IBO 03
IBO 03 Free Solved Assignment
IBO 03 Free Solved Assignment July 2021 & Jan 2022
Q. 1. What do you mean by WTO? What is its role in in world trade? Descibe India’s efforts for intergrating itself with the world trade.
Ans. World Trade Organization (WTO) is today the most powerful organization in the world of commerce and business.
It has brought most countries of the world on a common platform for their economic prosperity through mutual co-operation and certain commitments to ground rules of conducting trade.
India is a member of WTO and is bound to follow its rules. However, many people and nationalist organizations in the country are opposed to WTO regime, which they denounce as sell out of the country’s interests.
ROLE OF GLOBAL ORGANIZATIONS IN WORLD TRADE
There are many international Organizations like World Trade Organization (WTO), International Monetary Fund (IMF/ World Bank, United Nations Conference on Trade and Development (UNCTAD),
Asian Development Bank (ADB), Economic and Social Commission for Asia and the Pacific (ESCAP), United Nations Industrial Development Organization (UNIDO), Food and Agriculture Organization (FAO),
Organization of the Petroleum Exporting Countries (OPEC), Organization for Economic Cooperation and Development (OECD), International Chamber of Commerce (ICC), etc., which are directly or indirectly involved in the promotion of world trade.
Besides these international organizations, there are also a large number of regional economic groups, which are part of efforts for the advancement of world trade.
Important ones among these are the European Union (EU), North America Free Trade Area (NAFTA), Association of South-East Asian Nations (ASEAN), South Asian Association of Regional Cooperation (SAARC), etc.IBO 03 Free Solved Assignment
Among all these organisations, World Trade Organization is the only international organization dealing with the rules and regulations of trade between nations. It came into existence in 1995.
One of the youngest of the international organizations, the WTO is the successor to the General Agreement on Tariffs and Trade (GATT) set up after the Second World-War.
GATT and the WTO have helped to create strong and prosperous trading systems contributing to extraordinary growth in world trade.
WTO’S main function is to ensure that trade flows smoothly, freely, fairly and predictably. This is achieved by
(i) Administering trade agreements
(ii) Acting as a forum for trade negotiations
(iii) Setting trade disputes among nations
(iv) Reviewing national trade policies
(V) Assisting developing countries in trade policy issues, through technical assistance and training programmes
(vi) Co-operating with other international organizations. Today, WTO has more than 140 members, accounting for over 90 percent of the world trade. Many other nations are negotiating for its membership. IBO 03 Free Solved Assignment
STRATEGY FOR INTEGRATING INDIA WITH WORLD TRADE
India adopted an all-inclusive programme of macro-economic stabilization and structural adjustment in June, 1991.
The objective was to remove controls on industry, external trade and foreign investments and allow a free atmosphere for growth trade.
However, due to various problems and opposition faced within the country, these reforms could not be immediate 31 implemented to their logical end in different spheres of economic activity.
At best it is still a half-hearted effort. The result is India is not yet able to reach desired goals in its external trade and foreign direct investment.
A sustained rapid growth in exports is the most critical need if the country wants to ensure lasting external viability, Vigorous efforts are, therefore, necessary to achieve a hasty expansion of exports, especially when one or other difficult international trading environment is brought about by succeeding economic and financial crisis like those in East Asia or in post-Iraq war Middle East.
There is also the apprehension that East Asian countries may reorient their economic activities away from capital-intensive industries and move towards labor-intensive ones.
Such a move is bound to intensify competition in markets that are crucial for Indian exports.
It is therefore, imperative that as early as possible various transaction costs incurred by our exporters are cut to a minimum. IBO 03 Free Solved Assignment
Transaction costs originating from enforcement of various rules and regulations for obtaining licenses, customs clearances, refund of duties, infrastructure constraints, etc., are some such unnecessary costs.
These affect export performance adversely. Although export transactions are being simplified and rule and regulations are being cut down, the pace is very slow.
Petroleum and allied products have a comparatively large share of India’s total import bill. Global prices of these goods keep on fluctuating, reflecting general world reversionary conditions.
