Difference Between Internal Trade and External Trade

Trade is said to be an economic concept that is involved with buying and selling of goods or products. Trade is carried out between two or more entities which can be an individual or a business entity.

Trade Can be of Two Types:

1. Internal Trade

2. External Trade

Internal trade is the trade that is performed between parties within the political and geographical boundaries of a country, while external trade is the trade that is carried out between two parties that are outside the country’s borders or between two nations.

Distinguish Between Internal Trade and External Trade

Following are the main points of difference between internal trade and external trade:-

Types of Internal Trade

Internal trade and external trade are classified into different types of trades. That being said, internal trade can be divided into two categories:

1. Wholesale Trade:

It is the trade in which products and services are sold at a huge level and in bulk quantities. The owner of this trade is termed as a wholesaler. He buys the products in bulk from the manufacturer and sells them to the retailers in small lots. The wholesaler acts as a middleman between the manufacturer and the retailer.

2. Retail Trade:

This trade involves the sale of goods in small lots to the final consumption. A person who buys the goods and sells them to the ultimate customer is called a Retailer.

Types of External Trade

External Trade Can be Classified into the Following Types of Trades:-

1. Import: The trade is conducted when one nation purchases goods from another nation. For example, portable LED Lights and USB desk lamps imported from china, surgical items imported from China, Dry Fruits imports from Afghanistan, Garlic grater, and cutter, etc. generally when you visit the departmental store then you look at these types of goods and often salesman provides information that these gods are imported or made in China and so on.

2. Export: It implies selling goods and services to other nations. Stitched and unstitched garments are exported to Dubai from India; Cereals like bread, wheat, oats, rye, etc. are also exported to the UAE. India earned about 523902 thousand dollars from UAE in FY 2017 by exporting cereals.

3. Entrepot: When a nation buys goods or services with the key objective to sell them to another country is referred to as an entrepot. It is also called export. For example, India entrepot different chemical products to manufacturing industries all over the world.

Therefore, in internal trade traders conduct activities in reference to the sale and purchase of goods and services within the boundaries of the nation. On the other hand, trading worldwide or trade between two or more countries is called International Business. Some people regard it as external trade since countries are dealing in products and services across geographical limits.