India is one of the largest and fastest growing economies in the world. In the past, India was not involved into the world markets because it wanted to protect its economy and autonomy. But, in the last few years, there has been an increase in India’s economic power. Like other developing countries, India is using trade as a rise in development. Its services and manufacturing areas have grown rapidly. Foreign trade focuses on export and import taxes and quantitative restrictions. In 2012, India imported $500.3 billion and exported $309.1 billion goods (Factbook). The goods that it imports are machinery, fertilizer, iron and steel, food grains and crude oil. It exports textile goods, jewelry, engineering goods, petroleum products and agricultural products. There have been changes in the India’s trade patters. It didn’t export much in the last 10-15 years because the government neglected trade policy. During that period imports grew due to industrialization, which consisted of raw materials and customers goods. Since liberalization, there has been an increase in India’s foreign trade. India’s rate of economic growth grew to about 6 percent in 2001 ( ). After trade liberalization, India has experienced a positive growth. The liberalization of trade policy led to a contributing factor to India’s economic growth. The trade in goods and services increased from 16 percent in 2001 to 47 percent in 2010 ( ). India exports about 1.44 percent and imports 2.12 percent for merchandise trade and services globally ( OECD). It major trade partners are U.S., China, European Union and United Arab Emirates. In 2010, it exports increased to $14 billion and imports increased to $20 billion and for the same year, it trade deficit dropped signific... ... middle of paper ... ...I inflows. India received projects from other nations based on Greenfield, acquisitions and mergers projects. An example of a city that received the largest Greenfield projects in India was Mumbai ( ). The growth of U.S. investments in India has increased, but the country still remains a small destination for foreign U.S. investors. So, we know that U.S. views India as a growing nation compared to U.S. foreign investors so, the U.S. is considered a significant source of FDI in India. However, there are things that might increase the importance of India for U.S. firms looking for foreign investment opportunities. The multinationals firms in U.S. facing increased labor costs can invest in India due to its large, well-educated and English speaking workforce. India and U.S. share about their economic and trade issues and both are members of WTO, IMF and World Bank.
The trend toward a more globalized market has become increasingly developed in the latter half of the 20th century. Emphasis on world trade has become a dominant figure in almost every Nation’s economy. Between 1970 and 2000 world trade has experienced an increase of almost 370 percent. Concurrently, world GDP increased by 150 percent. Trade is beneficial to Nations because it allows the creation of avenues that aid in efficient allocation of resources (Canas & Coronado). Countries can gain from trade when they specialize according to their comparative advantage. This is, when they create conditions where goods and services can be produced at a lower opportunity cost than in any other country. Along the same logic, countries can also make large profits by taking advantage of another countries comparative advantage.
Direction of India’s trade was towards Europe and the US markets because of its cultural and colonial past and this become the one reason behind the low trade between India and Japan. Direction of India’s trade results into stagnant trade between India and Japan without exceeding the US$4 billion mark before 1990s. This stagnation in the economic relationship between India and Japan was finally broken when India board on major economic reforms by liberalizing the country’s economy and adopting an open-door policy that led to a gradual acceleration of bilateral business relationships between both countries. After 1991 India made many changes in the policies to improve the bilateral relations with Japan and there is an exemplary shift between
The Indian Economy is the tenth largest in the world by nominal Gross Domestic Product and the third largest in terms of purchase power parity.
In realising that foreign investments are the key source of the nation’s economic rise, the Chinese government has given special preferences to foreign investors (Financial Express, 2006). This is mostly done through reduction of most favoured nation (MFN) tariff rate. In India, on the other hand, fair competition exists between domestic and foreign investors. Although the Indian government states that it aims to reduce its MFN tariff rate, which currently doubles the rate in China, to other ASEAN country levels, it is in reality a big challenge because a large portion of the nation’s tax revenue comes from customs tariffs (Henley, 2004).
1. Explain the importance of International Trade Finance in today’s context, with appropriate examples. (In general and with specific reference to India).
