•Foreign trade also called , international

Trade

•Trade among countries is normal & desirable.

•The fact remains that the natural resources

of earth are not evenly distributed.

• FOREIGN TRADE is significant for the

economic development of developing

countries

• The process of industrialization

• To reduce the scarcity of consumer

Goods.

India & Global Trade:India & Global Trade: India had a significant share in the

world trade at the time of independence. However, since then there was a secular decline in India’s share in the world exports till 1980. since from 1950 to 1980 the percentage declined from 2 to 0.4. it has, how ever improved to about 0.8 by 1997 and is expected to reach one percent by 2000.

India’s Global shareFactor India’s share (percentage)

Area 2.47

Arable land 11.24

Population 16.78

GNP 1.50

GNP at purchasing power parity

5.45

FDI 0.5

Merchandise exports 0.7

Merchandise imports 0.8

Service exports 1.2

Service imports 1.4

•The value of foreign trade of our country

has been rising From year to year. It rose

from

Rs. 30,553 cr during 1985 – 86 to Rs.

8,38,575 cr during 2004 – 05, Representing

an increase of six times.

•It is because of the high stakes involved

in foreign Trade that the government of

India has assumed Sweeping powers of

control over our exports & imports.

Cont………..

EXPORTS as a % of national income

Year In %

1960-61 6.8

1970-71 3.8

1980-81 5.4

1990-91 7.2

1996-97 9.6

1997-98 8.4

1998-99 8.0

1999-00 8.5

2000-01 8.8

2001-02 8.7

2002-03 9.0

The break-up of foreign trade in terms of exports & import

Year Export Import TVOT BOT

1995-96 106353 122678 229031 -16325

1996-97 85623 97111 182734 -1488

1997-98 126286 151553 277839 -25267

1998-99 101850 132447 234297 -25267

2002-03 255137 297206 552343 -42067

2003-04 291582 353976 645558 -62394

2004-05 356625 481950 838575 -125190

•Exports help to finance imports

•Export earnings helps service external debt

•Exports would make our economy highly vibrant

EXPORTS: 5 FASTEST GROWING SECTORS (INDIA’S TOP EXPORT MARKET)

ITEMS 2003-04($bn)

2004-05($bn)

(%)change

Petroleum crude & products

3.57 6.79 90.34

Software 13.30 17.9 34.00

Gems & jewellery

10.57 13.71 29.62

Machinery 2.78 3.49 25.82

Drugs 3.31 3.71 12.14

•Imports will increase and to finance them, we need higher exports earning

•It is not advisable to depend on external assistance to finance imports

•Debt – servicing burden is ever mounting, necessitating increased export earning

5 FASTEST GROWING EXPORT DESTINATION

COUNTRY 2003-04($bn)

2004-05($bn)

(%)change

Singapore 2.12 3.80 78.63

China 2.96 4.59 55.20

UAE 5.13 7.10 38.48

US 11.49 13.27 15.45

Hong kong 3.26 3.65 11.94

TOP FIVE FASTEST GROWING NATIONS:

1994-95($ bn ) 2004-2005 ($bn)

US 5.02 EU 17.25

JAPAN 2.03 US 13.26

GERMANY 1.75 UAE 7.09

UK 1.69 CHINA 4.58

RUSSIA 0.81 SINGAPORE 3.80

TOP 5 EXPORTS,THEN & NOW

1994-95 2004-05($bn)

Gems & jewellery

4.50 Software 17.20

Readymade garments

2.28 Engineering goods

14.58

Cotton yarn, fabrics,

made-ups

2.23 Gems & jewellery

13.70

Marine products

1.13 Chemicals& related

products

12.67

Leather 1.06 Textiles 12.01

•Shortage of supply hampers growth

•Quality of goods and service

•Efficient trade information is non-existence

•Lack of competitive advantage too impedes exports

•The value of imports has increased from rupees 608 cr in 1950-51 to rupees 353976 cr in 2003-04

•In relation to national income, the imports during the first 30 years of planning varied between 6.5% and 8.5% of GDP the variation being minimal

•Again since 1979-80 this percentage varied between 8 & 12 signifying that ratio to GDP has been fairly stable

Rank Name of Commodity

Apr 2006 - Feb 2007

Export Value of Goods

%Growth %Share

Value (INR in Crores) Value (INR in Crores)

