Once a trade transaction is completed, the importer must pay the exporter reliably and on time, with a bank often acting as an intermediary between both parties. Broadly speaking, there are five commonly available methods for efficient international trade settlements.

Letters of Credit (LC)

One of the most secure payment methods for both buyers and sellers, an LC is a letter from a bank that guarantees it will make a payment on behalf of the buyer to the seller, on time and for the stipulated amount, without fail. …

International trade refers to the economic transactions made between countries or economies. Broadly speaking, three types of international trade exist. These are Export Trade, Import Trade and Entrepot Trade.

Export & Import Trade

When one country sells its goods or services to another country, the selling country is engaged in export trade. When a country buys goods or services from another country, it is engaged in import trade. It thus naturally follows that every such trade transaction requires the participation of an exporter and an importer and vice versa.

Both export and import trade can have many advantages for each party. For emerging markets…

Various theories of international trade have emerged and evolved over the years. Understanding them can help us better understand trade patterns and origins. Here are some of the most important theories in international trade.

Mercantilism

.One of the oldest theories, mercantilism is an economic policy adopted by countries to maximize exports, while concurrently minimizing imports, thus creating a trade surplus. However, this model advocates for measures such as tariffs, subsidies and even imperialism to achieve this.

Absolute Advantage — Smith Model

.This refers to the model put forward in economist Adam Smith’s work, “The Wealth of Nations”. It revolves around the…

International trade helps developing countries build links with global trade partners, thus gaining many benefits. These include leveraging comparative advantages, economies of scale, improvements in technology, increased employment, better utilization of manufacturing capacities, increased domestic savings and improved potential for foreign direct investment. Overall, international trade has the potential to spur real economic development and improvements to standards of living.

Comparative Advantage, Economies of Scale & Enhanced Capacity Utilization

Comparative advantage refers to the idea that if a country is better suited to producing some kind of good or service than its peers, it will produce more of it while consuming less of it, resulting in a surplus that…

• India is considered to be among the most important food producers around the world
• This is because of the fact that the Indian economy is still quite dependent on agriculture
• In addition to this, the domestic demand for food grains in the country continues to rise each year. The South Asian nation’s population continues to grow at a steady pace, thereby meaning that there are more mouths to feed
• This has also meant that India has ramped up the production of food grains such as rice
• Products such as parboiled rice are not only produced for the domestic market but…

• India and Indonesia continue to be important partners both in terms of trade and politics
• The two countries are reliant on each other’s products in order to meet the demands of their local population
• For example, Indonesia is among the largest producers of coal and other natural resource
• However, the country does not have the local manufacturing capabilities needed to cater to the high demand
• Therefore, the country imports machinery and other mining equipment from nations such as China and India
• During the year 2019, Indonesia imported machinery and related equipment worth $632 million from India
• This category of products…

India and China have been trading partners for a long period of time

• The two Asian neighbours have been reliant on each other in order to meet the demand of their respective populations
• India’s key exports to China include organic chemicals, mineral fuels, cotton and related products, iron ores, as well as plastic items
• Almost all major product categories have recorded strong growth in recent years

However, the recent border tensions between the two nations cast a major shadow over their trade relations

• India decided to place curbs on imports from China, while also banning certain mobile apps that are…

Despite the recent border tensions between the two countries, India and China continue to be major trading partners China was India’s second-largest trading partner as of 2019, only behind the USA

The country accounts for nearly 13.7% of the total imports into India as of 2019

• Although India’s imports from China declined by 27.63% during April to August 2020, the South Asian nation is still quite dependent on its Eastern neighbour
• India imports a wide range of products from China, including machinery, chemicals, plastic, and fertilisers

This blog analyses the key items that India imports from China

The Items that India Imports from China

India imports several…