In order to understand bilateral trade relation between India and Central Asia and its potential the Gravity Model was used. The gravity model is a simple model that has been extensively used to study bilateral trade patterns and determinants. The main objectives of model are the GDP of countries and distance between countries. The GDPs of the two countries represent the size of the economies that indulge in bilateral trade. In the country of export, the GDP reflects the output of the economy and acts as a proxy for the production capabilities. In contrast, GDP represents the income in the importing country. It denotes the size of the market for commodities - countries with a higher GDP are likely to have a greater demand for goods in the international market. In its simple form, the gravity model suggests that bilateral trade between two countries is directly proportional to the GDP of both the nations and inversely proportional to the distance between them.
Being one of most essential industries in India, Iron and steel industry has helped in generation of several subsidiaries and small scale industries. It also supports transport, fuel, power and communication industries. It is estimated that Indian iron and steel industry exports around 50% of total production. Production in these industries has been increasing for last 20 years. Also there is an increase in export of iron ore. Experts believe that reduction in export duty has helped iron and steel industry grow at a rapid pace. There are several players that operate in this industry in India. Major ones include Tata Steel, SAIL, Jindal Steel and power limited, Essar Steel and Bhushan Power and steel.
Paulino AS, Thirlwal A.P, 2004, The impact of Trade Liberalisation on Exports, Imports and the Balance of Payments of Developing Countries, Amelia Santos-Paulino and A. P. Thirlwall The Economic Journal Vol. 114, No. 493.
From April to June 2005, India’s GDP grew at 8.1 per cent, compared with 7.6 per cent in the same period the year before. More impressively, India is achieving this result with just half of China’s level of domestic investment in new factories and equipment, and only 10 per cent of China’s foreign direct investment…
Wilson, Beth Anne, & Keim, Geoffrey N. (2006). India and the Global Economy. Business Economics, 41(1), 28-36.
Government interference is still relatively high and government contacts are essential to do business in India. Since its openness to the global market and trade liberalization in 1991, India’s labor laws have been pushed to be less restrictive on companies and private capitalists. The nation’s tariffs continue to be high with still restrictive investment norms (The World Bank Group).
British colonialism brought this quest of modern industrial development to India in early 19th century. India being the second largest populated country in the world; industrial revelation was must for her. The business class of India identifies this requirement first and acted as the change was needed. With the help of western machinery they stated the industrialization with home grown agricultural product. Jute, Cotton, Metal (especially steel), and Tea were the first few product that came out in the initial phase of this development process. Along with the independence, India started ...
greater investment in country especially from foreign investors. Reducing tariff wall, give opportunity to invest with some products and supporting foreign investors to use asset in the local for set up their business. These are driver of gross domestic product and income per capita become high significantly. Therefore it can be said that India’s trade system provides advantage with investment of abroad. Resources also available with investment especially coal. It is similar to human resource in India have most efficiency and low wages. All of these catch the attention of many investors to come to invest in India. In contrast, India is a socialist and has both of caste and class structures in social. These has influenced from religion. It is origin of not equal between men and women in society and forward also affect with patterns of operations of business and make contacts with another company in local as well as political instability and corruption in India. In consequently, investors need to learn and understand lots of beliefs and traditional of India. That would be help reduced obstacle for joint venture in India.
This report aims to analyse the global expansion opportunity in the India. In this regard, it considers the ease of doing business in India, its infrastructure, pestle analysis, comparative advantages of India against USA, and entry modes. The company functions in USA and keen to spread its business in India and company manufactures tires and it wants to establish a manufacturing facility in India.
The term economic growth implies an increase in the nation’s real GDP, and more importantly, an increase in the nation’s per capita income. When we are analyzing a nation’s economic growth, we are basically studying as to how that economy is advancing in quantitative terms. Economic development, on the other hand, is a much more encompassing term which includes both the qualitative as well as the quantitative dimensions of economic progress. Not only does it include the aspect of economic growth, but it also considers the process by which an economy improves the economic and social well being of it’s citizens. A mere look at the figures is not enough. We have to judge the progress of an economy by assessing a number of other factors like the level of infrastructure, health, education etc. Economic growth is no doubt important, but so is the development of the social sector. Economic growth, economic development and the social sector are all intertwined and are key elements in a nation’s progress. We shall now go on to discuss the role that they have played with respect to the Indian economy.