INDIA'S FORIEGN TRADE
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. Foreign trade accounted
for 48.8% of India's GDP in 2018.
HISTORY
Even before independence, the Government of India
maintained semi-autonomous diplomatic relations. It had colonies (such as the
Aden Settlement), who sent and received full missions,and was a founder member
of both the League of Nations and the United Nations.After India gained
independence from the United Kingdom in 1947, it soon joined the Commonwealth
of Nations and strongly supported independence movements in other colonies,
like the Indonesian National Revolution.The partition and various territorial
disputes, particularly that over Kashmir, would strain its relations with
Pakistan for years to come. During the Cold War, India adopted a foreign policy
of non-alignment policy itself with any major power bloc. However, India
developed close ties with the Soviet Union and received extensive military
support from it.
Around 100CE
The Periplus of the Erythraean Sea is a document
written by an anonymous sailor from Alexandria about 100CE describing trade
between countries, including India.
Around 1500
In 1498 Portuguese explorer Vasco da Gama landed in
Calicut (modern day Kozhikode in Kerala) as the first European to ever sail to
India. The tremendous profit made during this trip made the Portuguese eager
for more trade with India and attracted other European navigators and tradesmen.
Pedro Álvares Cabral left for India in 1500 and
established Portuguese trading posts at Calicut and Cochin (modern day Kochi),
returning to Portugal in 1501 with pepper, ginger, cinnamon, cardamom, nutmeg,
mace, and cloves. The profits made from this trip were huge.
1991 economic reform
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.
India was the eighth largest exporter of commercial
services in the world in 2016, accounting for 3.4% of global trade in services.
India recorded a 5.7% growth in services trade in 2016–17.
EXPORTS AND IMPORTS
India exports approximately 7500 commodities to about
190 countries, and imports around 6000 commodities from 140 countries.India
exported US$318.2 billion and imported $462.9 billion worth of commodities in
2014.
The Government of India's Economic Survey 2017–18
noted that five states — Maharashtra, Gujarat, Karnataka, Tamil Nadu and
Telangana — accounted for 70% of India's total exports. It was the first time
that the survey included international export data for states. The survey found
a high correlation between a state's Gross State Domestic Product (GSDP) per
capita and its share of total exports. With a high GSDP per capita but low
export share, Kerala was the only major outlier because the state's GSDP per
capita was heavily influenced by remittances.
The survey also found that the largest firms in India
contributed to a smaller percentage of exports when compared to countries like
Brazil, Germany, Mexico, and the United States. The top 1% of India's companies
accounted for 38% of total exports.
The provisional data for March exports, released by
the Ministry of Commerce at the end of April, reveals a grim situation. As per
the data, India’s exports during March 2020 accounted for a little over $21.4
billion, despite a promising performance in just the previous month. This fall
of approximately 35% year-on-year, as compared to March 2019 ($32.72 billion),
is touching a multi-year low, and the figures are bound to fall further. A key
thing to note is that exports have fallen across almost all of the commodity
groups. Some commodities have registered a decline by over 30-40%, particularly
engineering goods, textiles, meat, cereals, plastics and chemicals, which have
been the major growth drivers of exports in recent years. As an immediate
aftermath of the spread of the COVID-19 pandemic to multiple countries, global
demand has fallen significantly and many orders have been cancelled. Further,
the disruption of supply chains due to the ongoing lockdown has aggravated the
poor performance of Indian exports -- and the situation is likely to worsen in
the coming months, before recovery starts. India's electrical machinery and
equipment has 40 per cent dependence on imports from China. However this number
has reduced from 59.5 per cent in FY18 to 40 per cent in FY19. Although India
has increased production of low-end electronic components. Import dependency on
China is its major limitation. The automobile sector, which accounts for 7.5
per cent of India's GDP and a massive 49 per cent of the manufacturing GDP, is
already facing slowdown. The coronavirus lockdown has made the situation worse
for the auto sector as 10 to 30 per cent of automotive components are supplied
from China. If factories do not resume activity in China, it could adversely
affect the sector.
PARTNERS
India's largest trading partners in order of value of
total trade are Bangladesh, Bhutan, Germany, Hong Kong, Iraq, Israel, Japan,
Nepal, Russia, Saudi Arabia, Singapore, Switzerland, the United Arab Emirates
and the United States. India is biggest exporter of pharmaceuticals, some food
products and is a mixed economy.
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