INTRODUCTION TO THE STUDY OF THE PROJECT

The Project describes all about the World Trade Organization

(WTO), its Introduction in the World Economy, the Objectives laid
for the Organization, Functions that operates, EXIM Trade Policies,
and Scenarios occurred with India Before the formation of WTO &
the Benefits gained by India from the organization.
The topic discussed in this project has a long history with India as
one of the powerful member attached to it. Following the Uruguay
Round Agreement, the General Agreement on Tariff and Trade
(GATT) was converted from a provisional agreement into a Formal
Organization known today as the World Trade Organization (WTO),
with effect from January 1, 1995. There were 128 member
countries in 1995, which has increased to 144, with India as one
of the important member. The Secretariat of the WTO is based in
Geneva, Switzerland. According to the current status WTO now
accounts for about 97 per-cent of international trade.

TRADE & INEQUALITIES:

Where trade has contributed to increased inequality, its impact

has generally being minor to others factors, most notably
Technological Change.
TRADE & STRUCTURAL ADJUSTMENT:
If Trade reforms are introduced, economic changes need to be
made. Import-competing firms appear to adjust by reducing markoffs, increasing efficiency & often by reducing firm size.
TRADE & POVERTY:
One of the biggest challenges facing the world community is to
how to address poverty.

INTRODUCTION:
Simply put: The World Trade Organization (WTO) deals with the
rules of trade between nations at a global or near-global level. But
there is more to it than that.

GATT:

In 1947, 23 countries came into an agreement in Geneva on

multilateral Trade. This agreement was termed as The General
Agreement on Tariffs and Trade (GATT) which came into effect on
1st of Jan. 1948. These countries sought to expand multilateral
trade among them. India was one of the founder members of
GATT. Many countries signed this agreement in 1994 which
resulted no. of members of GATT to 124.

The agreement consists of two main themes:-

1)
The agreement formulated some regulations which were to
be observed by the member countries.
2)
The member countries were to comply with was the Most
Favoured Nation (MFN) clause.
GATT was not an organization but was a multilateral treaty, it had
no legal status. It provided a platform to its member nations to
negotiate and enlarge their trade.

OBJECTIVES OF GATT:

The primary objective of GATT was to expand international trade

by liberalising trade to bring economic prosperity. GATT mentions
the fallowing important objectives.
1)

Raising standard of living of the member countries.

2)
Ensuring full employment through a steady growth of
effective demand
and real income.
3)

Developing optimum utilization of resources of the world.

4)
Expansion in production exchange of goods and services on
a global level.

PRINCIPLES:

1)

Follow the Most Favored Nation (MFN) clause.

2)

Carry on trade in a non discriminatory way.

3)

Grant protection to domestic industries.

4)

Condemn the use of quantitative restrictions or quotas.

5)
Liberalize tariff and non-tariff measures through multilateral
negotiations.

THE URUGUAY ROUND:

Uruguay Round (UR) is the name by which the 8th and the latest
round of Multilateral Trade Negotiations (MTNs) held under the
auspices of the GATT popularly known in Punta Del Este in
Uruguay launched in September 1986. The main issues in this
round discussed were of Agricultural Subsidies, Multi Fiber
Agreement (MFA), Trade in Services, Anti Dumping etc.

These discussions were resolved by the then Director General of

GATT, Arthur Dunkel. Who came up or Draft of the Uruguay Round
consisted of 28 agreements which spelt out the results of
Multilateral Trade Negotiations (MTN).
Some of the main agreements of the Uruguay Round were as
follows:1)
Anti-Dumping Code: Dumping is to be condemned if it
causes or threatens material injuries to an established domestic
industry. A committee on anti-dumping practices should look into
such matters related to dumping.
2)
Trade Related Investment Measures (TRIMs): Refers to
certain conditions or restrictions imposed by a Government in
respect of foreign investment in the country. TRIM is widely
employed by developing countries.
The agreement on TRIMs provides that no contracting party shall
apply any TRIM which is inconsistent with GATT articles. An
illustrative list identifies the fallowing TRIMS as inconsistent:WORLD TRADE ORGANISATION
i.

