Friday, May 10, 2019

Dibrugarh University B.Com 6th Sem: International Business Solved Papers (May' 2017)


2017 (May)
The figures in the margin indicate full marks for the questions
(New Course)
Full Marks: 80
Pass Marks: 24
1. Write the full forms of the following:                                               1x8=8

a)      EOUs = Export Oriented Units.
b)      GDRs = Global Depository Receipts.
c)       DGFT = Directorate General of Foreign Trade.
d)      DEPB = Duty Entitlement Pass Book.
e)      MFN = Most Favoured Nation.
f)       FOB = Free on Board.
g)      ECGC = Export Credit Guarantee Corporation of India Limited.
h)      FDI = Foreign Direct Investment.
2. Write short notes on:                                               4x4=16
a) Export-Import Bank of India: The Export-Import (EXIM) Bank of India is the principal financial institution in India for coordinating the working of institutions engaged in financing export and import trade. It is a statutory corporation wholly owned by the Government of India. It was established on January 1, 1982 for the purpose of financing, facilitating and promoting foreign trade of India. Export-Import Bank of India (Exim Bank) was set up by an Act of the Parliament “THE EXPORT-IMPORT BANK OF INDIA ACT, 1981” for providing financial assistance to exporters and importers, and for functioning as the principal financial institution for co-ordinating the working of institutions engaged in financing export and import of goods and services with a view to promoting the country’s international trade and for matters connected therewith or incidental thereto.
b) Export Promotion Council: The Export Promotion Councils are established under the Companies Act 2013 to provide direct institutional support to the Indian exporters. The Government of India has created a separate export promotion council for every industry. Export Promotion Councils are the representative bodies of the various exporting industries. They serve as a bridge between the Government and exporters for export promotion and development. The exporters should register themselves with the respective export promotion councils and become the member of the councils. A nominal fee is charged by the export promotion council to issue membership certificate. This certificate is called Registration-cum-Membership Certificate (RCMC). This certificate is issued in terms of the EXIM policy. Export Promotion council helps the member-exporters on technical matters, export marketing strategies and export promotion. Experts are appointed in various working committees of the export promotion councils in order to help the exporters to solve various issues relating to international trade. The offices of the Indian Export Promotion Councils are established in foreign countries for the benefit of the Indian exporters. The export promotion council perform both advisory and executive functions.
c) Deferred Payment System: A deferred payment is an arrangement in which a debt does not have to be repaid until sometime in the future. The debt might be created when a person imported a good or service. The use of deferred payment plans is one of the more common sales and marketing tools used by companies. Essentially, the underlying concept is that importer can buy now and pay later. When an importer is unable to pay for the purchase right away but has a reasonable expectation of being able to provide payment in full by a certain date in the future, a deferred payment plan makes sense for both the consumer and the seller. Some companies offer these plans only to preferred customers, but others offer them to everyone.
In case of a foreign trade deferred payment means payment made by a buyer at a specified or determinable future date stipulated in the letter of credit or documentary collection, providing that the documents are found to be in order. An example is 60 days after date of transport document or invoice date. No draft is called for under this type of payment. It is important to remember that a buyer will have credit/collateral/cash tied up until payment is made; and if a deferred payment is made through a letter of credit, it is guaranteed to a seller just as if it were made immediately. The risk increases for a seller if the remitting bank is located in a risky country.
d) Foreign Exchange Control: Exchange control is one of the important means of achieving certain national objectives like an improvement in the balance of payments position, restriction of inessential imports and conspicuous consumption, facilitation of import of priority items, control of outflow of capital and maintenance of the external value of the currency. Under the exchange control, the whole foreign exchange resources of the nation, including those currently occurring to it, are usually brought directly under the control of the exchange control authority (the Central Bank, treasury or a specially constituted agency). Dealings and transactions in foreign exchange are regulated by the exchange control authority. Exporters have to surrender the foreign exchange earnings in exchange for home currency and the permission of the exchange control authority have to be obtained for making payments in foreign exchange. It is generally necessary to implement the overall regulations with a host of detailed provisions designed to eliminate evasion. The allocation of foreign exchange is made by the exchange control authority, on the basis of national priorities. Though the exchange control is administered by a central authority like the central bank, the day-to-day business of buying and selling foreign exchange ill ordinarily handled by private exchange dealers, largely the exchange department of commercial banks. For example, in India there are authorised dealers and money changers, entitled to conduct foreign exchange business.
Definition: Exchange control is a system in which the government of the country intervenes not only to maintain a rate of exchange which is quite different from what would have prevailed without such control and to require the home buyers and sellers of foreign currencies to dispose of their foreign funds in particular ways.
According to Crowther: “When the Government of a country intervenes directly or indirectly in international payments and undertakes the authority of purchase and sale of foreign currencies it is called Foreign Exchange Control”.
Simply, Exchange Control means the control of the government in the purchase and sale of foreign currencies in order to restore the balance of payments equilibrium and disregard the market forces in the decision of monetary authority.
3. (a) Discuss the growth of India’s foreign trade after liberalization.                                     14
Ans: Direction of Indian foreign trade since last 10 years or after liberalisation
The international environment is very important from the pint of view of certain categories of business. It is particularly important for industries directly depending on imports or exports and import-competing industries. An international marketer is required to understand, evaluate and work out various parameters before venturing into any country. These Parameters are called environmental factors and they determine the direction and purpose of the international business operation. Many decisions depend upon environmental factors right from selection of the country, location of the plant liaison with the government, and entry of investment from local bodies, product launch, channel management, promotion and opening of outlets. The first challenge for an organization is to navigate from its home country to the host country. Thereafter it has to develop a proper system so that the venture is successful in the host country; learn all about the regulatory bodies both in the host country and home country; understand the customer’s changing tastes and attitude towards foreign goods and finally obtain revenue and make the business effective with right people.
The severity of economic crisis of 1991 provided an opportunity to the Government to make far-reaching changes in macroeconomic policy. There was liberalisation of domestic investment by removing direct controls on private sector and adopted fiscal and monetary policies to promote growth. Besides, the New Economic Policy pursued since 1991 also liberalized foreign trade and investment. The growth strategy was made export-oriented. Not only quantitative restrictions on imports have been removed but also customs duties have been drastically reduced.
Thus efforts have been made to integrate the Indian economy with the global economy. Rupee was devalued in 1991 and from 1993 exchange rate of rupee was made market-determined. It is, therefore, important to know how India’s foreign trade sector has performed in response to these important changes in economic policy framework.
The performance of foreign trade since 1991 is shown in Table 27.6 which reveals that after a transition period of 2 years, merchandise exports grew at about 20 per cent a year in dollar terms for three successive years during 1993-94 to 1995-96. Then due to slowdown in world trade and recession in the USA which is India’s major trade partner, annual growth of exports slowed down from 1996-97 to 1999-2000.
However after 2000 up till 2007-08 with the exception of year 2001 -02 there was more than 20 per cent annual growth of exports on sustained basis for over eight years (2000 to 2008) and in 2007-08 average annual growth rate of our exports was around 29 per cent.

