Difference between Home

Trade and Foreign Trade

Trade is the defined as the exchange of goods and services between person or entity to another. The
trade involves buying and selling of goods and services. Trade is the central activity in the
economy. Trade not only refers to the exchange of goods and services within the country but also
between two or more countries.

Trade is basically divided into two types,

1. Home Trade
2. Foreign Trade.

HOME TRADE

Home trade is also called as “Domestic Trade”. Home trade is the trade that happens within the
boundaries of the country. It means the exchange of goods and services are only made within the
geographical boundaries of the country. The seller and buyer of the goods are from the same
country.

FOREIGN TRADE

Foreign Trade is also called as “International trade”. Foreign Trade is the trade that takes place
between two or more countries. Foreign Trade involves the transfer of goods from one country to
the other country. The seller and buyer of the goods are from different countries.

COMPARISON TABLE

The below given comparison chart shows some of the differences between Home
trade and Foreign Trade

HOME TRADE FOREIGN TRADE

Home trade refers to the trade within the Foreign Trade refers to the trade between two or

borders of the country. more countries.

 HOME TRADE FOREIGN TRADE

 Exchange of Currencies

There is no exchange of currencies takes place Foreign Trade involves the exchange of

in the Home trade because there is a same currencies between the nations which are

currency in the country. involved in the trade.

 Restrictions on transfer of goods

Home trade usually doesn't have any Foreign Trade is subjected to many restrictions

restrictions on movement inside the country. on transfer to certain goods to certain countries.

 Transportation costs

Home Trade generally has fewer Foreign Trade involves very high transportation

transportation costs and risks to transfer the costs and risky situations to transfer goods from

goods. one country to another.

 Transport Systems

Home Trade depends upon the network and Foreign Trade depends upon the seaways and the

internal transport systems like roads, railways, airways between the countries involved in the

etc. trade.

 Benefit to Country

Home trade leads to economic development Foreign Trade leads to the economic

and self-sufficiency of the country. interdependence between the countries.

 Approvals

The home trade involves fewer Foreign Trade involves more documentations and
 HOME TRADE FOREIGN TRADE

documentations and approvals from the approvals from government and it is a long

government to transfer the goods. process to get approvals from government.

 Volume of Trade

The volume of the trade depends upon the Foreign Trade has many restrictions imposed on

population of the country, demand for the free entry of goods and many duties and taxes

product, etc have to be paid to trade goods between countries.

 Time Gap

Home trade usually have less time gap Foreign Trade involves wide time gap between

between the goods dispatched and goods the goods dispatched from the home country and

received and payment received for the goods received by the other country.

consignment.

 Credit Problems

In the case of Home Trade, there are fewer Foreign trade involves special steps to find out

credit problems between the sellers and the credit worthiness of the importer by the

buyers in the country. exporter of the goods.

 Trading of Goods

Home trade only involves the trade of the Foreign Trade facilitates countries to export the

goods and services which are available in the goods which they have surplus and import goods

country. which are short in supply.

 Flow of Currency
 HOME TRADE FOREIGN TRADE

Foreign Trade helps in exchange of currencies

Home Trade helps in the flow of currency
between two countries and helps increase of
from one place to another place in the country.
foreign exchange reserves.

 Advantage to People

Home Trade helps in increase the employment Foreign Trade helps in bringing the international

and specialization within the country. division of labour and specialization.

 Insurance

The goods of Home Trade don't carry a

The goods which are sent to other countries by
compulsion to have the insurance for goods in
the foreign need to be insured compulsorily.
transport.