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Industry, Trade and International Organization

Category : Banking


Industry, Trade and International Organisation



Industry refers to an economic activity concerned with the processing of raw materials and manufacturing of goods in factories. Industries are often classified based on their principal product e.g. steel industry, automobile industry, textile industry, etc. The products of industries can be consumer goods (goods, which are finally consumed by consumers) like textiles, cosmetics etc., or producer goods (goods used by manufacturers for producing some other goods) like machinery, tools, equipment, etc.


Industrial Development

The concept of 'Industrial Policy’ is comprehensive and it covers all those procedures, principles, policies rules and regulations which control the Industrial undertakings of a country and shape pattern of industrialization. It incorporates fiscal and monetary policies, the tariff policy, Labour policy and government's attitude not only towards external assistance, but towards the public and private sectors also. When India achieved independence in 1947, the national consensus was in favour of rapid industrialization of the economy, which was seen not only as the key to economic development, but also as economic sovereignty.


Industrial Policy

An industrial policy provides guidelines for the effective coordination of the activities of various sectors of the economy. It is an official strategic effort of a country to encourage the development and growth of part or all of the manufacturing and sector as well as other sectors of the economy. In the subsequent years, India's Industrial Policy evolved through successive Industrial Policy Resolutions and Industrial Policy Statements. Specialised priorities for industrial development were also laid down in the successive five year plans.


New Industrial Policy, 1991

The Government of India announced the New Industrial Policy on 24th July, 1991. The main objective of this policy is to unshackle the Indian industrial economy from administrative and legal controls. Its main aim is to raise industrial

efficiency to the international level through substantial deregulation of the industrial sector of the country.


Industries Requiring Compulsory Licensing (Presently)

  • Distillation and brewing of alcoholic drinks.
  • Cigars and cigarettes of tobacco and manufactured tobacco substitutes.
  • Electronic aerospace and defence equipment of all types.
  • Industrial explosives including match boxes.
  • Specific hazardous chemicals viz,

(i) Hydrocyanic acid

(ii) Phosgene

(iii) Isocyanates and diisocyanates of hydrocarbon


Index of Industrial Production (IIP)

IIP is an index for measuring the level of industrial activity in the country. The all India IIP is a composite indicator that measures the short term changes in the volume of production of a basket of industrial products during a given period with respect to that in a chosen base period. It is complied and published monthly by the Central Statistics Office (CSO), with the time lag of six weeks from the reference month.


The Index of Industrial Production (IIP), with 2004-05 (Now, 2011-12) as base is the leading indicator for industrial performance in the country. Compiled on a monthly basis, the current IIP series based on 399 products/product groups is aggregated into three broad groups of mining, manufacturing and electricity. The IIP as an index shows both the level of production and growth.


Achievements of Industrial Sector

Following are the achievements of recent years

Patent Design It is a form of legal protection granted to the ornamental design of a functional item. Design patents are a type of industrially right design.

Indian Trademark Law It statutorily protects trademarks as per the Trademark Act. 1999 and also under the common law remedy of passing oft. Trademark law 2010, was accepted by the Parliament and was convened into a law.

IPR. Awareness Program Recognising the importance of intellectual property, the Hon'ble President of India, declared the decade of 2011-2020 as the Decade of Innovation. The future prosperity of India in the new knowledge economy would increasingly depend on its ability to generate new ideas, processes and solutions and the process of innovation would convert knowledge into social good and economic wealth.

National Design Policy This policy was announced on February, 2007. Realising the increasing importance of design in economic, industrial and societal development and in improving the quality of products and services, the Government of India had initiated a consultative process with industry, designers and other stakeholders to develop the broad contours of a National Design Policy.


The Maharatnas

Maharatna Scheme was introduced for Central Public Sector Enterprises (CPSEs), with effect from 19th May, 2010, in order to empower mega CPSEs to expand their operations and emerge as global giants.

The objective of the scheme is to delegate enhanced powers to the boards of identified large-sized Navratna CPSEs, so as to facilitate expansion of their operations, both in domestic as well as global markets.

CPSEs fulfilling the following criteria are eligible to be considered for grant of Maharatna status

(i) Having Navratna status,

(ii) Listed on the Indian stock exchange, with a minimum prescribed public shareholding under SEBI regulations, An average annual turnover of Rs. 20000 crore for 3 yr,

(iii) An average annual turnover of more than Rs. 2500 crore during the last 3 yr,

(iv) An average annual Net Worth of more than Rs. 15000 crore during the last 3 yr,

(v) An average annual Net Profit after tax of more than Rs. 5000 crore during the last 3 yr,

(vi) Significant global presence or international operations.

The coveted status empowers the hoards of these firms to take investment decisions up to Rs. 5000 crore as against the present Rs. 1000 crore limit for Navratnas without seeking government approval. The Maharatna firms would now be free to decide oil investments up to 15% of their Net Worth in a project, limited to an absolute ceiling of Rs. 5000 crore.