Despite the sluggish performance of exports from 1996-97 to 1998-99 deficit in trade balance remained below 4 per cent of GDP (See Col. IV of Table 27.8) due to the equally subdued growth in imports during this period. During the four-year period, 2004-05 to 2007-08, India’s imports grew at a much higher rate due to robust industrial growth relative to growth in our exports and as a result deficit in our trade balance greatly increased; as a percentage of GDP it was 4.8 per cent in 2004-05, 6.8 per cent in 2006-07, and 7.8 per cent in 2007-08.
Due to global financial crisis and consequent economic slowdown in the US and European countries, the growth rate of our exports fell to 13.6 per cent in 2008-09, whereas imports grew at 26.7 per cent. As a result deficit in our trade balance rose to 12 per cent of GDP.
Bolstered by the measures taken by the government to help exports in the aftermath of the world recession of 2008 and also the low base effect, India’s export growth of 40.5 per cent in 2010-11 reached an all time high since Independence. Though it decelerated in 2011 -12 to 21.3 per cent, it was still above 20 per cent and higher than the compound annual growth rate (CAGR) of 20.3 per cent for the period 2004-05 to 2011-12.
After registering very high growth of 56.5 per cent in July 2011, export growth started decelerating with a sudden fall to single digits in November 2011 as a result of the emerging global situation and then to negative figures from March 2012. Export growth rate in 2012-13 was negative and equal to – 1.8%. For three months in 2012-13, exports declined YOY by double digits with the largest decline recorded in July 2012 at – 15.1 per cent.
Export growth in dollar terms was negative at-1.8 per cent in 2012-13, compared to 21.3 percent growth in 2011-12 (full year). In rupee India’s export growth has almost continuously been above world export growth in the 2000s decade and in 2011. One issue that has been a topic of debate is whether India’s export growth rate is dependent on world growth/trade or exchange rate. There is a strong correspondence between India’s export growth and world export growth.
Or
(b) Discuss the commodity composition and direction of India’s foreign trade.                                 14
Ans: COMMDITY-WISE AND DESTINATION-WISE EXPORTS (2011-12)
Commodity-wise exports data available upto March 2012, shows that the share of manufacturing sector in total merchandise exports declined marginally from 62.9% in 2010-11 to 61.3% in 2011-12. However, the respective share of petroleum products and primary products increased during the period (Table 2). Within exports of manufacturing sector, the share of engineering goods and textile & textile products declined while that of chemical and related products improved marginally.
Among the major sectors, growth in exports of manufacturing sector seems to have been affected significantly during 2011-12. Within manufacturing sector, growth in exports of engineering goods and textile products was lower as demand conditions in key markets like the US and Europe were sluggish. These two markets account for nearly 60% and 50% of total exports from engineering and textile sector. Within engineering sector, growth in exports of transport equipment, iron & steel, electronic goods and manufactures of metals was significantly hit while that of machinery and instruments moderated marginally. However, growth in exports of leather & manufactures and chemicals & related products witnessed higher growth during 2001-12 as compared with 2010-11.
Table 2: India’s Merchandise Trade
(US$ billion)
Item
2010-11
R
2011-12
P
2011-12
2012-13
April – March
April – June
1
2
3
4
Exports

Oil Exports

Non-Oil Exports

Imports

Oil imports

Non-oil imports

Non-oil gold imports

Trial Balance
Oil Trade Balance
Non-Oil Trade Balance
251.1
(40.5)
41.5
(47.1)
209.6
(39.2)
369.8
(28.2)
106.0
(21.6)
263.8
(31.1)
223.3
(29.3)
-118.7
-64.5
-54.2
304.6
(21.3)
55.6
(34.0)
249.0
(18.8)
489.4
(32.4)
154.9
(46.2)
334.5
(26.8)
278.3
(24.6)
-184.8
-99.3
-85.5
76.5
(36.4)
15.3
(76.2)
61.2
(29.1)
122.7
(36.3)
39.4
(52.5)
83.3
(29.7)
67.2
(18.9)
-46.2
-24.1
-22.1
75.2
-(1.7)
-

-

115.3
-(6.1)
41.6
(5.5)
73.7
-(11.6)
65.3
(-2.9)
-40.1
-
-
Table 3: India’s Exports of Principal Commodities
(Percentage Share)
Commodity Group
2010-11
2011-12
April – March
1
2
I. Primary Products
Agriculture and Allied Products.
Ores and Minerals
II. Manufactured Goods
Leather and Manufactures
Chemicals and Related Products
Engineering Goods
Textiles and Textile Products
Gems and Jewellery
III. Petroleum Products
IV. Others
Total Exports
13.1
9.6
3.4
62.9
1.6
11.5
23.1
9.6
16.1
16.5
7.5
100
15.0
12.3
2.7
61.3
1.6
12.2
22.0
9.2
15.4
18.3
5.4
100
An analysis of the shift in the composition of India’s commodity exports reveals some interesting facts. Before the reforms, India’s exports were significantly driven by exports of primary agricultural commodities and a few manufacturing commodities such as textiles, and gems and jewellery; whole the commodity composition at the global level was shifting to technology-intensive manufacturing commodities such as engineering goods and chemicals. The reforms and favourable trade policy brought a shift in the composition of India’s commodity exports. Technology-intensive exports comprising engineering goods such as metals, machinery and transport equipment, and chemicals, including pharmaceuticals emerged as the leading export sector for the country, signifying rising prominence of exports in India’s GDP growth. Besides a shift towards technology-intensive exports, exports of petroleum products (which showed spectacular growth) emerged as a major contributor to total exports, reflecting the impact of India becoming the sixth largest refinery in the world.

