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International trade poses various risks to the good. Moreover the goods are mainly transported through sea which is quite risky. Hence to protect the goods from damage due to humid atmosphere of sea, sinking of sea, attacks of pirates, etc. goods must be insured.

Countries sign trade agreements in order to assure that they will trade with each other. This boosts their import and export trade and economy.

International (foreign) trade:

• When individuals, business units or government of a country trades i.e. either buys or sells with individuals, business units or government of another country it is called international or foreign trade.
• The one who buys from foreign country is called the importer of goods/services whereas the one who sells is called the exporter.
• According to Thomas, ‘Exchange of product of one country with another country is called foreign trade.

Correct option is (A) 1991

According to Thomas, ‘Exchange of product of one country with another country is called foreign trade.

Correct option is (A) Politicians

Correct option is (D) Lesser taxes and duties

No country is self-sufficient. It needs a very large number of resources, goods and services that too in huge quantity to keep the economy running smoothly. This cannot be possible if the country just deals with internal trade.

• International trade contributes heavily in making optimum use of resources, obtaining resources from other countries, and selling excess produce of country.
• A country can also stabilize its prices, improve its standard of living and above all get a lot of help from other countries in times of natural calamities.
• Owing to these reasons it is impossible for a country not to get lured by foreign trade.

Correct option is (A) Unequal distribution of natural resources

Correct option is (D) Banswada

SEZ is set-up with the aim of attracting direct local and foreign capital investment. Under SEZ the government provides part or full exemption of custom duty, central excise, service tax, central sales tax, security transaction tax, etc. on products produced in SEZ.

Correct option is (B) 10 February 2006

(i) OGL :

If a businessman wish to import/export goods/ services mentioned in the list published by the government he needs to obtain an Open General License (OGL).

(ii) WTO :

The World Trade Organization (WTO) is an intergovernmental organization which regulates international trade. 104 nations including India signed an agreement and established WTO on 1st January, 1995 by replacing the General Agreement on Tariffs and Trade (GATT)

(iii) GATT :

In 1948, 23 nations also known as founding members established the General Agreement on Tariffs and Trade (GATT) in Geneva. India wap one of those 23 nations

(iv) SEZ :

A special economic zone (SEZ) refers to certain fix area of a country which enjoys special economic regulations and liberal economic laws compared to other parts of the country.

Correct option is (B) Thomas

Correct option is (A) Attract local and foreign investment

Correct option is (C) 1st January 1995

Correct option is (A) Foul receipt

If an importer wants to import items that are not mentioned in the Government list then he needs to apply for the license to comptroller of import trade.

Correct option is (B) 23

• Both GATT and WTO aimed at increasing trade, encouraging businessman and government and bring them on common platform of foreign trade.
• They aimed at removing barriers to foreign trade and encourage free-trade and globalization.
• Under these objectives several countries including India signed numerous trade agreements with each other and traded enormously.
• All the‘sectors namely primary, manufacturing and service sectors made unprecedented progress due to these trade agreements.
• As a result, GATT and WTO both have played a vital role in world economy.

General Agreement on Tariffs and Trade (GATT):

• In 1948,23 nations also known as founding members established the General Agreement on Tariffs and Trade (GATT) in Geneva. India was one of those 23 nations.
• The main aim of this agreement was to remove barriers from international trade by reducing tariffs, boost international trade and encourage distribution of regional labour.
• The policies established under GATT encouraged free-trade i.e. liberalization and globalization.
• Under GATT, Government of India made several agreements with different countries so that Indian industries can join hands with industries of those countries and make progress.
• Due to GATT, many modern fields of trades emerged in India.

Correct option is (B) Shipping company

A certificate obtained by exporter certifying that the products to be exported are wholly procured or produced or manufactured in India is called the certificate of origin.

If government has set a limit on importing only a fix quantity of particular goods then it is said that the government has decided quota on that product. In such a case, government issues a quota certificate to the importer which states the maximum quantity of the listed product an importer can import.

Correct option is (C) Reserve bank

Correct option is (B) 1948

Correct option is (B) Certificate of origin

Correct option is (D) Any of these

Paying import duty or say excise:

• Goods are not allowed to bring out of port unless duty is paid on them.
• If the importer is exempted from import duty he can collect the goods without paying it.
• If the importer is exempted from import duty he need to present consular invoice and the certificate of origin of goods (from the exporter) and obtain a certificate of exemption of import duty from the excise department.
• If the importer is liable to pay full import duty then he needs to pay it to possess the goods.
  If at all the importer has to pay only partial duty i.e. lesser than actual then he needs to fill a form called ‘bill of entry form’. The form contains the details of name of the ship, name of the port of the country from where goods were loaded, name of exporter, name and address of importer and complete details of the goods.
• Based on this form the excise department decides the amount of duty to be paid by the importer. Once the importer pays the duty, the excise officer endorses the ‘bill of entry’ and hands it to the importer.

