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Describe the meaning of internal and external trade |
| Answer» Internal Trade\xa0:Internal trade is done within the geographical boundaries of a country. As an example, trade done amongst the traders of Delhi, Mumbai, Chennai, Kanpur and Amritsar etc. is called Internal Trade.Types of Internal Trade :(i)\xa0Wholesale Trade\xa0: It involves purchase and sale of goods in wholesale quantities. Large quantities of goods purchased from manufacturer are sold in small quantities to various retailers.(ii)\xa0Retail\xa0:\xa0It involves the sale of goods to consumers by the retailers. A retailer buys the goods from a wholesaler and sells them to customers in their required quantities. It is a link between a wholesaler and consumer. Different types of goods are available at a retailer shop so that a customer could buy the goods of his own choice.Internal trade can also be classified as : (a) Local Trade, (b) State Trade, (c) Inter-State Trade.\xa0External Trade\xa0:\xa0Whenever trade occurs between two countries, it is known as external trade. In foreign trade, both buyer and seller live in different countries. If Reliance Ltd. sells Polyester Yarn to a French firm or L&T Ltd. purchases a heavy machine from a Swiss firm, these would classified as external trade.Types of External Trade :1.\xa0Import Trade\xa0:\xa0When the trader of one country buys the goods from foreign countries, it is known as import trade for the trader who buys the goods.2.\xa0Export Trade\xa0:\xa0When the trader of a country sells goods to a foreign country, it is known as export trade for the trade who sells the goods e.g., if a tea firm of Darjeeling sells tea to U.K., it is export trade.3.\xa0Entrepot Trade\xa0:\xa0The\xa0goods imported from one country for export to another country, is known as entrepot trade. It is also known as Re-export. It is done when a country does not have her own seaport or not having good political relations with other countries or no direct access to those countries from where goods are to be imported. | |