Trade has played a major role in India’s history. It is very well said that the countries that are open to trade and investment are more prosperous than countries that restrict individual’s freedom to decide how to spend and invest your money.

1. OVERVIEW
OF
TRADE POLICY
Presented By:- Dr. Pooja Singh
Assistant Professor
SGT University, Gurugram, Haryana

2. • Trade has played a major role in India’s history.
• It is very well said that the countries that are open to trade and investment are
more prosperous than countries that restrict individual’s freedom to decide how to
spend and invest your money.

3. Trade policy is a collection of
rules and regulations which
pertain to trade. Every nation
has some form of trade policy in
place, with public officials
formulating the policy which
they think would be most
appropriate for their country.

4. Things like import and export
taxes, tariffs, inspection
regulations, and quotas can all be
part of a nations trade policy.

5. Some nations attempt to protect their local
industries with trade policies which place a heavy
burden on importers, allowing domestic producers
of goods and services to get ahead in the market
with lower prices or more availability.

6. Others eschew trade barriers,
promoting free trade, in
which domestic producers
are given no special
treatment, and international
producers are free to bring in
their products.

7. Or you can also say that trade policy is
Government strategy that emphasizes
replacement of some agricultural, or
industrial imports to encourage local
production rather than producing for
export markets.

8. Import substitutes are meant to
generate self-employment, reduce
foreign exchange demand,
stimulate innovation and make the
country self-reliant in critical areas
such as food, defense and advanced
technology.

9. Why trade policies?
National Defense Policy- No
nation would afford to be
dependent on other exporter
nation at the time of conflicts.

10. Next is infant industry theory-
New domestic industries
should be protected from
foreign competition for so
long so that they will have a
chance to develop.

11. Antidumping Theory- Dumping is
allowed foreign producers will
temporarily cut prices and drive
domestic firms out of the market.
Then they will use their monopoly to
exploit consumers.

12. • Increased cost to consumers in this trade barriers artificially raise the price of imported products.
• It also increased cost to domestic suppliers. Trade barriers artificially raise prices on foreign
commodities, making it less profitable to buy from other countries.
• And finally, it leads to less competition. Trade barriers lessen foreign competition, leading to fewer
product choices for consumers thereby paving the way for firms for gaining monopoly market power.
DISADVANTAGES

13. What is Exchange Rate?
Before the advent of currency as a
medium of exchange the
…………………… was prevalent.

14. BARTER
SYSTEM

15. Now we will understand this system with the help
of an example in which there are people doing
different types of work like weavers, cobblers,
farmers, tailors etc. When cobbler needs vegetable,
he goes to farmer and exchanges a pair of sleepers
with the vegetables he needs. In this way both are
satisfied. This is known as barter system. The
system by which one person could exchange
goods and services with goods and services
produced by another.

16. LIMITATIONS
The barter system has its own problems. So, we will see the
various flaws of barter system.

17. 1. Wants of trading parties does not coincide.
2. Lack of common measure of value.
3. Indivisibility of certain goods.
4. Difficulty in storing value.
5. Difficulty in making deferred payments.
6. Lack of specialization.

19. • So, therefore money was introduced.
• Thus, it was due to the flaws of the barter system that
finally saw the rise of currency as a medium of
exchange.
• Let us have a quick look of the advantages of money
as a medium of exchange. It adds durability,
homogeneity, divisibility and convenience.
• For everything we buy or sell, a certain price is levied
on it. The price is a certain amount of money. Thus
money forms a medium of all exchange for all
transactions be it goods or services.

20. • Different countries represent different economies. Each economy has its own unique currency. For
example – Indian currency is rupees.
• Japanese currency is yen
• American currency is dollar

21. Currency helps people of a nation to
buy and sell, products and services.
Thus, currency facilitates the demand
and supply chains of a nation.

22. An exchange rate is the rate at which one currency
will be exchanged for another currency.