Local content requirement.

ii.

Trade balancing requirement

iii.

Trade and foreign exchange balancing requirements.

iv.

Domestic sales requirements.

3)
Trade related aspects of Intellectual Property Rights (TRIPs) One of the most controversial outcomes of Uruguay Round is the
agreement on Trade Related aspects of Intellectual Property
Rights (TRIPs) including Trade in counterfeit Goods. According to
GATT Intellectual Property Rights are the rights given to persons
over the creations of their minds. They usually give the creator an

exclusive right over the use of individuals creation for a certain

period of time.
4)
Trade in services - Bank, Insurance, Transport and
Communication, etc. are trade related services. The draft
agreement proposed that all restrictions on such services should
be waived.

Conclusion:
Following the Uruguay Round (UR) Agreement GATT was
converted from a provisional agreement into a formal
international organisation known as World Trade Organisation
(WTO). The organisation began its function from 1st Jan. 1995. It
serves as a single institutional framework directed by a Ministerial
Conference once every two years and its regular business is
overseen by a general council. The WTO secretariat is based in
Geneva, Switzerland. The membership of the WTO increased from
128 in July 1995 to 144 countries by Jan. 1st 2002. The WTO
members now accounts for over 97 percent of the international
trade.

FROM GATT TO WTO:

After World War II over 50 countries came together to create the
International Trade Organization (ITO) as specialize agency of the
UN to manage the business aspect of international economic cooperation. The combined package of trade rules and tariff
concessions negotiated and agreed by 23 countries out of the 50
participating countries came to be known as the General
Agreement on Tariffs and Trade: It came into force in 1948; well
the WTO charter was still being negotiated. WTO came into effect
from 1 January, 1995.

The GATT was provisional for almost half a century but it

succeeded in promoting and securing liberalization of world trade.
Its membership increased from 23 countries in 1947 to 123
countries in 1994. The membership of WTO increased from 128 in
July, 1995 to 144 countries as of 1 January, 2002. During its
existence from 1948 to 1994 the average tariffs on manufacture
good on developed countries declined from about 40% to a mere
4%. GATT focused on tariff reduction till 1973. It was only during
Tokyo and Uruguay Rounds that non-tariff barriers were discussed
under GATT. With increasing use of non tariff barriers and the
increasing significance of service sector in the economy the need
was felt to bring non-tariff barriers and intellectual property under
the preview of multilateral trade.

OBJECTIVES OF WTO:

The WTO has the fallowing objectives:

1)
To raise the standard of living in member countries by
ensuring full employment and by expanding production and trade
in goods and services.
2)
To develop an integrated, viable and durable multilateral
trading system.
3)
To promote sustainable development in member countries by
the optimal use of resources.
4)
To help the developing countries to get a share in the growth
in the international trade.
5)
To reduce tariffs and other trade barriers among member
countries and to eliminate discriminatory treatment in
international trade relations.

6)
To insure linkages between trade policies, environmental
policies and sustainable development.

FUNCTION OF WTO:
The basic functions of WTO are as follows:
1)
It facilitates the implementation,
operation of the trade agreements.

administration

and

WORLD TRADE ORGANISATION:

2)
It provides the forum for further negotiations among
member countries on matters covered by the agreement as well
as the new issues falling within its mandate.
3)
It is responsible for the settlement of the differences and
dispute among its member countries.
4)
It is responsible for carrying out periodic reviews of the trade
policies of its member countries.
5)
It assists developing countries in trade policies issues
through technical assistance and training programme.
6)
It
encourages
organisations.

co-operation

within

international

STRUCTURE OF WTO:
1.

To know about the structure, function and objective of WTO.

2.

GATT and how it changed to WTO

3.

Uruguay Round and its resolution

4.

How WTO had its impact of India

5.

India and WTO- Indias role in WTO, Indias commitment

6.

How India was benefited before and after joining WTO

7.

