International Trade (India)

Changing Pattern Of The Composition Of India’s Exports

India's export composition has significantly transformed over the decades, reflecting its economic development, industrial growth, and integration into the global economy. There has been a noticeable shift from traditional low-value primary products to higher-value manufactured goods and services.

• Pre-Liberalisation Era (Before 1991): Exports were dominated by primary products like
• Agricultural Products: Spices, tea, coffee, jute, cotton.
• Minerals: Iron ore.
• Post-Liberalisation Era (After 1991):
• Rise of Manufactured Goods: The share of manufactured goods in India's exports has increased dramatically. This includes:
  • Engineering Goods: Machinery, vehicles, electrical equipment.
  • Gems and Jewellery: India is a major global player in this sector.
  • Textiles and Clothing: Readymade garments, fabrics.
  • Chemicals and Pharmaceuticals: India has become a significant exporter of generic drugs and various chemicals.
  • Leather Goods.
• Dominance of Services: India has emerged as a global leader in the export of services, particularly IT and IT-enabled services (ITES), business process outsourcing (BPO), software development, and professional services. This sector now forms a substantial portion of India's total exports.
• Shifting Composition: While traditional exports like agricultural products and minerals still contribute, their relative share has declined as manufactured goods and services have gained prominence, indicating a move up the value chain.

Key Drivers of Change: Economic reforms of 1991, increased foreign investment, technological advancements, improved quality standards, and the growth of the IT sector.

Changing Patterns Of The Composition Of India’s Import

India's import composition has also evolved, reflecting changes in its domestic economy, industrial structure, and global economic trends.

• Pre-Liberalisation Era (Before 1991): Imports were heavily skewed towards essential items and capital goods due to import substitution policies.
• Essential Goods: Food grains (to meet domestic shortages), fertilizers.
• Capital Goods: Machinery and equipment for industrial development.
• Petroleum Products: Essential for energy needs.
• Strategic Imports: Defence equipment.
• Post-Liberalisation Era (After 1991):
• Increased Import of Petroleum Products: Despite domestic production, India remains a net importer of crude oil and petroleum products, which constitute a significant portion of its import bill due to rising energy demand.
• Capital Goods and Machinery: Imports of advanced machinery and technology have increased to support industrial modernization and diversification.
• Electronic Goods: Imports of consumer electronics, components, and telecommunication equipment have surged due to growing domestic demand and manufacturing capabilities.
• Precious Metals: Gold and silver imports remain high, driven by cultural demand and investment.
• Intermediate Goods: Increasing imports of components and semi-finished goods for use in domestic manufacturing and assembly.
• Reduction in Foodgrain Imports: India's self-sufficiency in food grains has reduced the need for food imports.

Key Drivers of Change: Rising domestic demand, industrial growth requiring imported inputs and technology, increased energy consumption, and trade liberalization.

Direction Of Trade

The direction of India's international trade refers to the countries and regions with which India primarily trades its goods and services. This pattern has also evolved significantly over time.

• Major Trading Partners: India trades with a large number of countries across the globe. Its major trading partners currently include:
  • Asia: China, United Arab Emirates (UAE), Saudi Arabia, Singapore, South Korea, Japan.
  • North America: United States of America (USA).
  • Europe: European Union (as a bloc), Germany, United Kingdom.
  • Africa: Growing trade relations with several African nations.
• Shifting Trade Patterns:
• Increased Trade with Asia: Trade with Asian countries, particularly China, UAE, and Southeast Asian nations, has grown substantially due to geographical proximity and strong economic ties.
• Dominance of USA: The USA remains a key trading partner for both exports and imports, especially for services.
• Traditional Partners: Trade with traditional partners like the UK and European countries continues, though their relative share may have changed.
• Growing Trade with Africa: India is increasingly strengthening its trade and investment ties with African nations.
• Factors Influencing Direction: Geographical proximity, historical ties, trade agreements (bilateral and multilateral), economic growth of trading partners, global commodity prices, and geopolitical relationships.

Sea Ports As Gateways Of International Trade

Sea ports are the primary gateways for India's international trade, handling the vast majority of its merchandise trade volume and value.

• Role: Ports facilitate the import of raw materials, capital goods, and essential commodities, and the export of manufactured goods, agricultural products, and services.
• Number of Major Ports: India has a long coastline with numerous ports, including 12 major ports and several intermediate and minor ports.
• Major Ports on the West Coast:
• Kandla (Gujarat): A natural harbour, important for petroleum, general cargo, and export of grains and textiles.
• Mumbai (Maharashtra): A natural harbour, handles substantial trade, including petroleum and general cargo. It is also a major passenger port.
• Marmagao (Goa): Primarily handles iron ore exports.
• New Mangalore (Karnataka): Important for export of iron ore, manganese, and coffee; handles petroleum products.
• Kochi (Kerala): A natural harbour, handles petroleum products, fertilizers, chemicals, and other general cargo.
• Major Ports on the East Coast:
• Tuticorin (Tamil Nadu): Handles cargo like coal, salt, food grains, petroleum products, and edible oils.
• Chennai (Tamil Nadu): An artificial harbour, handles a significant volume of trade, including automotive components, petroleum products, and general cargo.
• Vishakhapatnam (Andhra Pradesh): A natural harbour, primarily handles iron ore, petroleum, coal, and other bulk cargo.
• Paradip (Odisha): Handles bulk cargo like iron ore, coal, and petroleum.
• Haldia (West Bengal): Located on the Hugli river, it serves as an outport for Kolkata and handles bulk cargo, containerised cargo, and petroleum.
• Container Terminals: Many major ports have developed specialized container terminals to handle the increasing volume of containerized trade efficiently.

Airports

Airports serve as crucial gateways for India's international trade in high-value, time-sensitive, and perishable goods, as well as for passenger traffic.

• Role in Trade: Air cargo is essential for the quick transport of goods like pharmaceuticals, electronics, high-fashion garments, and fresh produce, where speed is critical.
• Major International Airports: India has numerous international airports that handle a significant volume of air cargo and passenger traffic. Key airports include:
  • Delhi (Indira Gandhi International Airport)
  • Mumbai (Chhatrapati Shivaji Maharaj International Airport)
  • Chennai (Chennai International Airport)
  • Kolkata (Netaji Subhas Chandra Bose International Airport)
  • Bengaluru (Kempegowda International Airport)
  • Hyderabad (Rajiv Gandhi International Airport)
  • Vishakhapatnam, Kochi, Ahmedabad, Amritsar, etc.
• Air Cargo Terminals: Airports are equipped with specialized cargo terminals to handle the sorting, storage, and clearance of international air freight.
• Importance: Essential for facilitating rapid movement of goods that cannot be transported efficiently by other means, supporting high-tech industries and time-sensitive trade.