There is much uncertainty about the future movements of international prices of petroleum. Under such uncertain trends, there are always significant downside risks to country’s balance of payments.
Therefore, efficient use of these products is to be encouraged on war-footing while removing all distorting policies in remaining energy sectors.
Tourism was a major source of buoyant invisible earnings in the past. However, in last few years, growth of tour arrivals and earnings has not been satisfactory.
This is in spite intense efforts by the Centre and State Governments to accelerate expansion of tourism in India. IBO 03 Free Solved Assignment
Priority needs to be given to banishing irritants like delayed air and rail travels, unclean hotels, lack of quick and cheap international communication.
The entire tourist industry needs a complete overhaul if we want to attract foreign tourists and increase our dollar earnings. Airport systems, entry and exit procedures also need to be greatly improved.
There is certainly great potential for higher direct foreign investment from major companies of the world. What is needed is our having a studied positive stance towards FDI.
For this, government must give the highest priority to get rid of red tape at every stage of FDI process. The red tape continues to be cited as the main culprit and deterrent for many potential foreign investors.
Also, all policy impediments in the infrastructure sectors, which can absorb large FDI, need to be put to an end on a priority basis.
To succeed in international arena and to become a foremost market player at global level, India must bring to perfection every type of basis infrastructure to match them to the world standards.
The financial crisis in East Asia and post Iraq-war Middle East has brought into focus the challenges and risks involved in getting involved into free global capital movements.
Such crises clearly show that capital account liberalization has to be carefully calibrated to minimize the risks of disruption against increased uncertainty.
Q. 2. How has the new tariff policy of the Government of India helped improving competitiveness in the industries? Describe its salient features.
Ans. Tariff Policy: Since 1991, government is in the process of overall economic reforms. An important part of this process has been to gradually reduce high rate of import duty.
The main objective in reforming custom duty structures was tr lower costs of production and to make user industries more competitive.
The gradual reduction of import tariff also allow realistic time to domestic producers to adjust to new competition from similar goods. IBO 03 Free Solved Assignment
(R The Indian import tariff system is based on the Customs Cooperation Council (Brussels) Nomenclature.
Most of the import tariffs are today made ad-valorem. Aggregate duties on imports include basic duty, auxiliary, and/or countervailing duties.
Countervailing duties are levied to link the import tax burden with India’s internal excise duties. As a matter of sensible policy, consumer goods, components and parts that can be made in India carry higher rate of import duties.
Duty drawback is given on imported raw materials, which are used in the manufacture of exported products. Duty-free import of such raw materials is also allowed subject to certain conditions.
Tariff Changes Introduced in EXIM Policy The recent EXIM Policy has introduced following major changes in the tariff structure:
1 Quantity Based Advance Licence Scheme will continue but the Value Based Advanced Licence and the old Passbook Scheme are replaced by the Duty Entitlement Pass Book (DEPB) Scheme.
DEPB combines positive features of both the schemes. It is also easy to administer and is more transparent. IBO 03 Free Solved Assignment
2 Under this new scheme, exporters, in accordance with notified entitlement rates, will be offered duty credits allowing them to import goods duty-free.
The changes in the import tariff conform to the recommendations of the Tax Reforms Committee headed by Dr. Raja Chelliah.
The Committee suggested a phased reduction in tarilts so that the ad-valorem import duty on industrial inputs ranges from 5 per cent to 30 per cent, while import duty on non-essential consumer goods is at least 50 per cent.
The import tariff reforms are expected to continue in the coming years.
Main Features of New Tariff Policy
Major features of the new tariff policy are as listed below:
1 The focus is on trimming down the multiplicity of duty rates and also rationalisation of the rate structure.
2 The scope of discretion is radically curtailed by doing away with the power to allow ad-hoc duty exemptions. IBO 03 Free Solved Assignment
3 An Authority for Advance Rulings is now set-up for Excise and Customs. This means more transparency. The Author will also provide binding rules. The prospective investors will now know in advance about their duty liability.
4 Custom tariff stands further reduced from 45% to 40%.
5 Introduction of a rational and simplified duty structure. In the past there have been as many as seven major ad valorem rates of customs duty.
