Recent Trends in India s foreign trade India's Trade Performance Indias merchandise exports reached a level of US $ 185.

3 billion during 200809 registering a growth of 13.6 percent as compared to a growth of 29.1 percent during the previous year. Notwithstanding the deceleration of the growth in 2008-09, Indias export sector has exhibited remarkable resilience and dynamism in the recent years. Our merchandise exports recorded an Average Annual Growth Rate (AAGR) of 23.9 per cent during the five year period from 2004-05 to 2008-09, as compared to the preceding five years when the exports increased by a lower AAGR of 14.3 per cent. According to latest WTO data (2009), Indias share in the world merchandise exports increased from 0.8 per cent in 2004 to 1.1 per cent in 2008. India also improved its ranking in the leading exporters in world merchandise trade from 30th in 2004 to 27th in 2008.

Box: 2.1 Export Target and Achievement during the last five years

The Government had initially set an export target of US $ 200 billion for 2008-09, which was later revised downward to US $ 175 billion because of global slowdown in the second half of the year. With merchandise exports reaching US $ 185.3 billion in 2008-09, the actual exports exceeded the target by 5.9 per cent which is a remarkable achievement during a period of recession in countries of Indias major export destinations. Exports Exports recorded high growth during the first half of 2008-09 although a deceleration was witnessed during the subsequent months due to global economic slowdown. During 2008-09 (Apr-Sept) exports grew by 48.1 per cent with almost all the major commodity groups, except marine products,

handicrafts recording significant growth. In the second half of the year 2008-09 (Oct-Mar), exports declined by (-) 14.7 per cent with almost all the major commodity groups, except Gems & Jewellery, RMG, Electronics goods, recording significant negative growth. Commodities like Engineering Goods, Other basic Chemicals, Man-made Yarn, Leather & Leather Manufactures, and Spices which recorded overall positive growth during the year, as a whole, also recorded negative growth during the second half. However, despite the significant decline in the second half of the 2008-09, exports registered an overall growth of 13.6 per cent for the year. Imports Cumulative imports during 2008-09 was US $ 303.7 billion as against US $ 251.6 billion during the corresponding period of the previous year registering a growth of 20.7 per cent in $ terms. Oil imports were valued at US $ 93.7 billion which was 17.4 per cent higher than oil imports valued US $ 79.8 billion in the corresponding period of previous year. Non-oil imports valued US $ 210.0 billion which was 22.2 per cent higher than non-oil imports of US $ 171.8 billion in previous year. Table: 2.1 Export, Imports & Balance of Trade

Value in Rs. Crore Year 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 Exports 375340 456418 571779 655864 840755 563304 GrowthRate (%) 27.9 21.6 25.3 14.7 28.2 -13.7 Imports 501065 660409 840506 1012312 1374436 927969 GrowthRate (%) 39.5 31.8 27.3 20.4 35.8 -17.6 Balance of Trade -125725 -203991 -268727 -356448 -533680 -364665

Value in US $ Billion Year 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 Exports 83.5 103.1 126.4 163.1 185.3 117.5 (P): Provisional
Trade Balance The Trade deficit in 2008-09 was estimated at US $ 118.4 billion which was higher than the deficit of US $ 88.6 billion during 2007-08. Performance of Exports, Imports and Balance of Trade during 2004-05 to 2009-10 (AprilDecember) is given in the table 2.1 below: During the year 2009-10 (April-December), the cumulative value of exports was US $ 117.6 billion as against US $ 147.6 billion registering a decline of 20.3 per cent in US $ term over the corresponding period of the previous year. Cumulative of imports for the same period was US $ 193.8 billion as against US $ 253.8 billion during the corresponding period of the previous year registering a decline of 23.6 per cent in US $ terms. Oil imports for the same period were valued at US $ 56.9 billion which was 29.8 per cent lower than oil imports valued US $ 81.1 billion in the corresponding period of last year. Non-oil imports for the same period valued at US $ 136.9 billion which was 20.7 per cent lower than non-oil imports of US $ 172.7 billion in December, 2008. The Trade deficit in April-December 2009-10 was estimated at US $ 76.2 billion which was lower than the deficit of US $ 106.2 billion during April-December 2008.Indias exports have not been affected to the same extent as other economies of the world during the phase of global slowdown, yet our exports which suffered a decline since October 2008 continued for first seven consecutive months in 2009-10 as well. However, growth during the first phase of 2009-10 though continued to be negative was progressively slower from June 2009 onwards and entered the positive phase from the month of November 2009 reversing the earlier trend.