Recent Trends and Developments in India’s Foreign Trade
I. Trade in Merchandise
EXPORTS (including re-exports)
In consonance with the revival exhibited by exports in the last four months, during January,2017 exports continue to show a positive growth of 4.32 per cent in dollar terms (valued at US$ 22115.03 million) and 5.61 per cent in Rupee terms (valued at Rs. 150559.98 crore) as compared to US$ 21199.02 million (Rs. 142568.31 crore) during January,2016.
Cumulative value of exports for the period April-January 2016-17 was US$ 220922.78 million (Rs. 1484473.55 crore) as against US$ 218532.64 million (Rs. 1420572.68 crore) registering a positive growth of 1.09 per cent in Dollar terms and positive growth of 4.50 per cent in Rupee terms over the same period last year.
Non-petroleum exports in January 2017 were valued at US$ 19422.86 million against US$ 19111.38 million in January 2016, an increase of 1.6 %. Non-petroleum exports during April - January 2016-17 were valued at US$ 196254.10 million as compared to US$ 192071.50 million for the corresponding period in 2016, an increase of 2.2%.
The growth in exports is positive for USA (2.63%),EU(5.47%) and Japan(13.43%) but China has exhibited negative growth of (-1.51%) for November 2016 over the corresponding period of previous year as per latest WTO statistics.
IMPORTS
Imports during January 2017 were valued at US$ 31955.94 million (Rs. 217557.32 crore) which was 10.70 per cent higher in Dollar terms and 12.07 per cent higher in Rupee terms over the level of imports valued at US$ 28866.53 million (Rs. 194134.02 crore) in January, 2016. Cumulative value of imports for the period April-January 2016-17 was US$ 307311.86 million (Rs. 2065656.42 crore) as against US$ 326277.38 million (Rs. 2120158.57 crore) registering a negative growth of 5.81 per cent in Dollar terms and 2.57 per cent in Rupee terms over the same period last year.
CRUDE OIL AND NON-OIL IMPORTS:
Oil imports during January, 2017 were valued at US$ 8140.83 million which was 61.07 percent higher than oil imports valued at US$ 5054.29 million in January 2016. Oil imports during April-January, 2016-17 were valued at US$ 69062.66 million which was 5.81 per cent lower than the oil imports of US$ 73321.66 million in the corresponding period last year.
Non-oil imports during January, 2017 were estimated at US$ 23815.11 million which was 0.01 per cent higher than non-oil imports of US$ 23812.24 million in January, 2016. Non-oil imports during April-January 2016-17 were valued at US$ 238249.20 million which was 5.81 per cent lower than the level of such imports valued at US$ 252955.72 million in April-January, 2015-16. 
II. TRADE IN SERVICES (for December, 2016, as per the RBI Press Release dated 15th February 2017)
EXPORTS (Receipts): Exports during December 2016 were valued at US$ 13804 Million (Rs. 93729.71 Crore) registering a positive growth of 3.49 per cent in dollar terms as compared to positive growth of 1.72 per cent during November 2016 (as per RBI’s Press Release for the respective months).
IMPORTS (Payments): Imports during December 2016 were valued at US$ 8294 Million (Rs. 56316.59 Crore) registering a negative growth of 0.35 per cent in dollar terms as compared to positive growth of 8.37 per cent during November 2016 (as per RBI’s Press Release for the respective months).
III.TRADE BALANCE
MERCHANDISE: The trade deficit for April-January, 2016-17 was estimated at US$ 86389.08 million which was 19.82% lower than the deficit of US$ 107744.74 million during April-January, 2015-16.
SERVICES: As per RBI’s Press Release dated 15th February 2017, the trade balance in Services (i.e. net export of Services) for December, 2016 was estimated at US$ 5510 million. The net export of services for April- December, 2016-17 was estimated at US$ 48316 million which is lower than net export of services of US$ 53557 million during April- December, 2015-16. (The data for April-December 2015-16 and 2016-17 has been derived by adding April-December month wise QE data of RBI Press Release).
OVERALL TRADE BALANCE: Overall the trade balance has improved. Taking merchandise and services together, overall trade deficit for April- January 2016-17 is estimated at US$ 38073.08 million which is 29.7 percent lower in Dollar terms than the level of US$ 54187.74 million during April-January 2015-16. (Services data pertains to April-December 2016-17 as December 2016 is the latest data available as per RBI’s Press Release dated 15th February 2017)
4. (a) Define exchange control. Explain the objectives and methods of exchange control with reference to India. 4+10=14
Ans: Meaning of Exchange Control: Exchange control is one of the important means of achieving certain national objectives like an improvement in the balance of payments position, restriction of inessential imports and conspicuous consumption, facilitation of import of priority items, control of outflow of capital and maintenance of the external value of the currency. Under the exchange control, the whole foreign exchange resources of the nation, including those currently occurring to it, are usually brought directly under the control of the exchange control authority (the Central Bank, treasury or a specially constituted agency). Dealings and transactions in foreign exchange are regulated by the exchange control authority. Exporters have to surrender the foreign exchange earnings in exchange for home currency and the permission of the exchange control authority have to be obtained for making payments in foreign exchange. It is generally necessary to implement the overall regulations with a host of detailed provisions designed to eliminate evasion. The allocation of foreign exchange is made by the exchange control authority, on the basis of national priorities. Though the exchange control is administered by a central authority like the central bank, the day-to-day business of buying and selling foreign exchange ill ordinarily handled by private exchange dealers, largely the exchange department of commercial banks. For example, in India there are authorised dealers and money changers, entitled to conduct foreign exchange business.
Definition: Exchange control is a system in which the government of the country intervenes not only to maintain a rate of exchange which is quite different from what would have prevailed without such control and to require the home buyers and sellers of foreign currencies to dispose of their foreign funds in particular ways.
According to Crowther:
“When the Government of a country intervenes directly or indirectly in international payments and undertakes the authority of purchase and sale of foreign currencies it is called Foreign Exchange Control”.
Simply, Exchange Control means the control of the government in the purchase and sale of foreign currencies in order to restore the balance of payments equilibrium and disregard the market forces in the decision of monetary authority.
Objectives/Importance of Exchange Control are outlined below:
1.       To Conserve Foreign Exchange: The main objective of foreign exchange regulation in India, as laid dawn in the Foreign Exchange Regulation Act (FERA), 1973, is the conservation of the foreign exchange resources of the country and the proper utilisation thereof in the interest of the national development. This is one of the important objectives .of foreign exchange regulation of many other countries too.
2.       To Check Capital Flight: Exchange control may be employed to prevent flight of capital from the country and to regulate the normal day-to-day capital movements. If adequately implemented and enforced, exchange control tends to be highly effective in curbing erratic outflows of capital.
3.       To Improve Balance of Payments: Exchange control is one of the measures available to improve the balance of payments position. This can be achieved by restricting imparts by means of exchange control.
4.       To make Possible Essential Imports: Due to the non-availability of or scarcity within the country, the developing countries generally have to import capital goods, know how and certain essential inputs and consumer goods. By giving priority to such imports in the allocation of foreign exchange, exchange control may ensure availability of foreign exchange for these imports.