Correct option is (A) Simplifies excise payment

If at all the importer has to pay only partial duty i.e. lesser than actual then he needs to fill a form called ‘bill of entry form’. The form contains the details of name of the ship, name of the port of the country from where goods were loaded, name of exporter, name and address of importer and complete details of the goods. Based on this form the excise department decides the amount of duty to be paid by the importer.

Import procedure:

In order to conduct import trade one needs to follow procedure framed by the Government of India. It is discussed below.

1. Obtaining import license:

Open General License (OGL):
If an importer wants to import those items/services which are listed in government list, he needs to obtain Open General License (OGL) which is quite easy.

License from trade director:

• If an importer wants to import items that are not mentioned in the government list then he needs to apply for the license to comptroller of import trade.
• The importer needs to provide various details in the application like his name, address, complete detail of goods to be imported, financial records of the importer, name of the exporter and exporting country, etc.
• If and only if the assessing officers are thoroughly satisfied with all the details, they will provide the import license to the importer.
• If the government has set some quota for importing only a specific quantity of goods than the importer is given a quota certificate. As per the quota certificate, the importer can import only upto the maximum quantity mentioned in the certificate.

2. Obtaining foreign exchange:

• When goods are imported from a foreign country the payment has to be made in the currency from which he is importing. For this the importer needs to raise necessary foreign currency or say foreign exchange.
• The Reserve Bank of India (RBI) controls the foreign exchange in India.
• The importer has to submit an application in the prescribed form along with import license to any bank that deals with foreign exchange. The bank than forwards the application to RBI. RBI scrutinizes the application and then sanctions the release of foreign exchange.
• The importer can then obtain the sanctioned foreign exchange from the bank. The applicant needs to mention the amount he needs in American Dollar as per the prevailing currency rate.

3. Placing the indent or order:

• The order that the importer places for importing the goods is called ‘indent’. He places the indent to the exporter.
• The importer first collects information of different manufacturers and exporters of the exporting country. He collects information regarding the details of goods, price and other conditions and then gives the indent to the exporter he selects. -> Indent contains details regarding quantity of goods, price, packaging, insurance, name of transporter, etc.

4. Dispatching Letter of Credit (L/C):

Generally, foreign traders are not acquainted to each other and so before the exporter exports the goods he wants to make sure he will receive his payment. For this, the importer obtains a Letter of Credit (L/C) from his bank and sends it to the exporter to assure his credit worthiness.

5. Receipts of documents:

• Once the exporter receives L/C, he prepares various shipping documents like bill of lading, invoice, the insurance policy of goods, etc., and sends it to the importer via. a foreign exchange bank. All these documents together are called ‘Documentary bill. There are two types of documentary bills. They are:
  1. D/A (i.e. Documents against acceptance) bills
  2. D/A (i.e. Documents against payment) bills
• The exporter may send the type of bill as per terms decided with importer.

6. Obtaining bill of lading:

• A bill of lading is a legal document between the shipper (i.e. exporter) of the goods and the carrier i.e. the transporter. It contains details like quantity of goods, destination, etc.
• It is issued by the carrier to the exporter.
• The shipping company makes three copies of bill of lading. It keeps one copy and gives the other two to the exporter.
• The exporter then makes a mark on one copy i.e. endorses it and sends it to the importer as a part of documentary bill. The importer can obtain the goods from the carrier only if he shows the bill of lading.

7. Paying import duty or say excise:

• Goods are not allowed to bring out of port unless duty is paid on them.
• If the importer is exempted from import duty he can collect the goods without paying it.
• If the importer is exempted from import duty he need to present consular invoice and the certificate of origin of goods (from the exporter) and obtain a certificate of exemption of import duty from the excise department.
• If the importer is liable to pay full import duty then he needs to pay it to possess the goods.
• If at all the importer has to pay only partial duty i.e. lesser than actual then he needs to fill a form called ‘bill of entry form’. The form contains the details of name of the ship, name of the port of the country from where goods were loaded, name of exporter, name and address of importer and complete details of the goods.
• Based on this form the excise department decides the amount of duty to be paid by the importer. Once the importer pays the duty, the excise officer endorses the ‘bill of entry’ and hands it to the importer.

8. Payment of dock charges:

A place where the goods are kept once they arrive is called a dock. Since goods of importer are unloaded from the ship and handled and stored by dock employees the importer needs to pay dock charge for theses dock services he received. Dock charges also include charges on equipment and facilities that were used for the goods in the dock.

• Dock charge is to be paid irrespective of the mode of arrival of goods i.e. airway, waterway, roadway or railway.
• After paying the dock charges the importer gets a dock receipt.

