The Meaning and Definition of Export Promotion

THE MEANING AND DEFINITION OF EXPORT PROMOTION
Export promotion has been defined as “those public policy measures which
actually or potentially enhance exporting activity at the company, industry, or
national level”. Although many forces determine the international flow of goods
and services, export promotion is one of the principal opportunities that
governments have to influence the volume and types of goods and services
exported from their areas of jurisdiction.
Government of India, like in almost all other nations, has been endeavouring to
develop exports. Export development is important to the firm and to the economy
as a whole. Government measures aim, normally, at an overall improvement of the
export performance of the nation for the general benefit of the economy. Such
measures help exporting firms in several ways.
Export Promotion strategy promotes only the industries that have potential for
developing and competing with foreign rivals. Since the goal is to trade abroad,
there becomes competition, which in turn remedies the returns to scale. The main
goal of the export promotion is to prepare the “potential” industries for competition
with the foreign rivals. So the industries at their childhood must be protected for a
while.
Exporters, facing the increasing competition, have to improve their technologies,

their quality continuously in order to compete with their rivals. They have to make
research and development studies.
IMPORTANCE OF EXPORT PROMOTION:
At present, the importance of export trade as a carrier of economic development

has increased significantly. To speed up economic development in developing
countries like India, is required to import of machinery, technical knowledge etc.
from abroad. The three main sources of foreign exchange are: Foreign exchange
reserves and gold reserves, foreign loans and aid and exports promotion. Foreign
exchange reserves in India may not be enough to pay off overseas payments. So it
cannot be completely dependent on this source. Foreign currency can be earned
through foreign loans and aid, but there are various conditions and uncertainties
associated with this aid. Therefore, this source can neither be a viable solution to
meet the foreign exchange requirement. For this reason, the best, surest and most
sustainable way to earn foreign exchange is to expand exports. The importance and
requirements of export trade in India can be realized from different perspectives.
Therefore, various arguments are made in favour of exports promotion to help
India's economic development. The arguments worth mentioning are described
below.
(1) Current account deficit: The strength of exports has a large role in
determining the current account deficit. A permanent solution is possible to the
current account deficit of the India’s transaction balance through using the
foreign exchange earned through export expansion to meet the cost of imports
export promotion. Abid Hussain's committee on India's trade policy has also
recommended such a development-oriented export policy.
(2) Reducing the burden of foreign debt: India needs a lot of foreign exchange to
meet the interest and principal of foreign loans. Export growth has become
essential for the repayment of interest-bearing loans as the debt burden is huge.
If this is possible, India will be free from the humiliating conditions of foreign
loans.
(3) Massive capacity increase: Increasing exports facilitates the compression of
the expenditure of mass production. As a result, the efficiency of competition in
the international market increases and indirectly it increases exports. The
increase in exports not only expands the market for exported goods but also
expands the domestic market for other commodities. In this way, the increase in
exports creates a desirable environment for mass production in the country and
accelerates economic development.
(4) Increase import capacity: The increase in exports also increases the foreign
exchange reserves in the country which in turn increases the import capacity.
As a result of this, it is possible to increase the production of import substitute
goods and export commodities by importing raw materials, machinery,
technical knowledge etc. In addition, if the import capacity increases, it will be
possible to import sophisticated equipment and techniques, which will
accelerate the development of the country's economic situation.
(5) Employment: Growth in exports can create employment. If exports expand
then the volume of domestic production will increase and if production is to
increase it wants a lot of manpower which will increase employment. So in a
hugely populous country like India, unemployment is a serious problem and the
solution to the problem is possible through export promotion policies.
(6) Proper use of domestic resources: If exports expand, there will be a need to
increase production. To increase the volume of production, a large quantity of
input is required which can be obtained from the domestic market. Therefore, it
is possible to increase the speed of national income and economic development
by increasing production through proper utilization of domestic resources.
Above all, it appears that export trade or export promotion policies help India's
economic development in many ways. Export expansion will not only increase the
income of the country, but also the overall development of the country. The
economy of India is full of problems of unemployment, poverty, proper utilization
of national resources, industrial sickness, etc. Many of these problems can be
overcome through massive export expansion. If we look at the developed
countries, we will see that one of the main reasons for their economic development
is the policy of export expansion. So in a word, the importance or necessity of
export trade in the Indian economy is immense.

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THE MEANING AND DEFINITION OF EXPORT PROMOTION

Exporters, facing the increasing competition, have to improve their technologies,

IMPORTANCE OF EXPORT PROMOTION:

At present, the importance of export trade as a carrier of economic development

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