CPSEs Maharatna

(i) Bharat Heavy Electricals Limited (BHEL)

(ii) Coal India Limited (CIL)

(iii) Gas'-'Authority of India Limited (GAIL)

(iv) Indian Oil Corporation Limited (IOCL) NTPC Limited

(v) Oil and Natural Gas Corporation Limited (ONGC)

(vi) Steel Authority of India Limited (SAIL)


The Navratnas

Navratna was the title given originally to nine Public Sector Enterprises (PSEs), identified by the Government of India in 1997, as its most prestigious, which allowed them greater autonomy to compete in the global market. Navratna status empowers the PSUs to invest up to Rs. 1000 crore or 15% of their net worth on a single project without seeking government approval. The overall ceiling on such investments in all projects put together is 30%, of the net worth of the company.


CPSEs Navratna

  • Bharat Electronics Limited (BEL)
  • Bharat Petroleum Corporation Limited (BPCL)
  • Hindustan Aeronautics Limited (HAL)
  • Hindustan Petroleum Corporation Limited (HPCL)
  • Mahanagar Telephone Nigam Limited (MTNL)
  • National Aluminium Company Limited (NACL)
  • NMDC Limited
  • Oil India Limited (OIL)
  • Power Finance Corporation Limited (PFCL)
  • Power Grid Corporation of India Limited (PGCIE)
  • Rashtriya Ispat Nigam Limited (RINL)
  • Rural Electrification Corporation Limited (RECL)
  • Shipping Corporation of India Limited (SCIL)
  • Nevyeli Lignite Corporation Limited (NLCL)
  • Engineers India Limited (EIL)
  • National Buildings Construction Corporation Ltd. (NBCCL)
  • Container Corporation of India Ltd (CONCOR)


The Miniratnas

The government has also accorded the status of Miniratna to some profit making PSEs.

There are two categories of Miniratnas

Category I These are companies, which have made a profit in each of last three years and earned a profit of Rs. 30 crore in atleast one of the three years. They are allowed to incur capital expenditure without government approval upto Rs. 500 crore or equal to their net worth whichever is lower. There are 58 Miniratnas of this category at present (February, 2016).

Category II These are companies, which have made profits for the last three years continuously and have a positive Net Worth. They can incur capital expenditure upto Rs. 300 crore or 50% of their Net Worth whichever is lower. There are presently (February, 2016) 15 such category II Miniratnas.


Foreign Trade and Balance of Payment


Meaning of Foreign Trade

The Exchange of goods and services between the two countries is termed as foreign trade. The purpose of foreign trade lies in meeting the domestic demands for goods and services.

There are two components of foreign trade

  • Exports When goods and services are sold to the foreign country for the motive of earning more profit, it is called exports.
  • Imports When goods and services are purchased from a foreign country to meet the domestic needs it is known as imports.

Foreign Trade Policy

It is a set of guidelines and instructions established by the Director General of Foreign Trade (DGFT) in matter related to the import and export of goods in India.


New Foreign Trade Policy, 2015- 20

The Foreign Trade Policy, 2015-20 was finally announced by the Hon’ble Minister of Commerce and Industry, Smt Nirmala Sitharaman on 1st April, 2015. The FTP has been announced in the backdrop of several measures initiated by the Government of India and such as 'Make in India', 'Digital India’ and 'Skills India’, among others.

The focus of the new policy is to support both the manufacturing and services sectors, with a special emphasis on improving the 'ease of doing business'.


Features of the New Foreign Trade Policy (2015-20)

Features of the Foreign Trade Policy are as follows

  • India to be made a significant participant in world trade by 2020.
  • Merchandise Exports from India Scheme (MEIS) to promote specific services for specific markets.
  • FTP would reduce export obligations by 25% and would give boost to domestic manufacturing. FTP benefits from both MEIS and Service Exports from India Scheme (SEIS), and will be extended to units located in SEZs.
  • Industrial products to be supported in major markets at rates ranging from 2% to 3.5%.
  • Branding campaigns planned to promote exports in sectors where India has traditional strength.


New Scheme in FTP, 2015-20

FTP 2015-20 introduces two new schemes namely Merchandise Exports from India Scheme (MEIS) and Service Exports from India Scheme (SETS).

  • Merchandise Exports from. India Scheme (MEIS) Now, 5 different earlier schemes (Focus Product Scheme, Market Linked Focus Product Scheme; Focus Market Scheme, Agri

Infrastructure Incentive Scheme and VKGUY) have been merged into a single scheme, namely Merchandise Export from India Scheme (MEIS) Incentives under this scheme are available on exports of notified goods to notified markets at notified rates.

  • Service Exports from India Scheme (SEIS) Served from India. Scheme (SEIS) has been replaced with Service Exports from India Scheme (SEIS).

Now, all service providers located in. India and earning foreign exchange, regardless of the Constitution or profile of the service provider, who is exporting notified services. Would be eligible for the benefits at the rate of 3% or 5% of net foreign exchange earnings.

