Counter Trade

Counter Trade Definition:
Reciprocal trade in which goods or services are exchanged not for cash but for other goods or services. A large part of the internet commerce comprises of local and international counter-trade

Countertrade means exchanging goods or services which are paid for, in whole or part, with other goods or services, rather than with money. A monetary valuation can however be used in counter trade for accounting purposes. In dealings between sovereign states, the term bilateral trade is used

Types of Counter Trade
There are five main variants of countertrade: • Barter: Exchange of goods or services directly for other goods or services without the use of money as means of purchase or payment. Barter is the direct exchange of goods between two parties in a transaction. The principal exports are paid for with goods or services supplied from the importing market. A single contract covers both flows, in its simplest form involves no cash. In practice, supply of the principal exports is often held up until sufficient revenues have been earned from the sale of bartered goods. One of the largest barter deals to date involved Occidental Petroleum Corporation's agreement to ship sulphuric acid to the former Soviet Union for ammonia urea and potash under a 2 year deal which was worth 18 billion euros. Furthermore, during negotiation stage of a barter deal, the seller must know the market price for items offered in trade. Bartered goods can range from hams to iron pellets, mineral water, furniture or olive-oil all somewhat more difficult to price and market when potential customers must be sought. • Switch trading: Practice in which one company sells to another its obligation to make a purchase in a given country. • Counter purchase: Sale of goods and services to one company in other country by a company that promises to make a future purchase of a specific product from the same company in that country. • Buyback: occurs when a firm builds a plant in a country - or supplies technology, equipment, training, or other services to the country and agrees to take a certain percentage of the plant's output as partial payment for the contract.

• Offset: Agreement that a company will offset a hard - currency purchase of an unspecified product from that nation in the future. Agreement by one nation to buy a product from another, subject to the purchase of some or all of the components and raw materials from the buyer of the finished product, or the assembly of such product in the buyer nation. • Compensation trade: Compensation trade is a form of barter in which one of the flows is partly in goods and partly in hard currency

Importance of CounterTrade:

Countertrade also occurs when countries lack sufficient hard currency, or when other types of market trade are impossible.
In 2000, India and Iraq agreed on an "oil for wheat and rice" barter deal, subject to UN approval under Article 50 of the UN Persian Gulf War sanctions, that would facilitate 300,000 barrels of oil delivered daily to India at a price of $6.85 a barrel while Iraq oil sales into Asia were valued at about $22 a barrel. In 2001, India agreed to swap 1.5 million tonnes of Iraqi crude under the oil-for-food program.
The Security Council noted: "... although locally produced food items have become increasingly available throughout the country, most Iraqis do not have the necessary purchasing power to buy them. Unfortunately, the monthly food rations represent the largest proportion of their household income. They are obliged to either barter or sell items from the food basket in order to meet their other essential needs. This is one of the factors which partly explains why the nutritional situation has not improved in line with the enhanced food basket. Moreover, the absence of normal economic activity has given rise to the spread of deep-seated poverty."
RESTRICTION FOR EXPORTING GOODS:
Export restrictions, or a restriction on exportation, are limitations on the quantity of goods exported to a specific country or countries by a government.
An export restriction may be imposed: • To prevent a shortage of goods in the domestic market because it is more profitable to export • To manage the effect on the domestic market of the importing country, which may otherwise impose antidumping duties on the imported goods • As part of foreign policy, for example as a component of trade sanctions • To limit or restrict arms or dual-use items that may be used in proliferation, terrorism, or nuclear, chemical, or biological warfare. • To limit or restrict trade to embargoed nations.
Export restrictions from USA are specified by Bureau of Industry and Security to enforce the Export Administration Regulations. The Department of State has the responsibility of overseeing export of defense and military-related articles as per the International Traffic in Arms Regulations or ITAR.
EXPORT PROMOTION:
The major objective of export promotion programmes is to create awareness about exports and make the people understand that it is one of the most crucial instruments of growth and market expansion
Advantages of Export Promotion:
Earning of foreign exchange
Export promotion leads to expansion of goods for the foreign market. These goods earn foreign exchange that can be used to facilitate development.
Greater utilisation of resources
Export promotion industries have a wide market for their produce for both domestic and foreign markets. They are therfore able to produce for a greater capacity. Production for export enables them to increase utilization of locally available resources that would otherwise be idle. Full utilisation of plant capacity
Due to the fact that export promotion industries have a wide market, they are able to fully utilize the existing plant capacity. In this way, they can take advantage of large scale production. This will lead to lower production costs. Addition of value to primary exports
By establishing export oriented industries, a country is able to process its primary products instead of exporting them in their raw form. This adds value to primary exports, hence increasing foreign exchange earnings.
Creation of employment
Generation of employment opportunities is a major consideration in any industrialisation strategy. In this regard, export oriented industries absorb labour, thereby helping to reduce the problem of unemployment in a country. For example, people will be employed directly in a particular export promotion industry, as well as indirectly in allied industries such as transport and insurance. Encouragement of efficiency in production
Since export promotion industries are exposed to competition from foreign producers, they are likely to strive for greater efficiency in production and higher quality of goods. This will ensure their competitiveness both in the domestic and foreign markets.

