discuss the main problams of foreign trade in india
Answers
Foreign trade helps a country to utilize its natural resources and to export its surplus production, it contributes hugely to the GDP of a country. We are going to discuss the importance of foreign trade in India and all of its aspect.
PROBLEMS- (5 Main problems)
1) Difficulty in transportation and communication:
Dispatch and receipt of goods takes a longer time and involves considerable expenses. During the war and natural calamities, transportation of goods becomes even more difficult. Similarly, the costs of sending or receiving information are very high.
2) Import and export restrictions:
Every country charges customs duties on imports to protect its home industries. Similarly, tariff rates are put on exports of raw materials. Importers and exporters have to face tariff restrictions.They are required to fulfill several customs formalities and rules. Foreign trade policy, procedures, rules and regulations differ from country to country and keep on changing from time to time.
3) Documentation:
Both exporters and importers have to prepare several documents which involve expenditure of time and money.
4) Problems in payments:
Every country has its own currency and the rate at which one currency can be exchanged for another (called exchange rate) keeps on fluctuating change in exchange rate create additional risk.
Every country has its own currency and the rate at which one currency can be exchanged for another (called exchange rate) keeps on fluctuating change in exchange rate create additional risk.Remittance of money for payments in foreign trade involves much time and expense. Due to wide time gap between dispatch of goods and receipt of payment, there is greater risk of bad debts.
5) Risk in transit:
Foreign trade involves much greater risk than home trade. Goods have to be transported over long distances and they are exposed to perils of the sea. Many of these risks can be covered through marine insurance but increases the cost of goods.