Amity MBA 4th Sem ASODL Indias Foreign Trade & Trade Policy

Assignment A
Q1. Within three years, SEZs in India have witnessed phenomenal success with incremental investment of Rs.97, 871 crores and incremental direct employment provided to 231,629 persons with twice that number getting employed outside. Considering the statement, examine the role of Export Oriented Units / Export Processing Zones / Special Economic Zones in promoting export from India.
Q2. What are the main provisions in Foreign Trade Policy of India 2009-2014? How will these initiatives help the Government to promote export from the Country?
Q3. What are the steps taken by the Government of India to promote export of Pharmaceutical products from India? Highlight the problems faced by the Indian Pharmaceutical companies in venturing the Foreign Market.
Q4. What is the role of WTO in promoting International Trade. What are the challenges faced by the organization in facilitating global trade of Agriculture products?
Q5. What is the role of World Bank in promoting International Trade? What are the functions of IDA and IRDB?
Q6. How International Monetary Fund (IMF) helps its member countries in their economic development? What steps were taken by IMF to help the member countries to come out of the recession?
Q7. What are the major functions of EXIM Bank of India? Which are the major initiatives taken by the Bank to promote export from our country?
Q8. Write a short note on any three of the following:–
a) Trends in exports from India for last three years to major destinations.
b) Role of USA in India’s total export in the current scenario.
c) Evolution of GATT and its role in promoting international trade.
d) IMF and its quota decisions with respect to developing nations.
e) Objectives of Foreign trade policy

Assignment B
Case Study
Organic Food Consumption in India
Some people believe that organic food is only a “concept” popular in the developed countries. They think that when it comes to organic food, India only exports organic food and very little is consumed locally. However, this is not true. Though 50% of the organic food production in India is targeted towards exports, there are many who look towards organic food for domestic consumption.

AC Nielsen, a leading market research firm, recently surveyed about 21,000 regular Internet users in 38 countries to find their preference for functional foods – foods that have additional health benefits. The survey revealed that India was among the top ten countries where health food, including organic food, was demanded by the consumers.

The most important reason for buying organic food was the concern for the health of children, with over 66 percent parents preferring organic food to non organic food. Though organic food is priced over 25 percent more than conventional food in India, many parents are willing to pay this higher premium due to the perceived health benefits of organic food.

The increase in organic food consumption in India is evident from the fact that many organic food stores are comming up in India. Today (2009) every supermarket has an organic food store and every large city in India has numerous organic food stores and restaurants. This is a huge change considering that the first organic food store in Mumbai was started in 1997.

What do Indian organic food consumers prefer? The pattern of organic food consumption in India is much different than in the developed countries. In India, consumers prefer organic marmalade, organic strawberry, organic tea, organic honey, organic cashew butter and various organic flours.

However, the Indian organic food consumer needs education. There are many consumers who are unaware of the difference between natural and organic food. Many people purchase products labeled as Natural thinking that they are Organic. Further, consumers are not aware of the certification system. Since certification is not compulsory for domestic retail in India, many fake organic products are available in the market.

Organic Farming in India
Organic farming was practiced in India since thousands of years. The great Indian civilization thrived on organic farming and was one of the most prosperous countries in the world, till the British ruled it.

In traditional India, the entire agriculture was practiced using organic techniques, where the fertilizers, pesticides, etc., were obtained from plant and animal products. Organic farming was the backbone of the Indian economy and cow was worshipped (and is still done so) as a God. The cow, not only provided milk, but also provided bullocks for farming and dung which was used as fertilizers.

Shift to Chemical Farming in 1960s
During 1950s and 1960s, the ever increasing population of India and several natural calamities lead to a severe food scarcity in India. As a result, the government was forced to import food grains from foreign countries. To increase food security, the government had to drastically increase the production of food in India. The Green Revolution (under the leadership of M. S. Swaminathan) became the government’s most important program in the 1960s. Large amount of land was brought under cultivation. Hybrid seeds were introduced. Natural and organic fertilizers were replaced by chemical fertilizers and locally made pesticides were replaced by chemical pesticides. Large chemical factories such as the Rashtriya Chemical Fertilizers were established.

Before the Green Revolution, it was feared that millions of poor Indians would die of hunger in the mid 1970s. However, the Green Revolution, within a few years, showed its impact. The country, which was greatly relied on imports for its food supply, reduced its imports every passing year. In 1990s, India had surplus food grains and once again became and exporter of food grains.

As time went by, extensive dependence on chemical farming has shown its darker side. The land is losing its fertility and is demanding larger quantities of fertilizers to be used. Pests are becoming immune requiring the farmers to use stronger and costlier pesticides. Due to increased cost of farming, farmers are falling into the trap of money lenders, who are exploiting them no end, and forcing many to commit suicide.

