GATT - WTO

General Agreement on Tariffs and

Trade
Context: Pre-war depression cured by WWII
- unlikely to be a regular economic policy
option.

Depression caused by protectionism.
Depressions causes political instability.
Political instability causes war

Ergo: Need to end protectionism

General Agreement on Tariffs and
Trade
Thus - US leads campaign for postwar trade regime
based upon:
Classic (economic) liberal principle of comparative
advantage. In effect:
Tariffs would be lowered
Each country to specialise in production of those
goods it produced best (trading with other countries
as appropriate).
In theory all countries would be better off as a result.
General Agreement on Tariffs and
Trade
1947: Originally US vision for postwar trade
regime to be encapsulated in creation of
International Trade Organisation. Met
domestic opposition.
GATT - established as temporary agreement to
provide basis for trade negotiation underway
in Geneva.
General Agreement on Tariffs and
Trade
In consequence US effectively dominated
GATT.
For example:
The eight trade rounds that constituted GATT
for example, were typically initiated by grants
of negotiating authority from the US congress
to the US President
General Agreement on Tariffs and
Trade
GATT embodies 1st world rules/ assumptions
for economic prosperity:

Standardised production,
Vast scale of production,
Endless expansion of markets

combine to create the engine for global
economic growth
General Agreement on Tariffs and
Trade
GATT based on four norms:
Most-Favoured Nation
Reciprocity
Exemptions
Development Norm
General Agreement on Tariffs and
Trade
Most-Favoured Nation

All members agree to extend unconditional MFN
status to one another - no country receives
preferential treatment not accorded to all other MFN
countries.
Any benefits acquired by one country are
automatically extended to all MFN partners
Only exceptions to this rule are customs unions (e.g.
EU, NAFTA)
General Agreement on Tariffs and
Trade
Reciprocity

Any country that benefits from anothers tariff
reduction should reciprocate to an equivalent extent.
In theory then, fair and equitable tariff reductions by
all countries are ensured.
Taken with the MFN principle, reciprocity is intended
to create a downward spiral of tariffs.
General Agreement on Tariffs and
Trade
Exemptions

Regarded as acceptable if:
temporary
imposed for short-term balance-of-payments
reasons
country experiencing severe market disruptions
due to increased imports

General Agreement on Tariffs and
Trade
Development Norm added (from 1965
onwards) allowing:
1. Unilateral/unreciprocated tariff reductions
by developed countries on imports from
developing countries
2. Export subsidies by developing countries.



General Agreement on Tariffs and
Trade
GATT until the 1980s focused (very successfully) on
reducing manufacturing tariffs:

1948 - 1993
Reduction in official tariffs on manufacturing from 40% to 5%
Global trade increases by factor of four (mainly benefiting 1st
world - by 1990s 20% of the worlds population does 80% of
international trade.)
SO - GATT A (BUT NOT THE ONLY) FACTOR BEHIND
GLOBALISATION
General Agreement on Tariffs and
Trade
GATT and film:
1947 - Preparatory meeting in Geneva. US delegation
worked vigorously to secure agreement for
inclusion of provision under GATT under which all
film restrictions would be removed except quotas on
playing time for domestically produced motion
pictures.
MPEA Paris Rep, worked closely with the US
delegation throughout.
GATT Article IV - SPECIAL PROVISIONS
RELATING TO CINEMATOGRAPH FILMS
Quantitative regulations relating to films limited to screen
quotas - governments could require the exhibition of
cinematograph films of national origin during a specified
minimum proportion of the total screen time actually
utilized, over a specified period of not less than one year.
The quotas were to be subject to negotiation for their
limitation, liberalization or elimination.
GATT - From Geneva to Ururguay
Despite Article 4, GATT manufacturing focused
until 1980s.

By 1990s, however, services sector outstrips
value of manufacturing:
70% of 1st world GDP
50% of 3rd world GDP

GATT slow to recognise this - services
notoriously hard to quantify
However de-industrialisation in the 1960s and
1970s has left the US the most indebted
nation in the world

As of 1993 - the US recorded international
trade surpluses from the aerospace and
audiovisual industries - and nowhere else.
Uruguay Round
Hence - September 1986 Punta del Este
Declaration placed Trade in Services (TIS) at
centre of GATT debates.
Driven by US pressure (in turn influenced by
American Express, Citibank and IBM lobbyists)
TIS included: film, TV and broadcast
advertising production and distribution
Uruguay Round
Cinema used to be side salad in world
commerce - now its the beef.

Daniel Toscan du Plantier - President of French
Govt. Film Marketing Body
Uruguay Round
US objected to the the following barriers to trade
in audiovisual products:
Local media content quotas
Restrictions on foreign ownership of the press
Subsidies to screen industries
Subvention and diplomacy designed to assist a/v
industries in exporting their product
Uruguay Round
The US makes these objections in the following context:
The US government endorses trust-like behaviour overseas
whilst prohibiting it domestically.
The US government has a long history of aiding its own film
industry through:
tax-credit schemes,
film commission assistance,
State and Commerce Department Representation,
The Informational Media Guaranty Programme
Uruguay Round
Whats more the Justice Department is
authorised to classify all imported films which
it can ban as political propaganda.
Uruguay Round
EU A/V Deficit 1992 - 1996 (in $000,000s)
1992 1993 1996
3375 3720 5600

To put this in context: in 1992 the EU
imported $3.7bn in a/v material from the
US whilst the US imported just over $300m
(less than 10% of exports to EU) of Euro a/v
material.
Uruguay Round
Despite the inclusion of TIS in the UR, the major
focus from 1986-93 was on reducing agricultural
export subsidies (e.g. the EUs CAP).

Deadline for agreement December 15 1993. Farm
issue settled December 7.
Suddenly replaced by dispute over a/v industries.


Uruguay Round
From the outset of the UR US attempts to
remove support for a/v industries almost
universally opposed, esp. by India, Canada,
Japan, Australia, Europe and the Third World -
in the name of cultural sovereignty.

In the last week, however, the dispute became
the US versus EU (and mainly France)
Uruguay Round
US Position - Sought end to all EU subsidies and
quotas arguing from the precepts of neoclassical
economics for untrammelled play of comparative
advantage inside laws of supply and demand.

French position - cultural products are public as well
as private goods with a historical and national
significance which couldnt be captured within
economic formulas
Uruguay Round
Reason for prolongation of dispute - use of differing premises:
US - justified monopolistic competition on the grounds of the
sovereign consumer
French - justified state support on the ground of the sovereign
citizen

The consumer was a fully formed subject making a rational
choice in favour of entertainment and distraction the citizen
was an insufficiently knowing subject in need of education in
civics
Uruguay Round
In Ireland concern expressed that the US, if
successful, would demand end of:

Eurimages
Irish Film Board
TV Without Frontiersdirective
Uruguay Round
French and US dig in their heels.

