Tuesday, September 10, 2019

M.Com Previous Year Solved Papers: Business Environment' 2016 (August - Incomplete)


2016 (September)
COMMERCE
Paper: 101 (Business Environment)
Full Marks – 80
Time – Three Hours
The figures in the margin indicate full marks for the questions.
1. Either
a)      Critically evaluate the Indian business environment. Do you think that it is progressing in the right direction? Justify. 10+6=16
Or
b)      Analysis the significance of business environment. Do you think that the study of business environment becomes meaningless because of high volatility? Explain.                      9+7=16

2. Either
a)      Discuss the various components of government control in India prior to free economy.                       16
Or
b)      Discuss the objectives and scope of MRTP Act. What are the remedies available under the Act?                      16 (THIS ACT IS NOW ABOLISHED SO NO QUESTION EXPECTED)
Ans: Objectives of MRTP Act, 1969
The monopolies and Restrictive Trade Practices Act, 1969, brought into force from 1st June 1970, was a very controversial piece of legislation. The principal objectives of the MRTP Act which extends to the whole of India except to the state of Jammu and Kashmir, viz.:
a)      Prevention of concentration of economic power to the common detriment.
b)      Control of monopolistic, restrictive and unfair trade practices which are prejudicial to public interest.
The MRTP Act was significantly amended in 1982, 1984, 1985 and 1991. After the amendments the first objective has become irrelevant as the relevant provisions to achieve the objective have been deleted. The objectives now are:
a)      Controlling monopolistic trade practices.
b)      Regulating restrictive and unfair trade practices.
Scope of MRTP Act, 1969
This Act covers mainly Monopolistic Trade Practices and Restrictive Trade Practices which are stated below:
a) Monopolistic Trade Practices (MTP’S):
A monopolistic trade practice is essentially a trade practice which represents the abuse of the market power in the production or marketing of goods, or in the provision of services, by charging unreasonably high prices, preventing or reducing competition, limiting technical development, deteriorating product quality, or by adopting unfair or deceptive practices. Two tests will determine whether a trade practice is an MTP or not:
i)        abuse of market power, and
ii)       Unreasonableness in any practice.
Thus, the following are MTPs:
1.       Maintaining the prices of goods or charges for any services at an unreasonable level.
2.       Limiting technical development or capital investment to the common detriment.
3.       Unreasonably preventing or lessening competition.
4.       Allowing quality of goods produced, supplied or distributed or any service rendered to deteriorate.
5.       Increasing unreasonably the cost of production of any goods or charges for provision or maintenance of services.
6.       Increasing unreasonably the selling price of goods, or charges at which the services may be provided.
7.       Increasing unreasonably the profits that are derived from the production, supply or distribution of any goods or the provision of any services.
8.       Preventing or lessening competition in the production, supply or distribution of any goods or in the provision or maintenance of any services by adopting unfair methods of unfair practices.
b) Restrictive Trade Practices (RTP):
A trade practice which restricts or reduces competition may be termed as restrictive trade practice. The following are the RTPs as described by section 33(1) of the MRTP Act:
(a) Refusal to deal with persons or classes of persons: Any agreement which restricts or it likely to restrict by any methods, the persons or classes of persons to whom goods are sold or from whom goods are bought.
(b) Tie-in sales or full line forcing: Any agreement requiring purchaser of goods, as a condition of such purchase, to purchase some other goods.
(c) Exclusive dealing agreement: Any agreement restricting in any manner the purchaser in the course of his trade from acquiring or otherwise dealing in any goods other than those of seller or any other goods.
(d) Collective price fixation and tendering: Any agreement to purchase or sell goods or to tender for the sale or purchase of goods only at prices or terms and conditions agreed upon between the sellers or purchaser.
(e) Discriminatory Dealings : Any agreement to grant or allow concession or benefits, including allowances, discounts, rebate or credit, in connection with or by reason of dealings.
(f) Re-sale price maintenance: Any agreement to sell goods on condition that the prices to be charged on resale by the purchaser shall be the prices stipulated by the seller unless it is clearly stated that prices lower than those prices may be charged.
