India’s Foreign Trade

Volume of India’s Merchandise Foreign Trade

Prior to 1947, India’s trade was a typical colonial trade, in which she used to supply raw materials to the colonial master and imported the manufactured goods. So, naturally the industrialization at home was not permitted. The indigenous handicrafts suffered because of the competition from the British manufactured products as well as British traders located in India as well as abroad.

The colonial pattern of trade was to be changed after independence. The first major challenge was the increase in the production capacity of the country. So, this led to import of the heavy plants and machinery which was called the “developmental Imports”.

To maintain the productive capacity of the country, the objects such as machines were imported and this was called “maintenance imports”. The above two similar kinds of imports were vital for a developing country like ours which just embarked on the path of the economic development.

Apart from that , India needed to import a lots of Food grains in the beginning of the independent era. Since, the food grain production in the country was so less to fulfil needs. The import of food grains was also necessary to contain the inflation in these consumer goods.

This objective of writing the above paragraph is to say that India when became independent was heavily dependent upon the imports. The higher imports and negligible exports means a pressure on the balance of trade. The result is pressure on the economy.

So, there was need to encourage the exports. The imports were inelastic, and to fight with the pressure of the foreign debt, the country needed to boost its exports.

India’s merchandise exports has been showing remarkable resilience in the last few years. The following table presents volume of India’s Foreign Trade in last few years:

Year

Exports

Imports

Total Trade

1997-98

35006

41484

76490

1998-99

33218

42389

75607

1999-00

36822

49671

86493

2000-01

44560

50536

95096

2001-02

43827

51413

95240

2002-03

52719

61412

114131

2003-04

63843

78150

141993

2004-05

83536

111518

195054

2005-06

100607

140237

240844

2006-07

126413

185735

312148

2007-09

163132

251654

414786

2008-09

185295

303696

488991

2009-10

178751

288372

467123

2010-11 (APR-JUNE)

52709

81454

134163

All values Million Dollars, Source : Ministry of Commerce

 

The Latest economic survey says that India’s exports fell following the deepening of the global financial crisis midway through 2008-09; they rose in the second half of 2009-10, which continued through 2010-11 until June 2010. Thereafter growth decelerated till October 2010 and picked up subsequently to reach 36.4 per cent in December 2010, which is the highest growth in the last two years. Nevertheless cumulative export growth in April-December 2010-11 was at 29.5 per cent with cumulative exports reaching US $ 164.7 billion during this period. Current indications are that India would not only achieve the target of US$ 200 billion but surpass it in 2010-11. India’s merchandise imports also affected by the global recession fell to US$288.4 billion with a negative growth of – 5.0 per cent in 2009-10. This was due to the fall in growth of petroleum, oil, and lubricants (POL) imports by 7.0 per cent and non-POL imports by 4.2 per cent. POL import growth was low mainly due to decline in import price of the Indian crude oil import basket by 16.5 per cent despite the increase in quantity by 7.7 per cent.

Composition of India’s exports

The merchandise exports of India are broadly classified into the following 4 categories:

  1. Agriculture and allied products (such as Coffee, Tea, Oil cakes, Tobacco, Cashew, Kernels, Spices, sugar, Raw Cotton, Rice, Fish & other seafood items, Meat & meat products, Oils such as vegetable oils, Pulses, fruits, vegetables.
  2. Ores and Minerals which mainly include manganese, mica, iron ore.
  3. Manufactured Goods such as textiles, readymade garments, jute, leather, footwear, handicrafts & handlooms, jewelry, pearls and precious stones, chemicals, engineering goods, iron steel etc.
  4. Mineral Fuels and Lubricants

The following table shows the composition of India’s Exports till 2009-10 (April-September):

Commodity Group

2007-08

2008-09

2009-10 (Apr-Sep)

Agriculture and allied products

9.9

9.1

9.0

Ores and Minerals

5.5

4.2

3.7

Manufactured Goods

    Of which

64.1

66.7

69.2

  1. Gems and Jewelry

12.1

15.3

17.8

  1. Drugs and Pharmaceuticals

4.7

4.7

5.2

  1. Metal products

4.1

4.3

3.5

  1. Transport Equipments

4.3

6.0

6.4

  1. Machinery and Instruments

5.6

5.9

6.1

  1. Electronic goods

2.1

3.9

4.0

  1. Readymade garments

5.9

5.9

6.3

  1. Handicrafts

0.3

0.2

0.1

Crude and Petroleum (Including Coal)

17.8

14.9

14.2

Others

2.7

5.1

3.9

Total

100.0

100.0

100.0

Source: Ministry of Commerce

In the above table we see that the manufactured goods are backbone of India’s Merchandise exports. In Merchandise exports too, the share of Gems and Jewelry is maximum. The top 10 Commodities in full financial year 2009-10 are segregated as follows:

S.No.

