Similarity Report ID: oid:22828:45446631

PAPER NAME AUTHOR

A study on the impact of foreign trade on Samrita

the Indian Economy.pdf

WORD COUNT CHARACTER COUNT

24390 Words 137201 Characters

PAGE COUNT FILE SIZE

80 Pages 723.7KB

SUBMISSION DATE REPORT DATE

Oct 26, 2023 4:04 PM GMT+5:30 Oct 26, 2023 4:05 PM GMT+5:30

27% Overall Similarity

The combined total of all matches, including overlapping sources, for each database.
24% Internet database 8% Publications database
Crossref database Crossref Posted Content database
16% Submitted Works database

Excluded from Similarity Report

Bibliographic material Quoted material
Cited material Small Matches (Less then 10 words)

Summary
 CHAPTER I

INTRODUCTION

India's economic history is a rich tapestry that spans millennia, marked by periods of
great prosperity and significant transformation. For nearly two and a half millennia, starting at
the end of the first century BC, India had one of the world's largest economies. This period of
economic prominence endured until the beginning of British colonial rule in India. The
country's economic fortunes during British colonialism took a sharp downturn due to merciless
exploitation. Renowned economic historian Paul Bairoch noted the devastating impact of
British rule on the Indian economy in 1993. Angus Maddison, a British economist, further
underscored this decline, claiming that India's contribution to global income plummeted from
a substantial 27% in 1700 AD to a mere 3% in 1950, while Europe's share rose to 23% during
the same period. India's economic history is rich tapes try that spans millennia, marked by
periods of great prosperity and significant transformation. For nearly two and a half millennia,
starting at the end of the first century BC, India had one of the world's largest economies. This
period of economic prominence endured until the beginning of British colonial rule in India.
The country's economic fortunes during British colonialism took a sharp downturn due to
merciless exploitation. Renowned economic historian Paul Bairoch noted the devastating
impact of British rule on the Indian economy in 1993. Angus Maddison, a British economist,
further underscored this decline, claiming that India's contribution to global income plummeted
from a substantial 27% in 1700 AD to a mere 3% in 1950, while Europe's share rose to 23%
during the same period.
7
In response to the persistent economic challenges, the government of India, under the
leadership of Prime Minister P.V. Narasimha Rao and Finance Minister Dr. Manmohan Singh,
initiated sweeping economic reforms in 1991. These reforms marked a decisive shift in India's
economic policy. They abolished the infamous License Raj, which had stifled entrepreneurship
and innovation for decades. Tariffs and interest rates were significantly reduced, and several
107
public monopolies were dismantled. These bold reforms opened the doors to foreign direct
investment (FDI) in various sectors, catalyzing a fundamental shift toward economic
liberalization. By the start of the twenty-first century, India had made substantial headway
toward establishing a free-market economy. The reforms had substantially reduced
governmental control over the economy, fostering greater financial liberalization. India's
economic transformation was underway, and the nation was poised for significant growth. One

1
of the remarkable milestones in India's economic journey was its ability to surpass China's
economic growth between 2013 and 2018. India's economic performance during this period
was marked by robust expansion, underlining its emergence as a global economic powerhouse.
The young demographic profile of the country, with a high proportion of the population being
of working age, coupled with a low dependence ratio, contributed significantly to India's
economic prospects. Strong rates of savings and investment, coupled with growing
globalization and integration into the global economy, added further impetus to India's long-
term development.

India's current economic status is a testament to its resilience and adaptability in the
77
face of historical challenges. The nation now boasts the world's third-largest economy by
purchasing power parity (PPP) and the fifth-largest nominal GDP. This remarkable growth has
been underpinned by a commitment to economic liberalization and openness to global trade.
Before India's economic liberalization, the country had largely insulated itself from global
61
markets, pursuing a policy of self-sufficiency. This strategy involved imposing import tariffs,
export taxes, and quantitative restrictions on trade. Additionally, foreign direct investment
(FDI) was significantly constrained by upper limits on equity involvement, restrictions on
technology transfers, export requirements, and a complex web of government approvals. These
measures effectively severed India from the global economy. However, with the advent of
55
liberalization in the early 1990s, India embarked on a transformative path. The dismantling of
trade barriers and the relaxation of FDI restrictions marked a significant departure from the
country's previous policies. Import tariffs were reduced, and export taxes were eased, fostering
greater integration with global markets. India's international trade began to expand significantly
in terms of value, with overall trade in goods and services rising from a modest 16% in 1990–
1991 to a substantial 47% in 2009–2010. This surge in international trade's contribution to the
economy had profound implications for India's GDP and per capita income growth. Today,
India's commerce has a substantial impact on its GDP and overall economic health. According
to data from the India Brand Equity Foundation in 2022, the country's total exports of goods
and services combined were anticipated to reach a significant US$ 669.7 billion in April–
March 2021–22. This marked a staggering 34.5% increase over the same period in the previous
year and a remarkable 27.2% increase over April–March 2019–20. The trade-to-GDP ratio for
2021 stood at 43.68%, underscoring the critical role of international trade in India's economic
growth.

2
 India's journey through the global trade landscape is a fascinating tale of transformation
and adaptation, punctuated by significant milestones and evolving strategies. The embrace of
economic liberalization in the early 1990s was a watershed moment that set the stage for India's
integration with the world economy. Foreign trade became an essential driver of economic
growth, delivering a myriad of positive outcomes, from job creation and technological
advancement to the accumulation of foreign exchange reserves. However, this period of
economic expansion also presented challenges, including trade deficits and environmental
38
concerns. The Balance of Payments (BoP), a comprehensive record of a nation's economic
transactions with the rest of the world, plays a pivotal role in understanding the repercussions
of foreign trade on India's fiscal health and economic stability. Comprising various components
such as the current account, capital account, and financial account, the BoP provides
policymakers and economists with a holistic view of a nation's financial position on the global
stage. A robust BoP is often regarded as a symbol of economic stability, whereas deficits can
raise concerns about a country's economic vulnerabilities. The interplay between foreign trade,
115
the Balance of Payments, and the Foreign Trade Policy of 2015 illuminates the intricate
tapestry of India's engagement with the global economy. This dynamic interaction offers a
nuanced understanding of the opportunities and constraints that India faces in a rapidly
changing world.

A robust Balance of Payments is often seen as a sign of economic stability and a healthy
engagement with the global economy. When a country consistently maintains a surplus in its
BoP, it indicates that it is exporting more value than it imports, accumulating foreign exchange
reserves, and attracting foreign investment. Conversely, persistent deficits in the BoP can raise
concerns about a nation's economic vulnerabilities, as it implies a reliance on external financing
to sustain its economic activities. India's experience with the Balance of Payments has evolved
over the years, reflecting the changing dynamics of its engagement with the global economy.
During the era of economic liberalization and globalization, India witnessed shifts in its BoP,
driven by changes in trade patterns, capital flows, and financial investments. The growth in
exports of goods and services played a pivotal role in India's current account dynamics. The
9
expansion of key sectors such as information technology (IT), software services,
pharmaceuticals, and business process outsourcing (BPO) contributed significantly to India's
export performance. The IT and software services sector witnessed remarkable growth, with
Indian IT companies becoming global leaders in software development and IT services.
Additionally, the influx of remittances from the Indian diaspora, particularly from countries

3
with significant Indian populations, such as the United States, the United Arab Emirates, and
Canada, played a vital role in bolstering the current account. These remittances provided a
steady source of foreign exchange and contributed to India's foreign exchange reserves.

On the import side, India's growing economy led to increased demand for capital goods,
energy, and raw materials. The import of capital goods, machinery, and equipment was
essential for supporting industrial and infrastructure development. Energy imports, including
oil and natural gas, were crucial to meet the energy needs of a rapidly expanding economy.
87
However, the surge in imports also led to concerns about trade deficits. India's trade deficit, the
difference between the value of imports and exports of goods, widened at various points in its
economic history. The trade deficit raised questions about the sustainability of India's external
trade position and its reliance on foreign capital to finance the gap between imports and exports.
In response to these concerns, policymakers implemented measures to address the trade deficit.
These included efforts to diversify export markets, reduce import dependence, and promote
domestic manufacturing. Additionally, India sought to enhance its competitiveness in
international trade by investing in infrastructure, streamlining customs procedures, and
implementing trade facilitation measures. India's journey through the global trade landscape
serves as a compelling narrative of transformation and adaptation. From historical prosperity
to colonial exploitation, from post-independence rehabilitation to economic liberalization,
India has navigated a complex and ever-changing economic terrain. The nation's resilience,
innovation, and capacity to leverage its demographic advantage have been key drivers of its
economic success. As India continues to engage with the global economy, the interplay
between trade, the BoP, and trade policy will remain essential in shaping the nation's economic
trajectory. The pursuit of sustainable and inclusive growth, the promotion of export-oriented
industries, and the diversification of export markets will be integral components of India's
strategy in the global trade arena.

1.1 FOREIGN TRADE:

100
The trading of goods and services among nations is referred to as foreign trade or
international trade. It is a cornerstone of the world economy, making it easier for resources and
23
goods to move across borders. Exports (goods and services sold to other countries) and imports
(goods and services bought from other nations) are how this trade takes place. The economic
development of countries is fundamentally dependent on foreign commerce. It enables access

4
to a greater variety of goods and resources for nations, encourages competition, and encourages
specialization, where each country produces what it can most effectively. Economic growth
and higher efficiency are results of specialization.
78
Trade can take various forms, including bilateral agreements between two countries,
multilateral agreements involving several nations, or trade within regional blocs. Organizations
like the World Trade Organization (WTO) help regulate global trade by establishing rules and
resolving trade disputes. In recent decades, advancements in technology and transportation
have further accelerated foreign trade, connected distant markets and enabled the exchange of
information and goods at an unprecedented scale. Geopolitical tensions, protectionism, and
trade imbalances are a few of the difficulties that can arise from trade. Overall, foreign
commerce shapes the wealth and growth of countries all over the world and is a vital and
dynamic component of the global economy.

1.1.1 HISTORICAL OVERVIEW OF FOREIGN TRADE IN INDIA:

The Indian economy and foreign trade have a long and complex historical perspective
36
that has evolved over thousands of years. Foreign trade has played a significant role in India's
economic history for centuries. Here's a historical overview of foreign trade in India:

• Ancient and Medieval Periods: India's history of trade reaches back to around 3000
BCE when it engaged in maritime trade with ancient civilizations. Notably, the Indus
Valley Civilization had trade connections with Mesopotamia and ancient Egypt, as
indicated by archaeological findings of seals and artifacts. Although India wasn't
directly on the Silk Road, it played a pivotal role in connecting Central Asia and Europe.
India's exports during these periods were diverse. Spices like pepper, cinnamon, and
cardamom influenced the cuisines of various regions. The fine cotton and silk textiles,
along with precious gemstones like diamonds and emeralds, were in high demand. India
was also renowned for producing perfumes, cosmetics, and luxury goods. In the
medieval period, especially from the 7th to the 14th centuries, India's trade with the
Islamic world, particularly Arab merchants, thrived. The Indian Ocean became a critical
maritime route, connecting India with the Middle East, East Africa, and Southeast Asia.
India's historical trade networks were not only economically significant but also had
profound impacts on the exchange of cultures, ideas, and religions. This rich history

5
 contributed to the cultural diversity and development of civilizations across Asia and
beyond.

117
• Colonial Era (16th - 19th Century): The Portuguese were among the earliest
European powers to establish a presence in India, primarily in the 16th century. They
established trading posts along the western coast of India, including in areas like Goa.
The Dutch East India Company established a significant presence in India in the 17th
century. They controlled trading posts in various parts of India, including the
Coromandel Coast and Bengal. The Dutch were primarily interested in the trade of
spices, textiles, and other valuable commodities. The French also established colonies
in places like Pondicherry, Chandernagore, and Mahe. The French were involved in the
trade of textiles, spices, and other goods. The British East India Company had a
profound impact on India's foreign trade. They not only controlled India's resources but
also monopolized trade with the British Empire. The colonial era had a long-lasting
effect on India's economy and trade, preparing the country for several economic
difficulties in the post-independence era. India wasn't able to take back control of its
trade policy or start on a road of economic development until it attained independence
in 1947.

• British Raj (1858 - 1947): India's trading patterns were drastically changed by British
colonial control, which also suppressed its industries while making it the main source
of raw materials for the British Empire. India's economy entered the system of
international trade, focusing on the export of agricultural goods and raw commodities.
India's share in world commerce decreased because of this change, creating a trade
imbalance. The British policies gave the British Empire's interests priority over India's
economic development, which had negative economic and social effects on the Indian
populace. India's struggle for independence from British colonial rule was also closely
tied to the desire for economic self-determination and control over its own trade and
industries.
• Post-Independence (1947 - 1991): After gaining independence from British colonial
rule in 1947, India pursued a policy of economic self-sufficiency and import
substitution as part of its development strategy. This approach, commonly known as

6
 the "Nehruvian model," was influenced by the ideas of India's first Prime Minister,
Jawaharlal Nehru, and his economic advisors. The primary objective was to reduce
dependence on foreign trade and promote domestic industrial growth. Under this policy,
110
India implemented Import Substitution Industrialization (ISI), aiming to reduce its
reliance on imports of manufactured goods. The government played a substantial role
in the economy, with central planning and state control being key features. Public sector
enterprises were established in strategic industries, and the government regulated prices
and foreign exchange. To protect domestic industries, India imposed high tariffs, import
quotas, and subsidies. Trade barriers were erected to shield these industries from
foreign competition. Consequently, India's trade engagement with the global economy
remained limited during this period, and it primarily traded with a select group of
countries through bilateral agreements. Protected industries often lacked
competitiveness and were inefficient. Moreover, the emphasis on heavy industries
sometimes came at the expense of agricultural and rural development. Over time, India
faced balance of payments crises and limited foreign exchange reserves due to its
restrictive trade policies.