(g) Restriction on output or supply of goods: Exclusive distributorship, territorial restriction and market sharing.
(h) Control of manufacturing process.
(i) Price control arrangements.
(j) Governmental recognition of practice as restriction.
(k) Residual restriction trade practices: Any agreement to enforce the carrying out of any such agreement as is referred to in the foregoing classes.
Remedies under the MRTP Act
Under the Monopolistic and Restrictive Trade Practices Act, 1969, the commission has the power to attend complaint, inquire facts and pass orders regarding any unfair trade practice, monopolistic trade practice and/or restrictive trade practice. The commission can order any person to bring in any books of accounts, or other documents to investigate the matter of such practices. During investigation, if the commission has grounds to believe that any books or papers are being destroyed, mutilated, altered, falsified or secreted, it may authorize any officer of the Commission to search and seizure any such books or papers. The commission after inquiring the case shall pass the remedial order.
The remedies under this Act are:
a)      Temporary Injunction
b)      Compensation
Section 12A Power of the Commission to Grant Temporary Injunctions
Section 12A of the MRTP Act, 1969, accounts for the power of the Commission to grant temporary injunctions. The provisions of the section are:
Where it is proved that any undertaking or any person is carrying on any monopolistic or restrictive, or unfair, trade practice and such monopolistic or restrictive, or unfair, trade practice is likely to affect the interest of any trader, class of traders or of any consumer or public generally, the Commission may, for the purposes of staying or preventing the undertaking, grant a temporary injunction restraining such undertaking or person from carrying on any monopolistic or restrictive, or unfair, trade practice until the conclusion of such inquiry or until further orders.
For the purposes of this section, an inquiry shall be deemed to have commenced upon the receipt of any complaint or reference by the Commission or upon its own knowledge or information reduced to writing by the Commission.
For the removal of doubts, the power of the Commission with respect to temporary injunction includes power to grant a temporary injunction without giving notice to the opposite party.
Section 12B Power of the Commission to Award Compensation
Section 12B provides for the second remedy under this Act. The provision regarding the power of the Commission to award compensation is:
Where any loss or damage is caused to the Central Government or State Government or trader or class of traders or any consumer because of the monopolistic, or restrictive, or unfair, trade practice carried on by any undertaking or any person, then such Government, trader, class of traders or consumer may make an application to the Commission for the recovery of any compensation from that undertaking or person. The recovery shall be of such amount as the Commission may determine as compensation for the loss or damage so caused.
Where any loss or damage is caused to numerous persons having the same interest, then one or more of such persons may, with the permission of the Commission, make an application for the benefit of all the persons so interested.
The Commission after inquiring into the allegations made in the application, shall make an order directing the owner of the undertaking to make payment to the applicant, of the amount determined by it as realizable from the undertaking as compensation for the loss or damage caused to the applicant by reason of any monopolistic or restrictive, or unfair, trade practice carried on by such undertaking or other person.
Where a decree for the recovery of any amount as compensation for any loss or damage has been passed by any court in favor of any, the amount shall be set off against the amount payable under such decree.
Every order made by the Commission, under section 12A granting a temporary injunction or under section 12B awarding compensation, may be enforced by the Commission in the same manner as if it were a decree or order made by a court. In case such orders are not executed by the undertaking or other person, then it shall be lawful for the Commission to send such order to the court.

3. Either
a)      Discuss the meaning of monetary policy. Discuss at least two features of Indian Monetary Policy. Write a note on the monetary growth in India.                                           2+4+10=16
Ans: Monetary policy refers to policy formulated and implemented for achieving the following objectives:
a)      Regulating the supply of money including credit money and adjusting it to the needs of the economy
b)      To control the cost of money by regulating the rates of interest.
c)       Directing the supply of money to the required channels in accordance with the plan of priorities prepared by the planning authority.
According to A.G. Hart "A policy which influences the public stock of money substitute of public demand for such assets of both that is policy which influences public liquidity position is known as a monetary policy."