EXIM policy

AGRICULTURE:

Globalization manifesting in progressive integration of

economies and societies has assumed increasing significance in
the lives of common people all over the world. In the field of the
trade the World Trade Organization (WTO) is the principal
international institution responsible for laying down rules for the
smooth conduct of trade in goods and services among nations in
this globalized world. This is achieved by developing a set of rules
of multilateral trading system which aims to remove, inter alia,
trade barriers (tariff and non tariff) as well as reduce and
eventually remove domestic support and system of export
subsidies that distort international trade between nations. These
problems of trade distortion are most conspicuous in agriculture
sector.
Agriculture is of special significance for developing countries
particularly the extreme poor (i.e. those living on one dollar or
less per day). It has been estimated that three quarters of them
about 900 million people live and work in rural areas, most of
them as small farmers. Table 1 shows that where as agriculture
contributes 3% to the GDP and employs only 4% of the
population in developed countries the corresponding figures for
developing countries are 26% and 70% respectively.

The agriculture was included in the multilateral trading system

after the eighth (Uruguay) round of talks under GATT on demand
of developing countries who had a comparative advantage in this
sector and its benefits were being denied to them. This trade
round stretched from 1986-1994 and concluded in establishment
of WTO and inclusion among others of agriculture in the discipline
of WTO. This was achieved by developing countries only after
paying a heavy price in the form concessions on many fronts
especially intellectual property rights and services.

WTO policies impact agriculture principally through the

following agreements:

1.

Agreement on Agriculture (AOA)

2.
Agreement on Application of Sanitary and Phytosanitary
Standards (SPS):
(Dealing with Health and disease related issues)
3.

Agreement on Technical Barriers to Trade (TBT):

(Dealing with Regulations, standards, testing and certification

procedures, packaging, marking and labeling requirements, etc)
4.
Agreement on Trade Related Aspects of Intellectual Property
Rights (TRIPs):
(Dealing with Patents and copyrights, plant breeders rights etc).
Activists cry foul that Indian agriculture, already reeling under
severe drought and fall in cash crop prices, will die once the
import curbs are removed and free flow of food items are allowed
into India.

"There is going to be 'madness' in the agriculture sector. Farmers

will be hit hard by the WTO regime. What happens to our
vegetable oils, rice, rubber, coconuts and fruits, if similar items
can be imported cheaply from other countries," asks K Sundaran,
a social activist espousing farmers causes in South India.
He says currently there is a massive distortion in the international
trade in agriculture. Industrialised countries have been giving
huge domestic subsidies to their agricultural sector that there is
excessive production, import restrictions and dumping of agriproducts in international markets.
But despite the concerns of farmers, many believe the WTO rules
will not adversely affect the Indian agriculture as it is made out.
Developed nations have committed to the WTO that they would
reduce subsidies and tariff. So then better overseas markets will
be available for Indian agricultural products.
PHARMACEUTICALS:
India has one of the most efficient pharmaceutical industries in
the world.
Pharmaceutical firms grew mainly thanks to the absence of patent
protection of medical drugs in the country. For instance, Indian
companies are now producing their own AIDS drugs, which are
available cheaply, compared to the original products from foreign
countries.
But the imposition of the new WTO rules will begin to threaten
India's achievements in the pharmaceutical field. The Indian
Patents Act, introduced in 1970, boosted Indian pharma
companies. The Act allowed them to develop and patent
alternative processes for products discovered and patented
elsewhere.

According to the Indian Drug Manufacturers' Association, selfsufficiency in Indian pharmaceutical sector is more than 70 per
cent.
"Worldwide, India is a country of very low prices for high-quality
medicines," points out the IDMA president Nishchal H Israni.
But now the rules of the game in the pharmaceutical industry will
change as India has committed to toe the WTO line on product
patents. Product patent rules and Exclusive Marketing Rights
(EMR) under the WTO could affect a paradigm shift in India's
pharma majors.
As per the EMR provision, a product for which original patent was
granted prior to 1995, is not fit for an EMR in the country. This has
forced nine leading domestic pharma companies to form the
Indian Pharmaceutical Alliance that has demanded a more
transparent WTO regime for EMR grants.
How will the WTO rules affect 500,000 employees working in
roughly 20,000 pharma firms in the country?
Well, many expect a spate of mergers, acquisitions and alliances
in the domestic pharmaceutical industry in the coming years, as
the impact of WTO regulations kick in, Indian pharma players are
learning to collaborate and consolidate to grow.
If the industry is to be believed, the Matrix-Strides merger is only
the beginning of the shakeout that the pharma sector is set to
witness over the next few years.

