CONTENTS

1) Preface

2) War on freedom

3) International Business: Scope

4) Emerging India

5) Outsourcing

6) Latest in International Business: News

7) IB-Quest

8) Acknowledgement

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 VISION

The newsletter is envisaged as an attempt to form a link with the latest happenings in the
dynamic world of international business- as a platform for the authors to bring across to the
readers their perspectives on what moves the wheels of the corporate world in the international
arena.

Newsletter of International Business Cell, MIB

 PREFACE
It is a matter of immense pride for us to bring forth the very first issue of “VishwaVyapar”, the
in-house newsletter of the International Business Cell, an initiative of the students of Master of
International Business, Department of Commerce, Delhi School of Economics, University of
Delhi.

The newsletter is an attempt to share with the readers the most pertinent issues and happenings
that have the ability to drastically modify the global landscape, so far as doing business on an
international stage is concerned. The views and opinions presented in this issue, and the
forthcoming ones as well, would therefore be aimed at presenting in a comprehensive manner the
implications of the latest happenings, as well as attempting to bring forth the analysis and
thoughts of the most experienced and knowledgeable minds from the business world, the
academia, and policy think-tanks.

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 International Business: Scope
The last two decades have been a testimony of burgeoning economies, India in particular, world
in general. The best thing, arguably, that has happened to the world of business is globalization
leading to liberalization in international trade which is formalized first by GATT & thereafter by
WTO. These have introduced a new concept of OPEN MARKET, which has opened new
horizons of international trade in diversified product line.

A Glimpse of India in International Trade:

Year Description

1991- Introduction of new economic policy India‟s foreign trade- $ 18 billion

2003 India‟s share in world trade- 0.92%
2008 India‟s share rose to 1.64%
2009 India‟s foreign trade- $ 200 b (expected)

Analysis of data

- 45% India‟s GDP coming from export import

- 14 m jobs have been created directly or indirectly by augmentation in IB from 2003 to 2004
- GOI has strengthened foreign trade policy & has set up SEZ, Dry ports, Ports as well educational
institutes as IIFT, DSE (MIB), and Indian Institute of Packaging etc.

IB: A Dynamic Multidimensional Field

In short the basic aim of international business is to promote foreign trade between countries in a
symbiotic relationship by co-operation and understanding of each other‟s needs, interests& trade
policies. As trade is between countries which are regionally, culturally, politically, and legally
different, a lot of complexities arise for e.g. different EXIM policies, standardization,
documentation required custom agreement & legalization. Here comes the niche area for
professional managers in IB to understand these differences and harmonize trade between
countries in terms of production, packaging, shipping, insurance, invoicing, inspection, logistics,
quality control, finance, marketing, customs clearance, legislation, risk management, surveying,
service, liaisoning, FOREX, merchandizing, taxation. R&D etc. besides people are needed in HR
management with understanding of cross cultural trade practices, communication and
negotiation, in export promotion councils, commodity boards, state trade boards, multilateral
bilateral trade agreements & e- commerce. This clearly shows the vast opportunity lying

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 untapped for young professionals. The need of the hour isthat IB professionals in making should
recognize their field of interest and be adept in one or more of areas discussed.

Fields and Profiles for IB Post Graduates in Management:

The curriculum of IB students is such that they become skilled in the general management of
business happening at international level, therefore Export Import houses, Merchandisers,
Customs clearance houses, SEZ, Dry Ports, Ports, Logistic co., Transportation corporations,
director general Foreign trade, state trading corporations, shipping co., marine insurance co.,
banks and financial institutions catering to EXIM houses, FOREX services, pre & post shipment
quality control labs, export marketing firms , BPO involved in EXIM business, customer
relationship mgt., international accounting. Most of the companies provide decent placements to
fresh management professionals in IB with attractive initial packages clubbed with perks and
tremendous growth opportunities both in profile as well as remunerations but most importantly it
gives a fertile ground to an entrepreneur mind to explore his horizons as it is relatively a new
field and most part of it is untapped so always people have the option to grab the emerging
markets throughout the world.