Dec 12 - US accepts continuation of state
subvention of cultural production in Europe
(and elsewhere) but pushed issue of levies on
cinema/video tickets/rentals.
Uruguay Round
Specifics:

French subsidy system levied an 11% tax on cinema
tickets - used to fund some 150 films per annum
Mickey Kantor pointed out that the majority of
tickets sold in France were for US films
Uruguay Round
3 am December 14 1993
US still seeking:
EU free to continue reserving 51% of local TV
programming for European production but thus should
apply to 24 hour day as a whole (e.g. France was entirely
banning US material from primetime)

For satellite, cable (new techs) - Us willing to allow EU to
reserve 50-70% of all channels but opposed application of
EU must carry 51% Euro content rules to every channel
(potential source of difficulty for Comedy Channel,
Nickelodeon, Discovery - indeed Sky)


Uruguay Round
US artists/producers entitled to fair share of levies
raised from blank audio and video tapes but would
commit to investing the funds raised in Europe. Film
and television industries

Pay-per-view and video-on-demand channels should
not be restricted since consumers could make a free
choice to watch one film rather than another and pay
for that choice.

Uruguay Round
EU offered:

Standstill on existing legislation
No more than 51% of programming would be
reserved
Commitment to begin negotiations on how
the a/v sector should be handled
multilaterally

SO WHAT HAPPENS?
Final Outcome - an agreement to
disagree.
Mickey Kantor:
Rather than accepting that EU proposal which
would have enshrined the principle of
limiting viewers rights to see what they
wishand recognised a system which denies
artists and producers the right to funds they
have legally earned through royalties Kantor
rejected any deal.
Final Outcome - an agreement to
disagree.
We can best advance the interests of our
artists, performers and producers - and the
free flow of information around the world - be
reserving all our legal rights to respond to
policies that discriminate in these areas.

Mickey Kantor Dec 15 1993
Final Outcome - an agreement to
disagree.
A great and fine victory for French and
European cultureWe got what we wanted
from the start, which is basically the cultural
exception.

Alain Carignon,
French Communications Minister
Who won the Uruguay round?
Everybody a winner? Success by contrast might add $270
billion to world income by 2002 (GATT, OECD & World Bank
estimates).
Much of the discussion re: the Uruguay round stressed the
dire consequences of failure.
Arguably the only clear winners from the freeing of world
trade under GATT rules may be those 500 or so companies
which control two-thirds of that trade.
Barrie Axford, The Global System
Who won the Uruguay round?
Uruguay round brought economic imperatives
and cultural institutions head-to-head.

Under UR - any rule of institution that might
hinder another nations goods or services
from entering freely will be counted as a tariff.
Such tariffs must be reduced.
Who won the Uruguay round?
However in some cases these hindrances are not
rules but ways of life or means of supporting
cultural diversity:
Hence French defence of film subsidies but also
US negotiators considered as restraint of trade
the Japanese practice - hokoosha tengoku - of
encouraging small shops in pedestrian streets
since it interfered with thew prospects of US
traders for establishing large out-of-town
shopping facilities in Japan.
Who won the Uruguay round?
French claim victory over a/v negotiations

Yet despite the absence of any specific commitments on a/v
industry, the sector was still included within the general
framework of the Uruguay Round of trade negotiations under
GATT (specifically the GATS - General Agreement on Trade in
Services).

Thus it would be subject to the rules laid down for
international trade generally, particularly in connection with
transparence and settlement of trade conflicts at GATT level.
Who won the Uruguay round?
Also meant that the a/v industry would come
under the dispute resolution mechanisms of
the WTO

WTO designed as successor to GATT -
responsible for ensuring growth and
liberalisation of world trade, policing
observance of Uruguay Round rules and
settling trade conflicts
GATT is dead, Long live WTO
Actually GATT rules still form basis of WTOs operations.
WTO:
Secretariat (of 500 people) based in Geneva. Main functions
to supply technical support to WTOs various councils,
committees and ministerial conferences.
WTO Structure
Ministerial Conference

General Council



Goods Council Services Council Intellectual Property Council
WTO operation
Ministerial Council meets every two years.
Sets general aims of WTO.
Council membership made up of 130
countries, representing 90%+ of world trade
WTO and media/communications
WTO treats these industries in the context
of the GATS

The GATS formally consists of:
29 articles, 8 annexes, and 130 schedules of commitments
(each WTO Member must submit a schedule) on specific
services or service sectors.
The articles of the GATS lay out the scope of the
Agreement and the general obligations and disciplines to
be observed.


WTO and media/communications
The GATS formally consists of:

They also define the specific commitments to be inscribed in
schedules and how to go about negotiating them.
Finally, there are provisions for dispute settlement and the
establishment of the Council for Trade in Services.
WTO and media/communications
GATS principles:

Covers all services
MFN
National treatment only applies where specific
commitments are made
Definition of Services
Ways of providing international services defined as:
Services supplied from one country to another (e.g.
telecoms)
Consumers/firms making use of service in another
country (e.g. tourism)
Foreign company setting up subsidiary in another
country
Individuals travelling from home to supply services in
another country
What has WTO done for us?
A/V services not directly subject to any WTO
negotiations - yet.

Telecoms - however:

Feb 1997 - Basic Telecoms Agreement
Basic Telecoms Agreement
GATT sees US push (unsuccessfully) for
inclusion of provision on liberalising network
access.

Issue pursues through GATT.
Basic Telecoms Agreement
Origins of the negotiations

Marrakesh Ministerial Meeting closed the
Uruguay Round in April 1994. Meeting
extends negotiations on trade in basic
telecommunications beyond the
Uruguay Round.
Basic Telecoms Agreement
Negotiations begin May 1994, (with
33 WTO Member govts), under the auspices of
the Negotiating Group on Basic
Telecommunications (NGBT). Negotiations to
conclude by 30 April 1996.

Actually takes until 1998 to implement the
final agreement
Defining basic telecommunications
Examples of the services under negotiation
were voice telephony, data transmission,
telex, telegraph, facsimile, private leased
circuit services (i.e. the sale or lease of
transmission capacity), fixed and mobile
satellite systems and services, cellular
telephony, mobile data services, paging, and
personal communications systems.
Basic Telecoms Agreement
Overview

The February 1997 deadline for the
negotiations on basic telecoms
resulted in the tabling of 55 offers, covering 69
governments (counting individually the EU
Member States)
Basic Telecoms Agreement
Only the schedules themselves provide
authoritative and complete information on
the telecoms services included, the scope of
the commitments, and the degree (i.e. full or
partial) of market access permitted.

