Trade is the defined as the exchange of goods and services between person or entity to

another. The trade involves buying and selling of goods and services. Trade is the central
activity in the economy. Trade not only refers to the exchange of goods and services
within the country but also between two or more countries.

Trade is basically divided into two types,

1. Home Trade
2. Foreign Trade.

HOME TRADE / DOMESTIC TRADE / INTERNAL TRADE

Home trade is also called as “Domestic Trade”. Home trade is the trade that happens
within the boundaries of the country. It means the exchange of goods and services are
only made within the geographical boundaries of the country. The seller and buyer of
the goods are from the same country.

FOREIGN TRADE / EXTERNAL TRADE

Foreign Trade is also called as “International trade”. Foreign Trade is the trade that
takes place between two or more countries. Foreign Trade involves the transfer of goods
from one country to the other country. The seller and buyer of the goods are from
different countries.

below given comparison chart shows some of the differences between Home
trade and Foreign Trade

HOME TRADE FOREIGN TRADE

Home trade refers to the trade within the Foreign Trade refers to the trade between two or

borders of the country. more countries.

Exchange of Currencies
 HOME TRADE FOREIGN TRADE

There is no exchange of currencies takes Foreign Trade involves the exchange of

place in the Home trade because there is a currencies between the nations which are

same currency in the country. involved in the trade.

Restrictions on transfer of goods

Home trade usually doesn't have any Foreign Trade is subjected to many restrictions

restrictions on movement inside the country. on transfer to certain goods to certain countries.

Transportation costs

Home Trade generally has fewer Foreign Trade involves very high transportation

transportation costs and risks to transfer the costs and risky situations to transfer goods from

goods. one country to another.

Transport Systems

Home Trade depends upon the network and Foreign Trade depends upon the seaways and the

internal transport systems like roads, railways, airways between the countries involved in the

etc. trade.

Benefit to Country
 HOME TRADE FOREIGN TRADE

Home trade leads to economic development Foreign Trade leads to the economic

and self-sufficiency of the country. interdependence between the countries.

Approvals

The home trade involves fewer Foreign Trade involves more documentations and

documentations and approvals from the approvals from government and it is a long

government to transfer the goods. process to get approvals from government.

Volume of Trade

The volume of the trade depends upon the Foreign Trade has many restrictions imposed on

population of the country, demand for the free entry of goods and many duties and taxes

product, etc have to be paid to trade goods between countries.

Time Gap

Home trade usually have less time gap

Foreign Trade involves wide time gap between
between the goods dispatched and goods
the goods dispatched from the home country and
received and payment received for the
goods received by the other country.
consignment.
 HOME TRADE FOREIGN TRADE

Trading of Goods

Home trade only involves the trade of the Foreign Trade facilitates countries to export the

goods and services which are available in the goods which they have surplus and import goods

country. which are short in supply.

Insurance

The goods of Home Trade don't carry a The goods which are sent to other countries

compulsion to have the insurance for by the foreign need to be insured

goods in transport. compulsorily.