5.       To Protect Domestic Industries: Exchange control may also be employed as a measure to protect domestic industries from foreign competition.
6.       To Check Recession-induced Exports into the Country: If foreign economies are undergoing recession when 'the domestic economy is free from it, the decline in prices of foreign goods, due to the recession, may encourage their exports into the country not yet affected by recession. Exchange control may be employed to check such recession-induced exports into the country.
7.       To regulate foreign companies: Exchange Control may also seek to regulate the business of foreign companies in the country. For instance, the FERA provided that non-residents, foreign national resident in India, companies (other than banking companies) incorporated abroad and having more than 40 per cent non-resident interest could not carry on in India, or establish a branch/office or other place of business in the country for carrying on any activity of a trading, commercial or industrial revenue, without the permission of the Reserve Bank of India.
8.       To regulate Export and Transfer of Securities: Exchange control may be employed also for the purpose of controlling the export and transfer of securities form the country. The FERA for instance, prohibited the sending or transferring of securities from the country to any place outside India, without the permission of the Reserve Bank of India.
Methods of Exchange Control
Exchange control is exercised either by regulating international movements of goods through various devices or by the purchase and sale of foreign currency at specified rates in order to maintain a particular range of exchange fluctuations. Exchange control can be exercised by influencing demand for, and supply of, currencies in the exchange market. This can be done indirectly by devices like tariffs, quotas, bounties, changes in interest rates, etc. Imposition of import duties and of import quotas will reduce imports, cut down the demand for foreign currency, lower its value or raise the value of the domestic currency. Export duties, which are not so common, will have the opposite effect. There are various methods of exchange control which may be broadly classified into:
(1) Unilateral Methods: Unilateral measures refer to those methods which may be adopted by a country unilaterally i.e., without any reference to or understanding with other countries. The important unilateral methods are outlined below:
(a) Influencing Exchange Rate: Exchange control is exercised either by regulating international movements of goods through various devices or by the purchase and sale of foreign currency at specified rates in order to maintain a particular range of exchange fluctuations. Exchange control can be exercised by influencing demand for, and supply of, currencies in the exchange market. This can be done indirectly by devices like tariffs, quotas, bounties, changes in interest rates, etc. Imposition of import duties and of import quotas will reduce imports, cut down the demand for foreign currency, lower its value or raise the value of the domestic currency. Export duties, which are not so common, will have the opposite effect.
(b) Regulation of Foreign Trade: The rate of exchange may be controlled by regulating the foreign trade of the country. For example, by encouraging exports and discouraging imports, a country can increase the demand for, in relation to supply, its currency in the foreign exchange market and thus bring about an increase in the rate of exchange of the country’s currency.
(c) Controlling Exchange Rate. There are two methods generally adopted for controlling exchange:
(1) Intervention. In this case, the government enters the exchange market either to purchase or to sell foreign exchange in order to bring the rate up or down to the desired level. This method has been called intervention and leads to exchange pegging.
(2) Restriction. In this case, the government can prevent the existing demand for, or supply of, the country, in which they are interested, from reaching the exchange market. This method has been called restriction. The second method has been more popular because intervention proved a weak weapon and was also expensive.
(d) Exchange Control Proper. Exchange restriction is exchange control proper. For this three things are done: (a) all foreign dealings are centralised, usually in the central bank; (b) the national currency cannot be offered for exchange without previous permission, and (c) it is made a criminal offence to enter into an unauthorised foreign exchange transaction.
(e) Exchange Pegging: This device is usually adopted during war in order to minimize exchange fluctuations. The internal value of a currency may depreciate due to inflation but the government may seek to keep its external value at a higher level than warranted by the purchasing power parity in order to facilitate international transactions.
(f) Exchange Equalisation Account: Exchange funds were the outgrowth of the transformation of the international gold standard convention into an international gold settlement system under which gold came to be used as a balancing item in international trade.
(g) Blocked accounts: When foreign debts paid in domestic currency to the central bank cannot be remitted abroad without the permission of the government, blocked accounts are said to arise. Since idle funds in the country lead to contraction of credit, the foreign creditors are not altogether prevented from using them. But they have to be used in manner prescribed by the government. Usually, they are allowed to be sold in the open market. In most cases, they are sold at a heavy discount.
(2) Bilateral/Multilateral Methods
The important bilateral/multilateral methods are the following:
(a) Private Compensation Agreement: Under this method, which closely resembles barter, a firm in one country is required to equalize its exports to the other country with its imports from that country so that there will be neither a surplus nor a deficit.
(b) Clearing Agreements: Under a clearing agreement between two countries, importers in both countries pay into an account at their respective central banks the purchase price of the goods imported. This money is then used to pay off exporters. The rate between the currencies is usually fixed by the terms of agreement. The object is to regulate imports according to the wishes of the government, to ensure equilibrium in the balance of payments and to prevent uncertainties of fluctuating exchanges. The system tends to encourage bilateral trade at the expense of multilateral trade and thus has a restrictive effect on international trade. On the other hand, it discourages dumping and currency depreciation.
(c) Standstill agreement: A standstill agreement is a device to prevent the movement of capital through a moratorium on outstanding short-term foreign debts of a country and to give her time to put her house in order. Either the short-term debt is converted into long-term debt or provision is made for its gradual repayment.
(d) Payments Agreement: Under the payments agreement, concluded between a debtor country and a creditor country, provision is made for the repayment of the principal and interest by the debtor country to the creditor country. The creditor country refrains from imposing restrictions on the imports from the debtor country in order to enable the debtor to increase its exports to the creditor. On the other hand, the debtor country takes necessary measures to encourage exports to and discourage imports from the creditor country.
(e) Transfer moratoria: It is another device of the same kind. Under this system, importers or others pay their foreign debts in their domestic currency to a specified authority. When the moratorium is concluded these funds are remitted abroad. A foreign creditor is sometimes allowed to use his funds in the country imposing the moratorium in a way specified by the government.
Or
(b) Write a note on Export-Import Policy of India in recent years.                                            14
Ans: Export – Import Policy or Foreign Trade Policy