6 Import duty structure is now rationalized for project imports.
7 Import duty on many items used in the IT sector is reduced and rationalized.
Q. 3. ”Garments have emerged as the star-performer in the Indian textile export scenario.” Elaborate.
Ans. Trends in Readymade Garments Export: Garments are the star-performer in the Indian textile exports. The sheer enormity of the achievement recorded by readymade garment segment is awe-inspiring.
Table clearly brings out this fact. The exports have gone up from $2583.41 m in 1993-94 to $4807.92 m in 1999-2000. IBO 03 Free Solved Assignment
The achievement over the years is there despite severe global competition. The noteworthy feature of all this is that the Indian garment industry is mostly in the smallscale sector with a moderate capital investment.
Although total exports from India in garments are much lower than some of its competitors like Hong Kong, South Korea or Taiwan, the growth rate achieved is far higher than any of them.
That is why the future appears very bright.
Table : Exports of Readymade Garments
(5 million)| Year | Exports |
| 1993-94 | 2583.41 |
| 1994-95 | 3282.83 |
| 1995-96 | 3681.04 |
| 1996-97 | 3756.45 |
| 1997-98 | 3880.85 |
| 1998-99 | 4363.96 |
| 1999-2000 | 4807.92 |
REASONS FOR EXCELLENT GROWTH
The Indian garment sector has shown a steady growth over last few decades. Reasons for its swelling exports are as discussed below:
Rising Labour Costs in Development Markets: Many of the developed markets have found it tough to continue their garment manufacturing operations because of growing labour charges.
These nations now find it more economical and cost-effective to buy their requirements front the developing countries with abundance of labour and low wage structures.
Shift to Technology Intensive Industries: During the 1970s many developed countries started more on focussing the emerging hi-tech industries like computer hardware and software, electronics, ship building etc. IBO 03 Free Solved Assignment
Labour-oriented and pollution prone industries like textiles Clothing, tanning and finished leather were increasingly de-emphasised.
These industries also did not suit the economic profile of many of the developed Western countries. This provided the opportunity for developing nations like India to step in to fill the void thus formed.
Special Fascination of Indian Fabrics: Indian fabrics have always fascinated foreign buyers, particularly the Western designers.
Most appealing have been the rich colours and design variations of these fabrics. In fact, it was the traditional Indian handloom fabric, which started the garment export boom in early 1970s.
Two well-known handloom fabrics-Madras Checks and Cannanore Crepes caught the eye of Western designers and clothing made out of these items soon became a rage throughout Europe. The rest, as they say, is history,
Move Towards Natural Fibres: People now clearly prefer to use clothes made of natural fibres.
There has been a continuing swing towards natural fibres and their blends in place of synthetics (nylons, etc.). IBO 03 Free Solved Assignment
In the beginning, the immediate reason was the increasing cost of petrochemical based items. Later on the consumers also realised plus factors like comfort in wearing cotton apparel and health/environmental reasons.
India gained in a big way from these changes in consumer preference and Indian exporters soon began to exploit the opportunities that now came their way.
Ability to Satisfy Even Small Orders: Orders for garments arrive from large importers and departmental stores abroad as-well-as from ethnic shops and small boutiques.
Though individual orders coming from such sources are small, as a whole they do form sizeable import orders for clothing.
Such small orders ideally suit the Indian garment sector. This is because the garment sector here mostly consists of small units and is highly decentralized.
It is thus very flexible and in an ideal position as compared to its competitors in other countries, to cater to small orders for diverse items.
Most of our competitors have large composite clothing units with assembly line operations. They are thus not in a position to satisfy such small orders for wide-ranging designs and colour combinations. IBO 03 Free Solved Assignment
Better Publicity and Promotional Campaign: After realizing the potential of garment export as foreign exchange earner, the Central Government also stepped in and launched a massive publicity and promotional campaign to popularise Indian garments among importers and world markets.
India now regularly participates in specialized clothing exhibitions overseas.
Apparel Export Promotion Council, set up by the Government, and the Clothing Manufacturers Association have been holding periodic buyer-seller meets at important production centres.
