Discuss the major trends in India’s foreign trade. Also list the major products that India trades with other countries.

India is 10th largest economy in the world. It is the second fastest growing economy, next only to China. But India’s performance in international business is not very good. India’s share in world trade in 2003 was just 0.8%. In absolute terms, there has been significant increase in imports as well as exports. Total exports have increased from 606 crores in 1950- 51 to Rs. 2, 93,367 crores in 2003-04 while imports have increased from 608 crores in 1950-51 to 3, 59,108 crores in 2003-04. Exports increased 480 times while imports increased 590 times indicating that there is adverse balance of trade. India’s major trading partners are USA, UK, Germany, Japan, Belgium, Hong Kong, UAE, China, Switzerland, Singapore and Malaysia. India’s major items of exports include: Textiles, garments, gems and jewellery, engineering products and chemicals, agriculture and allied products. 

India’s major items of imports include: Crude oil and petroleum products, capital goods, electronic goods, pearls, precious and semi precious stones, gold, silver and chemicals. Before 1991, promotion of import substitution and discouraging of exports was government strategy. Imports consisted of machinery, equipment and intermediates in production, petroleum and petroleum-products. After green revolution, imports of fertilizer too increased. Before 1991, India’s exports consisted of agricultural products like tea, raw cotton with the diversifying industrial structure, promoted by import substitution, exports of manufactures were growing. During 1986-91, external trade formed only 13.40 % of the GDP. During the 1990-2000, this share is rising continuously. India’s foreign trade has grown to exports of $250 billion and imports of $380 billion in 2010- 11. The ratio of exports plus imports to GDP has grown from 13.40 % during 1985-90 to almost three times that, being 37.7 % in 2010-11. On adding services it becomes from 22.9 % in the 1990s to 49.0 % in 2010-11. Leading role has been played by ‘invisibles’ which includes both services, mainly software services, export of which has grown to $59 billion in 2010-11. It has decreased the current account deficit from $130 billion to $44. This deficit was compensated by capital account surplus of $59 billion in that year. But it is only because of IT services and we are still lacking in manufacturing exports which can generate a large volume of employment. We have not done as well as China and Malaysia have done.

India’s share in world trade in 2003 was very low i.e., just 0.8% as compared to those of other developing countries such as China (5.9%), Hong Kong (3.0%), South Korea (2.6%), Malaysia (1.3%), Singapore (1.9%), and Thailand (1.1%). India’s share in world merchandise exports started rising fast since 2004, reached 1.3% in 2009 and 1.5% in 2010. It increased to 1.9% in the first half of 2011, mainly due to the relatively higher Indian export growth of 55% compared to the 23.1% export growth of the world.

Trends in India’s Foreign Trade in Goods Volume of Trade Share of foreign trade in the country’s Gross Domestic Product (GDP) has considerably increased from 14.6% in 1990-91 to 24,1% in 2003-04. India’s total merchandise exports were Rs. 606 crore in 1950-51 which increased to Rs. 293367 corers in 2003-04, representing an increase of over 480 times over the last five decades.

During the last decade, India’s exports and imports registered a five to seven fold increase from US $ 44.6billion and US $ 50.5 billion respectively in 2000- 01 to US $ 251.1 billion and US $ 369.8 billion in 2010-11 respectively. While the Compound Annual Growth Rates (CAGR) of India’s exports and imports (in US dollar terms) were 8.2% and 8.4% respectively in the 1990s, they increased to 19.5% and 25.1% during 2000-01 to 2008- 09. Total imports.

which stood at Rs. 608 crore in 1950-51 increased to Rs. 359108 corers in 2003-04, thus registering a growth of about 590 times during the same period. Composition of Trade Composition wise, textiles and garments, gems and jewellery, engineering, products and chemicals and related products and agricultural and allied products are India’s major items of India’s exports. Great changes in the sectoral composition of India’s export basket were seen in the 2000s decade.

The share of petroleum crude and products increased by 11.8 percentage points during the 10-year period from 2000-1 to 2009- 10, and further increased by 4.8 percentage points from 2009-10 to the first half of 2011-12. The share of the other two sectors, i. e., manufactures aildirrinidiy products fell -abnest-proportionately by 11.6 and 1.1 percentage points respectively during 2000-1 to 2009-10.

Although in overall terms India accounts for just above 1% of world exports, in many individual product items such as tea, pearls, precious and semi-precious stones, medicinal and pharmaceutical products, rice, spices, iron ore and concentrates, leather and leather manufactures, textile yarns fabrics, garments ,and tobacco, its share is much higher and ranges between 3% to 13%.

India even holds the distinct position of being the largest exporter in the world in select commodities such as basmati rice, tea, and ayurvedic products. As far as imports are concerned, products like crude oil and petroleum products, capital goods (i.e., machinery), electronic goods, pearl, precious and semi-precious stones, gold, silver and chemicals constitute major items of India’s imports. India’s trade in services has also grown manifold over the years.