From the above discussion, it is clear that a monetary policy is related to the availability and cost of money supply in the economy in order to attain certain broad objectives.
Features of Monetary Policy
1. Largely affected by busy and slack seasons: The monetary policy is characterised by the changing behaviour of busy and slack seasons. These seasons are tied to the agricultural seasons. In the busy season there is an expansion of funds on account of the seasonal needs of financing production, and inventory building of agricultural commodities. On the other hand, the slack season is characterised by the contraction of funds due to the return flow. It may be pointed out that aggregate contraction of funds during the slack season has tended to fall far short of expansion in the preceding busy season.
2. Tight and Dear Monetary Policy: In order to restrain inflation the Reserve Bank has often adopted a tight and dear monetary policy. A tight monetary policy implies that the rate of growth of money supply is lowered. A dear money policy refers to increase in bank rate. This increase in bank rate leads to an increase in the interest rates charged by the banks.
3. Investment and Saving Oriented: The monetary policy adopted by the Reserve Bank is both investment and saving oriented. To encourage investment, adequate funds were made available for productive purposes at reasonable rates of interest. The Reserve Bank has also kept the interest on deposits at a reasonable rate to attract savings.
Importance of monetary policy in Indian perspective
 A modern economy is a money economy. All transactions are effected with the help of and through the medium of money. The prices of goods, services and factors are fixed in terms of money. People earn their income in the form of money and spend it in the form of money. So the supply of money creates money income in the hands of the community and expenditure of money generates the demand for different goods and services.
The monetary authority has to maintain a perfect balance between increase in the production of goods and services and increase in the supply of money. If increase in the supply of money exceeds increase in the production of goods and services the result is inflation. On the other hand, if the production of goods and services increases at a fast rate and the supply of money increases at a slow rate the result is recession and maybe depression. Hence the monetary authority has to monitor the growth in production very closely and adjust the money supply to it.
In India the monetary policy is formulated and implemented by the Reserve Bank of India which is an autonomous financial institution. It is expected that the RBI would use professional expertise to control the supply of money to the benefit of the community.
Through the monetary policy is useful in attaining many goals of economic policy, it is not free from certain limitations. Its scope is limited by certain peculiarities, in developing countries such as India. Some of the important limitations of the monetary policy are given below.
a)      There exists a Non-Monetized Sector: In many developing countries, there is an existence of non-monetized economy in large extent. People live in rural areas where many of the transactions are of the barter type and not monetary type. Similarly, due to non-monetized sector the progress of commercial banks is not up to the mark. This creates a major bottleneck in the implementation of the monetary policy.
b)      Excess Non-Banking Financial Institutions (NBFI): As the economy launch itself into a higher orbit of economic growth and development, the financial sector comes up with great speed. As a result many Non-Banking Financial Institutions (NBFIs) come up. These NBFIs also provide credit in the economy. However, the NBFIs do not come under the purview of a monetary policy and thus nullify the effect of a monetary policy.
c)       Existence of Unorganized Financial Markets:  The financial markets help in implementing the monetary policy. In many developing countries the financial markets especially the money markets are of an unorganized nature and in backward conditions. In many places people like money lenders, traders, and businessman actively take part in money lending. But unfortunately they do not come under the purview of a monetary policy and creates hurdle in the success of a monetary policy.
d)      Higher Liquidity Hinders Monetary Policy: In rapidly growing economy the deposit base of many commercial banks is expanded. This creates excess liquidity in the system. Under this circumstances even if the monetary policy increases the CRR or SLR, it dose not deter commercial banks from credit creation. So the existence of excess liquidity due to high deposit base is a hindrance in the way of successful monetary policy.
e)      Money not appearing in an Economy: Large percentage of money never comes in the mainstream economy. Rich people, traders, businessmen and other people prefer to spend rather than to deposit money in the bank. This shadow money is used for buying precious metals like gold, silver, ornaments, and land and in speculation. This type of lavish spending give rise to inflationary trend in mainstream economy and the monetary policy fails to control it.
f)       Time Lag Affects Success of Monetary Policy: The success of the monetary policy depends on timely implementation of it. However, in many cases unnecessary delay is found in implementation of the monetary policy. Or many times timely directives are not issued by the central bank, then the impact of the monetary policy is wiped out.
g)      Monetary & Fiscal Policy Lacks Coordination: In order to attain a maximum of the above objectives it is unnecessary that both the fiscal and monetary policies should go hand in hand. As both these policies are prepared and implemented by two different authorities, there is a possibility of non-coordination between these two policies. This can harm the interest of the overall economic policy.