E-commerce and Other New Facilities: The world has become like a global village. With advance of Internet, instant e-mails, e-commerce, online money transactions, mobile telephones, and other technologies the international trade has become fast, swift and more profitable.
International travel has become easy and one can go across the globe in few hours. This has greatly reduced the North-South divide and brought prospective sellers and buyers closer together.
Private Contacts and Initiatives: There is now a far greater understanding of Indian capabilities in certain fab 6 designs and variety of clothing, especially in the summer wear.
The garment export sector, it may be pointed out, came into prominence primarily because of private initiatives. IBO 03 Free Solved Assignment
First there were direct deals between the Indian entrepreneurs and the overseas importers. Government assistance and incentives was a much later development.
Rising Wages in Competing Countries: During the early nineties rising labour costs in some of our competing countries like Hong Kong, Taiwan and South Korea made exports of labour-intensive goods like clothing unappealing for their exporters.
Some of them also shifted to technology-intensive industries like electronics and automobiles. This again helped Indian exports of clothing, as it, therefore, became more competitive.
Q. 4. Write short notes on the following:
(a) Indian competitors in the export of electronic goods
Ans. India and the New Asian Economic Tigers: Although Indian electronic goods are being exported to advanced countries like USA, Britain, France, Germany, Holland, Japan, etc.
India has still to go a long way to assert itself strongly in international markets. Brand India is yet unknown and Indian items are largely bundled with non-branded products in markets abroad. IBO 03 Free Solved Assignment
There is a cut-throat competition against the already strong and established competitors from developed as well as New Industrialised Countries (NICs).
India’s main competitors are, in fact, the Asian NICs. They are not only giving a run for money to Indian goods in the global markets, but are also attracting large scale MNC investment in consumer electronics.
Excepting China, which till now relied mostly on its huge domestic market, the other NICs (South Korea, Taiwan, Singapore, Malaysia and Thailand) heavily rely on massive exports to sustain their consumer electronics industry and economic growth of the nation.
Since 1980s exports has become the mainstay of their economy. So much so that the economic experts are calling these countries as Asian Economic Tigers.
There economic prosperity even forced China to do some rethinking about its policies.
As a result even China shifted its focus on the export market in late 1990s and started encouraging joint ventures with multinational companies to increase its export operations.
Several factors are responsible for the dramatic breakthrough the NICs have achieved in the international electronics market.
The first and foremost factor is development of a strong component base providing cheap yet high quality inputs.
The second factor is heavy Foreign Direct Investment (FDI) by MNCs due to attractive and liberal economic policies. IBO 03 Free Solved Assignment
The third factor is the free use of reputed foreign brands. This critical decision has helped these nations to expand their global market share and increase export revenues in the highly priced branded segments worldwide.
As opposed to the Asian Tigers, the entire Indian consumer electronics industry displays very little enthusiasm for exports.
All these years, exports have not been a major concern for Indian companies. Sometimes, some hectic activity had been seen but that too only for short-term profitability considerations.
Mainly, this has been for getting benefits from the export incentives declared by the government from time-to-time.
What is urgently required is a proactive government policy on consumer electronics as adopted by the Asian NICs.
Within the framework of such policy, a proper strategy can then be formulated to boost the exports. Also, we must keep track of present and future competitors and do away with our deficiencies to improve the industry working.
