FOREIGN TRADE

Every country in the world in some way or the other relies on their imports. Similarly, they also overproduce certain products so that they export. There is not a single country in the world that produces all the products it needs. Thus, a country produces the commodity which they have a comparative advantage while importing the other commodities. This exchange of commodities by countries is considered as the foreign trade of the country. As every country relies on this they need to maintain good relations with the country they are importing from. In this article, we will learn about foreign trade and the important features of foreign trade.

There is always a relative difference in certain products of a country. So, this gap is filled by importing the product from other countries. Mostly this gap is seen in fields like technology, tastes, etc.In India, there a noticeable difference due to foreign trade. Thus, some of the features of foreign trade in India are as follows –

Salient Features of Foreign Trade:

The following are the features of foreign trade:

(i) Change in the composition of exports:

After independence many changes took place in export trade. India exported tea, jute, cloth, iron, spices and leather before independence. Now chemicals, readymade garments, gems, jewellery, electronic goods, processed foods, machines. Computer software etc. are exported along with tea, jute and cotton textiles.

(ii) Change in the composition of imports:

India imported consumer goods, medicines, textiles, motor vehicles and electrical goods before independence. After independence, imports are fertilizers, petroleum, steel, machines, industrial raw materials, edible oils and unfinished diamonds.

(iii) Direction of foreign trade:

Direction of foreign trade means those countries with which India has trade ties. Before independence, India has trade relations with England and Commonwealth Nations Now India has trade relations with U.S.A, Russia, Japan, European Union and Organization of Petroleum Exporting Countries (OPEC).

(iv) Balance of trade:

Simply speaking balance of trade means the difference between value of exports and imports. Balance of payments is favourable if exports exceed imports and un-favourable if imports exceeds export. India’s balance of payment was favourable before Independence. It was favourable to Rs. 42 crore, but after independence it becomes un-favourable. It was Rs. 65741 crore adverse in 2003-04.

(v) Dependent trade:

Before independence, Indian foreign trade was dependent on foreign shipping, insurance and banking companies. After independence, cargo ships are being built in India. Banks and insurance companies have started taking interest in foreign trade.

(vi) Trade through sea routes:

India’s foreign trade is through sea routes. India has very little trade relations with neighbouring countries like Nepal, Afghanistan, Pakistan, Bhutan and Sri Lanka etc.

(vii) Dependence on a few Ports:

Indian foreign trade is through Chennai, Kolkata and Mumbai ports. These ports are always over-crowded. After independence ports like Kandla, Cochin and Vishakhapatnam have been developed.

(viii) Less percentage of world trade:

India’s share in world trade has been diminishing. It was 1.8% of world’s total imports and 2% of world’s total exports in 1950-51. In 2003-04 India’s share in total world imports was 1% and in total world exports was 0.8%.

(ix) Increased Share in Gross National Income:

Foreign trade has significant contribution in Indian national income. In 1950-51, India’s foreign trade contribution into national income was 12% and rose is 29% in 2003-04.

(x) Increae in value and volume of trade:

The value and volume of imports and exports increased many fold. In 1950-51 imports were Rs. 608 crores and exports were Rs. 606 crores. So total value was Rs. 1214 crores. In 2003-04, it increased to Rs. 6, 52,475 crore. Value of exports 2, 93,367 crore and of imports 3, 59,108 crore.

COMPOSITION OF FOREIGN TRADE 

Composition of foreign Indian foreign trade means major commodity or sectors in which India is doing export and import. India is a very old participant in world trade. Indian foreign trade registered a number of structural changes during the planning period. The percentage of non- traditional goods in total export has increased i.e, export of chemical and engineering goods have shown a good rise. Some other items are gems and Jewellery. India is making export of few traditional goods like; tea, coffee, rice, pulses, spices, tobacco, jute, iron ore etc.There has been substantial change in the composition of foreign trade over the years. Several new items have been entered in the export basket.

