Question

Please explain what government's influence on trade is?

Answer 1

Government's decisions on business activities are multi-fold. Any business in any sector shall either directly or indirectly get impacted by the various policies and decisions of the government; Governtment generally issues its guidelines, policies on domestic trade as well as international trade practices.

Any policy changes with respect to local taxes, tax holidays, subsidies, special economic zones, rate ceiling clauses, shall have direct effect on the trade pattern. Also, certain decisions on logistics, service related changes, new laws, new regulations etc shall have indirect impact towards operational delays, additional compliance issues, etc.

With regard to international trade, any policy changes with respect to restrictions on import or export of products or pricing limits, quantity limits, etc shall have significant impact on the trading activities. International trade Sanctions are something which need to be keenly monitored to avoid any inadvertent trade links and transactions, which might land the business in to significant regulatory restrictions.

These decisions or changes are constant and are done by the respective governements to safeguard its own economy and to ensure self sufficiency for its country interms of consumption, supply-demand support, GDP, etc.

Every business require to understand these changes and their inflence on their business and need to prepare their business to take the impact.