Both consumer and farmers are now gradually shifting back to organic farming in India. It is believed by many that organic farming is healthier. Though the health benefits of organic food are yet to be proved, consumers are willing to pay higher premium for the same. Many farmers in India are shifting to organic farming due to the domestic and international demand for organic food. Further stringent standards for non-organic food in European and US markets have led to rejection of many Indian food consignments in the past. Organic farming, therefore, provides a better alternative to chemical farming.

According to the International Fund for Agriculture and Development (IFAD), about 2.5 million hectares of land was under organic farming in India in 2004. Further, there are over 15,000 certified organic farms in India. India therefore is one of the most important suppliers of organic food to the developed nations. No doubt, the organic movement has again started in India.

Organic Food Exports from India
Organic food exports from India are increasing with more farmers shifting to organic farming. With the domestic consumption being low, the prime market for Indian organic food industry lies in the US and Europe. India has now become a leading supplier of organic herbs, organic spices, organic basmati rice, etc.

RCNOS recently published a report tilted ‘Food Processing Market in India (2005)’. According to its research, exports amount to 53% of the organic food produced in India. This is considerably high when compared to percentage of agricultural products exported. In 2003, only 6-7% of the total agricultural produce in India was exported.

Exports is driving organic food production in India
The increasing demand for organic food products in the developed countries and the extensive support by the Indian government coupled with its focus on agro-exports are the drivers for the Indian organic food industry.

Organic food products in India are priced about 20-30% higher than non-organic food products. This is a very high premium for most of the Indian population where the per capita income is merely US$ 800. Though the salaries in India are increasing rapidly, the domestic market is not sufficient to consume the entire organic food produced in the country. As a result, exports of organic food is the prime aim of organic farmers as well as the government,

The Indian government is committed towards encouraging organic food production. It allocated Rs. 100 crore or US$ 22.2 million during the Tenth Five Year Plan for promoting sustainable agriculture in India.

APEDA (Agricultural and Processed Food Export Development Authority) coordinates the export of organic food (and other food products) in India. The National Programme for Organic Production in India was initiated by the Ministry of Commerce. The programme provides standard for the organic food industry in the country. Since these standards have been developed taking into consideration international organic production standards such as CODEX and IFOAM, Indian organic food products are being accepted in the US and European markets. APEDA also provides a list of organic food exporters in India.

Organic food costs in India are expected to decrease driving further exports in future
Organic food production costs are higher in the developed countries as organic farming is labor intensive and labor is costly in these countries. However, in a country like India, where labor is abundant and is relatively cheap, organic farming is seen as a good cost effective solution to the increasing costs involved in chemical farming. Currently most of the organic farmers in India are still in the transition phase and hence their costs are still high. As these farmers continue with organic farming, the production costs are expected to reduce, making India as one of the most important producers of organic food.

Organic food products exported from India include the following:
Organic Cereals: Wheat, rice, maize or corn
Organic Pulses: Red gram, black gram
Organic Fruits: Banana, mango, orange, pineapple, passion fruit, cashew nut, walnut
Organic Oil Seeds and Oils: Soybean, sunflower, mustard, cotton seed, groundnut, castor
Organic Vegetables: Brinjal, garlic, potato, tomato, onion
Organic Herbs and Spices: Chili, peppermint, cardamom, turmeric, black pepper, white pepper, amla, tamarind, ginger, vanilla, clove, cinnamon, nutmeg, mace,
Others: Jaggery, sugar, tea, coffee, cotton textile.
Q1. What are the initiatives taken by the Government of India to boost export organic food products from India?
Q2. What are the reasons behind the increase in the demand for organic food products?
Q3. What are the future prospects for export of organic food products from India?

