Direction of India's Foreign Trade ↓

By direction of trade we mean the countries with which India keeps international trade relations. It also helps us to understand the diplomatic relations maintained by India with other countries in direction of trade. For the purpose of direction of trade, the countries to which India exports are broadly divided into following five groups.

The group of countries to which India Exports are :1. 2. 3. 4. Organization for Economic Co-operation & Development (OECD) comprising of USA, Canada, European Union (EU), Australia and Japan. Organization of Petroleum Exporting Countries (OPEC) which includes Kuwait, Iran, Iraq, Saudi Arabia and others. Eastern Europe which includes Romania, Russia and others. Developing Nations which includes China, Hong Kong, South Korea, Singapore and Malaysia.

A. Direction of India's Exports ↓

The above table reveals following changes in India's Exports :-

1. OECD
The OECD group accounted for a major portion of India's exports. The share of this group was 56.4% in 1990-91 & 44.3% in 2005-06. About 45% of these exports have been to European Union (EU) countries.

2. OPEC
The share of OPEC which was 5.6% in 1990-91. In 2005-06 it has increased to 14.8% i.e. share of OPEC has been showing an upward trend since 1990-91.

B. 5.S.S. In the recent years. Asian countries now account for 1/4 of India's export earnings.A. The share of U.S. Eastern Europe There was a rapid decrease in the share of Eastern Europe particularly U. there has been a distinct shift in the direction of trade. There has been a healthy growth of bilateral trade between India and China. mainly Hong Kong.K and U. 4.00% in 1990-91 to 0. the share of Eastern Europe decreased from 17. Due to political problems & disintegration of the U. The share of OECD countries both in exports & imports is on the decline.S.S. Among the Asian countries the major export destinations have been Hong Kong.S.1% in 1990-91 to 38.3% in 1980-81 but declined to 0. Direction of India's Imports ↓ Since the last decade. Other Countries The share of other countries has declined from 3. th 5.R. The share of U. In the first seven months of 2002-03. Its share has reached the lowest among the group. The position changed markedly after the disintegration of U.7% in 2005-06.K in India's exports declined from 26.9% in 1990-91 to 1.9% in 2005-06.4%. US to be the single largest trading partner for India but with a declining trend.S. Developing Countries The share of developing nations increased from 17. India was dependent on U. Singapore and Thailand.7% in 2004-05.R and the third position by Japan. 4. export to East Asian Countries has increased. 3. The Asian developing countries are becoming important trade partners.5% in 2004-05. The share of USA in India's exports was 16% in 1960-61 and it rose to 16.A for 43% of its export earnings in 1960-61.S.S. Between 1986-90.R. Singapore & Thailand. Eastern Europe is no more a major partner in our trade. Important Facts of India's Country Wise Exports ↓ 1.R.S.R.S.S. (Russia) rose from 4. The above table reveals following changes in India's Imports :- .S.3% in 2005-06. Indo-China bilateral trade expanded by 43. 2.R.S. China is the second largest trading partner for India next to USA.5% in 1960-61 to 18.8% in 2004-05 due to the disintegration of U. the first position was occupied by U.9% in 1960-61 to 4. second position by U.3.

