Export trade is necessary to sell domestic surplus goods, to make better utilization of resources, to earn foreign exchange, to increase national income, to generate employment and to increase Government revenue.

The government controls the import trade.
The objectives of import policy are:
(i) Proper use of foreign exchange,
(ii) Restrictions on imports of non-essential and luxury goods and
(iii) Developing indigenous industries.

With the intention of earning more money, the essential goods needed by the home country are exported to other countries. This results in shortage of goods in the home country. With excessive exports, natural resources may get exhausted in a shorter period. This will cause economic downfall of the country in the long run.

When goods are imported from one country with the purpose of re-exporting to another country, it is called 'Entrepot Trade'. Import duty is not levied on these goods.
The need for Entrepot Trade are:
(i) Entrepot trade helps the import of goods where adequate banking facility is not available.
(ii) When, the volume of trade is not enough to carry regular foreign trade.
(iii) When, it is difficult to establish direct link between the exporting country and the consuming country.

Besides increasing national income, international trade is beneficial in many ways.
(a) The merits of International Trade are:
(i) It leads to specialisation when goods are produced at large scale.
(ii) Foreign trade enables a country to get those goods which it cannot produce.
(iii) Benefits of large-scale production are enjoyed.
(iv) Quality goods are produced and Prices are stabilized, employment opportunities increase and better international understanding takes place.
(b) The demerits of International Trade are:
(i) Foreign trade procedures are very complicated.
(ii) It leads to economic as well as political domination of the exporting country.
(iii) With the intention of earning more money natural resources may get exhausted and
(iv) It adversely effects home industry at small-scale.