AGENCIES FOR PROMOTING EXPORTS: 1. Agricultural and Processed Food Products 2. Export Development Authority 3. Marine Products Exports Development Authority 4. Apparel Export Promotion Council 5. Building Materials and Technology Promotion Council 6. Carpet Export Promotion Council 7. Cashew Export Promotion Council of India 8. Chemicals & Allied Products Export Promotion Council 9. Council for Leather Exports 10. Cotton Textiles Export Promotion Council 11. Electronics & Computer Software Export Promotion Council 12. Engineering Export Promotion Council 13. Export Promotion Council for Handicrafts 14. Export Promotion Council for Handicrafts- NIC Site 15. Gem and Jewellery Export Promotion Council 16. Handloom Export Promotion Council 17. Indian Silk Export Promotion Council 18. Jute Manufactures Development Council 19. Plastics and Linoleums Export Promotion Council 20. Powerloom Development & Export Promotion Council 21. Shellac Export Promotion Council 22. Sports Goods Export Promotion Council 23. Synthetic and Rayon Textile Export Promotion Council COMMODITY BOARDS AND OTHER AGENCIES : 24. Asia Pacific Textile Clothing Forum 25. Board for Industrial and Financial Reconstruction (BIFR) 26. Bureau of Indian Standards 27. Central Board of Excise and Customs 28. Central Insecticides Board Registration Committee 29. Central Silk Board 30. Coconut Development Board 31. Coir Board 32. Federation of Indian Export Organisations (FIEO) 33. Forward Markets Commission 34. India Trade Promotion Organisation 35. Indian Institute of Foreign Trade 36. Indian Investment Centre 37. Industrial Credit Investment Corporation of India 38. Industrial Development Bank of India 39. Industrial Finance Corporation of India (IFCI Ltd.) 40. National Accreditation Board for Cerfification Bodies (NABCB) 41. National Agricultural Cooperative Marketing Federation of India Limited (NAFED) 42. National Centre for Jute Diversification 43. National Centre for Trade Information (NCTI) 44. National Cooperative Consumers Federation of India 45. National Council for Cement and Building Materials 46. National Dairy Development Board 47. National Foundation for Corporate Governance 48. National Horticulture Board 49. National Oilseeds and Vegetable Oils Development Board 50. National Medicinal Plants Board 51. National Pharmaceutical Pricing Authority 52. National Productivity Council 53. Patent Facilitating Centre 54. Plant Quarantine Organisation of India 55. Small Industries Development Bank of India (SIDBI) 56. Rubber Board 57. Spices Board of India 58. State Trading Corporation of India (STC) 59. Tariff Commission 60. Tea Portal- Tea Board India 61. Tobacco Board

The Foreign Trade
Policy of India is guided by the Export Import in known as in short EXIM Policy of the Indian Government and is regulated by the Foreign Trade Development and Regulation Act, 1992.
DGFT (Directorate General of Foreign Trade) is the main governing body in matters related to Exim Policy. The main objective of the Foreign Trade (Development and Regulation) Act is to provide the development and regulation of foreign trade by facilitating imports into, and augmenting exports from India. Foreign Trade Act has replaced the earlier law known as the imports and Exports (Control) Act 1947.
EXIM Policy
Indian EXIM Policy contains various policy related decisions taken by the government in the sphere of Foreign Trade, i.e., with respect to imports and exports from the country and more especially export promotion measures, policies and procedures related thereto. Trade Policy is prepared and announced by the Central Government (Ministry of Commerce). India's Export Import Policy also know as Foreign Trade Policy, in general, aims at developing export potential, improving export performance, encouraging foreign trade and creating favorable balance of payments position.
History of Exim Policy of India
In the year 1962, the Government of India appointed a special

Exim Policy Committee to review the government previous export import policies. The committee was later on approved by the Government of India. Mr. V. P. Singh, the then Commerce Minister and announced the Exim Policy on the 12th of April, 1985. Initially the EXIM Policy was introduced for the period of three years with main objective to boost the export business in India