These are major obstacles in implementation of monetary policy. If these factors are controlled or kept within limit, then the monetary policy can give expected results. Thus though the monetary policy suffers from these limitations, still it has an immense significance in influencing the process of economic growth and development.
Or
b)      What do you mean by Fiscal Policy? Discuss the different types of fiscal policies. Write a note on the changing structure of private savings in India.                       2+6+8=16
4. Either
a)      Discuss the objectives of Consumer Protection Act of 1986. Define consumer as per the Act. What are the basic rights of consumers as per the Consumer Protection Act?                                        4+2+10=16
Ans: OBJECTIVES OF CONSUMER PROTECTION ACT, 1986: The main objective of the act is to provide for better protection of consumers. Unlike existing laws which are punitive or preventive in nature, the provisions of this Act are compensatory in nature. The act is intended to provide simple, speedy and inexpensive redressal to the consumers' grievances, and reliefs of a specific nature and award of compensation wherever appropriate to the consumer.
The objectives of the Consumer Protection Act are as follows:
a)      To assist countries in achieving or maintaining adequate protection for their population as consumers;
b)      To facilitate production and distribution patterns responsive to the needs and desires of consumers;
c)       To encourage high levels of ethical conduct for those engaged in the production and distribution of goods and services to consumers;
d)      To assist countries in curbing abusive business practices by all enterprises at the national and international levels which adversely affect consumers;
e)      To facilitate the development of independent consumer groups;
f)       To further international cooperation in the field of consumer protection;
g)      To encourage the development of market conditions which provide consumers with greater choice at lower prices.
Meaning of Consumer
Section 2 (1) (d) of the Consumer Protection Act, 1986 defines the term "consumer". It says ‘consumer’ means any person:
a)      Who buys goods and has paid or promised to pay a consideration partly or fully under any system of deferred payment.
b)      Who hires or avails of services and has paid or promised to pay a consideration partly or fully under any system of deferred payment.
c)       Who uses the goods with the approval of the person who has bought the goods for a consideration
d)      Who is a beneficiary of the services hired or availed by an individual with the consent of that individual.
Rights of Consumers:
a)      The right to safety: It refers to the right to be protected against products, production processes and services which are hazardous to health or life. It includes concern for consumers immediate and long term needs.
b)      The right to be informed: Consumers have a right to be informed about the quality, quantity, potency, purity, standard and price of goods or services so that they can make the right decision and protect themselves against malpractices.
c)       The right of choice: The consumer has the right to be assured of a choice of various goods and services of satisfactory quality and competitive price.
d)      Right to representation (or right to be heard): It is a right and the responsibility of civil society to ensure consumer interest prevails while formulating and executing policies which affect the consumers, as well as right to be heard while developing or producing a product or service.
e)      Right to seek redressal of grievances: The consumer has the right go to court if he has been unscrupulously exploited against unfair or restrictive trade practices and receives compensation for supply of unsatisfactory or shoddy goods.
f)       The right to consumer education: It is the right to acquire knowledge and skills to be an informed consumer because it is easier for the literate to know their rights and to take actions to influence factors that affect consumer’s decisions. The Union and State Governments have accepted the introduction of consumer education in school curriculum.
g)      Right to basic needs: It is the right to receive the eight basic necessities that are required to survive and lead a dignified life. These eight basic necessities include food, clothing, shelter, health care, sanitation, education, energy and transportation.
h)      Right to healthy environment: It is the right to be protected against environmental pollution and environmental degradation so as to enhance the quality of life of both the present and future generation.