Growth Rate (%) 30.9 23.4 22.6 29.1 13.6 -20.3

Imports 111.5 149.2 185.7 251.7 303.7 193.8

Growth Rate (%) 42.7 33.8 24.5 35.5 20.7 -23.6

Balance of Trade -28.0 -46.1 -59.3 -88.6 -118.4 -76.2

Data Source: DGCI&S, Kolkata

Trade Balance Foreign Trade Policy, 2009-14 The Foreign Trade Policy (FTP) 2009-14 was announced on 27th August, 2009 in the backdrop of a fall in Indias exports due to global slowdown. The short term objective of FTP (2009-14) was to arrest and reverse the declining trend of exports as well as to provide additional support especially to those sectors which were hit badly by recession in the developed world. The Policy envisaged an annual export growth of 15 per cent with an annual export target of US$ 200 billion by March 2011 and to come back on the high export growth path of around 25 per cent per annum in the remaining three years of this Foreign Trade Policy i.e. up to 2014. The long term policy objective for the Government is to double Indias share in global trade by 2020.

The International Marketing Mix When launching a product into foreign markets do you standardise or adapt your marketing mix to the foreign market? A company can adopt to use a standardised marketing mix around the world or an adapted marketing mix in each country. International Product Strategies Standardisation Vs Adaption So what should an organisation do? Adapt or sell a standardised product? Basic marketing concepts tell us that we will sell more of a product if we aim to meet the needs of our target market. In international markets ,we have to take into consideration consumers cultural background, buying habits, levels of personal disposable income etc in order to deliver a tailored marketing mix program to suit their needs. The arguments however for standardisation suggest that if you go through the process of adapting the product to local markets it does little but add to the overall cost of producing the product and weakens the brand on the global scale. In todays global world, where consumers travel more, watch satellite television, communicate and shop internationally over the internet, the world now is becoming a lot smaller. Because of this there is no need to adapt products to local markets. Brands such as Coca-Cola, MTV, Nike, Levis are all successful global brands where they have a standardised approach to their marketing mix, all these products are targeted at similar groups globally. In many circumstances a company will have to adapt their product and marketing mix strategy to meet local needs and wants that cannot be changed. Mcdonald is a global player however, their burgers are adapted to local needs. In India where a cow is a sacred animal their burgers are served with chicken or fish. In Mexico burgers come with chilli sauce. Coca-cola is some parts of the world taste sweeter then in others. Yes we can argue that standardisation is better for the organisation because it reduces cost, however many organisations will have to think global, but act local if they are to successfully establish them selves in foreign markets. International Promotion Strategy

As with international product decisions an organisation can either adapt or standardise their promotional strategy and message. Advertising messages in countries may well have to be adapted because of language barriers or the current message used in the national market may be offensive to overseas residents. The use of certain colours may also need to be thought about. In India red is the colour worn by the bride in weddings, white is the colour for mourning in Japan. The level of media development has to also be taken into account. Is commercial television well established in your host country? What is the level of television penetration? How much control does the government have over advertising on TV and radio? Is print media more popular then TV? Many organisation go for a strategy of adapting advertising messages to local markets to best meet consumer demand. International Pricing Strategies Pricing on an international scale is difficult. As well as taking into account traditional price considerations (see marketing mix pricing) i.e.: Fixed and variable costs, Competition, Company objectives , Proposed positioning strategies, Target group and willingness to pay, the organisation needs to consider the costs of transport, any tariffs or import duties that may be levied on their product(s) when they are sold on the international scale. Also what currency do you expect to be paid in? Will it be home or international currency? Exchange rate fluctuation will also impact profitability and influence pricing decisions. Other factors to consider include local incomes, what are income and PDI levels. What is the general economic situation of the country and how will this influence pricing? The internet is now making pricing more transparent for consumers. Goods can be purchased online from any overseas organisations at local currency prices, a prime examples is dvds which are purchased from sites like www.dvdsoon.com which deliver internationally. International Distribution Strategies A standard distribution channel in the UK may go from a Manufacturer, wholesaler, retailer to consumer or direct from a manufacturer to a retailer. In an overseas market there may well be more intermediaries involved. For example in Japan there are approximately five different types of wholesaler a product goes through before the product reaches the final consumer. In your international market , is it dominated by major retailers or is the retail sector made up of small independent retailers? Is internet distribution common for your product.