International Trade & FDI in India

Impressed by this worldwide supply chain and the international entanglement of markets we now want to discuss some of the bases of global trade, its implications and the advantages and disadvantages of such an evolution. The major reason behind international expansion and the import of goods is the search for minimum labour cost at a certain quality level or the highest quality for a certain price. Products are bought from the best and cheapest producers whereas transportation costs often play a secondary role. Domestic producers, paying wages many times higher than in developing countries, cannot always fulfil the requirements. Products, which only require low skilled workers, are already produced and imported from abroad since many years. Moreover, as the workers in low-wage areas gets more educated, foreign companies challenge more and more the local white-collar workforce. Isn't this evolution a major threat to our local labour market?

India has emerged as a trading superpower and as an increasing magnet for FDI.  Its role in the international economy to this point has been less remarked than the rise and dominance of China but increasingly India will be appreciated for the opportunities it is creating for its citizens, employers and foreign and domestic firms.

Agriculture: This is the most important area. A special agricultural produce scheme called the Vishesh Krishi Upaj Yojna was set up as an initiative to promote exports in this sector.

India is the second-most populous country with over 1.2 billion people which located in South Asia. India is the world’s seventh-largest economy based on nominal GDP and is the third-largest purchasing power parity. Following market-based economic reforms in 1991, India became one of the fastest-growing economies country and began to implement export-oriented foreign trade policy. However, before the reform due to the long-time of the implementation of Inward-looking import economic development strategy, the domestic market is highly protected in India which lead to the slow development of India 's import and export trade and stay in the trade deficit situation for a long time. As well as the contribution of foreign trade to GDP is low, ultimately affect the Indian economy development speed. Now, it is one of the most attractive country of the BRIC markets, which also includes Brazil, China and Russia. Sino-India trade relationship began in 1951 and start rapid growth in the 90s, now India has become the biggest trading partner of China in the area of South Asia.

The clothing commodity chain involves all four sectors of the Global Economy: “Global buyers determine what is to be produced, where, by whom, and at what price. In most cases, these lead firms outsource manufacturing to a global network of contract manufacturers in developing countries that offer the most competitive rates” (Fernandez-Stark et al. 2011). These firms often times perform the most valuable actions –branding, design, and the marketing of products- in the apparel value chain. And often times, “these lead firms outsource manufacturing to a global network of contract manufacturers in developing countries…[and] since these lead firms in the apparel industry adopted global sourcing models in the 1970s, manufacturing has become the domain of developing countries” (Fernandez-Stark et al. 2011). The apparel industry’s commodity chain is broken up. The differing stages of this chain take place in different countries, each interdependent to create the end product. Raw materials are extracted and then shipped to textile clothing manufacturers around the world. These include fiber, yarn, and fabric manufacturers. From there, fabric finishers and clothing manufacturers take over. These

The economy in China has always been inspiring to me, how this country made all of this civilization and how this country used its economy to overcome the barriers which it faced by used lots of methods. One of these method is the ‘’Exchange Rate Issue’’ in general is the low value of your currency to increase the investments and therefore, will increase the rate of employment. So, an important determinant of foreign trade and foreign investment is the exchange rate. A low value of Chinese RMB makes Chinese exports cheaper and investment in China more attractive if the investment is to produce for export. Many countries in the world including those in the European Union, Japan and Taiwan, have adopted the flexible exchange rate system while China adopted a fixed exchange rate up to July 2005 but the government did change the fixed rate several times in the 1980s and early 1990s relative to the US dollar as its government deemed appropriate. Most recently the Chinese government has adopted a managed floating rate with the government deciding the rate around a small band daily relative to the value of a basket of foreign currencies but the basket is not explicitly specified. There are pros and cons of the fixed and the floating exchange rate systems. (See the Appendix for a more detailed discussion.) A fixed exchange provides an anchor for the government in the conduct of its monetary and fiscal policy. It limits the discretionary power of the government in the exercise of its

Figure 1 shows the net inflow of FDI into the developing countries. There is a fall into the amount of FDI going to the developing countries from late 1980 to early 1990 and in the late 2000. Overall, there is an upward trend of amount of FDI going to the developing countries. The same trend with ODA shown in Figure 2. The amount of Net ODA received by developing countries from 1990 to mid-1990 is fluctuating then continued to fall until 2000. From year 2000 onwards, there is a steady increase of ODA received by the low-income countries. Compared with FDI and Net ODA, personal remittances has a steady upward trend (shown in Figure 3), noting a huge increase in 2008 of US$4.5 billion from US$15.2 billion in 2007. With the

5) The investments in retail by the FDI route, when they come, should come only through a short-list of recognised tax adherence countries. The misused option of FDI coming in through known or suspect tax havens needs to be blocked—firmly. Likewise, full disclosures of the strictest sort need to be made on who the investors are—again, these cannot be suitcase corporate identities hiding behind consultants and banks in shady tax havens or other countries. Unlike what happened in, for example, airlines, Indians need to know who is investing and from where. And in case there are legal issues, then we need to know who the faces are who will go through the Indian legal system, unless those who made the policy are ashamed of our legal system.

Dipankar Dey of ICFAI Kolkata deliberates in his paper that unlike in other sectors, FDI in retail will have a much wider impact on the economy. Essentially, organised global retail chains will break the traditional

The visit of Narendra Modi, Indian Prime Minister to Nepal undoubtedly strengthened the ties between the two nations. But, most importantly, it also provides Nepal with an avenue for development through investment – foreign direct investment.

India is in the midst of a retail boom. The sector witnessed significant transformation in the past decade from small-unorganized family-owned retail formats to organized retailing. Indian business houses and manufacturers are setting up retail formats while real estate companies and venture capitalist are investing in retail infrastructure. Many international brands have entered the market. With the growth in organized retailing, unorganized retailers are fast changing their business models. However, retailing is one of the few sectors where foreign direct investment (FDI) is not allowed at present.

Traditionally, Indian retail sector has been characterized by the presence of a large number of small-unorganized retailers. With high GDP growth, increased consumerism and liberalization of the manufacturing sector, India is being portrayed as an attractive destination for foreign direct investment (FDI) in retailing. However, at present this is one of the few sectors, which is closed to FDI. Within the country, there has been significant protest from

Foreign Direct Investment (FDI) is the outcome of the mutual interest of multinational firms and host countries. The current debatable issue in India is whether to permit FDI in Multi Brand Retail (MBR) or not. This paper provides a study of various aspects of FDI in Multi Brand Retail. Firstly the paper examines the present set up of retail sector in India. Further it focuses on the benefits of FDI which are expected in terms of better quality, better technology, better customer services and infrastructural development of India. The paper also discusses the major concerns / risk associated in form of unemployment

Involving a plethora of investor classes, foreign investment can take multiple forms. An overseas investor can buy directly into a company involved in manufacturing, infrastructure development, banking, insurance, retail, etc.

Keywords: Economic Growth, Foreign Direct Investment (FDI) , Foreign Exchange Reserve (FER), Gross Domestic Product ( GDP), Compound Annual Growth Rate (CAGR), Trend, Correlation.