Work Place Profile Description of Jobs

Export House + Merchandiser CHA- custom house agent Documentation of EXIM, Liaisoning
Export Manager between
Between exporter &custom authority
Insurance co. Assessors, surveyors, Asses the loss to goods shipped in a
certifiers Country
International Marketing Firms Strategic Marketing Manager Boosting overseas sales, searching
CRM- customer relationship business hubs & potential markets
manager abroad
Consultancy Consultant, Risk & business Providing specific information to
analyzer Business firms for business
Development ,foreign investment,
Competition in market
WTO, UNCTAD, IMF WB, International trade legislation,
REGIONAL TRADE Negotiations, R&D, patents etc.
BLOCKS
International Finance Finance manager , finance FOREX exchange transaction risk
analyzer management , LC etc.
Faculty position Education institutes Grooming budding managers in IB

Entrepreneurs Whole world Own export house or specialized

Trade of goods or services in
International markets
- Kapil Goswami (MIB 1st Year)

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 WAR OR FREEDOM
There are two powerful instincts inherent in human beings; to be free and to associate.
Paradoxical as they are, humans as individuals and nations as a whole are struggling to strike the
right balance between the two. The underlying debate is between Regionalism and
Multilateralism.

International trade economist like Jagdish Bhagwati say free trade is in the larger interest of all
but can you think of feeding your neighbour when your own child is crying for milk? This is
what happened after 1930‟s great depression. The protectionist policies and complex system of
bilateral treaties made World War inevitable.

Regional Trade Agreements are supposed to result into economic benefits for the member
nations. This economic benefit must stem from increased intra-regional trade but comparison of
intraregional trade as a percentage of global trade before and after the implementation of RTA
shows that barring MERCOSUR none of the RTA showed any significant increase that could
justify the cost involved in implementing an RTA. Yet RTAs are growing exponentially,
especially after 1991. Then what could be the explanation for seemingly pointless proliferation
of RTAs?

One of the reasons cited is failure of WTO as a multilateral body in 2001 Doha Round. As a
result many developing countries started forming RTAs with developed countries in a struggle to
avoid being excluded from the process of development. This argument stands invalid as most of
the growth in RTAs happened before 2001. Also if we look at the role of WTO in curbing tariff
wars in the recent recession we can say that WTO has not entirely failed. A better explanation
can be the decline of US hegemony after 1991 resulting into emergence of multipolar negotiating
blocs.

The major question is so much of regionalism is good or bad. Some say regionalism is good
because it promotes multilateralism. Supporters of free trade on the other hand consider it a
barrier in the form of discrimination for the non-member countries. The trade is diverted from
non-member efficient countries to inefficient member countries.

Today need for association is more dominant than the need for freedom possibly because
countries consider association a way to gain economic security and prosperity. Hence as long as
economic disparity exists in the world, RTAs will flourish. But WTO must address the problem
as issue is not just economic but political. Weather this stream of association lead to freedom or
the 3rd World War, is yet to be seen.

- Sunita Arora (MIB 1st year)

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 Emerging -India

India has achieved GDP growth rate of more than double that of United States during the past
decade. With this achievement, we can say that India has become one of the most promising and
fastest growing economies in the world. Economical and efficient work-force equipped with the
best of technologies is one of the biggest reasons of this achievement .A powerful media and
relatively efficient judiciary provides transparency that is required by any business model in
world.

Introducing India

About 20 years back we were a closed economy based mostly on agriculture, but in 1991 we
took various reforms to change the structure of our economy to encourage foreign investments.
Our economy is 12th largest in the world when measured in US dollars but becomes 4th largest
when measured in purchasing power parity.

After the removal of trade barriers and entry of MNCs, the Indian labor market has witnessed a
dawn of new era offering a plethora of job opportunities at higher remuneration. The major
entrants are industries like pharmaceuticals and Information technology. We have also imported
the best global practices and implemented them successfully like the Japanese concept of just in
time.

There are still many gaps like poor literacy, undeveloped infrastructure and inflexibility of labour
due to huge population is a big hurdle in starting high volume manufacturing, but still companies
are trying to remove this gap with the use of technology and communications.

In 2007 our imports from US was 73.4% more than 2006. We have got the position among top
20 trading partners of USA .Our imports from US are increasing at a good rate .But surely this
is not the end .In the coming years we expect to move further. More MNC are willing to enter
India to get first mover advantage and get the best talent along with building good relationships
with suppliers.

