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2. EXPORT
PROMOTION

3. MEANING OF ‘EXPORT’
 The commodities (goods & services) sold to a
foreign country is called export
MEANING OF ‘PROMOTION’
 Encouragement of the progress, growth or
acceptance of something.
MEANING OF “EXPORT PROMOTION”
 Refers to the policy of the govt that offers
encouragement to the exporters with a view to
enhance the exports of the country.

5.  Devaluation of rupee by 36.5% in gold in
June 1965
 Govt. expressed hope for expansion in
export earnings because
 Indian goods would be cheaper in
International market
 Lasted upto 1972-73

6.  This phase began in 1973 and lasted upto
a decade
 Import substitution could not bring viability
in BOP
 Govt undertook steps to increase exports

7.  Recent phase
 The govt. of India has framed various
schemes so as to promote exports &
improve the country’s exchange earnings

8.  The Export Promotion Council Of India was
established under Companies Act 1956
 Focuses on promotion of exporters and
producers to export goods
 To achieve higher level of export
performance & foreign exchange earnings

9.  To promote & develop the exports of the
country
 Each council is responsible for the promotion
of a particular group:
1. Products
2. Projects
3. Services
4. Assistance
 Assists members in taking advantage of
opportunities
 Helps in expansion & diversifying exports

10. JUTE
IRON
ORE TEA
TOBACC
O
TEXTILES
; COTTON
& SILK
GEMS &
JEWELLE
RY
MISCELLANEO
US

11. Neglect of
factors
other than
price
Wasteful
formalities
Wrong
focus
Trading
problems
Production
problems

12.  Neglect of factors other than price
 Other factors like quality of product
 Ability of the exporters
 Delivery schedule & other imp factors are
more imp influencing foreign buyers
 Wasteful formalities
 Availing of promotional measures &
procedural formalities are long, complicated
& time consuming
 Wrong focus
 We often focus on selected products
 Other products should be promoted.

13.  Trading problems
 Developing countries find problems due to
tarrifs
 Tarriif rates become higher as one moves
from raw material to manufactured products
 Production problems
 Lack of sophisticated technology
 Inspite of changes in industrial & trade policy
Indian firms continue to produce outdated
products by outdated technology

14. Cash
compensatory
support
Duty drawback
system
Advanced
license & duty
exemption
scheme
Replenishment
licenses
Organizational
structure for
export
promotion

15. Government built up various organizational
structures to promote exports such as:
 EPCs
 Commodity Boards
 The Trade development authority
 Indian Institute of Packaging
 Trade Fair Authority of India

16. IMPORT
SUBSTITUTIO
N

17.  Growth can be thought of as expanding the size
of the community through the use of land and
other natural resources.
 Development, on the other hand, can be thought
of as improving liveability through, jobs,
education, cultural preservation, public safety, and
sense of community.
 Fortunately, there exist ways for communities to
develop without growing. One of those ways is
through Import Substitution.

18.  Import substitution is a trade policy aimed to promote
economic growth by restricting imports that competed
with domestic products in developing countries.
 The import substitution approach substitutes
externally produced goods and services with locally
produced ones.
 Import substitution can also be discussed as a policy
strategy that attempts to utilize underused capacities,
reduce regional unemployment or protect infant
industries.

19. leaky bucket” model.
 Money circulates within the region when money that is earned
locally is also spent locally. This requires that some money exists in
the bucket to begin with
—one way this happens is when local goods and services
are purchased by consumers outside the region.
— Another source of inflow comes from businesses which
decide to set up shop locally and generate jobs that pay
local workers.
 The “leak” in the bucket that allows money to escape from the
community is created when goods and services from outside the
region are purchased with local money

20. Plugging the Leaks
 One way to prevent money from leaving the local economy is to connect
local demand for goods and services with the local suppliers of those goods
and services.
 Many of the things that individuals or businesses need
can be found from suppliers within the area but, due to
lack of adequate information or convenience, those
things are often purchased from the outside. This
represents another flow of capital leaving the system.
 By substituting demand for externally produced things with locally
produced things, communities can retain capital for use within the
community.

21.  The notion of import substitution was
popularized in the 1950s and 1960s as a strategy
to promote economic independence and
development in developing countries
 This initial effort failed due in large part to the
relative inefficiency of 3rd world production
facilities and as a result their inability to compete
in a globalizing marketplace.
 Thus an export oriented approach has became the
norm.

22.  Promotion of Domestic Industry
 Employment Generation
 Promotion of Industrialization
 Production of consumer’s goods
 Improvement in Balance of Payment

23.  Advantages
• Increase in domestic employment.
• Reduced dependence on labor non intensive industries.
• Resilience in the face of global economic shock (recessions &
depreciations)
• Less long distance transportation of goods.
 Disadvantages
• The IS industries are inefficient as they are not exposed to
internationally competitive industries.
• Increase in unemployment internationally as world GDP
decreases through promotion of inefficiency.

24.  Import Licenses: - Import license is an important
instrument. There can be a large variety of licenses- for users
or for wholesalers they can be obtained by direct permission
from some ministry or the central bank. They can be
combined with specific import programs and they might be
combined with lists of prohibited import products.
 Guarantee Deposits: - Other means are guarantee
deposits which have to be made by the importer for the right
to import an item. Foreign firms can be restricted in their
right to repatriate dividends and profits. Domestic exporters,
on the other hand may be allowed to resell part of their
foreign earnings at advantageous exchange rates.

25.  Tariff Walls: - Tariffs and surcharges are common protection devices. Tariff
rates differ between countries and also vary over time. It is convenient to
characterize a country’s control over foreign
trade according to the policy implemented.
 Physical Restrictions:- The method of physical restriction on import or even
outright banning of import is used in cutting out imports. Reduction in imports
is brought out by such devices as quotas, licensing, ban on certain imports etc.
It is a sure way of protecting the domestic producers from the foreign
competition.