India’s Foreign Trade

Presented By:-Hrushikesh Panda (1401247023)Pritish Das (1401247010)Md. Ahtezaz Parways (1401247026)Sambit Kr. Mishra (1401247012)

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

Source : Foreign Trade Policy Statement 2015-2020, Govt. of India

India’s Foreign Trade

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.

20%

25%

10%

13%

5%

5%

3%

7%

7%3%

2%

Petro Products

Others

Agri

Gems & Jewellery

Machinery

Pharma

Metal Products

Fabric & Textiles

Transport Parts

Electronics

Plastics

India’s Top Exports 2013-2014

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.

37%

22%

7%

6%

5%

5%

6%

4%3% 3%2%

Crude

Others

Electronics

Gold

Jewellery Stones

Machinery

Chemicals & Plastics

Coal

Transport Equipment

Ores

Edible Oil

India’s Top Imports (2013-14)

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.

Source : Foreign Trade Policy Statement 2015-2020, Govt. of India

49%

12%

10%

5%

4%

4%

4%

4%3%

3% 2%

India’s Export DestinationsOthers

USA

UAE

China

Hong Kong

Singapore

Saudi Arab

Unspecified

UK

Netherland

Germany

23%

34%2%

12%

0%1%

23%

4% 2%

Shares of Groups/Countries in India's Imports

OECD

OPEC

Eastern Europe

China

Latin America

SAARC

Other Asian Developing Countries

Africa

Others/Unspecified

Source : DGCI&S