World Re-Discovers India

Many outside companies have been active in India for long. The best example is, DuPont India,
an American firm‟s subsidiary which began its operations in 1802 when it sent its first shipment
of raw materials to DuPont (USA) to produce black powder for explosives. Today, DuPont India
markets a wide range of products in varied market segments around the world. DuPont
discovered India‟s value proposition long before other multinationals discovered the unique
powers of India.

After 1991 import restrictions aimed at multinationals have been removed in nearly all sectors.
Big giants like J&J, Nokia and Pepsi have entered India to take advantage of manufacturing and
marketing opportunities. Hindustan Lever (Unilever's Indian arm), ITC and Maruti are among
the successful multinationals with a long-term presence there. Other multinationals, LG

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Electronics, Ericsson, S.T. Microelectronics and Motorola for instance, have built businesses
with more than $1 billion in annual revenues in just a few years. FDI inflows increased from
$2-3 billion a year to an estimated $41 billion in fiscal year 2008-09. Among the imports major
products are crude oil, electronic goods, gold and other metals.
Attractive Industry Sectors

Our country with a population of more than one billion and a gross domestic product of more
than 1000 billion dollars provides a world of opportunities for domestic and international
marketers in multiple industry sectors. All the types of brand luxury, telecommunications, food
& beverage etc have established significant presence in India. Bangalore has become IT hub with
presence of more than 500 major companies. Big chip makers like Intel, Free-scale, S.T.
microelectronics and Mediatek have significant presence in India .Mediatek have
revolutionized in mobile phone sector by making chips are very low cost and the major factor is
India‟s cheap labour.

India has become a very big spare part market also. Toyota recognized India as a source of
components and enters in Indian market in 2001 by investing $200 million in six joint ventures.
It now exports many complex parts like transmission assemblies from India.

Shape of Things to Come

If we consider the world investment report of 2005 India was ranked third as an R&D spot,
which was defined as a place where foreign companies can tap in scientific and technical
expertise with in India .Indian education system provides large pool of doctors and engineers,
which is a big resource and can be tapped for further growth.

As mentioned in UNCTAD reports, more than 50 percent of R&D firms conduct research in
India and China. Recent survey done by firms like Booz, Allen, Hamilton and the French
business school INSEAD indicated that 75% of new R&D sites planned over the next few years
will be in these two countries.

No-doubt FDI and FII in India have increased in last decade, but still it is well below the rate in
China and other parts of immediate neighbourhood. India is fastest growing free market
economy which provides unique value proportion which I will cover in my later articles.

Vishal Singla (MIB 1st Year)

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 OUTSOURCING
Companies from west have been sending jobs off to India or China or some other country where
they can be done at a lower cost, increasing the profit margin and productivity. An increase in
productivity is made possible by working 24 hours a day; when the office in US is ready to close,
its Indian counterpart is ready to begin, thus creating a continuous work cycle. Despite the
advantages of outsourcing for companies, the practice has attracted much criticism from the US
public and some politicians recently.

Outsourcing has attracted much attention since it became a hot topic during the last presidential
elections in the USA. Democratic U.S. presidential candidate John Kerry criticized U.S. firms
that outsource jobs abroad or that incorporate overseas in tax havens to avoid paying their "fair
share" of U.S. taxes during his 2004 campaign, calling such firms "Benedict Arnold
corporations". Companies have laid off workers in the US and hired people in India and China to
do the same kind of work for much less. Many American companies have outsourced their
customer care centers to India. In addition to concerns about many Americans losing jobs, people
have complained about the quality of service provided. Nevertheless, a person who believes that
he has received bad service will have a negative opinion on outsourcing. Another reason for the
increasing opposition to outsourcing is the concern that in the long term, the American economy
will suffer since not only the low-paying jobs but the high-tech ones are moving away from
America. They are concerned that in the future, America will lose its edge as the technical
leader.

