India’s Foreign
Trade
Content
• Introduction
• Composition of Trade
• Composition of Exports
• Composition of Imports
• Direction of Trade
• Direction of Exports
• Direction of Imports
Foreign Trade
• Foreign trade is exchange of capital, goods, and services across
international borders or territories. In most countries, it represents a
significant share of gross domestic product (GDP).
• Generally no country is self-sufficient. It has to depend upon other
countries for importing the goods which are either non-available with it
or are available in insufficient quantities. Similarly, it can export goods,
which are in excess quantity with it and are in high demand outside.
• Foreign Trade involves different currencies of different countries and is
regulated by laws, rules and regulations of the concerned countries.
Foreign Trade of India
• Foreign trade in India includes all imports and exports to and from
India. At the level of Central Government it is administered by the
Ministry of Commerce and Industry.
• Prior to the 1991 economic liberalisation, India was a closed economy
due to the average tariffs exceeding 200 percent and the extensive
quantitative restrictions on imports. Foreign investment was strictly
restricted to only allow Indian ownership of businesses. Since the
liberalisation, India's economy has improved mainly due to increased
foreign trade.
In USD Billion
India’s Foreign Trade
Source : Foreign Trade Policy Statement 2015-2020, Govt. of India
Composition of Trade
• Composition of trade shows the mix of goods imported and exported by
a particular country.
• By looking at the composition of trade, we get an idea of the structure
and level of development of a country.
• If a country mostly imports manufactured goods and exports primary
goods, we say that such a country is an under-developed country.
• On the contrary, If a country imports primary goods and exports
manufactured goods, we say that such a country is a developed country.
Composition of Indian Exports
• At the time of Independence, India mainly exported jute, tea, cotton
textiles, hides and skins, manganese ore, mica, etc. The share of
engineering products was negligible.
• But as the process of industrialization got momentum, the combined
share of these commodities fell down. For instance, the share of
agricultural and allied products in total exports declined considerably
from 44.2 % in 1962 to 9.7% in 2010-2011, while that of the
manufactured products increased from 45.3% to 66.1% over the same
period.
India’s Top Exports 2013-2014 Petro Products
Others
2% Agri
3%
7% 20% Gems & Jewellery
7%
Machinery
3%
Pharma
5%
Metal Products
5%
25% Fabric & Textiles
13% Transport Parts
10% Electronics
Plastics
Composition of Indian Imports
• At the time of Independence, India imported machinery; oils; grain,
pulses and flour; cotton, raw and waste; vehicles; cutlery, hardware,
implements and instruments; chemicals drugs and medicines; dyes and
colours; other yarns and textile fabrics; paper, paper board and
stationary products, and various types of metals.
• The initiation of the planning process in 1951-52, and more specifically
the beginning of second five year plan in 1956-57 brought about a
considerable change in the composition of imports.
India’s Top Imports (2013-14) Crude
Others
3% 2%
Electronics
3%
4% Gold
6%
Jewellery Stones
37%
5%
Machinery
5% Chemicals & Plastics
6% Coal
Transport Equipment
7%
Ores
22%
Edible Oil
Direction of Trade
• By Direction of Trade we mean the countries with which we trade.
• India, being a colony of Britain, traded chiefly with Britain during the
pre-independence period. This continued even after the independence
at least for some years.
• Trade picked up and now after 50 years of Independence , India has
trade relations with almost all countries.
• This has resulted in reducing our dependence on a few countries and
thus has reduced the vulnerability of the economy to outside pressures.
India’s Export Destinations
Others
USA
3% 2%
4%
3% UAE
4% China
4%
Hong Kong
4%
49%
Singapore
5%
Saudi Arab
Unspecified
10%
UK
12% Netherland
Germany
Source : Foreign Trade Policy Statement 2015-2020, Govt. of India
Shares of Groups/Countries in India's Imports
OECD
4% 2% OPEC
23%
Eastern Europe
23%
China
Latin America
0% SAARC
0%
12% Other Asian Developing Countries
34%
2%
Africa
Others/Unspecified
Source : DGCI&S