Composition of Exports 

 India's export was largely agro-based during 50's. Three principal traditional items- textiles, jute manufactures and tea accounted for nearly 54% of the country's export. The contribution of all primary and traditional items was about 85% of the total export. During this period, emphasis was given on the attainment of self sufficiency and there was stringent restrictlons on imports. The need of industrialisation was felt badly. Capital goods and technology were needed for the industrialisation. The country was not having modem technology, capital goods and raw materials for the fast developmental requirements. Hence, it was further realised that only increased imports of technology, machinery and essential raw materials - could provide the foundations for the industrial base. This would also generate export production for world markets. During 60's various measures were adopted to give a fillip to India's foreign trade. Imports were made relatively easier and the export promotion measures  were adopted. As a result, the share of traditional items in the export basket started declining slowly. the share of iron and steel, machinary, transport and equipment non metallic minerals manufactures and chemicals started increasing. 

Government of India gave a definite shape for the first time to the export policy during 70's. Exports were accorded the third pIace of importance next to the defence and food. As a result, the major changes were witnessed in the composition of exports. The share of traditional products went down further and non traditional items startcd increasing. Engineering goods, leather manufactures, readymade garments, gems and jewellery, chemicals and marine products figured significantly. Thus, the exports of manufactured commodity witnessed upward Inovenlent.  The effort to enhance export further sustained during 80's. The share of manufactured export to total exports increased significantly. The major foreign exchange earners during this period were gems and jewellery, readymade garments engineering goods, leather manufactures, marine products, chemicals,etc.

Change in Composition of India’s Export Basket (%)

The extent to which global slowdown may impact a country’s exports depends largely on the number of trading partners of the country and the composition of its export basket. High dependence on few markets and few exportable products may increase the severity of the impact of slowdown on exports, both in terms of coverage and depth. In order to assess the extent of the impact of global slowdown on India’s exports, we examine the trends overtime in composition of India’s export basket and its direction. Concentration on few exportable products may worsen the impact of global slowdown on the exports of a country, especially if these products are those whose demand is closely related to incomes of the people, in other words, if these are not necessity products. India’s traditional exports have constituted of items such as textile products, gems and jewellery, tea & coffee and leather & leather products. It is important to trace the extent of diversification of the export basket overtime. The trends show that there has been some diversification in composition of India’s export basket overtime. However, there still remains large scope for further diversification (UNCTAD, 2009). 

The share of petroleum products in India’s export basket has been increasing since 2000-01. Interestingly, the share of readymade garments, which has been predominant sector in export basket, has been declining continuously and it reached to 4.78% in 2013-14. Engineering goods, representing a very broad category, continues to be a sector with highest share in India’s export basket. Share of chemical and chemical products has remained same overtime while share of gems and jewellery has declined from 16.67% in 1987-88 to around 13.14% in 2013-14. Share of leather has declined from 8% in 1990-1991 to 1.82% in 2013-14. Share of tea and marine products have been continuously declining, while share of electronic goods has been increased to 2.44% in 2013-14. 

Disaggregated data on exports of Principal Commodities, both in Rupee and Dollar terms available for the period Apr-Mar 2018-19 as compared to Apr-Mar 2017-18 are given in Table 3.1 and Table 3.2 respectively Department of Commerce | Annual Report 2018-19 | 24 in the appendix. Exports of the top five commodities during the period Apr-Mar 2018-19 registered a share of 33.03 per cent mainly due to significant contribution in the exports of Petroleum products; Pearl, precious, semi-precious stones; Drug formulations biological; Gold and other precious metal jewellery; and Iron and Steel.

The export performance (in terms of growth) of top five commodities during Apr-Mar 2018-19 vis-a-vis the corresponding period of the previous year is shown in Chart 3.3:

Plantation Crops

Export of Plantation crops during 2018-19 (Apr-Mar), decreased by 8.55 per cent in US$ terms compared to corresponding period of the previous year. The value of export decreased from US$ 1,819.82 million in 2017-18 (Apr-Mar) to US$ 1,664.25 million in 2018-19 (Apr-Mar). All the commodities in this group have reflected a negative growth.

