Introduction to India’s Foreign Trade
Foreign Trade is one of the important macro important variables of an economy. India till in recent times was mainly a principal goods exporting and an industrial goods importing country. In 1950s, India’s portion in the world trade was 1.78% which was decline to 0.59% in 1990 and lasts to continue around 0.60% till now. India’s share in world exports was 0.8% in 2006.
Composition of India’s Exports
British strongly considered that India was a country well-matched to resource raw ingredients and other major goods and a good market place for British companies. So at the time of our freedom our exports were primarily of main goods and imports were of makers. At the time of independence, agricultural supplies and light manmade consumer goods-controlled India’s export basket. During the post-independence period India’s arrangement of exports altered.
Now exports of India are broadly classified into following four categories:
1. Agricultural and Allied Products
2. Ores and Minerals
3. Manufactured Goods
4. Mineral Fuel and Lubricants
The arrangement of India’s export can be summarised as follows:
1. Agricultural and Allied Products: The share of agriculture substances in the total exports of India has dropped from 1990-91 to 2005-06. The part of agriculture exports was 19.5% in 1990-91. It originated about 10.2% in 2005-06.
The top items of agriculture exports consist of:
· Fish Products,
· Rice,
· Oil Cakes, and
· Fruits and Vegetables.
The most important export item in ‘Agriculture and Allied products’ group over the period 1991-92 to 2005-06 has been ‘Fish and Fish Preparations’. From $ 585 million in 1991-92 export pays from fish and fish preparations rose to $ 1,589 million in 2005-06. On the other hand, in percentage terms, their portion fell marginally from 3.3 per cent in 1991-92 to 1.5 per cent in 2005-06.
As far as agricultural exports are worried, an important progress during the period since 1991 has been the significant exports of rice in certain year. In fact, exports of rice were as extraordinary as $ 1,366 million in 1995-96 which was 4.3 per cent of total export getting in that year. In 2005-06, exports of rice were worth $ 1,405 million which was 1.4 per cent of total export earning in that year.
2. Ores and Minerals: The general export presentation of ores and reserves is not acceptable. In measurement terms, the export performance of ores and mineral has improved from 4.4% in 1990-91 to 5.2% in 2005-06.
A major share of ores and minerals exports originates from the export of iron ore.
3. Manufactured Goods: The part of manufactured substances in the total export pays of India is on the increase. In 1990-91, the share of manmade items in the total trade earnings was about 73% of the total export earnings.
In 2005-06, the share of man-made items in the total export pays of India continued stagnant at 72%.
The top manufactured export items include:
· Engineering Goods,
· Gems and Jewellery,
· Chemicals and Allied products, and
· Readymade Garments.
The export of engineering goods improved from $ 2,234 million in 1991-92 to $ 21,315 million in 2005-06. In proportion terms, the portion of engineering goods rose from 12.5% in 1991-92 to 20.7% in 2005-06. Over the period 1991-92 to 2002-03, engineering goods engaged the second position in India’s export pays after gems and jewellery. Conversely, thereafter engineering goods have engaged the first place. In 2005-06 they donated 20.7% (i.e. one-fifth) of total export earnings.
For most of the era since 1991, largest transfer earnings came from the exports of gems and jewellery. The share of gems and jewellery in India’s total export was 15.3% in 1991-92 and 15.1% in 2005-06. Though, gems and jewellery industry is an extremely import demanding industry needing large amount of imports of pearls and valuable stones.
Exports of chemicals and allied products rose expressively from $ 1,583 million in 1991-92 to $ 11,935 million in 2005-06. In percentage terms, their share stood at 11.6% in 2005-06 and they engaged the third place in India’s export earnings in this year.
In percentage terms, readymade garments preserved an almost continuous share all through the period since 1991. They contributed 12.3% of export earnings in 1991-92 and 12.5% of export earnings in 2000-01. In 2003-04, their share fell to 9.8% and in 2005-06 to 8.3%.
4. Mineral Fuel and Lubricants: There has been a development in the export of mineral fuels and lubricants both in relations of value and in terms of percentage. In percentage terms, its portion has improved from less than 2.9% in 1990-91 to 11.5% in 2005-06.
Some other facts concerning structural change in India’s export since 1991 are as follows:
(i) There is signal that during 1990s, some of Indian exports have stimulated upwards in value addition chain whereby in its place of exporting raw materials, the country has substituted over to export of processed goods.
(ii) There were important compositional changes within the main manmade product groups such as engineering, goods, chemicals and allied products, etc.