BUT...
Basic Telecoms Agreement
- On voice telephone service, 63 govts committed to
competitive supply (permitting two or more suppliers).

These commitments permit competition the supply of public
voice services, (either immediate or phased-in)
on local service, domestic long distance, and international
service and resale of public voice telephone

In total 70% of the 62 governments were permitting a degree
of competition in public voice service.
Basic Telecoms Agreement
Commitments on other services:
65 govts - data transmission services;
62 govts - access to cellular/ mobile telephone markets
56 govts - competition in leased circuit services (the
supply of transmission capacity)
62 govts - mobile services (PCS, mobile data or paging).
53 govts - mobile satellite services/transport capacity
52 govts - fixed satellite services/transport capacity.
10 govts - value-added telecoms services (e.g. e-mail, on-
line data processing or data base retrieval).
FTP is the new
name for the
earlier EXIM policy.
31
st
august 2004
- To double our % share
of global merchandise
trade within the next 5
years

To act as an effective
instrument of economic
growth by giving a thrust to
employment generation.

Strategy of FTP (2004-2009)
Identifying and developing special focus areas
Simplifying procedures
Technological and infrastructural upgradation of all
sectors
Facilitating development of India as a global hub for
manufacturing, trading and services.
Revitalizing the board of trade by redefining its role,
giving it due recognition and inducting experts on
trade policy
Exports
$63billion
in 2003-04
$168billion
in 2008-09
Share of Global
merchandise
trade
0.83% in
2003
1.45% in
2008
Share of global
commercial
service export
1.4% in
2003
2.8% in
2008
Total share in
goods and
service trade
0.92% in
2003
1.64% in
2008
ACHIEVEMNTS OF THE FTP
2004-09
FOREIGN TRADE
POLICY (2009 -
2014)
2009 most severe global recessions
WTO estimates project a grim forecast that global trade is likely to decline
by 9% in volume terms and IMF estimates project a decline of over 11%.
World bank estimate suggests that 53million more people would fall into
the poverty and over a billion people would go chronically hungry.
It was difficult to announce a FTP in this economic climate.
There was a need to set in motion ,strategies and policy measures which
would catalyse the growth of exports.
short term
objectives
Arrest and reverse the declining trend
of exports
Additional support to those sectors
which have been hit badly by
recession
By 2014, the objective is to double
Indias exports of goods and services

To double
Indias share
in global
trade by
2020.
Policy measures
Fiscal incentives, institutional changes, procedural
rationalization, enhanced market access across the
world and diversification of export markets.
Improvement in infrastructure related to exports,
bringing down transaction costs
SEZs in India: origin and evolution
India: the first Asian country to have an EPZ in 1965.

Four phases of evolution:

1965-1990:

1991-2000:

2000 2006 (Feb 9)

2006 (Feb 10 onwards)

India 1965-2000 EPZs Small
Diversified activity
7 SEZs all owned by the central
government
Preferred small scale industry set up
Limited incentives
Set up mainly near port
No legal apparatus
2000-05 EPZs/SEZs Private zones allowed,
Location decision deregulated
Incentives raised
No legal apparatus
Mostly created by state government
2005- SEZs Low tech to very high tech
Wide variety
Wide ownership profile
SEZ act 2005, SEZ act 2006
Large scale industrialisation

Evolution of SEZs
Is the SEZ policy a paradigm shift?
Paradigm shift is thinking out of the box.

Not a paradigm shift but radical reforms

Some suggestions.

Why SEZs: Theoretical perspectives
Right wing:
Orthodox approach (Neo classical)
Political economy approach
Left wing
International division of labour approach (IDL)
Heterodox approach
New international division of labour
approach


Industrial clustering approach
Widely prevalent perception:
SEZs are an alternative strategy of development which is based on second
best solutions either to total liberalization or economy wide improvement
in investment climate.

Alternative perception: SEZs
are not an alternative development policy.
are a component of the broader industrial strategy and their
development needs to be synthesised with the overall cluster
development policy.
should be strategically located in or around existing clusters,
natural or government-promoted. Alternatively, plan large SEZs
or foster the development of clusters of several small SEZs to
ensure a critical mass of activity.

Encourage the growth of local industries around them and
facilitate the synthesis of SEZs with local production networks.
Promoting agglomeration economies: Some observations
Creation of industrial estates for promoting new industries (Andhra
Pradesh)
(Genome valley for bio tech, Geetanjali SEZ for gems and jewellery)

Augmenting existing industrial estates (AP, Maharashtra, Gujrat,
Rajasthan, UP, Karnataka)
(Jamnagar in Guj., Jaipur in Raj., Noida in UP, Mumbai-Nashik-Pune in Mah.)

Reinforcing industrial clusters (Gujrat, Rajasthan , UP)
(Ahemdabad, Vadodara, Bharuch in Gujrat, Jodhpur in Rajasthan, Moradabad in UP)

Promotion of corridors of industrial excellence (Tamilnadu)
(Chennai-Manali-Ennore corridor; Chengalpattu-Sriperumbudur- Ranipet corridor;
Madurai-Thoothukkudi and Coimbator - Salem)

Promotion of industrial clusters in backward regions (Maharashtra)
(Nagpur, Jalna, Nanded, Latur, Amravati, and Akola, among others )
Qualitative benefits
Economic restructuring : increased productivity
Scale advantage and shift to virtuous circle
Diversification of exports ( old vs new)
New industries : EMS, Solar energy, Windmill,
aerospace, Biotechnology, sports shoes
Geographical diversification of industries
AP : promotion of IT, bio-tech, gems and jewellery
Tamil Nadu : Electronics,
Localisation of global supply chains
Nokia, Suzlon, Geetanjali, Uniparts in Vizag








Quantitative impact: A big push
Latest data

585 SEZs approved, 381 have been notified of
which 143 SEZs are already exporting.

SEZs now export in excess of Rs. 3,00,000 crore

With an investment of Rs. 2,00,000 crore,

SEZs today provide direct employment to over
7,00,000 persons.

However, there are costs
Regional inequalities
Only 5 states
Only 5 top SEZs
Positive correlations between SEZ and domestic economy
investment and employment
Tax loss:
Indirect tax loss per unit of exports from outside SEZs
larger than that within SEZs
Relocation:
No evidence of decline in investment outside SEZs
except in large IT sector
.