Table : shows how India and the Asian NICs differ in operational features of their electronic industry. The Table clearly reveals that India is far behind the Asian NICs in competing on the global scale. IBO 03 Free Solved Assignment
Table: Comparing Operational Features of Electronics Industry in India and the Asian NICs
| India | NICS |
| . Low production volumes | . Large volumes of production |
| . Fragmented capacities (mostly uneconomic) with many units selling in the domestic market,which was protected in the past. | . The average operational volume of companies is nearly 2.5 times of the Indian companies. Manufacturing capacities are well consolidated. Large units have capacities of international standards. |
| . Production factories are scattered and are often far away from components suppliers. | . Production is often integrated with component manufacturing facilities. Locations are well planned. |
| . Diffusion of latest products and technology has been sluggish in the past | . Special export zones parks offer improved location advantages, Conscious efforts to diffuse latest products and technology. |
| . Backward integration by companies has been lethargic Weak relationships with components suppliers. | . All leading export companies have opted for backward integration. They, thus, have better control over operations while ensuring good quality and low costs. |
| . Technology imports in bits and pieces, which led to assembly-oriented units and killed innovation. | . The presence of domestic component suppliers is a major factor for success in exports markets and attracting MNCs. |
| . Low labour cost is still the main advantage. It is, however, outweighed by many other factors including production scale, finance cost and infrastructure. | . Low labour cost was a major advantage in the early years of developing the industry. |
| . High selling prices due to low volume of production, high infrastructure expenses and finance costs. | . Competitive prices, mainly because of high volume production. |
(b) Potential of health services in India
Ans. Healthcare has become one of India’s largest sectors, both in terms of revenue and employment. Healthcare comprises hospitals, medical devices, clinical trials, outsourcing, telemedicine, medical tourism, health insurance and medical equipment.
The Indian healthcare sector is growing at a brisk pace due to its strengthening coverage, services and increasing expenditure by public as well private players.
The Indian healthcare delivery system is categorised into two major components: Public and private. IBO 03 Free Solved Assignment
The Government, i.e., public healthcare system, comprises limited secondary and tertiary care institutions in key cities and focuses on providing basic healthcare facilities in the form of Primary Healthcare Centres (PHCs) in rural areas.
The private sector provides a majority of secondary, tertiary, and quaternary care institutions with major concentration in metro cities.
India’s competitive advantage lies in its large pool of well-trained medical professionals. India is also cost competitive compared to its peers in Asia and Western countries.
The cost of surgery in India is about one-tenth of that in the US or Western Europe.
The healthcare market can increase three-fold to Rs. 8.6 trillion (US$ 133.44 billion) by 2022. In Budget 2021, India’s public expenditure on healthcare stood at 1.2% as a percentage of the GDP.
A growing middle-class, coupled with rising burden of new diseases, are boosting the demand for health insurance coverage With increasing demand for affordable and quality healthcare, penetration of health insurance is poised to expand in the coming years.
India is a land full of opportunities for players in the medical devices industry. The country has also become one of the leading destinations for high-end diagnostic services with tremendous capital investment for advanced diagnostic facilities, thus catering to a greater proportion of population.
Besides, Indian medical service consumers have become more conscious towards their healthcare upkeep. IBO 03 Free Solved Assignment
The Indian healthcare sector is much diversified and is full of opportunities in every segment, which includes providers, payers, and medical technology.
With the increase in the competition, businesses are looking to explore the latest dynamics and trends which will have a positive impact on their business.
- Comment briefly on the following statements:
(a) Electronic eommerce is re-creating the worlds economy.
Ans. Electronic Commerce: Electronic commerce is creating an entirely new scenario for world’s economy in this era liberalization and globalization. Information-based industries have completely transformed the ways competitive marketing.
For the open global economy electronic commerce has come as a boon. The most significant and important characteristics inherent to electronic commerce is its ability to respond to markets without any botheration about national boundaries or time through a medium that is ever-present and instantaneous.
However, an enormous investment is needed in electronic commerce technology and the speed with which electronic commerce will benefit a country certainly depends on how fast that country liberalises its market and adopts a predictable trade regime-these two being the necessary and essential conditions for staring e-commerce.
Electronic Data Interchange (E Is normally means paperless commutation. Most industrial countries now insist that all necessary documents for international trade must be sent to them through EDI. IBO 03 Free Solved Assignment
In some extreme cases, they have even specifically declared that No EDI No Trade.
Many less developed and also some developing countries find it still difficult to put into practice electronic data interchange simply because they do not have the necessary infrastructure in information technology to make it possible for them to deal electronically with their clients from developed nations.
In 1998, WTO members earnestly started delving into the problem of how the World Trade Organization should deal with the use of electronic commerce.
