LEGAL FRAMEWORK FOR INTERNATIONAL TRADE AND COMMERCE IN INDIA.

The word ‘trade’ can be defined as the action of buying and selling goods and services, while the term ‘commerce’ means the trade of goods, services, or other things of value between companies or organizations. International trade is the purchase and sale of goods and services by companies in the international marketplace. International trade allows countries to expand their markets and access goods and services that otherwise would not have been available domestically. As a result of International trade, the market becomes even more competitive. This ultimately results in more competitive pricing and helps facilitate a cheaper product for the normal consumer. International trade was a crucial factor which in turn led to the rise of the global economy. In the global economy, both demand and supply which determine the price are impacted and also impact the global economic events.

Political economists like Adam Smith and David Ricardo were among the first to understand the significance of international trade. In Economics, International trade is portrayed as an International division of labor, whereby each country specializes in the production of commodities. The theory of division of labour among nations is traced back to Adam Smith who is considered an important Economist. Many neoclassical economists consider Smith’s theory in his famous economic treatise ‘The Wealth Of Nations’ (1776), as unsatisfactory. However, Smith is often considered a liberal thinker by many economists as he was one of the forerunners of the Modern trade theory which aimed to increase International trade. David Ricardo, another important economist also followed Smith’s economic imprints although the theory he proposed in his book ‘The Principles of Political Economy (1817) was different in many aspects. The Ricardian theory of Rent is renowned but David Ricardo also proposed one of the most important economic theory that was the ‘Theory of Comparative Advantage’. The capacity of a nation or business to create goods and services at a lower opportunity cost is known as comparative advantage. A potential economic gain that a nation or company forgoes while producing one good or service over another is known as an opportunity cost. Adam Smith’s and David Ricardo’s respective theories have enhanced the domain of International trade and led to its enormous growth.

The legal framework for international trade and commerce in India is a multifaceted system that encompasses a range of legislations, treaties, agreements, and case laws. India’s approach to international trade and commerce has evolved over the years, reflecting its commitment to promoting economic growth, ensuring fair competition, and facilitating smooth cross-border transactions. This article explores the key components of the legal framework, including various legislations and case laws that have shaped India’s approach to international trade and commerce.