There are different reasons for state trading. Important reasons are given below.
(i) State may directly buy the goods required by the various government departments and agencies for reasons of economy, reliability, etc.
(ii) State may engage in foreign trade to sell the surplus stock of goods procured by it as part of price support policy. -
(iii) In the centrally planned economies, state trading was essentially an inevitable part of the economic system.
(iv) In mixed economies, state trading in certain areas may be a part of the economic system.
(v) In some cases, state trading is a part of the entrepreneurial role played by the government in a mixed economy.
(vi) State trading in some commodities may be due to strategic reasons.
(vii) State trading may also be resorted to, to reap advantages of bulk buying and selling.
(viii) Another objective of state trading is to avoid unhealthy competition between domestic exporters.
(ix) Efficient regulation of foreign trade is also an important objective of state trading.
(x) Export market development is also an objective of state trading in several cases.
(xi) In case of some countries, like India, one of the objectives to state trading was expansion foreign trade with the socialist countries.