The reward, issued as Duty Credit Scrip under this scheme and goods impelled by using this scrip will be freely transferable and usable for all types of goods/services for payment of custom duty, excise duty and service tax. Incentives (MEIS and SEIS) now are available to units located in SEZs also.


Position of India's Foreign Trade

India's participation in foreign trade had been continuously declining till 1980. Since 2001, it has continually improved. Share of India in foreign trade was 0.80% in 2001. A WTO report of 2016, the IMF has admitted that the share of India in foreign trade was would be 3.4%. As per the current rawlings, India is the 19th largest exporter with a share of 1.7% and 12th largest importer with a share of 2.5% of foreign trade


Major Export-Import Zone of India Special Economic Zones (SEZ)

It is a geographical region that has economic and other laws that are more free market oriented than a country's typical national laws.

Incentives Granted to SEZ Units, Duty free imports/domestic procurement of goods for development, operation and maintenance of SEZ units.

  • 100% income tax exemption 'for SEZ M units for the first five years, 50% for the next five years and 50% of the ploughed-back export profit for the next 5 yr.
  • Exemption from minimum Alternate tax.
  • Exemption from the Central sales tax.
  • Exemption from the Service tax.
  • Exemption from the State sales tax and other levies (e.g. stamp duty and electricity duty) as extended by the respective State Government.
  • External commercial borrowing by SEZ units up to US $ 500 million in 1 yr without any maturity restriction through recognised banking channels.
  • 100% FDI investment through automatic route.
  • Single window clearance for Central and State level approval procedures.


Export Processing Zone (EPZ)

A Free Trade Zone (FTZ) or Export Processing Zone (EPZ), also called foreign trade zone, formerly free port, is an area within, which goods may be landed, handled, manufactured or reconfigured and re-exported without the intervention of the customs authorities.

Only when the goods are moved to consumers within the country in which the zone is located do they become subject to the prevailing customs duties.

Free trade zones are organised around major seaports, international airports and national frontiers areas with many geographic advantages for trade.

The seven Export Processing zone in India are

(i) Madras Export Processing Zone (MEPZ), Madras.

(ii) Cochin Export Processing Zone (CEPZ), Cochin Kerala.

(iii) Santa Cruz Electronic Export Processing zone, S. Cruz, Maharashtra.

(iv) Noida Export Processing Zone, Noida, UP.

(v) Visakhapatnam Export Processing Zone, Visakhapatnam, AP.

(vi) Kandia Free Trade Zone, Kandia, Gujarat.

(vii) Falta Export Processing Zone, falta, West Bengal.

It is a region where a group of countries has agreed to reduce or eliminate trade barriers. Free trade zones can be defined as labour intensive manufacturing centre that involve the import of raw materials or components and the export of factory products.


Agri Export Zone (AEZ)

An Agri Export Zone (AEZ) is a specific geographic region in a country demarcated for setting up of agriculture based processing Industries, mainly for export. The term is widely used mainly in India.

AEZ are to be identified by the State Government, who would evolve a comprehensive package of services provided by all State Government agencies, state agriculture universities and all institutions and agencies of the Union Government for intensive delivery in these zone. Corporate sector with proven credentials would be encouraged to sponsor new agri export zone or take over already notified agri export zone or part of such zones for boosting agri exports from the zones.


Foreign Trade Agreement (FTA)

Across the globe, there is an expanding network of Free Trade Agreements (FTAs). High-quality, comprehensive free trade agreements can play an important role in supporting global trade liberalization and are explicitly allowed for under the World Trade Organisation (WTO) rules.


Balance of Payment (BoP)

Balance of payments is a systematic record of all economic transactions among the residents of a country and the East of the world.

BoP records the transactions m goods, services and assets among residents of a country with the rest of the world for a specified time period, typically a year. There are two main accounts in the Bop—the Current Account and the Capital Account. In addition to that, BoP includes errors and omissions and change in foreign exchange reserves. BoP is broadly divided into two parts.

Balance of payments is thus, an overall record of all economic transactions of a country in a given period, with rest of the world.


Balance of Trade (BoT)

When the difference in the value of imports and exports of only physical goods or visible items, is taken into account, it is called balance of trade or net exports. Balance of trade may be

  1. Surplus or Favourable In this situation, exports are greater than imports. i.e. Exports > Imports
  2. Deficit or Unfavourable In this situation, imports are greater than exports. i.e. Exports < Imports
  3. Equilibrium in Balance of Trade In this situation, total value of goods exported is equal to the total value of goods imported by a country

i.e. Exports = Imports


Structure of Balance of Payments

Balance of Payments (BoP) account broadly comprises of the following components

  • Current Account Current account is that account, which records imports and exports of goods and services and uniliteral transfers. The current account is used to mark the inflow and outflow of goods and services into a country. Earnings on investments, both public and private, are also put into the current account.


  • Capital account It is that account, which records all such transactions among residents of a country and rest of the world, which causes a change in the asset or liability  status of the resident of a country or its government. Investment (FDI and FII) and Borrowings (ECB etc) are part of the capital account.


