BEP

PRESENTATION

Presented By:

Course Instructor:
Prof. Sibananda Senapati
Group No. :- 05
Group Members:
 Adarsh Kumar Mishra (110005)
 Avinash (110013)
 Kalyani (110021)
 Mona Ranjan (110029)
 Prayag Pushkaram (110037)
 Rohit Kumar (110045)
 Siddhant Ranjan (110053)
 An Overview of Select Multinational
Companies in the Indian Marketplace
The Indian economy is one of the fastest growing economy and a robust growth
trajectory with stable annual growth rate. With introduction of LPG concept after
1991 era paves way for many investment from external sources.
Reason for making foreign investment:
• Higher disposable income.
• Emerging middle class.
• Low-cost competitive workforce.
• Investment friendly policies.
• Progressive reform process.
 Political Backdrop
• INC have traditionally supported socialist economics policy and in the
1990’s endorsed market reform, which includes privatization and
deregulation of the economy.
• They are perceived as an ethnocentric as well as nationalistic political
party and they sought to define there culture in terms of ancient and
traditional Indian values ( Bharatiya janta party 2009).
• The major supporters of this party have been conventionally the
higher-caste members and the Northern Indians they have sought to
attract the support from lower castes by appointing several lower-
caste member to prominent position.
• In 2004, National Congress came back to the power and remain
guiding the economic scenarios, including in the particular the focus
on globalization.
 Geographical Backdrop
• The Indian ocean make up its vast shoreline and gives the country
access to important trade route. Benefits of 12 nautical miles.
• The country’s natural resource include the 4th largest coal reserve in
the world, minerals, petroleum and arable land.
• India has several environmental issue deforestation, air pollution,
water pollution, and large growing population.
• India’s agricultural industry produce rice, wheat, oilseed, and cotton
as well as sheep, goats, poultry and fish.
• Textile, Chemicals and Pharmaceuticals are some of the major
industries in India.
 Transport System
• Railways: In 2009, Indian railways carried almost 20 million passenger
and 2.4 million tons freight a day which is major source of its income.
• Waterways: India has 13 major and 199 minor ports along its
coastline and has enjoyed a 10% increase in port, cargo volume in the
last ten year.
• Airways: India has 15 international airports which handle 142 million
passenger in 2010-11 and 1.6 million tons of cargo.
• Roadways: Most of the Indian roads are in poor shape, congested and
consist mostly of two lanes or less and yet they carry 85% passenger
and 60% of country’s fright.
Several government plans contain measures for infrastructural
development in country with rapid pace through various authorities
working in these aspects. Better transport system leads to reduction of
time, money and growth of economy.
 Societal Dimensions
• India has a population estimated to be over 1 billion with an annual
growth rate of 1.3%.
• Indian has one of the largest school- age population in the world and
has a literacy rate of 74.04% ( male 82.1% female: 65.5%).
• It has well established education system with more than 1.6 million
schools enrolling and excess of 130 million students.
• For higher education, India has more than 500 university as well as
25,000 colleges and 7,000 technical institutions with approximately
13 million students.
• Most of India's population are employed in agriculture but the
service sector steadily gaining 34%
 Hofstede’s Five Dimensions
• Geert Hofstede 5-D Model can be used in comparison between the
American and Indian culture.
• MAS (Masculinity)- mid range score for both countries which lean
toward a balance of gender and skill
• UAI- measures anxiety in unknown situations. US scored 46 and India
40 which shows conducting business in Indian and US company
would be similar in terms of business meetings and expectations.
• PDI- Power distance in terms of acceptance of inequality and caste
system, India posses much higher power distance as compared to US.
• IDV- High degree of individualism in US than India where more group
cohesion and loyalty to others.
 Human Rights: Issues & Challenges
• With the passage of time Indian women’s ownership of assets, girls’
education and lower fertility levels contributed to nation in terms of
equality.
• Issues relating to female mortality in India, out of world’s 3.9 million
“missing women” 1 million from India leads to death in terms of before
birth, infancy, early childhood
• One quarter of poorest 40% population still marries before the age of 18,
deprived from taking any major marital decision.
• India’s civil liberty rating declined from 4 to 5, live ammunition used in
enforcement on curfews who opposes the increase in militarization.
• Accused govt. officials and ministers even allowed to join their office after
charged with receiving bribe.
• Militant issue.
 Cultural Dimension
• Diverse and complex society of India makes no standard rule for doing
business.
• Business person have to consider region, religion and caste while
dealing with Indian businesses.
• Importance to greet senior person and decision also lies in their
hands.
• Gestures and titles during meeting.
• More focus on relationship building and a sort of relation chain.
• Negotiations- slow & patience.
• Business lunches.
 Cultural Dimension
• DBS Bank- strikes and strings the emotional chord, banking as per
Indian culture and tries to builds affinity through Indian people needs.
 Economic Backdrop
• IMF report- Indian economy: US$ 1.843 trillion.
10th largest by market exchange rate.
3rd largest by PPP.
• World’s fastest growing economy.
• Before 1991 protectionist policies and after 1991 LPG was considered for
paving way of development
• Median age of 25 favourable demographic position will lead till 2050.
• 2nd largest workforce, 28% agriculture, industrial 18%, service 54%.
• Telecommunication industry is world’s fastest growing.
• Most favourable outsourcing destination after US.
 Foreign Trade and Investment
• Liberalisation of FDI policy leads to more flow of fund from external
sources in terms of joint venture and FIIs
• FDI inflows grown at a rate of over 30% added annually over last
decade after phasing out of investment ceilings.
• During global crisis and sovereign debt crisis in the Euro zone
countries leads to surge in FDI by 23%, FII by 46% due to making
money in higher interest rate.
Tax heaven countries leads to more inflows and many a times leads to
loss in the economy. Ex- Mauritius, Singapore, Netherland, Dubai
 Information Technology
• Rise in IT industry in India is due to dynamic role of Indian govt.
• Goal to make India as IT superpower and one of the largest
generators and exporters of software in the world.
• National task force on IT and software development was setup and
closely monitored by ministry of IT.
• 5 of the top 10 IT organisation in the world, India now able to provide
low cost and high quality products and services.
• Expected to have larger contribution in future in IT sector and will
boost more.
 Current Issues: The Other Side of the Coin.
• In spite of impressive economic growth India faces socio economic
challenges
• Largest concentration of people living below World bank’s
international poverty line.
• Basic issues children malnutrition, underweight- cure through mid
day meal scheme.
• Corruption issue.
• Structural issue barrier.
• Imbalance approach.
 METRO
• METRO cash & carry started operations in India in 2003 Bangalore.
• Benefit of quality product at best wholesale prices among many to
hotels, restaurants, caterers, international buyers.
• 7 wholesale centers of METRO is in operation s in Bangalore (2),
Hyderabad(2), Mumbai, Kolkata and Ludhiana.
• METRO poised to concept of B2B and target to professional
customers rather than end customers.
• Served to registered one and have core customer groups.
IBM India
• IBM has been present in India since 1992 with Tata joint venture, named Tata information system.
• In 1999, IBM bought out Tata stake in the company and IBM India become fully owned subsidiary of IBM corporation.
• IBM head count in India has grown by almost 800% from 9,000 in 2003 to nearly 74,000 in 2007.
• It was expected that in 2011, IBM will recruit approximately 24,000 more employees taking it to a total nearly 1,54,000
employees from India.
• IBM has made significant investments towards setting up some world class R&D and innovation oriented facilities in India
including India research laboratory, software innovation center.
• On march 2, 2012 it was reported that IBM India wants to open sales office in around 40 in tire-1 & tire-2 cities of India
in year 2012-2013

