IMT-19 Indian Foreign Trade: Notes

IMT-19
INDIAN FOREIGN TRADE

Notes:
a. Write answers in your own words as far as possible and refrain from copying from the text books/handouts.
b. Answers of Ist Set (Part-A), II nd Set (Part-B), IIIrd Set (Part C) and Set-IVth (Case Study) must be sent together.
c. Submit the assignments in IMT CDL H.O. along with the assignments Question Papers for evaluation .
d. Only hand written assignments shall be accepted.
A. First Set of Assignments
B. Second Set of Assignments
C. Third Set of Assignments
D. Forth Set of Assignments
5 Questions, each
5 Questions, each
5 Questions, each
to 200 Words.
Two Case Studies
question carries 1.5 marks.

question carries 1.5 marks.
question carries 1.5 marks. Confine your answers to 150
: 7.5 Marks. Each case study carries 3.75 marks.
SECTION - A
1. What are the objectives of Foreign Trade Policy (FTP: 2009 14) of India?
2. Briefly describe the major steps taken for liberalisation of trade in India.
3. Describe the incentives given to exporters under Market Development Assistance (MDA) Market Access
Initiative (MAI) to promote exports from Indian economy.
4. Critically analyse the impact of globalization on foriegn trade of Indian economy?
5. Distinguish between (a) Physical and deemed exports (b) Countertrade and consignment sale.
SECTION - B
1. Describe the features of Duty Exemption and Duty Remission Scheme.
2.
Why is India facing a high current account deficit since last five years? How can it be controlled?
3. Briefly describe the features of Export Promotion Capital Goods Scheme.

4. What is the Market Linked Focus Product Scheme (MLFPS)? State the incentive given under it during the
FTP: 2009 14.
5. Compare current composition of export and imports of the Indian economy with 1950s.
SECTION - C
1. Describe the role of Indian Trade Promotion Organisation (ITPO) in export promotion.
2. How far have special economic zones (SEZs) helped in promotion of exports in India?
3. Do you think FDI should be allowed in multi-brand retail in India? Why?
4. Describe the measures taken in the Foreign Trade Policy (2009 14) for promotion of marine exports.
5. What privileges are given to the Star Export Houses?
CASE STUDY - 1
Exports of Agro Processed Food
The average rate of growth of food processing sector during the first four years of the 10th Plan period was @13.25%
th
at current prices and @ 6.75% at 1999-2000 prices. In the 11 Plan, the Ministry proposes to launch a revamped
Infrastructure Scheme under which it will promote setting up of Mega Food Parks, cold chain infrastructure, value
added centres and packaging centres. The Mega Food Park Scheme will provide backward and forward linkages as
well as reliable and sustainable supply chain. The emphasis will be on building strong linkages with agriculture and
horticulture, enhancing project implementation capabilities, increased involvement of private sector investments and
support for creation of rural infrastructure to ensure a steady supply of good quality agri/horticulture produce. It will
provide a mechanism to bring farmers, processors and retailers together and link agricultural production to the market
so as to ensure maximization of value addition, minimize wastages and improve farmers' income. The Mega Food
Park would be a well-defined agri/horticultural-processing zone containing state of the art processing facilities with
support infrastructure and well established supply chain. The primary objective of the proposed scheme is to facilitate
establishment of integrated value chain, with processing at the core and supported by requisite forward and backward
linkages. It is envisaged that the implementation of the projects would be assisted by professional Project
Management Agencies (PMA) from concept to commissioning. In 11
th
Plan it is planned to support establishment of
thirty (30) Mega Food Parks in various parts of the country.

