Export Strategy for Indian Textile Industry to Australia - Term Paper Example

Export strategy for Indian textile industry to Australia Introduction An export strategy is aimed at assessingthe potential of a country to export its products into an overseas market. The paper consists a board paper proposed for India, outlining the proposed export strategy for India’s textile products to Australia. India does not currently export its textile products to Australia and therefore there is need for coming up with an export strategy to facilitate this. The current sales of the textile and garment productsin the Indian market will be a factor to consider when developing the export strategy. Exportation of goods and services allows a country to sell commodities across its border and therefore will involve the participation in the international trade. India will therefore be expected to be familiar with the operations of the international trade which will help it to export its products effectively. The export strategy therefore proposed for the board of directors is dependent on the factors that will be brought out from the knowledge of the international trade (In Nafziger & In Paterson, 2014). The international trade International trade involves the exchange of products and services across the country boundaries. International trade consists of imports, which are the products that come into the country, and exports which are the products that the country sells to other countries. International trade is regulated by customs that regulate the oversight and taxation of the countries involved. International trade is laid on a theoretical foundation that includes mercantilism which tried to impose more exports than imports, referring this as a positive trade balance, neomercantilism which like the former, tries to meet a positive trade balance, absolute advantage over competitors which is based on the ability of a nation to produce effectively by using less resources. Another foundation is comparative advantage where a nation is encouraged to take part in exportation of a product which it is best suited to produce compared to its competitors, and endowment of factors which increases the comparative advantage thus enabling a nation to export products that it has a high factor endowment, therefore attaining higher sales level of the product and at the same time spreading its production cost, and importing the products which it has a low factor endowment in order to acquire them from countries that are suited to produce them. The complexity of the international market is based on the need for international transportation from one country to another. It involves the physical transportation infrastructure, transportation services such as distribution and logistics and the transactional environment which the international transportation takes place. There is also a global trade flow that has enabled developing country to participate in international trade as well as emergence of complex production systems integration processes, and transactional efficiency (Krugman1996). The actors in international trade are the countries that are involved in the export of products and services. International trade theory is a theory that demonstrates how free international trade broadens the contract opportunity for private economic factors and the mutual gains realizable from exchange of products with parties that have different levels of factor endowment. The institutions that are intended to increase trade in the international trade are the World Trade Oganisation (WTO), Generalized Agreement on Tariffs and Trade (GATT), International Monetary Fund (IMF) Organization for Economic Cooperation and Development (OECD)(Davidson 1997).There are also several barriers to entry into the international trade. These are quotas, tariffs and nontariff barriers. Tariffs are forms of taxes that are imposed on imports in order to raise their prices and prevent the domestic consumers from buying them. Quotas on the other hand are restrictions set on the quantity of the product that should be imported into a country, while nontariff barriers are quotas restrictions and other such as those restricting a certain quality which might include packing procedures (Karlsson, 2008). Analysis of trade exchange at both quantitative and qualitative levels Trade exchange implies the listing of securities and investments in the market. In a quantitative level, trading decisions are made using a set of systematic rules that are predetermined. At a qualitative level, qualitative factors are used to assess the trade exchange when making investment decisions. Environment and Climate Change Outlook (ECCO) is an ethical project formed by the European Union that is used by governments to carry out an assessment of vulnerability and impact for adaptations to changes in climate. This is aimed at achieving the economic cooperation and development. At the national level, it is aimed at enhancing trade and environmental sustainability for domestic trade and to enhance the production of goods and services. At the global level, it is aimed at enhancing the sustainability of trade at the international market (Grath, 2012). Export strategy for Indian textile products to Australia. The main aim of exporting products is to maximize the sales while spreading the production cost. The export strategy will require the involvement of every person who is aimed at making the exportation to be successful. The first step to be effected will be to define the aims of exporting and matching these aims with the resources available. The textile production will then be identified as the core business and the required resources will be allocated for the production. This will ensure that there is production of quality products for exportation. According to Krugman (1996), the strategy will involve focusing on the goals of exporting which are to ensure a reduction in fixed cost of production, to realize the full production capacity, getting access to new technology and achieving an international reputation. Indian textile industry will then need to determine whether the textile products will have the international potential and this will be aided by assessing the strength of the competitors. Next, the industry will need to select the market for the export and in this case Australia. The industry will be required to assess its position on what it needs to acquire from the exportation. It should then assess its readiness towards the start of exporting products. The industry and the country at large will then need to identify the risks that will need to be addressed. The industry will then be required to draw a budget, outlining the costs, expenses ant the exporting risks expected as well as the expected returns from exporting the textile products. There will then be a need to plan how the exports will be managed. It should then appoint a person to be in charge of managing the exports, ensure that the right number of employees is available as well as the appropriate equipment (Markusen, 2004). The next step will be to carry out a research on the potential markets. This will involve enquiring about the Australian textile industry. The next step will be to find out information about the legal issues associated with exporting in the Australian market. This will involve issues like the need for a trading license and labeling requirements. This will also require familiarization with the institutions governing the exportation such as WTO, GATT OECD and IMF(Davidson, 1997).There will also be a need to know the regulations outlined by these institutions. There will then be a need to come up with a legal sales contract engaging both Australia and India. An understanding of the tax rules will also be required and this will be explained in the contract. There is need to be aware of the rules governing the value added tax on exports which should be zero rated but taxable on the country receiving the goods. There will also be a need for the Indian textile company to modify its textile products to enhance a preference of the Australian market and to ensure that it surpasses the local textile products. Changes might be required in the branding of the products in order to suit the new market and to ensure that they fit the specifications required. The next step will require selecting a channel for exporting the product which may include the use of agents, coming to partnership with a local firm in Australia or even opening up a local subsidiary (Gandolfo & Gandolfo, 1998). It will then be expected to find the best form of transport for delivering the products into the market. Exporting textile products from India to Australia will require a complex transportation system that will ensure timely delivery of goods to the market. There will then be a need to consider the financial measures, considering how payments for the exports will be made and measures to be taken to guard against non–payment. Next consideration is on insurance against exportation risks that might be encountered when exporting the textile products Australia. The final step is the consideration for the barriers available to prevent entry into exporting the textile products to Australia. These might be tariffs, quotas and nontariff barriers. It should be aware of the tariffs that might be set to increase the imported textile products in Australia, as well as the limits set for imports on the products and also other conditions that might be set to restrict imports. The implementation of this proposed export strategy therefore will see a rise in the sales of textile products in the country and will enhance a spread in the production cost. This will result to overall improvement in the economic performance (Koul, 1997). Reference list Davidson, P. J. (1997). The legal framework international economic relations: ASEAN and Canada. Singapore: Institute of Southeast Asian Studies. Koul, A. K. (1977). The legal framework of UNCTAD in world trade. Bombay, India: N.M. Tripathi. In Nafziger, J. A. R., & In Paterson, R. K. (2014). Handbook on the law of cultural heritage and international trade. Gandolfo, G., & Gandolfo, G. (1998). International trade theory and policy. Berlin: Springer. Krugman, P. R. (1996). Rethinking international trade. Cambridge, Mass. [u.a.: MIT Press. Grath, A. (2012). The handbook of international trade and finance. London: Kogan Page. Markusen, J. R. (2004). Multinational firms and the theory of international trade. Cambridge, Mass. [u.a.: MIT Press. Karlsson, C. (2008). Handbook of Research on Cluster Theory. Cheltenham: Edward Elgar Pub. Read More