Daimler-Chrysler India
• Daimler enter into the market and set up merecedes-benz India ltd in 1994
• Mercedes-benz India is a 100% owned subsidiary of Daimler AG.
• Mercedes – Benz India has been delighting customer with strong brands and wide range of product equipped with the
latest in automotive technology.
• It has also launched different petrol and diesel engines and the time difference between global and India launch of its
latest model is constantly optimized.
• The brand trust report and also won the best brand award 2011.
AMWAY INDIA
• Amway India is a fully owned subsidiary of US $10.9 billion amway corporation.
• It has presence in 80 countries established in 1995 and has emerged as the direct selling FMCG company
• It has invested in excess of Rs.200 crore in India in this Rs 22 crore in the form of FDI.
• It has provided income generating opportunity over 5,50,000 active independent Amway Business owners. It provides
training to the distributor to grow the business.
• Amway India recorded a sales turnover of over Rs 2,130 crore in 2011, up from 1,790 crore in 2010

AVIVA
• Dabur and Aviva Group, one of the UK’s largest insurance group, whose association with India date back to 1834.
• It has emerged one of the leading player in the Indian private sector life insurance market with wide distribution of
network of 140 branches and strong bancassurance partnership.
• Aviva seek to build robust product portfolio meeting all customer life cycle needs related to – protection , retirement,
saving, investment.
• Aviva Great Wall education was awarded elite recognition for marketing effectiveness.
 Changing Dimensions of Indian Business

 Business Environment is the world around a company over which it has no direct control It
covers many dimensions impacting a company's activities & performance.

 It is an aggregate of all forces & factors external to the business enterprise, but which
influence it's functioning.

 A business enterprise is an open system and it continuously interacts with its environment.

 Interaction between business and environment is in various ways such as: exchange of
information, resources, influence & power.

Raw material, capital, labor, energy

BUSINESS
ENVIROMENT
ENTREPRISES
Goods&Service
 The companies in India are primarily affected by following six aspects of external business
environment

P
Political S
E
Economical Societal

Business
environment

L
T
Legal E
Technological
Environmenta
l
 Economic Environment
 The totality of economic factors, such as employment, income, inflation, interest rates, productivity,
and wealth, that influence the buying behavior of consumers and institutions.
 Economic environment can be divided into three parts. We shall now study their effect on
business. They are as under:
(i) Economic system
(ii)Economic policies

(i) Economic System:

 It is necessary to know about the economic system prevailing in a country in order to
understand the economic environment. Economic system influences the freedom or openness of
business. Economic system is mainly of three kinds:
(a) Socialistic Economic System
(b) Capitalistic Economic System
(c) Mixed Economic System.

(ii)Economic policies
Economic policies deeply influence the business of a country. The economic policies are laid down
to direct the economic activities. Like government policies of LPG liberalization, privatization, Globalizations
Have changed the shape of Indian economy so far.
 LPG
The economy of India had undergone significant policy shifts in the beginning of the 1990s. This new
model of economic reforms is commonly known as the LPG or Liberalization, Privatization and
Globalization model.
Reasons for implementing LPG
• Large and growing fiscal imbalances.(Gross fiscal deficit rose to 12.1% of GDP in 1991)
• Growing inefficiency in the use of resources.
• Low foreign exchange reserves.($1.2 billion in January 1991)
• High inflation rate.(13.87% in year 1990-91)

Liberalization
Liberalization refers to relaxation of government restrictions in areas of economic policies. Thus, when
government liberalizes trade it means it has removed the tariff, subsidies and other restrictions on the
flow of goods and service between countries.

