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IB5 India Assignment2

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IB5 India Assignment2

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GROUP ASSIGNMENT COVER SHEET

STUDENT DETAILS
Student name: Phạm Cao Cường Student ID number: 31231021463

Student name: Trần Lan Ngọc Linh Student ID number: 31231025171

Student name: Trần Nguyễn Tú Uyên Student ID number: 31231021296


Student name: Lê Ngọc Mai Student ID number: 31231027449

Student name: Nguyễn Quỳnh Mai Student ID number: 31231022971

UNIT AND TUTORIAL DETAILS


Unit name: International Business Unit number: BUS302
Tutorial/Lecture: Lecture Class day and time: 08:00, Thursday
Lecturer or Tutor name: Mrs. Tran Linh Nhi

ASSIGNMENT DETAILS
Title: Assignment 2
Length: 2 pages Due date: November 30, 2024 Date submitted: November 30, 2024

DECLARATION
I hold a copy of this assignment if the original is lost or damaged.
I hereby certify that no part of this assignment or product has been copied from any other
student’s work or from any other source except where due acknowledgement is made in the
assignment.
I hereby certify that no part of this assignment or product has been submitted by me in
another (previous or current) assessment, except where appropriately referenced, and with
prior permission from the Lecturer / Tutor / Unit Coordinator for this unit.
No part of the assignment/product has been written/ produced for me by any other person
except where collaboration has been authorised by the Lecturer / Tutor /Unit Coordinator
concerned.
I am aware that this work may be reproduced and submitted to plagiarism detection software
programs for the purpose of detecting possible plagiarism (which may retain a copy on its
database for future plagiarism checking).
Student’s signature: Phạm Cao Cường

Student’s signature: Trần Lan Ngọc Linh

Student’s signature: Trần Nguyễn Tú Uyên

Student’s signature: Lê Ngọc Mai

Student’s signature: Nguyễn Quỳnh Mai


Note: An examiner or lecturer / tutor has the right to not mark this assignment if the above
declaration has not been signed.
Question 1: Trade policy & foreign ownership restrictions of India.

With a focus on foreign investment, India's trade strategy aims to increase exports and
support domestic industry (Velut, 2015). The four pillars of the Foreign Trade Policy (2023)
are as follows:
- Remission incentive.
- Cooperation for export promotion.
- Lowering transaction costs and implementing e-initiatives.
- Developing districts as export hubs and emerging sectors.
The government promotes exports in sectors like handicrafts, leather goods, and textiles
through tax breaks and incentives. Lower corporate tax rates and streamlined FDI procedures
also boost international investment. However, there are ownership restrictions: agricultural
property cannot be purchased by foreigners, and some businesses, particularly those related to
national security, require government clearance before foreign investment can take place
(Gaggar et al., 2022).

Question 2: List trade barriers of India. These include tariff barriers, non-tariff
barriers, quotas, anti-dumping policies, and bureaucratic rules.

2.1. Tariff barriers:


India has imposed tariff barriers in a number of industries, including technology,
industry, and agriculture. The nation has the highest average Most-Favored-Nation (MFN)
tariff among major economies in 2022, at 18.1%. India can change rates flexibly due to the
large difference between WTO-bound and imposed tariffs, which causes uncertainty for
exporters from other countries. (U.S. Trade Representative, 2024).

2.2. Non-tariff barriers:


Export limitations and import licenses are examples of non-tariff obstacles in India.
To increase domestic production, the nation uses import licensing in a number of sectors,
including pharmaceuticals and agriculture. Export restrictions target nations like the United
States, the European Union, and Canada, especially with regard to agricultural commodities.
Although certain limitations have lately been removed, India has prohibited agricultural
exports, particularly rice, since 2022 in order to ensure food security. Export restrictions still
apply to other commodities, such as sugar and wheat.

2.3. Quotas:
From 1997 to the present, India has established quotas on different sectors:
agricultural, textile, and industrial products. This system is applied to various exporter
countries, especially Australia. Since 2021, under the Australia-India Economic Cooperation
and Trade Agreement, India has established tariff-rate quotas for dairy products to protect
local producers (U.S. Department of Agriculture, 2022).
2.4. Anti-dumping policies:
Since 1997, India has established anti-dumping duties on the industries of steel,
chemicals, and textiles, primarily against exporters like China, the EU, and the U.S. to protect
domestic industries from foreign competition deemed unfair. These measures are often
subject to review and can change based on market conditions.

