What is Foreign Trade?

Foreign trade is all about imports and exports. The backbone of any trade between nations is those products and services which are being traded to some other location outside a particular country's borders. Some nations are adept at producing certain products at a cost-effective price. Perhaps it is because they have the labor supply or abundant natural resources which make up the raw materials needed. No matter what the reason, the ability of some nations to produce what other nations want is what makes international trade work.

Benefits of International Trade

With the help of modern production techniques, highly advanced transportation systems,transnational corporations, outsourcing of manufacturing and services, and rapid industrialization, the international trade system is growing and spreading very fast. International trade has flourished over the years due to the many benefits it has offered to different countries across the globe. International trade is the exchange of services, goods,and capital among various countries and regions, without much hindrance.

Over the years, India's foreign trade has come to occupy a pivotal position in the economic scenario and prosperity of the country. India exports a huge number of products and imports equally a good number of required products. Major export of products of India is to countries such as USA, UK, UAE, Hong Kong, China, Germany, Singapore, Belgium, Japan etc. India's major import of product is from countries such as USA, UK, Germany, China, Belgium, Japan, Switzerland etc.

Types of Foreign Trade – The two types of Foreign Trade are:

  • Bilateral trade: This is a trade agreement in which two countries exchange goods and services.
  • Multilateral trade: This is the type of international trade where a country trade with two or more countries.

What are the documents used in foreign trade?

The documents include the commercial invoice, Bill of Lading, warranty of title, Letter of Credit, Certificate of origin of goods, Inspection certificate, Packing weight list, Export declaration, Consular invoice, and the insurance document.

What are the components of foreign trade?

Exports by Principal Commodities:
  • 1) Plantation Crops: ...
  • 2) Agriculture and Allied Products: ...
  • 3) Ores and Minerals: ...
  • 4) Leather and Leather Manufactures: ...
  • 5) Gems and Jewellery: ...
  • 6) Chemical and Related Products: ...
  • 7) Engineering Goods: ...
  • 8) Electronic Goods:


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