Agriculture and Allied Products

Agriculture and Allied Products as a group include RiceBasmati; Non-Basmati; Other Cereals; Pulses; Tobacco; Spices; Cashew; Meat; Fresh Fruits & Vegetables, etc. During 2018-19 (Apr-Mar), export increased to US$ 28,433.58 million from US$ 27,778.34 million in the previous year registering a positive growth of 2.36 per cent. This is mainly because, out of 40 commodities under this commodity group, 24 commodities registered a positive growth during the said period.

Marine Products

During 2018-19 (Apr-Mar), export of marine products registered a negative growth of 8.02 per cent reaching a value of US$ 6,796.37 million from US$ 7,389.22 million in the corresponding period of the previous year.

Ores and Minerals

During 2018-19 (Apr-Mar), export of Ores and Minerals increased to US$ 3,582.37 million from US$ 3,305.28 million in the corresponding period of the previous year registering a positive growth of 8.38 per cent. This is mainly due to positive growth in exports of Bulk minerals and ores by 52.91 per cent and Processed minerals, etc. by 21.71 per cent.

Leather and Leather Manufactures

Export of Leather and Leather Manufactures recorded a negative growth of 2.66 per cent during 2018-19 (AprMar) as the value of exports decreased to US$ 5,300.47 million from US$ 5,445.40 million in the corresponding period of the previous year.

Gems and Jewellery

Export of Gems and Jewellery decreased to US$ 40,190.36 million in 2018-19 (Apr-Mar) from US$ 41,544.44 million in the corresponding period of the previous year registering a negative growth of 3.26 per cent. This is mainly due to the fall in exported value of Gold and Other precious and base metals by 50.96 per cent and 70.49 per cent respectively.

Sports Goods

During the period 2018-19 (Apr-Mar), the export of Sports Goods increased to US$ 313.48 million from US$ 232.80 million in the corresponding period of the previous year registering a positive growth of 34.65 per cent.

Chemicals and Related Products

During the period 2018-19 (Apr-Mar), the export of Chemicals and Related Products increased to US$ 43,757.58 million from US$ 37,559.55 million in the corresponding period of the previous year registering a positive growth of 16.50 per cent. Under this commodity group, except for fertilizers crude; all commodities in this group have shown a positive growth.

Plastic & Rubber Articles

During the period 2018-19 (Apr-Mar), the export of Plastic & Rubber Articles increased to US$ 9,443.69 million from US$ 7,572.68 million in the corresponding period of the previous year registering a positive growth of 24.71 per cent. This is mainly due to positive growth of all commodities under this commodity group in the said period Articles of Stone, Plaster, Cement Asbestos, Mica or similar materials, Ceramic products, Glass and Glassware During the period 2018-19 (Apr-Mar), the export of goods in this category increased to US$ 5,093.17 million from US$ 4,520.73 million in the corresponding period of the previous year registering a positive growth of 12.66 per cent. All the commodities under this commodity group registered a positive growth in the said period.

Paper & Related products

During the period 2018-19 (Apr-Mar), the export of Paper & Related products increased to US$ 3,488.68 million from US$ 2,650.53 million in the corresponding period of the previous year registering a positive growth of 31.62 per cent.

Base Metals

During the period 2018-19 (Apr-Mar), the export of Base Metals decreased to US$ 25,428.58 million from US$ 28,211.07 million in the corresponding period of the previous year registering a negative growth of 9.86 per cent. This is mainly due to negative growth of Iron and Steel; Copper and products made of copper; Zinc and products made of Zinc and Tin and products made of Tin

Optical, Medical & Surgical Instruments

During the period 2018-19 (Apr-Mar), export of Optical, Medical & Surgical Instruments increased to US$ 2,323.71 million compared to US$ 2,273.41 million in the corresponding period of the previous year registering a positive growth of 2.21 per cent. All commodities in this group have registered positive growth in the said period.