Foreign Investment

Foreign investment means an investment into production or business in a country by an individual or company in another country for profit earning.

Typically, foreign investment denotes that foreigners take a some what active role in management as a part of their investment. Foreign investment typically works both ways, especially between countries of relatively equal, economic


Foreign investment on the basis if nature can be categorised into two types


Foreign Direct Investment (FDI)

Broadly, foreign direct investment includes "mergers and acquisitions, building new facilities. reinvesting profits earned from overseas operations and intra company loans”. In. a narrow sense, foreign direct investment refers just to building new facilities.

It refers to direct investment in the productive capacities of a country by someone from outside the country. Such an investment can be In the form of setting up of a new plant or through purchase of shares of a company,, where the shareholding gives the foreign entity control over the business of the company,

Two concepts associated with FDI are

  • Greenfield Investment Its a form- of foreign direct investment; where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
  • Brownfield Investment It happens, when a company or government entity purchases or leases existing production facilities to launch a new production activity.


Tabular Representations of the Key Changes Proposed under the FDI Limits



% of FDI/Equity

Defense Sector


Telecom Services


Tea Plantation


Asset Reconstruction Company


Petroleum and Natural Gas


Commodity Exchanges


Power Exchanges


Stock Exchanges/Clearing  Corporations


Credit Information Companies


Couries Services


Single Brand Product Retail Trading


Insurance lector




Animal Husbandry


Food item





Foreign Portfolio Investment (FPI)

In economics, foreign portfolio investment is the entry of funds into a country where foreigners make purchases in the country's stock and bond markets, sometimes for speculation. It is a usually short term investment (sometimes less than a year, or with involvement in the management of the company), as opposed to the longer term Foreign Direct Investment partnership (possibly through joint venture), involving transfer of technology and "know-how".

FPI is positively influenced by high rates of return and reduction of risk through geographic diversification. The return on FPI is normally in the form of interest payments or non-voting dividends.


Foreign Institutional Investment (FII)

These are investments by entities from outside the country into the financial assets like debts and shares of companies from a different country, in which they are incorporated. Fits (Foreign Institutional Investment) are required to register with SEBI (Securities and Exchange Board of India) and any foreign individual wanting to invest into India has to come through one of these FIIs.


Other Way of Investment Participatory Notes (P-Notes)

These are financial instruments used by investors or hedge funds that are not registered with the securities and exchange board of India to invest in Indian securities.

India based brokerages buy India based securities and then issue participatory notes to foreign investors. Any dividends or capital gains collected from the underlying securities go back to the investors.


Global Depository Receipts (GDRs)

These are equity instruments issued in international markets like London, Luxembourg, etc. Indian companies use GDRs to raise capital from abroad, GDRs are designated in dollars, euros, etc.


American Depository Receipts (ADRs) These are the equity instruments issued to American retail and institutional investors. They are listed in Nev/ York, either on Nasdaq or New York Stock Exchange.


Indian Depository Receipts (IDRs)

These are similar to ADR/GDR. They are used by non-Indian companies in the Indian stock markets for issuing equity to Indian investors.


Convertibility of Rupee

Convertibility of a currency is the ease, with which it can be converted into any other foreign currency. Current account convertibility which has already been achieved to a large extent in India, refers to freedom in respect of exports and imports. Capital account convertibility refers to freedom in respect of investment and borrowing within India (by outsiders) and outside India (by those inside India).


Capital Account Convertibility in India

Capital Account Convertibility (CAC) for Indian economy refers to the abolition of all limitations with respect to the movement of capital from India to different countries across the globe. According to the Tarapore Committee, capital account convertibility refers to the freedom to convert local financial assets into foreign financial. Assets and vice- versa at market determined rates of exchange. It is associated with changes of ownership in foreign/domestic financial assets and liabilities and embodies the creation and liquidation of claims on or by the rest of the world.


Tarapore Committee II

The Reserve Bank of India has released the Report of the Tarapore Committee, which was setup to prepare a roadmap for capital account convertibility, on 1st Sep, 2006.

The committee has made several recommendations

  • Removal of tax benefits to NRIs.
  • Greater autonomy to RBI.
  • Complete check on fiscal deficit.
  • Disallowing investment channel led by a particular country.
  • Reduction of government stake in banks from 51% to 33%.
  • Allowing enhanced presence of foreign banks.
  • 10% voting limit for investment in banks should be scrapped.
  • Non-resident corporates should be allowed to invest in Indian markets,


Exchange Rate

It is the rate, at which Indian rupee will be exchanged vis-a- vis other international currencies, say US dollar, in the foreign exchange market.


Double Taxation Avoidance Agreements (DTAA)

DTAA stands for Double Taxation Avoidance Agreement, It is an agreement between two countries with an objective to avoid taxation of the same income in both countries. India has comprehensive Double Taxation Avoidance Agreements (DTAA) with 84 countries as of now. These treaties benefit institutions and individuals who earn in countries other than their country or residence, provided such an arrangement exists between their country of residence and the country/countries where their income sources are.


