Q. The foreign trade of India during British regime shrunk considerably, because:

1. India was not allowed to have foreign trade relations with counties other than the United Kingdom (UK).
2. India imported significantly more than what it exported to other countries.

Which of the above is / are correct?
Answer: None of the above
Notes: None of the statement is correct. It is true that the restrictive policies of commodity production, trade and tariff pursued by the colonial government adversely affected the structure, composition and volume of India's foreign trade. But the given statements do not correctly explain the causes. Moreover, half of India's foreign trade was restricted to Britain while the rest was allowed with a few other countries like China, Ceylon (Sri Lanka) and Persia (Iran). The second statement is also incorrect as the most important characteristic of India's foreign trade throughout the colonial period was the generation of a large export surplus.