Electronic Items

During the period 2018-19 (Apr-Mar), export of Electronic Items increased to US$ 8,396.52 million from US$ 6,071.77 million in the corresponding period of the previous year registering positive growth of 38.29 per cent. All commodities in this group have registered a positive growth.

Machinery

Machinery export during the period 2018-19 (Apr-Mar) increased to US$ 29,087.93 million compared to US$ 24,632.72 million in the corresponding period of the previous year registering a positive growth of 18.09 per cent.

Office equipments

During the period 2018-19 (Apr-Mar), the export of Office equipments increased to US$ 144.21 million from US$ 78.6 million in the corresponding period of the previous year registering a positive growth of 83.47 per cent.

Transport Equipments

During the period 2018-19 (Apr-Mar), the export of Transport equipments increased to US$ 26,699.20 million compared to US$ 23,481.41 million in the corresponding period of the previous year registering a positive growth of 13.70 per cent. This is mainly because all the commodities in this group have registered a positive growth except for Aircraft, Spacecraft & Parts.

Project Goods

During the period 2018-19 (Apr-Mar), the export of Project Goods decreased to US$ 16.04 million from US$ 21.95 million in the corresponding period of the previous year registering a negative growth of 26.93 per cent.

Textiles & Allied Products

During the period 2018-19 (Apr-Mar), the export of Textiles & Allied Products increased to US$ 36,878.63 million compared to US$ 36,048.77 million in the corresponding period of the previous year registering a positive growth of 2.30 per cent. During the period, out of 25 commodities under this group, 18 commodities have registered a positive growth.

Petroleum Crude & Products

Export of Petroleum Crude & Products increased to US$ 46,397.35 million during 2018-19 (Apr-Mar) as compared to US$ 37,465.08 million in the corresponding period of the previous year registering a rise of 23.84 per cent. 

 

Composition of Imports

In order to attain self sufficiency, Government of India put stringent restrictions on imports since beginning. The policy of import substitution was adopted to give boost to the domestic industry. The second plan gave a new thrust to the process of planned development with emphasis on capital intensive investment. ~he'country was not in a position to produce the required capital goods needed for the developmental purposes. The need for import of capital eoods was felt at this juncture. It was gradually realised that increased import of technology, L. machine~y and essential raw materials would be able to enhance the industrialisation process of the country. Proper production facilities will certainly provide room for the export business. Therefore, liberal import of capital goods, technology and raw materials are required to boost the export of the country. You must remember here that import bill must be met by the export proceeds.

 Hence, the policy of import management should be followed in such a manner that export business gets a boost. During 60's India's imports comprised of capital goods (3 1.7%). Iron and steel (1 I%), petroleum, oil and lubricants (6.1%), ferrous metal (4.2%) and chemical elements and compounds (3.5%) and fertiliser and fertiliser mate (1.2%). There has been a significant shift in the import composition. In the year 1996-97, the major import item was petroleum, oil and lubricants (25.6%) followed by capital goods (2 IS%), pearls, precious and semi- precious stones (7.5%), iron and steel (4.9%), ferrorus metal (2.8?/0), fertilisers and fertilised mate 2.3% and plastic materials (2%). In the year 1998-99 the major import item was capital goods (16.6%) followed by petroleum and lubricants (1 5.4%,) pearls precious and semiprecious stone (9.0%) Iron & steel (2.8%) and fertiliser & fertiliser mfg. (2.4%) Look at Table 1.4 which shows the trends in India's imports. Let us now briefly learn the trend of India's major import commodities. 

