Download - Import Substitution
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Import Substitution
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GROUP MEMBERS
Jay Rathod 61Surinder Kaur Saini 62Tanvi Sangani 64Shobid Sawant 65Akshaye Shah 67
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IntroductionImport - To bring goods or other things in one country from another
Substitute - A thing used in place of another
Import Substitution - means replacement of goods and services for one an other
Import Substitution is defined as ‘An attempt by a country to reduce imports (and hence foreign exchange expenditure) by encouraging the development of domestic industries regardless of inefficiencies’
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Import Problems
Procedure for clearing imported goods is very difficult and time-consuming.
Renewal of license is based on the previous years consumption and imported quantity is about one years’ requirement
Crude oil prices
Essential unavoidable items have to be imported on any circumstances
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Other Import Problems Infrastructure problems viz. port facilities, cargo
handling, etc. Different commercial practices and commodity
specifications Problem of different technical representation in
foreign countries To provide on-site facilities for inspection in
foreign countries Limited foreign exchange resources to settle
external bills Lack of experience and technical skills
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Role of Purchase Executive
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Import Substitution and R & D
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How is Import Substitution Practiced
Information Sharing and Networking - Matching local producers with local suppliers
Buy Local Programs- Encouraging firms and consumers to purchase local products rather than imported
Industry Targeting- Attracting firms and business that will engage in or import substitution
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Procedure for Import Substitution
Information Sharing and Networking
Actions • Identify imported inputs• Search for same inputs locally• Link suppliers and buyers
Advantages• Takes existing opportunities• Cost savings for local suppliers• Flexibility of supply chain• Engages local businesses
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Procedure for Import Substitution
Problems • Harder to do for services • Firms prefer current suppliers• Programs need visibility, effective marketing
Examples • Oregon marketplace• Washington marketplace• Industrial supplies office
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Procedure for Import Substitution
Buy Local Voluntary campaigns Problems
• Works better with tourism and consumer goods• Large purchases are more cost-conscious• Sizeable firms and branch plants are less tied to local
area
Examples• Made in USA• Australian tourism bureau
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Procedure for Import substitutionIndustry Targeting
Actions • Analyses opportunities, expert opinion • Provides information to entrepreneurs• Encourages import substitution
Advantages • Thorough procedure• Engages local entrepreneurs • Generates useful information for others
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Procedure for Import Substitution
Problems• Needs supply of capital and willing
entrepreneurs• Negative aspects of industry and location
incentives• Slow, laborious process
Examples • Centre for economic development university
of Alaska at Anchorage• British Columbia Business Service Centre
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Examples of Import Substitution
Information Sharing And Networking
Oregon Marketplace – Key Features Oldest state program in US, began in 1986 $3.5 million in import substitution created 1987-
1990
Washington Marketplace – Key Features Run by local and regional economic development
organizations $3.7 million in import substitution created 1987-
1990
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Examples of Import Substitution
Buy Local Campaign
Made in USA- Key Features Encourages American supplying and consumption Involved with policy creation and economic
lobbying
Australian Tourism Bureau – Key Features Policy oriented approach Enhances international and domestic
competitiveness of Australia’s tourism industry
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Examples of Import Substitution
Industry Targeting
U. Of Alaska Centre of Economic Development –
Key Features
Analyses opportunities in Alaska Relays information to state govt. and
entrepreneurs
British Columbia Business Service Centre – Key Features
Provides various information on economic development and opportunities
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Import Substitution Problems
Non-availability of drawings and detailed technical specifications
High quality materials are not available locally Due to lack of technical know-how the goods
produced is not as good as the imported one, despite of high price
The quantity required is too small Power cuts, informal voltage fluctuations etc. delay
the delivery of goods Natural calamities like flood, earthquake etc High lead time Profit margin of 100% Bad after sales services Foreign collaborators look after their own interest
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Conclusion
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Thank You