Examining The Approaches To International Business And Trade Investments In India (Term Paper Sample)

Approaches to International Business and Trade Investment in India
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Approaches to International Business and Trade Investment in India
In the recent years, the changes in the market structure and the advancement in technology has led to the adoption of the international business operations among the developing nations in the world. India is one of the most developing nations with a high economic growth rate and a Gross Domestic Product of $ 2.60 trillion according to the 2017 financial reports. The major factor that has brought a tremendous impact on the growth of the Indian economy has been the increase in foreign trade. In 2015, the participation in the international trade led to the generation of 48.8% the of the GDP revenue in the country. Indian exports its commodities and services mainly to the United States, the European Union, the United Arab Emirates as well as the Asian countries. This shows the importance of the foreign trade in the economy of India. Through the adoption of favorable economic policies and approaches to the foreign trade, India has created a sustainable environment for the international business and the trade investments.
Approaches to foreign trade
The major approach that India has adopted to boost foreign trade was to make reforms in the economic policy. In 2015, India adopted a new foreign trade policy that was aimed at improving global trade. According to Goyal et al. (2015), the policy aimed at creating an enabling environment for international business, boosting the relationship between India and the global trading partners, and promoting the balance of payments in the country. The approaches that have been used to operate in the global market include:
Diversification of the products and services in the international trade
India has implemented a consumer-oriented global value chain that is aimed at enhancing its participation in the global market. The country provides agricultural commodities, Information Technology infrastructure, pharmaceuticals, petroleum products as well as services such as outsourced labor. The export products and services have played a significant impact on the foreign market since they have cemented India’s reputation as a G-20 economy country. The products and services are exported to foreign market destinations majorly the United States, European Nation, Middle-East Countries and other Asian countries such as Japan. India has become a major exporter of pharmaceuticals in the global market. The country supplied 8% of the global pharmaceuticals in the international market. Moreover, India also produces affordable generic medicine that is consumed by underdeveloped nations in the foreign market. India has also provided various agricultural products such as cashew kernels, wheat, rice, and spices (Baer & Sirohi, 2013). Most of the agricultural produce are exported into Asian countries as well as the United States of America. India has embraced market-based economic policies in regards to its economic liberation initiatives that were adopted a decade ago.
Moreover, the Asian country has also been producing petroleum products, agrochemicals, automobiles, textile, and jewelry. The services that India supplies in the global market include outsourced skilled labor-force and the aviation industry. India has also undertaken the initiative of promoting and branding the products and services for export. Through the use of advanced technology, the country has promoted the products and services in the international market. India has adopted the use of online transactions to boost payments in the global market. The use of online transactions has reduced the production costs and expenditure through enhancing the efficiency of business operations.
Provision of fiscal incentives to exporters
The Indian government also implemented the economic policies that have called for the provision of fiscal incentives on the export products and services. To boost the operations of exporters in the global market, the government provides incentives and a reduction in export tax. This measure has created an enabling environment for the exportation of the commodities and services. The fiscal incentives and tax breaks, therefore, reduce the cost of production in the local market. The industrial sector, the health center, and the agricultural sector are given the incentives to lower the cost of production and also to stimulate the production of large quantities of commodities for the global market. The provision of incentives on the export products and services also results in the reduction of the prices in the foreign market. In comparison with the prices of commodities of other competitors in the foreign market, the cost of exports from the Indian market is cheaper thus leading to high demand. The global market has recognized the low prices of commodities from India. Unlike other countries in the global market such as the United States and The European Union, the commodities and services from India have generated a higher demand due to the global prices. According to the Foreign Trade Policy, the government is expected to promote the export products through creating a good relationship with the nations in the global market.
Increase in the focus on the utilization of trade agreement
Another measure that the India has undertaken to promote the foreign trade is to increase the focus on the utilization of the trade agreements. The trade agreements are critical for the participation in the international business. This is because the agreements shape the operations of the foreign trade. India follows the foreign trade policies that have been implemented by the World Trade Organization. The international trade organizations play an important role in creating a sustainable environment for the foreign trade. India has been at the forefront of advocating for the utilization and adherence to the international trade agreements among different nations in the global market. The trade agreements also stipulate the market share that each country has in the foreign market. For example, there is a particular percentage of commodities that India is expected to export to the European Union, the United States, and the United Arab Emirates. According to the trade policies, the competitors in the foreign market such as China is not allowed to dominate the European Union market. According to the World Trade Organizations, each country should produce a specific amount of exports into the global market. Such policies are supposed to regulate the foreign trade and also to prevent the monopoly in the global market.
Trade Investments
One critical issue that has enabled India to penetrate the global market is the adoption of a favorable environment for trade investments. The amendment of the Foreign Trade Development and Regional Act of 1992 led to the adoption of critical measures that was aimed at promoting trade investments. The adoption of the Foreign Direct Investment Initiative has boosted the economy of India (Lahiri, 2013). The largest stock exchange in India, the Bombay Stock Exchange recorded a market capital of $ 1.71 trillion in 2016. According to the World Trade Organization, the economic growth of India has been attributed to the presence of policies that have enabled the implementation of the foreign direct investment. The trade investments that have occurred India include:
Industrial Investments
The industrial development in India has brought a great impact on the economic growth. The industrial income contributed to 26% of the GDP in 2015. The country is known globally as an international oil producer. Indian has invested in petroleum and related products’ manufacture. Crude oil, agrochemical, and polymers are also produced in the country for the global market. Moreover, several automobile assemblies produce vehicles that are exported to the global market. India has become an industrialized nation due to the adoption of advanced technology. The industries also produce the software that is used by multinational corporations. The software industries have also led to the exportation of outsourced labor. The skilled labor force is hired to work remotely in producing high quality software that is used in the technology-based business organizations. Another industrial investment has occurred in the production of ornaments and jewelry. India is known for the production of high quality Surat diamonds as well as gold.
The jewelry and ornaments production has boosted the economic growth. The country also has established the pharmaceutical companies that produce the generic medicine for the global market. The exportation of p...