Direction and Composition of Indian Foreign Trade

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India’s foreign trade always shows a poor performance of the economy. In order to give a clear idea about India’s foreign trade, let us show its trend in different periods. In today’s article we are going to know about the Direction and Composition of Indian Foreign Trade. So let’s discuss in details.

Trend of India’s Foreign Trade

The trend of India’s foreign trade shows in the following table-

Year Imports Exports Total Value Balance of Trade
1950-51 1025 947 1972 – 78
1960-61 1795 1040 2835 – 755
1970-71 1634 1535 2169 – 99
1980-81 12549 6711 19260 – 5838
1990-91 43193 32553 75746 – 10640
2000-01 230873 203571 434444 – 27302
2010-11 1683467 1142643 2826116 – 540818

The table reveals that the total value of foreign trade was Rs.1972 crores in 1950-51 which gradually increased to Rs.2826116 in 2010-11. From the table it also clear to us that during the pre-liberalization period (from 1950-51 to 1980-81).

The total value increased at a slow rate but it rise significantly during to post liberalization period. Thus we may comment that the new economic policy influence India’s foreign trade significantly.

Another important observation is that India’s foreign trade is very much import oriented. The table reveals that the value of imports increased from Rs.1025 crores in 1950-51 to Rs.1683467 in 2010-11.

The factors which were largely responsible for these imports include huge import of industrial raw materials, regular import of food grains and periodic like on it prices. Due to high import India faces deficit balance of trade.

Another very important observation is that India has been facing a very slow growth in respect of exports. During pre liberalization period, total value of exports rose marginally from 947 crores in 1950-51 to Rs.6711 crore in 1980-81.

Due to introduction of globalization policy the value of Indian export rewarded some increases but it was totally inadequate considering the growth value of imports.

During the post liberalization period the value of export increased from Rs.32553 crore in 1990-91 to Rs.1142649 crore in 2010-11. (Direction and Composition of Indian Foreign Trade).

The factor which is mostly responsible for this low growth of export include, inadequate export surplus, recession in developed country and adoption of the protective trade policy by the developed countries.

Composition of Indian Foreign Trade

The composition is an important indicator of the pattern of trade. By the term composition of trade we mean the structural analysis of various items of export and import trade.

Thus composition reflects the specialization, diversification and nature of production structure of the country. The composition of trade changes according to the time and economic development.

Let us explain the composition of Indian foreign trade with the help of following table-

Composition of Indian import

Items 1960-61 1970-71 1980-81 1990-91 2000-01 2010-11
Food 286 242 280 N.A N.A N.A
Raw materials 776 889 9760 N.A N.A N.A
Capital goods 560 404 1910 10466 28289 28059
Others 173 99 499 N.A N.A N.A

From the above table it is clear that in India’s import trade capital goods occupied an important position. During pre liberalization period India import food, raw materials, capital goods and others items from the foreign country.

But after liberalization India imported huge amount of capital goods from the foreign countries. Agricultural development has made India self sufficient in the production of foods and other raw materials.

Composition of India’s Export

Items 1960-61 1970-71 1980-81 1990-91 2000-01 2010-11
Agricultural 406 487 2057 6317 29312 180279
Minerals 84 164 414 1497 4736 40953
Manufactured 471 772 3747 23736 161161 964388
Fuel & lubriants 11 13 28 948 1520 273231
Others 12 100 466 55 3398 7108

From the above table it is clear to us that before liberalization policy the composition of India’s export trade did not show any significant improvement. (Direction and Composition of Indian Foreign Trade)

Due to introduction of economic reforms India’s export trade has increased its value composition wise. Therefore, we may comment that liberalization policy influences India’s composition of export trade.

Direction of Indian Foreign Trade

Analysis of direction of trade reflects on regional direction of country’s foreign from where trade is originated. Indian foreign trade has changed its direction after the introduction of new economic policy in 1991.

Let us explained it with the help of following table-

Direction of India’s Imports

Country 1960-61 1970-71 1980-81 1990-91 1995-96 2003-04
OECD 875 1042 5740 23310 64254 135889
OPEC 22 162 3488 7041 25586 25905
Eastern Euro 38 220 1296 3377 4217 5673
Developing Countries 732 239 1966 7965 22509 72037
Others 25 08 60 1500 6112 119504
USA 328 453 1619 5245 12916 23136
UK 217 127 731 2894 6415 14862
Japan 61 83 749 3245 8254 12258
Germany 123 108 694 3473 10520 13411
Iran 30 92 1339 1018 2001 1226
Saudi Arabia 14 24 540 2899 6773 3390
Russia 16 106 1014 2548 2864 4410
France 21 21 280 1304 2812 5010
Australia 18 37 170 1464 3418 12174
Belgium 15 12 296 2718 5693 18270
Kuwait 6 8 33 363 6590 55
Other Countries 288 454 4785 14967 54422 108802

Conclusion

So friends, this was the concept of Direction and Composition of Indian Foreign Trade (Direction and Composition of India’s Foreign Trade). Hope you get the full details about it and hope you like this article.

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