Social impacts

Human development (race to bottom?)
Human capital upgradation
Environment (race to bottom?)
Spatial restructuring and urbanisation
Empowerment of rural communities



Issues
Land acquisition
International experience
Newer models of land acquisition
LARR ( will it help?)
Food security
Private vs public SEZs
Real estate proposition


Are these issues SEZ-centric issues??

Perhaps not.

Can be overcome through dynamic learning
and institution building?

SEZs : testing lab for large industrialisation
programme.

Challenges
Policy gaps
RTAs: large Indian markets and SEZs
WTO: Trade based subsidies

Major hurdles

Weak commitment, lack of political will
power, uncertainties and policy dilutions


export Oriented Unit
The purpose of this scheme was basically to boost exports by creating additional
production capacity with certain minimum value addition.
INTRODUCTION
OBJECTIVES OF THE EOU SCHEME
Stimulate direct
foreign
investment
Transfer of
latest
technologies





















OBLIGATION OF EOU
The EOUs are required to achieve Positive Net Foreign
Exchange Earning (NFE).

NFE shall be calculated cumulatively for a period of Five years
from the date of commencement of production.

Input / output norms to be maintained as per FTP on the
resultant product.

Unutilized material can be disposed on payment of applicable
duties.
BENEFITS OF EOU
All the imports to units are customs duty free.
Exemption from Central Excise Duty for the procurement of Capital
Goods and Raw Materials from domestic market.
Units are entitled to sell the product in local market upto 50% of the
products exported in value terms.
100% of foreign equity is permissible.
Reimbursement of Central Sales Tax (CST) paid on domestic purchases.
No restrictions on External Commercial Borrowings.
Full freedom for sub-contracting.
EOUs are free to select the location of a project.
Exemption from paying electricity duty.
BENEFITS CONT.
Fast Track Clearance Scheme (FTCS) for clearances of imported
consignments for EOU.
Sub-contracting to DTA units permissible after obtaining permission on
annual basis.
Unutilized raw material can be disposed of on payment of applicable
duties.
The unit can exit with permission of Development Commissioner, on
payment of applicable duties.
Prescribed percentage of foreign exchange earnings can be retained in
EEFC account in foreign exchange.
EOUs can export through an export house/trading house/star trading
house or other EOUs.
MAJOR SECTOR IN EOU
COFFEEE
FOOD
PROCESSING
ELIGIBILITY CRITERIA
An EOU can be set up by any entrepreneur for manufacturing of
goods and also for rendering services.

An EOU can be set up for repair, reconditioning, re-making and re-
engineering also.

An EOU unit is required to achieve only positive Net Foreign
Exchange Earning (NFE) over a period of 5 years.

Trading activity is not allowed in the EOU Scheme.

EOU can also be set up in the sectors like agriculture , animal
husbandry, aquaculture, floriculture, horticulture, viticulture, etc.
BASIC REQUIREMENTS FOR SETTING UP AN EOU

Planning your venture
Is it on your own
With foreign participation and nature of participation (foreign investment allowed
100%)

What product do you intend to manufacture
Product/By-product
Does it requires clearance from Central/State Government authorities
Is it an SSI Unit. If so, registration is required as an SSI.

Technology to be used
Indigenous / foreign.
Related costs and conditions.

Feasibility report
On your own or with help of consultant.

The finances involved
Land, structure, buildings etc (Please note, building construction material is not
exempted from duty).
SALIENT FEATURES
No licence required for import ( except restricted items)
Exemption from Central Excise Duty in procurement of capital goods, raw
materials, consumables, spares, packing material etc from the domestic
market.
Exemption from Customs duty on import of capital goods, raw-materials,
consumables, spares, packing material etc.
Reimbursement of Central Sales Tax (CST) paid on domestic purchases (but
no local tax).
Supplies from Domestic Tariff Area (DTA) to EOU treated as deemed
exports.
100% Foreign direct investment permissible.
Exchange earners foreign currency (EEFC) Account.
Facility to retain 100% foreign exchange proceeds in EEFC account. Facility
to realize & repatriate export proceeds within 12 months.
CONT.
Re-export of imported goods found defective for repair/replacement,
testing/ calibration and return.
Access to domestic market upto 50% FOB value of export on payment of
concessional rate of duty.
Job work on behalf of domestic exporters for direct export allowed.
Conversion of existing Domestic Tariff Area (DTA) unit into an EOU
permitted.
New EOUs get Corporate Income Tax concessions till 2009 .
Even second hand plant & machinery can be imported.
Can Procure duty-free inputs for supply of manufactured goods to advance
licence holders.
EOUs get upto 5 years for utilization of imported capital goods, and upto 3
years for other items.
Copyright 2006 Pearson
Addison-Wesley. All rights
reserved.
8-90
Export Subsidy
An export subsidy can also be specific or ad valorem
A specific subsidy is a payment per unit exported.
An ad valorem subsidy is a payment as a proportion of the value
exported.
An export subsidy raises the price of a good in the exporting
country, making its consumer surplus decrease (making its
consumers worse off) and making its producer surplus
increase (making its producers better off).
Also, government revenue will decrease.
Copyright 2006 Pearson
Addison-Wesley. All rights
reserved.
8-91
Export Subsidy (cont.)
An export subsidy raises the price of a good in the
exporting country, while lowering it in foreign
countries.
In contrast to a tariff, an export subsidy worsens the
terms of trade by lowering the price of domestic
products in world markets.
Copyright 2006 Pearson
Addison-Wesley. All rights
reserved.
8-92
Export
Subsidy
(cont.)
Copyright 2006 Pearson
Addison-Wesley. All rights
reserved.
8-93
Export Subsidy (cont.)
An export subsidy unambiguously produces a negative effect
on national welfare.
The triangles b and d represent the efficiency loss.
The tariff distorts production and consumption decisions: producers
produce too much and consumers consume too little compared to the
market outcome.
The area b + c + d + f + g represents the cost of government
subsidy.
In addition, the terms of trade decreases, because the price of exports
falls in foreign markets to P
*
s
.
Copyright 2006 Pearson
Addison-Wesley. All rights
reserved.
8-94
Import Quota
An import quota is a restriction on the quantity of a
good that may be imported.
This restriction is usually enforced by issuing licenses
to domestic firms that import, or in some cases to
foreign governments of exporting countries.
A binding import quota will push up the price of the
import because the quantity demanded will exceed
the quantity supplied by domestic producers and
from imports.
Meaning Of Dumping
Firm charges a lower price for exporting goods than
it does for the same goods sold domestically

Price Discrimination: share of exports is usually
lesser than the domestic demand

Capture new market

Condition mandatory for dumping to take place:
Presence of an imperfect market (firms are price
setters)
Segmented markets

Antidumping
Antidumping duties: nullify the effect of
market distortions created due to unfair
trade practices (dumping)