The recent Ohio Ban on outsourcing in US has ignited a spark in the International business
environment which is very much capable of turning into a fire. The US president Barack Obama
has been raising pitch against outsourcing since his inception in White House. He says that “One
of the keys to job creation is to encourage companies to invest more in the United States. But for
years, our tax code has actually given billions of dollars in tax breaks that encourage companies
to create jobs and profits in other countries”. Obama is firm on ending tax breaks for the
companies which outsource their work to other countries. Infosys Technologies Ltd has already
voiced its concern over Ohio State‟s move to ban IT outsourcing to offshore locations. The
profitability of Indian software companies could be hit if other states in the US follow Ohio‟s
example and local staff in US are hired to deliver services. Indian companies are also likely to
face loss of jobs following this decision. Indian IT companies have created more than 250000
jobs in the US in the last 3 years through nearly 500 investment and acquisition deals worth USD
26.5 billion. During 2004-2009, 90 Indian companies made 127 Greenfield investments worth
USD 5.5 billion, and created 16,576 jobs in the US. Greenfield investments are investments
made to start a new venture by constructing new operational facilities from the ground up.

It is important that we look at this issue with regards to both sides of the argument. It is true that
Americans are losing jobs, but the expenses the company is saving by outsourcing can be
invested in the laid off worker's training so that they gain new skills and can be employed again
in a high-skilled job within or outside the company. Jobs in health care, law enforcement,
journalism, and construction have the least chances of being outsourced. We can train laid off

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people in these fields which have higher earning potential. Even the economy will benefit in the
long run as a result of cost savings, increased profits and rise of high paying and high skilled
jobs.
Rohit Sarang (MIB 1st Year)

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 Latest In International Business
1. Ministry initiates dumping probe on soda ash imports

The Designated Authority in the Commerce Ministry has initiated anti-dumping investigations
into soda ash imports from China, the European Union (EU), Kenya, Pakistan, Iran, Ukraine and
the US, following a petition filed by the domestic producers' association.

The product under probe is disodium carbonate, in popular parlance soda ash, with chemical
formula Na2CO3.

The petitioner, Alkali Manufacturers' Association of India — with the costing and injury
information from GHCL Ltd, DCW, Nirma and Saurashtra Chemicals Ltd — stated that soda ash
is produced in two forms by the domestic producers — light soda ash and dense soda ash. The
main difference in the two types is bulk density.

The petitioner has furnished details on various parameters pertaining to material injury and
brought evidence concerning the injury having supervened as a result of the alleged dumping in
the form of fall in production, capacity utilisation, profits, return on investments, cash flow,
market share and significant price undercutting and price underselling due to dumped imports
from the subject countries.

2. Canada, Australia growing pulses just for India

Would you believe that in Canada and Australia, pulses or dals are being grown exclusively for
export to India, where skyrocketing prices and shortages of some of these protein-rich
commodities have become common?

According to Mr R. Gopalakrishnan, Executive Director of Tata Sons Ltd, teams from these two
countries have studied the Indian habit of eating dals. They have also come up with a dal map of
the country, with information including the specific dal for specific needs, say, for making dosa.

The potential these countries see is so high that some special economic zones are coming up
where pulses would be grown exclusively for India. Traditionally, India has been dependent on
Myanmar, which is the largest exporter to the country, he told a group of newspersons here.

The Tata Group itself has decided to give a big push to pulses production in the country. Its
companies, Rallis India and Tata Chemicals, have done pilot studies in Tamil Nadu and Punjab
to establish the entire chain of procuring seed to growing and selling dal in packaged form, he
said.

3. Trade with Poland likely to double over the next three years

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Indo-Polish bilateral trade is likely to double to $2 billion by 2013, the Indian Ambassador to
Poland, Mr Deepak Vohra, said.

Speaking at an event organized by the Confederation of Indian Industry for the high-level Polish
business delegation, he added that import and export between the two countries has crossed $1
billion now.

The Central European country is keen to boost bilateral trade ties and is looking for new business
opportunities in renewable energy, infrastructure and innovative technology, clean and green
environment technology and waste management. Some of the other sectors where Poland is
looking for new investments are education, health care and hospitality.

The bilateral trade at present is in sectors such as Agro, textiles, defense, heavy engineering,
mining, IT, agro food processing and other such sectors. About 20 Indian companies have made
capital investment in Poland so far.

4. Govt for easing foreign investment rules for joint ventures

The Department of Industrial Policy and Promotion has sought views on whether the restrictive
conditions on foreign and technical collaborations in the case of existing ventures and tie-ups in
India should be abolished or relaxed gradually. The stakeholders are to give their views by
October 15.

The latest DIPP thinking is that the existing venture/tie-up conditions are nearly 12 years old and
could therefore be outdated. “There is a need to examine whether such conditionality continues
to be relevant in the present day context,” the DIPP said.