Value (INR in Crores)

1 India Import Of –crude oils

236,601.84 34.47 32.10

2 India Import Of –electronic goods

65,281.46 25.32 8.86

3 India Import Of - GOLD

58,704.81 37.35 7.97

4 India Import Of machinery

56,216.24 43.37 7.63

5 India Import Of –pearls n jewel

30,061.51 -21.37 4.08

Top Import (Products)

6 India Import Of – IRON & STEEL

24,413.75

40.20 3.31

7. India Import Of - ORGANIC

CHEMICALS

22,405.24

18.93 3.04

8. India Import Of - COAL, COKE &

BRIQUITTES etc

18,363.64

19.77 2.49

9. India Import Of - OTHER

COMMODITIES

18,258.34

-22.47

2.48

10 India Import of- Wheat

1,417.61 - 0.19

Foreign Trade 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00

Exports            

Rs in Crore 82674 (18.52)

106353 (28.64)

118817 (11.71)

130101 (9.49)

141604 (8.84)

162925(15.06)

US$ in Million 26330 (18.40)

31797 (20.76)

33470 (4.50)

35006 (4.60)

33659 (-3.84)

37599 (11.70)

Imports            

Rs in Crore  89971 (23.04)

122678 (36.35)

138920 (11.69)

154176 (10.98)

176099 (14.21)

204583 (16.17)

US$ inMillion

28654 (22.94)

36678 (28.0)

39133 (6.70)

41484 (6.00)

41858 (0.90)

47212 (12.79)

Forex ** Reserves

           

Rs in Crore* 66006 (39.58)

58446 (-11.45)

80368 (37.50)

102507 (27.54)

124412 (22.34)

152924(21.94)

US$ in Million 20809 (38.10)

17044 (-18.09)

22367 (31.23)

25975 (16.13)

29522 (13.65)

35058(18.75)

INDIA’S EXPORT-IMPORT STATISTICS

•1 crore = 10 million 

** Excluding US$ 2800 million of gold and US$ 2 million of Special Drawing Rights (SDRs) reserves as on November 24, 2000.

** Including US$ 5500 million deposit mobilized by the State Bank of India through India Millennium Deposit.

Figures in bracket indicate year-on-year difference

32.1

8.86

4.083.04 2.49

0

5

10

15

20

25

30

35

Petroleum Electronic Perals Organic Che coal, cokee

% of Share

Growth competitiveness

Govt Regulatory standard

Export promotion

Average tariff

Investment rates

Overall infrastructure

Technological sophistication

E- commerce

India 49 19 49 5 59 14 54 38 51

USA 1 25 5 26 15 41 7 1 1

Singapore 2 13 15 1 2 4 1 8 10

Finland 6 52 8 43 17 46 2 2 7

Canada 7 42 12 7 29 47 11 13 3

Hong Kong 8 2 25 45 1 11 8 18 20

UK 9 40 10 16 26 54 22 15 8

Switzerland 10 38 11 44 10 43 4 9 13

Indices of Global Competitiveness

Factor India’s share (percentage)

Area 2.47

Arable land 11.24

Population 16.78

GNP 1.50

GNP at purchasing power parity

5.45

FDI 0.5

Merchandise exports 0.7

Merchandise imports 0.8

Service exports 1.2

Service imports 1.4

India’s Global share

India’s RankFactor Rank Factor Rank

Population 2 Milk production 1

Area 7 Butter and ghee production

1

Arable land 2 Sugar production 2

Irrigation area 1 Merchandise exports 31

Tractors in use 2 Merchandise imports 26

Nitro fertiliser consumption 2 Service exports 22

Rice production 2 Service imports 19

Wheat production 2 GNP 12

Tobacco production 2 GNP at purchasing power parity

4

Tea production 1

India’s share of Developing Countries

Factor India’s share (performance)

Population 19.72

GNP 7.43

GNP at purchasing power parity

12.13

FDI 1.6

Merchandise exports 2.42

Merchandise imports 3.07

•The foreign trade (DEVELOPMENT AND REGULATION),ACT 1992 , empowers to regulate imports and augment exports

•The government announces its foreign trade policy once in 5 years popularly called EXIM POLICY

•The latest policy was announced in march 2007