The fruits of liberalization reached their peak in 2007, when India recorded its highest GDP growth rate of
9%. With this, India became the second fastest growing major economy in the world, next only to China.
The growth rate has slowed significantly in the first half of 2012. An OECD report states that the average
growth rate 7.5% will double in a decade, and more reforms would speed up the pace.
Privatisation
It refers to the transfer of assets or service functions from public to private ownership or control and the
opening of the closed areas to private sector entry. Privatization can be achieved in many ways franchising,
leasing, contracting, etc. Capital markets should be sufficiently developed to be able to absorb the disinvested
public sector shares.

Successful Privatizations in India

• Lagan jute machinery company limited (LJMC)
Gross turnover: pre-privatization= Rs. 6 million (april-june 2000),
post-privatization= Rs. 24 million (july-september 2000)
• Modern food industries limited (MFIL)
Share value went up from Rs. 2138 on 30th Dec.(prior to sale) to Rs. 3247 on
25th Feb.(post sale).
• Paradeep Phosphates Limited (PPL)
Net profit: pre sale= Rs. -57.95 Cr., post sale= Rs. 23.96 Cr.
• Bharat aluminium company limited (BALCO)
• Hotel Corporation of India limited (HCI)
• Hindustan Zinc limited (HZL)
Globalisation
Economic globalization is the increasing economic interdependence of national economies across the world
through a rapid increase in cross border movement of goods, service, technology and capital. It is a process
which draws countries out of their insulation and makes them join rest of the world in its march towards a new
world economic order.

Current globalization trends can be largely accounted for by developed economies integrating with less
developed economies by means of foreign direct investment, the reduction of trade barriers as well as
other economic reforms and, in many cases, immigration
 Political
environment includes factors like a country's political system, type of goverment, centre-state relations, public
opinion, law & order, nature of government policies towards business - particularly those related to taxation,
industrial relations, regulation of business & industry, and foreign trade regulations. It also relates to the
stability of the government in power, the risk of major political disturbances, or threats from anti-social
elements, terrorists or other countries. Eg: GST, DEMONETIZATION

Technological dimension covers the nature of technology available and used by an economy. It also covers the
extent to which development in technologies are likely to take place.
• Introduction of computer in banking sector changed the entire banking industry
• Also introduction of television and mobile phone made radio absolence.

Environmental factor refers to the physical or geographical environment affecting the business. It also
includes the considerations like environmental pollution, climate change, carbon footprint, etc.
example: Plastic Ban, Introduction of BS-IV vehicle
Legal Environment
 Many Acts are passed from time to time in order to control and regulate business activities.
The sum total of all these Acts creates legal regulatory environment. Acts are mossy passed to regulate such
business activities as sale purchase, industrial disputes, labor, regulating partnership business, regulating
company business, foreign exchange, etc.

2G Spectrum Scam
 The 2G spectrum scam involved politicians and government officials in India illegally undercharging
mobile telephony companies for frequency allocation licenses, which they would then use to create 2G
subscriptions for cell phones.
 The shortfall between the money collected and the money which the law mandated to be collected is
estimated to be Rs.1,76,645 crore, as valued by the Comptroller and Auditor General of India based on 3G
and BWA spectrum auction prices in 2010
What is Social Environment?
Social environment is the totality of conditions which concern in the effecting of the activity feature of a
human being. Those conditions promote or hinder, motivate or restrain, the characteristic activities of a
living being

Why Study Social Environment?

Businesses live within society and the interrelation between businesses and stakeholders takes place within a
social environment. They interrelate with society on many levels: owners, customers, suppliers, employees,
government and the community as stakeholders

Cultural Environment
The cultural environment mean a environment which affect the basic values, behaviours, and preferences of
the society-all of which have an effect on business decisions. Socio-cultural environment. All companies
often include an examination of the socio-cultural environment prior to entering their markets.

Case of McDonalds In India.

 A Company, which got benefit due to social environment of India was McDonalds.
 All the ethical decisions to respect the tastes of the Indians and their religious beliefs were taken
care of.
 McDonalds made sure that it altered the menu to better suit the taste and religious beliefs of Indians.
Import Substitution and Its Impact

IS strategy backfired because the countries aiming at import substitution had

to opt for closed economy, removal of trade tariff and quota restriction on
imports, poor management, lack of technological upgradation and inefficiency
caused domestic production to fail on one side and increased competition from
imported items on other side. Due to fall in domestic production domestic
factories closed down which caused loss in employment thus impacting
economy negatively.
Failure of Oil Import Substitution in India

Taking oil import substitution in India into consideration into consideration, we can
get the information that all the attempts by Indian manufacturers of lubricant to
pursued shippers and other industries set up with imported machinery to use
indigenously manufactured lubricants had failed. It was pointed out that since
Indian products were not on approved list of engine builders, these could not be
used. As a result there was continuous outgo of foreign exchange resources from
the country. Despite vigorous attempts at import substitution until year 2017,
India had to import a wide range of lubricants at an estimated cost of Rs 37cr per
annum. The basic reason was lack of technology that the foreign country opt for
lubricant production and also poor management and inefficiency. As a result of
which import substitution failed.
Export Promotion Strategy