No country is self-sufficient in the world today.  Therefore, every country has to import goods and to pay for imports it has to export goods to other countries.  The ideal situation would be if every country specialized in the production of those goods in which it has a comparative cost advantage.  But in addition to comparative cost several other factors including political considerations have played an important part in determining the pattern of imports and exports. To protect domestic industries, many countries in the past had imposed heavy tariffs to restrict imports. 
India's Foreign Trade Policy also known as Export Import Policy (EXIM) in general, aims at developing export potential, improving export performance, encouraging foreign trade and creating favorable balance of payments position. Foreign Trade Policy is prepared and announced by the Central Government (Ministry of Commerce). Foreign Trade Policy or EXIM Policy is a set of guidelines and instructions established by the DGFT (Directorate General of Foreign Trade) in matters related to the import and export of goods in India.
The foreign trade policy, has offered more incentives to exporters to help them tide over the effects of a likely demand slump in their major markets such as the US and Europe. Foreign trade is exchange of capital, goods, and services across international borders or territories. In most countries, it represents a significant share of gross domestic product (GDP). While international trade has been present throughout much of history, its economic, social, and political importance has been on the rise in recent centuries.
Objectives Of The FTP (EXIM) Policy: The main objectives are:
a)      To accelerate the economy from low level of economic activities to high level of economic activities by making it a globally oriented vibrant economy and to derive maximum benefits from expanding global market opportunities.
b)      To stimulate sustained economic growth by providing access to essential raw materials, intermediates, components,' consumables and capital goods required for augmenting production.
c)       To enhance the techno local strength and efficiency of Indian agriculture, industry and services, thereby, improving their competitiveness.
d)      To generate employment.
e)      Opportunities and encourage the attainment of internationally accepted standards of quality.
f)       To provide quality consumer products at reasonable prices
Export- Import (EXIM) Policy 2002-07 
In order to maintain the balance of payments and to avoid trade deficit the government of India has announced a trade policy for imports and exports. After every five years the government of India reviews the import and export policy in view of the changing international economic situation.  The policy relates to promotion of exports and regulation of imports so as to promote economic growth and overcome trade deficit. Accordingly, the export-and import policies (EXIM Policy) were announced by the government first in 1985 and then in 1988 which was again revised in 1990.  All these policies made necessary provision for extension of import liberalisation measures.  All these policies made necessary provision for import of capital goods and raw materials for industrialization, utilisation and liberalisation of REP (Registered Exporters Policy) licenses, liberal import of technology and policy for export and trading houses.  The government announced its new EXIM policy for 2002-2007 which is mainly a continuation of the EXIM policy of 1997-2002. The new export-import policy for 2002-2007 aims at pushing up growth of exports to 12 per cent a year as compared to about 1.56 per cent achieved during the financial year 2001-2002.  
The main features of this export- import policy are given below:
a)      Concessions to exporters: To enable Indian companies to compete effectively in the competitive international markets and to give a boost to sagging exports various concessions had been given to the exporters in this new EXIM policy 2002-2007.  These concessions are:
1.       Exporters will now have 360 days to bring in their foreign exchange remittances as compared to the earlier limit of 180 days.
2.       Exporters will be allowed to retain the entire amount held in their exchange earner foreign currency (EEFC) accounts.
3.       Exporters will now get long-term loans at the prime lending rate for that tenure.
b)      Duty Entitlement Pass Book (DEPB) and Export Promotion Capital Goods (EPCG) SchemesDEPB and EPCG are important tools of promoting exports.  These schemes have been made more flexible.  In the DEPB and EPCG schemes new initiatives have been granted to the cottage industries, handicrafts, chemicals and pharmaceuticals, textile and leather products.
c)       Strengthening Special Export Zones (SEZ): The new long-term EXIM policy has sought to enable Indian SEZs to be at par with its international rivals.  The EXIM policy has given a boost to the banking sector reforms by permitting Indian banks to set up overseas banking units in SEZs. 
d)      Soft options for computer hardware industry: The export import (EXIM) policy has put the Indian computer manufacturers at par with manufacturers in other parts of the world. Companies manufacturing or assembling computers in the country will be able to import both capital and raw materials at lower duty rates to sell in the domestic market.
As per the information technology agreement which is part of the world trade organisation zero duty the agreement on I. T. sector, 217 I. T. components would attract a zero duty by 2005.  Therefore, foreign companies can import these products into the country while Indian manufacturers who did the same had to meet export obligations on their imports.  Now, the new EXIM policy states that domestic sales will be considered as a fulfillment of the export obligation, thereby freeing the domestic manufacturers from exports completely.
Salient Features of Foreign Trade Policy 2009-14
1.       $ 200 billion or Rs 98,000 crore is the export target for 2010-11.
2.       100% growth of India’s export of goods and services by 2014.
3.       15% growth target for next two years; 25% thereafter.
4.       3.28% targeted India’s share of global trade by 2020 double from the current 1.64%.
5.       Jaipur, Srinagar Anantnag, Kanpur, Dewas and Ambur identified as towns of export excellence.
6.       26 new markets added to focus market scheme.
7.       Provision for state-run banks to provide dollar credits.
8.       Duty entitlement passbook scheme extended till Dec. 2010.
9.       Tax sops for export-oriented and software export units extended till March 2011.
10.   New directorate of trade remedy measures to be set up.
11.   Plan for diamond bourses.
12.   New facility to allow import of cut and polished diamonds for grading and certification.
13.   Export units allowed to sell 90% of goods in domestic market.
14.   Export oriented instant tea companies can sell up to 50% produce in domestic market.
15.   Single-window scheme for farm exports.
16.   Number of duty-free samples for exporters raised to 50 pieces.
17.   Value limits of personal carriage increased to $5 million (Rs 24.5 core) for participation in overseas exhibitions.
Salient Features of the present  Foreign Trade Policy 2015-2020
1.       Increase exports to $900 billion by 2019-20, from $466 billion in 2013-14
2.       Raise India's share in world exports from 2% to 3.5%.
3.       Merchandise Export from India Scheme (MEIS) and Service Exports from India Scheme (SEIS) launched.
4.       Higher level of rewards under MEIS for export items with High domestic content and value addition.
5.       Chapter-3 incentives extended to units located in SEZs.
6.       Export obligation under EPCG scheme reduced to 75% to Promote domestic capital goods manufacturing.
7.       FTP to be aligned to Make in India, Digital India and Skills India initiatives.
8.       Duty credit scrips made freely transferable and usable For payment of custom duty, excise duty and service tax.
9.       Export promotion mission to take on board state Governments
10.   Unlike annual reviews, FTP will be reviewed after two-and-Half years.
11.   Higher level of support for export of defence, farm Produce and eco-friendly products.