What's most significant is the emergence of China.A. The share of U. Iraq. declined. There has been a change in the source of oil imports from OPEC to other countries.7% in 2005-06 mainly because of crude oil.K was 19. India's share of imports from Eastern Europe has also declined from 7.8% in 2004-05. OECD . Latin America and Caribbean.4% in 1960-61.3% in 1990-91 to 7. Germany and Canada the dependence on U. Trade with Japan increased in absolute terms and India has now entered in to a number of collaborations with Japan.A.4% in 1960-61 to 2.2% in 2004-05. th Conclusion on Direction of India's Foreign Trade ↓ Significant changes have taken place in the direction of India's foreign trade since 1991. The share of OPEC countries decreased from 16. Asia. . South America and Middle-East Asian Countries as these rich countries would offer huge markets for India's export. 4.4% in 1960-61 to 3.K ranked the second. Singapore.K. Switzerland from OECD countries.4% in 1990-91 to 25.S. U. and more particularly during the last two-three years.5% in 1990-91 to 31. during 1984.2% in 2004-05. The share of developing nations in India's import expenditure increased from 18. the share of Russia fell to 1. The share of USSR increased from 1. Important Facts of India's Country Wise Imports ↓ 1. Eastern Europe This includes mainly the former USSR. 3.1. in Indian imports declined from 19. However.S. and UAE& Indonesia (which left OPEC in 2008) from OPEC countries. 2. 2. The percentage share of Japan has decreased from 5. This is mainly due to decline in imports from Russia. The share of developing countries has constituted more than 1/4 of total imports in 2004-05 of these imports from Asian countries are most important. During the whole planning period. 3. Hong Kong. 5.6% in 2005-06. India has established herself in the highly competitive world market in the recent years. The share of U.Organisation for Economic Co-operation and Development The share of OECD in India's import expenditure declined from 54% in 1990-91 to 32.8% in 1990-91 to 2.1% in 2005-06.Organisation of Petroleum Exportinq Countries OPEC mainly include Iran. 5. Developing Nations This includes the developing countries of Africa. Other Countries The share of other countries increased from 3.S. With the disintegration of USSR. The directions has now changed markedly.A in India's imports was 29.9% in 2005-06. South Korea & Malaysia as important trading partners of India from the Asian region.4% in 1984-85. India has obtained maximum imports from U.4% in 1960-61 to 10. The diversification of India's exports has fetched a cheaper source of imports and a bigger market for exports.K. Trade with USSR occupied the second place next to USA. 4.2% and that of U. ranked first and U. Kuwait and Saudi Arabia. Thus the importance of OECD declined over the period 1990-91 to 2005-06.73% in 2005-06. With the emergence of new trading partners like Japan. OPEC . India should cultivate more trade relations with Africa.

Agricultural and Allied Products The share of agriculture items in the total exports of India has declined between 1990-91 to 2005-06. Table below shows composition of India's export from 1990-91 to 2005-06. So at the time of our independence our exports were predominantly of primary goods and imports were of manufacturers. Now exports of India's are broadly classified into following four categories. It came down to about 10. The share of agriculture exports was 19.Composition of India's Exports ↓ Britishers strongly believed that India was a country well suited to supply raw materials and other primary goods and a good market place for British manufacturers.2% in 2005-06. During the post independence period India's composition of exports changed. The top items of agriculture exports include :1. Fruits and Vegetables . 4.5% in 1990-91. 3. The composition of India's export can be summarised as follows :- 1. Rice. Fish Products. 2. Oil Cakes. At the time of independence agricultural commodities and light manufactured consumer goods dominated India's export basket.

Gems and Jewellery. their share stood at 11. In 2005-06. As far as agricultural exports are concerned.3 percent of total export earning in that year.2% in 2005-06.7% in 2005-06.3% in 1991-92 and 15. However. readymade garments maintained an almost constant share all through the period since 1991. gems and jewellery industry is a highly import intensive industry requiring large amount of imports of pearls and precious stones.5 percent in 2005-06.e. In 2005-06. The share of gems and jewellery in India's total export was 15. exports of rice were worth $ 1. The top manufactured export items include :1. a significant development during the period since 1991 has been the considerable exports of rice in certain year. the share of manufactured items in the total export earnings was about 73% of the total export earnings.405 millions which was 1. exports of rice were as high as $ 1.8% and in 2005-06 to 8.315 million in 2005-06. Manufactured Goods The share of manufactured items in the total export earnings of India is on the increase. In percentage terms. one-fifth) of total export earnings.4% in 199091 to 5. In 1990-91. . 2. In percentage terms the share of engineering goods rose from 12. their share fell to 9.5% of export earnings in 2000-01. and Readymade Garments The export of engineering goods increased from $ 2. in percentage terms.3 percent in 1991-92 to 1. engineering goods occupied the second position in India's export earnings after gems and jewellery.583 millions in 1991-92 to $ 11. the share of manufactured items in the total export earnings of India remained stagnant at 72%.1% in 2005-06. In percentage terms. the export performance of ores and mineral has increased from 4. Ores and Minerals The overall export performance of ores and minerals is not satisfactory.935 millions in 2005-06.7% (i. 2.6% in 2005-06 and they occupied the third place in India's export earnings in this year. In fact.3%. In 2005-06 they contributed 20. 3. However.234 millions in 1991-92 to $ 21. Exports of chemicals and allied products rose significantly from $ 1.5% in 1991-92 to 20. Engineering Goods.3% of export earnings in 1991-92 and 12.The most important export item in 'Agriculture and Allied products' group over the period 1991-92 to 2005-06 has been 'Fish and Fish Preparations'. largest export earnings came from the exports of gems and jewellery. Over the period 1991-92 to 2002-03. However. They contributed 12. Chemicals and Allied products. From $ 585 millions in 1991-92 export earnings from fish and fish preparations rose to $ 1.4 percent of total export earning in that year. thereafter engineering goods have occupied the first place. For most of the period since 1991. 4. In 2003-04.589 millions in 2005-06. A major share of ores and minerals exports comes from the export of iron ore. 3. their share fell slightly from 3.366 millions in 1995-96 which was 4. In percentage terms.