9. Obtain possession of goods:

• After completing all the formalities the importer can then obtain possession of the goods.
• The importer needs to take the goods from the bonded warehouse where they are stored by the customs department within the specified time. If the importer does not collect the goods on time, he will have to pay demurrage along with the additional rent.

Correct option is (A) Bill of entry

Obtaining import license:
Open General License (OGL):

If an importer wants to import those items/services which are listed in government list, he needs to obtain Open General License (OGL) which is quite easy.

License from trade director:

• If an importer wants to import items that are not mentioned in the government list then he needs to apply for the license to comptroller of import trade.
• The importer needs to provide various details in the application like his name, address, complete detail of goods to be imported, financial records of the importer, name of the exporter and exporting country, etc.
• If and only if the assessing officers are thoroughly satisfied with all the details, they will provide the import license to the importer.
• If the government has set some quota for importing only a specific quantity of goods than the importer is given a quota certificate. As per the quota certificate, the importer can import only upto the maximum quantity mentioned in the certificate.

Correct option is (D) Consular invoice

Export processing zone:

Indian government has established export processing zones or say free processing zones to encourage export trade. In such zones exporters can import goods, re¬process them if needed, manufacture goods and export them without interference of custom authorities. This helps in bringing more foreign earnings to our country.

• Excise duties, financial transaction regulations and some labour laws are liberal in these zones.
• Government assures people that it will provide all basic facilities such as roads, electricity, water, communication, transportation, facility to procure high quality raw material, etc. to industries set-up in such zones.
• Government also provides information on export procedures, international market, demand of products for export, political conditions favorable export, etc. to people interested in export business.
• Under its economic policy India has developed various free trade zones (FTZ) in places like Kandla, Santa Cruz (Mumbai), Falta (West Bengal), Noida, (Cochin, Chennai, Vishakhapattannam, Kosindra, (Near Dwarka) and Dahej (near Bharuch), etc.

Obtaining foreign exchange:

• When goods are imported from a foreign country the payment has to be made in the currency from which he is importing. For this the importer needs to raise necessary foreign currency or say foreign exchange.
• The Reserve Bank of India (RBI) controls the foreign exchange in India.
• The importer has to submit an application in the prescribed form along with import license to any bank that deals with foreign exchange. The bank than forwards the application to RBI. RBI scrutinizes the application and then sanctions the release of foreign exchange.
• The importer can then obtain the sanctioned foreign exchange from the bank. The applicant needs to mention the amount he needs in American Dollar as per the prevailing currency rate.

Correct option is (D) Comptroller of import trade

Main characteristics of Indian Trade 

1. Mostly trade through sea 

2. Lack of foreign trade. 

3. Reduction in per capita trade. 

4. Result of trade and increase of price 

5. Negative trade balance

6. Characteristics of export trade

(i) Maximum of traditional articles. 

(ii) More export of engineering and prepared articles from industries. 

(iii) More customer (Buyer) of India’s exported goods 

(iv) Change the direction of trade

7.Characteristics of import trade- 

(i) Maximum of heavy machineries in trade. 

(ii) Increase of manufactured of articles. 

(iii) Reduction in food grains and raw materials

Amritsar northern most international airport of India.

India is the member of Safta trading block.

European union (EU).

1. High price at world level 

2. Devaluation of Indian rupee at international trade 

3. Slow progress in production in India . 

4. Increasing domestic demand in India. 

1. Demand due to excessive population 

2. Most of the cultivated land under food ex. 

3. Low per hectare productivity of pulses. 

4. Less profitable as compare to other crops. 

5. Risky farming due to high vulnerability

(i) Import and export by ports only. 

(ii) Can reach upto sea through ports only. 

(iii) Ports provide link with other countries.

The world port is derived from the latin word “Porta” meaning Gateway. Port is a connecting link between land and water.

It is a place on the coast where ships start and end their journey. 

Here reached Cargo is unloaded and the Cargo which is to be exported is loaded Port provides facilities of export and import.

It is well connected to the interior of the country by a good network of roadways and railways.

International Trade- The movement of goods and Services from areas of Surplus to deficit area between two countries. 

The two types of international trade 

1. Bilateral trade- The exchanging of good between two countries. 

2. Multilateral trade- The exchange takes place between several countries on regular basis.

On the basis of Cargo handled 

1. Industrial ports 

2. Commercial ports 

3. Comprehensive 

On the basis of location 

1. Inland ports 

2. Outports 

On the basis of specialized functions 

1. Oil ports 

2. Ports of call 

3. Packet stations 

4. Entre port 

5. Naval ports.

Correct option is (B) D/P

In 2005, government of India passed law for SEZ in the parliament and brought it in force from 10th February, 2006.