Import by Principal Commodities: Disaggregated data on import by principal commodities, both in Rupee and Dollar terms; available for the period Apr-Mar 2018-19 as compared to Apr-Mar 2017-18 are given in Table 3.3 and Table 3.4 respectively. Import of the top five commodities during the period Apr-Mar 2018-19 registered a share of 44.25 per cent mainly due to significant contribution of Petroleum crude; Gold; Pearls, precious and semiprecious stones; Petroleum products; and Coal, coke and briquettes etc.

The import performance by growth of top five Principal commodities during 2018-19 (Apr-Mar) vis-a-vis the corresponding period of the previous year is shown at Chart 3.5:

Plantation Crops

Import of Plantation crops during 2018-19 Apr-Mar increased by 1.73 per cent in US$ terms. The value of import increased from US$ 1039.28 million in Apr-Mar 2017-18 to US$ 1057.26 million in Apr-Mar 2018-19. This positive growth is contributed by positive growth of Natural Rubber by 5.32 per cent, which has a share of 82.60 per cent in plantation imports.

Agriculture and allied Products

During Apr-Mar 2018-19, import of Agriculture and allied products decreased by 16.48 per cent over the corresponding period of the previous year. The value of import decreased from US$ 22223.10 million in AprMar 2017-18 to US$ 18560.25 million in Apr-Mar 2018- 19. Out of 39 commodities under this group, 10 have registered negative growth during this period.

Marine products

During Apr-Mar 2018-19, import of Marine products increased to US$ 155.70 million from US$ 123.06 million in the corresponding period of the previous year registering a positive growth of 26.52 per cent.

Ores and Minerals

During Apr-Mar 2018-19, import of Ores and Minerals increased to US$ 33622.63 million from US$ 31743.71 million in the corresponding period of the previous year registering a positive growth of 5.92 per cent. All the commodities in this group have reflected a positive growth except Bulk minerals and ores which fell by 37.53 per cent.

Leather and Leather Manufactures

Import of Leather and Leather Manufactures recorded apositive growth of 3.47 per cent during Apr-Mar 2018- 19 as the value of import increased to US$ 1093.22 million from US$ 1056.60 million in the corresponding period of the previous year. This is mainly due to rise in the growth rate of Footwear of Leather and Leather goods which exhibits positive growth of 18.26 per cent and 6.41 per cent respectively.

Gems & Jewellery

During Apr-Mar 2018-19, import of Gems & Jewellery decreased to US$ 64666.22 million from to US$ 74668.31 million in the corresponding period of the previous year registering a negative growth of 13.40 per cent. Except Silver all commodities in this group registered negative growth.

Sports Goods

During the period Apr-Mar 2018-19, import of Sports Goods increased to US$ 332.06 million from US$ 292.05 million in the corresponding period of the previous year registering a positive growth of 13.70 per cent.

Chemicals and Related Products

During the period Apr-Mar 2018-19, the import of Chemicals and Related Products increased to US$ 47802.56 million from US$ 40392.72 million in the corresponding period of the previous year registering a positive growth of 18.34 per cent. Out of 15 commodities under this group, all have registered positive growth except Essential oils.

Plastic & Rubber Articles

During the period Apr-Mar 2018-19, import of Plastic & Rubber Articles increased to US$ 18468.86 million from  US$ 17038.02 million in the corresponding period of the previous year registering a positive growth of 8.4 per cent. Out of 7 commodities under this group, 4 have registered positive growth includes Plastic raw materials, Other rubber product except footwear Plastic sheet, film, plates etc., Moulded and extruded goods. Articles of Stone, Plaster, Cement Asbestos, Mica or similar materials, Ceramic products, Glass and Glassware During the period Apr-Mar 2018-19, import of goods in this category increased to US$ 2789.97 million from US$ 2715.30 million in the corresponding period of the previous year registering a positive growth of 2.75 per cent. Out of 4 commodities under this group, 2 have registered positive growth including Glass and glassware, Ceramics and allied products.