more than eight times. In percentage terms. Petroleum ProductImports of petroleum oil and lubricants rose significantly from $ 5364 millions in 199192 to $ 43. cutlery. Mineral Fuel and Lubricants There has been an improvement in the export of mineral fuels and lubricants both in terms of value and in terms of percentage. etc. oil. The composition of India's imports can be summarised as follows :- 1.Now imports of India's are broadly classified into following four categories. Composition of India's Imports In 1947-48 the main items of India's imports were machineries.5% in 2005-06.e. hardware implements. grains. goods.963 millions i. its share has increased from less than 2.4. .9% in 1990-91 to 11. cotton. chemicals and allied products. chemicals. After that due to the emphasis on industrialisation during the second 5-Year plan necessitated the imports of capital goods. Table below shows composition of India's import from 1990-91 to 2005-06. There are indication that during 1990s. They constituted 70% of India's imports. some of Indian exports have moved upwards in value addition chain whereby instead of exporting raw materials. B. etc. 2. Some other facts regarding structural change in India's export since 1991 are as follows :1. the country has switched over to export of processed goods. There were significant compositional shift within the major manufactured product groups such as engineering.

the POL imports jumped to $ 15. In 1990-91. In 1995-96 due to sharp rise in non-electrical machinery imports. Pearls and Precious Stones To meet the requirements of the gems &jewellery industry pearls and precious stones are imported in large quantities. which has come down slightly in 2005-06 to about 22. Fertilizers Import of fertilizers in 1991-92 stood at $ 954 millions.650 millions in 2000-01. the imports of capital goods jumped upto $ 8.458 millions.3%. However due to slowing domestic demand imports of capital goods fell subsequently. Iron and Steel The imports of iron and steel have declined over the years in percentage terms. In 2005-06. Conclusion on India's Foreign Trade ↓ Composition of India's foreign trade has undergone a positive change.5% in 2005-06. which has come down to 3% in 2005-06. Capital Goods The imports of capital goods was $ 3.4% in 2005-06. 3. This is because. The share in total imports of fertilizers was 4. In 2003-04 expenditure on import of fertilizers was $ 635 millions. it has further increased to nearly 31% of the total import bill of India. which came down to 1. The capital goods and related items were 24. It is a remarkable achievement that India have transformed itself from a predominantly primary goods exporting country into a non-primary goods exporting country. 4.1% in 1990-91.7% which has reduced in percentage terms to 6. the share of pearls and precibus stones was 8. In 1990-91. 2.610 millions in 1991-92. the share of iron and steel imports was 5%.1% of the total imports of India in 1990-91. In 1990-91.The trend indicates structural transformation of Indian economy . Under import too India's dependence on food grains and capital goods has declined. 5. The import of fertilizers have declined.Due to high price of crude oil. which indicates less dependence of India on imported fertilizers. petroleum products accounted for nearly 25% of total imports of India. a good amount of iron ore is now extracted in India which has reduced imports.

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