• Economic Reforms (1991 - Present): In 1991, in response to a balance of payments

crisis and a stagnating economy, India started a series of economic liberalization
reforms. These reforms, which were spearheaded by Finance Minister Dr. Manmohan
Singh, aimed to lessen onerous restrictions and open up the Indian economy to global
investment and trade. The removal of trade obstacles and the lowering of tariffs were
two important components of these changes that made it easier for foreign goods to
enter the Indian market and gave Indian companies additional opportunities to trade
internationally. This shift toward a more open economy led to India's integration into
the global economic landscape. Foreign direct investment (FDI) flowed into the
country, and India began to diversify its exports. Notably, the software services,
pharmaceuticals, textiles, and other industries saw substantial growth in their export
55
activities. The information technology (IT) and software services sector emerged as a
major contributor to India's export earnings. The consequences of these reforms were
112
profound. India rapidly became one of the world's fastest-growing major economies,
with significant improvements in various economic indicators. Foreign trade played a
pivotal role in driving this growth, contributing to higher GDP growth rates and

7
 providing opportunities for businesses to expand globally. Importantly, the process of
economic liberalization did not conclude in 1991; it continued with ongoing reforms
aimed at further opening the economy and enhancing the business environment. India's
decision to embrace economic liberalization in 1991 marked a turning point in its
economic history, enabling it to tap into its potential and become a prominent player in
the global economy.

India's foreign trade history has been shaped by its interactions with various
civilizations, colonial rule, and post-independence economic policies. Today, India is an
increasingly important player in the global trade landscape, with a diverse range of exports and
imports.

1.1.2 IMPORTANCE OF FORIEGN TRADE:

The importance of foreign trade in the context of India cannot be overstated. It acts as
a potent engine for promoting economic expansion, social progress, and international
integration. India can grow its markets, generate jobs, acquire essential resources, and improve
its competitiveness globally by engaging in foreign trade. This crucial element of India's
economy is crucial in determining the prosperity and standing of the country abroad. Here are
104
some key reasons highlighting the importance of foreign trade in the context of India:

• Economic Growth and Development: Foreign trade is a vital driver of economic

growth in India. It allows for the expansion of markets beyond domestic borders,
leading to increased production and higher GDP growth rates. Since the liberalization
of trade policies in the early 1990s, India's economy has grown significantly, with
commerce playing a crucial part in this development.
• Resource Access: India is not self-sufficient in various critical resources like crude oil,
coal, and certain minerals. Foreign trade enables the country to secure a consistent
supply of these resources from other nations. This resource access is essential for
sustaining domestic industries, especially in sectors like energy, manufacturing, and
infrastructure development.
• Technology and Capital Import: Foreign trade facilitates the import of advanced
technology, machinery, and capital goods, helping domestic industries to upgrade and
enhance their productivity. Access to cutting-edge technology is critical for the

8
 development of industries like information technology, pharmaceuticals, and
manufacturing.
• Exchange Rate Stability: Engaging in foreign trade can help stabilize exchange rates
by balancing the demand and supply of foreign currency. Stable exchange rates are
essential for businesses engaged in international trade, as they reduce uncertainty and
risk.
• Export Opportunities: India has a diverse array of products and services to offer to
the global market, ranging from textiles and IT services to pharmaceuticals and
engineering goods. Exporting these goods and services generates foreign exchange
earnings, which can be used to pay for essential imports and boost economic growth.
• Foreign Direct Investment (FDI): A conducive foreign trade environment attracts
foreign investors to establish businesses in India. FDI brings in capital, creates job
opportunities, transfers technology, and contributes to industrial development.
• Standard of Living Improvement: Access to imported goods and services from
around the world enhances the standard of living for Indian consumers. It provides
consumers with a wider variety of choices and often more affordable options.
• Global Competitiveness: To succeed in international markets, Indian businesses need
to become more competitive, innovative, and efficient. This competition and the need
to meet international quality standards often result in the improvement of products and
services, benefiting the domestic market as well.
• Risk Diversification: Relying solely on the domestic market can expose businesses to
risks associated with economic fluctuations in a single market. Foreign trade allows
Indian companies to diversify their customer base, reducing their vulnerability to
economic downturns in one region.
• Job Creation: The growth of export-oriented industries and the expansion of
international trade create employment opportunities in various sectors, including
manufacturing, services, logistics, and export-related support services.
• Diplomatic Relations: Foreign trade serves as a diplomatic tool, strengthening
international relations and fostering cooperation between nations. Trade agreements
and partnerships can lead to collaboration on various fronts, including political,
security, and environmental matters.

9
 • Revenue Generation: The government generates revenue through tariffs, customs
duties, and taxes on imports and exports. These revenues contribute to public finances
and can be used for infrastructure development and welfare programs.

An essential component of India's economic growth and development is overseas trade.

Not only does it give people access to necessary resources and markets, but it also advances
technology, creates jobs, and raises the standard of living. To fully take use of these advantages,
India must continue to implement sensible trade policies, make infrastructure investments, and
place a high priority on innovation and skill-building to compete globally.

1.1.3 DRAWBACKS OF FOREIGN TRADE:

36
Foreign trade has played a pivotal role in India's economic development, fostering
growth, diversification, and global integration. However, this economic engagement with the
world also brings along a set of challenges and drawbacks that deserve consideration. While
foreign trade offers substantial benefits, such as access to a broader range of goods and services
and the potential for economic expansion, it simultaneously exposes India to vulnerabilities
that range from trade imbalances and exchange rate volatility to environmental concerns and
income inequality. In this context, it becomes crucial to examine and address these drawbacks
to ensure that foreign trade contributes positively to India's economic progress and social well-
being. Here are some of the drawbacks of foreign trade in the context of India:
35
• Trade Imbalances: India often experiences a trade deficit, where it imports more goods
and services than it exports. This persistent trade imbalance can strain the country's
foreign exchange reserves and impact on its overall economic stability.
• Exchange Rate Volatility: Foreign trade exposes India to fluctuations in exchange
35
rates. Rapid changes in currency values can affect the competitiveness of Indian exports
and increase the cost of imported goods, impacting businesses and consumers.
• Competition for Domestic Industries: Foreign trade can subject domestic industries
to intense competition from foreign producers. While competition can drive efficiency,
it can also lead to job losses and the decline of certain industries if they cannot adapt or
compete effectively.
• Income Inequality: The benefits of foreign trade are not distributed evenly. Those
working in industries that gain from trade might see increased wages and job

10
 opportunities, but those in labor-intensive or low-skilled sectors may experience job
losses and stagnant wages, exacerbating income inequality.
38
• Dependency on Imports: India heavily relies on imports for essential commodities
such as oil, electronic components, and pharmaceuticals. This dependency can make
the country vulnerable to supply disruptions and price volatility in global markets.
• Global Economic Vulnerability: India's economy is closely tied to global economic
conditions. Downturns in major trading partners can lead to reduced demand for Indian
exports, affecting economic growth and stability.
• Dependence on Global Supply Chains: India's integration into global supply chains
106
can make it vulnerable to disruptions. Events like the COVID-19 pandemic have
highlighted the risks associated with global supply chain dependencies, impacting
industries and causing economic challenges.
• Trade Barriers Abroad: India often encounters trade barriers and protectionist
measures imposed by other countries. These barriers can limit market access for Indian
exports and hinder the country's economic prospects on the international stage.
• Intellectual Property Issues: Trade can lead to disputes over intellectual property
rights. India has faced challenges related to patent and copyright issues, which can
affect access to essential technologies and products.
• Environmental Concerns: Pursuing economic growth through trade can put pressure
on the environment. Increased trade can lead to higher resource consumption, pollution,
and deforestation, causing adverse environmental impacts and long-term sustainability
concerns.
• Balance of Payments Issues: Persistent trade deficits can lead to balance of payments
problems, as India needs to finance these deficits. This can result in increased debt and
interest payments, further affecting the country's financial stability.
• Agricultural Vulnerability: India's agriculture sector is particularly vulnerable to
global trade dynamics. Fluctuations in commodity prices and market access issues can
impact the livelihoods of millions of Indian farmers.
• Dependency on Certain Export Markets: Over-reliance on specific export markets
can expose India to risks if those markets experience economic downturns or political
instability.

11
While there are significant economic advantages to overseas commerce, India also faces a
complicated range of difficulties and inconveniences. For India to fully utilize the benefits of
foreign trade while minimizing its negative effects, it is imperative that these problems are
successfully managed through the implementation of policies that support diversity,
competitiveness, and sustainability.

1.2 FOREIGN TRADE POLICIES:

The economic landscape and competitiveness of India have been significantly shaped
by its foreign trade policies. India has developed a varied strategy to foreign trade, fusing
elements of protectionism with those of liberalization to attain multiple economic goals, given
the size and diversity of its economy. Over the years, these policies have changed dramatically
in response to shifting global dynamics and internal economic requirements. In the past, self-
sufficiency and import substitution were heavily emphasized in India's foreign trade policies.
This strategy, also known as import substitution industrialization (ISI), promoted home
businesses through protective measures including high tariffs and import restrictions, with the
goal of reducing reliance on imports. While ISI had some success in fostering the growth of
domestic industries, it also led to inefficiencies and limited exposure to international markets.
In the early 1990s, India underwent a significant shift in its foreign trade policies as it embraced
economic liberalization and globalization. This transformation was driven by a series of
economic crises and the recognition that the country needed to integrate more deeply into the
global economy to spur economic growth and development. Key elements of India's foreign
trade policies during this period included:

• Liberalization: India reduced tariffs and dismantled trade barriers, making it easier for
foreign goods and investments to enter the Indian market.
• Export Promotion: The government implemented various export promotion schemes
and incentives to boost the competitiveness of Indian exporters in international markets.
• Foreign Direct Investment (FDI): India opened several sectors to foreign investment
through the automatic route or government approval, attracting foreign capital and
technology.
• Special Economic Zones (SEZs): SEZs were established to provide a conducive
environment for foreign investors, offering tax benefits and streamlined regulations.

12
 • Trade Agreements: India entered into numerous bilateral and regional trade
agreements to expand market access for its goods and services.
• Digital Economy: The growth of the digital economy and e-commerce sector also
received attention, with certain foreign investment restrictions in place to protect
domestic interests.

India's foreign trade policies have been shaped not only by economic considerations
but also by geopolitical factors and international trade dynamics. The country has actively
engaged in the World Trade Organization (WTO) and sought to protect the interests of its
domestic industries while advocating for fair trade practices on the global stage. In recent years,
India has continued to refine its foreign trade policies to strike a balance between protecting
domestic industries and fostering global integration. The "Make in India" initiative has sought
to promote domestic manufacturing, while efforts to improve the ease of doing business and
reduce trade barriers continue.

1.2.1 EVLOUTION OF FORIEGN TRADE POLICIES:

The evolution of India's foreign trade policies has been marked by distinct phases, each
shaped by changing economic priorities, global trade dynamics, and domestic imperatives.
From the early years of import substitution to the era of economic liberalization and global
56
integration, and more recently, the "Make in India" initiative, these policies have played a
pivotal role in India's economic development. In this overview, we will delve into the key
milestones and transformations that have defined India's foreign trade policies, providing a
comprehensive understanding of the country's approach to international trade over the years.
Here is an overview of the evolution of India's foreign trade policies since its independence:

• Import Substitution (1950s-1960s): After gaining independence in 1947, India

pursued a strategy known as Import Substitution Industrialization (ISI) to achieve self-
sufficiency and reduce reliance on foreign goods. This approach involved imposing
high tariffs and quantitative restrictions on imports to shield domestic industries from
foreign competition. The primary goal was to nurture domestic capacity and foster
economic self-reliance. Under ISI, India focused on developing various industries, with
the government playing a substantial role in supporting state-owned enterprises. While
this strategy did spur growth in certain sectors, it also resulted in inefficiencies and a

13
 lack of competitiveness on the global stage. Some industries became sheltered from
competition and failed to innovate.
• Export Promotion (1970s-1980s): In the 1970s and 1980s, India embarked on a
pivotal economic transformation. Recognizing the need to invigorate its industrial
sector and reduce its reliance on imports, the country shifted towards Export-Oriented
Industrialization (EOI). This strategy involved the implementation of various
incentives, such as tax exemptions and subsidies, to promote exports. Export Processing
Zones (EPZs) were established, fostering a favorable environment for export-driven
industries to thrive. Moreover, the introduction of Export-Import (EXIM) banks
facilitated trade financing, bolstering India's global trade presence. Simultaneously,
India took modest steps towards economic liberalization. In the 1980s, certain import
restrictions and tariffs began to diminish, especially for technology and capital goods.
The country also started exploring opportunities for foreign direct investment (FDI) and
initiated discussions on trade liberalization. Although these initial liberalization efforts
were limited compared to the sweeping reforms of 1991, they set the stage for India's
subsequent economic transformation, characterized by the dismantling of the License
Raj and significant reductions in trade barriers. These comprehensive reforms propelled
India towards higher economic growth and enhanced integration into the global
economy in the years that followed.
• Economic Liberalization (1990s): In 1991, India was grappling with a severe balance
of payments crisis when it underwent a transformative shift in its trade policy. Under
the guidance of then-Finance Minister Manmohan Singh, the country embarked on a
path of economic liberalization and structural reforms. This comprehensive overhaul
included reducing tariffs, abolishing industrial licensing requirements, and opening
various sectors to foreign investment. Exchange rate policies were also partially
liberalized, and foreign exchange controls were eased. These sweeping changes
unleashed a surge in foreign investment, fostered increased trade, and ultimately
propelled India towards higher economic growth rates. This pivotal moment in India's
economic history marked the beginning of its journey towards global economic
integration and prosperity.
98
• WTO Membership and Global Integration (2000s-2010s): India's entry into the
World Trade Organization (WTO) in 1995 marked a pivotal moment in its trade history,
signaling a commitment to international trade rules and liberalization. Over the

14
 subsequent decades, India made strides in aligning its trade policies with global norms.
Tariffs and non-tariff barriers were systematically reduced, fostering greater economic
integration into the world economy. India actively pursued trade negotiations and inked
key bilateral and regional agreements with countries like South Korea and the ASEAN
bloc. However, these efforts were not without challenges, as domestic interests and
concerns about small enterprises posed hurdles. India's trade policy evolved, reflecting
the complex interplay of economic and political factors, shaping its engagement in the
global marketplace.
• "Make in India" and Trade Facilitation (2014-present): In 2014, the Indian
government launched the ambitious "Make in India" initiative, with the goal of
bolstering domestic manufacturing, attracting foreign investment, and reducing reliance
on imports. To complement this initiative, they introduced the Goods and Services Tax
(GST) in 2017, simplifying the tax structure and enhancing the ease of doing business.
Streamlining trade processes further, the Single Window Interface for Trade (SWIFT)
reduced bureaucratic obstacles, facilitating international commerce. Concurrently,
56
ongoing bilateral trade negotiations, notably with the United States and the European
Union, sought to expand trade horizons. These combined efforts showcased India's
commitment to fostering a competitive business environment, encouraging investment,
and fostering global economic partnerships.
• Recent Developments (2020s): In the wake of the COVID-19 pandemic and ongoing
tensions with neighboring countries, India confronted formidable trade obstacles. To
counter these challenges, the government initiated a multifaceted approach. It
prioritized boosting domestic manufacturing, encouraging exports, and attracting
79
foreign direct investment (FDI). A pivotal step in this direction was the launch of the
Atmanirbhar Bharat Abhiyan, or Self-Reliant India Initiative, designed to bolster local
production and reduce dependency on imports in critical sectors. These strategies were
instrumental in fortifying India's economic resilience during a time of global
uncertainty, positioning the nation on a path towards self-sufficiency and growth.

