India's International Trade, BOP & International Trade Documents
India's International Trade, BOP & International Trade Documents
India's International Trade, BOP & International Trade Documents
A
PROJECT ON
GLOBAL FINANCE
International Trade
Introduction
Ricardian Model
Focuses on comparative advantage
Heckscher-Ohlin Model
Stresses that countries should export goods of abundant resources & import goods of
scarce resources
Gravity Model
Predicts trade based on the distance between countries and the interaction of the countries'
economic sizes.
Risks in International Trade
Buyer insolvency
Non-acceptance
Credit Risk
Regulatory Risk
Exchange Rate Risk
Government Intervention
Political Risk
War and other uncontrollable events.
India’s International Trade
Objectives
Like any other country, trade propels economic growth and national
development in India. The primary purpose is not the mere
earning of foreign exchange, but the stimulation of greater
economic activity. The Foreign Trade Policy of India is based on
two major objectives, they are –
Rs 130,101 Cr. Rs. 250,130 Cr. Rs. 454,800 Cr. Rs. 9,00,471 Cr
Rs 154,176 Cr. Rs. 297,206 Cr. Rs. 630,527 Cr. Rs. 949,133 Cr
Value in US $ billion
Year Export Growth Import Growth Balance of
Rate (%) Rate (%) Trade
Source: RBI
Major Export Commodities
Inflation
The exporters have long wanted the RBI to change its Currency
Policy from free floating to fixed for exporters. This would
enable them to focus on managing their business and save them
from the trouble of managing currency movements. With a stable
exchange rate, more trade can be booked abroad by Indian
traders.
Balance Of Payments
Introduction
Washington
Bretton Consensus
Woods 1945- post 2009
Deglobalizatio 2009
n 1914-1945
Free Trade
1820-1914
Merchan
tilism
pre 1820
Trends in India’s BOP
1949-50 to 1999-2000
The Situation
Not only was our technology backward then, there was food
scarcity too. Large amounts of food grains had to be imported to
feed the huge population.
The BOP was always under pressure and had huge deficits due to
high imports of food grains and capital goods, the heavy external
borrowings and its payment and poor exports.
Influencing Factors
The easy going and conservative attitude of the policy makers were
shaken by the 1990-91 liberalization.
It was realized that the basis of a sound BOP situation lies in the
inner economic strength of the country.
Current Account
I. Trade Balance
II. Invisibles
Capital Account
In other words,
current account = changes in net foreign assets
Elements of Current Account
Source: RBI
BOP & Offshoring
CAC does not however, serve the purposes of the real sectors of
Indian economy, like eradication of poverty, escalation of the
employment rates and other inequalities
Current Account Convertibility
Documents outline the sale and responsibilities of each party so that the
full transaction is understood and complete without delay or additional
costs.
Proof of Contract
Proof of Title
Proof of Information
Proof of Compliance
In Terms of Function
Commercial Documents
Official Documents
Insurance Documents
Transport Documents
Financing Documents
Transport Documents
Certificate of Origin
Post Parcel Customs Clearance
Customs Declaration Form
Customs Invoice
Black List Certificate
Certificate of Inspection
Manufacturer's Certificate
Certificate of Chemical Analysis
Short Shipment Form
Financial Documents
Bill of Exchange
A non-interest-bearing written order used in international trade
that binds one party to pay a fixed sum of money to another
party at a predetermined future date
Letter of Credit
It is a commitment on the part of buyer's bank to pay or accept
drafts drawn upon it provided that such drafts do not exceed
specified amount.
Commercial Invoice:
It is a bill of goods supplied to importer. This is prepared
according to terms and conditions settled.
Learning Group 1 Members