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Types of Trade barriers



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By : Paras Goyal    29 or more times read
Submitted 2019-07-25 12:14:02
Due to the presence of misconducts, wrongdoing, lawlessness, and malpractices in the international trade, introduction of trade barriers become an important criteria to stabilize and keep the trade ethics alive between countries. Though, it helps in solving disputes between traders and also prevent in formation of such disputes in the first place.

Basically, any provision or limitation in executing free flow of trade practices is known as ‘Trade Barrier’. Majorly, there are 2 types of barriers in trade and that are tariff barriers and non-tariff barriers. Tariff barriers are the barriers which involve levy of ordinary negotiations on custom duties or tariff on goods entering a country. On the other hand, non-tariff barriers are the barriers which doesn’t count in the tariff barriers. Although, to counter trade barriers, free trade agreements can be taken into consideration.


Import licence
it is the most common non-tariff barrier, which implements prohibition and restriction on imports kept up through import licensing requirements. Although, India has abolished its import licensing requirements for most of the consumer goods but still certain products face licensing related trade barriers. For an instance, the Indian government imposed a special import license for the automotive sector that is very constraining. Import licenses for automobiles are assigned only to the foreign nationals (who are permanently residing in India) or working in India for foreign companies (that holds greater than 30% of equity) or to the foreign nations (working at embassies and foreign projects).


Standards, testing, labeling


The Indian government has recognized 109 goods that must be registered under its National Standard body I.e. the Bureau of Indian Standards (BIS). Also, there is an another agency, the food safety and standards authority of India established under “the Food Safety and Standards Act, 2006”. In terms, it is the statutory body for putting down the standards for articles of food and regulating manufacturing, processing, sale and import of food. The basic motive behind these registrations are to ensure the quality of goods being exported into the market, but many countries exercise them as safety measures.


Anti dumping measures

Anti-dumping measures are authorized under the WTO Agreements in predefined situations to protect the domestic industries from serious damages arising from dumped or subsidized imports. India impose these measures on regular basis to protect domestic manufacturers from dumping and increasing hazardous events. In few cases, India’s anti dumping policy has raised concerns regarding clarity and due process. Moreover, India seems to have an aggressive addition in its application of the anti dumping law.

Export subsidies

Many export subsidies and other domestic support is issued to several firms of different industries to give them competitive strength in the international market. However, Export incomes are exempted from taxes and the exporters don’t have to bear any local manufacturing tax. While export subsidies tend to uproot exports from other countries market into third countries market, the domestic support performs as a direct barrier in entering the domestic market.

India sustain several export subsidy programs, including immunity from taxes for certain export businesses and also for exporters in Special Economic Zones. Almost every sector (e.g., textiles and apparel, paper, rubber, toys, leather goods, and wood products) obtains numerous subsidies, which includes exemption from customs duties and internal taxes. India not only offer subsidies to its textiles and apparel sector to boost exports, instead it also expands such programs and even implement new export subsidy programs. Therefore, the Indian textiles sector gets the privilege of many export promotion measures for instance, Export-Oriented Units, Special Economic Zones, Focus Product, and Focused Market Schemes.


Procurement


India needs an overall government procurement policy as its government procurement practices and procedures vary between states, central government and different ministries within the central government. In addition, Multiple procurement rules, guidelines, and procedures issued by different national bodies have reported many problems with transparency, accountability, competition, and efficiency in public procurement. According to the World Bank report, there are over 150 different contract formats being used by state owned Public Sector Units and each with different qualification criteria, selection processes and financial knowledge. Even The government has launched many schemes in preference to the Indian micro, small, and medium enterprises(MSME’s) and also to the state owned enterprises.

If you are new to the world of global trading or just starting your own export business and would like to learn more about the import-export process, procedure or documentation required for this particular practice. Then, Connect2India is the best platform which will help you to enhance your knowledge about import-export business practices and even help you to easily start your own overseas business.



Author Resource:- Visit Connect2India for more export import related details.

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