Export promotion strategy has a positive impact in an economy. Growth in export of

country not only causes expansion, increase and profitability of the main industry
but also benefits its subsidiary or connected industry. Export promotion brings
various opportunities for the country. EP caused increase in demand of unskilled
labor causing rise in relative wage rate resulting in increase in income of poorer
household. It also brings opportunity for related industry. Thus the overall
economy gain from export promotion.
Export of leather in India

Leather is a prominent industry in India. While the Indian leather totals upto 13
percent of the world’s total production of skins, around 10 percent of world’s
footwear production also comes from India. India’s leather industry is bestowed
with skilled manpower, innovative technology, increasing industry compliance to
international environmental standards and the support of allied industries. As per
the official data, the exports of leather and leather products for April-Jun 2018
have touched USD 1420 million.
Export Promotion of Leather in India

The Government of India had identified the leather sector as a focus sector in the
Indian Foreign Trade Policy in view of its immense potential for export growth
prospects and employment generation. With the implementation of various
industrial developmental programs as well as export promotional activities, and
industry’s inherent strengths of skilled manpower, innovative technology,
increasing industry compliance to international environmental standards, and
dedicated support of the allied industries, the Indian leather industry aims to
augment the production, thereby enhance export, and resultantly create
additional employment opportunities. The EP strategy will thus generate
employment opportunities thus impacting Indian economy positively .
FOREIGN DIRECT INVESTMENT

Foreign direct investment refers to the net inflow of investment to acquire a

lasting management interests in an enterprise operating in an economy other
than that of investor

 FDI is an investment to acquire long term interest operating outside of the

economy of the investor
 FDI is a source of external finance which mean that countries with limited
amount of capital can receive finance beyond the national border from
wealthier countries
 FDI is consider as an ingredient in economic growth
WHY FDI????

• No debt creation on the part of the government.

• Triggers technology transfer.
• Assists capital formation.
• Contributes to international integration by promoting exports.
• Increases productivity and competitiveness. Improves efficiency of resources.
• Promotes innovation.
FDI IN INDIA

Currently FDI is permitted in India;

• Through financial collaborations.
• Through joint ventures and technical collaborations. Through capital markets via
Euro issues.
• Through private placements or preferential allotments

Major Sector for FDI in India are:

• Infrastructure • Retails
• Automotive • Railways Infrastructure
• Pharmaceuticals • Chemicals
• Textiles
• Defence • Airlines
FDI RELATED INSTITUTION IN INDIA

• Foreign Investment Promotion Board (FIPB)

• Foreign Investment Promotion Council (FIPC)
• Foreign Investment Implementation Authority (FIIA)
• Secretariat for Industrial Assistance (SIA)
FDI IN MULTIBRAND RETAIL TRADING

• Marketing of similar and competing products by the same firm under different and
unrelated brands. For example: Walmart, Big Bazar, Tesco

• FDI in multi brand retail was not permitted in India. however, the Government of
India proposed some policy changes in late 2011. they are as follows..
• A decision has been taken by the Government to permit FDI in all products, in a
calibrated manner, subject to the following conditions:
• FDI in Multi Brand Retail Trade (MBRT) may be permitted up to 51%, with
Government approval;
• Fresh agricultural produce, including fruits, vegetables, flowers, grains, pulses,
fresh poultry, fishery and meat products, may be unbranded.
• Minimum amount to be brought in, as FDI, by the foreign investor, would be US
$ 100 million.
• At least 50% of total FDI brought in shall be invested in 'back-end infrastructure‟.
Back-end infrastructure will include investment made towards processing,
manufacturing, distribution, design improvement, quality control, packaging,
logistics, storage, ware-house, agriculture market produce infrastructure etc.
• At least 30% of the procurement of manufactured/ processed products shall be
sourced from Indian 'small industries' which have a total investment in plant &
machinery not exceeding US $ 1.00 million. Further, if at any point in time,
this valuation is exceeded, the industry shall not qualify as a 'small industry'
for this purpose.

• Retail sales locations may be set up only in cities with a population of more
than 10 lakh as per 2011 Census and may also cover an area of 10 kms around
the municipal/urban limits of such cities; retail locations will be restricted to
conforming areas as per the Master/Zonal Plans of the concerned cities and
provision will be made for requisite facilities such as transport connectivity
and parking;
• Government will have the first right to procurement of agricultural products
Foreign trade
Foreign trade is exchange of capital goods
and services across International border or
territories. Foreign trade represent a
significant share of GDP.
Foreign Trade Policy
Foreign Trade Policy or EXIM is a set of guidelines and instruction established by
the DGFT (Directorate General of Foreign Trade) which is related to export and
import of goods in India. Foreign trade policy is prepared and announced by the
central government ministry of commerce.
India's foreign trade policy aims developing export potential improving export
performance encouraging foreign trade and creating favourable balance of
payment position.
Foreign trade policy is announced for the period of 5 year. Last foreign trade
policy announced was for the period of 2015-20 which replaces the foreign
trade policy 2009-14 which expired on the 31st March 2014. The updated
foreign trade policy every year announced on 31st March and the
modification improvement and new scheme become effective from 1st April
every year.