1.2.2 TRADE BARRIERS IN INDIA:

67
Trade barriers in India refer to various policies and regulations that restrict the flow of
goods and services across its borders. These barriers are designed to protect domestic
industries, ensure product quality and safety, and address various economic and social
objectives. Common trade barriers in India include tariffs, non-tariff barriers like quotas and

15
licensing requirements, complex customs procedures, investment restrictions, and concerns
about intellectual property protection. While these measures serve specific purposes, they can
also impact on international trade and foreign investment in the country. India's trade policies
and barriers can change over time, reflecting evolving economic and political priorities.
Understanding these trade barriers is essential for businesses and policymakers seeking to
engage in trade with India.

These barriers help maintain a competitive environment by countering unfair trade

practices such as dumping, which harms domestic industries. They also contribute to the
protection of intellectual property, fostering innovation and creativity. Trade barriers can be
employed to safeguard traditional crafts, public health, and the environment. However, finding
the right balance is crucial, as excessive protectionism can hinder overall economic growth and
consumer welfare. India is actively reforming its trade policies, participating in international
trade agreements to promote both domestic industries and foreign trade. The need for trade
barriers in India is continually evaluated and adjusted to align with the nation's evolving
economic and social objectives.

These barriers are implemented to protect domestic industries from foreign

competition, helping them develop and preserving jobs. They can also promote strategically
vital industries like defense and technology. Additionally, tariffs on imported goods generate
government revenue that can fund public initiatives and infrastructure projects, contributing to
economic development. Trade barriers are essential for managing India's balance of payments
during times of economic instability. Furthermore, non-tariff barriers, such as quality and
safety standards, ensure that imported products meet specific criteria, protecting consumers
and promoting reliability. Import restrictions might also be imposed for cultural, social, or
environmental reasons, emphasizing their multifaceted role in India's economic landscape.
Here are some of the key reasons for their existence:
103
• Protection of Domestic Industries: Trade barriers, including tariffs and import quotas,
are often implemented to shield domestic industries from foreign competition. These
measures aim to help fledgling industries develop, safeguard existing jobs, and prevent
foreign goods from undercutting domestic production.
• Promotion of Strategic Industries: India may use trade barriers to promote industries
that are strategically important for the nation's security or economic development, such
as defense, agriculture, and technology sectors.

16
 • Revenue Generation: Tariffs on imported goods can generate substantial revenue for
the government. This revenue can be used to fund various public initiatives and
infrastructure projects.
• Balance of Payments: Trade barriers can help India manage its balance of payments
by reducing imports and conserving foreign exchange reserves. This is especially
important during times of economic instability.
• Quality and Safety Standards: Non-tariff barriers, such as technical regulations and
standards, help ensure that imported products meet certain quality, safety, and
environmental criteria. This protects consumers and ensures product reliability.
• Cultural and Social Concerns: Import restrictions may be imposed on cultural or
social grounds, such as preserving traditional crafts or protecting public health.
• Intellectual Property Protection: Stringent intellectual property regulations can
protect Indian innovations and the rights of Indian creators, fostering innovation and
creativity.
• Mitigating Dumping and Unfair Trade Practices: Trade barriers can be used to
counteract dumping, which occurs when foreign producers sell goods in India at prices
lower than their production cost. Such practices can harm domestic industries.
• Environmental Considerations: Some trade barriers may be imposed to address
environmental concerns, such as restrictions on the import of products that have a high
carbon footprint or harm ecosystems.
The significance of trade barriers in India lies in their ability to balance economic
development, protect domestic industries, and address various societal needs. However, it's
essential to strike a balance between protectionism and promoting international trade, as
excessive trade barriers can hinder economic growth and reduce the overall welfare of
consumers. India has been actively reforming its trade policies to strike this balance,
participating in international trade negotiations and agreements to promote both domestic
industries and foreign trade. The need for trade barriers in India is continually evaluated and
adjusted to align with the country's evolving economic and social objectives.

1.3 EXPORTS:
Over the past five decades, India's export landscape has undergone a remarkable
transformation, evolving from traditional industries to a diverse array of goods and services.
This journey reflects the country's strategic shift towards economic liberalization and

17
globalization. Starting in the 1970s with a focus on traditional sectors, India gradually
diversified its exports, reaching a pivotal point in the 1990s with economic reforms that
propelled software and IT services to the forefront. In the ensuing decades, the nation continued
to expand its export horizons, with pharmaceuticals, manufacturing, and a broader array of
industries contributing to its global trade footprint. Here is a broad overview of India's export
trends during this period:
• 1970s: In the 1970s, India's economy was predominantly agrarian and marked by a
heavy reliance on traditional sectors like textiles, jute, and handicrafts. However,
despite the rich cultural heritage of these industries, India faced significant challenges
on the global trade front. The government's protectionist policies, characterized by high
tariffs and non-tariff barriers, hindered international trade and limited access to global
markets. This, coupled with the country's struggles with balance of payments crises,
constrained its ability to engage in meaningful global commerce. India didn't begin its
transformational journey toward economic liberalization and globalization until the
early 1990s. These changes enabled the growth of new, export-oriented industries
including IT, software services, pharmaceuticals, and automobile manufacture by
gradually removing trade barriers, promoting foreign investment, and removing
obstacles to foreign investment. India has diversified its export base throughout the
years by utilizing both its technological prowess and skilled labor force. This change
not only improved the country's economic outlook but also established it as a significant
player in the international market. The example of India demonstrates the
transformative potential of economic reforms and a dedication to open trade policies in
releasing a country's export potential.
• 1980s: In the 1980s, India embarked on a transformative journey that reshaped its
economic landscape. This pivotal decade witnessed a strategic shift in the country's
export policies. India moved away from its historical reliance on traditional agricultural
exports and began diversifying its export portfolio. Notably, it expanded into new
sectors such as engineering goods, gems, and jewelry. This diversification was driven
by a recognition of changing global demand patterns and a desire to reduce dependency
on a few key commodities. However, it was the late 1980s that marked a watershed
moment in India's economic history. Responding to economic challenges, the
government initiated a series of reforms collectively known as economic liberalization.
These reforms were aimed at opening the Indian economy to the world. They included

18
 reducing trade barriers, encouraging foreign investment, dismantling stifling
regulations, and fostering competition. This bold approach, championed by leaders like
Manmohan Singh and P.V. Narasimha Rao, bore fruit in the 1990s. India's economy
experienced a remarkable surge in growth, attracting foreign capital and emerging as a
global economic player. The diversification in exports, coupled with economic
liberalization, set the stage for what would later be called the "Indian Economic
119
Miracle." These decades laid the foundation for India's journey toward becoming one
of the world's fastest-growing major economies, demonstrating the power of strategic
economic reforms and adaptability in a changing global landscape.
• 1990s: In the early 1990s, India underwent a seismic economic transformation with the
initiation of sweeping reforms collectively known as "Liberalization, Privatization, and
Globalization" (LPG). These reforms, which commenced in 1991, fundamentally
reshaped India's economic landscape and catapulted the nation onto the global stage.
The core tenets of LPG were multifaceted. Liberalization entailed the dismantling of
the infamous License Raj, liberating businesses from stifling government regulations,
fostering competition, and encouraging private sector investment. Privatization,
another crucial facet, led to the divestment of state-owned enterprises, boosting
efficiency and competitiveness by injecting private sector dynamism into previously
sluggish sectors. Globalization, perhaps the most transformative element, opened
India's doors to the world. It entailed reducing trade barriers, facilitating foreign
investment, and fostering international trade. One of the most remarkable outcomes of
these reforms was the meteoric rise of India's software and IT services industry. As the
regulatory shackles loosened, India's IT sector blossomed. Renowned for its skilled
127
workforce, the nation has become an outsourcing hub for software and IT services.
Giants like Tata Consultancy Services (TCS), Infosys, and Wipro emerged, delivering
cost-effective, high-quality solutions to global clients, catalyzing India's export growth.
This pivotal era in India's economic history not only unleashed entrepreneurial spirit
but also solidified the country's reputation as a global IT powerhouse. The
Liberalization, Privatization, and Globalization reforms forever altered India's
economic trajectory, propelling it towards modernity and global prominence.
• 2000s: During the 2000s, India experienced a dynamic transformation in its export
landscape, marked by robust growth in various sectors. The software and IT services
industry emerged as a powerhouse, with companies like Infosys, TCS, and Wipro

19
 gaining global recognition for their expertise in software development and IT
consulting. These firms played a pivotal role in driving India's export earnings, offering
cost-effective solutions to clients worldwide. Simultaneously, the pharmaceutical
sector thrived, as India became a key player in producing affordable generic medicines.
The nation's pharmaceutical manufacturers adhered to stringent international quality
standards, further enhancing their global appeal. In addition to software and
pharmaceuticals, India's engineering goods sector saw substantial growth, capitalizing
on its manufacturing capabilities and cost competitiveness. Products like machinery,
automobiles, and components found favor in international markets. The 2000s also
witnessed a surge in outsourcing and offshoring trends, as multinational companies
sought India for its skilled workforce and cost advantages. This globalization of
services fueled India's exports, with businesses outsourcing IT services, customer
support, and back-office operations. These export successes were underpinned by
economic reforms initiated in the 1990s, which continued to create an enabling
environment for international trade. The 2000s thus represented a pivotal era in India's
economic journey, characterized by diversified export growth and an increasing role on
the global stage.
• 2010s: During the 2010s, India's export landscape underwent a significant
transformation, reflecting the country's evolving role in the global economy. The
decade witnessed a diversification of export sectors, with traditional industries like
textiles and chemicals coexisting with emerging powerhouses like automobile
manufacturing. Notably, India's pharmaceutical industry continued to thrive, gaining
worldwide recognition for supplying affordable generic medicines. India strategically
expanded its export destinations, with a focus on both emerging markets and developed
economies. This diversification helped reduce dependence on any single market and
89
ensured a more balanced trade portfolio. Concurrently, the "Make in India" initiative
launched in 2014 aimed at promoting domestic manufacturing and boosting exports.
114
This initiative, underpinned by efforts to improve the ease of doing business and attract
foreign investment, sought to position India as a global manufacturing hub. In essence,
the 2010s marked a period of dynamic change and growth in India's export sector. With
a diversified portfolio of exports, a strong pharmaceutical industry, and a focus on
expanding trade horizons, India emerged as a more competitive and resilient player in
the global trade arena, setting the stage for continued economic development in the
years to come.
20
 • 2020s: In the early 2020s, India found itself navigating a complex economic landscape.
The global COVID-19 pandemic unleashed a wave of uncertainty, triggering a
worldwide economic downturn. Amid this turbulence, certain sectors of India's
economy stood resilient. Pharmaceuticals emerged as a beacon of strength, with the
nation's robust industry playing a pivotal role in producing and exporting essential
COVID-19 medications and vaccines. Simultaneously, India's IT services sector
remained a global powerhouse, providing critical technological solutions during the
pandemic. Recognizing the need to bolster its economic foundation, India embarked on
a journey to enhance its infrastructure and streamline its business environment.
Investments were poured into improving transportation networks, ports, and logistics
systems. These initiatives aimed not only to facilitate domestic commerce but also to
elevate India's status as an attractive destination for international trade and investment.
However, this period was not without its challenges. India grappled with trade tensions,
notably with China, which influenced its trade policies. Geopolitical conflicts led to
increased scrutiny of Chinese investments and products, prompting India to seek self-
reliance and promote domestic manufacturing. In the early 2020s, India's economic
journey was marked by resilience, adaptation, and a strategic approach to addressing
both opportunities and challenges on the global stage.

Throughout these decades, India's export landscape evolved from a focus on traditional
sectors to a more diverse array of goods and services. The country became a global player in
industries like IT services, pharmaceuticals, and manufacturing. India's export growth was
facilitated by economic liberalization, technological advancements, and a strategic approach to
trade and commerce.