E-commerce is definitely of a unique nature in entering into contracts of delivering products (goods and services across the world. This very uniqueness has raised many issues, which still remain unresolved.
In e-commerce, products are bought and paid for over the Internet. However, they are delivered physically across the world. Such transactions are subject to existing WTO rules on trade in goods.
The situation becomes more convoluted for products that are delivered as digitalised information over the Internet. This is just one example. Many such issues are bound to arise as e-commerce becomes widespread.
The supply of Internet access services and delivery of many products over the Internet come within the scope of the General Agreement on Trade in Services (GATS).
However, there is clearly a need to know the extent to which particu 8/ activities come under market-access commitments of the WTO members.
In view of the undefined nature of electronic commerce and its capability to affect most aspects of trade, it was agreed by WTO members to carry out Work Programme on Electronic Commerce in a parallel mode, among the various WTO bodies with different competencies. IBO 03 Free Solved Assignment
Different WTO bodies are still engaged in examining trade-related aspects of electronic commerce within the framework of Work Programme on Electronic Commerce.
(b) The government of India annouced sweeping changes in the trade policy in the year 1991.
Ans. Liberalisation Arrives: The government declared far-reaching changes in the trade policy in 1991. A new ExportImport Policy was introduced from April, 1992.
This was a major step towards economic reforms of India. To have stability and continuity, the policy was meant for the duration of next five years.
The policy liberalized imports and strengthened export promotion measures. It also stressed on boosting domestic industrial production.
Major features of the export-import policy (1992-97) were:
- Introduction of duty-free Export Promotion Capital Goods (EPCG) scheme,
- Strengthening of Advance Licensing System,
- Waiving of the condition on export proceeds realization for imports,
- Rationalization of schemes for the export-oriented units and units in the Export Processing Zones (EPZS). In a nutshell, the thrust of the entire policy was on liberalising imports and boosting exports.
It soon became clear that there was a need for further liberalization of imports and promotion of exports and in 1997 Government of India announced its new Export-Import Policy for next five years (1997-2002).
This policy not only further simplified procedures and but also reduced the interaction between exporters and the Director General of Foreign Trade (DGFT) by cutting down the number of export documents to almost half.
Import was further liberalized and there was promise o intensive efforts to promote exports. IBO 03 Free Solved Assignment
(c) The most remarkable aspect of Indian agriculture is its diversified nature.
Ans. There are a large number of agricultural products available for export from India. Most of these products are food items.
They are either for human consumption or for animal feed. Raw materials like wool, jute, silk, cotton, etc., in their natural form, are also covered under agricultural products.
Raw hides and skins are also generally classified as agricultural products. However, India has banned their exports.
It should be mentioned here that processed leather and leather products by convention are not part of agricultural products.
So also is the case of processed items of jute, wool, silk and cotton. They fall under the category of textiles.
Tobacco and tobacco products technically belong to the category of food items and hence are a part of agricultural products.
Again fish and fish products either from sea or river are an agricultural produce. Interestingly, while essential oils are not considered as agricultural products, caster oil is taken as an agricultural product. IBO 03 Free Solved Assignment
Indian agriculture is greatly diversified in nature because of varied climatic and soil conditions across the country and abundance of sunshine.
Very few countries in the world are as lucky as India with food grain crops, commercial crops, piscine culture, floriculture, sericulture, horticulture, viticulture, poultry,
animal husbandry, dairy sector, forestry and a manufacturing and food processing sector for the agricultural commodities.
(d) The ASEAN region is important to India for several reasons.
Ans. India’s trade with ASEAN has gone up but not fast enough. All projections show that this is the region which has registered the highest growth in the past and is expected to maintain this growth in the years to come.
Further, the world trading system is in the process of evolving into trade blocs in spite of the successful conclusion of the Uruguay Round to Multilateral Trade Negotiations.
No trading bloc in South Asia is likely to have enough of economic clout to counteract this phenomenon of trading block causing a market entry problem to a country like India.
This calls for a closer relationship with regional trading blocs on a bilateral basis. Thus a closer relationship with ASEAN is a prerequisite for India. IBO 03 Free Solved Assignment
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