THE SERVICE SECTOR:

As per the WTO rules, two obligations apply to all services. They
are the Most Favoured Nation (MFN) treatment and transparency
by way of publication of all laws and regulations. Which in other
words means that areas like banking, insurance, investment
banking, health, and many other professional services that are
opened up will be bound by the WTO commitments? India will
have to open up its services sector to other WTO member
countries. The result: many overseas service providers will enter
into the services sectors in the country, thereby reducing the
chances of domestic enterprises.

But experts believe India need not be frightened of the WTO rules
on services because the country at present has a distinct
competitive advantage in many areas that include health,
engineering construction, computer software and other
professional services.

TEXTILES AND CLOTHING:

The WTO agreement on textiles and clothing states that the MultiFibre Agreement (MFA) will eventually be eliminated. MFA at
present groups the major importer countries -- the United States,
Austria, Canada, the European Community, Finland and Norway -who apply restrictions by way of quota.
Exporting countries like India are a part to the MFA. The phasing
out of MFA will boost textile exports from India. It will also
increase investment in textiles and joint ventures. But the risk is
that as India opens up its market from next month, import of
textiles and clothing will considerably increase from countries like
China, the Unites States, Taiwan and Indonesia.
This will force many textile manufacturers to modernize their mills
and improve quality.
INFORMATION TECHNOLOGY:

Under the Information Technology Agreement signed under the

WTO, Indian hardware and software companies can become major
players in the value-added arena.
Availability of high-skilled of IT personnel and low cost of labor
and operation will allow India to compete in the international
market.

TRIPS (TRADE RELATED INTELLECTUAL PROPERTY RIGHTS):

TRIPS Article 27.3(b), which requires all WTO countries to provide

some kind of intellectual property rights (IPR) on plant varieties,
was up for review in 1999. TRIPS are a clearly anti-developing
country treaty. Its provisions seriously threaten self reliance in
agriculture and the livelihoods of farmers. TRIPS do not contain
any elements of equity or benefit sharing. It does not allow
countries to claim a share of benefits companies who breed
new varieties using farmers varieties as the base since there is
no provision requiring disclosure of the country of origin from
where base materials have been taken. The Trade Related Aspects
of Intellectual Rights (TRIPS) agreement set minimum standards
for protection of IPRs, a standard that is closer to the level of
protection provided in the developed world.

INDIAS ROLE IN THE WTO:

India is a founding member of the GATT (1947), it actively

participated in the Uruguay Round Negotiations, and is a founding
member of the WTO. India strongly favours the multilateral
approach to trade relations and grants MFN treatment to all its
trading partners, including some who are not members of WTO.

Within the WTO, India is committed to ensuring that the sectors in

which the developing countries enjoy a comparative advantage
are adequately opened up to international trade. It also has to see
that the different WTO Agreements are translated into specific
enforceable dispensations, in order that developing countries are
facilitated in their developmental efforts. India feels that the
multilateral system would itself gain if it adequately reflected
these concerns of the developing countries, so as to create the
necessary impetus to enable developing country members to
catch up with their developed country counterparts.

INDIAS WTO COMMITMENT:

Under the Uruguay Round India has bound 67% of all its tariff
lines, whereas prior to that only 6% of tariff lines were bound. The
bindings range from 0 to 300% for agricultural products from 0 to
40% for other products. Under the Uruguay Round manufactured
products were bound at 25% on intermediate goods and 40% on
finished goods.

Balance of payments:

Under the exceptional provision of Article XVIII: B of GATT, India

has some residual quantitative restrictions on imports
maintained for balance-of-payments purpose. These aggregate to
2,714 tariff lines at the eight-digit level of the Indian Trade
Classification. In May 1997, India presented to the WTO a plan for
the elimination of these restrictions in imports, including those on
consumer goods. This plan was considered at the consultations
with India of the WTO Committee on Balance-of-Payments

Restrictions in June-July 1997. At the request of the United States,

a panel was constituted on 18 November 1997 to examine the US
allegation that the continued maintenance of quantitative
restrictions on imports by India is inconsistent with India's
obligations under the WTO Agreement.