21
Export rate of India Since 1970.

1.4 IMPORTS:

Over the past five decades, India's import landscape has undergone significant
transformations, reflecting the nation's evolving economic policies and global interactions.
Beginning with import substitution strategies in the 1970s, India gradually transitioned to
economic liberalization in the 1990s, resulting in increased imports of technology, machinery,
and consumer goods. The 2000s marked a period of remarkable growth in imports, making
India one of the world's major importers. In the 2020s, the country faced unique challenges due
to the COVID-19 pandemic while also pursuing domestic manufacturing initiatives. This
historical overview provides insights into India's changing import patterns and its evolving role
in the global trade landscape. Here's a broad overview:

• 1970s: During the 1970s, India embarked on a bold economic strategy known as import
substitution industrialization (ISI). The primary objective was to reduce the country's
dependence on imports and promote self-reliance in key industries. To achieve this, the
Indian government implemented a series of protectionist measures, including high
tariffs and import restrictions, making foreign goods less competitive in the domestic

22
 market. This approach aimed to encourage the growth of domestic industries by
offering them various incentives and support, such as subsidies and tax breaks. Key
sectors like agriculture, heavy machinery, and petrochemicals received special attention
as India sought to strengthen its industrial base. While the policy allowed for essential
imports like food grains to ensure food security, it maintained an overall emphasis on
domestic production. However, the import substitution strategy had mixed results.
122
While it fostered the growth of some industries, it also led to inefficiencies and a lack
of competitiveness. By the late 1970s and early 1980s, India began to experience
economic challenges, prompting a gradual shift in economic policies towards
liberalization and globalization in the 1980s and comprehensive economic reforms in
1991. These reforms marked a significant departure from the import substitution era
and set India on a new path towards a more open and market-oriented economy.
• 1980s: In the 1980s, India was at a crossroads, grappling with economic stagnation and
outdated industrial practices. Recognizing the need for transformative change, the
country embarked on a journey of economic liberalization. This shift in policy was
marked by a deliberate relaxation of import restrictions, allowing for the inflow of
crucial technology, machinery, and raw materials. The aim was clear: to modernize and
revitalize Indian industries, paving the way for increased efficiency, competitiveness,
and growth. This opening up of trade was complemented by a series of reforms that
sought to reshape the nation's economic landscape. Industries previously shackled by
excessive government regulation found themselves with newfound freedom, fostering
a more vibrant and dynamic business environment. Furthermore, India actively courted
foreign investment, reformed its financial sector, and even undertook privatization
efforts to spur innovation and boost productivity. These strategic moves not only
resuscitated the Indian economy but also propelled it onto the global stage as a
burgeoning economic powerhouse. The era of liberalization in the 1980s laid the
foundation for India's impressive economic growth in the subsequent decades,
fundamentally reshaping the country's economic destiny and positioning it as a major
player in the global economy.
• 1990s: In the early 1990s, India stood at a crossroads in its economic history. Faced
with stagnant growth, a burgeoning fiscal deficit, and a heavily regulated economy, the
Indian government took a momentous step by initiating a series of economic reforms
in 1991. These reforms, often termed "economic liberalization," ushered in a new era

23
 of economic transformation. One of the most significant changes was the liberalization
of trade policies. India significantly reduced import tariffs and opened its doors to
foreign investment. This policy shift led to a surge in imports of consumer goods,
electronics, automobiles, and a wide array of products. As a result, Indian consumers
were exposed to a broader range of choices, while domestic industries faced heightened
competition, compelling them to enhance their efficiency and quality. Foreign
investment poured into India, bringing with it advanced technologies and expertise.
Industrial de-licensing reduced bureaucratic hurdles for businesses, promoting
121
entrepreneurial activity and industrial growth. Privatization of state-owned enterprises
improved efficiency and reduced the government's role in business operations. These
reforms were pivotal in driving India's economic growth over the subsequent decades,
turning the country into one of the world's fastest-growing major economies. However,
they also presented challenges, such as income inequality and disparities in
development across regions, underscoring the complex nature of India's liberalization
journey. Nonetheless, the early 1990s marked a turning point that set India on a path
toward economic prosperity and global integration.
• 2000s: During the 2000s, India experienced a profound economic transformation
characterized by robust growth and deepening globalization. This transformative era
was underpinned by a series of economic reforms initiated in the early 1990s, which
continued to yield positive outcomes. One of the most noticeable trends during this
period was the substantial expansion of India's imports. The country's burgeoning
middle class and rapid urbanization fueled a surge in consumer demand. As a result,
India increasingly imported a wide array of goods, including oil to meet its growing
energy needs, electronics and machinery to support its burgeoning IT and
manufacturing sectors, and an extensive range of consumer products to satisfy the rising
aspirations of its populace. Moreover, India actively engaged in trade agreements and
embraced globalization. It participated in negotiations with various nations and regional
blocs, fostering stronger trade relationships and facilitating the cross-border flow of
goods and services. India's pivotal role in the IT and business process outsourcing
industries attracted global companies, propelling the country's exports of IT-related
services. In essence, the 2000s were a pivotal period for India, marked by economic
growth, diversification of imports, and an increasingly prominent role in the global
economy through active participation in trade agreements and the services sector's
expansion.
24
• 2010s: During the 2010s, India experienced a remarkable transformation in its trade
landscape, solidifying its position as one of the world's foremost importers of goods.
This shift was driven by a confluence of factors that reflected the country's expanding
economy and evolving consumer demands. Crude oil emerged as a dominant import
item, as India heavily relied on foreign sources to satisfy its escalating energy
requirements. Meanwhile, the burgeoning consumer electronics market spurred the
import of substantial quantities of electronics and machinery. The chemical industry,
too, witnessed robust growth, prompting India to import various chemicals and related
products to meet industrial and consumer needs. India's deep-seated cultural affinity for
precious metals, particularly gold, remained intact, resulting in imports of precious
metals for jewelry and investment purposes. Simultaneously, trade relationships with
neighboring countries, such as China, and major global trading partners like the USA
and the European Union, flourished. These partnerships expanded across various
sectors, reinforcing India's position in the global trade arena. In sum, the 2010s marked
India's emergence as a global trade powerhouse, with imports of vital commodities and
strategic partnerships playing pivotal roles in the country's economic ascent. This shift
not only reflected India's own economic progress but also underscored its integral role
in the interconnected web of international trade.
• 2020s: In the tumultuous decade of the 2020s, the world grappled with a formidable
adversary: the COVID-19 pandemic. India, like nations across the globe, found itself
facing a complex web of challenges stemming from the unprecedented health crisis.
Among these challenges, the disruption of global supply chains and trade flows stood
out prominently. The pandemic-induced lockdowns and restrictions in various
countries had a cascading effect, impacting the manufacturing and trade sectors, which
are the lifeblood of a globalized world. Amidst this upheaval, India maintained its
commitment to ensuring a steady supply of essential goods and pharmaceuticals.
Recognizing its critical role in the global pharmaceutical industry, the nation continued
to import vital medical equipment and drugs, ensuring that its healthcare system had
the resources needed to combat the virus. Moreover, the pandemic served as a stark
reminder of the importance of self-reliance and domestic manufacturing. India's "Make
in India" initiative, initiated in 2014, gained renewed relevance during these testing
times. It aimed to reduce the nation's dependence on imports and create jobs through
increased domestic production. In response to the crisis, India stepped up efforts to

25
 manufacture critical medical equipment and pharmaceuticals domestically, such as
personal protective equipment, ventilators, and generic drugs. In this context, the
challenges of the 2020s underscored the need for adaptability and self-sufficiency in
the face of global disruptions, highlighting the delicate balance between international
interdependence and the imperative of domestic resilience.

India's import history over the past five decades reflects a journey from import
substitution and protectionism to economic liberalization and globalization. This evolution has
shaped India's trade dynamics and its role on the global stage, making it a significant player in
international commerce.

Import rate of India Since 1970.

1.5 TRADE BALANCE

41
India's trade balance refers to the difference between the value of its exports (goods and
services sold to other countries) and the value of its imports (goods and services purchased
from other countries). A positive trade balance, where exports exceed imports, is often referred
80
to as a trade surplus, while a negative trade balance, where imports exceed exports, is called a

26
 35
trade deficit. Historically, India has generally had a trade deficit, meaning that it imports more
102
goods and services than it exports. Several factors contribute to this trade deficit, including the
country's reliance on imported oil and gold, as well as a growing demand for consumer and
capital goods. India's trade balance can fluctuate from year to year due to changes in global
economic conditions, exchange rates, and government policies. The government of India has
38
taken various measures to address the trade deficit, such as promoting exports, implementing
trade agreements, and encouraging domestic manufacturing through initiatives like "Make in
India."
21
YEAR EXPORTS IMPORTS TRADE BALANCE
1970-71 1535.3 1634.2 -99
1971-72 1608.2 1824.5 -216.4
1972-73 1971.5 1867.4 104
1973-74 2523.4 2955.4 -432
1974-75 3328.8 4518.8 -1190
1975-76 4036.3 5264.8 -1228.5
1976-77 5142.7 5073.8 68.9
1977-78 5407.9 6020.2 -612.4
1978-79 5726.1 6810.6 -1084.6
1979-80 6418.4 9142.6 -2724.2
1980-81 6710.7 12549.2 -5838.4
1981-82 7805.9 13607.6 -5801.7
1982-83 8803.4 14292.7 -5489.4
1983-84 9770.7 15831.5 -6060.8
1984-85 11743.7 17134.2 -5390.5
1985-86 10894.6 19657.7 -8763.1
1986-87 12452 20095.8 -7643.8
1987-88 15673.7 22243.7 -6570.1
1988-89 20231.5 28235.2 -8003.7
1989-90 27658.4 35328.4 -7669.9
1990-91 32557.6 43192.9 -10635.2
1991-92 44041.8 47850.8 -3809
1992-93 53688.3 63374.5 -9686.3

27
1993-94 69751.4 73101 -3349.6
1994-95 82674.1 89970.7 -7296.6
1995-96 106353.3 122678.1 -16324.8
1996-97 118817.1 138919.7 -20102.6
1997-98 130100.6 154176.3 -24075.7
1998-99 139753.1 178331.9 -38578.7
1999-00 159561.4 215236.5 -55675.1
2000-01 203571 230872.8 -27301.8
2001-02 209018 245199.7 -36181.8
2002-03 255137.3 297205.9 -42068.6
2003-04 293366.8 359107.7 -65740.9
2004-05 375339.5 501064.5 -125725
2005-06 456417.9 660408.9 -203991
2006-07 571779.3 840506.3 -268727
2007-08 655863.5 1012311.7 -356448.2
2008-09 766935 1305503 -538568
2009-10 845534 1363736 -518202
2010-11 1142922 1683467 -540545
2011-12 1465959 2345463 -879504
2012-13 1634318 2669162 -1034844
2013-14 1905011 2715434 -810423
2014-15 1896445 2737087 -840642
2015-16 1716384 2490306 -773922
2016-17 1849434 2577675 -728241
2017-18 1956515 3001033 -1044518
2018-19 2307726 3594675 -1286949
2019-20 2219854 3360954 -1141100
2020-21 2159043 2915958 -756915
2021-22 3147021 4572775 -1425754
2022-23 3620631 5733959 -2113328

28
1.5.1 FACTORS AFFECTING TRADE BALANCE:
120
India's trade balance, whether it's in surplus or deficit, is influenced by a complex
interplay of various economic, political, and global factors. Here are some of the key factors
affecting India's trade balance:

• Oil Prices: India is one of the largest importers of crude oil and petroleum products.
73
Fluctuations in global oil prices have a significant impact on India's trade balance. A
rise in oil prices can lead to an increase in the import bill, contributing to a trade deficit.
• Commodity Prices: Prices of other commodities, such as metals and minerals, also
impact India's trade balance. India imports various raw materials for industries like
manufacturing and infrastructure development, and changes in their prices can affect
the trade balance.
• Exchange Rates: Currency exchange rates play a crucial role. A weaker Indian rupee
can make imports more expensive, potentially reducing the trade deficit, while a
stronger rupee can make exports more expensive, contributing to a deficit.
• Global Economic Conditions: The overall state of the global economy influences
India's trade. During periods of global economic growth, demand for Indian exports
may rise, improving the trade balance. Conversely, during global economic downturns,
exports may decline.
• Domestic Demand: The level of domestic demand for goods and services can impact
imports. When domestic demand is high, India may import more to meet consumer and
industrial needs, potentially contributing to a trade deficit.
• Government Policies: Government policies, including trade policies, import tariffs,
and export incentives, can have a significant impact on the trade balance. Changes in
these policies can either promote or restrict trade.
• Bilateral and Multilateral Trade Agreements: Trade agreements with other
countries and regions can affect trade balances. Trade agreements may open up new
markets for Indian exports or lead to increased imports.
• Global Supply Chain Disruptions: Events such as the COVID-19 pandemic can
disrupt global supply chains, affecting both exports and imports. Supply chain
disruptions can lead to temporary imbalances in trade.

29
 • Import Restrictions: The government's imposition of import restrictions, tariffs, and
non-tariff barriers can influence the volume and value of imports, affecting the trade
balance.
• Domestic Production Capacity: India's ability to produce goods domestically also
affects its trade balance. Expanding domestic production capacity can reduce the need
for imports.
• Consumer and Business Confidence: High levels of consumer and business
confidence can boost domestic demand and potentially lead to increased imports.
• Infrastructure Development: Investment in infrastructure projects can increase
demand for raw materials and capital goods, impacting imports.
• Global Trade Tensions: Trade tensions between major trading partners can have
indirect effects on India's trade. Tariffs and trade disputes can lead to shifts in global
supply chains and trade patterns.
• Geopolitical Factors: Geopolitical events and tensions can influence trade dynamics.
Changes in diplomatic relations can impact trade agreements and patterns.

It's important to note that these factors are interconnected, and changes in one factor
can have ripple effects throughout the trade balance. Additionally, the trade balance is not static
and can vary from year to year based on evolving economic conditions and policy decisions.
Monitoring these factors and their impact on trade is essential for policymakers and businesses
in Indi

30
Trdae Balance of India Since 1970.

1.6 FOREIGN TRADE AND ECONOMIC GROWTH:

Foreign trade has long been a cornerstone of India's economic landscape, shaping the
95
nation's growth trajectory and global integration. As one of the world's fastest-growing major
economies, India's experience with foreign trade offers a fascinating study of the intricate
118
interplay between international commerce and domestic economic development. The
relationship between foreign trade and economic growth in India is a multifaceted journey
marked by periods of dynamic expansion, policy reforms, and the challenges of a rapidly
changing global landscape. This exploration delves into the various dimensions of India's
engagement with foreign trade and its profound influence on the nation's economic well-being.
12
From the emergence of export-led growth sectors to the importance of foreign direct
investment, the balance of payments, and the role of government policies, this analysis seeks
to unveil the complexities, opportunities, and potential vulnerabilities inherent in India's
foreign trade dynamics. Through a nuanced examination, we aim to understand how India's
interaction with the global economy has shaped its development trajectory and the ongoing
101
pursuit of sustainable economic growth.

