5: Benefits of trading international business
trade is a lawful exchange of products and services between nations. At the
point when a business in one nation exports (sell abroad) product and service
to consumer in another country, it’s called international trade. International trade
also occurs when consumers in a nation import (buy from abroad) products and
service from a foreign country.
trade is important because it enables national markets to give variety of
products and services to their consumers that they would be not able to provide
if they were limited to the production of goods and services within their
consequence of international trade is that almost any type of good is
accessible on the global market, from resources, for example, oil, water, and
steel to necessities, for example, food, attire, and building materials to
luxury products, for example, precious stones and designer clothing. Numerous
services are exchanged globally, for example, legal, accounting, advertising
and banking. Another major consequence of international trade is that the more
manufactures that participate in an industry, the greater the competition
between manufactures becomes. greater
competition brings about more
competitive costs, which means that buyers have access to a number of low cost
1991, the Indian economy was opened up for globalization under the initiative
of then Prime Minister P. V. Narasimha Rao and Former Finance Minister Manmohan
Singh for empowering international trade in
India. India is currently the eighth biggest economy on the world in
terms of nominal GDP.
2016 India exported $256B, making it the eighteenth biggest exporter in the
world. during the most recent five years the exports of India have decreased at
an annualized rate of – 1.585%, from $274B in 2011 to $256B in 2016. The latest
exports are driven by Refined Petroleum which represent 9.9% of the aggregate
exports of India, followed by Diamonds, which represent 9.3%.
on statics from the International Monetary Fund’s World Economic Outlook
Database, India’s aggregate Gross Domestic Product amounted to $8.721 trillion
as of October 2016. Along these lines, exports represented around 3% of
aggregate Indian economic output.
a continental point of view, 49.1% of Indian exports by value are conveyed to
Asian nations while 19.5% are sold to European importers. India transports
another 18.1% to North American clients with 8.7% worth landing in Africa.
following exports good groups represent to the highest dollar value in Indian
global shipments during 2016. Also indicated the percentage share each export
category represent in terms of overall exports from India.
1. Gems, precious metals:
US$43 billion (16.5% of total exports)
2. Mineral fuels including
oil: $27.7 billion (10.6%)
3. Vehicles: $15 billion
4. Machinery including
computers: $13.6 billion (5.2%)
5. Pharmaceuticals: $13
6. Organic chemicals: $11.3
7. Clothing, accessories
(not knit or crochet): $9 billion (3.5%)
8. Electrical machinery,
equipment: $8.2 billion (3.1%)
9. Knit or crochet
clothing, accessories: $7.9 billion (3%)
10. Iron, steel: $6.4
of these are significant Indian export organizations. The following is a choice
of some of the greatest Indian companies.
Reliance Industries (oil, gas)
Tata Motors (cars, trucks)
Indian Oil (oil, gas)
Coal India (diversified metals, mining)
Bharat Heavy Electricals (electrical equipment)
Hindalco Industries (aluminum)
Tata Steel (iron, steel)
Bharat Petroleum (oil, gas)
Hindustan Petroleum (oil, gas)
Sun Pharma Industries (pharmaceuticals)
Steel Authority of India (iron, steel)
Bajaj Auto (recreational products)
Hero Motocorp (recreational products)
Grasim Industries (construction materials)
JSW Steel (iron, steel)
top 25 export destinations of India :
2016 India imported $344B, making it the fourteenth biggest importer in the
world. During the most recent five years the imports of India have decreased at
an annualized rate of – 8.912%, from $420B in 2011 to $344B in 2016. The latest
imports are driven by Crude Petroleum which represent to 17.6% of the aggregate
imports of India, followed by Gold, which represent 6.65%.
a continental point of view, 58.2% of India’s aggregate imports by value in
2016 were bought from other Asian nations. European trade partners supplied
17.5% of import sales to India while 7.4% worth started from North America with
7.3% originating from suppliers in Africa.
following imports good groups represent to the highest dollar value in India’s
import buys during 2016. Also indicated the percentage share every good
category represents in terms of overall
imports into India.