AGRICULTURE:

The only commitment India has undertaken under the Agreement

is to bind its agricultural tariffs. This commitment has been
fulfilled by India binding its tariffs for primary agricultural
products at 100%, processed food products at 150% and edible
oils at 300%.India's prevailing agricultural tariffs are well within
the bound rates. Under the Uruguay Round, whenever we have
bound tariffs on agricultural commodities at zero or very lowlevels, renegotiation of tariff bindings have been sought under
Article XXVIII of GATT.
The Agreement on Agriculture was designed to improve world
trade, raise prices of agricultural products and ensure higher
standards of living for farmers.

TEXTILES:

As per the obligations under the Agreement on Textile and

Clothing (ATC) to integrate this sector into GATT 1994 in stages,
the Indian Government moved cotton and wool yarn, polyester
staple fibre and 20 other industrial fabrics on to the list of freely
importable goods in 1995. India is concerned about the fact that
repeated anti-dumping investigation by certain trading partners

on the same product lines, without giving full effect to the special
dispensation provisions of Article 15 of the Anti-dumping
Agreement has resulted in trade harassment for its exporters of
textiles.

INTELLECTUAL PROPERTY:

India is availing itself of the transition periods due to her under

Article 65 of the TRIPS Agreement to meet her obligations under
the seven areas covered by the Agreement.
India's achievements in this field have been in the passing of
TRIPS plus legislation in the field of Copyright Law. The 1994
amendments to the Act of 1957 provides protection to all original
literary, dramatic, musical and artistic works, cinematographic
films and sound recordings. The most recent changes bring
sectors such as satellite broadcasting, computer software and
digital technology under Indian copyright protection.

TRADES RELATED INVESTMENT MEASURES:

Substantial modifications have already been made to the foreign

investment regime, increasing the number of sector where foreign
investment can take place and also increasing the foreign equity
limit on these investments. India has already notified the traderelated investment measures maintained by it in terms of Articles
2 and 5 of the TRIMs Agreement and the illustrative list annexed
to the TRIMs Agreement.

ANTI-DUMPING:

Anti-dumping and countervailing duties are imposed under the

Customs Tariff Act 1975 and the Rules made there under. The Act
and Rules are on the lines of the respective GATT Agreement on
anti-dumping and countervailing duties. The time limits and the
procedures prescribed under the Indian laws/GATT Agreement is
strictly followed by the designated authority. With the increasing
number of cases, the Government of India proposes to set up a
Directorate General of Anti-dumping and Allied Duties for
expeditious disposal of anti-dumping and countervailing duty
cases.

SERVICE SECTOR:

The services sector accounts for about 40% of India's GDP, 25% of
employment and 30% of export earnings. Recognizing the
importance of the services sector in achieving higher economic
growth, the government is giving added emphasis to improving
services such as telecommunications, shipping, roads, ports and
air transport. The foreign direct investment regime has been
liberalized to attract foreign investment in the services
sector.India actively participated in the Uruguay Round services
negotiations and made commitments in 33 activities as compared
to an average of 23 for developing countries. India also
participated
in
the
spill-over
negotiations.
In
basic
telecommunication services, India has undertaken commitments
in the areas of voice telephone service for local and long-distance
(within the service area), cellular mobile services and other
services such as circuit switched data transmission sources,

facsimile services, private leased circuit services as per details

given in the schedule of commitments.

While developed countries have surplus capital to invest, most of

the developing countries have surplus of skilled, semi-skilled and
unskilled workers. We have a large pool of well-qualified
professionals capable of providing services abroad. As developed
countries have a comparative advantage in exporting capital
intensive services, similarly developing countries have a
comparative advantage in exporting labor intensive services
involving movement of persons.
In Article IV of GATS, there is a clear obligation to increase the
participation of developing countries in trade in services. The
Agreement also recognizes the basic asymmetry in the level of
development of the services sector in developed and developing
countries and a commitment that the developed countries will
take concrete measures aimed at strengthening the domestic
service sector of developing countries and providing effective
market access in sectors and modes of supply of export interest
to developing countries.