Remedial in nature

Levied on the exporting country

Antidumping measures:
Antidumping duty
Price undertaking
Justifications
Material injury to domestic producers

Long start up period and high start-up costs

Once these firms are forced out of the
market as a result of dumping; difficult to
restart

Intention of dumping is to wipe out the
domestic industries and eventually acquire
monopoly power in the foreign market

Anti-Dumping Law With Reference
To WTO And Anti-Dumping
Agreement
Introduction
GATT/WTO (1995) : promote free trade

Barriers to free trade: tariff barrier or non-tariff
barrier (Antidumping, countervailing measures)

Article VI of the GATT, 1945

Agreement to give effect to Article VI (1994):
provisions strictly followed during anti-dumping
investigation



WTO and Anti-Dumping Agreement
The Agreement governs the application of
antidumping measures by Members of the
WTO

The provisions of the Agreement were first
negotiated during the Kennedy Round (1967) of
GATT negotiations

The Agreement lays the sunset provision

The Agreement applies to trade in goods only



Rules for the conduct of anti-dumping investigations
initiation of cases,
calculation of dumping margins,
application of remedial measures,
injury determinations,
enforcement,
reviews,
duration of the measure and
dispute settlement.

Dispute settlement: strengthens the ability of national
governments to challenge anti-dumping actions by other
member nations

Public interest requirement: Gains to the consumers
from lower prices more than outweigh the losses
suffered by the producers


Anti-Dumping Law in India


Legal Framework
Based on Article VI of GATT 1994
Customs Tariff Act, 1975 - Sec 9A, 9B (as
amended in 1995)
Anti-Dumping Rules [Customs Tariff
(Identification, Assessment and Collection of
Anti Dumping Duty on Dumped Articles and
for Determination of Injury) Rules,1995]
Investigations and Recommendations by
Designated Authority, Ministry of Commerce
Imposition and Collection by Ministry of
Finance

Determination Of Dumping
Difference between Normal Value and Export Price:
Margin of dumping (% of export price)

Normal Value: comparable price at which the goods
under complaint are sold, in the ordinary course of
trade, in the domestic market of the exporting country

If the normal value cannot be determined by means of
domestic sales, following two alternative methods :
Comparable representative export price to an appropriate
third country
Cost of production in the country of origin with reasonable
addition for administrative, selling and general costs and for
profits

Export Price: price paid or payable for the
goods by the first independent buyer

Like Articles: The article produced in
India must either be identical to the
dumped goods in all respects or in the
absence of such an article, another article
that has characteristics closely resembling
those goods

Injury To The Domestic Industry
The Indian industry must be able to show that dumped imports
are causing or are threatening to cause material injury to the
Indian domestic industry
Injury analysis can broadly be divided in two major areas:
The Volume Effect: The Authority examines the volume of
the dumped imports, including the extent to which there
has been or is likely to be a significant increase in the volume
of dumped imports, either in absolute terms or in relation to
production or consumption in India
The Price Effect: Extent to which the dumped imports are
causing price depression or preventing price increases for
the goods which otherwise would have occurred
Causal Link: A causal link must exist between the material
injury being suffered by Indian industry and dumped imports


Who Can File An Application
A dumping investigation can be initiated only upon
receipt of a written application by or on behalf of the
Domestic Industry

In order to constitute a valid application, there must be
support of those who account for more than 25% of
total domestic production, and more than 50%
production by those supporting and those opposing the
application

Domestic Industry: Indian producers of like articles as a
whole or those producers whose collective output
constitutes a major proportion of total Indian
production. The following are excluded:
Importers
Those related to importers or exporters
Relief To The Domestic Industry
ANTI-DUMPING DUTIES: Non-cooperative
exporters are required to pay the residuary duty
(highest of the co-operative exporters)

Lesser Duty Rule: Government is obliged to restrict the
anti-dumping duty to the lower of the two i.e. dumping
margin and the injury margin
Injury Margin: Difference between the fair selling price
due to the domestic industry and the landed cost of the
product under consideration
De Minimis Margins: Any exporter, whose margin of
dumping is less than 2% of the export price and the
volume of the dumped imports are below 3% of the
total imports, shall be excluded from duties

PRICE UNDERTAKINGS: Exporter concerned must
furnish an undertaking to revise his price




The Application Procedure
Made by or on behalf of the concerned
domestic industry to the Designated
Authority in the Ministry of Commerce

Period of Investigation: Not less than six
months

Confidentiality
Investigation Process
Preliminary Screening: Application scrutinized to
ensure that it is adequately documented and
provides sufficient evidence for initiation
Initiation: Public Notice issued initiating an
investigation to determine the existence and
effect of the alleged dumping. Diplomatic
representative of the Government of the
exporting country notified.
Access to Information: The Authority provides
access to the non-confidential evidence presented
to it
Preliminary Findings: Made within 150 days of
the date of initiation
Provisional Duty: A provisional duty not
exceeding the margin of dumping may be
imposed by the Central Government on the
basis of the preliminary finding
Oral Evidence: Interested parties can
request the Designated Authority for an
opportunity to present the relevant
information orally
Final Determination: Made within 150 days
of the date of preliminary determination
Disclosure of Information: The Designated
Authority will inform all interested parties of
the essential facts which form the basis for
its decision
19-112
Global Sourcing
Considerations
Costs
Control
Expertise
Distance
Languages
Laws and regulations
Begin simple
Then move to complex

19-113
Global Sourcing
The Lure of Global Sourcing
Suppliers with improved competitiveness
Cost
Quality
Timeliness
Suppliers in less developed countries with low-cost labor
Attractive for labor-intensive products with low skill
requirements
19-114
Global Sourcing Arrangements
Arrangement that provide a firm with foreign
products
Wholly owned subsidiary
Overseas joint venture
In-bond plant contractor
Overseas independent contractor
Independent overseas manufacturer
19-115
Use of Electronic
Purchasing for Global Sourcing
Growth of electronic procurement exchanges
Identify potential suppliers or customers

Facilitate efficient and dynamic interactions among
prospective buyers and suppliers

Recognize strategic function of purchasing
19-116
Global Electronic Procurement
Electronic Exchange Options
Catalog purchases
Permits buyers and suppliers to interact through a standard
bid/quote system
Facilitates obtaining letters of credit, contracting for logistics
and distribution, and monitoring daily
Benefits
Cut costs and invoice and ordering errors
Improve productivity and internal purchasing processes
Reduce trading cycle time, paper
Compare bids

19-117
Global Sourcing
Problems

Unanticipated added costs
Currency fluctuations
Transportation cost increases

E-procurement exposes business systems to wide
range of potential security issues

