Exports have a significant impact on the economy, influencing economic growth, employment, and the balance of payments. Globalization, trade strengthening of the economies, operational scale benefits, and lower tariff barriers have contributed to exports becoming a larger share of national income. Together, these factors have contributed to improvising the scenario of export from India.
There are various benefits for the exporting country, including the resources obtained from the trade transactions. All these elements help offset the cost of imports while stimulating the domestic economy and increasing the nation’s Gross Domestic Product. As a result, exports benefit the country by promoting monetary movement and contributing to industrial growth, creating jobs and income.
Of course, some complications come with exporting, but there are significant benefits. If we count along the complex part, it includes more paperwork, a slight degree of financial risk because of currency fluctuations, cultural barriers, and altered product packaging standards.
But the benefits associated are indeed more. Let’s take a stroll at these benefits:
- With the opportunities to sell across international borders, a nation gets higher access to a more significant number of consumers and businesses. Considering the practical scenario, if you export from India to a single country, you may be limiting your potential for profits and opportunities to expand your business globally.
- Diversifying market opportunities can help you sell your goods and services in other growing markets. Your products get international exposure and better demand on the global front.
- Exports are also beneficial if you are looking forward to exploring a new market for your products. So, if you believe that the domestic market for your goods and services is saturated, you can introduce them to new markets. This is a smart move for every business
- Potential financing assistance from the government agencies and authorities is a major driving force that boosts exports from every country. This assistance is provided in the form of loans that guarantee your exporting initiatives’ funding.
- Exports stimulate domestic production. This is the prime reason why the Indian Government is so focused on raising export from India. This is one of the direct benefits derived from the increasing number of exports. We are aware that when domestic production increases, it necessitates domestic labour. As a result, exports increase employment in the country. Employment generation is a significant issue that the Government has been for years.
- Some economists have also suggested that there is also a spill over effect, apart from the employment generation. This means that once export workers are paid, they spend their earnings on goods and services. As a result, even more, jobs are created. And, the result is that the economy grows as a whole.
Every nation thrives on keeping the exports positive. The simple reason is that If net exports are buoyant, the country has a positive trade balance. This goes well in the case of export from India. On the other hand, If exports are negative, the country’s trade balance also goes on the opposing side. Almost every country in the world prefers to have a positive balance. That is, no government wants a negative trade balance.
Exports bring home Dollars. We all are aware that Dollars are the applicable currency worldwide. The more dollars a country has, the better is its economic position. Exports are the only way to earn this currency. As a result, exports are critical to a country’s financial stability. In the absence of dollars, an economy can stumble and implode.
This is because they will not import essential commodities if they don’t have any dollars. This is also the prime reason why exports are regarded as an economy’s lifeline. Economists and government officials worldwide are thriving to devise special programs and encourage exports to earn more dollars.
As far as the export from India is considered, we have a substantial hold of certain export items, including tea, coffee, rubber, and spices. The export promotion council of India and other relevant agencies are also coming up with schemes and policies to boost exports.
However, it should be noted that exports must be profitable for all the involved parties. Some countries subsidize their products to make them more affordable on the international market and increase exports. This can be the right move for the short run, but there has to be a specific plan that can suffice the demands and requirements of the hour in the long run.
Other ways in which governments try to raise the exports:
- Countries also increase their exports by negotiating trade treaties. This is an ancient practice wherein the governments thrive on lowering trade protectionism. As a result, most countries rely on bilateral or regional trade agreements. The other way for countries to increase exports is to devalue their currencies. However, this is not a suitable measure in the long term and the economy’s health. No doubt, the export prices are lower in the receiving country, but there are a lot of economic disturbances as a repercussion. To increase the export from India, the Indian Government has not resorted to this measure for so long.
- Despite some countries’ attempts at protectionism and trade without barriers, free trade has recently been the dominant trend in most countries. Economists generally Favor free trade because it provides consumers with the most incredible variety of products at the lowest prices. This happens because some countries are better than others at producing specific effects.
The bottom line:
Various components drive international trade. At the national level, governments try to control these elements. However, the factors play a cumulative role in regulating the trade scenario on the world stage. The principle of comparative advantage is at the heart of international trade, and many impacts are created by these factors alone.
Some countries are endowed with specific natural resources, whereas others have access to various resources. For example, Saudi Arabia has far more oil than it could ever use. However, there are very few other resources available for internal use. Exports of oil enable Saudi Arabia to live a prosperous and wealthy life. They export excess oil while importing other goods from the rest of the world. Similarly, countries with the most significant working populations, such as India, carry out the labor services export from India. As a result, any government must identify its core competencies and export them.