Commodity

2008-2009

%Share

2009-2010

%Share

%Growth

1

Natural Or Cultured Pearls, Precious Or Semiprecious Stones, Items clad with precious metals

28,466.39

15.3627

29,202.93

16.3372

2.59

2

Mineral Fuels, Mineral Oils And Products Of Their Distillation; Bituminous Substances; Mineral Waxes.

28,437.14

15.3469

29,036.29

16.244

2.11

3

Organic Chemicals

7,463.66

4.028

7,448.97

4.1672

-0.2

4

Electrical Machinery And Equipment And Parts Thereof; Sound Recorders And Reproducers, Television Image And Sound Recorders And Reproducers,And Parts.

9,541.11

5.1491

7,233.19

4.0465

-24.19

5

Nuclear Reactors, Boilers, Machinery And Mechanical Appliances; Parts Thereof.

7,993.46

4.3139

7,187.91

4.0212

-10.08

6

Ores, Slag And Ash.

5,456.22

2.9446

6,651.91

3.7213

21.91

7

Vehicles Other Than Railway Or Tramway Rolling Stock, And Parts And Accessories Thereof.

6,002.03

3.2392

6,169.48

3.4514

2.79

8

Articles Of Apparel And Clothing Accessories, Not Knitted Or Crocheted.

5,902.92

3.1857

6,127.79

3.4281

3.81

9

Miscellaneous Goods.

4,776.38

2.5777

5,204.99

2.9119

8.97

10

Pharmaceutical Products

5,078.77

2.7409

5,191.18

2.9041

2.21

 

Composition of India’s Imports

Around one third of India’s imports are POL (Petrol, Oil and Lubricants) products. The following table shows the share of various commodity groups in India’s total imports till April September 2009-10.

Commodity Group

2007-08

2008-09

2009-10 (Apr-Sep)

Food and allied products

    Of which

2.3

2.1

3.5

  1. Cereals

0.3

0.0

0.0

  1. Pulses

0.5

0.4

0.6

  1. Edible Oils

1.0

1.1

2.0

Fuel

    Of which

34.2

33.4

33.2

  1. POL

31.7

30.1

30.1

Fertilizers

2.0

4.3

2.5

Capital Goods

    Of which

18.7

15.5

14.3

  1. Machinery except electrical and machinery tools

7.9

7.8

8.2

  1. Electrical and machinery tools

1.2

1.2

1.2

  1. Transport Equipment

8.0

4.4

2.3

Others

Of which

38.9

40.0

43.4

  1. Chemicals

4.9

5.0

5.8

  1. Pearls, Precious stones and Semiprecious stones

3.2

5.5

4.4

  1. Gold and Silver

7.1

7.2

9.3

  1. Electronic Goods

8.2

7.7

8.6

Total

100.0

100.0

100.0

 

In 2009-10, the top 10 Import commodities were as follows:

S.No.

Commodity

2008-2009

%Share

2009-2010 

%Share

%Growth

1

Mineral Fuels, Mineral Oils And Products Of Their Distillation; Bituminous Substances; Mineral Waxes. 

1,03,933.81

34.2229

96,321.16

33.4016

-7.32

2

Natural Or Cultured Pearls, Precious Or Semiprecious Stones,Pre.Metals,Clad With Pre.Metal And Artcls Thereof;Imit.Jewlry;Coin. 

43,926.25

14.4639

46,321.87

16.0632

5.45

3

Nuclear Reactors, Boilers, Machinery And Mechanical Appliances; Parts Thereof. 

26,640.75

8.7722

23,990.26

8.3192

-9.95

4

Electrical Machinery And Equipment And Parts Thereof; Sound Recorders And Reproducers, Television Image And Sound Recorders And Reproducers,And Parts. 

25,205.12

8.2994

22,074.22

7.6547

-12.42

5

Organic Chemicals 

8,607.78

2.8343

9,406.70

3.262

9.28

6

Iron And Steel 

10,265.46

3.3802

8,814.09

3.0565

-14.14

7

Fertilisers. 

12,011.24

3.955

5,991.54

2.0777

-50.12

8

Animal Or Vegetable Fats And Oils And Their Cleavage Products; Pre. Edible Fats; Animal Or Vegetable Waxex. 

3,457.87

1.1386

5,645.43

1.9577

63.26

9

Plastic And Articles Thereof. 

4,481.49

1.4756

5,515.35

1.9126

23.07

10

Aircraft, Spacecraft, And Parts Thereof. 

5,384.37

1.7729

4,943.77

1.7144

-8.18

 

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Comments

  • sachit jain
    Reply

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