International Organisations

An International Organisation has been defined as a forum of cooperation of Sovereign states based on multilateral international agreement and comprising of a relatively stable range of participants. The fundamental features or this is the existence of permanent organs with definite competencies and powers acting for carrying out of common, aims,- In common language, it is known as Inter-governmental Organisations.


Bretton Woods Conference

The Bretton Woods Conference, officially known as the United Nations Monetary and Financial Conference, was a gathering of delegates from 44 nations that met from 1st to 22nd July 1944, in Bretton Woods, New Hampshire, to agree upon a series of new rules for the post (World War II) International Monetary System (IMS). The two major accomplishments of the conference -were

(i) The creation of the International Monetary Fund (IMF).

(ii) The creation of the International Bank for Reconstruction and Development (IBRD) also known as World Bank.

Reconstruction has remained an important focus of the bank's work, given the natural disasters, humanitarian emergencies and post-conflict: rehabilitation needs.


International Monetary Fund

The IMF came into formal existence in December, 1945 when its first 29 member countries signed its Article of Agreement. It began operations on 1st Mar, 1947. At present, 188 nations are members of IMF. The IMFs primary purposes is to ensure the stability of International Monetary System, system of exchange rates and international payments that enable countries (and their citizens) to transact with one another. This system is essential for promoting sustainable economic growth, increasing living standards and reducing poverty.


Main Objective of IMF

  • To promote international monetary cooperation.
  • To facilitate the expansion of international trade.
  • To ensure stability to foreign exchange rates.
  • To reduce disequilibrium in the international balance of payments of member countries.
  • To promote capital investment in backward and underdeveloped countries.
  • To assist in the establishment of a multinational system of payments in respect of current transactions between the member countries.
  • The secure multilateral convertibility (i.e. to convert the currency of any member into the currency of any other member).


India and IMF

  • India is a founder member of IMF.
  • Finance Minister is the ex-officio governor or the board to the governors of the IMF. RBI governor is the alternate governor at the IMF.


IMF Quota

When a country joins the IMF, it is assigned to an initial quota in the same range as the quotas of existing members that are broadly comparable in economic size and characteristic. The quota determines the country's financial contribution to the IMF, its voting power and ability to access IMF financing. Quota subscriptions generate most of the IMF's financial resources.



IMF Member’s (Major Country) Quotas in Descending Order



Quotas (in %)
























Special Drawing Rights (SDRs)

SDR, is an international reserve asset, created by the IMF in 1969, to supplement its member countries official reserves. Its value is based on a basket of five key international currencies US Dollar, Japanese Yen, Pound Sterling, Euro Chinese renminbi (RMB) and SDRs can be exchanged for freely usable currencies.


World Bank

Since inception in 1944, the World Bank has expanded from a single institution to a closely associated group of five development institutions. Their mission evolved from the International Bank for Reconstruction and Development (IBRD) as facilitator of post-war reconstruction and development to the present-day mandate of worldwide poverty alleviation in close coordination with the International Development Association and other Members of the World Bank Group.



July, 1944




189 countries (IBRD), 173 countries (IDA)


Jim Yong Kim (12th President)


Objectives of World Bank

Its main objective is to provide financial help for the economic development and reconstruction of member nations. Other objectives includes

  • To put the world on the path of development
  • To reduce the number of poor in world
  • To encourage the international finance


Function of World Bank

Following are the main function of World Bank

  • Investing in people, particularly through basic education and health.
  • Focusing on social development, including governance and institution-building as key elements of poverty reduction.
  • Strengthening ability of the governments to deliver quality services, efficiency and transparency.
  • Protecting the environment.
  • Supporting and encouraging private business development.
  • Promoting reforms that create stable macronomic environment which is conducive to long term investment.


World Bank Group

The World Bank Group is a family of five international organisation that make leveraged loan to poor countries.

Its five organisations are as follows

  • International Bank of Reconstruction and Development (IBRD).
  • International Development Association (IDA).
  • International Finance Corporation (IFC).
  • Multilateral Investment Guarantee Agency (MIGA).
  • International Centre for Settlement of Investment Disputes (ICSID).


International Bank for Reconstruction and Development (IBRD)




Association with UN





Provides loan to developing countries, facilitates trade, capital investment.


Poverty reduction, assistance in development


International Development Association (IDA)







IDA financed operations deliver positive change among poorest nations of world. Lends money on concessional terms.


Helps the poorest countries, single largest donor of funds to under developed nations.


International Finance Corporation (IFC)



July, 1956

Association with UN

20th Feb. 1957


184 Countries


People should have the opportunity to escape poverty and improve their lives


Multilateral Investment Guarantee Agency (MIGA)







Promotes foreign direct investment into developing countries by insurance, technology, etc.


