Answer
The sustainable export growth has been considered crucial for maintaining and accelerating the GDP growth impetus, which also contributes to the increase in the employment opportunities and eradication of poverty. Also, it is impossible for any country to frame the strategy to cover all the export products simultaneously, due to the lack of available human and financial resources. Export promotion, one of the important components of a country’s foreign trade policy focuses on the promotion and development of the best potential markets for the industry.
Export Promotion refer to the various incentive programs designed to attract more firms into the exporting by offering the help in product and market identification and development, pre-shipment and post-shipment financing, training, payment guaranty schemes, trade fairs, trade visits, foreign representation, etc.
Various Export Promotional Schemes have been introduced by the government of India as a result of the expected delay in the implementation of the liberalization of the imports and reduction in the transaction costs, with the focus of the small, medium and long terms periods of the strategy. The government of India provides assistance to the private sector businesses through the wide array of the services, from simply providing information about current opportunities in the world market to providing specialized assistance to design and implementation of the marketing programmes and sales campaigns abroad, often described as the ‘export promotion’ or ‘export development’.
The basic objective of export promotion activities is to encourage increased sales of the products available currently available for export, by concentrating all promotional efforts on the existing production with the aim to increase the value of foreign sales by a given target. These activities are usually carried out by the trade promotion organizations, i.e., the TPOs. TPOs, in most of the countries, concentrate their effort on export promotion, comprising of the set of the actions and activities to encourage increased sales of products that are currently available for export.
Thus, it can be said that the export promotion policies reflects the interest of the national governments to stimulate the exports. The main instruments of the export promotion are subsidies, tax exceptions, and
special credit lines. However, in the late twentieth century, the regulatory aspects of export promotion have changed significantly, but, since the creation of the World Trade Organization in 1995, some exportpromotion activities have been identified as the trade distorting practices, as the consequence of the devised rules by the WTO, allowing the countries, affected by the export promotion practices of their trading partners, to use the WTO’s dispute-settlement procedure and in some cases retaliate.
The export promotion schemes, which allow access to external markets, are sometimes also used as the complementary development strategy to import protection, which encourages the development of the infant industry. But, for this, the foreign demand is often required by the domestic markets with limited size which requires the attainment of the economies of scale for the various productive activities.
However, recently, some of the governments have also focused on the programmes of export development, by responding to the greater liberalization of foreign trade regulations and increased competition from abroad. The government expects that the sustained export promotion and development efforts willhelp earn additional foreign exchange needed to cover the cost of imports, solve balance of payments problems, help reduce the burden of the increased foreign indebtedness and create additional employment for the people.
Export development is different from export promotion, as export development aims at producing new export products and/or penetrating new markets that were not accessible before. The aim of export development activities is to identifyexisting opportunities and encourage new industries or production facilities to be set up in order to meet newly identified demands in the international market. Thus, export development concentrates on the product adaptation, which involves, the use of existing production capacityto manufacture new products when better markets are found for those products than for traditional products. Relatively, the export development approach requires more effort, resources, and determination. However, due the country specific limitations, the export development cannot always be fully adopted. Therefore, the export promotion and development are at priority by most of the developing countries for the attainment of the economic development goals.
The Export Promotion and Development can succeed through orderly distribution of responsibilities, adequate co-ordination of policies at the formulation and implementation stages and definition of an appropriate and realistic strategy. The Export Promotion and Development
Strategy of the developing country have the scope to set up the stage for determining the level and types of the trade linkages within various international markets.