INFORMATION TECHNOLOGY:

India participated in the negotiations on the Agreement from the

early stages and after examination of the implications of the
proposed agreement and extensive discussions with trading
partners joined as a participant on 1 April 1997. India is
committed to phasing out the import tariffs on the products
covered by the ITA as scheduled.

REGIONAL TRADE AGREEMENTS:

India attaches significance to her participation in regional

agreements within the framework of multilateral rules. India has
been instrumental in setting up the South Asian Association for
Regional Cooperation (SAARC), whose major achievement in 1995
was the conclusion of the negotiations on trade preferences
within the framework of the SAARC Preferential Trading
Arrangement (SAPTA). SAPTA became operational on 7 December
1995 and includes preferential tariff concessions on 226 items
and product groups. A second round of SAPTA trade negotiations
was launched in January 1996 to broaden tariff concessions. India
granted concessions on 902 tariff lines, effective 1 March 1997.

BEFORE BECOMING THE MEMBER OF WTO:

Its agreed that India was one of the founder member of WTO; it
faced problems in Foreign Trade grounds. The problems that India
faced before the formation of WTO were the following:

(1)

Absence of Anti dumping

(2)

No Subsidy Facilities

(3)

Absence of TRIMs & TRIPs

(4)

Lac of Market Scenario & Strategies

AFTER BECOMING THE MEMBER OF WTO:

(1) Anti-Dumping - Dumping is condemned if it causes or

threatens material injury to an established industry. A product is
considered as dumped when its export price becomes less as
compared to the normal price in the exporting country plus a
reasonable amount for administrative, selling and any other costs
and for profits.
Anti dumping measures can be employed only if dumped imports
are shown to cause serious damage to the domestic industry in
the import industry. The measures are not allowed if the margin of
dumping is de minimize.
(2) Subsidies - The draft agreement defined certain specific
subsidies which would be subjects to various disciplines. Certain
other types of subsidies would fall under prohibited category.
(3) Technical barriers to trade - Technical regulation and
standards along with testing and certification procedures should
not create unnecessary obstacles to trade.
(4) Right of market-The main issue is to reduce tariff and other
trade restriction in case of commodities like agricultural goods,
textiles etc.
(5) TRIMs (Trade related investment measures) - Widely
employed by developing countries. Refers to certain conditions
imposed by government in respect of foreign investment. The
agreement of TRIM provides the following inconsistent TRIMs.
a) Local content requirement
b) Trade balancing requirement
c) Trade and foreign exchange balancing requirement.
d) Domestic sales requirements.
(6) TRIPs (Trade Related Aspects of Intellectual Property Rights-It
is defined as information with commercial value. Intellectual

Property Rights have been characterized as a composite of

ideas, inventions and creative expression.

IMPORT:

Indian Import Policy:

Import is the antonym of export. In the terms of economics,

import is any commodity brought into one country from another
country in a legal way. The economic needs of the country,
effective use of foreign currency are the basic factors which
influence India's import policy. There are mainly 3 basic objectives
of the import policy of India:

To make the goods easily available.

To simplify importing license.

To promote efficient import substitution.

Current Scenario of Imports in India:

There are few goods which cannot be imported namely tallow fat,
animal rennet, wild animals, unprocessed ivory etc. Most of the
restrictions are on the ground of security, health, environment
protection etc. Imports are allowed free of duty for export
production. Input output norms have been specified for more than
4200 items. The norms tell about the amount of duty free import
of inputs allowed for specified products. There are no restrictions
on imports of capital goods. Import of second hand capital goods
whose minimum residual life is of five years is permitted. Export
Promotion Capital Goods (EPCG) scheme provides exporters to
import capital goods at a concessionary custom rates. In the past
30 years Indian imports have risen quite dramatically. At present
imports accounts for 17% of the GDP. Capital goods have been
continued to be imported and in the last three years, their share
has fallen from 25% to 22%.
EXIM POLICY:

Major Indian Imports:

There are facilities available for the service industries to enjoy the
facility of zero import duty under EPCG scheme. Some of the
major imports of India are edible oil, newsprint, petroleum and
crude products, crude rubber, fabrics, electronic goods etc.

