Significance Of Foreign Trade Policy Of India
Foreign Trade, as the term suggests is trade between various nations. This could also be stated as International Trade, or Inter Region Trade. The reason why we need to have a foreign trade policy of India is to maintain a mutual agreement of wants and requirements during the trading process. It is fundamentally a guideline around import and export trades. In order to have a successful financial development of India, a strong foreign trade policy is vital.
Foreign trade policies worldwide are normally of two types: Free Trade Policy and Protective Trade Policy.
As the name states, in the free trade policy, there are absolutely no limitations on sections such as exchange of goods/services, amid nations which are into trading. Moreover, there are neither any constraints or restrictions on manufacturing or consumptions, nor are there any excises, subsidies or tariffs to follow. The plan of free trade works pretty well in developed nations.
The Protective Trade Policy in general shields the native economy from outside competition in goods which may be a threat to the national market for their goods and services. Such a policy is perfect for developing nations like India.
Benefits Of Foreign Trade Policy Of India
- Appropriate Distribution of Labour
- Stable Pricing
- Consumer Advantage
With the foreign trade policy, India can generate a sphere of expertise and specialization over a worldwide platform. Foreign trade policy of India can support in making merchandises at a lower cost. So, imagine India that has massive natural resources, it has plenty of labor, can import some raw material and export finished goods to countries. Thus, this lessens the overall cost of production.
With the assistance of Foreign trade policy, India can lead to parity of pricing to guarantee a steady demand and supply scenario. A foreign trade policy of India also allows us to import some products at the period of a natural calamity when demand is huge. This makes sures the shortage is handled without taxing the consumer.
There is a consumer advantage by availing better quality and quantity of goods. It also aids in elevating the standard of living particularly for underdeveloped areas.
Foreign trade policy of India is very significant from the viewpoint of developing economies. For instance, in India, we have a huge Iron and Coal reserve. These are recognized industry opportunities. Though, for the development of this industry, we ought to import the mechanical know-how from other countries who excel in it. Imagining that we as a country, didn’t have a foreign trade policy, then it could have turned into both, an intimidating task and a pricey effort.
One more area that would bring our country to a halt is the incapability to meet the needs of the petroleum products. Not having a foreign trade policy of India would enormously hamper the financial development of our country.
India, in the current years, is considered as one of the most vital players in the global financial setting. There are numerous aspects contributing to this such as the current trade policies, monetary reforms. Moreover, India’s inherent strengths are most preferred in the international space. The country is also encouraging infrastructure and technological advancements, that are favourable for the financial sector in the years to come.
With the approaching foreign trade policy of India, our exports are anticipated to reach new heights.