Insuring against risk, mediating disputes


International Centre for Settlement of Investment Disputes (ICSID)







Handles legal disputes between international investors. Helps administer the dispute resolution.


facilitates arbitration, dispute resolution


IMF Vs World Bank


  • Both are Bretton Wood heirs.
  • Both were established to promote economic cooperation,


  • World Bank provides long term Scans for promoting balanced economic development.
  • IMF provides short term loans to member countries


General Agreement on Tariffs and Trade (GATT)

It was a multilateral agreement regulating international trade. According to its preamble, its purpose was the 'substantial reduction of tariffs and other trade barriers and the elimination of preferences, on a reciprocal and mutually advantageous basis'.

It was negotiated during the United Nations Conference on Trade and Employment and was the outcome of the failure of negotiationg governments to create the International Trade Organisation (ITO).

GATT was signed in 1947 and lasted until 1994, when it was replaced by the World Trade Organisation in 1995. The original GATT text (GATT 1947) is still in effect under the WTO frame work subject to the modifications of GATT 1994.


World Trade Organisation (WTO)

It is the only global international organisation dealing with the rules of trade between nations. The goal is to help producers of goods and services, exporters and importers conduct their businesses smoothly.


Established                     1st Jan, 1995

Headquarter                   Geneva, Switzerland

Membership                   164

Created by                     Uruguay Round negotiation (1986-94)


Functions of WTO

  • Administering WTO trade agreements.
  • Forum for trade negotiations.
  • Handling trade disputes.
  • Monitoring national trade policies.
  • Technical assistance and training for developing countries’.


WTO and India

India is the foundation member of WTO. India can secede from WTO at any time as per its will.

  • India in recent years has emerged as the leader of developing countries.
  • India due to its membership has influenced many economic decisions of WTO.
  • Due to patent laws under WTO agreements, Indian medicines and seeds prices have gone up.
  • WTO membership has led to less members of bilateral trade agreements for India.
  • Being a member of WTO, India has become more attractive to foreign investors. It has helped India to attract foreign investments.
  • Due to WTO member, India's foreign trade, in both goods and services has seen significant growth.


There are a total of 164 member countries in the WTO, with Afghanistan being new member as of 2016 of the original GATT members.


International Financial Organisations

These are as follows


United Nations Industrial Development Organisation (UNIDO)

UNIDO is the specialised agency of the United Nations that promotes industrial development for poverty reduction, inclusive globahsation and environmental sustamability. The mandate of the United Nations Industrial Development

Organisation (UNIDO) is to promote and accelerate inclusive and sustainable industrial development in developing countries and economies in transition.


Bank for International Settlements (BIS)

The mission of the Bank for International Settlements (BIS) is to serve central banks in their pursuit of monetary and financial stability, to foster international cooperation in those areas and to act as a bank for central banks.

The head office of BIS is in Basel, Switzerland and there are two representative offices; in the Hong Kong Special Administrative Region of the People's Republic of China and in Mexico City. Established on 17th May, 1930, the BIS is the world's oldest international financial organisation.


World Intellectual Property Organisation (WIPO)

It is one of the specialised agencies of United Nations and established in 1967. Its headquarters are in Geneva, Switzerland. WIPOs mission is to lead the development of innovative, creative intellectual property system which benefits all.


Food and Agriculture Organisation (FAO)

It is an agency of the United Nations that leads international efforts to defeat hunger serving both developed and developing countries. The World headquarters of FAO are located in Rome, in the former seat of the Department of Italian East Africa. FAO was established in 1945.


International Labour Organisation (ILO)

The ILO was founded in 1919, in the wake of a destructive war, to pursue a vision based on the promise that universal, lasting peace can be established only if it is based on social justice. The ILO became the first specialised agency of the UN in 1946. 185 of the 193 UN member states are members of the ILO.


International Fund for Agricultural Development (IFAD)

It is a specialised agency of the United Nations, which was established as an International. Financial Institution in 1977 as one of the major outcomes of the 1974 World Food Conference.


Asian Development Bank (ADB)

Asian Development Bank is a regional development bank. ADB was modelled closely on the World Bank and has a similar weighted voting system where goods are distributed in proportion with member's capital subscription.

Headquarters                              Manila, Philipines

Members                                    67 (48 area from Asia and the

Pacific and rest of 19 from outside)

Establishment                             22ndAug, 1966


Objectives of ADB

  • The bank aims at fighting poverty in Asia and in the Pacific. The bank gives special attention to the needs of the smaller or less-developed countries and priority to regional, sub-regional and national projects and programmes. ADB was basically founded to promote the social and economic progress of the Asian and the Pacific region.
  • It facilitates economic development of Asian countries primarily by lending of funds for development purposes. It is modeled closely on the World Bank and functions in a similar manner.


Asian Infrastructure Investment Bank (AIIB)

It is a Multilateral Development Bank (MDB) conceived for the 12th century. Chinese President XiJinping and Premier Li Keqiang announced the AIIB initiative during their respective visits to South-East Asian countries in October, 2013.

