Indian Foreign Trade

Its Composition,, Destination,, and Origin-A trend analysis

Presented by:

Tanzeela Shah Sreejith Viswam Manish Roychoudhury Manish Rajput

What is Foreign Trade???

Each

country tries to increase the availability of goods and services to its people through purchase from other countries. Similarly, it tries to sell its surplus production to other countries. Buying of goods from other countries is called import and selling of goods to other countries is called export. And both import and export together constitute Foreign Trade of a country

Who are engaged in foreign trade???

In

India, government as well as private sector participates in foreign trade. In India before independence, foreign trade was mainly carried by private sector. However after independence, government of India set up number of organizations to engage in foreign trade.

Government Organizations
The

government organizations mainly carry out foreign trade in bulk items like food grains, iron ore, minerals and metals. Examples of government agencies engaged in foreign trade are STC (State Trading Corporation) MMTC (Mineral and Metal Trading Corporation) etc

Private Sector
Some

of the important items exported by this sector are readymade garments, gems and jewellery, handicrafts, tea and coffee etc Some of the items imported by private sector are consumer goods, capital goods etc.

Origin
Over

last 60 years Indian Foreign Trade has undergone a complete change in terms of composition and directions. Before 1991, foreign trade of India suffered from bureaucratic and discretionary controls. Foreign exchange reserves were tightly controlled by Govt. and the RBI.

Composition of Foreign Trade

Composition

of foreign trade means that goods we are importing and the goods we are exporting. Therefore composition of foreign trade consists of composition of exports as well as composition of imports. We usually import following commodities:-

Food

and allied products This commodity includes cereals, pulses, cashew nuts, edible oils etc. Fuel Coal and POL (Petroleum, Oil and Lubricants) are the important sources of energy. After independence with the growth of industries the demand for the same has increased. As our domestic production is not sufficient so India imports petroleum goods in large quantities.

 Fertilizers

It is the important input of agricultural and our domestic production of fertilizers falls short of our requirement hence we need to import the same. Paper board, manufactures and newsprint Sometimes we fall short of the above so we have to import it from other countries.

 Capital

Goods It includes machinery, transport equipments, electronic goods etc. With the growing requirements of Indias rapidly developing economy, import of capital goods continue to have a very high share of our total imports. Other bulk items This commodity group includes things like chemicals, Iron and steel, pearls, precious stones etc Unclassified items Other items which where not classified above comes into this category.

Composition of Indias Imports

Commodity Group
2007-08

Years (Percentage Share)

2008-09 2009-10

Food and allied products 2.3 Fuel (POL) Fertilizers Capital goods Others -Chemicals -Gold & Silver -Pearls, precious stones -Electronic Goods TOTAL 34.2 2.0 18.7 38.9 4.9 7.1 3.2 8.2 100

2.1 33.4 4.3 15.5 40.0 5.0 7.2 5.5 7.7 100

3.5 33.2 2.5 14.3 43.4 5.8 9.3 4.4 8.6 100

Composition of Exports
Composition

of exports means the goods we are selling to other countries. It includes the following commodities Agricultural and allied products It includes tea, coffee, cereals, spices, tobacco, oil meals, vegetables, marine products and raw cotton. etc

 Ores

and minerals This commodity includes iron ore, processed minerals, and other ores and minerals like mica etc. Manufactured Goods This group includes leather and leather products, gems and jewellery, machine and transport equipments, electronic goods, drugs, pharmaceuticals, cotton yarns and fabrics, ready made garments and handicrafts etc.

 Crude

and petroleum products This commodity group at one time was important part of Indias exports. However setting up of our own oil refineries, their export is very significant. Other and unclassified items Items which have not been included in the above categories come in this list.

Commodity Group
Agricultural & allied products Ores & minerals

Composition of Indias Export

2007-08

Year (Percentage Share)

2008-09 2009-10

9.9 5.5

9.1 4.2 66.7

9.0 3.7 69.2

Manufactured goods 64.1 -Gems & Jewellery -Cotton yarn, Fabric made ups -Readymade garments -Handicraft Crude & Petroleum Others & Unclassified items

17.8 2.7

14.9 5.1

14.2 3.9

TOTAL

100

100

100

Direction of Foreign Trade

Direction

of foreign trade means the countries to which India exports its goods and the countries from which it imports. Thus directions consists of destination of our exports and sources of our import. USA has emerged as our most important trading partner followed by Germany, Japan and UK.

Direction of Imports
Direction

of imports means countries from which we import goods. Before independence most of our imports were from Britain. After independence we are importing goods from other countries such as USA, Japan, Germany, France. etc

Direction of Indias Imports

Country
2007-08

Year (Percentage Share)

2008-09 2009-10

UK
Germany Other EU USA

14
8 8 23.3

14.9
7.1 10 24

14.4
7 12 24.6

Japan
Russia Other East Europe OPEC Other LDCS Others

11.5
9.3 7.4 3 5.5 10

9.9
9 7.1 2 5.6 10.4

10.7
9.5 7.5 3.3 5.8 10.2

Direction of Indias Exports

Before

independence, Britain had largest share of our exports. After independence, share of Britain in our total exports declined as USA emerged as the largest single buyer of our goods.

Direction of Indias Exports

Countries
2007-08

Year (Percentage Share)

2008-09 2009-10

UK Germany Other EU USA

23 7 5 27

20.2 7.1 5.6 28.3

19.9 6.9 5.5 28.9

Japan
Russia Other East Europe OPEC Other LDC Others

10.2
8.8 4.2 3.8 2.5 2.5

10
8.7 4 3.3 1.9 2.9

9.2
8.7 4.2 3.5 2.2 2.3

Questions????