The relationship between foreign trade and economic growth in India, as in most
countries, is complex and multifaceted. Foreign trade, which includes both exports and imports,

31
92
can have both positive and negative impacts on a country's economic growth. Here are some
126
key aspects of the relationship between foreign trade and economic growth in India:

• Export-Led Growth: Historically, many countries, including India, have experienced

periods of rapid economic growth driven by exports. Export-led growth occurs when a
116
country increases its exports, leading to increased production, job creation, and overall
economic expansion. India has witnessed export-led growth in sectors like information
technology (IT), pharmaceuticals, and textiles.
• Importance of Foreign Markets: Foreign trade allows Indian businesses to access
international markets, which can significantly boost economic growth. Exports enable
Indian companies to sell their products and services to a global customer base, thereby
increasing revenue and profits.
• Diversification of the Economy: Foreign trade can help diversify a country's economy.
India's services sector, particularly IT and business process outsourcing (BPO), has
become a major contributor to foreign exchange earnings and employment, diversifying
the country's economic base.
• Foreign Direct Investment (FDI): Foreign trade often goes hand-in-hand with foreign
direct investment. FDI can bring in capital, technology, and expertise, which can
enhance productivity and stimulate economic growth. India has actively sought FDI in
various sectors to promote economic development.
93
• Balance of Payments: A crucial aspect of foreign trade is the balance of payments,
which includes trade balance (exports minus imports), capital flows, and remittances.
A sustainable trade balance is essential to maintain economic stability and growth. A
persistent trade deficit can lead to external imbalances and pressure on the currency.
• Vulnerabilities and Risks: Heavy dependence on foreign trade can expose a country
like India to external shocks and global economic fluctuations. Events such as changes
in global demand, trade disputes, or protectionist measures in other countries can affect
India's economic growth.
111
• Policy Matters: Government policies, including trade policies and exchange rate
management, play a crucial role in shaping the relationship between foreign trade and
economic growth. Proactive trade policies can encourage exports and attract foreign
investment.

32
 • Infrastructure and Logistics: The efficiency of a country's trade infrastructure and
logistics also impacts its ability to engage in international trade. Improvements in ports,
transportation, and customs procedures can boost trade and economic growth.
• Income Distribution: The benefits of foreign trade may not always be evenly
distributed across a population. It is important to consider how trade impacts income
distribution and whether policies are in place to address potential inequalities.
Foreign trade can be a significant driver of economic growth in India, but its impact depends
on various factors, including the structure of the economy, government policies, global
economic conditions, and the ability to manage risks and vulnerabilities. A balanced approach
that promotes exports, attracts foreign investment, and ensures economic stability is crucial for
India's sustained economic growth through foreign trade.

1.7 RESEARCH STATEMENT:

36
Foreign trade plays a pivotal role in the economic development of nations, and India is
81
no exception. The purpose of this research project is to conduct an in-depth study of the impact
of foreign trade on the Indian economy, with a focus on understanding the intricate interplay
between trade policies, economic growth, and their broader socioeconomic implications. By
delving into this complex relationship, we aim to provide valuable insights for policymakers,
economists, and stakeholders to make informed decisions that can contribute to India's
sustained economic development.

1.8 RESEARCH QUESTIONS:

• What is current trend of the foreign trade in India?

• What is the impact of the foreign trade on the Indian economy?

1.9 OBJECTIVES:
33
 • To find out the growth and pattern of foreign trade in India from FY 2013-14 to FY
2022-23.
• To predict the forecast value of exports and imports in India from 2024 to 2028.
• To find out the relationship between determinants of India’s foreign trade.

1.10 LIMITATIONS:

• Data availability post pandemic is limited.

• Since the project is based on secondary data it has its own limitations.

CHAPTER II
REVIEW OF LITERATURE

This chapter shows the reviews of the various articles that were collected related to the
objectives of the study. Therefore, while reviewing the literature, interest is mainly focused not
only on the main themes and impact of the foreign trade on the Indian economy but also the
methodology adopted in such studies conducted over a period.

Priyanka Karmakar et al1 (2022) have tried to study on Growth and Impact of India’s
Foreign Trade –Engine of Economic Development. The four important objectives of the study
4
are to examine the growth of India exports, imports and trade balance from 1990-91 to 2018-
19, to examine the principal commodities of India exports and imports from 1990-91 to 2018-
19, to study on top ten exports and imports by country and state wise share from 2016-17 to
36
2018-19 and to study on India's performance in global trade from 2011-2017. The study is
54
based on secondary data collected from Economic survey 2018-19, Statistical Appendix. The
growth rates of exports (∆X/ X), Import (∆I /I) are obtained by using the following formula:

1 109
Priyanka Karmaka, Suvan Taso Lepcha, Growth and Impact of India’s Foreign Trade –
Engine Of Economic Development. Department of Economics Bijoy Krishna Girls’ College, West Bengal. June
2022, Vol. 3 Issue. 1, PP. 27-39.

34
 Grt = Yt-Yt-1/Yt-1 x 100
1
where, Grt is the growth rate of variable Y for the time period compared to its previous year
and it is represented as percentages. To examine the role of foreign trade in economic growth
5
of India, linear regression model has been used. Export, Import and Trade Balance at factor
cost at constant price is taken as a measure of economic growth; and volume of export, import
5
and trade balance terms are taken as variables of the study. Before applying the Ordinary Least
Squares (OLS) method, the stationery of the variables concerned are tested using the
28
Augmented Dickey Fuller (ADF) Test. The result also suggests that the growth rate of imports
was more than the growth rate of exports. The result of the paired sample “t” test suggests that
there was a positive effect of the new economic policy on India’s Exports, Imports and Total
Trade. It means after the new economic policy India’s Exports, Imports and Total Trade had
increased significantly.

Diptibala et al2 (2022) have studied International Trade and Economic Growth.
17
International trade is the interchange of capital, merchandise and services across international
86
borders or areas. The objective of the study was to analyze and interpret the impact of
international trade on economic growth. This study is purely based on the qualitative way of
analysis and hence doesn’t use any specific statical tool for the analysis of the study. The study
also considers the various objectives of the Foreign Trade Policy of 2015 for deriving the
32
conclusion. Therefore, the study concludes that the international trade has played an important
role in India’s economic growth in the past two decades. Overseas trade has boosted
32
competitiveness in the marketplace and expanded business chances for local markets. By
eliminating unnecessary obstacles, it made easier for India and the US to export and import.
Since the economic changes introduced in the year 1991, India has totally changed its trade
relations with the United States of America.

2 51
Diptibala R. Solanki, International Trade and Economic Growth. International Journal of Education, Modern
Management, Applied Science & Social Science (IJEMMASSS) 23 ISSN : 2581-9925, Impact Factor: 6.340,
Volume 04, No. 01(III), January - March, 2022, pp.23-26.

35
 Ajay Sood et al3 (2022) have analyzed the Impact of Economic Reforms on Directions
99
of India’s Foreign Trade: An Evaluation of Three Decades. The main objectives of the study
were to study directions of India’s foreign trade in the three decades of economic reforms, to
identify the impact of Economic reforms and percentage change in foreign trade with trade
90
partners India and to suggest ways and means for accelerating India’s foreign trade and
16
increasing the number of trade partners. The present study is based upon the time series
secondary data collected from various published sources of Government agencies. The data
has been collected from Economic Survey of Government of India, RBI Bulletins, RBI
Handbook of Statistics, Ministry of Commerce and Industry of Govt. of India etc. The study
broadly covers the period of 30 years from 1990-91 to 2019-20. To achieve the objectives of
the study the entire study period is divided into three sub periods viz., 1990-91 to 1999-2000
(first decade of economic reforms), from 2000-01 to 2009-10 (second decade of economic
reforms), 2010-11 to 2019-20 (third decade of economic reforms. The annual percentage of
exports and imports has been calculated to draw the inferences. Simple statistical tools like
percentage year over year are used to achieve the objectives. It can be concluded that trade with
the OECD remained highest in the post reforms period but percentage wise it has come down.
The percentage share to OPEC has gone up in all three decades. It was very low in the early
90s, but liberalized policies were able to attract more demand for Indian exports from OPEC
group. Another significant change in the destination pattern is a sharp decline in the share of
Eastern European countries of which the former USSR constituted a major part. The share of
Indian exports to Eastern European Countries fell very sharply in the nineties because of
disintegration of former USSR and economic turmoil in these countries. Study reveals that
there is sharp increase in the trade with Developing countries which compensated the loss
suffered from East European market.

Niraj Kumar (2022) et al4 made a study on the Pre-& Post Liberalizations of Indian
Economy and Its Impact on the Foreign Trade. The study makes it clear that while India’s

3 Ajay Sood,16Impact of Economic Reforms on Directions of India’s Foreign Trade: An Evaluation of Three Decades. Assistant Professor (Economics) Himachal Pradesh
University, Shimla.84
International Journal of Humanities Social Science and Management (IJHSSM)
Volume 2, Issue 1, pp: 206-215.

4 124
Niraj Kumar Assistant professor Department of Economics C.M College Darbhanga, Bihar (India), Himanshu
125
Shekhar Professor Department of Economics Lalit Narayan Mithila University, Darbhanga, Bihar (India), A Study
14
on the Pre-& Post Liberalizations of Indian Economy and Its Impact on the Foreign Trade. 2022 IJCRT, Volume
10, Issue 11 November 2022, ISSN: 2320-2882.

36
25
economic rise is influencing East Asia’s economic integration, India itself has also been
strongly influenced by East Asia in its trade, investment and development strategies, and in
how it has undertaken economic reform and liberalization. It is suggested that to deepen its
economic integration with East Asia, India must overcome institutional obstacles and improve
operational capacity, which are the targets of its next stage of reform and liberalization. The
66
study also projects that owing to India’s persistent pursuit of its ‘Look East’ policy, its
economic integration with East Asia is likely to continue. It is also found that the foregoing
analyses, in the paper, indicate that in view of the last ten years’ pattern of consistent growth
of trade between East Asia and India, India’s trade volume would grow substantially with
China and East Asian countries in general.

Shaifali et al5 (2021) have tried in Analyzing the Role of Foreign Trade on Economic
83
Development of Nation. The main aim of the study is to find the significance of foreign trade
in the Indian economy. This study is mostly a qualitative analysis and hasn't used any statistical
24
tools for their analysis. This study sums up that international trade leads to economic progress
if policy procedures and economic infrastructure are flexible enough to cope with the resulting
24
changes in the financial and social environment. The study also suggests that today's
developing countries can rely on trade for considerably less of their growth and development
than developing economies did in the past. Due to less favorable demand and supply situations,
this is the case.

Suriaganth et al6 (2021) have made research on the Impact of Foreign Trade on the
5
Economic Growth of India. The objectives of the study were to analyze the trend of foreign
trade in India since 1991 and to analyze the impact on the economic growth of India. The study
is based on secondary data collected from Statistical Handbook published by RBI. To examine
the trend and composition of foreign trade in India after New Economic Policy of 1991 simple

5 60
Shaifali R. Puri, Dr. Saurabh Kumar, Analyzing the Role of Foreign Trade on Economic
24
Development Of Nation. Associate Professor, Department of Education/English, Himalayan
University, Ita Nagar (Arunachal Pradesh)
6 S. Suriaganth, Dr. A. Mohamed Abdullah,5Impact of Foreign Trade on the Economic Growth of India. 5The

Rajah’s College (Autonomous), (Affiliated to Bharathidasan University), Pudukkottai, Tamil Nadu, India. Indian
Journal of Economics and BusinessVol. 20 No. 1 (January-June 2021) Copyright@ Ashwin Anokha Publications
& Distributions

37
5
statistical tools like growth rate, percentage share calculations, and simple diagrams have been
used. The growth rates of exports (ΔX/X), Import (ΔI/I) and GDP (ΔI/Y) are obtained by using
the following

formula:

Grt = Yt-Yt-1/Yt-1 x 100

where Grt is the growth rate of variable Y for tth time compared to its previous year and,
5
it is represented as percentages. This study suggests that inspite of fluctuations in GDP growth
5
rate, the volume of trade is increasing day by day. It is also found that though import has a
negative influence on economic growth, the volume of trade reflected by economic openness
has a positive impact on the economic growth of India and its magnitude is increasing
continuously.

Nirmala Mani (2021) et al7 conducted a study on Trends of India’s Foreign Trade in
11
the Post economic Reforms Period. The study employed Autoregressive distributing lag
(ARDL) and vector autoregressive error correction model (VECM) models to assess the results.
11
The study found that India imports mineral fuel from Iran and India exports goods like
chemicals, articles of iron, drugs, and pharmaceuticals to Iran by importing and exports of
goods are considerable leads to economic development from the effect of competitive
advantage. The present study examined the India’ export performance of the nation during the
post-economic reforms period 1991-2018. The study reveals that there was efficient growth in
terms of foreign trade when compared to 1991 with 2018. Nearly two decades after the reforms
of 1991, this has created enormous growth in the Indian economy through accessing the large
markets beyond the national borders.

7 Nirmala Mani N, Associate Professor, Department of Economics, A.N.U. Ongole Campus, Ongole., Trends of
105
India’s Foreign Trade in the Post economic Reforms Period. 2021 IJCRT | Volume 9, Issue 5 May 2021 | ISSN:
2320-2882.

38
 Govindan et al8 (2020) have made an analysis on the Growth and Impacts of India’s
Foreign Trade - An Engine for Entrepreneurship and Economic Development. The main
4
objectives of the study were to examine the growth of India exports, imports and trade balance
from 1949-50 to 2018-19, to examine the principal commodities of India exports and imports
from 1949-50 to 2018-19, to study on top ten exports and imports by country and state wise
share from 2016-17 to 2018-19 and to study on India performance in global trade from 2011-
4
2017. This present research data was processed with the help of descriptive statistical
techniques applied such as tables, charts, mean, standard deviation and averages. It is used to
find out descriptive outcome of data. It also examines with help inferential statistical techniques
applied such as correlation, regression, ANOVA and Paired t test were tested for various
hypotheses. The present research study period data of exports, import and balance of trade were
4
starting from 1949-50 to 2018-19. This present research study finally concluded that export
profile of India state-wise share was secured by first rank secured by the Maharashtra, followed
by Gujarat and third position secured by Tamil Nadu. India’s exports by destination revealed
that the first position secured by USA, followed by United Arab Emirates and third rank
secured by China. India’s imports by destination revealed that the first position secured by
China, followed by USA and third rank secured by United Arab Emirates.

37
Radha Raghuramapatruni et al9 (2020) tried on analyzing the Impact of International
Trade on Economic Growth of India- through the ARDL Approach. The objective of the study
was to study and analyze the trend of international trade over the last 15 years and its impact
2
on the Indian economy. The study employs the Augmented Dickey Fuller (ADF) Test for unit
root and Autoregressive Distributive Lag Model (ARDL) cointegration approach which entails
the Wald Test, Long run OLS estimation test, Error Correction and short Run relationship
estimation test, as well as the short run Causality test. The data on the variables of model and
Trade Openness Indicator were sourced from the various data sources of The Handbook of

8 52
Govindan P, A Study on Growth and Impacts of India’s Foreign Trade - An Engine for Entrepreneurship and
Economic Development. Applied Econometrics and International Development Vol. 20-2 (2020) 161

9 2
Radha Raghuramapatruni, Reddy V. Surya Chaitanya, An Appraisal of the Impact of International Trade on
Economic Growth of India- through the ARDL Approach. Submitted 19/02/20, 1st revision 11/03/20, 2nd
2
revision 28/03/20, accepted 25/04/20, International Journal of Economics and Business Administration
Volume VIII, Issue 2, 2020.