Foreign trade policy of India is guided by the export import is known as short
EXIM policy of the Indian government and is regulated by the Foreign Trade
Development And Regulation Act, 1992

DGFT (Directorate General of Foreign Trade) is the main governing body in

matters related to EXIM policy.
Objective of the foreign trade (EXIM) policy

 To accelerate the economy from low level of economic activities to high-level

of economic activities by making it a global oriented vibrant economy and to
drive maximum benefit from expanding global market opportunity.
 To enhance the techno local strength and efficiency of Indian agriculture
industries and services thereby improving their competitiveness.
 Generate employment
 Opportunities and encourage the attainment of entertain internationally
accepted standard quality.
 To provide quality consumer product at reasonable price
 The main objective of the government EXIM policy is to promote exports to the
maximum extent. The export should be promoted in such a manner that the
economy of the country is not affected by a regulated exportable item especially
needed within the country.
 Export should we exercise in respect of a limited number of items supply position
demands that their export should be regulated in the larger interest of the country.
 Main objective of foreign trade development and regulation act is to provide the
development and regulation of foreign trade by facilitating import into the
augmenting exports from India.
History of trade policy of India

India is a country with immense resources

available through its length and breadth. From
ancient times India wall exporting goods.
Textiles from Gujarat was sent to Arab
countries and to south East Asia. Trade history
of India also so that hardwood furniture who
was a very popular item for export. Carpet
export trade both in ancient as well as medieval
India. River routes promo to the trade between
different part of the country.
If we talk about the current scenario India stands as 1 trillion economy.

DARJEELING TEA
INDIAN KHADI COTTON
KASHMIRI CARPETS
INDIAN SPICES
DRY FRUITS

The economic level have improved in the urban and semi urban areas. Literacy is
penetrating deep into even for foreach areas and creating awareness and to higher
consumption pattern of all kind of goods across all sections of the society. The
promotion of availability of good has race in period with more countries.
India’s Trade Policy : Background

On analytical ground trade policy has been broadly divided into two
groups
• Inward oriented policy- Trade and industrial incentives are biased in
favor of production for domestic market over the export market. Often
designated as the import substitution strategy
• Outward oriented policy- Trade and industrial policies do not
discriminate between production for domestic goods and foreign
goods.
Phase 1 (1950-1990)

Almost 40 years after independence India adopted inward oriented strategy. The
basic reason behind it was that it would help rapid industrialization through import
substitution and at the same time will save valuable foreign exchange.
This strategy covers the period from 1951 to 1990. This paid considered as the
period of licence Kota Raj in which there was a controlled and restrictive
environment.

This period was marked by an overall, though limited, liberalisation of our foreign
trade. India entered into planned development era in 1950’s and at that time
Import Substitution was a major element in India’s trade and industrial Policy.
Phase 2 (1990 Onwards)

The decade of 1990 is marked with a U turn in Indian

economy. India adopted gradually apart of economic
liberalisation and it was followed by the policy of
liberalisation, privatisation, and globalisation (LPG) to solve
the BOP and its related problem.
After that the Indian economy which was a closed economy
for almost 40 years now become relatively more open and
from 1990 onwards India adopted and outward oriented
strategy which can be considered as a significant turnaround
for the earlier period.
This change in trade policy was accompanied by annual
union budget which also gift tax benefit and exemptions to
the exporter.
Foreign Trade Policy 2015-2020

• The FTP was flagged off in the financial year of 2015-16, and will remain
effective until 31st March 2020
• During this period, all the exports and imports of the country will be governed
by the policy
• The Government strives to make India a significant partner in global trade by
2020.
Some highlights :-

 Announced two new schemes MEIS (Merchandise Export from India

Scheme) and SEIS (Service Export from India Scheme).
 MEIS to promote specific services for specific Markets Foreign Trade Policy
 For services all schemes replaced by a SEIS which will benefit all services
exporters in India
 FTP would reduce export obligations by 25% and give boost to domestic
manufacturing.
 Tax and duty on Indian Manufacturers have been reduced
 Industrial products to be supported in major markets at rates ranging from 2%
to 3%
 Business services, hotel and restaurants to get rewards scrips under SEIS at
3% and other specified services at 5%
 Branding campaigns planned to promote exports in sector where India has
traditional strength
 RBI has simplified the rules for credit to exporters, through which they can
now get long-term advance from banks for up to 10 years to service their
contracts. This measure will help exporters get into long-term contracts while
aiding the overall export performance
 The Government of India is expected to announce an interest subsidy scheme
for exporters in order to boost exports and explore new markets
 In September 2018, Government of India increased the duty incentives for 28
milk items under the MEIS
 As of December 2018, Government of India is planning to set up trade
promotion bodies in 15 countries to boost exports from Small and Medium
Enterprises (SME) in India
Impact on the economy

• FTP has been Simplicity and Stability

• Reducing Complexities
• Promote the increased use of technology
• FTP stating as progressive, path breaking and development friendly
• The policy also turns its attention to other sector like healthcare, R&D,
logistics, professional services, entertainment

According to the commerce minister of India in 2015 the new trade policy
focused export through make in India and by looking at sectors that give greater
employment and have high-tech value addition. In the current scenario of world
the main focus is to join global value chain in making the environment eco
friendly and producing wealth out of waste due to which the priority areas in this
new foreign trade policy are technology driven labour intensive driven and
environment driven.
Impact
E-Commerce export eligible for Service Export from India scheme - As part of digital
India vision, mobile apps would be created to ease filing of taxes and stamp duty,
automatic money transfer using Internet Banking have been proposed. Online procedure to
upload a digitally signed document by Chartered Accountant/Company Secretary/Cost
Accountant to be developed.
No need to repeatedly submit physical
copies of document available on
exporter importer profile.