Or
b)      Discuss the trends of Indian export from 2003 onwards.                                       16
Ans: Direction of Indian foreign trade
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.
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
2011-12
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.
5. Either
a)      Discuss the salient features of Indian foreign policy in terms of globalization and trade promotion.               16
Ans: 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:
i)        Exporters will now have 360 days to bring in their foreign exchange remittances as compared to the earlier limit of 180 days.
ii)       Exporters will be allowed to retain the entire amount held in their exchange earner foreign currency (EEFC) accounts.
iii)     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.
Or
b)      Discuss the advantages of e-commerce and develop a road map to create an effective e-commerce system.    16   
Ans: Meaning of E-Commerce: E – Commerce also known as Electronic Commerce refers to a firm’s interactions with its customers and suppliers over internet. It includes purchase and sales of goods and services, transfer of funds and data from one party to another party. These types of business transactions can be done in four ways: Business to Business (B2B), Business to customer (B2C), Intra-B commerce, Customer to Customer (C2C) and Customer to Business (C2B). Amazon, Flipkart, Shopify, Olx, Myntra are some examples of e-commerce websites.
Types of E-Commerce business
(i) B2B Commerce: Here, both the parties involved in e-commerce transactions are business firms, and, hence the name B2B, i.e., business-to-business. Creation of utilities or delivering value requires a business to interact with a number of other business firms which may be suppliers or vendors of diverse inputs; or else they may be a part of the channel through which a firm distributes its products to the consumers. For example, the manufacture of an automobile requires assembly of a large number of components which in turn are being manufactured elsewhere— within the vicinity of the automobile factory or even overseas. To reduce dependence on a single supplier, the automobile factory has to cultivate more than one vendor for each of the components. A network of computers is used for placing orders, monitoring production and delivery of components, and making payments. Likewise, a firm may strengthen and improve its distribution system by exercising a real time (as it happens) control over its stock-in-transit as well as that with different middlemen in different locations.
(ii) B2C Commerce: As the name implies, B2C (business-to-customers) transactions have business firms at one end and its customers on the other end. B2C commerce entails a wide range of marketing activities such as identifying activities, promotion and sometimes even delivery of products (e.g., music or films) that are carried out online. E-commerce permits conduct of these activities at a much lower cost but high speed. For example, ATM speeds up withdrawal of money.
(iii) Intra-B Commerce: Here, parties involved in the electronic transactions are from within a given business firm, hence, the name intra-B commerce.
(iv) C2C Commerce: Here, the business originates from the consumer and the ultimate destination is also consumers, thus the name C2C commerce. This type of commerce is best suited for dealing in goods for which there is no established market mechanism, for example, selling used books or clothes either on cash or barter basis. The vast space of the internet allows persons to globally search for potential buyers. OLX, PayPal is a good example of this kind.
(v) C2B Commerce: Consumer-to-business (C2B) is a business model where a consumer makes a product or service that is consumed by an organization to complete its business process. The C2B methodology is completely opposite of the  traditional business-to-consumer (B2C) model, where a business produces services and products for consumer consumption.
Need of E-Commerce
In present world, E-Commerce is very effective because it provides many opportunities not only to the producers but also to the wholesalers, retailers and customers which are stated below:
a)      Opportunity to producers: E-Business enables producers to select the best suppliers regardless of their geographical location. The producers can acquire quality raw materials and latest production technology from new suppliers.
b)      Opportunity to wholesaler / distributes: Wholesaler by taking the advantage of e-business can work more closely with their suppliers and they can be more responsive to the needs and expectations of their retailers and customers
c)       Opportunity to retailer: A retailer can save his existence by linking his business with the on – line Distribution. There fore the retailers who have the capacity to link their business with the online, E-business is a good opportunity
d)      Opportunity to customer: Customers can purchase required quality products and services at competitive prices from suppliers anywhere in the world.
Role of E-Commerce
Advantages of E-Commerce
(i) Ease of formation and lower investment requirements: Unlike a traditional business, e-commerce business very easy to start with low investment. It is not necessary to build an infrastructure for business and it can be started  at the convenience of home by developing an e-commerce website. Customer can visit websites and place order over internet. It increases the customer base of business.
