3. WHAT IS AN EXPORT ?
• An export is a function of international trade whereby goods produced in one
country are shipped to another country for future sale or trade.
• The sale of such goods adds to the producing nation's gross output.
• If used for trade, exports are exchanged for other products or services in other
countries.
4. BENIFITS OF EXPORT IN ECONOMY
• Employement : If exports are more that means that demand of those products are more
in international market. And if demand increases, more supply need to be generated which
in turn increases the production, which needs more labour. This results in increased
employment.
• Spending Power : If exports increases, the inflow of the funds increases. This simulates the
consumer to spend more. This also increases the life style of people.
• Competition : If exports increases than that means that international demand is increased.
Thus, it means that we are good competition in the market to other countries.
• Exchange rates : When exports increases, the value of money of that country w.r.t other
country increases. This means that there happens increase in exchange rates.
• Balance of Trade : Increase in exchange rate may hamper the trade. Thus, its very
important to maintain the balance between imports and exports.
7. PRE-REFORM ERA
• Contributuion of Exports in Indian economy was very less in Pre-reform Era.
• The % GDP of exports were 6.5% in 80’s whereas % GDP of imports were 8.4%.
• Total hold of international market was only 0.5% in 80’s.
Exports(Avg.
annual growth
rate)
Imports(Avg.
annual growth
rate)
Exports
(% GDP)
Imports
(% GDP)
International
Hold of INDIA
1951-1960 0.7 8.6 6.3 8 1.4
1961-1970 4.6 0.3 4.2 5.8 0.9
1971-1980 6.8 8.7 5.8 6.7 0.5
1981-1990 6.1 3.9 6.5 8.4 0.5
8. WHY ??
• India relied much on domestic products for the growth and avoided international
trade due to which exports were not much seen.
• India’s policy was restricted and focused on developing domestic industry.
• India had strict rules and regulations for the control of International trade.
• As a result only selected manufacturers and selected agricultural firms had rights
to export incentives.
• And as the exports suffered, it had negative impact which gave rise to Balance of
Payment Crisis and fiscal deficits.
10. Why ?
• In 1991 economic reforms were introduced which aimed at liberalization,
Globalization, and Privatization.
• Many restrictions on trade policies were removed.
Tariff lines were made free, substantial capital account liberalization measures were
introduced.
• Proper implementation of all these reforms lead to maximum growth in 1995.
0
5
10
15
20
25
30
35
40
45
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
11. Why ?
“East Asian Crisis 1997-98”
The money value of countries like Japan and other ASIAN countries decreased.
The ASIAN countries and Japan were acutely affected by the crisis, which was not the case
with India.
• Their respective currencies lost value. This also meant that this depreciation in their
currencies resulted in appreciation of rupee due to interest rate differentials.
0
5
10
15
20
25
30
35
40
45
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
12. Why ?
• The ASIAN nations and Japan devalued their money to increase the exports and hence
contributing to rise in their economy.
• Due to their money devaluation, the demand of India good and services were reduced
as other nations tend to import at a cheaper rate from those ASEAN nations.
• The main decrease in the exports were in textile and electronic market which were
main export market areas of India.
0
5
10
15
20
25
30
35
40
45
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
13. Why ?
“Attack on World Trade Centre(WTC)”
Due to the terrorist attack at WTC in 2001, the economy of US was affected which in
turn affected the trade of India as US is one of the major importer of Indian products.
• Also the ASIAN countries which were just recovering from the crisis, were also
affected.
0
5
10
15
20
25
30
35
40
45
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
14. Why ?
“Global Financial Crisis”
It began in 2007 with a crisis in the excessive risk taking in the mortgage market in the
US, and developed into a full-blown international banking crisis with the collapse of the
investment bank Lehman Brothers.
The crisis was nonetheless followed by a global economic downturn, the Great Recession
and the European debt crisis.