Problems due to Large Import of Products:

The recent trend of imports is of some concern. The regular

imports of oil reflect upon the fact that India is not able to
produce the quantity of oil required in India. Moreover the

increase in the imports of products also highlights the fact that

the Indian domestic industries need to be developed. It also
creates pressure on the economy as the money ultimately has to
be bearded by the people.

EXPORT:

Export means the transferring of any good from one country to

another country in a legal way for the purpose of trade. Export
goods are provided to the foreign consumers by the domestic
producers.

Indian Exports: A History:

The history of Indian exports id very old. During prehistoric times

India exported spices to the other parts of the world. India was
also famous for its textiles which were a chief item for export in
the 16th century. Textiles and cotton were exported to the Arab
countries from Gujarat. During the Mughal era India exported

various precious stones such as ivory, pearls, tortoise stones etc.

But during the British era, Indian exports declined as the East
India Company foreign trade of India.

Indian Exports: Current Scenario:

Every year India earns billion of dollars by exporting various

goods and items. The Indian government has outlined certain
export policies. The export policies tell about the products to be
exported and the countries to whom exports are to be done. The
government of India works with the Federation of Indian Export
Organization, the leading export promotion organization of India.
Exports are the major focus of India's trade policy and most of
the items can be freely exported from India. A few items are
subject to export control to prevent their shortage. The profits
from exports are exempted from income tax. Indian exports
contribute nearly 12.4% in the GDP.
Leading Export Items of India:

In the past ten years, exports have grown at a rate of nearly 22%.
Some commodities have enjoyed faster export growth than
others. Some of India's main export items are cotton, textiles, jute
goods, tea, coffee, cocoa products, rice, wheat, pickles, mango
pulp, juices, jams, preserved vegetables etc. India exports its
goods to some of leading countries of the world such as UK,
Belgium, USA, China, Russia etc.

Restriction on the Exports of Items:

However there are some restrictions on the export of goods.

Under sub section (d) of section 111 and sub section (d) of section
113, any good exported or attempted to be exported, contrary to
any prohibition imposed by or under the customs act or any other
law is liable for confiscation.

Problems of the Indian Export Sector:

But there are few problems which need to be solved before India
makes a mark for itself in the export sector. The Indian goods
have to be of superior quality. The packaging and branding such
be such that countries are interested to export from India. At the
same time India must look for potential market to sell their goods.
The government should frame policies which gives boost to the
exports. The developed countries want that the underdeveloped
countries observe some restrictions relating to labor employment
and ecological balance. Their argument is that the
underdeveloped countries use child labors or their social security
measures are very poor. Further, these countries do not take
measures to control pollution or to maintain ecological balance.
As a result, cost of production in such countries is low. So, the
developed countries should be allowed to impose tariffs or
imports from underdeveloped countries until the developing
countries improve the condition of labor and do not employ child
labor. Thus, the developed countries tried to impose many
restrictions on the production process of the underdeveloped
countries. Thus, if the developing countries try to protect their
interest as a group, they may stand to gain from the WTO system.
If we consider both sides of a coin then we can conclude that if
the developed countries liberalize their import of agricultural
goods, Indias export of agricultural goods will increase. India has
a comparative cost advantage in the production of agricultural

commodities. Hence Indias of such commodity is expected to

increase.
On the other side according to the agreement of Trade Related
Investment Measures (TRIMs), there should not be any
discrimination between foreign and domestic investments. As a
result, it will very difficult to control the restrictive activities of the
following investors. This agreement will also favor the investors of
the developed countries.

(1) Business Economics & Business Environment Jaydeb

Sarkhel.

(2)

International Business - Francis Cherunilam

(3)

International Marketing Rakesh Mohan Joshi

(4)

www.wikipedia.org

(5)

www.exprasspharma.com

(6)

www.wto.org