Mineral fuels including oil: US$89.3 billion (25% of total
Gems, precious metals: $48.1 billion (13.5%)
Electrical machinery, equipment: $37 billion (10.4%)
Machinery including computers: $32.5 billion (9.1%)
Organic chemicals: $14.8 billion (4.1%)
Plastics, plastic articles: $11.4 billion (3.2%)
Animal/vegetable fats, oils, waxes: $10.5 billion (2.9%)
Iron, steel: $8.7 billion (2.4%)
Optical, technical, medical apparatus: $7.2 billion (2%)
10. Ships, boats: $5.5 billion (1.5%)
India’s top 25 import sources
4. Saudi Arabia
7. South Korea
14. Hong Kong
19. South Africa
can increase the sales and the sales potential in general. Businesses that
attention on exporting extend their vision and markets locally,
internationally. Rather than gaining money by selling their offerings on the
nearby market, these businesses are centered around finding new chances to
exhibit their work abroad.
items is particularly useful for medium and large businesses the ones that have
already extended inside the nearby market. When they have saturated the market
in their nation, exporting items abroad can be an extraordinary chance for
these businesses to rise the business sales potential. Furthermore, exporting
can be one method for filtering chances for abroad diversifying or even
items can largely contribute to expanding your profits. This is for the most
part because of the foreign requests, as they are generally bigger than those
set by the local buyers. While local clients buy a couple of items or a bed,
businesses abroad periodically arrange a compartment of items which definitely
leads to expanded profits. Besides, if your items are viewed as unique or
creative abroad, your profits can rise quickly in the blink of an eye.
Introducing new products to the
businesses in India and China tend to create products for the European and
American market. This is for the most part because of the size of these
market and the purchasing power of the
population there. In any case, once a new item is introduced to these two
markets, it might take a year or more before the item is introduced to other,
a item produced in China appears to be attractive/valuable to business people
in Australia, they can import it and introduce it with their potential buyers.
thanks to the web extension, business people can lead market surveying prior to
importing specific item. This will enable them to decide whether there is a
real need available on the market for such an imported item, so they can build
up an effective marketing strategy in advance.
major benefit of importing is the
decreasing in manufacturing costs. Numerous businesses today discover importing
items, parts of items and resources more reasonable than producing them locally.
are various situations when entrepreneur discover item of good quality which
are low priced even when the general import costs are incorporated. Instead of
investing in modern, costly machinery, entrepreneurs choose import products and
minimize their expenses. Much of the time, they end up requesting large amounts
in order to get a reasonable price and limit the expenses.
Providing high quality
benefit of importing is related to the capacity to market items of high
quality. Loads of successful entrepreneurs travel abroad, visit factories and
other highly professional sellers in order to discover high quality items and
import them into their own nation. Besides, manufactures may give instructive
courses and training, and in addition introduce benchmarks and practices to
ensure company abroad is well prepared to sell their items.
you choose to base your business on importing items, chances are you are going
to get high quality items. This is because to the fact that manufacturing
businesses are extremely aware that their reputation depend upon the quality of
the items they produce.
or merchandising is the arrangement and design of products and retail space to
influence the purchasing to encounter more appealing and a good time for the
buyer. Merchandising comprises of item display, pricing, store layout,
promotional, limited time occasions and all way of different sales driving
techniques went for raising the profile and the profits of your small retail
is intangible services being traded.
Smith proposed a theory of absolute
advantage with free trade each nation gains by specializing in economic
activities in which it has absolute advantage. Absolute advantage is the
economic advantage one nation enjoys that is absolutely superior to other nations.
For example, is India’s call center. U.S. companies buy this service because it
is cheaper than locating the call center in America. Indian call centers aren’t
better than U.S call centers. Their workers don’t always speak professional
English. But they provide the service cheaply enough to make the tradeoff worth
it. On the other hand, since United States have
the richest farmland, easier to grow corn and wheat, then United States have an
absolute advantage in the food industry.
David Ricardo developed a theory of comparative advantage in 1871. This theory
suggests that even though the united states has an absolute advantage over
China in both wheat and aircraft as long as China is not equally less efficient
in the production of both goods, China can still choose to specialize in the
production of one good (such as wheat)
where it has comparative advantage. Comparative advantage is the
relative (not absolute) advantage in one economic activity that one nation
enjoys in comparison with other nations. India is a comparative advantage in
the global information technology market.