how does manufacturing helps in earning foreign exchange
Answers
Answer:
Manufacturing produces good in large quantities by converting raw materials into more valuable products. These products can then be exported to other countries which will fetch the country valuable foreign exchange.
Not only manufacturing but service providing companies too help earn foreign exchange for a country.
Say for example, Welspun is a bedsheet manufacturer and exports its products to major economies like US through Target,Walmart and other stores. Welspun will bill Walmart,Target in USD and receive money in foreign currency. Welspun can’t use USD in India so essentially it will sell USD for INR and Bank will purchase USD and sell INR. Thereby increasing USD reserves for the country.
TCS does the same. It exports the services of Information Technology and receives payment in GBP,USD etc and follows the same process to receive the amount in INR for USD.
Thus, both manufacturing and service providing companies help earn a country earn foreign exchange.(by exporting)