INTERNATIONAL

TRADE BY INDIA
(Imran Khan)
EMBA,
Delhi Technological University
International trade is an exchange of capital, goods and
services across international borders. In most countries, it
represents a significant share of gross domestic product
(GDP).
International trade has been present throughout the history,
its economic, social and political importance has been on the
rise in recent centuries.

The 2008 global financial crisis and subsequent slowdown in
the world economy has clearly demonstrated that tremor
originating in one corner of the world can quickly reach other
parts among others via the trade channel.
The 2008 crisis left world trade (both goods and services)
shattered with a steep fall to a negative 19.8% in 2009.
For five years before the crisis (20032007) world trade value
grew at a robust 16.6% (compound annual growth rate
CAGR) and for five years after the crisis (2009-2013) it grew at
a subdued 9.9%.
Indias exports (goods and services) which also had robust
growth of 30.1% in the five pre-crisis years (2003-2007)
decelerated to 16.0% in the five post-crisis years (2009-2013).
Without international trade, nations would be limited to the
goods and services produced within their own borders.

International trade is the backbone of modern commercial
world, as producers in various nations try to profit from an
expanded market, rather than be limited to selling within their
own borders. There are many reasons that trade across national
borders occurs, including lower production costs in one region
versus another, specialized industries, lack or surplus of natural
resources and consumer tastes.
Buyer insolvency (purchaser cannot pay);
Non-acceptance (buyer rejects goods as different from the
agreed upon specifications);
Credit risk (allowing the buyer to take possession of goods prior
to payment)
Regulatory risk (e.g., a change in rules that prevents the
transaction)
Intervention (governmental action to prevent a transaction being
completed)
Political risk (change in leadership interfering with transactions
or prices)
War and other uncontrollable events.
In addition, international trade also faces the risk of unfavorable
exchange rate movements

Trade and commerce have been the backbone of the
Indian economy right from ancient times.

Textiles and spices were the first products to be
exported by India.

The Indian trade scenario evolved gradually after the
countrys independence in 1947. From the 1950s to the
late 1980s, the country followed socialist policies,
resulting in protectionism and heavy regulations on
foreign companies conducting trade with India.
Indias ranking in the top merchandise exporters and importers
in the world has also improved from 31
st
in 2000 to 19
th
in
2013 in exports and from 26
th
to 12
th
for imports in the same
years, as per the World Trade Organization (WTO).

Also an improvement in Indias total merchandise trade to
GDP ratio from 21.8% in 2000-01 to 44.1% in 2013-14.
In commercial services trade, India was the sixth largest
exporter with 3.4% share of world exports and seventh largest
importer with 3.0% share of world imports in 2012.
The 2008 global financial crisis gave a big jolt to Indias
service exports. In the five years prior to 2008 (i.e. 2003-04 to
2007-08) service export growth (CAGR) at 35.4% was faster
and way above the merchandise export growth at 25.8%.
In the five years post crisis (2008-09 to 2012-13), service
export growth at 8.3% was below the 12.8% merchandise
export growth.
In 2012-13, service exports at US$ 145.7 billion showed a
lower growth of 2.4% compared to the 14.2% in the preceding
year. They improved slightly in 2013-14 with a 4% growth the
same as merchandise export growth
Indias major imports comprise of crude oil, machinery, military
products, fertilizers, chemicals, gems, antiques and artworks.
Imported goods are divided into the following categories:
Freely importable items: For these items, no import license is
required. They can be freely imported by an individual or a firm.
Canalized items: These items can only be imported by public
sector firms. For example petroleum products fall under this
category.
Prohibited items: Items such as unprocessed ivory, animal rennet
and tallow fat cannot be exported to India.
Indian exports comprise mainly of engineering and textile
products, precious stones, petroleum products, jewelry, sugar,
steel chemicals, zinc and leather products. Most of the exported
goods are exempt from export duties.
India also exports services to several countries, primarily to the
US. In fact, India is among the worlds largest exporters of
services related to information and communication technology
(ICT). It is also the key destination for business process
outsourcing (BPO).
Set up by an act (Export-Import Bank of India) of
parliament in September 1981
Wholly owned by Government of India
Commenced operations in march, 1982
Established for providing financial assistance to exporters
and importers and for functioning as the principal financial
institution for coordinating the working of institutions
engaged in financing export and import of goods and
services with a view to promoting the countrys
international trade
A. EXPORTS (Receipts)
Exports during July, 2014 were valued at US $ 13344
Million (Rs. 80142.20 Crore).

B. IMPORTS (Payments)
Imports during July, 2014 were valued at US $ 6822
Million (Rs. 40971.98 Crore).

C. TRADE BALANCE
The trade balance in Services (i.e. net exports of Services)
for July, 2014 was estimated at US $ 6522 Million.
INDIAS FOREIGN TRADE
(SERVICES)
(As per the RBI Press Release dated 15
th
September, 2014)
THANK YOU