39
2
Statistics on the Indian Economy and the UNCTAD, World Bank Databases. The Data for the
63
index and the model is collected and analyzed for the period of 1991 to 2017. The research
model is specified as follow:

GDP= f (EX, IM, EXR, DI, INF)

where: GDP- Real Gross Domestic Product

IMP- Imports (Imports to GDP ratio)

EX- Exports (Exports to GDP ratio)

DI- Domestic Investment (Gross Domestic Capital Formation as a Ratio of GDP)

INF- Inflation EXR-Exchange Rate

The equation takes the form of:

GDP= α + β1EX + β2IMP + β3EXR + β4INF + β5DI + U

2
Finally, this study concluded that the measures need to be taken to keep the rupee value stable
and the government needs to encourage domestic investments into the economy through
enhancement of gross capital formation as it boosts the economic growth of the country.

Satyanarayana Rentala (2019) et al10 made a survey on export performance of India and
11
its impact on GDP during post economic-reforms period. The study divulges that the joint trade
between the two republics grew considerably. India became a significant source for Iran's
imports with regards to trading of chemicals, man-made staple fibers, iron & steel products,
and cereals. Simultaneously, India offered a stable market for petroleum products to be
exported from Iran at competitive international prices. Thus, this serves as an evidential support
11
India and Iran mutually gained from the strategic economic and trade relations. Therefore, it is
submitted that Indian may endure and capture the wider exports market in the worldwide and
simultaneously may continue with the imports of necessary ram materials and innovative
technology for improve the production capacity for accomplish the exports efficiency of the
nation.

10

40
 Rijesh et al11 (2019) have studied regarding International Trade and Productivity
Growth in Indian Industry: Evidence from the Organized Manufacturing Sector. The objective
8
of the study was to examine the impact of international trade on productivity growth of the
8
organized manufacturing sector in India. They collected the production statistics of organized
manufacturing from the Annual Survey of Industries (ASI), published annually by the Central
Statistical Organization (CSO), Government of India.18 We have used Volume 1 of ASI, which
contains the summary result of registered factory sector at various classification levels
8
Econometric framework14 relates productivity growth (P) in manufacturing to the relative
import price (RP), import penetration (IMP) ratio, export intensity (EXI), CI and capacity
utilization (CU). That is,

Pj,t = f (RP, IMP, EXI, CI, CU)

where j refers to manufacturing sector and t refers to year. The first three traderelated variables
are intended to capture the theoretical channels outlined in section ‘Trade and Productivity:
Theoretical Propositions’. Specifically, the import price to domestic price ratio reflects the
effects of domestic market competition induced by importing cheap foreign goods. The study
8
suggests that organized manufacturing has witnessed considerable dynamism in terms of
growth in production, productivity and patterns of trade. There is evidence of a change in
specialization from less technology-intensive/traditional manufacturing to highly technology-
/skill-intensive modern activities. The growth in production is accompanied by an expansion
in productivity, both TFP and LP, most notably during the 2000s.

Adarsh Choubey et al12 (2019) have analyzed the role of WTO and Its Impact on Indian
47
Economy. The World Trade Organization, as an institution, was established in 1995. It replaced
the General Agreement on Trade and Tariffs (GATT) which has been in place since 1946. The
main objective of the study is to analyze and interpret the impact of the World Trade
Organization on the Indian economy. This study has opted for the descriptive way of analysis
and has covered both the primary and secondary sector for the study. The study has used the
data from the official website of the World Trade Organization for the descriptive analysis.

1172
RijeshR, International Trade and Productivity Growth in Indian Industry: Evidence from the Organized
Manufacturing Sector. Journal of South Asian Development 14(1) 1–39, 2019© The Author(s) 2019Sage Publications
India Private Limited Reprints
12Adarsh Choubey, B. Tech (Chemical) IIT, BHU. WTO and Its Impact on Indian Economy. 2019 JETIR January
2019, Volume 6, Issue 1 www.jetir.org (ISSN-2349-5162).

41
And since the paper has conducted a descriptive, they didn’t use any statistical tool for the
19
analysis. The paper suggests that India must continue its effort to prevent issues of
developmental importance to be side-lined. Until this is done WTO cannot impinge upon
sovereignty of India. India has already marked red line in sectors such as agriculture by making
it clear than there is no scope of compromise on its positions. West has relentlessly tried to
project India as rigid and uncompromising negotiator. However, these attributes are better
suited to U.S. and other developed countries. They have been backtracking on various
commitments under Doha Development Round and desperately trying to bring in new issues
including Singapore issues.

Pournima et al13 (2019) have studied on the Impact of Exchange Rate Fluctuations on
3
India’s Foreign Trade. The objective is to examine the impact of Exchange Rate on India’s
foreign trade. This study is mainly concerned with the fluctuation in the exchange rates and its
impact on the foreign trade of India. It also focuses on the concept whether there is any short-
3
run or long-run relationship exists between exchange rates and India's foreign trade. Secondary
data was obtained. The monthly values of exchange rates and foreign trade were extracted from
Reserve Bank of India website. The monthly values of exchange rate and India’s import and
export trade has been converted into Quarterly and only one country is taken i.e., India and
variables taken are exchange rate, foreign trade of India i.e., India’s import and export trade.
The study is carried out using Monthly data of Exchange Rate i.e., USD-INR and India’s
Foreign Trade i.e., India’s Export trade and India’s Import trade from January 2000 to
75
September 2018. The study has used Unit Root Test (Augmented Dickey Fuller Test (ADF),
3
Johansen Co-integration Test, Granger Causality Test for the analysis of the study. It has been
found that exchange rate is co-integrating between Foreign trade that conclude there is a long
run relationship between them, the reason could be as an exchange rate changes it has the effect
on foreign trade mostly on import as due to whenever there is appreciation in foreign currency
imports fall by a certain percentage i.e. in 2012-13, 11% appreciation in USD against INR leads
to 8% decrease in India's Import during that period. From the study, it can be concluded that
the past values of foreign trade can forecast the future value of the exchange rate for the short-
term period.

13Pournima 3 3
Dhume, Ms. Vitiksha Venji, Impact of Exchange Rate Fluctuations on India’s Foreign Trade. Assistant
Professor, Department of Commerce, Goa University, Taleigao Goa, India. 2019 IJRAR March 2019, Volume 6, Issue
1.

42
 6
Kritika Pathak et al1 14 (2019) have analyzed on India: Impact of Globalization. The
paper focuses on the changes in the economic performance of the country before and after
6
globalization. The paper shows the graph of import and export rates for the past 20 years to
draw an analysis and conclude the changes in the development of exports and imports in the
country. For the analysis purpose the paper has used the data for the past five years for the
interpretation of the impact of globalization. Therefore, the paper has concluded that the
6
Globalization has its own Positive and Negative impacts on the economy of a country in this
modern era. Government should reap the benefits from globalization by implementing policies
such that it can attract foreign direct investments. It is said that our policies are influenced by
the Corporates as there is an increase in billionaires according to Forbes list and the elections
are financed by the corporates so it’s obvious that the policies are influenced by them to fulfil
their own personal interests. China and Russia have utilized the FDI to elevate masses above
the poverty line, such policies can be adopted by India towards Globalization. Also, the exports
of the top 5 countries are taken for which the data for exports shows that they are increasing at
a decreasing rate. An extreme increase in the Trade Deficit has been observed from 2010-11 to
2015-16 with 92,115.15 USD Million.

Gopalakrishnan et al15 (2018) have studied on Impact of Foreign Trade in India in The
1
Post Liberalization Era. The main objective of the study is to analyze the trend and composition
of foreign trade in India since 1991 and to examine the role of foreign trade in economic growth
of India. The study is based on secondary data collected from Statistical Handbook published
by RBI. To examine the trend and composition of foreign trade in India after New Economic
Policy of 1991 simple statistical tools like growth rate, percentage share calculations, and
simple diagrams have been used. The growth rates of exports (ΔX/X), Import (ΔI/I) and GDP
(ΔI/Y) are obtained by using the following formula:

Grt = Yt-Yt-1/Yt-1 x 100

14Kritika Pathak, Divya MV, India: Impact of Globalization. Christ University, Bannerghatta Road Campus,
6
Bangalore, India. International Journal of Management and Commerce Innovations ISSN 2348-7585 (Online)
Vol. 7, Issue 1, pp: (752-755), Month: April 2019 - September 2019.

15 22
A. Gopalakrishnan, A. Mahalakshmi, A Study on Impact of Foreign Trade in India in The Post Liberalisation
Era. Associate Professor & Research Advisor, Department of Economics Periyar E.V.R. College (Autonomous),
1
Tiruchirappalli, Tamil Nadu, India. Volume: 6 Issue: 3 Month: June Year: 2018 ISSN: 2319-961X

43
1
where Grt is the growth rate of variable Y for tth time period compared to its previous year
and, it is represented as percentages. To examine the role of foreign trade in economic growth
of India, linear regression model has been used where Gross Domestic Product (GDP) at factor
cost at constant price is taken as a measure of economic growth; and volume of export, import
and economic openness in monetary terms are taken as variables of the study. Before applying
Ordinary Least Squares (OLS) method, the stationary of the concerned variables is tested using
1
Augmented Dickey Fuller (ADF) Test. The study also indicates that post liberalization era has
certainly helped India in achieving high growth in the economy as there has been a rapid growth
of imports of capital goods and technical raw materials to meet the requirement of
industrialization and growing imports of petroleum products for meeting industrial and
consumption requirement. It is also found that though import has a negative impudence on
economic growth, the volume of trade re ected by economic openness has a positive impact
on the economic growth of India and its magnitude is increasing continuously.

Radha Krishanan et al16 (2018) have studied the Role of WTO in Promoting
37
International Trade After Marrakesh Agreement. The objective of the study was to check if the
26
role of World Trade Organization qualitative in the international trade. The present research is
descriptive and conclusive. The study was concluded on secondary source of data books,
27
articles, journals, e-sources. The paper concludes that it must be valued that there are some dim
sides of WTO. Many immature nations have criticized the working of WTO as a pointless and
costly publicity for global exchange. Its work has been denounced on the ground that the WTO
is a method for created countries to take part in exchange wars and to have constrained section
26
in immature nations. There are two certainties that should stay: First, Governments, with or
without national help will probably keep on supporting the WTO, and Secondly, to achieve
globalization time is required.

Mini et al17 (2016) have studied on the Impact of Services Trade on India’s Economic
Growth and Current Account Balance: Evidence from Post-Reform Period. The objectives of

1658
Radha Krishnan H, Nivetha V, Role of WTO in Promoting International Trade After Marrakesh Agreement.
26
International Journal of Pure and Applied Mathematics Volume 120 No. 5 2018, 3271-3282 ISSN: 1314-3395 (on-line
version).
17 Mini P. Thomas, 7Impact of Services Trade on India’s Economic Growth and Current Account Balance: Evidence

from Post-Reform Period. PhD Candidate in Centre for Economic Studies and Policy, Institute for Social and
Economic Change (ISEC), Bangalore, India.

44
 60
the study were to analyze and interpret the impact of the international trade on the Indian
7
economy after the post-reform period. Thirlwall’s 1979 Balance of Payments Constrained
Growth (BPCG) model relates a country’s international trade to its economic growth and
current account balance. The model is explained in Thirlwall (2011) is as follows:

Ρ𝑑 Χ = Ρ𝑓 𝑀𝐸
7
where X and M refer to exports and imports respectively. P d is domestic price; Pf is
7
foreign price, and E is the exchange rate. The major findings that emerge from this study are
as follows. When Thirlwall’s Balance of Payments Constrained Growth Model is applied to
the Indian economy, it is found that the balance of payments equilibrium growth rate of goods
sector is lower than that of service sector. Also, the service sector is found to grow at a rate
almost equal to its balance of payments equilibrium growth rate (15.1%), whereas the goods
sector is growing at a rate higher than its balance of payments equilibrium growth rate. This
inherent asymmetry between goods sector and service sector has resulted in Indian economy
growing at a rate much higher than its balance of payments equilibrium growth rate, producing
a balance of payments deficit.

Harish et al18 (2013) have made research on The World Trade Organization and Its
Impact on Indian Businesses. This paper specifically focuses on the impact on the impact of
the World Trade Organization on the Indian Businesses. This study is completely a descriptive
analysis and hasn't used any specific statistical tool for the analysis process. This study has also
analyzed the impact of the various trade policies till 2013 that were prevailing in India. The
74
paper finally concludes that there needs to be a system of checks and balances in accordance
48
with aspects affecting trade. The completion of a WTO agreement reflects a broad appetite for
trade integration and reduces the risk that regional deals degenerate into a world of Balkanized
42
trade. Not before time that countries accepted the fact that just mere exploitation is not the route
42
for the betterment of humanity and the world must integrate and form a marketplace where
every country gets opportunities and protection.

18 65
Harish K. Raman, The World Trade Organization and Its Impact on Indian Businesses. Symbiosis Law School,
Pune (Constituent of Symbiosis International University).

45
 14
Attahiru Babaji Abubakar et al19 (2015) have studied the Impact of International Trade
on Economic Growth of India. International trade refers to the trade across national boundaries.
49
The objective of this study was to examine the impact of international trade on economic
growth of India and to determine the relationship between the components of international
14
trade and economic growth of India. The data on the variables were sourced from The
Handbook of Statistics on the Indian Economy and World Bank Database. The data was
2
collected for the period of 1980 to 2012. The study employed the Augmented Dickey Fuller
(ADF) Test for unit root and Autoregressive Distributive Lag Model (ARDL) Cointegration
approach which entails the Wald Test, Long run OLS estimation test, Error Correction and
Short run relationship estimation test, as well as the short run Causality test. The equation can
be written as:

GDP = f (EX, IM, EXR, DI, INF)

Where: GDP – Real Gross Domestic Product

IMP- Imports (Imports to GDP ratio)

EX- Exports (Exports to GDP ratio)

DI- Domestic Investment (Gross Domestic Capital Formation as a Ratio of GDP)

INF- Inflation. EXR- Exchange Rate.

