Import and Export Markets in India

Import is any goods or services brought in from one country to another country in a legitimate fashion, typically for use in trade.

Export is any goods or services, transported from one country to another country in a legitimate fashion, typically for use in trade.

Introduction

Balance of trade represents a difference in value for import and export for a country

A country has demand for an import when domestic quantity demanded exceeds domestic quantity supplied, or when the price of the good (or service) on the world market is less than the price on the domestic market

NX = X − I, where NX represents Balance of Trade, X is Exports and I is Imports

Balance of Trade

Export value = $176.5 billion (2009) Import value = $287.5 billion (2009) Hence there is a deficit of $111 billion Export grew by 22.5% in August to $16.64

billion. Target being $200 billion for the year.

Import jumped to a higher rate of 32.2% to $29.7 billion in August resulting in trade deficit of $13.06 billion

Current Export and Import Statistics

Software Petroleum products Textile goods Gems and jewellery Engineering goods Chemicals Leather manufactures

Major Exported Goods in India

Crude oil Machinery Gems Fertilizer Chemicals Transport equipments, aircraft spare parts Electrical and electronic goods Medicine & medical equipments

Major Imported Goods In India

12.30%

9.40%

9.30%

Countries

USUAEChina

Main Export Partners

11.10%

7.50%6.60%5.10%

4.20%

4.20%

4.20%

Countries

ChinaSaudi ArabiaUSUAEIranSingaporeGermany

Main Import Partners

1. Customs duties: The Customs Act governs the levying of

tariffs on imports and exports and frames the rules for customs valuation.

Total duties on imports now consist of basic duty (ranging from zero to 65%) plus additional or countervailing duties (equal to excise duties) on manufactured "luxury" items, total import taxes can amount to 150%

Tariff Schedule

2. Duty Exemption Scheme: Indian import policy includes a duty

exemption scheme for registered exporters

Imported items which are exempt from customs duty are raw materials, components and consumables.

The government has wide discretionary power to declare full or partial duty exemptions "in the public interest" and to specify conditions such as end-use provisions.

All imports now fall into one of the following four categories:

1. Freely importable items: Most capital goods fall into this category. Items in this category do not require import licences and may be freely imported by any individual or entity.

2. Licensed imports: Certain items can be imported only with licences and only by actual users. Items include precious and semi-precious stones; products related to safety and security; seeds, plants and animals; some insecticides, pharmaceuticals and chemicals; some electronic items; several items reserved for production by the small-scale sector; and 17 miscellaneous or special-category items

Regulations and Procedures

3. Canalised items: Items under this category can be imported only by specified public-sector agencies. These include petroleum products (to be imported only by the Indian Oil Corporation); nitrogenous phosphatic, potassic and complex chemical fertilizers (by the Minerals and Metals Trading Corporation); vitamin- A drugs (by the State Trading Corporation); oils and seeds (by the State Trading Corporation and Hindustan Vegetable Oils); and cereals (by the Food Corporation of India).

4. Prohibited items: Only three items-tallow fat, animal rennet and unprocessed ivory-are completely banned from importation.

Most items can be freely exported from India. A few items are subject to export control in order to

avoid shortages in the domestic market, to conserve national resources and to protect the environment.

Export profits are exempt from income tax. Higher royalty payments of 8% (net of taxes) are

permitted on export sales as compared to 5% on domestic sales.

Export commissions up to 10% are also permissible.

Export Policy

Export Oriented Units (EOUs) and Export Processing Zones (EPZs) enjoy special incentives such as duty free import of capital goods and raw materials for the purpose of export production

A Brand Equity Fund has been set up to popularize high quality India brands in the world market. The corpus of the fund of Rs 5 billion (US $156 million) will receive equal contributions from the government and industry.

The only products subject to an export tax (at the rate of 10%) are goat, sheep and bovine leathers.

Products may also be subject to a minimum export price.

The list of products subject to minimum prices includes basmati and non-basmati rice, cotton, and hard and soft cotton waste.

Export Charges

Positive influence on the future international system, promoting stability, democracy, prosperity and peace across the world

Outsourcing of knowledge work to India by the US based companies as producing goods and services in India makes them cheaper in the US.

The US-India Agricultural Alliance 2005, promoted teaching, research, service and commercial linkages.

Bilateral Knowledge Initiative on Agriculture- linked universities, technical institutions and businesses to support agriculture education, joint research and capacity building projects

US institutional investors are increasingly investing in India and on the other hand Indian multinational corporations are going on buying companies in the US and establishing operations in the US. 

Indo-US Trade Relations

UK-oldest democracies, India-world’s largest UK is the largest European investor in India and

the fourth largest internationally with £3.87bn of FDI stock in 2008.

The two biggest acquisitions for India globally involve the UK:  Vodafone's £7.3bn ($11bn) acquisition of Hutchison in 2007 and Tata’s £8bn ($12bn) acquisition of Corus in the same year.

UK, the gateway to European Union single market-2nd in India’s global trade partnership after the US and 3rd in terms of FDI in India.

India-UK Trade Relations

A few years ago, India Inc had a fear of being swamped by Chinese imports. Today, India enjoys a positive balance of trade with China.

In 2004, India's total trade to China crossed US $13.6 billion, with Indian exports to China touching $ 7677.43 million and imports from china at US $ 5926.67 million.

India and China have been directly competing across several product categories

Export to China-Iron ore(53%),marine products, oil seeds, salt, inorganic chemicals, plastic, rubber, optical and medical equipment and dairy products

Import from China-Value added items dominate Chinese exports to India, especially machinery, including electrical machinery, which together constitute about 36% of exports from that country.

Indo-China Trade Relation

India's share in the global trade, including trade in merchandise and services sector, has increased from 1.1 percent in 2004 to 1.5 percent in 2006 and will cross the two percent in 2009.

Foreign trade, as a percentage of GDP (in rupee terms) was over 25% in 2006, up from 14.1 percent in 1990-91.

Where India Stands

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