5. (a) Describe the role of Export-Import Bank of India.                                                                                 14
Ans: Role of EXIM Bank: The Export-Import (EXIM) Bank of India is the principal financial institution in India for coordinating the working of institutions engaged in financing export and import trade. It is a statutory corporation wholly owned by the Government of India. It was established on January 1, 1982 for the purpose of financing, facilitating and promoting foreign trade of India. Export-Import Bank of India (Exim Bank) was set up by an Act of the Parliament “THE EXPORT-IMPORT BANK OF INDIA ACT, 1981” for providing financial assistance to exporters and importers, and for functioning as the principal financial institution for co-ordinating the working of institutions engaged in financing export and import of goods and services with a view to promoting the country’s international trade and for matters connected therewith or incidental thereto.
FUNCTIONS OF EXIM BANK:
1. Lending Programme to Indian Exporters:
Ø  Supplier’s credit: This enables the exporters to extend credit to overseas importers of eligible Indian goods.
Ø  Finance for consultancy and technology services: This enables Indian exporters of consultancy and technology services to extend term credit to overseas importers.
Ø  Pre-shipment credit: This enables Indian exporters to buy raw materials and other inputs for fulfilling export contracts involving cycle time exceeding six months.
2. Finance for deemed exports:
Ø  Finance for EOU and EPZ Units.
Ø  Software Training Institutes.
Ø  Export marketing finance.
Ø  Export-Product Development Finance: these Indian firms to undertake product development, R & D for exports.
3. Services Offered to Indian Exporters:
Ø  Underwriting: This enables the Indian exporters to raise finance from capital markets with the backing of EXIM Bank’s underwriting commitment.
Ø  Forfeiting: This Indian exporters to convert sale to cash on without recourse basis.
Ø  Guarantee Facility: To execute export contracts and imports transactions.
Ø  Business Advisory and Technical assistance.
Ø  Cooperation arrangement with African Management Services.
4. For Commercial Banks:
Ø  Refinance of Export Credit.
Ø  Bulk import finance.
Ø  Guarantee cum Refinance supplier’s credit.
5. Other activities:
Ø  The bank helps Indian companies go global by setting up subsidiaries and joint ventures abroad.
Ø  It provides information to potential exporters about projects abroad specially about multilaterally agencies.
Ø  It also helps companies in preparing bids according to strict condition prescribed by the multilateral agencies.
Ø  It also entertains proposals for various facilities under he European Community Investment Partners like feasibility studies for setting up export units.
The bank introduced the “cluster of Excellence” programme for up gradation of quality standards and obtaining ISO certification.
Exim Bank has two broad business streams:
i) The traditional export finance typical of export credit agencies around the world
ii) Financing of export oriented units (export capability creation), which are non-traditional for export credit agencies.
Since inception, Exim Bank has been the principal financial institution in the country for financing project exports and exports on deferred credit terms. As per Memorandum of PEM (MEMORANDUM OF INSTRUCTIONS ON PROJECT EXPORTS AND SERVICE EXPORTS) of Reserve Bank of India, the following constitute project exports:
a)      Supply of goods / equipment on deferred payment terms
b)      Civil construction contracts
c)       Industrial turnkey projects
d)      Consultancy / services contracts
Exim Bank extends funded and non-funded facilities for overseas turnkey projects, civil construction contracts, technical and consultancy service contracts as well as supplies. Turnkey Projects are those which involve supply of equipment along with related services, like design, detailed engineering, civil construction, erection and commissioning of plants and power transmission & distribution
Construction Projects involve civil works, steel structural works, as well as associated supply of construction material and equipment for various infrastructure projects.
Technical and Consultancy Service contracts, involving provision of know-how, skills, personnel and training are categorized as consultancy projects. Typical examples of services contracts are: project implementation services, management contracts, supervision of erection of plants, CAD/ CAM solutions in software exports, finance and accounting systems.
Supplies: Supply contracts involve primarily export of capital goods and industrial manufactures. Typical examples of supply contracts are: supply of stainless steel slabs and ferro-chrome manufacturing equipments, diesel generators, pumps and compressors.
Exim Bank, under powers delegated vide the PEM, provides post-award clearance for project export contracts valued upto USD 100 million. Project export contracts valued above USD 100 million need to be provided post-award clearance by the inter-institutional Working Group.
In the case of very large value projects, officials of Ministry of Finance, Ministry of Commerce and Industry and Ministry of External Affairs, Government of India, are invited to participate in the Working Group Meetings.  In order to obtain immediate clarifications for speedy clearance of proposals by the Working Group, the exporters concerned and their bankers are also associated with the meetings.
With the same objective, participation of the main sub-suppliers, sub-contractors or other associates and their bankers in such meetings is also encouraged, particularly in respect of proposals for high value contracts.  Exim Bank also plays the role of a financier and provides funded and non-funded support for project export contracts of Indian Entities.
In addition to project exports, Exim Bank also extends fund-based and non-fund-based facilities to deemed export contracts as defined in Foreign Trade Policy of GOI, e.g., secured under funding from Multilateral Funding Agencies like the World Bank, Asian Development Bank, etc.; Contracts secured under International Competitive Bidding; Contracts under which payments are received in foreign  currency. Contracts in India categorized as Deemed Exports in the Foreign Trade Policy of India.
From the above discussion we can say that, the main role of Exim bank in foreign trade is to give credit facilities. Exim Bank extends Lines of Credit (LOC) to overseas financial institutions, regional development banks, sovereign governments and other entities overseas, to enable buyers in those countries, to import goods and services from India on deferred credit terms. The Indian exporters can obtain payment of eligible value from Exim Bank, without recourse to them, against negotiation of shipping documents. LOC is a financing mechanism that provides a safe mode of non-recourse financing option to Indian exporters, especially to SMEs, and serves as an effective market entry tool. Exim Bank extends LOC, on its own, as well as, at the behest of Government of India.
Or
(b) What is Export Credit Insurance? Discuss the various export incentives offered by Indian Government for promotion of export.                            4+10=14
Ans: Export Credit Guarantee Corporation of India Limited, was established in the year 1957 by the Government of India to strengthen the export promotion drive by covering the risk of exporting on credit. ECGC provides a range of export credit risk insurance covers to exporters against loss in export of goods and services, and also offers guarantees to banks and financial institutions to enable exporters obtain better facilities from them.
Export credit insurance is a policy offered by ECGC and private entities to business houses who wants to their assets from the credit risk of importers. These risks include non-payment risk, currency risks and political risk.  Exporters have a lot to benefit from export credit as it provides:
a)      insurance protection to exporters against payment risks
b)      provides information on credit-worthiness of overseas buyers
c)       provides information on about 180 countries with its own credit ratings
d)      guidance in export related activities
e)      makes it easy to obtain export finance from banks/financial institutions
f)       assists exporters in recovering bad debts
Export Promotion Incentives
Details of various trade promotion measures and schemes available to business firms to facilitate their export and import operations are announced by the government in its export-import (EXIM) policy. Major trade promotion measures (especially those related to exports) are as follows:
(i) Duty drawback scheme: Since goods meant for exports are not consumed domestically, these are not subjected to payment of various excise and customs duties. Any such duties paid on export goods are, therefore, refunded to exporters on production of proof of exports of these goods to the concerned authorities. Such refunds are called duty draw backs. Some major duty draw backs include refund of excise duties paid on goods meant for exports, refund of customs duties paid on raw materials and machines imported for export production. The latter is also called customs drawback.
(ii) Export manufacturing under bond scheme: This facility entitles firms to produce goods without Usance draft: It is a type of bill of exchange wherein the drawer of the bill of exchange instructs the bank to hand over the relevant documents to the importer only against acceptance of the bill of exchange. Import general manifest. Import general manifest is a document that contains the details of the imported good. It is the document on the basis of which unloading of cargo takes place. Dock challan: Dock charges are to be paid when all the formalities of the customs are completed. While paying the dock dues, the importer or his clearing agent specifies the amount of dock dues in a challan or form which is known as dock challan.  The firms desirous of availing such facility have to give an undertaking (i.e., bond) that they are manufacturing goods for export purposes and will export such products on their production.
(iii) Exemption from payment of sales taxes: Goods meant for export purposes are not subject to sales tax. Even for a long time, income derived from export operations had been exempt from payment of income tax. Now this benefit of exemption from income tax is available only to 100 per cent Export Oriented Units (100 per cent EOUs) and units set up in Export Processing Zones (EPZs)/Special Economic Zones (SEZs) for select years.
(iv) Advance licence scheme: It is a scheme under which an exporter is allowed duty free supply of domestic as well as imported inputs required for the manufacture of export goods. As such the exporter is not required to pay customs duty on goods imported for use in the manufacture of export goods. The advance licences are available to both the types of exporters— those who export on a regular basis and also to those who export on an adhoc basis. The regular exporters can avail such licences against their production programmes. The firms exporting intermittently can also obtain these licences against specific export orders.
(v) Export Promotion Capital Goods Scheme (EPCG): The main objective of this scheme is to encourage the import of capital goods for export production. This scheme allows export firms to import capital goods at negligible or lower rates of customs duties subject to actual user condition and fulfillment of specified export obligations. If the said conditions are fulfilled by the manufacturers, then they can import the capital goods either at zero or concessional rate of import duty. Supporting manufacturers and service providers are also eligible to import capital goods under this scheme. This scheme is especially beneficial to the industrial units interested in modernisation and upgradation of their existing plant and machinery. Now service export firms can also avail of this facility for importing items such as computer software systems required for developing softwares for purposes of exports.
(vi) Scheme of recognising export firms as export house, trading house and superstar trading house: With an objective to promote established exporters and assist them in marketing their products in international markets, the government grants the status of Export House, Trading House, Star Trading House to select export firms. This status is granted to a firm on its achieving a prescribed average export of performance in past select years. Besides attaining a minimum of past average export performance, such export firms have to also fulfill other conditions as laid down in the import-export policy.
Various categories of export houses have been recognised with a view to building marketing infrastructure and expertise required for export promotion. These houses are given national recognition for export promotion. They are required to operate as highly professional and dynamic institutions and act as an important instrument of export growth.
(vii) Export of Services: In order to boost the export of services, various categories of service houses have been recognised. These houses are recognised on the basis of the export performance of the service providers. They are referred to as Service Export House, International Service Export House, International Star Service Export House based on their export performance.
(viii) Export finance: Exporters require finance for the manufacture of goods. Finance is also needed after the shipment of the goods because it may take sometime to receive payment from the importers. Therefore, two types of export finances are made available to the exporters by authorised banks. They are termed as pre-shipment finance or packaging credit and post shipment finance. Under the pre-shipment finance, finance is provided to an exporter for financing the purchase, processing, manufacturing or packaging of goods for export purpose. Under the post-shipment finance scheme, finance is provided to the exporter from the date of extending the credit after the shipment of goods to the export country. The finance is available at concessional rates of interest to the exporters.
(ix) Export Processing Zones (EPZs): Export Processing Zones are industrial estates, which form enclaves from the Domestic Tariff Areas (DTA). These are usually situated near seaports or airports. They are intended to provide an internationally competitive duty free environment for export production at low cost. This enables the products of EPZs to be competitive, both quality wise and price-wise, in the international markets. These zones have been set up at various places in India which include: Kandla (Gujarat), Santa Cruz (Mumbai), Falta (West Bengal), Noida (Uttar Pradesh), Cochin (Kerala), Chennai (Tamil Nadu), and Vishakapatnam (Andhra Pradesh). Santa Cruz zone is exclusively meant for electronic goods and gem and jewellery items. All other EPZs deal with multifarious items. Recently the EPZs have been converted to Special Economic Zones (SEZs) which are more advanced form of export processing zones. These SEZs are free from all rules and regulations governing imports and exports units except relating to labour and banking Government has also permitted development of EPZs by private, state or joint sector. The inter-ministerial committee on private EPZs has already cleared proposals for setting up of private EPZs in Mumbai, Surat and Kanchipuram.
(x) 100 per cent Export Oriented Units (100 per cent EOUs): The 100 per cent Export Oriented Units scheme, introduced in early 1981, is complementary to the EPZ scheme. It adopts the same production regime, but offers a wider option in location with reference to factors like source of raw materials, ports, hinterland facilities, availability of technological skills, existence of an industrial base and the need for a larger area of land for the project. EOUs have been established with a view to generating additional production capacity for exports by providing an appropriate policy framework, flexibility of operations and incentives.
6. (a) What do you mean by export processing zone (EPZ)? Describe the benefits provided to the units setup in EPZs in India.                                                    4+10=14
Ans: Export Processing Zones (EPZ): Export Processing Zones in India was set up by the government of India with the aim to initiate infrastructural development and tax holidays in various industrial sectors in the country. EPZ has incessantly accelerated the economic growth of the country by ensuring a flourishing export production. The export processing zones in India came into existence soon after the political independence, when India proclaimed the first Industrial Policy Revolution in the year 1948. It was from then that the actual industrial growth begun in India, which resulted in the constitution of the export processing zones later. Export promotion has always been the chief concern of the government of India and it strictly follows the ISI policy while carrying out all its activities.
Benefits of EPZ:
Ø  Ensuring better infrastructural facilities in the industrial units that were set up in the export processing zones in India
Ø  Introducing the privilege of tax holidays
