Individual Trade Project for India Export Market - Assignment Example

A REPORT ON “INDIVIDUAL TRADE PROJECT”: INDIA EXPORT MARKET Prepared by Student’s Name Professor’s Name Course Name 20th September 2012 Table of Contents: 1.0 Executive Summary……………………………………………………………………3 2.0 Introduction…………………………………………………………………………….4 3.0 Main Body………………………………………………………………………………5 4.0 Recommendations………………………………………………………………………10 5.0 Conclusion……………………………………………………………………………….11 References…………………………………………………………………………………12 1.0 Executive Summary: The purpose of this research is to provide assumptions which are aimed at formulating business export potential for Australia. Notwithstanding, the research paper provides an extensive analysis into one of Australia’s major products: Bauxite a mineral element that is produced in bulk in most parts of the country. In this case the potential export market is India since it is perceived as a growing industrial hub across the globe. India’s demand market for Alumina products is expected to rise with respect to increase in its population structure. Further, it is safe to indicate that Australia’s capacity to produce substantial volume of Bauxite calls for immediate expansion in export activities in order to maximize on sales revenue. In this way the Gillard government of Australia has embarked on formulating effective as well as efficient trade policies and restrictions which are aimed at both increasing trading agreements as well as protection by way of constant maintaining in-progress contracts. Taking into consideration the already established Indian infrastructure as well as investments and political environment it is fair to postulate a substantial increase in the trading contracts in terms of exports to the country as a whole. It is expected that the country’s demand for exports will increase from the current 21.1 % to about 30 %. 2.0 Introduction: In this research paper the main focus entails a clear and deep analysis of India as one of the major trading partners of Australia. As a country, India is considered colorful and rich in terms of cultural assortment. Consequently, the country portrays some elements of inconsistencies in the sense that it possesses vast buildings as well as ancient monuments which co-exist within the ever-growing modernized industries. India boasts of being one of the world’s most industrialized countries as well an economy that is considered to be growing at a much faster rate as compared to most of other Asian countries. This growth and development has instigated so much potential in terms of export markets. It is for this reason that Australia took to enter into numerous trade arrangements between the two countries. Australia exports to India include such goods as Coal, non-monetary forms of gold, copper ores, wool as well as agricultural products like fresh vegetables. These countries also enjoy both multilateral and bilateral trade agreements (Workman 2007). The main potential product to be introduced to the Indian Market is Alumina. The major reason for selecting this product is because of its untapped market in India also it is perceived that India imports mostly minerals while Australia is rich on the same. A Report on “Individual Trade Project”: India Export Market 3.0 Business and Trade Environment in India In terms of potential business as well as trade opportunities India is considered to be a prospective destination. This fact is derived out of several facets which gives India an upper hand over other Asian countries which may be interested with Alumina. These facets are discussed as below: I) Information on Industry Developments: as earlier stated, India boasts to be one of the most industrialized countries within the Asian Market. This is made possible by the large skilled labor market existing within the Indian economy as a whole. The aspect of industries is also catapulted to achievable and established levels out of the ever-growing Foreign Direct Investments into India’s industrial sector. More investors are perceived as having interest into the market out of the fact that India has a substantial population which will acts towards providing a ready market. It is worth noting that the Indian government has allowed cities like Mumbai to host significant mineral-processing industries which is a factor that promotes ease in market hubs (Australian Business Consulting & Solutions 2010). II) Investments: vast oversees campaigns conducted by the Indian fraternity has promoted Foreign Direct Investments (FDI). FDI portfolio on mineral-related industrial activities has been encouraged and it will be fair to postulate that Alumina products have an upper edge over most of other minerals needed by the Indian market. III) Political Environment: India is one of the best renowned democracies in the world. This is further evident with the current political stability that is being enjoyed throughout the country. The fact that the country enjoys political stability favors industrial growth as well as developments. This is an aspect that will benefit Alumina exports from Australia mining companies. IV) Government Regulation: upon the desire to develop economically the government of India has seen it fit to lift some of the trade policies it had previously held and which are considered outdated and in-effective especially because of the current formulation of World Trade Organization. The decision to lift major tariffs which affect mining industry directly has acted towards positive growth of a potential mineral market. Trade agreements have also been widened to make sure that relevant and workable business ideas are not left behind. V) Commercial Law: with the current Indian industrialization awakening the government through its Trade and Industrialization ministry has made it easier for international companies to register and operate within its economy. Also, policies regulating major operations of international firms within the sector have been made even friendlier. Apart from good relations who have resulted from friendlier and conducive business environment the sector has in turn enjoyed substantive retain earnings. VI) Transportation: India is interconnected through various network links that include roads, rails, water transport as well as air transport. Major cities within the country are connected with advanced road networks as well as rail transport. Internationally, the country enjoys easier and reliable water and air transports. For instance, in Mumbai the country is accessible to the Pakistan market through water as a credible means of transportation. To other markets the country is connected through international airports. Alumina and coal exports from Australia could reach India through air transport which will later be transported to other parts of the country by way of rail or roads which are considered reliable and cheaper in that matter (Australian Business Consulting & Solutions 2010). VII) Distribution and Trade Restrictions: as earlier-on stated business environments in India has been favorable for operations especially because of the government desire to increase investment growths. Therefore, it has embarked on providing reliable infrastructure such as roods and rails which connect air and water to main lands