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After independence, Indian foreign trade has made cumulative
progress both qualitatively and quantitatively. Though the
size of foreign trade and its value both have increased
during post-independence era, this increase in foreign trade
cannot be said satisfactory because Indian share in total
foreign trade of
the world has remained remarkable low. In 1950, the Indian
share in the total world trade was 1·78%, which came down to
0·6% in 1995. India’s share in world merchandise exports,
after remaining unchanged at 0·8 per
cent between 2003 and 2004, reached 1·0 per cent in 2005 and
remained there in 2006 and also in the first half of 2007.
Currently India is the 30th leading exporter and 23rd
leading importer in world merchandise trade which clearly
indicates that India has failed to increase its share in the
total world trade. Trade policy (2004–09) has set a
target of achieving 1·5% share in global trade by 2009.
India's trade links with all the regions of the world have
increased over the years. In view of the current wave of
world-wide globalisation, India has taken major initiatives
to diversify its exports as also their destinations. Indian
exports cover over 7500 commodities to about 190 countries
while imports from about 140 countries account for over 6000
commodities.
It is a remarkable fact that during whole planning period
our balance of trade has remained unfavourable. Our imports
have exceeded exports, showing a trade deficit.
Only two financial years i.e., 1972-73 and 1976-77
were exceptional in showing favourable balance of trade
worth Rs. 104 crore and Rs. 68 crore respectively. The
deficit in balance of trade in our country has been
generally increasing, even though our foreign trade has been
getting much more broad based. The Government has introduced
a number of measures for reducing deficit in the balance of
trade. The main objective was to control imports on the one
hand and to promote exports on the other. The basic reason
of increasing deficit in balance of trade in India has been
the high import bill of petroleum products. Since July 1991,
the government adopted the policy of economic liberalisation
and a series of economic reforms were adopted in the
country.
Devaluation of rupee in 1991, and the convertibility of
Indian rupee in trade account and current account
during 1993-94 and 1994-95 respectively improved the balance
of trade position in 1993-94. But the deficit again
increased during the subsequent years.
Export performance was dominated by volume growth till
2002-03. There was a reversal of this trend in 2003-04, with
increasing contribution of higher unit value in export
performance. Subsequent years witnessed a surge in exports
both in terms of volume and unit value with a relatively
higher growth of volume. During 2006-07, export volume
increased by 15·8 per cent mainly due to items like crude
materials, machinery and transport equipment, and mineral
fuels and lubricants. The unit value of such exports
increased by 8·1 per cent mainly due to the three categories
: manufactured goods classified chiefly by materials; food
and food articles; and mineral fuels and lubricants.
The Foreign Trade Policy (2004-09) announced by the
Government in August 2004, had visualized a doubling of
India’s merchandise trade in five years. With an enabling
policy framework and concerted efforts by the Government for
facilitating a favourable environment for international
trade, exports have nearly tripled between 2001-02 and
2006-07. India’s merchandise exports (in US dollar terms and
on customs basis) which have grown continuously at more than
20 per cent since 2002-03, posted 22·6 per cent growth in
2006-07. The value of merchandise exports reached US $ 111
billion in April-December 2007 with a growth of 21·6 per
cent. For the year 2007-08, an export target of US $ 160
billion was set and during the first nine months of the
current year, 69·4 per cent of the export target has been
achieved despite the appreciating rupee.
Merchandise imports grew by 24·5 per cent to US $ 185·7
billion in 2006-07 due to the high growth of 30
per cent of POL and 22·2 per cent of non-POL. POL import
growth was due to both volume growth by 13·8 per cent and
increase import price of the Indian crude oil import basket
by 12·1 per cent. Trade deficit increased to US$ 59·4
billion in 2006-07 and US$ 57·8 billion in the first nine
months of the current year. However, net POL import growth
peaked at 41·4 per cent in 2005-06 and decelerated sharply
to 19 per cent in 2006-07, despite the 30 per cent growth in
POL imports, as a substantial part was input for export
production. In the first half of 2007-08, there was a
further moderation in the growth of net POL imports. Imports
of gold and silver are highly variable and have increased
sharply in April-September 2007 after a decline in
April-September 2006.
India’s share in world merchandise export after remaining
unchanged at 0·8 per cent between 2003 and 2004, reached 1
per cent in 2005, and remained there in 2006 and also in the
first six months of 2007. The increase in China’s share of
world exports between 2001 and 2007 at 4·1 percentage points
is one-half of the total increase in the share of developing
countries over this period. While China’s exports continued
to grow at more than 27 per cent both in 2006 and the first
six months of 2007, India’s export growth was lower.
Thailand and Brazil, with higher value of exports than India
in absolute terms, also registered good export growth rate
for the above period.
In 2006, India had a global export share of 1 per cent or
more in only 36 out of a total of 99 commodities at the
two-digit level. In these 36 items, India had a significant
world export share of 5 per cent or more only in eight
items. Five of these have had an increase of global share by
0·5 per cent point or more between 2002 and 2006, while
three have lost global share. The former are carpets and
other textile floor coverings, lac, gums, resins, vegetable
saps, ores, slag and ash; other made textile articles, sets,
worn clothing; vegetable plaiting materials and vegetable
products n.e.s. The latter are silk, pearls, precious
stones, etc.; and cotton.
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