Ø  Establishing 100 percent export-oriented system in the EPZ in India
Ø  EPZ in India are entirely devoid of all kinds of duties, levies, and taxes
Ø  Implementing tax holidays in the importing of goods like capital goods, raw materials, and consumer goods as well.
Ø  The units in export processing zones follow the automatic route set by the government of India which offers 100 percent foreign direct investment in the zone
Ø  The rules set by the government of India are executed and implemented by the development commissioner of the respective export processing zones in India
Ø  Some of the significant features of the Export Processing Zones in India have been enumerated as under:
Ø  The activities that are carried out in the EPZ in India are not liable to be licensed apart from the IT enabled sectors
Ø  The units set up in the export processing zones in India can select their desired locations by following certain parameters as prescribed by the state governments
Ø  The export processing zones in India religiously follows the active export-import policy
Ø  The units in EPZ in India are totally custom bonded
Ø  The proposals for the units in Export processing zones in India are entitled to follow the automatic route for approval as enforced by the state governments
Ø  The proposals which do not fall under the procedure of automatic route system are governed or approved by the FIPB
Ø  The activities in EPZ in India belonging to the Domestic Tariff Area sector are converted into Export oriented units to meet the parameters set for the export production by the government
Ø  100 percent FDI is granted to these zones.
Or
(b) Discuss briefly about the various Export Promotion Organizations in India.                  14
Ans: Institutional Support for Export Promotion: Government of India has also set up from time-to-time various institutions in order to facilitate the process of foreign trade in our country. Some of the important institutions are as follows:
1. Department of Commerce: Department of Commerce in the Ministry of Commerce, Government of India is the apex body responsible for the country’s external trade and all matters connected with it. This may be in the form of increasing commercial relations with other countries, state trading, export promotional measures and the development, and regulation of certain export oriented industries and commodities. The Department of Commerce formulates policies in the sphere of foreign trade. It also frames the import and export policy of the country in general.
2. Export Promotion Councils (EPCs): Export Promotion Councils are non profit organisations registered under the Companies Act or the Societies Registration Act, as the case may be. The basic objective of the export promotion councils is to promote and develop the country’s exports of particular products falling under their jurisdiction. At present there are 21 EPC’s dealing with different commodities.
3. Commodity Boards: Commodity Boards are the boards which have been specially established by the Government of India for the development of production of traditional commodities an their exports. These boards are supplementary to the EPCs. The functions of commodity boards are similar to those of EPCs. At present there are seven commodity boards in India: Coffee Board, Rubber Board, Tobacco Board, Spice Board, Central Silk Board, Tea Board, and Coir Board.
4. Export Inspection Council (EIC): Export Inspection Council of India was setup by the Government of India under Section 3 of the Export Quality Control and Inspection Act 1963. The council aims at sound development of export trade through quality control and pre-shipment inspection. The council is an apex body for controlling the activities related to quality control and pre-shipment inspection of commodities meant for export. Barring a few exceptions, all the commodities destined for exports must be passed by EIC.
5. Indian Trade Promotion Organisation (ITPO): Indian Trade Promotion Organisation was setup on 1st January 1992 under the Companies Act 1956 by the Ministry of Commerce, Government of India. Its headquarter is at New Delhi. ITPO was formed by merging the two erstwhile agencies viz., Trade Development Authority and Trade Fair Authority of India. ITPO is a service organisation and maintains regular and close interaction with trade, industry and Government. It serves the industry by organising trade fairs and exhibitions— both within the country and outside, It helps export firms participate in international trade fairs and exhibitions, developing exports of new items, providing support and updated commercial business information. ITPO has five regional offices at Mumbai, Bangalore, Kolkata, Kanpur and Chennai and four international offices at Germany, Japan, UAE and USA.
6. Indian Institute of Foreign Trade (IIFT): Indian Institute of Foreign Trade is an institution that was setup in 1963 by the Government of India as an autonomous body registered under the Societies Registration Act with the prime objective of professionalizing the country’s foreign trade management. It has recently been recognised as Deemed University. It provides training in international trade, conduct researches in areas of international business, and analysing and disseminating data relating to international trade and investments.
7. Indian Institute of Packaging (IIP): The Indian Institute of Packaging was set up as a national institute jointly by the Ministry of Commerce, Government of India, and the Indian Packaging industry and allied interests in 1966. Its headquarters and principal laboratory is situated at Mumbai and three regional laboratories are located at Kolkata, Delhi and Chennai. It is a training-cum-research institute pertaining to packaging and testing. It has excellent infrastructural facilities that cater to the various needs of the package manufacturing and package user industries. It caters to the packaging needs with regard to both the domestic and export markets. It also undertakes technical consultancy, testing services on packaging developments, training and educational programmes, promotional award contests, information services and other allied activities.
8. State Trading Organisations: A large number of domestic firms in India found it very difficult to compete in the world market. At the same time, the existing trade channels were unsuitable for promotion of exports and bringing about diversification of trade with countries other than European countries. It was under these circumstances that the State Trading Organisation (STC) was setup in May 1956. The main objective of the STC is to stimulate trade, primarily export trade among different trading partners of the world. Later the government set up many more organisations such as Metals and Minerals Trading Corporation (MMTC), Handloom and Handicrafts Export Corporation (HHEC).
(Old Course)
Full Marks: 80
Pass Marks: 32
1. Write the full forms of the following:                                                 1x8=8
a)      SAARC = South Asian Association for Regional Co-operation.
b)      EPZ = Export Processing Zone.
c)       FOB = Free on Board.
d)      MFN = Most Favoured Nation.
e)      STC = State Trading Corporation.
f)       GDR = Global Depository Receipt.
g)      FDI = Foreign Direct Investment.
h)      AEZ = Agri Export Zone.
2. Write short notes on:                                                4x4=16
a)      Export-oriented Units.
b)      Multilateral Agreement.
c)       Exim Policy.
d)      Foreign Direct Investment.
3. (a) Explain the direction of foreign trade of India during last ten years.                               12
Or
(b) Discuss the commodity composition and direction of India’s foreign trade.                    12
4. (a) What is exchange control? Explain the objectives of exchange control.                       2+9=11
Or
(b) Analyze the Export-Import Policy of the Government of India.                                            11
5. (a) What is deferred payment system? Explain the procedures of export under deferred payments.      2+9=11
Or
(b) Describe the benefits and facilities provided to the units setup in export processing zone (EPZ).                         11
6. (a) Discuss the functions of Export Promotion Council.                                               11
Or
(b) Discuss the role of commercial banks in Indian foreign trade.                               11
7. (a) Discuss the importance of bilateral agreement in promoting foreign trade.                               11
Or
(b) Examine the role of State Trading Organizations in the context of India’s export promotion. 11

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