Trade is a very important part of Commerce.
Trade helps the production of goods on a large scale by distributing goods among consumers spread over length and breadth of the globe.
Trade means the sale, transfer or exchange of goods and services for a money or money’s worth.
The people who are engaged in trade are called “Traders” or “Merchants”. They serve as a link between producers and consumers.
Types of Trade-
1. Internal Trade :
Internal Trade is also known as Home Trade or Domestic Trade
Internal trade refers to buying and selling of goods and services within the geographical boundaries of a country. For example, the trade happening between traders of Mumbai and Delhi.
Both the buyer and seller belong to the same country in this type of trade.
Payments in this type of trade are made and received in the home currency.
Internal trade can further be divided into two categories-
(a) Wholesale Trade: Wholesale trade refers to buying of goods in large quantities from manufacturers and selling them in relatively lesser quantities to retailers. The people engaged in wholesale trade are called ‘wholesalers. They act as a link between producers and retailers.
(b) Retail Trade: Retail Trade refers to buying of goods from wholesalers and/or manufacturers and selling them in small quantities to the ultimate consumers. People engaged in retail trade are called ‘retailers’. They act as a link between wholesalers and final consumers. Small scale retailers include general shops, hawkers, pedlars, etc.
2. External Trade :
It is also known as Foreign Trade or International Trade or External Trade.
External Trade refers to buying and selling of goods and services between different countries. In this trade, the seller and buyer belong to two different countries. For example, the trade happening among traders of India and China.
It may further be divided as follows:
(a) Import Trade: It means purchasing goods and services from other countries. For example, India buying petroleum from Iran.
(b) Export Trade: It involves selling goods and services to other countries. For example, India selling some product to Russia.
(c) Entrepot Trade:
Entrepot trade is also known as ‘Re-Export Trade’. Entrepot Trade means importing goods from one or more countries with the purpose of exporting them to some other country or countries. For example, India buying some product from Israel to resell it to Bhutan.
Also refer –
Economic and Non-Economic Activities
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