Difference Between Internal Trade and External Trade

The difference between Internal and External Trade tells about the activities performed by a number of traders outside and within the nation. In the Internal Trade traders doing activities related to the sale and purchase of goods and services within the boundaries of the countries. On the other side, External Trade tells about the sale and purchase of goods and services outside the country.

Meaning of Internal Trade:

 It refers to buying and selling of goods and services within the nation. It means domestic trade, which includes the Wholesale trade and Retail trade within the national boundaries. In this trade very fewer formalities to be completed by the traders as compared to international trade. Very few formalities are completed by the traders as compared to international trade.

Local transport is used for moving/transfer goods and services from one place to another.

Types of Internal Trade:

It can be divided into two categories:

1. Wholesale trade:

It refers to the trade in which goods and services are sold at a large level and in large quantities. The owner of this trade is known as a wholesaler. He buys the goods from the manufacturer in bulk and sells them to the retailers in small lots. the wholesaler acts as the middlemen between the manufacturer and the retailers.

2. Retail Trade:

This trade includes the sale of goods in small lots to the final consumption. A person who buys the goods and sale to the ultimate customer is known as a Retailer

Meaning of External Trade

Trading globally or trade between two or more nations is known as International Business/ External Business. Some people are considered it external trade because countries are dealing in goods and services across geographical limits.

This trade includes:

1. Import: When one country buys goods from another country. For example, portable USB desk lamp imported from china, Garlic grater, and cutter, nail art stamps, etc. usually when you visit in the departmental store then you look at these type of products and sometimes salesman give information that these products are imported or made in China and so on.

2. Export: It means selling goods and services to another country. Stitched and unstitched garments are exported from India to Dubai, Cereals like bread, oats, etc. are also exported to UAE. India earned 523902 thousand dollars from UAE by exporting cereals in FY 2017.

3. Entrepot: When one country buys goods or services with the main aim to sell them to another country is termed as an entrepot. It is also known as re-export. For example, India entrepot various chemical products to manufacturing industries all over the world.

The Chart of difference between Internal Trade and External Trade

Points of differences

Internal TradeExternal Trade
Meaning It refers to buying and selling of goods and services within the nation.Trading globally or trade between two or more nations is known as International Business/ External Trade.
CountriesThere is only one country involved in buying and selling.In this, a minimum of two countries involved.
RiskLess Risk is involved.There is a high-risk involvement. 
CurrencyPayments are made in the home currency.Foreign currency is used for the buying and selling of products and services.
Mode of Payment Cash or credit is used in internal trade.Payments are made by Bills of exchange and through the bank.
Mode of TransportationRoadways, Railways, are used for moving products from one place to another.Waterways-(sea transport), Airways are used  
CostOperating cost is lower.It involves long-distance which results in higher cost.
Types Wholesale Trade and Retail TradeImport, Export and entrepot.

Conclusion:

Thus, In the Internal Trade traders doing activities related to the sale and purchase of goods and services within the boundaries of the country. On the other side, Trading globally or trade between two or more nations is known as International Business. Some people are considered it external trade because countries are dealing in goods and services across geographical limits.

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