(ii) Convenience: Internet offers the convenience of ‘24 hours × 7 days a week × 365 days’ a year business that allowed any customer to go for shopping well after midnight. Such flexibility is available even to the organisational personnel whereby they can do work from wherever they are, and whenever they may want to do it. E-business is truly a business as enabled and enhanced by electronics and offers the advantage of accessing anything, anywhere, anytime.
(iii) Speed: As already noted, much of the buying or selling involves exchange of information that internet allows at the click of a mouse. This benefit becomes all the more attractive in the case of information-intensive products such as softwares, movies, music, e-books and journals that can even be delivered online. Cycle time, i.e., the time taken to complete a cycle from the origin of demand to its fulfillment, is substantially reduced due to transformation of the business processes from being sequential to becoming parallel or simultaneous.
(iv) Global reach/access: Internet is truly without boundaries. On the one hand, it allows the seller an access to the global market; on the other hand, it affords to the buyer a freedom to choose products from almost any part of the world. It would not be an exaggeration to say that in the absence of internet, globalisation would have been considerably restricted in scope and speed.
(v) Marketing of goods: E-commerce involves not only purchase and sale of goods and services but it started before the development of the product. Due to which product awareness is created amongst the customer before launch. Best example of this type of sale is Redme.
Limitations of E-Commerce
E-Commerce is not all that rosy. Doing business in the electronic mode suffers from certain limitations. It is advisable to be aware of these limitations as well.
(i) Low personal touch: High-tech it may be, e-commerce, however, lacks personal contact between buyers and sellers. To this extent, it is relatively less suitable mode of business in respect of product categories requiring high personal touch such as garments, toiletries, etc.
(ii) Incongruence between order taking/giving and order fulfillment speed: Information can flow at the click of a mouse, but the physical delivery of the product takes time. This incongruence may play on the patience of the customers. At times, due to technical reasons, web sites take unusually long time to open. This may further frustrate the user.
(iii) Need for technology capability and competence of parties to e-business: Apart from the traditional 3R’s (Reading, Writing, and Arithmetic), e-business requires a fairly high degree of familiarity of the parties with the world of computers. And, this requirement is responsible for what is known as digital divide that is the division of society on the basis of familiarity and non-familiarity with digital technology.
(iv) Increased risk due to anonymity and non-traceability of parties: Internet transactions occur between cyber personalities. As such, it becomes difficult to establish the identity of the parties. Moreover, one does not know even the location from where the parties may be operating. It is riskier, therefore, transacting through internet. e-business is riskier also in the sense that there are additional hazards of impersonation (someone else may transact in your name) and leakage of confidential information such as credit card details. Then, there also are problems of ‘virus,’ and ‘hacking,’ that you must have heard of. If not, we will be dealing with security and safety concerns of online business.
(v) People resistance: The process of adjustment to new technology and new way of doing things causes stress and a sense of insecurity. As a result, people may resist an organisation’s plans of entry into e-commerce.
(vi) Ethical fallouts: Stealing and selling of customer’s data is now a common practice which is against the ethics of business. Nowadays, companies use an ‘electronic eye’ to keep track of the computer files we use, our e-mail account, the websites we visit etc. Is it ethical?
Despite limitations, e-commerce is the way
It may be pointed out that most of the limitations of e-commerce discussed above are in the process of being overcome. Websites are becoming more and more interactive to overcome the problem of ‘low touch.’ Communication technology is continually evolving to increase the speed and quality of communication through internet. Efforts are on to overcome the digital divide, for example, by resorting to such strategies as setting up of community telecentres in villages and rural areas in India with the involvement of government agencies, NGOs and international institutions. In order to diffuse e-commerce in all nooks and corners, India has undertaken about 150 such projects. In view of the above discussion, it is clear that e-business is here to stay and is poised to reshape the businesses, governance and the economies. It is, therefore, appropriate that we familiarise ourselves with how e-business is conducted.

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