2.5. Bureaucratic Rules:


India has applied the system to a wide range of industries, such as manufacturing,
pharmaceuticals, electronics, textiles, and agriculture since 1991. The target countries for
these rules are: the United States, Japan, Germany, China, and members of the European
Union. Bureaucratic hurdles are perceived as the largest barrier to foreign investment in
India. A survey indicated that 64% of German businesses cited these hurdles as a primary
concern, up from 53% the previous year.

2.6. Amended Technology Upgradation Fund Scheme (ATUFS):


This regime is applied to 2 parties: India (as the beneficiary country), and export
markets (such as the U.S., EU, etc., as indirect beneficiaries). ATUFS supports technology
upgrades in textiles and related sectors. Although it is not a direct barrier to trade, it can
affect import competition by fostering competitive domestic production.

Question 3: Does the government subsidize any domestic industries? Are there any
restrictions on foreign ownership? In all industries or only some?

The Indian government is supporting indigenous businesses through initiatives like the
Production Linked Incentive (PLI) schemes, which disburse ₹1.97 lakh crores across 14
industries to boost employment, production, and technological capabilities (Invest India,
2024). Additionally, certain subsidy programs, such as the textile-focused Amended
Technology Upgradation Fund Scheme (ATUFS), provide funding for the industry's
increasing technological capability.

Further, foreign direct investment (FDI) rules have been eased to permit up to 100%. There is
allowed foreign ownership in most of the industries without the requirement of prior
government approval. Though Official approvals can be reached to acquire greater holdings
of several industries, such as military and telecommunications, remain restrictive, usually
limiting foreign ownership to 49% (Jackson, 2021). (Hsiao, 2024). India envisages
augmenting its economy but now emerges as a global manufacturing powerhouse.
References

1. Embassy of Denmark in India. (n.d.). Framework conditions and barriers. Retrieved


from
https://indien.um.dk/en/the-trade-council/india-as-a-market/framework-conditions-an
d-barriers
2. Gaggar, R., Kalra, A., Singh, A., & Ochani, C. (2022, December 6). India: Foreign
direct investment regulations. Retrieved from
https://globalcompetitionreview.com/guide/foreign-direct-investment-regulation-guid
e/second-edition/article/india
3. Hsiao. (2024). Foreign direct investment reviews 2024: India | White & case LLP.
Retrieved from
https://www.whitecase.com/insight-our-thinking/foreign-direct-investment-reviews-2
024-india
4. India - Trade barriers | Privacy shield. (n.d.). Retrieved from
https://www.privacyshield.gov/ps/article?id=India-Trade-Barriers
5. International Trade Administration. (2019). India - Trade barriers | Privacy shield.
Retrieved from https://www.privacyshield.gov/ps/article?id=India-Trade-Barriers
6. Invest India. (2024). FDI in India: Foreign direct investment policy of India | Inve...
Retrieved from https://www.investindia.gov.in/foreign-direct-investment
7. Jackson, J. (2021, April 8). Big changes to foreign investor restrictions in India.
Retrieved from
https://www.glasslewis.com/big-changes-foreign-investor-restrictions-india/
8. Technology Upgradation fund scheme | Ministry of textiles | Goi. (2024, May 8).
Retrieved from https://texmin.nic.in/schemes/technology-upgradation-fund-scheme
9. The Wife Staff. (n.d.). India bans wheat exports with immediate effect in a bid to
control domestic prices. Retrieved from
https://thewire.in/government/india-bans-wheat-exports-with-immediate-effect-in-a-bi
d-to-control-domestic-prices
10. United States Trade Representative. (2013). Retrieved from
https://ustr.gov/sites/default/files/2013%20NTE%20India%20Final.pdf
11. United States Trade Representative. (2024). 2024 National Trade Estimate Report on
Foreign Trade Barriers [Report]. Retrieved from
https://ustr.gov/sites/default/files/2024%20NTE%20Report_1.pdf
12. Velut, J. (2015, March 12). Page restricted. Retrieved from
https://www.sciencedirect.com/science/article/abs/pii/B9780080970868750537
13. World Trade Organization. (2001). WTO | dispute settlement - the disputes - DS90.
Retrieved from https://www.wto.org/english/tratop_E/dispu_e/cases_e/ds90_e.htm

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