GDP= α + β1EX + β2IMP + β3EXR +β4INF + β5DI + U, where U is random term.

14
The study also concluded that the government should take measures to lower the exchange rate
14
as this has a negative effect on economic growth. The study suggests that the government
should encourage domestic investment through enhancement of gross capital formation
because it boosts the economic growth of India.

19 14
Attahir Babaji Abubakar, An Appraisal of the Impact of International Trade on Economic Growth of India,
14
Department of Economics, MSc. Econometrics Student, SRM University Kattankulathur. Annamalai Journal of
Management,
Special Issue April 2015.ISSN-0974-0406, Page 30-35.

46
 Pushpalata Singh (2014) et al20 made a survey on the Performance of Foreign Trade in
1
India in the Post Liberalization Era. This study aims to achieve trend and composition of
foreign trade in India since 1991 and examine the role of foreign trade in economic growth of
India. The study is based on secondary data collected from Statistical Handbook published by
RBI. To examine the trend and composition of foreign trade in India after New Economic
Policy of 1991 simple statistical tools like growth rate, percentage share calculations and
54
simple diagrams have been used. The findings of the study are divided into two sub sections
29
according to the objectives of the study. Over the study period it has been observed that total
exports of India have increased after the adoption of New Economic policy in India. Although
India is facing continuous deficit in its balance of payment, but the overall prosperity is
unbounded. Despite fluctuations in GDP growth rate, the volume of trade is increasing day by
day.

Shubhada Sabade et al21 (2014) have analyzed on India’s Foreign Trade and Socio-
18
Economic Development Trio of WTO compliance, Currency Depreciation and Global Crisis.
The significant objective of the study is to analyze the Balance of Payment of 1991 and the
Liberalization, Privatization and Globalization model in India. This study is conducted from
the financial years 1991-92 to 2012-13. They have sourced the data from the economic survey
and from the official website of the World Trade Organization. For the analysis part they have
used the percentage change over the years and have made a comparative study. The study
2
suggests that if our dependence on imports and exports gets reduced, India can generate
incomes and employment especially to the masses at the bottom of the pyramid on the strength
of its own demand. India can identify and develop its own ‘growth drivers’ which can be a
separate research subject, rather than depending on the global growth engines. And economic

20 18
Pushpalata Singh. A, Assistant Professor, Department of Economics, Cachar College, Silchar-1, Performance
of Foreign Trade in India in the Post Liberalization Era. International Journal of Humanities Social Sciences and
Education (IJHSSE) Volume 1, Issue 10, October 2014, PP 11-17 ISSN 2349-0373 (Print) & ISSN 2349-0381
(Online).
21 18
Shubhada Sabade, India’s Foreign Trade and Socio-Economic Development Trio of WTO compliance,
Currency Depreciation and Global Crisis. Symbiosis Institute of Management Studies Annual Research
2
Conference (SIMSARC13), Associate Professor, Symbiosis Institute of Management Studies, Symbiosis
International University, Pune.

47
2
development is a sure way towards socio-cultural development. Independence, rather than
interdependence, may become the catch phrase of tomorrow.

Kanagasabapathy et al22 (2013) conducted a study on India’s Foreign Trade Policy. The
23
paper states about the trade policy announced on 27 August 2009, in the backdrop of the
economic crisis, kept the short-term objective of arresting and reversing the declining trend of
exports and sought to provide additional support to those sectors badly hit by the recession in
the developed world. Accordingly a policy objective of achieving an annual export growth of
15% with an annual export target of $200 billion (about $620 per person in the US) (about
$620 per person in the US) by March 2011 was set, and in the three years up to 2014, the
country was expected to come back on the high export-growth path of around 25% per annum
20
(Government of India 2009). Unfortunately, the growth target set for the years after 2012 turned
out to be too ambitious as exports declined sharply in the financial year (FY) 2012-13. To
conclude, after the eruption of the sub-prime crisis in the US which was followed by the
European crisis it was inevitable to change our focus towards non-traditional markets to keep
our exports alive, which have taken a major hit after the crisis and remained shaky. There is a
dire need to scale up exports in the wake of unabated and inevitable high imports.

Prabir De et al23 (2010) have made research on Global Economic and Financial Crisis:
India's Trade Potential and Prospects, and Implications for Asian Regional Integration. The
important objective of this paper is to analyze and conclude about the global trade in India and
13
its impact on the financial crisis in India. In the first part of this paper, the approach is to
estimate the trade potential between India and its partner countries for (a) the pre-crisis and (b)
13
the post-crisis periods. The data for the Gravity model are collected from several secondary
sources and taken in bilateral pairs. Appendix A provides the list of data sources and
classifications. The model considers data at the bilateral level for all the variables for their
individual partners. By including tariffs and transaction costs, it covers a major portion of trade

22 69
Kanagasabapathy K, Vishakha G Tilak, Krishnaswamy R., A Rethink on India’s Foreign Trade Policy, Economic
& Political Weekly EPW August 3, 2013, vol XLVIII no 31.
23 Prabir De, 2Global Economic and Financial Crisis: India’s Trade Potential and Prospects, and Implications for

Asian Regional Integration. Journal of Economic Integration 25(1), March 2010; 32-68.

48
 13
costs. This paper suggests that efforts to promote regional and global integration need to
address policy reform across a few areas and should not be limited to traditional trade policy
13
measures such as tariffs. Thus, it is concluded that the trade facilitation has an important
13
complementary role to play, in the broad sense, in enhancing India's trade. Finally, the actual
measures of trade costs in India and partner countries may be used to better estimate transport
costs between the countries.

37
Óscar Afonso et al24 (2001) analyzed the Impact of International Trade on Economic
17
Growth. The aim of the study was to analyze the impact of commercial and technological
effects (ignoring the financial component), resulting from IT, on the physical accumulation of
productive factors and on its improvement (efficiency gains). In other words, in the rate of EG,
during the evolution of economic growth theory. This study vaguely uses the descriptive way
of analyzation and interprets the results based on the percentage changes and mainly using the
17
theories of a few economists. This study suggests that trade openness tends to be beneficial for
growth. Especially for the DCs, because they affect the domestic rates of innovation. And for
the LDCs (which hardly invest in R&D) because of the dynamic effects of the economic
integration with DCs, the catch-up of the convergence, the importation of capital goods and the
capacity for adaptation and implementation of innovations.

David (2009) et al25 made a study on Impact of India’s Economy on its Foreign Policy
44
Since Independence. This study focuses on the impact of India’s economy on Indian foreign
policy since country’s independence in 1947. The first half, dealing with India’s economic
12
development, is divided into three parts. Not coincidentally, the three periods examined
coincide with three different phases in the principal drivers and underpinning Indian foreign
12
policy. These reforms gave impetus to sharp economic growth through liberalization of
12
government policies and the revitalization of the Indian private sector.1The essay concludes
that a transition has taken place in Indian foreign policy from the primacy of politics and geo-

24 59
Óscar Afonso, The Impact of International Trade on Economic Growth. CEMPRE, Faculdade de Economia do
Porto Rua Dr. Roberto Frias 4200-464 Porto, Portugal

2512
David
M. Malone President International Development Research Centre and Rajeev Chaturvedy Jawaharlal
88
Nehru University, New Delhi, Impact of India’s Economy on its Foreign Policy Since Independence, November
2009.

49
12
strategic considerations to a new emphasis on economic interests and ties, although economic
factors always influenced Indian leaders in their foreign policy choices from Nehru onward.

10
Grzegorz Bywalec et al26 (2020) made a study on Dynamics and Determinants of Trade
Exchange Between the European Union and India. This article attempts to identify and assess
trade exchange between the European Union and India, including an indication of the main
10
determinants of the process. In the last two decades, both the European Union and India have
grown to positions of global economic superpowers, and hence enjoy a considerable influence
on the shape of international trade relations and development processes. Therefore, the study
of the economic development of the EU and India, as well as their mutual relations, has become
10
an important topic within global economics. Trade exchange between the EU and India is
particularly important for India. Exports to the EU account for around 17-20% of Indian exports
in total. On the other hand, the EU’s share in Indian imports amounts to 10-12% of all imported
goods. Trade with India looks different from the EU side.

Nomfundo P. Vacu et al27 (2020) conducted a survey on The Determinants of Import

15
Demand. This paper provides a review of the theoretical and empirical literature on the key
determinants of import demand in developing and developed countries. Overall, the findings
from the studies reviewed in this paper show that the determinants of import demand differ
from country to country and over time depend on the proxies used to measure import demand.
Moreover, the findings confirmed that the key drivers of import demand depend on whether
the income variable is used as a single variable or is disaggregated into different components.
In general, many of the studies found that income and relative import price are the key
determinants of import demand – although the nature of the impact of these factors differs from
15
country to country. In the study, the theoretical and empirical literature survey on the
determinants of import demand is provided.

2610
Grzegorz BYWALEC, PhD, Professor UL Faculty of International and Political Studies, University of Lodz,
10
Dynamics and Determinants of Trade Exchange Between the European Union and India. DOI:
10.15290/oes.2020.03.101.10
27 Nomfundo82 P. Vacu , Nicholas M. Odhiambo the Determinants of Import Demand: A Review of International
Literature ISSN: 2065-0175

50
 50
Siti Aisah Ahmad et al28 (2017) made a survey on Determinants of Service Export in
Selected Developing Asian Countries. This paper attempts to empirically examine the
determinants of service export in selected developing Asian countries (China, Hong Kong,
South Korea, India, Iran, Indonesia, Malaysia, Philippines, Singapore, Thailand, Kuwait, Saudi
Arabia, and Turkey). The study conducted a static linear panel data analysis on annual data
30
covering the period of 1985-2012.This suggests that these countries have the opportunity to
compete globally by exporting services, provided that they are able to exploit and enhance their
potential by focusing on the significant and relevant indicators. To conclude, developing Asian
30
countries can compete in exporting services globally, if they can exploit their potential and
enhance their competitiveness in exporting services to the international market.

Fayaz et al29 (2016) made a study on Trends, Patterns and Determinants of Indian
31
Current Account Deficit. The study adopts Johansen Cointegration approach to identify long-
run relationships and uses Vector Error Correction Model (VECM) to identify short-run
relationships. The results of Johansen Cointegration test indicate the existence of long-run
equilibrium relationship between the current account and the variables of interest, implying
12
that India’s current account is influenced by these factors. The present study found a positive
12
relationship between WPI and the current account of India. Based on the empirical results of
this study, it can be concluded that continuously increasing NFAs will lead to the betterment
of the current account while, increase in imports encompassing exchange rate deterioration will
keep on mounting pressure on CAD of India.

Mini Thomas P et al30 (2015) made a study on estimation of the key economic
9
determinants of service trade. International trade theory has postulated different channels
through which a country’s current account balance depends critically on income and price
9
elasticities of demand of its exports and imports. The paper is organized as follows. Section 2
gives a review of literature and Section 3 comprises an empirical analysis. Section 3.1 provides
an overview of the growth trends in the two key economic determinants of India’s services

46
28Siti Aisah Ahmad, Shivee Ranjanee Kaliappan, Normaz Wana Ismail, Determinants of Service Export in
Selected Developing Asian Countries. International Journal of Business and Society, Vol. 18 No. 1, 2017,
113-132
29 Fayaz, Mohd Sandeep, Kaur Bhatia,70Trends , Patterns and Determinants of Indian Current Account Deficit,
Applied Econometrics and International Development Vol. 16-1 (2016).
30 Mini Thomas P,9Estimation of the Key Economic Determinants of Services Trade: Evidence from India, ISBN

978-81-7791-204-3,2015, Copyright Reserved the Institute for Social and Economic Change, Bangalore

51
9
trade. Section 3.2 specifies the empirical model for estimation of services export and import
demand functions and discusses the technique of estimation. Section 3.3 provides a brief
description of the variables and data sources used in this study. Section 3.4 gives the empirical
results. Section 4 gives the conclusion and major policy implications of the study. It is
9
concluded that India’s. service trade exhibits characteristics of a developed country as
expounded by Prebisch, because of which India is a net gainer when it engages in international
trade in services.

CHAPTER III

METHODOLGY

PERIOD OF STUDY:

52
 Annual data for ten years spanning from FY 2013-14 to FY 2022-23 has been used for
understanding the trend in international trade involving India and analyzing its impact on
Indian economy.

STUDY AREA:
64
The purpose of this research is to investigate the impact of international trade on the
Indian economy. The data from the year 2013 to 2023 is taken to analyze the impact of
international trade on Indian economy. The annual data of all the variables are taken.

PERIOD OF DATA:

A quantitative method incorporating secondary data from 2013 to 2023 was applied.

DATA SOURCES AND VARIABLE CONSTRUCTS:

14
The present study is based on secondary data. The data were collected from Handbook
of Statistics on the Indian Economy published by Reserve Bank of India. The data was also
collected from the Statista website.

22
LIMITATIONS OF THE STUDY:

The present study has certain limitations. Some of these are inherent in the research
design, while some others become part of the study during various stages of the research
process. The present study is subject to the following limitations:

1. The present study was based on secondary data.

22
2. The data collected were analyzed systematically to present a fair and unbiased picture
of implications.
108
3. The analysis and the interpretation in the present study is mainly based on the secondary
data published in the official website of Reserve Bank of India.