Assignment C
MCQ
Q1. A situation where any advantage given by one member of the WTO to another member must be extended to all WTO members—
Q2. A situation where countries export a product at a price below the cost of its production—
Q3. “SEZ” was launched in which year?
Q4. “Millennium Development Goals “are introduced by __________.
Q5. Vishesh Krishi Upaj Yojana was announced as part of the Special focus Initiative for agriculture in the Foreign Trade Policy in –
Q6. As a part of commitment to WTO India transited to a product patent regime from –
Q7. Which of the following is not the role of IMF?
Q8. The various rounds of multilateral trade negotiations carried out under the auspices of the GATT have—
Q9. In the context of the WTO Agreements, “non discrimination” means—
Q10. The “Enabling Clause” favours WTO developing country members by—
Q11. The Anti-dumping Agreement—
Q12. Technical barriers to trade are regulations that are—
Q13. Customs and administrative procedures—
Q14. The GATS differs from GATT among other things, because—
Q15. The need for “balance” under TRIPS means that—
Q16. Ministerial Conferences are—
Q17 The Doha Development Agenda—
Q18. What are the forms of assistance that the World Bank provides to its members?
Q19 The World Bank Group is made up of how many organisations?
Q20. Which organisation of the World Bank Group deals with matters related to the development of the poorest countries in the world?
Q21. What are countervailing measures?
Q22. EPCG is an initiative of government of India to allow duty free import of-
Q23. Which of the following is not a Town of Excellence as per the Foreign Trade Policy of India?
Q24. Main objective of the Focus Market Scheme of the Foreign Trade Policy of India is to—
Q25. Which of the following is a duty remission scheme as per FTP of India?
Q26. Pre-shipment finance is provided to the Indian exporter by EXIM bank for—
Q27. What is the role of the IMF
Q28. Who is currently the governor of IMF for India?
Q29. Which country has the largest quota with IMF?
Q30. Who is currently the Managing Director of IMF?
Q31. Which of the following is not a role of IMF?
Q32. EXIM Bank of India was setup in the year—
Q33. Which of the following is not the role of EXIM Bank?
Q34. The World Bank consists of the Bank itself and—
Q35. The International Monetary Fund Articles of Agreement were adopted at the Bretton Woods Conference in 1944. In general terms, the International Monetary Fund’s objectives today are, to foster—
Q36. The Bank for International Settlements deals with—
Q37. The World Trade Organization, headquartered in Geneva, Switzerland currently has _____member countries.
Q38. Which of the following is not a duty exemption / remission scheme in FTP of India?
Q39. Which of the following categories of supply of goods by main / subcontractors is not regarded as “Deemed Exports”?
Q40. The Foreign Trade Policy of India is prepared by—

1. The riskiness of an asset’s return that results from interest rate changes is called

2. The concept of _________ is based on the common-sense notion that a dollar paid to you in the future is less valuable to you than a dollar today.

3. A spot transaction in the foreign exchange market involves the

4. When the value of the British pound changes from $1.50 to $1.25, then the pound has _________ and the dollar has _________.

5. Typically, increasing interest rates

6. Adverse selection is a problem associated with equity and debt contracts arising from

7. The starting point for understanding how exchange rates are determined is a simple idea called _________, which states that if two countries produce an identical good, the price of the good should be the same throughout the world no matter which country produces it.

8. The _________ states that exchange rates between any two currencies will adjust to reflect changes in the price levels of the two countries.

9. If the dollar depreciates relative to the Swiss franc,

10. Financial markets and institutions

11. A bond’s future payments are called its

12. Higher tariffs and quotas cause a country’s currency to _________ in the _________ run.

13. The government institution that has responsibility for the amount of money and credit supplied in the economy as a whole is the

14. Money market instruments

15. Long-term debt and equity instruments are traded in the _________ market.

16. A loan that requires the borrower to make the same payment every period until the maturity date is called a

17. When the exchange rate for the euro changes from $1.20 to $1.00, then, holding everything else constant, the euro has

18. The commonly accepted goal of the MNC is to:

19. Insurance purchased to cover the risk of expropriation __________, and will typically cover __________.

20. Markets in which funds are transferred from those who have excess funds available to those who have a shortage of available funds are called

21. When the price of a bond is above the equilibrium price, there is excess _________ in the bond market and the price will _________.

22. If the demand for _________ goods decreases relative to _________ goods, the domestic currency will depreciate.

23. If the 2005 inflation rate in Britain is 6 percent, and the inflation rate in the U.S. is 4 percent, then the theory of purchasing power parity predicts that, during 2005, the value of the British pound in terms of U.S. dollars will

24. ______________ is(are) not a form of political risk.

25. Bonds that are sold in a foreign country and are denominated in a currency other than that of the country in which they are sold are known as

26. The process of calculating what dollars received in the future are worth today is called

27. The nominal interest rate minus the expected rate of inflation

28. The theory of purchasing power parity is a theory of how exchange rate are determined in

29. LIBOR is:

30. The price paid for the rental of borrowed funds (usually expressed as a percentage of the rental of $100 per year) is commonly referred to as the

31. If the dollar appreciates from 0.8 euros per dollar to 1.2 euros per dollar, the euro depreciates from _________ dollars to _________ dollars per euro.

32. The exchange rate is the:

33. The demand for dollars in the foreign-exchange market:

34. Changes in the value of the euro affect the economies of:

35. The main sources of financing for businesses, in order of importance, are

36. When the exchange rate between the U.S. dollar and the Japanese yen is $1=100 yen, this is an indication that:

37. If the exchange rate between the U.S. dollar and Japanese yen changes from $1=100 yen to $1=90 yen, then:

38. The merchandise trade balance is equal to:

39. A major problem with managed exchange rates is:

40. The bond markets are important because

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