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ITOL Case Study

ITOL Case Study

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Published by: Saurabh Kapoor on Jul 31, 2013
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07/31/2013

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ASSIGNMENT NO.

1

INTERNATIONAL TRADE OPERATIONS AND LOGISTICS

Case Briefs1. Trade Facilitation : A Paramount Need for India 2. India’s Trade Policy: Making it Work ; No Another Jerk 3. India’s Tea Exports: Challenges from RTA/FTA

Submitted to, Mr. SHRIRAM PURANKAR Submitted by, SAURABH KAPOOR 12609088 (Marketing and IB)

bureaucracy and TPO shall act in tandem to achieve it. The two most crucial elements of foreign trade efficiency and competitiveness are price of the goods and time taken to deliver the goods and has emerged as critical success factors for global trade success in LPG&M era. there is hell lot of loopholes and problems in reality. industry. Corruption. it can help in transactional cost reduction. India has to devise simple and ingenious mechanisms through trade facilitations measures and if such measures are sincerely devised and intelligently executed. which are needed to mend. India is not at par with current global standards. For being in league of export champions. Most problematic factors for doing business in India are:      Inefficient government bureaucracy and Political Instability. Foreign currency regulations. . reduction in customs tariffs etc. removal of government corruption. Tax rates and tax regulations. practices and formalities involved in collecting. facilitation and control area and it shall stand up and take lead in trade facilitation. Trade Facilitation has been defined as “simplification and harmonization of trade procedures”. regulation. India faces several problems in seamless trade transactions and the costs involved in trading with India are significant. In spite of world class trade practices and procedures set by the authorities. presenting. Putting India in league of global export champions require international norms of efficiency.TRADE FACILITATION: A PARAMOUNT NEED FOR INDIA The annual supplement as released on april 2008 has envisaged an 8 fold increase in Indian foreign trade in next 12 years. Present round of trade negotiations can be of immense help in capacity development and enhancement for Indian bureaucracy and machinery involved in trade promotion. The cost of moving cargo to and from the country is critical element of country logistical efficiency and competitiveness. While some impressive gains have been made over the last decade in terms of reducing transaction costs. procedures being further defined as “activities. productivity and cost reduction in Indian foreign trade. communicating and processing data required for the movement of goods in international trade”. trade community. The term trade facilitation is extended to refer a wider agenda in economic development and trade and may include improvement of transport infrastructure. Inflation. Achieving such a target is tough but achievable provided the government. etc.

India’s exports to South Asian Countries constitute only 2. that multilateral trade negotiations will not result in any tangible gain for India and other emerging market economies. Indian policy makers on the other hand. which will provide India a golden opportunity for it seems it is not prepared as it does not have the potential to match Chinese economic strength of being a key supplier of low cost items in the world market. In order to improve such structural weaknesses in Indian export basket. Another key question which Indian Policy makers has consistently neglected is that India does not have deep economic ties with its immediate neighbors. Chile. . and Bangladesh(1%). The market determined rupee which has become open to large scale vagaries has confused India Small Scale exporters who are at the mercy of god to trade as appreciating rupee has made their profit margin negligible and when rupee depreciates they do not have sufficient production capacity to reap the benefits. forgetting the fact that India eventual has an opportunity of promoting its trade especially with USA and EU which is connected to the present troubles of China. Nepal(0. Even then. India this is in a position to raise its imports from the South Asia region substantially if the policy makers may ensure that India which constitutes almost 80% GDP of the region has to take lead for it. 35 of which have taken effect. It has now become clear after almost more than 6 years of negotiations on Doha Development Agenda last year. The only way that they can be enabled is to ensure the technological up-gradation of their operations so as to scale up and bring down cost of production at par with Chinese. a small South American Country has taken the lead into enhancing its foreign trade.8% of its total exports with Pakistan(0. has been busy in an utopian world so that they can eventually emerged as moral leader of developing countries at WTO. NO ANOTHER JERK Failures of WTO’s Doha Development Round Talks should be an eye opener for India’s policymakers who still depend on multilateral to advance India’s economic interests and promote trade in LPG & M era.2%).INDIA’S TRADE POLICY: MAKING IT WORK. what is needed is that government should allow phased doses of direct foreign investment so as to chum out Indian entrepreneurship and cost advantages and making Indian MNCs which may eventually lead India’s march toward handsome share in world trade as has been successfully done in case of Information Technology. It has signed 52 bilateral investment agreements. Adding salt to woes is the fact Indian exports has less than 0.4% share in the products which constitute almost 65% world trade. our policy makers are concentrating all their efforts on the quagmire of multilateral negotiations when a historic opportunity beckons them in international trade for promoting India’s foreign trade through Bilateral Free Trade Agreements and Investment Treaties. its rival in the global trade arena.2%). China is facing international backlash due to various reasons.5%). Sri Lanka (1.

Some of the reasons for this downgrade are:     Fragmented nature of the industry. Tamil Nadu and West Bengal account for 96% of production. dominated the Indian exports with 27%. India and Sri Lanka together account for 60% of world’s black tea export market and such preferential tariff to Sri Lanka exporters is a cause of concern for Indian exporters and producers. This is mainly because of the pre-eminence as a foreign exchange earner and its contribution to the country’s GNP. and Iran(7%) till October 30th 2008. as also the larg est varieties. Kerala. Assam and Nilgiris are well known for their distinctive quality world over. Organically grown products are gaining popularity worldwide and India still is in its nascent stage for this category. Tea in these countries is currently on a downward trend with reduced demand followed by an over abundance of tea.5% has further aggravated the problems of Indian tea producers and exporters. India has long held the title of being the largest tea producer and consumer in the world. India. More than two million people derive their livelihood from the tea plantation and its ancillary activities. which consisted of former states of USSR. Russia and CIS due to political reasons. Sri Lanka is the biggest exporter. The only hope that comes under such downturn market is from CIS countries. the world’s largest tea producer is facing rising competition in the world tea market. . tea exports hit further as orders decline sharply and it seems that it is testing time for Indian tea exporters as they are hit not only by loopholes in Free and Regional Trade Agreements and has been exposed to actual decline in orders from two important markets viz Europe and North America. India produces some of the world’s finest tea. Tea prices have been falling worldwide because of an oversupply in production. followed by United Arab Emirates(19%). The signing of Free Trade Agreement with Sri Lanka in 1999 and subsequent beginning of tea imports at a preferential tariff of 7. In a time of financial crisis. Tea exports bring in a significant amount of foreign exchange into the country as well as revenue to the National Exchequer. The teas originating from Darjeeling. Sri Lanka another major tea producer and strong competitor to India faces similar problem. However. Tea is grown in 16 states of India of which Assam. Losing of major markets like Iraq.INDIA’S TEA EXPORTS: CHALLENGES FROM RTA/FTA Tea is indigenous to India and is an area where the country can take a lot of pride.

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