INDIA’S FOREIGN TRADE: VALUE COMPOSITION AND DIRECTION

Up to early 90’s the emphasis was on ‘Inward oriented’ policies Up to early 90’s the emphasis was on ‘Inward oriented’ policies. This means large scale Import substitution( through extensive protection of Domestic industries), direct controls on imports and Investment and overvalued exchange rates, export sector was marked with extreme pessimism.

Continued…….. But during 1991 massive trade reforms were announced to open up the economy to foreign trade and to integrate the Indian economy in the Global economy

Volume of India’s foreign trade India share in world trade (in %) Year Trade 1950 1.78 1991 .53 2000 .70 2005 1.00 2009* 1.5 * Means trade policy 2004-09 has set a target of achieving this target by 2009

A study on foreign trade data revels that trade balance was positive in only two years i.e 1972-73 and 1976-77 from the entire planning period till now

World trade report 2006 Total world merchandise exports in 2005. 10121 billion dollars Country having highest merchandise exports. GERMANY Total Indian exports(2007) 150 billion dollars % share of Indian exports in world exports .89% in 2005 % share of China in exports in world exports 7.5 %

Composition of India’s Foreign Trade during 2005-06 Exports Imports Commodities share Agri. And allied products 7.08 Crude petroleum 32.12% Gems and jewellery 17.26 Pearls precious stones 7.77 % Engg. Goods 18.27 Gold and silver 8.51% Textile 14.32 Petroleum products 11.33

Composition of India’s trade during 2005-06 shows that Engg Composition of India’s trade during 2005-06 shows that Engg. Goods and Gems and Jewellery possess the highest share in exports with 18.3% and 17.3 % respectively. Crude petroleum remains the highest import item in value term having 32.1 % share in total imports in the country during 2005-06.

Direction of Trade In the pre independence period ,the direction of India’s foreign trade was determined not according to the comparative cost dvantage but by the colonial relations between India and Britain. But now the situation has changed now india is having trade relation with each and every country of the world this is the result of New Economic Policy which India adopted during 90’s.

Direction of India’s Trade Imports Exports 1960-61 1990-91 2005-06 OECD 78 54 32.7 66.1 53.5 44.2 EU 37.1 29.4 15.7 18.4 21.8 21.6 USA 29.2 12.1 5.5 16 14.7 16.7 OPEC 4.6 16.3 7.7 4.1 5.6 14.8 DEVELOPING COUTNRIES CHINA - .1 7.5 6.5 SOURCE: RESERVE BANK OF INDIA REPORTS AND HANDBOOK OF STATISTICS

During Planning period as a whole ,India has obtained maximum imports from USA the reason being that India has imported large scale quantities of capital goods ,Intermediate goods and food grain from that country. In 2005-06, China occupied the first position in India’s imports(7.5%) followed be USA(5.5%). In 2005-06 , USA with share of 16.7 (%) occupied first position in India’s Exports followed by UAE

Growth and Structure of India’s Foreign trade since 1991 India’s Trade has increased significantly in the post reform period. In absolute terms the trade volume rose from US $ 42.2 billion in 1990-91 to US $ 252.26 billion. In 2004-05 exports increased by 30.8% over the previous year while Imports increased by 42.7 % over the previous year.

Foreign Trade Policy 2004-09 1.5 % share of global trade by 2009. Special focus on five traditional exports – agriculture, leather & footwear etc so as to make exports. Vishesh Krishi Upaj Yojana to be introduced for boosting exports of agriculture products. Duty free Imports for service importers .