Paper & Related products 

During the period Apr-Mar 2018-19, import of Paper & Related Products increased to US$ 8760.99 million from US$ 8276.87 million in the corresponding period of the previous year registering a positive growth of 5.85 per cent. All commodities under this group have registered positive growth during the period except Other wood and wood products. 

Base Metals 

During the period Apr-Mar 2018-19, import of Base Metals increased to US$ 32363.63 million from US$ 27429.26 million in the corresponding period of the previous year registering a positive growth of 17.99 per cent. Except for Zinc and products made of zinc, Lead and products made of led, Tin and products made of tin, all commodities in this group have registered a positive growth. 

Optical, Medical & Surgical Instruments 

During the period Apr-Mar 2018-19, import of Optical, Medical & Surgical Instruments was US$ 5891.82 million compared to US$ 5340.29 million in the corresponding period of the previous year registering a positive growth of 10.33 per cent. This is mainly due to the fact that all commodities under this group have registered positive growth during the period except Optical items (including Lens etc.).

Electronic Items 

During the period Apr-Mar 2018-19, import of Electronic Items was US$ 55475.52 million compared to US$ 51540.86 million in the corresponding period of the previous year registering a positive growth of 7.63 per cent. All commodities under this group have registered positive growth except Telecom instruments. 

Machinery

During the period Apr-Mar 2018-19, import of Machinery was US$ 46052.29 million compared to US$ 39148.54 million in the corresponding period of the previous year registering a positive growth of 17.63 per cent. Except for IC engines and parts; all commodities in this group have registered a positive growth.

Office Equipments

During the period Apr-Mar 2018-19, import of Office Equipments increased to US$ 52.73 million from US$ 46.83 million in the corresponding period of the previous year registering a positive growth of 12.60 per cent.

Transport Equipments

During the period Apr-Mar 2018-19, import of Transport Equipments stood at US$ 19761.84 million compared to US$ 19175.01 million in the corresponding period of the previous year registering a positive growth of 3.06 per cent. This is mainly due to high import growth of Ship, boat and Floating structure and Railway transport equipment, parts with positive growth of 20.85 per cent and 65.65 per cent respectively.

Project Goods

Import of Project Goods increased to US$ 2375.57 million during Apr-Mar 2018-19 as compared to US$ 2077.61 million in the corresponding period of the previous year showing a rise of 14.34 per cent.

Textiles & Allied Products

During the period Apr-Mar 2018-19, import of Textiles & Allied Products was US$ 6759.21 million compared to US$ 6401.90 million in the corresponding period of the previous year registering a positive growth of 5.58 per cent. Out of 25 commodities under this category, 15 have registered positive growth in imports.

Petroleum Crude & Products

Import of Petroleum Crude & Products increased to US$ 140883.78 million during Apr-Mar 2018-19 as compared to US$ 108658.69 million in the corresponding period of the previous year registering a positive growth of 29.66 per cent. This is due positive growth of Petroleum Crude by 30.52 per cent and Petroleum products by 26.10 per cent. 

 

DIRECTION OF FOREIGN TRADE 

Substantial changes have also been witnessed in the direction of foreign trade. USA has emerged as a major trading partner of India. The value of India?s exports and imports from major regions/countries both in Rupee and Dollar terms are given in Table 3.5, 3.6, 3.7 and 3.8 respectively. Share of major destinations of India?s Exports and major sources of Import during 2018-19 (Apr-Mar) are given in Chart 3.6 and 3.7 respectively