Representatives from 22 countries signed the October, 2014 Memorandum of Understanding (MOU) to establish the AIIB and Beijing was selected to host bank headquarters.

By the deadline of 31st -March. 1-or submission or membership applications, the Prospective Founding Members had increased to 57, and the 4th CNM was organised in Beijing in April 2015, members states holding a total number of 50% of Capital Stock,


Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC)

It is an international organisation involving a group of countries in South Asia and South East Asia. On 6th June, 1997, sub-regional grouping was formed in Bangkok and given the name BIST-EC (Bangladesh, India, Sri Lanka and Thailand Economic Cooperation). Later, Myanmar Nepal and Bhutan became its full member, thus its name became BIMSTEC. BIMSTEC has fourteen priority sectors which cover all areas of cooperation.


SAARC Preferential Trading Arrangement (SAPTA)

In December 1991, the Sixth Summit held in Colombo approved the establishment of an Inter-Governmental Group (IGG) to formulate an agreement to establish a SAARC Preferential Trading Arrangement (SAPTA) by 1997.

Given the consensus within SAARC, the Agreement on SAPTA was signed on 11th April, 1993 and entered into force on 7th Dec, 1995 well in advance of the date stipulated by the Colombo Summit. The Agreement reflected the desire of the Member States to promote and sustain mutual trade and economic cooperation within the SAARC region through the exchange of concessions.

South Asian Free Trade Area (SAFTA)

SAFTA came into force on 1 January, 2006. It is an agreement.’cached on 6th Jan, 2004 at the 12th summit in Is- lamabad, Pakistan. It created a free trade area of  1.6 billion people in Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka (as of 2011, the combined population is 1.8 billion people). The seven foreign ministers of the region signed a framework agreement on SAFTA to reduce customs duties of all traded goods to zero by the year 2016.


Shanghai Cooperation Organisation (SCO)

It is a Eurasian political, economic and military organisation which was founded in 2001 in Shanghai by the leaders of China, Kazakhstan, Kyrgyzstah, Russia, Tajikistan and Uzbekistan. Except for Uzbekistan, the other countries had been members of the Shanghai-5, founded in 1996; after the inclusion of Uzbekistan in 2001, the members renamed the organisation.

The SCO has established relations with the United Nations, where it is an observer in the General Assembly, the European Union, Association of South-East Asian Nations (ASEAN), the Commonwealth of Independent States and the Organisation of Islamic Cooperation.


Various Trade Blocks G-77

The G-77 was setup on 15th June, 1964 by 77 developing countries. Its first ministerial meeting was held at Algiers, Algeria in 1967.

G-77 is the largest coalition of the third world nations. The membership of G-77 has increased to 133 countries, the original name has been retained because of its historic significance.



The group of B (G-8) was a name of a group of 8 leading industrialised countries. Namely, Canada, France, Germany, Italy, Japan, UK, USA and the Russia. Earlier it was known as G6; after addition of Canada it became G7. In 1997, Russia was made a member and the group of seven became G-8 and again in 2014 Russia was suspended from Group due to Crimean crisis. The group of eight can be traced back to November, 1975, when the French President, Velary Giscard and Chancellor of West Germany Helmut Schmidt invited Britain, USA, Japan and Italy for a meeting at the Chateau, France, to discuss the economic crisis resulting from rise of oil prices.



The Group of 15 (G-15) is an informal forum set up to foster cooperation and provide input for other international group, such as the WTO and the group of 7.

Headquarters                              Geneva, Switzerland

Members                                    17

Establishment                             1989



It is a group of developing countries that coordinate on trade and economic issues. It was created in order to help a group of countries that were all facing similar problems. The G-33 has proposed special rules for developing countries at WTO negotiations, like allowing, them to continue to restrict access to their agricultural markets.



The Group of 20 Finance Minister and Central Bank Governor also known as (G-20) is a group of Finance Minister and Central Bank Governor from 20 major economies.

  • Formally established on 26th Sep, 1999, the Finance Ministers of the G-7 announced the formation of the G-20 in Washington DC to establish an informal mechanism for dialogue among systematically important countries, including the industrialised countries and the big emerging markets within the framework of the Bretton Woods Institutional System.
  • The inaugural meeting of the G-20 was held in Berlin on 15th-16th Dec, 1999.


Group of 24 (G-24)

Headquarters                           Belgrade (Serbia)

Members                                  24

Establishment              1971



To coordinate the positions of developing countries on international monetary and development of finance issues and to ensure that their interests are adequately represented in negotiations on international monetary matters G-24 was founded in 1991.



The E9 /s a forum of nine countries, which was formed to achieve the goals of UNESCO's initiative Education For All (EFA).

The E stands for education and the '9' represents the following nine countries Bangladesh, Brazil, China, Egypt, India, Indonesia, Mexico, Nigeria and Pakistan. E 9 initiative has become a forum for the countries to discuss their experiences related to education, exchange best practices and monitor EFA-related progress.



