Foreign

Trade Policy
NAME : TA N M AY S A N J AY K O T H AWA D E
CLASS : SYBBA DIVISION : A
R O L L N U M B E R : 11 0 4 1
SUBJECT : I N T E R N AT I O N A L B U S I N E S S
 INDEX
• MEANING

• S O M E C O N C E P T S R E L AT E D T H E TO P I C

• P R I M A RY F O C U S A R E A

• D U R AT I O N O F T H E P O L I C Y

• THE THREE MOST COMMON FOREIGN

T R A D E P O L I C I E S A R E TA R I F F S , I M P O RT

Q U O TA S , A N D E X P O RT S U B S I D I E S .  

• I N D I A’ S M O S T E X P O RT E D C O M M O D I T I E S &
I M P O RT E D C O M M O D I T I E S
The Foreign Trade Policy (FTP) was introduced by the
Government to grow the Indian export of goods and services,
generating employment and increasing value addition in the
country. The Government, through the implementation of the
policy, seeks to develop the manufacturing and service sectors.

Foreign trade in India includes all imports and exports to and

from India. At the level of Central Government it is administered
by the Ministry of Commerce and Industry. Foreign trade
accounted for 48.8% of India's GDP in 2018.

MEANING
 • This includes goods and services produced in the domestic economy of a nation and purchased by
the foreign sector, what is termed EXPORTS.
• Goods and services produced in the foreign sector and purchased by the domestic economy, what
is termed IMPORTS.
• Foreign trade is also termed INTERNATIONAL TRADE. The distinction between the two
terms is based on perspective. International trade is viewed from the perspective of the global
economy, in which each of the nations of the world are players in the exchange game.
• Tracking the flow of exports and imports, the foreign trade for a country, is commonly
accomplished with the BALANCE OF TRADE.
• In fact, the balance of trade is actually one component of a more extensive set of international
financial accounts termed the BALANCE OF PAYMENTS.
• Balance of Trade Surplus: A surplus in the balance of trade arises if the value of exports
exceeds the value of imports. In terms of "payments," this indicates that the domestic economy
is receiving a net inflow of payments from the foreign sector. More payments coming in than
going out means the domestic economy has more income that enhances the living standards of
domestic residents.
• Balance of Trade Deficit: A deficit in the balance of trade arises if the value of imports exceeds
the value of exports. In terms of "payments," this indicates that the domestic economy has a net
outflow of payments to the foreign sector. Fewer payments coming in than going out means the
domestic economy has less income and thus lower living standards.

Some Concepts Related the topic

Primary Focus Areas
The Government, through the policy, primarily focuses on
adopting a twin strategy of promoting traditional and sunrise
sectors of exports including services. Further, it intends to
simplify the process of doing business.

Duration Of The Policy

The Union Ministry of Commerce and Industry announced on
January 12, 2021, that the New Foreign Trade Policy 2021-2026
of India which is under formulation will come into effect on April
1, 2021. The policy will be implemented for five years and will
strive to make India a leader in international trade.
The three most common foreign trade policies are tariffs, import quotas, and
export subsidies. 

•Tariffs: One common trade policy is the imposition of tariffs on imports.

Tariffs are simply taxes placed on imports.
•Tariffs work like any other taxes.
•A tariff or tax is added to the price of the imported good. Suppose, for
example, that the price of an imported good is $10. A tariff of $1 would
then force importers to sell each good for $11.
•Domestic producers are usually thrilled with a tariff because the higher
price of imports is bound to reduce the quantity of imports sold.
•This means more domestic production is likely to be purchased.
Moreover, domestic producers can also raise the price they charge for
their goods.
•Import Quotas: An alternative to tariffs is to simply restrict the
quantity of imports coming in a country.
•The technical term for this is an import quota. Quotas are simply
restrictions on the quantities of goods imported.
•In this case, the government stipulates that foreign producers can sell
a specific number of imports in domestic economy.
•While domestic producers would likely prefer setting an import quota at
zero, preventing all foreign imports, any restriction is appreciated.
•With fewer imports entering the domestic economy, more domestic
production is sold, and in all likelihood, at higher prices.
•Subsidies: A third policy is for the domestic government to subsidize a
domestic industry facing competition from imports.
•That is, the government pays domestic producers for each good
produced.
• Subsidies are simply payments from the government to individuals or
businesses without any expectations of receiving any production in
exchange.
• Domestic producers usually promote the use of government subsidies
as a way to be "competitive" with "lower cost" foreign imports.
•A subsidy gives domestic producers the ability to produce more goods
at a lower price and presumably reduce the number of imports into the
country.
India’s Most Exported Commodities & Imported Commodities

Exported Commodities Imported Commodities

 India’s Most Exported Commodities & Imported Commodities

Exported Commodities Imported Commodities

I. Packaged Medicaments – $14 billion I. Gold – $32.8 billion (included in

‘Precious Stones & Metals’)
II. Jewelry – $12.6 billion II. Coal Briquettes – $27.2 billion

III. Rice – $7.47 billion III. Diamonds – $24.9 billion (included in

‘Precious Stones & Metals’)
IV. Cars – $7.34 billion
IV. Telephones – $9.58 billion
V. Vehicle Parts – $4.84 billion V. Broadcasting Equipment – $7.42 billion