that have in turn acted as distribution channels for major commodities including Alumina and coal .Trade restrictions have also been lifted to allow competitive business operations within the country as a whole. A Commodity over which Australia has Advantage to Indian Market: The product under promotion is Alumina. The future potential market of this mineral into Indian market is portrayed by the current trading relations it enjoys with Australia. Statistically, India contributes to 21.1 % of all mineral exports from Australia. The fact that Australia is the world’s leading producer of bauxite means that it has not exploited fully its market potential. India is a potential market of this commodity since it already imports other mineral commodities like coal and copper ores. It also means that the potential level of trading this commodity will be made easier since there is sufficient infrastructure and policies in place that would aid the trading activity as a whole. Trade Restrictions and Tariff Policy Adopted by Australia Mining Industry for Export Market: The move by the Australian government to allow for a free-trade standpoint is perceived to encourage vast Aussie exports through the already created international trade blocs such as Association of South East Asian Nations (ASEAN) and World Trade Organizations. This move has indeed increased the Australian exports in the period 2005/2006 to the EU by a 34 % which translates to about $ 20 billion. In an effort to promote Australia business fraternity and in that case encourage Australian exports the government embarked on formulating the Australian Trade Commission whose main mandate was to see it that an Export Finance and Insurance Corporation was established to prioritize efforts put in Australian business exports. Also, the Australian government has embarked on formulating rules and policies pertaining to trade agreements in a way that promotes national cohesion and treatment in that matter. In this case export policies are formulated at equal measures with import policies aim being to shield or rather protect both international and local business ventures. This formulation has been made possible through Gillard Principle of national treatment. Consequently, Australia has also embarked on both formulating and application of national export controls in order to oversee trading activities of goods considered sensitive which when exported illegally to other countries may act towards impairing intercontinental security which may in turn damage its overall global reputation (Productivity Commission 2010). To sum up, with the trade policies and tariff lifting Australia has formulated policies which adhere to some basic principles commonly used while formulating trading policies altogether. These principles are unilateralism which encourage inter-continental competition whose aim is to increase economic activity of the Country as a whole, non- discrimination policies which acts to equalize trade lifts for all countries trading with Australia without any form special considerations altogether. Trade Volume and Value for Alumina Exports in the next Five Years: The market in India is considered vast and growing all the same. Taking into account the already established infrastructure in India it is safe to project substantial increase in the amount of Bauxite to be exported. It is also safe to indicate that the rapid globalization as well as industrialization phenomenon which is being experienced in India is a major boost to the aforementioned increase in trade agreements. Another important aspect is that the Australian government together with its Indian counterpart is in the final process of coming up with a trade agreement: “Australia-India Comprehensive Economic Cooperation Agreement” which is expected to tighten trade between the countries even further. Statistically, the current standings put India at the 7th position amongst those countries which trades with Australia. The position accounts for $ 6.3 billion with a 21.1 % trading volume. In the next five years however, the figure is expected to rise to about 30 % trade volume translating to a value of about $ 8/9 billion (Workman 2007). 4.0 Recommendations: In order to meet Australia’s objective of increasing its export activities to India the following recommendations are encouraged: I) The Australian government should embark on providing special incentives to foreign markets so that a favorable business environment needed for trading is established and maintained at the same time. II) It is also important that Australia government increase its campaigning strategies which are tailored to attracting Indian export businesses. In this case the governments should allow for better terms of trading agreements so that flexibility in policies is utilized to formulate even better understandings and contracts and not act as an inhibiting factor. III) The Australian government should also embark on providing financial support to both public and private sectors in need of Research and Development(R&D) in the Indian market in order to facilitate better understanding on how aspects such as culture, social and economic might be utilized for better trading agreements (Pink and Jamieson 2000). 5.0 Conclusion: It is fair to indicate that Australia Bauxite exports have not been fully tapped or rather exploited in the Indian market. The focus of this commodity to the aforementioned market is considered fruitful and beneficial as far as matters exports are concerned. This form of potential in trading is made possible through factors such as fairer trade policies and restrictions which have in turn helped in creating relevant organizations focused on tightening current trading agreements between the two countries. It is also fair to postulate that the already established infrastructure and relations with India is considered a core drive into increasing trading activities of the commodity: Bauxite. India’s rapid growth in terms of economies and industries is another benefitting facet that is expected to facilitate trading agreements between Australia and India. India’s population growth and current standings is also a factor which encourages even further demand market for products manufactured from Alumina. The fact that Australia is the largest Bauxite producer in the globe puts it at an upper edge over the rest and is also a facet worth considering since its market has not been fully exploited. All these facets are considered to be the main reason for selecting India as a possible potential market for Bauxite. References Australian Business Consulting & Solutions, 2010. Export Opportunities in India, viewed on 11th September 2012 from http://www.australianbusiness.com.au/International-trade/Export-markets/India/Export-opportunities-in-India Pink, B. and Jamieson, C. (2000), ‘A Portrait of Australian Exporters,’ Australian Bureau of Statistics, Australian Trade Commission, Canberra and Sydney. Productivity Commission (2010), Bilateral and Regional Trade Agreements, Research Report, Canberra, November. Workman, D, 2007. Australia Trade Buddies: Top Ten Australian Import & Export Free Trade Partners, viewed on 11th September 2012 from http://suite101.com/article/australias-trade-buddies-a12718 Read More