Members                                   3 (India, Brazil, South Africa)

Establishment                          2003 by Brasilia Declaration


  • Objective

IBSA was formed to promote South-South cooperation. It aims at increasing the trade opportunities among the 3 countries and facilitating the trilateral exchange of information, technologies and skills to complement each other's strength.


Common Market for Eastern and Southern Africa (COMESA)

Headquarters                            Lusaka, Zambia


Members 20 (Burundi, Comoros, Democratic Republic of Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Libya, Madagascar, South Sudan, Sudan, Switzerland, Uganda, Zambia, Zimbabwe)


Establishment December, 1994

  • Objectives
  • To cooperate in developing natural and human resources for the welfare of people.
  • The main focus is on the formation of a large economic and trading unit and to bring economic prosperity through regional integration.


The Southern Common Market (MERCOSUR)

Headquarters                           Montevideo, Uruguay

Members                                  5 (Brazil, Argentina, Paraguay,

Uruguay, Venezuela).

Official Language                     Portuguese, Guarani, Spanish

Establishment 1991                 (by Treaty of Asuncion)


  • Objectives
  • Free transit of produced goods, services and factors among member states.
  • Fixing of a Common External Tariff (CET) and adoption, of a common trade policy in order to ensure free competition between member states.


Brazil, Russia, India, China and South Africa (BRIGS)

Members                                  5 (Brazil, Russia, India, China

and South Africa)

Establishment                                      2009

Term Coined by                       Jim O'Neil of Goldman Sachs

coined the Acronym BRIC in 2001.

  • Objectives
  • To boost cooperation among member states and take steps to jointly respond to common challenges.
  • To play a key role in reforming the world management systems and contribute towards maintaining economic growth, peace and security.


New Development Bank

The New Development Bank (NDB) formerly referred to as the BRICS Development Bank, created by Brazil, Russia, India, China and South Africe (BRICS) nations formally started its operation on 21st July, 2015 from its headquarters in Shanghai .China,


Asia-Pacific Economic Co-operation (APEC)

Establishment                             1989

Members                                     21 Pacific Rim Countries

APEC                                        Consists of annual ministerial

meetings, senior officials meeting,

working groups and a secretariat.

  • Objectives
  • To assist growing inter-dependence among Asia-Pacific economies. APEC began as an informal dialogue group, but has now grown to become the primary regional vehicle for promoting open trade and practical economic co-operation among its members
  • The objective of APEC is to promote free and open trade in the Asia-Pacific region through trade and investment, liberalization and facilitation.


Organisation of the Petroleum Exporting Countries (OPEC)

Headquarters                           Vienna, Austria

Members                                  12 (Algeria, Angola, Ecuador,

Iran, Iraq, Kuwait, Libya,

Nigeria, Qatar, Saudi Arabia,

UAE and Venezuela)

Official Language                     English

Establishment                          1960

OPEC nations account for two thirds of the world's oil reserves and 33.3% of the world's oil production.


ASEAN-India Free Trade Agreement (AIFTA)

It is a free trade area among the ten member states of the Association of South-East Asian Nations (ASEAN) and India. The initial framework agreement was signed on 8th Oct, 2003 in Bah, Indonesia and the final agreement was reached on 13th Aug. 2009.


South Asian Association for Regional Cooperation (SAARC)

Headquarters                              Kathmandu, Nepal

Official Language                        English

Demonym                                  South Asian

Membership                                8 Members

Establishment                             8th Dec, 1985


  • Objectives
  • To promote the welfare of the people of South Asia and to improve their quality of life.
  • To strengthen cooperation with other developing countries.
  • To cooperate with international and regional organisations with similar aims and purposes.
  • To maintain peace in the region.


Association of South-East Asian Nations (ASEAN)

Headquarters                              Jakarata, Indonesia

Members                                    10 (Brunei, Cambodia, Indonesia,

Malaysia, Myamnar, Vietnam, Laos,

Thailand, Singapore and Philippines)

Establishment                             1967


  • Objectives

Accelerating economic growth, social progress, cultural development among its members, protection of regional peace and stability. Providing opportunities for member countries to discuss differences peacefully.


European Union (EU)

Headquarters                  Brussels, Belgium

Members                        27

Establishment                 18th April, 1951


  • Objectives

The Treaty of Maastricht identified five goals designed to unify Europe in more ways than just economically.

The goals are as follows

  • To strengthen the democratic legitimacy of institutions.
  • To improve the effectiveness of the institutions.
  • To establish an economic and monetary union.
  • To develop the community social dimension.



It was the single currency of European Union, which came in circulation by 1999.



Euro Zone

Euro Zone was found under the treaty of Maastricht. The Treaty of Maastricht (officially the Treaty on European Union) was signed by the 12 member states of the European Economic Community on 7th Feb. 1991 in Maastricht, the Netherlands, after final agreement on 9th Dec, 1991. It entered into force on 1st Nov, 1993. The EU now has 27 member states. Brexit is an acronym for British exit. It is used for the separation of the UK from European Union.


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