Vision 2015 - A vision, strategy and action plan has also been finalized for giving boost to growth of food processing
sector. The objective is to increase level of processing of perishable food from 6% to 20%, value addition from 20% to
35% and share in global food trade from 1.6% to 3%. The level of processing for fruits and vegetables is envisaged to
increase from the present 2.2% to 10% and 15% in 2010 and 2015 respectively. The Cabinet has approved the
integrated strategy for promotion of agri-business and vision, strategy and action plan for the Food Processing Sector,
based on the recommendations made by the Group of Ministers (GOM).
An Integrated Food Law, i.e. Food Safety and Standards Act, 2006 was notified on 24.8.2006. The Act enables in
removing multiplicity of food laws and regulatory agencies and provide single window to food processing sector.
Ministry of Health & Family Welfare has been designated as the nodal Ministry for administration and implementation
of the Act.
The Ministry has set up a National Institute of Food technology Entrepreneurship & Management (NIFTEM) at Kundli
(Haryana). The Institute will function as a knowledge centre in food processing.
Between 1991 to November 2006 the total inflow of foreign direct investment in the food-processing sector accounts
Rs 52.7 bn (US$ 1.2 bn). The highest investment towards the food-processing sector in a single year was recorded in
2001-02 amounting to Rs 10 bn. During the last five years, FDI witnes sed an inflow of over Rs 24 bn of foreign
investment.
During the last five years Maharashtra received the highest share of FDI in food processing. The dairy and consumer
industries received FDI worth Rs 2.7 bn each as foreign investment. Countries of European Union such as
Netherlands, Germany, Italy and France contribute nearly 30% of FDI in food-processing sector. Perfetti, Cadbury,
Godrej-Pilsbury, Nutricia International, Manjini Comaco are some of the successful ventures from EU countries.
Major Food Processing Companies in India

Major MNCs
Major Indian Companies
Nestle,
Pepsi,Coke,
Kelloggs,
Conagra,
ITC, Dabur, Britannia, Parle, Amul, Haldiram,
Unilever,Perfetti, Glaxo Smithkline, Heninz, Wyeth,
Godrej, Venky's
Ajinomoto, Nissin met, Walmart
With the advent of the multinational companies in the Indian market the competition in food processing industry has
increased. These multinational companies are facing tough competition from strong Indian brands. Such competition
has obviously increased innovati ons. It has also facilitated a sustained growth of the sector and improved global
competitiveness. The emerging new growth phase of the sector is just in its initial stages with the potential for India to
emerge as a leading food supplier to the world.
Questions
1. Discuss the strength and weaknesses of the Indian agro processing industry in relation to the international
market for agro processed foods.
2. Describe the role played by the government in the development of agro processing industry.
CASE STUDY - 2
India's exports surged 37.5% in 2010-11their fastest annual growth since independencedespite a strong rupee
and weak demand in developed markets. The country shipped goods worth $245.9 billion during the year as attempts
to diversify markets and increase regional trade paid off. Exports surpassed the government's initial target of $200
billion. This is the highest annual percentage growth in exports (in dollar terms). Exports in March added to $29.1
billion, highest for a single month so far. The base effect, however, contributed to a part of the rise.
Exports had fallen 3.5% in 2009-10 because of the global financial crisis. Robust growth in exports and slower rise in
imports helped the government contain trade deficit at $104 billion as against a worrying mid-year estimate of $130
billion.
New Markets Drive Growth
Imports rose 21.5% to $350.5 billion in 2010-11. The strong growth was driven by higher exports to new markets in
Latin America, Africa and Asia.
"There was a slump in global demand in 2009 and the initial months of 2010, especially in the traditional markets, and
we felt that there was a need to reach out to new destinations," the minister said. The government had announced
incentives for shipments to 41 markets, most of which were new trading destinations for the country. Exports to Latin
America were up 74% in the first three quarters of 2010-11 compared with the year-ago numbers while those to
African countries jumped 50%.
Exports to the EU and UStraditional markets for Indian merchandisegrew a more modest 22.6% and 26.4%,
respectively. "Most of the growth has come from new markets in Latin America, Africa and also Asia, which has now
emerged as the main market for India's exports," said Ajay Sahai, director-general of the Federation of Indian Export
Organisations. The thrust on new markets is likely to continue in the export strategy to be announced by the
commerce ministry later this month, which will aim at increasing the country's exports to $450 billion over the next
three years.
Questions
1. In the light of the case compare the change in the destinations of Indias exports from and imports to India in the
last decade with the period before liberalisation?
2. Discuss the reasons for rapid growth of exports from India in 2010-11.
3. Identify some goods and services from your viewpoint that have export opportunities for major markets. What steps
can be taken to promote their exports?

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IMT-19

INDIAN FOREIGN TRADE

question carries 1.5 marks.

3. Briefly describe the features of Export Promotion Capital Goods Scheme.

Plan it is planned to support establishment of

thirty (30) Mega Food Parks in various parts of the country.

Major Food Processing Companies in India

Major Indian Companies

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