19-118
Added Costs
International freight, insurance and packing
Import duties
Customhouse brokers fees
Transit or pipeline inventory
Cost of letter of credit
International travel and communication costs
Company import specialists
Reworking of products out of specification
19-119
Advanced Production Techniques

Systems to improve competitiveness
Just-in-time supply chains (JIT)
Highly synchronized manufacturing systems
Mass customization
Six Sigma
19-120
Japans Use of JIT
Requirements to operate without inventory
Components defect-free
Components delivered to each point at specified time
Sellers maintain inventory of finished products
Process time reduced
Manufacturers simplified product lines
Suppliers cooperate
Designers, managers, purchasing people and marketers
work as a team

19-121
Total Quality Management
System in which organization is managed so
that it excels on all dimensions of product and
service that are important to the customer
TQM uses Quality Circles
Small work groups meet to discuss ways to improve
functional areas and product quality

19-122
Problems with JIT in U.S.
Failure to realize JIT is a total system, includes TQM
Cultural differences in U.S. workers
Highly specialized work
No company loyalty
Failure to train and integrate suppliers
JIT restricted to operations that produce same parts repeatedly
If one operation stops, entire production line stops
Achieving a balanced system difficult: production capacities differ
among machines
No allowances for contingencies
Much trial and error are required to put system into effect
19-123
Advanced Production Techniques
Synchronous Manufacturing
Manufacturing system with unbalanced
operations that emphasizes total system
performance
Mass Customization
Flexible manufacturing system to produce
customized products and services
Six Sigma
Business management process for reducing
defects and eliminating variation

2008 by Prentice Hall 14-124
Global Professional in Human Resources
(HRCI)
Strategic international HR management
Organizational effectiveness and employee
development
Global staffing
International assignment management
Global compensation
International employee relations and
regulations
2008 by Prentice Hall 14-125
Global Human Resource Management
Global HR managers
develop and work
through integrated global
human resource
management system
similar to one they
experience domestically
2008 by Prentice Hall 14-126
Environment of Global Human Resource Management
1
Human
Resource
Management
Other
Functional
Areas
Operations Marketing
Finance
L
e
g
a
l

C
o
n
s
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r
a
t
i
o
n
s


E
c
o
n
o
m
y

T
e
c
h
n
o
l
o
g
y

Society
S
h
a
r
e
h
o
l
d
e
r
s

Unions
Customers Competition Labor Market
Safety and
Health
INTERNAL ENVIRONMENT

EXTERNAL ENVIRONMENT UNITED
STATES

GLOBAL ENVIRONMENT
U
n
a
n
t
i
c
i
p
a
t
e
d

E
v
e
n
t
s

2008 by Prentice Hall 14-127
Global Staffing
Types of Global
Staff Members
Approaches to
Global Staffing
2008 by Prentice Hall 14-128
Types of Global Staff Members
Expatriate - Employee working in firm who
not citizen of country in which firm is located
but citizen of country where organization is
headquartered
Host-country national - Employees
nationality same as location of subsidiary
Third-country national - Citizen of one
country, working in second country, and
employed by organization headquartered in
third country
2008 by Prentice Hall 14-129
Approaches to Global Staffing
Ethnocentric staffing - Companies primarily
hire expatriates to staff higher-level foreign
positions
Polycentric staffing - When more host-country
nationals are used throughout the
organization, from top to bottom
2008 by Prentice Hall 14-130
Approaches to Global Staffing (Cont.)
Regiocentric staffing - Regional groups of
subsidiaries reflecting organizations strategy
and structure work as a unit
Geocentric staffing - Uses worldwide
integrated business strategy
2008 by Prentice Hall 14-131
Expatriate Selection Stages
Self-selection - Employees determine if they
are right for a global assignment (family also)
Creating a candidate pool
Technical skills assessment
Making a mutual decision
2008 by Prentice Hall 14-132
Background Investigation
Conducting background investigations is
equally, or more, important
Differences across cultures and countries
often put up barriers to overcome
Each country has own laws, customs and
procedures for background screenings
2008 by Prentice Hall 14-133
Global Human Resource Development
Expatriate Training &
Development
Continual Development:
Online Assistance and
Training
Repatriation Orientation
and Training
2008 by Prentice Hall 14-134
Expatriate Preparation and
Development Program
Expatriate Preparation and Development
Prior to Departure:
Orientation and Training

During Assignment:
Continual Development
Near Completion:
Repatriation Orientation
Training
Language
Culture
History
Local Customs
Living Conditions
Expanding Skills Career
Planning Home-Country
Development
U.S. Lifestyle U.S.
Workplace U.S.
Employees
2008 by Prentice Hall 14-135
Trends & Innovations:
Global E-learning
Globalization has created special need for e-
learning
Challenges for global e-learning
implementation are language and localization
issues
Companies that want to offer courses in
several languages usually turn to translators
2008 by Prentice Hall 14-136
Compensation for Host-Country Nationals
Organizations should think globally but act
locally
Compensation - Normally, it is slightly above
prevailing wage rates in the area
Variations in laws, living costs, tax policies,
and other factors all must be considered