Agricultural and village industry

product to be supported across
the globe at rates of 3% and 5%
under MEIS. Higher level of
support to be provided to
processed and packaged
agricultural and food items
under MEIS.
E-Commerce of handicrafts,
handlooms, books acceptable for
benefits of MEIS. E-Commerce
exports up to ₹25000 per
consignment will get SFIS
benefits.

The Export Promotion Capital Goods

Reduced export obligation (EO)
(75%) for domestic procurement
under EPCG scheme.
(EPCG) scheme allows duty free imports of
machinery and parts against an undertaking that a
firm will export a specified amount within a
stipulated time. This policy reduces the export
obligation to 75 per cent from 90 per
cent in the EPCG scheme.
 WTO
Intergovernmental organization which regulates the International trade
• Officially commenced on 1st Jan 1995 under the Marrakesh Agreement
• Signed by 123 nations in 1994
• WTO had replaced GATT (General agreement on tariffs and trade)
• They deal with: agriculture, textiles and clothing, banking,
telecommunications, government purchases, industrial standards and
product safety, food sanitation regulations, intellectual property and much
more.

WTO is not just about liberalizing trade, and in some circumstances its rules
support maintaining trade barriers — for example to protect consumers,
prevent the spread of disease or protect the environment.
FACT FILE OF WTO
• Location - Geneva, Switzerland
• Established - 1 January 1995
• Created by - Uruguay Round negotiations (1986-94)
• Membership - 162 countries since 30 November
2015
• Head - Roberto Azevêdo (Director-General)
• Secretariat staff - 625
WHY WTO ?
• To arrange the implementation, administration and operations of
trade agreements
• Settlement of disputes
• Trade relations in issues deal with under the agreements.
• To provide a framework for implementing of the results arising out of
the deliberations which taken place at ministerial conference level.
• To manage effectively and efficiency the trade policy review
mechanism (TRIM).
• To create more together relationship with all nations in respect of
global economic
FUNCTIONS OF WTO

• Administering WTO trade agreements

• Forum for trade negotiations
• Handling trade disputes
• Monitoring national trade policies
• Technical assistance and training for developing countries
• Cooperation with other international organizations
PRINCIPLES OF WTO
• Trade Without Discrimination
• Freer trade: gradually, through negotiation
• Predictability: through binding and transparency
• Promoting fair competition
• Encouraging development and economic reform.
PRINCIPLES OF WTO
Trade Without Discrimination
1. Most Favoured Nation (MFN): treating other people equally .
2. National treatment: Treating foreigners and locals equally
For eg. India is trading with many countries by imposing some tariffs on
import or export, but acc. to WTO we can not impose high tariffs on
one trading nation and low tariffs on another. We have to treat them
equally.
PRINCIPLES OF WTO
Freer trade
The objective of WTO, as in case of GATT, is to promote free trade
among nations through negotiations. For this purpose WTO has to
work for progressive liberalization of trade through reduction in tariffs
and removal of quantitative restrictions on imports by member
countries.
PRINCIPLES OF WTO
Transparency

For eg. India changed its policies regarding direct foreign investment.
So Indian Government released a press note for other countries
regarding its policy change. Press note came in effect from May 12,
2015.
Predictability: through binding and transparency

For eg. India is doing free trade with Sri Lanka (1998) and Thailand
(2003) , having trade agreements with Bangladesh, Bhutan, Maldives,
Japan, South Korea, Mongolia etc.
 PRINCIPLES OF WTO
Reciprocity -the practice of exchanging things with others for mutual
benefit, especially privileges granted by one country or organization to
another.

For eg. In case of Russia–USA and IranUNO, trade sanctions was

imposed on Russia and Iran prohibiting them to do trade with other
countries
Promoting fair competition

WTO system of multilateral trading system provides for transparent, fair

and undistorted competition among the various countries. Rules such
as Most Favoured Nation (MFN) treatment to all trading parties, equal
treatment to foreign goods, patents and copyrights as with nationals
ensure fair competition among trading countries. Besides, WTO
agreement provides for discouraging unfair competitive practices such
as export subsidies and dumping (that is, selling products abroad below
domestic prices to gain market access).
THE AGREEMENTS
• Agreement on subsidies and countervailing measure –
SCM
• General agreement on trade in service GATs -Overview:
a navigational guide
• Plurilateral agreement
• Further changes on the horizon, the Doha Agenda.
Some of the agreements of WTO: -Tariffs: more bindings
and closer to zero
• -The Agriculture Agreement: new rules and
commitments
• -Textiles: back in the mainstream
• -Intellectual property: protection and enforcement
 AGREEMENTS OF WTO
• 1. GENERAL AGREMENT ON TARRIFS & TRADE (GATT)
• 2. GENERAL AGREEMENT ON TRADE IN SERVICES (GATS)
• 3. TRADE RELATED ASPECTS OF INTELLECTUAL PROPERTY
RIGHTS (TRIPS)
• 4. TRADE RELATED INVESTMENT MEASURES (TRIMS)
TRIPS TRIMS GATS
LITERAL WORK TO FACILITATE MOVEMENT OF PERSONS
INVESTMENTS

ARTISTIC WORK TO LIBERALIZE WORLD AIR TRANSPORT , SHIPPING

TRADE

INDUSTRIAL PROPERTY TO STRIKE OUT FINANCIAL SERVICES

INVESTMENT MEASURES
WHICH CAN CREATE
HINDRANCE
TRIPS
• It is the GATT Uruguay Round Agreement on Trade Related Intellectual Property.
It deals with the protection & enforcement of “Trade-Related” intellectual
property “rights". It establishes minimum levels of protection that each
government has to give to the intellectual property of fellow WTO members
DEALS IN :
• How basic principles of the trading system and other international intellectual
property agreements should be applied
• How to give adequate protection to intellectual property rights
• How countries should enforce those rights adequately in their own territories
• How to settle disputes on intellectual property between members of the WTO
• Special transitional arrangements during the period when the new system is
being introduced.
TRIMS
Trade related Investment Measures does not provide any new language , but It concentrates on 2
major articles. Article III & Article IX which talks about National Treatment and Trade Restrictions
respectively.

