi. Chruliam Francis. (2008). International trade and export management. 8th Edition. Himalaya Publishing House. Mumbai. Berg Hendrik Van den & Lwerer J Joshua. (2007). International trade and economic growth. Printice Hall of India. Nayar Deepak. (1976). India’s Export and Export Policies in the 1960s. Cambridge University Press. Singh Ram. (2009). International trade operations, Excel Books, 1st Edition. New Delhi.