2008 by Prentice Hall 14-137
Compensation for Host-Country Nationals
(Cont.)
Factors to consider: minimum wage requirements,
which often differ from country to country and even
from city to city within a country; working time
information such as annual holidays, vacation time
and pay, paid personal days, standard weekly
working hours, probation periods, and overtime
restrictions and payments; and hiring and
termination rules and regulations covering severance
practices
2008 by Prentice Hall 14-138
Compensation for Host-Country Nationals
(Cont.)
Culture often plays a part in determining
compensation
North American compensation practices encourage
individualism and high performance
Continental European programs typically emphasize
social responsibility
Traditional Japanese approach considers age and
company service as primary determinants of
compensation
2008 by Prentice Hall 14-139
Expatriate Compensation
Cost 3 - 5 times an assignees host-country
salary per year and more if currency exchange
rates become unfavorable
Largest expatriate costs include overall
remuneration, housing, cost-of-living
allowances and physical relocation
U.S. citizens living overseas can exclude up to
$80,000 of income earned abroad
2008 by Prentice Hall 14-140
Expatriate Compensation (Cont.)
Countrys culture can affect compensation
People in U.S. derive great status from high
pay
Nations in large parts of Europe and Asia shun
conspicuous wealth
In Italy, teamwork is more valued than
individual initiative
2008 by Prentice Hall 14-141
Global Safety and Health
Important because employees who
work in safe environment and enjoy
good health more likely to be
productive and yield long-term benefits
to organization
U.S.-based global operations are often
safer and healthier than host-country
operations, but not as safe as similar
operations in U.S.
2008 by Prentice Hall 14-142
Global Employees and Labor Relations
Unionism maintains
much of its strength
abroad
Foreign unions less
adversarial with
management
2008 by Prentice Hall 14-143
Global Employees and Labor Relations in
European Countries
Codetermination, which requires firms to have
union or worker representatives on their
boards of directors, is very common
Laws make it hard to fire workers, so
companies are reluctant to hire
Generous and lengthy unemployment benefits
discourage the jobless from seeking new work
2008 by Prentice Hall 14-144
Global Employees and Labor Relations in South
American Countries
In countries such as Chile, collective
bargaining for textile workers, miners, and
carpenters is prohibited
Unions are generally allowed only in
companies of 25 workers or more. Practice
has encouraged businesses to split into small
companies to avoid collective bargaining
2008 by Prentice Hall 14-145
North American Free Trade Agreement
(NAFTA)
Between Canada, Mexico, and United
States
Facilitated movement of goods across
boundaries within North America
Free-trade zone of over 400 million
people
Combined gross domestic profit of
about $12 trillion
2008 by Prentice Hall 14-146
Central American Free Trade Agreement
Ratified by Americas
Congress after long
political battle, and signed
into law in 2005
Could provide huge
economic boost for
region
2008 by Prentice Hall 14-147
Political and Legal Factors
Nature and
stability of
political and
legal systems
vary throughout
globe
2008 by Prentice Hall 14-148
Tariffs and Quotas
Tariffs - Taxes collected
on goods shipped
across national
boundaries
Quotas - Limit number
or value of goods
imported across
national boundaries
2008 by Prentice Hall 14-149
Global Bribery
Foreign Corrupt Practices
Act
Law has teeth
Not having ability to use
bribery as tool of doing
business has been costly for
American companies
2008 by Prentice Hall 14-150
Global Equal Employment Opportunity
Women constitute more than 20% of total
expatriate workforce percent of U.S.
expatriate managerial workforce
Some cultures today will not accept woman as
a boss
Sexual harassment is global problem
Sexual harassment laws differ from country to
country
2008 by Prentice Hall 14-151
Virtual Teams in Global Environment
Necessity of everyday
working life
Enable companies to
accomplish things more
quickly and efficiently

2008 by Prentice Hall 14-152
Difficulties that Virtual Teams Confront
Do not feel as connected or
committed to team
Communication problems
directly proportional to
number of time zones
separating them
Language problems
Determination of trading
partners
INDEPENDENCE INTERDEPENDENCE
AND DEPENDENCE
Determination of trading partners
Trading partners :- One of the two or more participants in an ongoing
business relationship Or country or company that another company or
country does business with regularly.

There are number of theories that explain why do countries trade with
each other .Out of those theories we can make out that :-
Greater the dissimilarity among countries, the greater the potential for
trade. For example, great differences in climatic conditions would lead to
greatly differentiated agricultural products.
Countries that differed in labor or capital intensities would differ in the
types of products they could produce efficiently. And national differences
in innovative abilities would affect how production of a product would
move from one country to another during the products life cycle


Independence, Interdependence and
Dependence
The concepts of independence, interdependence,
and dependence help to ex- plain world trade
patterns and countries trade policies. They form
a continuum, with independence at one extreme,
dependence on the other, interdependence
somewhere in the middle.
There are no countries located at either extreme
of this continuum; some tend to be closer to one
extreme than the other.
Degree of Dependence
Independencecomplete economic independence
Country has no reliance on other countries for goods, services, or
technologies.
Hinders countrys ability to borrow and adapt existing technologies
Interdependence trade based on mutual need
Neither trading partner is likely to cut off supplies or markets for
fear of retaliation
Governments may be pressured to sustain trade
Dependencedeveloping countries rely heavily on:
The sale of one commodity for export earnings
25 % of emerging countries sell one commodity
One country as supplier or customer
Industrialized countries
Independence
In a situation of independence, a country would have no
reliance on others for any g00ds, services, or technologies.
Since all countries engage in trade, however, no country has
complete economic independence from other countries,
and all thus have at least some access to goods and services
produced in a foreign country.
In most countries, governmental policy has focused on
achieving the advantages of independence without paying
too high a price in terms of consumer deprivation. China
and India, for example, have pursued economic
independence much more vigorously than have Brazil and
Mexico, with different results in different periods.
Independence
large countries typically depend much less on foreign trade
than do small countries, but even in large countries
consumers could suffer through policies designed to
promote more independence. The degree of suffering
would, of course, depend on the type of product.
The elimination of coffee or tea imports into the United
States would probably involve less of a hardship than the
cessation of foreign purchases of certain essential metals,
such as manganese, cobalt, and chromium. In between are
products that could be produced domestically, but at a
much higher price. No country today seeks complete
independence, but most try to forge their trade patterns so
that they are minimally vulnerable to foreign control of
supply and demand..
Dependence

In recent years, many developing countries have decried
their dependence, realizing that they are too dependent on
the sale of one primary commodity and/or too dependent
on one country as a customer and supplier.
Because LDC economies are small, they tend to be much
more dependent on a given industrial country than the
industrial country is dependent on them
Mexico, for example, depends on the United States for over
60 percent of its imports and exports, whereas the United
States depends on Mexico for less than 5 percent of its
imports and exports. Mexico can thus be much more
adversely affected by U.S. policies than the United States
can be affected by Mexican policies.
Interdependence
One way of limiting ones vulnerability to
foreign changes is through interdependence,
or the development of trade relationships on
the basis of mutual need. France and
Germany, for example, have highly
interdependent economies . Each depends
about equally on the other as a trading
partner, and thus neither is likely to cut off
supplies or markets because the other could
retaliate effectively.
Trade Relations of India

Until the liberalization of 1991, India was largely and
intentionally isolated from the world markets, to
protect its economy and to achieve self-reliance.
Foreign trade was subject to import tariffs, export taxes
and quantitative restrictions, while foreign direct
investment (FDI) was restricted by upper-limit equity
participation, restrictions on technology transfer,
export obligations and government approvals; these
approvals were needed for nearly 60% of new FDI in
the industrial sector.
A large percentage of the capital flows consisted of
foreign aid, commercial borrowing and deposits of
non-resident Indians.
Trade Relations of India

India's exports were stagnant for the first 15 years after
independence, due to general neglect of trade policy by the
government of that period.
Imports in the same period, due to industrialization being
nascent, consisted predominantly of machinery, raw
materials and consumer goods.
Since liberalization, the value of India's international trade
has increased sharply, with the contribution of total trade
in goods and services to the GDP rising from 16% in 1990
91 to 47% in 200810.
[
India accounts for 1.44% of exports
and 2.12% of imports for merchandise trade and 3.34% of
exports and 3.31% of imports for commercial services trade
worldwide.