Direction of Exports 

During the year 1960-61 India's major export partner was UK followed by USA, ~a~ani~ussia, Germany and France. They accounted for 57.4% of our total export. The share of individual country to total India's export was - UK (26.9%), USA (16%, Japan (5.5%), Russia (4.5%), Germany (3.1%) and France( 1.4%). The trade agreements between lndia and East European Countries on rupee payment started bearing fruits during 70's. The policy of counter trade helped in rapid expansion of trade between lridia and USSR. As a result, USSR became the leading market for India during the , year 1970-71. USSR remained the leading market for India's export during the 80's followed by I IJSA, Japan, UK and Germany. Germany became fourth largest export partner of lndia during the year 1980-81. During the year 1990-91, Russiaremained the major export market followed by USA, Japan, Germany, UK, Belgium and France. The significant change was witnessed in the direction of India's export after 90's as a result of collapse of USSR. The share of export to USSR went down from 16.1 % in the year 1990-9 1 ald subsequently changed trade policy also brought changes in the direction of India's export. During the year 1996-97, India's major export market Gas USA followed by UK, Japan, Germany, Belgium, Netherlands and France. The significant growth rate and unification in the form of European Economic Community facilitated India's export to European countries. Hence, the share of export increased in European nations. The country wise share of export I w3s - USA l9.8?4, UK 6.l%, Japan 6.0%, Germany 5.6%, Belgium 3.3%, Netherlands 2.5% ard France 2.2%. These 6 countries accounted for 45.5% of total India's export. In the year ! 15'98-99, country wiw share of export was USA 2 1.8%, UK 5.7%, Germany 5.6%, Japan 4.9%, Belgium 3.9% and France 2.5%. They accounted for 44.4% oflndia's total export. 

During the period 2018-19 (Apr-Mar), the share of Asia comprising of East Asia, ASEAN, West Asia, Other West Asia, North East Asia and South Asia accounted for 48.77 per cent of India?s total exports. The share of America and Europe in India?s exports stood at 20.89 per cent and 19.54 per cent respectively of which EU countries (27) comprises 17.36 per cent. During the period, USA (15.91 per cent) has been the most important country of export destination followed by UAE (9.13 per cent), China P Republic (5.08 per cent), Hong Kong (3.93 per cent), and Singapore (3.51 per cent).

The above trend shows that India's export is highly concentrated in a few markets. It requires to formulate a suitable strategy to diversify the export market.

 

  

 Direction of Imports

During the year 1960-61 India's major importing partner was USA (29.2%) followed by UK (19.4%), Germany (1 0.9%), Japan (5.4%), Iran (2.6%), France (l.9%), Belegium and Russia (1.4%) each and Saudi Arabia (1.3%). The scenario has changed over a period of 40 years. For the year 1996-97 India's major importing partner was USA (8.8%) followed by Saudi Arabia (7.3%), Germany (7.2%), Belgium (6.3%) , Kuwait (6.2%), Japan (5.7%), LJK (5.4%), Iran (2.3%) and Russia (former USSR) (1.6%). The increasing quantity and amount of import of petroleum products has made Saudi Arabia and Kuwait 2nd and 5th largest import partners of India in 1996-97. In the year 1998-99, rndia's imports from major market was USA (8.7%), UK (6.1%) Belgium (6.0%), Japan (5.7%), Germany (5.1%) and Saudi Arabia (4.S0/0) and Kuwait (3.6%). They accounteci for 39.7% of total India's import. 

Asia accounted for 62.11 per cent of India?s total import during the period 2018-19 (Apr-Mar), followed by Europe (15.35 per cent) and America (12.65per cent). Among individual countries the share of China (13.70 per cent) stood highest followed by USA (6.88 per cent), UAE (5.80 per cent), Saudi Arabia (5.55 per cent) and Iraq (4.36 per cent).

