Communication has encouraged trade in the pre-historic times, but in the present century, Import Export business is essential for survival. Now, both import and export are fundamental aspects of any international trade, but a country should have more focus on export. However, the big question is when all countries across the world are engaged in both import and export of goods, why the focus should be on export? So, the top six reasons for you to know are as follows:
- Economic Stability
An excessive fluctuation in the financial system of any country is just too bad. This can lead to moderate to extreme inflation rates, crash in the stock market, and much worse outcomes. In such a scenario, people lose their confidence in their economy, and this hits investment severely. A good export rate minimizes the same to a decent extent and thus ensures an economic stability.
- Foreign Investment
Not just peace and a stable government are the pre-requisites to attract foreign investment. There is something more. A good export rate encourages investors to invest in countries, especially developing countries like India. Again, foreign investment is vital to fill up the gap between national savings and investment in an economy to have a high economic growth rate. For example, in India, Prime Minister Mr. Narendra Modi has taken several steps like relaxing FDI norms and ensuring favorable tax norms to encourage NRI investment.
- Inflation Rate
A high export rate keeps the inflation rate under a check and a low inflation rate does not allow the export of goods to slump. Thus, as said earlier, export of a country has a strong co-relation to the inflation rate. For example, India has performed well in the export of oil-based products, precious stones, cereals, textiles and heavy machinery in the recent years to control the inflation rate, which has increased the capacity to cause widespread public protest.
- Internal Trade
It may sound surreal that export promotes internal or domestic trade within a country, but it is true. When there are more goods of international standards in a surplus amount that an industry can export, a sense of competitiveness encourages industries in the domestic market to become more productive and internal trade prospers.
When an industry performs well in the export of finished or manufactured goods, there is an increase in employment opportunities. For example, in India, both the textile industry and gem and jewelry industry are the top performers in export, and both being labor-intensive have created big employment opportunities for millions of Indians. It is not an exaggeration that the Indian textile industry gives a direct employment to an approximate 5 million people only next to the agriculture sector.
- Foreign Currency
Lower exports of a country mean less foreign exchange, i.e. less foreign currency to make necessary imports from other countries, which could prove disastrous. For India, having an adequate foreign currency reserve is a matter of great significance. To cater to the need of its vast population, India has to import large quantities of oil, chemicals, iron and steel, fruits, dried vegetables and much more. So, an emphasis is also on boosting the production of all these items.
Apart from all the above reasons, a country needs to focus on export to contribute a big share of the country’s GDP growth. Ancient India was the ‘sone ki chidiya’ or ‘the golden bird’ because of its high export rate to a large number of countries and the need of the hour is to focus it on again with a renewed enthusiasm. In this endeavor, Ahmedabad-based Export Import institute named iiiEM is making some genuine efforts through their mission “Golden Bird”.