Foreign trade policy, or trade policy, is made up of all the means available to a State to guide the flow of trade between a country and abroad. In the panoply of usable instruments, a distinction is made between tariffs and other obstacles. The type of policy chosen and the nature of the means implemented depend on an institutional organization that differs from country to country. Even though the theories of exchange international promotion of the advantages of full free trade for all partners, the public authorities never completely give up protecting their national activities, nor helping export industries. These state interventions find justification in certain economic analyzes. These shed light on the gains that a country can perceive in situations different from those assumed by free trade theories. In fact, a country’s trade policy is often the result of compromise strategies between the desire to isolate certain national activities from the effects of external competition and the need to temper the interventionist inclinations of the partners.
Instruments
To mitigate the impact of external competition, governments levy duties on trade. Exemption regimes may be provided to promote the development of certain activities and certain regions. In principle, once the country is part of the World Trade Organization (WTO), the same rights are applied to all partners and result from agreements negotiated multilaterally. However, specific protective provisions, called contingency measures, can be adopted. In addition, all states set up non-tariff barriers, and some manipulate the exchange rate.
Advantages of international trade
The possibility of buying goods and services produced abroad has certain indisputable advantages. For example, access to international quality products, made in industrialized countries that would otherwise be impossible to have, allows less technologically advanced nations to access innovations.
In addition, this type of exchange encourages regional specialization, so that countries can enter to compete with what they do best, and thus lead a certain sector of international trade, no matter how small.
Finally, by diversifying the risk, international trade allows obtaining diverse inflows of money. In other words, countries are not entirely dependent on the domestic market. Although the latter is also a double-edged sword since it implies a high degree of dependence on the outside.
Three Schemes in India for promotion of export business:
- Advance Authorisation Scheme (AAS):
Under this scheme, any businessman, who requires raw material, whether in the form of a natural product, raw product, or even finished goods, is the input for the processing of the final product, can be imported as duty-free.
- Export Promotion Capital Goods Scheme (EPCG Scheme)
This is also the same as AAS, but under this EPCG Scheme, the companies that require the machines or any capital goods being utilized in the process and production of the goods, can be imported duty-free. There will be an exemption in the customs duty and thus businessmen can get the capital goods or machine at a comparatively much lower price.
- RoDTEP Scheme (Remission of Duties or Taxes on Export Products)
The RoDTEP Scheme reimburses or exempts various taxes and levies that are being charged by central, state or local bodies. These taxes are not refunded in any other scheme while these do occurs at the manufacturing and distribution system.