Under the current policy, a foreign investor that entered into a joint venture or technical
collaboration before January 12, 2005 not only needed Government approvals but also had to
demonstrate that fresh investments in the same field would not affect the interest of his local
joint venture partner.

The new policy aims at protecting the interests of joint venture partners of agreements entered
before January 12, 2005. Foreign collaborations entered after those dates are exempt from the
stipulation.

5. US domestic compulsions stalling Doha deal: Khullar

The Commerce Secretary, Dr Rahul Khullar, said that it will not be possible to conclude the
World Trade Organization‟s Doha Round negotiations this year due to the domestic compulsions
of the US.

Speaking at a CII conference on „WTO and Bilateral Agreements', Dr Khullar said, “For those
who thought Doha was going to get done in 2010, it's not going to get done. It is very difficult to
go into a room to negotiate a deal when one of the major trading partners in the world (the US) is
just not there.”

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“Doha (Round talks) is held up because the US is not ready just yet, whatever be the compulsion,
political or economic in terms of very high unemployment. Right now, it (the Round) is not
happening,” he said.

6. Curbs on outsourcing regressive: Anand Sharma

The Union Minister of Commerce and Industry, Anand Sharma, said measures such as the
recently enacted Emergency Border Security Supplemental Appropriations Act, which raises
visa fees for Indian IT professionals working in the U.S are “regressive.” “The U.S.., as the
leading global economy, has to have more confidence while engaging with the rest of the world,”
he said.

Speaking to the media after a visit to the Infosys campus in Bangalore, Mr. Sharma said he “is
mindful of the challenges faced by the IT industry, particularly in the recent times.”

Referring to the option of going to the World Trade Organisation to address the threat of
protectionism, Mr. Sharma said, “It is not a question of pursuing legal options.”

“Any mindset which is isolationist and inward-looking end up hutting economies and societies,”
he remarked. “Protectionist measures end up deepening the recession,” he warned.

7. IMF approves second instalment of Greek bailout loan

The International Monetary Fund said Greece would receive the IMF contribution to the second
instalment of its bailout loan, noting that the country had made a “strong start” in its recovery
programme.

The announcement came just days after finance ministers from the 16-country euro area
approved their part of the second instalment.

All told, Greece is receiving a little more than 9 billion euros (11.4 billion dollars) in this
tranche: 6.5 billion Euros from the eurozone and 2.57 billion euros from the IMF.;

8. Exports in July grow 13% to $16.2 b

Exports in July grew by 13.2 per cent, the slowest so far this fiscal, to $16.24 billion due to weak
demand in major markets like the US and Europe.

The Union Commerce Secretary, Dr Rahul Khullar, had recently said that export growth is likely
to slow down in the remaining months of this year. This would be due to a fall in aggregate
demand in developed nations, as they make a calibrated withdrawal from the stimulus packages,
he said. Export growth in April was 36.2 per cent, May (35.1 per cent) and June (30.4 per cent).

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However, after shrinking for 13 months in a row due to the global financial crisis and the
consequent fall in demand, exports have remained in the positive territory since November 2009
thanks to the stimulus packages and the gradual international economic recovery.

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 IB-Quest
1. Which country is largest exporter of pulses to India?
2. What is full form of DIPP?
3. Which company is recently acquired by Bharti?
4. Which Indian company has secured a contract from state oil company -- Saudi
Aramco for construction of a pipeline?

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 ACKNOWLEDGMENT
At this point in time, it is important that we acknowledge the contributions of the people, thanks
to whom the culmination of the newsletter was possible.

First and foremost, we would like to express our deep gratitude to Dr. Kavita Sharma, the Course
Coordinator, MIB, for her constant support and guidance throughout the teething process of the
setting up of the IB cell.

Also, we would like to take this opportunity to thank Rohit Sarang for his creative inputs in
designing the cover of the newsletter.

Finally, deep gratitude to our faculty and classmates, for their support.

IB Cell:

MIB 2009-11

 Anuj Kuthiala
 Sumeet Singh
 Swati Chaudhary

MIB 2010-12

 Kapil Goswami
 Sharique Anwar
 Sunita Arora
 Sunny Singh
 Vishal Singla

Newsletter of International Business Cell, MIB