Trade Relations of India

India's major trading partners are the European
Union, China, the United States of America and
the United Arab Emirates.
Major export commodities included engineering
goods, petroleum products, chemicals and
pharmaceuticals, gems and jwellery, textiles and
garments, agricultural products, iron ore and
other minerals.
Major import commodities included crude oil and
related products, machinery, electronic goods,
gold and silver
Indias Export
India's exports during November, 2011 were
valued at US$ 22.32 billion which was 3.87 per
cent higher in Dollar terms than the level of
US$ 21.49 billion during November, 2010.
Cumulative value of exports for the period
April-November 2011 -12 was US$ 192.69
billion as against US$ 144.66 billion registering
a growth of 33.21 per cent in Dollar terms
over the same period last year.

Country-wise exports
Country-wise exports during 2011-12 (April-June) indicate that:-
UAE continued to remain the largest importer of Indian goods with
a share of 11.6 per cent
followed by the US (10.4 per cent), Singapore (8.0 per cent), China
(5.1 per cent) and Indonesia (3.0 per cent).
These five countries together accounted for around 38 per cent of
Indias total exports during April-June 2011.
In spite of uncertainties prevailing in Europe, Indias exports to
Germany, U.K., Netherlands, Italy and Belgium grew significantly
during April-June 2011.
Among major export destinations, US, Japan, China and Hong Kong
were the economies where Indias exports showed lower growth
during April-June 2011.

commodity-wise exports
As per the commodity-wise exports data released by Directorate General
of Commercial Intelligence and Statistics (DGCI&S) during 2011-12 (April-
June)
manufactured goods continued to maintain the largest share with 66 per
cent,
followed by petroleum products (18.4 per cent) and primary products
(13.2 per cent).
The rise in the share of manufactured goods essentially emanated from
improvement in the share of engineering goods. Reflecting the robust
demand in the new markets like Latin America and Africa, exports of
engineering goods during April-June 2011 were more than double the
level recorded during the corresponding period of previous year.
Within engineering, exports of all major categories, viz., transport
equipment, machinery and instruments, manufactures of metals, iron &
steel and electronic goods have recorded higher growth
commodity-wise exports
Within manufacturing, other commodities groups, viz.,
leather & manufactures, chemicals & related products
and textiles & textile products witnessed higher growth
during April-June 2011 as against the corresponding
period of 2010-11.
However, petroleum products and ores and minerals
were the sectors which recorded decelerated growth
during April-June 2011.
Lower growth in commodities, viz., ores & minerals
possibly reflects reduced demand for basic inputs due
to concerns with regard to global slowdown.

commodity-wise exports
Furthermore, the impact of quantitative restrictions imposed on
exports of raw cotton was evident in negative growth recorded
during April-June 2011.
However, the export of raw cotton has now been placed on open
general licensing by the government since July 31, 2011.
During 2011-12 (April-June), the share of developing countries and
Organization of the Petroleum Exporting Countries (OPEC) countries
in Indias exports improved as compared to April-June 2010.
It reflects the impact of governments policy focus on diversification
of Indian exports to other markets, especially those located in Latin
America, Africa, parts of Asia and Oceania.

Indias Imports

India's imports during November, 2011 were
valued at US$ 35.92 billion representing a
growth of 24.55 per cent in Dollar terms over
the level of imports valued at US$ 28.84
billion in November, 2010. Cumulative value of
imports for the period April-November, 2011-
12 was US$ 309.53 billion as against US$
237.66 billion registering a growth of 30.24
per cent in Dollar terms over the same period
last year
Indias Imports

Oil imports during November, 2011 were valued at US$
10307.1 million which was 32.28 per cent higher than oil
imports valued at US$ 7792.1 million in the corresponding
period last year. Oil imports during April-November, 2011-
12 were valued at US$ 94116.5 million which was 42.67 per
cent higher than the oil imports of US$ 65967.8 million in
the corresponding period last year.
Non-oil imports during November, 2011 were estimated at
US$ 25615.3 million which was 21.69 per cent higher than
non-oil imports of US$ 21050.2 million in November, 2010.
Non-oil imports during April - November, 2011-12 were
valued at US$ 215413.9 million which was 25.46 per cent
higher than the level of such imports valued at US$
171696.3 million in April - November, 2010-11.

Country-wise imports
During 2011-12 (April-June), share of developing countries in total imports of India
was marginally lower than the corresponding period of 2010-11.
On the other hand, the share of OECD and OPEC group of countries rose to 30.8
per cent and 35.0 per cent, respectively.
Country-wise, China continued to be the largest source of imports with a share of
11.5 per cent in total imports, followed by the Switzerland, UAE, Saudi Arabia and
Iraq.
These five countries together constituted around 38.6 per cent of Indias imports.
During April-June 2011, there was a distinct shift in source countries for imports.
Switzerland became the second largest source country for imports replacing UAE
while Iraq emerged as fifth largest source of import replacing Australia.
In absolute terms, imports from Switzerland grew to more than double while that
from Iraq recorded an increase of 271.6 per cent during the period.
Import of items from Switzerland which recorded significant increase during the
period include non-ferrous metals, machinery (except electrical & electronics) and
electronic goods, etc.

commodity-wise imports
As per the latest available data on commodity-wise imports
released by Directorate General of Commercial Intelligence
and Statistics (DGCI&S) for 2011-12 (April-June), petroleum
and petroleum products continued to be the major item of
Indias imports during April-June 2011, followed by capital
goods and gold & silver.
Import of gold & silver, in absolute terms, was more than
double of that recorded during the corresponding period .
The quantum of Petroleum, Oil, and Lubricants (POL)
imports recorded a moderate growth of 4.6 per cent during
April-June 2011 as against 7.2 per cent during the
corresponding period of the preceding year 2010-11.

commodity-wise imports
Non-oil imports during 2011-12 (April-June) at US$ 79.4 billion witnessed
a growth of 23.7 per cent as against 40.3 per cent during the
corresponding period of previous year.
Deceleration in non-oil imports was mainly on account of decline in
imports of export related items and certain bulk items, viz., fertilizers,
manufactured items and iron & steel.
Import growth in most of export-related items (viz., pearls, precious and
semi-precious stones, chemicals, textile yarn and fabric) was either
negative or lower possibly reflecting incipient signs of export moderation
in these sectors in forthcoming months.
Import of certain categories of capital goods either declined or showed
decelerated growth raising concerns regarding domestic investment
scenario.