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What are the advantages and disadvantages of International Trade

International trade is the exchanges of goods and services across the international borders, it plays important role in the economic growth of the country. For the Globalization it is important to increase the trade business. 

International trade is all about the import export which involves buying and selling of goods and services. Import is buying of goods and services from outside of the country and Export is selling of goods or services outside the country.

International trade has more complex structure than the domestic trade, because it involves the following reason – 

• Tariff cost imposed by the border of the nation
• Time cost if shipments take time to clear from the port
• Costs involved due to differences between the nation such as Culture difference, legal structure, language etc.

By the International trade all the countries involved in Import-Export get the benefits, consider a country A has raw materials to manufacture the final goods but don’t have the skilled man power, in this case A will export to country B which has enough skilled man power but dnt have enough raw materials to manufacture the final goods. B will import the materiall from country A and will manufacture the goods and will sell it to the country A or any other country C which has important role in the trade business. Government launched RoDTEP Scheme to provide export incentive to the goods exporters.

To stabilized demand supply position prices can be stabilized, which in turn stabilize the price of goods, transportation cost and the other marketing expenses.

By International trade, customers can get various types of products and services.

It makes sure the goods manufactured for the export match the international standard and the quality.

Raises the standard of living of the citizen:-

Under foreign trade it gets the opportunity to provide the different types of goods and services. People can get better varieties of goods and services.

Employment Generation:-

It generates the employment directly for the import export sector and indirectly to other economy.

Economic Development:-

Import of raw materials or the capital goods facilitate the economic development of the country by using these import materials a nation can grow in all the sector not only in the sector for which the resources are available in their own country. Government of India has launched following two scheme to import duty free materials and capital goods – 

MEIS Scheme introduced to facilitate goods exporters and EPCG Scheme Introduced under foreign trade policy to issue the license which allows the import of capital goods without paying custom duties to manufacture the export goods with the condition of export obligation, export obligation can be fulfilled by exporting the goods manufactured by the capital goods six times of the duty saved amount on the capital goods in six year.

It fulfil the requirement of essential goods during the natural disaster:- 

There are various nation in the world which are getting affected by earthquakes, floods, famines, etc. almost every year and face the essential goods shortage, foreign trade enables the exchange of essential goods to fulfil the need.

Government of India launched Advance Authorisation Scheme which allows the duty free import of raw materials required to manufacture the export goods, EPC assist exporters for availing the Advance License under the Advance Authorisation scheme.