1. CANALISATION
GUIDED BY ~ PRESENTED BY ~
PROF. SHAKUNTALA JAIN ISHA JOSHI
BFT – VI SEMESTER

2. INTRODUCTION
• Means the establishment of trade monopoly in Foreign Trade
• “Canalisation” of import or export means Import or Export only through
the agencies designated by the Central Government.
• Emphhasizes on Foreign Trade flow rather than ownership of agency
conducting it.
• Examples – NAFED (National Agricultural Cooperative Marketing
Federation), MMTC , etc.

3. CANALISATION OF EXPORTS
• Petroleum products
• Gum karaya
• Mica waste (including factory cuttings) and scrap which is obtained by
processing mica
• Mineral ores , concentrates and compounds thereof
• Niger seeds
• Onions

4. BENEFITS
Eliminate under invoicing –
Objective of canalisation was to eleminate under invoicing. It was
found that sometimes the Indian exporters were quoting lower prices in
their invoices while the world prices for such products were
considerably higher. This led to the suspicion that the country had been
losing foreign exchange because of the malpractices adopted by
certain exporters.

5. Improve Bargaining Power –
Canalisation was also thought of as an instrument to improve the
bargaining power of Indian exporters. It was found that the principal
buyers in Western Europe and United States were large corporations
and too negotiate contracts with them would require the existence of
an equally large counterpart in India which would be able to supply
exportable products in bulk quantities. Specially for products which
originate in the small scale sector, a coordinating agency like this
would be helpful in promoting export of such products.

6. To Boost Exports –
It was observed in the case of certain products that there was
substantial decline in the total value of export. It was thought that
government trading organizations would be able to reverse this trend
by concentrated action. By continuous supply and fulfilling demands,
exports can boost.
Improve Unit Value Realization –
In some cases the inter competition among the Indian exporter was
resulting in lower unit value realization. Entry of State Trading
Organizations in the International market, through which exports were
to be canalized, resulted in the improvement of unit value realization.

7. CANALISATION OF IMPORTS
• Arms/Ammunitions
• Live or used cartridges
• Minerals and Metals (MMTC)
• Crude Oil

8. INTRODUCTION
The effect of canalisation of import through state agencies has
resulted in savings in Foreign Exchange on imports on account of bulk
purchases as also on account of bulk shipments and in supply of raw
materials to consumers in the country at reasonable rates.

9. BENEFITS
Import and Distribution in a Planned and Phased Manner –
- Import through proper channels
- Systematic import schedule
- Timely delivery
- Best Quality
- Load on & load off facility
- Proper Warehousing

10. Long – Term Supply Arrangements –
- Un-interrupted supply
- Reliable source
- Buyer – Seller relationship
- Lasts for long years
Equitable Distribution in India –
- No partiality/discrimination
- Fair treatment
- No bargaining
- Easy availability of required items
- Reach is throughout India, to every corner

11. Bulk Buying –
- More Quantity and at concessional prices
- Saves Foreign Exchange of the country
- Stocking becomes easier
- Businesses run smoothly
- Economy will boost