EXAMPLE - India — Certain Measures Relating to Solar Cells and Solar Modules.
CONSULTATIONS REQUESTED: 6 FEBRUARY 2013
CURRENT STATUS: AUTHORIZATION TO RETALIATE REQUESTED (INCLUDING 22.6 ARBITRATION)

ARTICLE III
●National treatment of imported product, unless specified in other agreements.
●Subjects the purchase or use by an enterprise of imported products to less favorable conditions
than the purchase or use of domestic products.

ARTICLE XI
●Prohibition of quantitative restrictions on imports and exports.
●Part of the general trend in textiles and agriculture to phase out the use of quantitative
restrictions.
GATS
General Agreement on Trade in Services, is the first and the only comprehensive multilateral
discipline covering international trade in Services. It was negotiated during Uruguay Round and
came into force along with other WTO agreements in January 1995.

A simple definition of services is that services are the tradable, which are intangible, invisible, and
incapable of storage and, therefore, requiring simultaneous production and consumption. This
description does have its limitations as technical advancements have made it possible for the
services to be visible and capable of storage (for example, a foreign consultant prepares a
documentary film for a local company and sends it to that company in the form of a video
cassette)

As per WTO services are divided into 12 areas and sub divided into 164 areas
Business Services, Communication Services, Construction and Engineering Services ,Distribution
Services, Education Services, Environmental Services, Financial Services , Health Services, Tourism
and travel Services, Recreation, cultural and sporting Services, Transport Services, Other Services
not included elsewhere.
MODES OF SUPPLY OF SERVICES
Mode 1: (Cross - Border Supply) - This refers to the delivery of service from
the territory of one country to the territory of the other country by crossing
international border. examples : financial trading, maritime transport and
telecommunication services.

Mode 2: (Consumption Abroad) - In this method, consumer moves to a

foreign country to get services, such as tourism, education, medical treatment
etc. examples :such as repair and maintenance of aircrafts.

Mode 3: (Commercial Presence) - In this method, foreign service-providing

companies establish their local subsidiary offices (affiliates) to supply services
in the domestic market. Establishment of local branches of foreign banks or
insurance companies is example of services provided through this mode.

Mode 4: (Movement of Natural persons) - In this mode, the service supplying

foreign person moves to the host territory on temporary basis. examples :
business consultants, engineers and I.T. experts traveling to some country for
a short period of time.
 AOA
Agreements on agriculture was concluded in 1994, aimed to remove
trade barriers and to promote transparent market access and
integration of global market

Example :
India and China joint proposal on
elimination of $160 billion of trade-
distorting farm subsidies in the US and
EU has come as a game changer in
global farm trade negotiations at the
WTO
Last Published: Mon, Aug 28 2017

https://www.wto.org/english/tratop_e/agr
ic_e/agboxes_e.htm

https://www.livemint.com/Politics/XSZUqh
4PKXUGOuZhMJ1RcK/India-China-jointly-
propose-removal-of-US-EU-farm-
 The Green Box contains fixed payments to
producers for environmental programs, so long as
the payments are “decoupled” from current
production levels. Example - environmental and
conservation programs, research funding,
inspection programs, domestic food aid including
food stamps, and disaster relief , farmer training
programs, pest-disease control program

These are basically Amber Box subsidies

but they tend to limit the production.
Example - Subsidies that don’t increase
with production. For example subsidies
linked with acreage or number of animals.

All domestic support measures considered to distort

production and trade Example :- Input subsidies
such as subsidy on electricity , seeds , fertilizers ,
irrigation etc. Market support price (MSP) subsidies
also fall under this box. WTO limit -
For developed country - 5% of agriculture
production in 1986-88
Some more agreements of WTO
• Special safeguard mechanism.
• Special products.
• Multi-fibre arrangements &agreements on textiles and clothing.
• Sanitary and phyto-sanitary measure .
Merchandise exports and imports by region,
2012Q1-2017Q4
Leading merchandise exporters and importers, 2017

https://www.wto.org/english/news_e/pres18_e/pr820_e.htm
Leading exporters and importers of commercial services, 2017
Globalization and WTO: Impact on India’s
economic growth and export

https://mpra.ub.uni-muenchen.de/16104/
Volume of world merchandise trade, 2015Q1-
2018Q4
Seasonally adjusted volume index, 2005=100
The WTO anticipates merchandise trade volume
growth of 4.4% in 2018, as measured by the Source: WTO and UNCTAD, WTO Secretariat estimates
average of exports and imports, roughly matching
the 4.7% increase recorded for 2017. Growth is
expected to moderate to 4.0% in 2019, below the
average rate of 4.8% since 1990 but still firmly
above the post-crisis average of 3.0%.

