IB0015- Foreign Trade of India

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ASSIGNMENT

 

 

 

Note: Answer all questions. Kindly note that answers for 10 marks questions should be approximately of 400 words. Each question is followed by evaluation scheme.

 

Q.1 Analyze the direction of India’s foreign trade since 2001.How has the direction of export and import affected our foreign trade.

 

Ans : Overall picture of changes in direction of trade :

 

Foreign trade in India includes all imports and exports to and from India. At the level of Central Government it is administered by the Ministry of Commerce and Industry. While the growth rate of the Indian economy has been increasing in recent times, though, with fluctuation but one phenomenon which was observed was that the growth performance

of the three major sectors of the economy, namely, agriculture, industry and services, has

been diverse

 

 

 

 

Q.2 Write short notes on:

a)European Union

b)APEC

 

Ans : a) countries and formation of EU :

 

The European Union (EU) is an economic and political union of 28 member states that are located primarily in Europe. The EU operates through a system of supranational independent institutions and intergovernmental negotiated decisions by the member states. Institutions of the EU include the European Commission, the Council of the European Union, the European Council, the Court of Justice of the European Union, the European Central Bank, the Court of Auditors, and the European Parliament. The European Parliament is elected every

 

b) countries and formation of APEC :

 

Asia-Pacific Economic Cooperation (APEC) is a forum for 21 Pacific Rim member economies that seeks to promote free trade and economic cooperation throughout the Asia-Pacific region. It was established in 1989 in response to the growing interdependence of Asia-Pacific economies and the advent of regional trade blocs in other parts of the world; to fears that highly industrialized Japan (a member of G8) would come to dominate economic activity in the Asia-Pacific region; and to establish new markets for agricultural products and raw materials beyond Europe (where demand had been declining). APEC works to raise living

 

 

Q.3 Discuss the current situation of FDI in India. List the sectors where 100% FDI id permitted.

 

Ans : FDI in India :

 

Foreign investments provide a great impetus for growth to Indian economy. The continuous upsurge in foreign direct investments (FDI), allowed across the industries and sectors, has proven that foreign investors have faith in the resilience of Indian markets. A wise policy regime and positive business environment have also played catalytic role to ensure the continuous inflow of foreign capital in the Indian markets.

 

Key Statistics:

 

 

 

 

 

Q.4 Discuss the salient features of India’s Foreign trade policy 2009-14.

 

Ans : The foreign trade policy 2009- 14 was announced by the union commerce minister on August 27, 2009.The new Foreign Trade Policy (FTP) takes an integrated view of the overall development of India’s foreign trade and goes beyond the traditional focus on pure exports.

This would be clear from the following statement in the policy document, “Trade is not an end in itself, but a means to economic growth and rational development. The primary purpose is not the mere earning of foreign exchange, but the stimulation of greater economic activity.”

 

 

 

Q.5 Explain the meaning and objectives of FEMA. Who is an authorized person according to its rules?

 

Ans : Meaning of FEMA :

 

The Foreign Exchange Management Act (FEMA) is a 1999 Indian law “to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India”. It was passed in the winter session of Parliament in 1999, replacing the Foreign Exchange Regulation Act (FERA). This act seeks to make offenses related to foreign exchange civil offenses. It extends to the whole of India, replacing FERA, which had become incompatible with the pro-liberalisation policies of the Government of India. It enabled a new

 

 

Q. 6 What are the major differences between forward and future contracts? What do you mean by currency option?

 

Ans : Difference between forward and future contracts :

 

Fundamentally, forward and futures contracts have the same function: both types of contracts allow people to buy or sell a specific type of asset at a specific time at a given price.

 

However, it is in the specific details that these contracts differ. First of all, futures contracts are exchange-traded and, therefore, are standardized contracts. Forward contracts, on the other hand, are private agreements between two parties and are not as rigid in their stated terms and conditions. Because forward contracts are private agreements, there is always a chance that a party may default on its side of the agreement. Futures contracts have clearing houses that guarantee the transactions, which drastically lowers the probability of

 

 

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