 

 

 

Major Problems of India's Export Sector

Poor Quality Image: "Made in India" does not enjoy good reputation in the markets abroad. Rather it is considered to be a sign of poor quality. The products manufactured in Japan, Korea and now even China are frequently quoted abroad as examples of dependable quality. Despite the measures taken under the Exports (Quality Control and Inspection) Act and other laws, our exports continue to suffer because of the quality problem. On several occksions, carelessrless and lack of commitment on the part of the exporters are also responsible. There is a general impression that a proper export culture is lacking in India.
High Costs: The rate of interests on export finance is substantially higher as compared to other countries. It is estimated that interest rates alone constitute nearly 15 per cent of the
cost of production in India. Moreover, the bank charges in lndia work out to nearly 3 per cent compared to 1 per cent in countries like Japan and Republic of Korea. Similarly, the port
charges in lndia are stated to be three to four times higher than those of Colombo, Hong Kong, Singapore and South Korea. Technological factors and low productivity also contribute to high cost of production in India. Further, the advantages of the economies of scale and ability of bulk supplies are not available to the Indian exporters. Productivity performance is linked to the issue of technology and management. Our policy towards technology has been somewhat lukewarm in encouraging the adoption of modem technology and technological innovations. Our traditional export sectors of textiles and jute have already suffered a lot due to lack of modernisation, whereas many other, competing countries have made rapid strides in this regard.

Unreliability: As pointed out above the products originating from lndia are considered to be of poor quality. Besides quality, Indian exporters are regarded as unreliabe on certain other factors such as going back on a contract and refusing to fulfil it on its original terms, inability to provide prompt aftersales service. Exporters from countries like Japan, South Korea and Taiwan normally replace a defective consignment free of cost and without taking much time. It is the prompt response or aftersales service which projects image of the supplying country for generating additional business. In sharp contrast, within the framework of our policies and procedural formalities a quick response for replacing a damaged or defective consignment or for providing a prompt aftersales service more often than not remains a far fetched idea for Indian exporters.
lnfrastructural Bottlenecks: In India, infrastructural shortages such as energy shortages, inadequate and unreliable transport and communication facilities hinder growth of exports. Power shortages and breakdowns disrupt production schedules, increase cost and adversely affect timely shipments. Improving the transportation system, including the expansion and modernisation of the port facilities, rationalisation of the charges, improving the procedural system, etc. are very much essential for the development ofthe export sector.
Inadequacy of Trade Information System: An efficient trade information system is essential for success in the dynamic global market. Electronic Commerce including Electronic Data Interchange and lnternet are playing very significant role in world trade. With the phenornenal expansion of the Internet it has become very easy in the world today to obtain inforrnation. However, in India because of lack of proper facilities of communication it is not possible to depend on lnternet for obtaining latest trade information. Even if these facilities are available the same are very costly. Some of the developed countries have mentioned that they would not like to trade with a country whose exporters/importers are not in a position to complete necessary formalities through the mode of Electronic Data Interchange. In India, satisfactory progress has not been made so far in this direction.

Supply Problems: A serious drawback of the Indian export sector is its inability to provide continuous and smooth supply in adequate quantities in respect of several products. The problem is that much of the exporting is the result of the residual approach rather than conscious effort of producing for export. The tendency for exporting what we produce rather than producing for export still continues to characterise the export behaviour.
Faceless Presence: Major export items of India like seafood, leather manufactures, spices, etc. have, in many cases, a faceless presence in foreign markets. Although these exports may undergo further processing or repacking in many cases, in several cases the Indian exports are sold in the foreign markets in the same condition as they are exported but under foreign brand names. It may also be true that when the product carries a foreign brand name it may fetch a much higher price than the same product with an Indian name.
Uncertainties, Procedural Complexities and Institutional Rigidities: One of the defects of our trade policy regime has been the uncertainty about future policies, incentive schemes, etc. In order to bring some stability in this direction, the Import-Export Policy has been given a five year span. However, still every year a large number of amendments in the Exim-Policy are effected. There have been reports of loss of exports worth hundreds of crores of rupees due to the problem of inter-departmental coordination. With regard to export documentation and formalities, it has been observed that most of the existing procedural and documentation formalities prescribed by different authorities have been developed to suit their own individual requirements without much regard to the repercussions they might have on the total export activity. When the export effort of the country is being intensified, it is necessary that the documentation and procedural formalities related to export activity are also streamlined and simplified so that they do not constitute impediments to the growth of the country's export trade.