The WTO's trade forecasts are predicated on consensus

estimates of global GDP, which have been revised
upwards strongly in recent months. World real GDP at
market exchange rates is projected to grow 3.2% in 2018
(up from 2.8% last September) and 3.1% in
2019. Brighter prospects reflect not only investment
and employment gains but also improved business and
consumer confidence as measured by OECD business
cycle indicators, although these could be undermined by
uncertainty going forward.
MINISTERIAL CONFERENCES
• Buenos Aires, 10-13 December 2017
• Nairobi, 15-19 December 2015
• Bali, 3-6 December 2013
• Geneva, 15-17 December 2011
• Geneva, 30 November - 2 December 2009
• Hong Kong, 13-18 December 2005
• Cancún, 10-14 September 2003
• Doha, 9-13 November 2001
• Seattle, November 30 – December 3, 1999
• Geneva, 18-20 May 1998
• Singapore, 9-13 December 1996
• SINGAPORE MINISTERIAL MEET AND ‘SINGAPORE ISSUES’ – 1996
The Singapore issues term refers to areas of
1. Trade and Investment
2. Trade and competition policy
3. Trade Facilitation
4. Transparency in government procurement

Only Trade Facilitation is directly related to trade while other three are only indirectly
related to trade
INDIA ‘S STAND
On Investment, India feels that having a multilateral agreement would be a serious
impingement on sovereign rights of countries. And on competition policy India has
pointed out that there is no clarity on whether these would include export curtains
cartels.
• DOHA MINISTERIAL SUMMIT (2001)
• Main Issues of Doha Development Round:
1. Agriculture
2. Access to patented medicines
3. Special and Differential Treatment
4. Implementation issues
• CANCUN MINISTERIAL MEET- ABANDONMENT OF SINGAPORE
ISSUES (2003)
The only positive Development from the point of view of trade negotiations was the
creation and survival of the new developing country, the G-20.
• GENEVA TALKS (2004)
o Singapore issues were dropped
o It was agreed to proceed in the area of agriculture, Non-Agriculture market access,
Services and trade Facilitations.
• BALI MINISTERIAL MEET AND ‘ BALI PACKAGE-TRADE FACILITATION AND PEACE
CLAUSE’ – 2013
o Trade facilitation was agreed by all nations and for adjustments/adaptations to limits under Agreement
on Agriculture; a ‘Peace clause’ was agreed at.
o 4 years was given to countries to adjust to the limit and avoid sanctions.
o Date for ratification of Bali Agreement was 31 July, 2014.
o India declined to ratify unless a permanent solution is reached.
o In November, India-US reached understanding in which time limit of 4 years was removed and in
return Trade facilitation was agreed to by India.
• NAIROBI MINISTERIAL MEET – 2015
o Commitment to completely eliminate subsidies for farm export
o To find permanent solution to food security

India and china are leading negotiation of RCEP agreement, to reflect interest of developing countries
in final draft.
• CASES OF COMPLAINTS AGAINST INDIA
o Measures relating to solar cells and solar modules- by USA
o Anti dumping duties on USB flash drives – by Chinese Taipei
o Measures concerning the importation of certain agriculture products – by USA
o Certain taxes and other measures on imported wines and spirits – by EU
Communities.

• CASES OF COMPLAINTS BY INDIA

o Countervailing measures on certain Hot-rolled Carbon steel flat products from India
against USA
o Safeguard measures on imports of cotton yarn(other than sewing thread) from India
against Turkey
o Seizure of Generic Drugs in transit from India against EU and a member state.
WTO AND INDIA
Market Access
• India maintaining Quantitative Restrictions due to balance of payments reasons
• The only commitment India has undertaken is to bind its
Primary agricultural products at 100%;
Processed foods at 150% and
Edible oils at 300%.
Domestic Support
• India does not provide any product specific support other than market price support.
• Non-product specific subsidy for fertilizers, water, seeds, credit and electricity.
• Not undertaken any commitment in scheduled filed under GATT, since total AMS is negative
and that too by a huge magnitude.
Export Subsidies
• Exporters of agricultural commodities do not get any direct subsidy apart from
(a) exemption of export profit from income tax under section 80-HHC of Income Tax Act .
(b) subsidies on cost of freight on export shipments of certain products like fruits,
vegetables etc.
• Indicated that India reserves the right to take recourse to subsidies (such as, cash
compensatory support) during the implementation period.
Liquor companies
Government forced to slash import duties on foreign liquor brands, affecting
domestic liquor companies (Threat).
Fear of Multinational liquor companies flooding Indian market with cheap,
second-hand products.
Liquor companies gearing up to meet the global challenge, charting new business
plans to ensure that the local brands survive ultimately.
The services sector
Areas like banking, insurance, investment banking, health, and many other
professional services opened up are bound by WTO commitments.
Many overseas service providers have entered 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.
Pharmaceuticals
Threaten India's achievements in the pharmaceutical field, but most of companies
emerged as a winner.
Forced 9 leading domestic Pharma-companies to form Alliance demanding more
transparent WTO regime for EMR (exclusive marketing rights) grants. Expecting
a spate of mergers, acquisitions and alliances in the domestic pharmaceutical
industry in the coming years.
Information technology
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.
Textiles and clothing
Phasing out of (Multi Fiber Agreement) MFA boosting textile exports from India.
Also increase in investment in textiles and joint ventures. But risk of increase in
import of textiles from countries ex. China, US, Taiwan etc.
Forcing many textile manufacturers to modernize mills & improve quality.
THANK YOU