0
5
10
15
20
25
30
35
40
45
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
financial
crisis Great
Depression
15. Why ?
“Global Financial Crisis”
Due to GFC countries like Europe, America and other main nation’s economy
collapsed.
• This resulted in the collapse of large investment banks around the world coupled
with high oil prices.
• Rising inflation led to global recession.
0
5
10
15
20
25
30
35
40
45
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
18. MERCHANDISE EXPORTS
Why??
• Agriculture was a major component till the early years following independence, a
shift towards manufactured exports occurred due to the industrialization which
took place during that time.
25.30% 26% 26.80% 24.90% 22.80%
28.10%
50.10%
56.60%
61.50% 66.80% 68.70%
64.60%
24.60%
17.30%
11.70% 8.30% 8.50% 7.30%
1985 1995 2000 2005 2007 2009
Others Manufacturing Agriculture
20. • Major manufactured Exports done by India was in the market of gems and
jewellery, ready made garments(cotton) and electronic goods.
1990
Gems and
Jewellery
Medicaments
Petroleum
related products
Cotton
Leather
Textile Yarn
2000
Gems and
Jewellery
Medicaments
Petroleum
related
products
Textile Yarn
Made up
Articles
Cotton
21. • Major manufactured Exports done by India was in the market of gems and
jewellery, ready made garments(cotton) and electronic goods.
2005
Gems and
Jewellery
Medicaments
Petroleum and
related
Products
Made up
articles-textiles
2009
Gems and
Jewellery
Medicamnets
Petroleum and
related
Products
Telecommunic
ation
Equipments
Ships and
boats
Motor cars
22. GEMS AND JEWELLERY
National Hold Inter-national Hold
0
5
10
15
20
25
0
5
10
15
20
25
1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009
25. STEPS TAKEN BY GOVERNMENT
• 100% Export Oriented Units : A 100% export oriented unit can be set up in Free Trade
Zones (FTZs), promoted by Government with infrastructure facilities. Examples are Madras
Export Processing Zone (MEPZ), Santacruz Electronic Processing Zone (SEPZ), besides
similar zones are in Kandla (Gujarat), Noida (Delhi), Cochin. Units in FTZ and 100% Export
oriented units have been given special status.
• Tax exemption on earnings : The profits earned on export earnings are
deducted by 50% for calculation of tax. It can be availed of by an individual or
company. There are also deductions available for earnings in foreign exchange by
approved hotels or travel agents. There is a provision of deduction in respect of
expenditure incurred by the companies for promoting sales outside India.
26. STEPS TAKEN BY GOVERNMENT
• Case assistance to exporters: Cash assistance is given to enable exporters to compete in
the international market. It is given as a percentage on the FOB value of exports. There is
International Price Reimbursement Scheme. This scheme is designed to match the
differences in the international prices of steel, aluminium, pig iron, etc
• Liberalized Exchange Rate Management System (LERMS): Under Liberalized Exchange
Rate Management System, the Government allows partial convertibility of rupee
for all the approved transactions. In this system, exporters of goods and services
who receive remittances from abroad would be able to sell bulk of their foreign
exchange receipts at market determined rates from the authorized dealers.
27. STEPS TAKEN BY GOVERNMENT
• Export Pass Book Scheme: This scheme enables, the Export House, Trading Houses
and manufacturer exporters having good track record of exports. The scheme has
extended its coverage even to well-established manufacturers.
• Duty Exemption Scheme: Duty exemption scheme allows the duty free import of
certain components, raw materials, consumables and spares for export
production. It covers categories of advance license, blanket advance license and
advance customs clearance permits. It provides benefits to indirect exporters. The
license holder of this scheme is also eligible for REP license.
28. STEPS TAKEN BY GOVERNMENT
• Export Promotion Capital Goods Scheme (EPCG): This scheme permits the import of
capital goods at a concessional rate of customs duty, subject to export obligation to be
fulfilled over a period of time. The scheme is applicable to service sector also. Second hand
capital goods are allowed to be imported under certain conditions. The importer has to
obtain the EPCG license.