53
ANALYTICAL TOOLS:

The statistical/econometrics tools used for the analysis are as follows:

• Sum, mean, standard deviation, coefficient of variance, linear growth rate (LGR),
compound annual growth rate (CAGR)
• Linear forecast and trend
• Correlation

Mean (χ) :

33
The most popular way to describe a central tendency is probably using the Mean or
Average. The distribution's center of gravity is represented by the mean. Every score in a
distribution affects how the mean is calculated. It is also referred to as the arithmetic mean.
The mean is the distribution's overall average value (Krishnaswamy & Ranganathan, 2006).
97
The sum of all the values is divided by the total number of values to determine the mean. The
following formula can also be used to compute mean:

Σ𝑥
Χ = 94
Ν

Where,

• X= sample mean
• Σx= sum of scores in a distribution
• N= number of items

68
Standard Deviation (SD):

The standard deviation demonstrates the relationship between the set of scores and the
23
sample mean. The positive square root of the total squared deviations from the mean divided

54
the number of scores minus one is the standard deviation. It is the typical deviation from the
mean of measured values. When dispersion is expressed in the same unit as the original
measurement, the standard deviation is employed. It has the prefix (). The following formula
can be used to get the standard deviation:

Σ(𝜒 − 𝑥)2
𝜎=√
𝑛

45
Where,
• σ = Standard deviation
• Σ = sum of
• x= each value of the data set
• X= mean of all values in the data set
• n = number of values in the data set

Linear Growth Rate (LGR):

123
The equation below has been used to calculate the linear growth rate of various ratios;

Y = a + bt

Where,

• Y = Denotes the value of dependent variable

• a = Constant
• B = Co-efficient
• t= time period

Compound Annual Growth Rate (CAGR):

The following linear regression equation model has been used to estimate the
compound annual growth rate of various ratios:

Y = a + bt

Where,

• Y = Denotes the value of dependent variable

55
 • a = Constant
• b = Growth co-efficient of ‘t’ or parameter
• t = Number of years

For fitting the exponential equation with the help of linear trend equation method it was
transformed into Semi-log linear function;
62
Log Y = log a + t log b

That is Y = a + bt

Where,

• Y = Log Y
• a = log a
• b = log b

Using the data of ‘y’ and ‘t’ with above specification, the regression functions of y =
a+bt were employed and the Annual Compound Growth Rate was calculated by using the
formula.
𝐶𝑜𝑚𝑝𝑜𝑢𝑛𝑑 𝑔𝑟𝑜𝑤𝑡ℎ 𝑟𝑎𝑡𝑒 𝑖𝑛 𝑝𝑒𝑟𝑐𝑒𝑛𝑡 = (𝐴𝑛𝑡𝑖 log 𝑜 𝑓 𝑏 − 1) × 100

Co-efficient of Variation (CV):

The co-efficient of variation is the name for the relative measure of dispersion. It served
as a tool for assessing the variability of two or more series. The proportion that results when
the standard deviation and arithmetic mean are used to express the relative dispersion is referred
to as the co-efficient of variability.

𝜎
Co-efficient of variation = Χ

Where,

• σ =Standard Deviation
• X = Mean

56
 Correlation:

The correlation is the process of establishing a connection or relationship between Two

71
or more objects. It's a typical technique for describing straightforward connections without
113
explicitly stating cause and consequence. The measure works best when there is a linear
relationship between the variables being employed. The correlation coefficient is a number that
represents how closely two variables are related to one another.

Σ(𝑥 − 𝑋)(𝑦 − 𝑌)
𝑟𝑥𝑦 =
√Σ(𝑥 − 𝑋)2 Σ(𝑦 − 𝑌)2

40
Where,

• r = the correlation coefficient of the linear of the linear relationship between the
variables x and y
• x = the values of the x-variable in a sample
• y = the mean of the values of the y-variable
• N = the number of observations in the sample

57
 CHAPTER IV
ANALYSIS AND INTERPRETION

57
4.1 INTRODUCTION:

This chapter shows the analysis and interpretation of the study on impact of foreign
trade on Indian economy. This analysis is based on the secondary data collected from FY 2013-
14 to FY 2022-23. The data regarding the imports and exports were collected from the official
website of Reserve bank of India. The interpretation was done using statistical tools such as
Mean, Standard Deviation, Correlation of Variance, Correlation, Compound Annual Growth
Rate.

4.2 RESEARCH OBJECTIVE – I:

Objective: To find out the growth and pattern of foreign trade in India from FY 2013-14 to FY
2022-23.
53
Introduction: Foreign trade has played a significant role in shaping the economy of India over
the past decades. The trend of foreign trade has been analyzed for the study period using various
statistical tools.

Table 4.1 Total Exports (in crores)

YEAR EXPORT CHANGE (in GROWTH RATE

crores) (in %)
2013-14 1905011 - -
2014-15 1896445 -8566 -0.449656196
2015-16 1716384 -180061 -9.494659745
2016-17 1849434 133050 7.751761844
2017-18 1956515 107081 5.789933569
2018-19 2307726 351211 17.95084628
2019-20 2219854 -87872 -3.807731074
2020-21 2159043 -60811 -2.739414394

58
 2021-22 3147021 987978 45.75999644
2022-23 3620631 473610 15.04947059
SUM 22778064 - -
MEAN 4141466.182 - -
SD 620341.2548 - -
CV 0.149787835 - -
CAGR 11.24%
18
Source: Handbook of Statistics on the Indian Economy, Reserve Bank of India
34
SD: Standard deviation; CV: Co-efficient of variation; CAGR: Compound Annual Growth
Rate.

From the table 4.1 we could clear see the fluctuations in the exports of India for the last
ten years. Ther has been a drastic decrease in the exports during FY 2015-16. There is almost
a 9.5% decrease in the exports but there is a clear increase from then on, this was due to the
implementation of the Foreign Trade Policy 2015. Going forward there comes a decline in the
exports in FY 2019-2020 and the successive year too, this was because of the covid pandemic
and India has also managed to increase the export in the forthcoming years and there has been
clear increase post the pandemic. The CAGR, which measures the overall growth achieved
during the study period, shows that there has been an 11.24% growth in exports over the period.

Table 4.2 Total Imports (in crores)

YEAR IMPORT CHANGE (in GROWTH RATE

crores) (in %)
2013-14 2715434 - -
2014-15 2737087 21653 0.797404761
2015-16 2490306 -246781 -9.016191301
2016-17 2577675 87369 3.508364032
2017-18 3001033 423358 16.42402553
2018-19 3594675 593642 19.78125532
2019-20 3360954 -233721 -6.501867345
2020-21 2915958 -444996 -13.24016931
2021-22 4572775 1656817 56.81895967
2022-23 5733959 1161184 25.39342084

59
 SUM 33699856 - -
MEAN 6127246.545 - -
SD 1035937.432 - -
CV 0.16907063 - -
CAGR 12.66%
18
Source: Handbook of Statistics on the Indian Economy, Reserve Bank of India
34
SD: Standard deviation; CV: Co-efficient of variation; CAGR: Compound Annual Growth
Rate.

From the table 4.2 we could have a clear idea about the import rates in India for the past
ten years. Like the export rates there is a decrease in the imports in the in FY2015-16, this
decrease was due to the economic downturn and the fluctuations in the exchange rate prevailing
that particular year. Then there is an increase the imports the successive year, this is due to the
economic recovery and the implications of the foreign trade policy 2015. The CAGR, which
measures the overall growth achieved during the study period, shows that there has been a
12.66% growth in imports over the year.

Table 4.3 Trade Balance of India

YEAR EXPORT IMPORT TRADE BALANCE

2013-14 1905011 2715434 -810423
2014-15 1896445 2737087 -840642
2015-16 1716384 2490306 -773922
2016-17 1849434 2577675 -728241
2017-18 1956515 3001033 -1044518
2018-19 2307726 3594675 -1286949
2019-20 2219854 3360954 -1141100
2020-21 2159043 2915958 -756915
2021-22 3147021 4572775 -1425754
2022-23 3620631 5733959 -2113328
76
Source: Handbook of Statistics on the Indian Economy, Reserve Bank of India
43
The table 4.3 shows the trade balance of India for the past 10 years. The trade balance
is calculated as the difference between the total exports and total imports. A positive trade
balance (surplus) occurs when exports exceed imports, while a negative trade balance (deficit)

60
occurs when imports exceed exports. The data shows the trade balance for the past 10 years
and for every single year the trade balance shows a deficit balance, that means the imports are
more than the exports for the past 10 years. This is one of the important reasons for India still
being a developing country. The country experienced a trade deficit throughout this period,
indicating that imports consistently exceeded exports. There were notable fluctuations in the
trade balance, with the trade deficit narrowing in some years and widening in others. The most
significant improvement in the trade balance occurred in 2021-22 when the deficit substantially
decreased. This might suggest increased exports or reduced imports during that year. Economic
conditions, global trade dynamics, government policies, and external factors can influence
trade balances. Understanding these factors is crucial for a comprehensive analysis of trade
performance. Reducing the deficit in trade balance is one of the foremost steps for India to
attain the status of a developed country. When the country has a surplus of trade balance it
57
depicts the country’s self-sufficiency level. It's important to monitor trade balances as they can
have implications for a country's foreign exchange reserves, economic stability, and overall
trade policy decisions.

Table 4.4 Exports of Oil and Non-Oil Products

OIL PRODUCTS NON-OIL PRODUCTS

YEAR
VALUE CHANGE PERCEN VALUE CHANGE PERCEN
(in crores) (in crores) TAGE (in crores) (in crores) TAGE
CHANGE CHANGE
(in%) (in%)
2013-14 383248 - - 1521763 - -

2014-15 346082 -37166 - 1550363 28600 1.8793990

9.6976370 92
39
2015-16 199638 -146444 - 1516747 -33616 -2.1682664
42.314827
12
2016-17 211509 11871 5.9462627 1637925 121178 7.9893350
36 7

61
 2017-18 241435 29926 14.148806 1715080 77155 4.7105331
91 44
2018-19 325929 84494 34.996582 1981797 266717 15.551286
93 24
2019-20 292340 -33589 - 1927514 -54283 -
10.305618 2.7390797
71 34
2020-21 190896 -101444 - 1968147 40633 2.1080521
34.700690 33
98
2021-22 503850 312954 163.93952 2643171 675024 34.297438
73 15
2022-23 781744 277894 55.154113 2838887 195716 7.4045909
33 25
SUM 3476671 - - 19301394 - -

MEAN 347667.1 - - 1930139.4 - -

SD 180718.34 - - 465700.27 - -
4 52
CV 0.5198028 - - 0.2412780 - -
34 52
CAGR 18.88% - - 18.85% - -

18
Source: Handbook of Statistics on the Indian Economy, Reserve Bank of India
34
SD: Standard deviation; CV: Co-efficient of variation; CAGR: Compound Annual Growth
Rate.

From table 4.4 we could clearly see the changes in the rate of the changes in the export
of oil and non-oi products for the past decade. The fluctuations might be due to various reasons
during the study period. Over time, the value of oil products fluctuated from its initial value of
383,248 crores in 2013–14. With a growth of 34.99%, the most notable increase happened in
the academic year 2018–19. This might be the result of rising oil product demand, possibly
brought on by other causes like economic expansion. The biggest decline, which occurred in
62
2020–21, was 34.70%. There could be a few reasons for this, including the COVID-19
pandemic's effects, which decreased economic activity and travel and so decreased demand for
oil goods. Non-oil product value fluctuated as well, beginning at 1,521,763 crores in 2013–14.
With a gain of 1.88%, 2014–15 saw the biggest increase. This might be the result of things like
better manufacturing or higher exports. With a reduction of 2.74%, 2019–20 had the biggest
decrease. Possible contributing variables include trade tensions, economic reasons, or
decreased consumer expenditure.

For both oil and non-oil products, the CAGR is roughly 18.88% and 18.85%, in that
order. This implies that there was a steady growth trend for the whole time. A rising population,
burgeoning industries, or a strengthening economy could be the main drivers of this consistent
growth. Oil products have a relatively high standard deviation, which suggests significant
variance from year to year; non-oil items, on the other hand, have a lower SD, which suggests
more consistent growth. Since oil products have a greater CV than non-oil products, their
values are likely to be more erratic than average. Ultimately, a variety of economic,
geopolitical, and environmental reasons can be blamed for the variations in these numbers.
Changes in oil prices, economic expansion or contraction, governmental initiatives, the
dynamics of international trade, and outside occurrences such as the COVID-19 pandemic are
a few examples of these.

Table 4.5 Imports of Oil and Non-Oil Products

OIL PRODUCTS NON-OIL PRODUCTS

YEAR
VALUE CHANGE PERCEN VALUE CHANGE PERCEN
(in crores) (in crores) TAGE (in crores) (in TAGE
CHANGE crores)2 CHANGE
(in%) (in%)2
2013-14 997885 - - 1717548 - -

2014-15 842874 -155011 - 1894212 176664 10.285826

15.533954 07
31

63
 2015-16 540505 -302369 - 1949801 55589 2.9346767
35.873570 94
66
2016-17 583217 42712 7.9022395 1994458 44657 2.2903362
72 96
2017-18 700321 117104 20.078975 2300713 306255 15.355299
75 54
2018-19 986275 285954 40.831847 2608400 307687 13.373549
11 85
2019-20 925168 -61107 - 2435787 -172613 -
6.1957364 6.6175816
83 59
2020-21 611353 -313815 - 2304605 -131182 -
33.919785 5.3856104
38 82
2021-22 1207803 596450 97.562292 3364972 1060367 46.010791
16 44
2022-23 1682475 474672 39.300448 4051483 686511 20.401685
83 36
SUM 9077876 - - 24621979 - -

MEAN 907787.6 - - 2462197.9 - -

SD 346426.50 - - 728183.15 - -
66 33
CV 0.3816162 - - 0.2957451 - -
58 77
CAGR 17.20% - - 24.15% - -

The table 4.5 shows the changes in the rate of imports of oil and non-oil products in
India. The petroleum products are one the commodities that being imported by India from the
gulf countries. The changes in the rates could be due to various reasons in the Indian economy.
The data starts with oil products valued at 383,248 crores in 2013–14. There are notable

64
variations in it over time. The most notable expansion was recorded in 2017–18, a 27.88% rise.
Demand and growing global oil prices could be the causes of this development. On the other
hand, a 34.70% decrease happens in 2020–21, which is the most significant decline. This
dramatic decline is probably due in part to the COVID-19 pandemic and its effects on oil prices
and demand. Non-oil products had a starting value of 1,521,763 crores in 2013–14, and their
value fluctuated over time. With a growth rate of 12.41%, 2018–19 shows the largest gain.
Increased consumer spending and better economic conditions could be the cause of this surge.
In comparison, the biggest decline, which was 4.49%, occurred in 2019–20. Trade disputes and
economic uncertainty may have an impact on this.

The compound annual growth rate (CAGR) for oil and non-oil products is roughly
14.22% and 10.65%, respectively. This suggests that oil products are growing at a steady but
marginally faster rate. Factors including population increase, industry development, and
economic expansion are responsible for this consistent growth. Oil products have a relatively
high standard deviation, indicating significant year-to-year volatility. The SD is less for non-
oil products, suggesting more steady growth. Compared to non-oil items, oil products have a
higher CV, which indicates higher volatility in relation to their mean value. These values have
fluctuated for a variety of reasons, including variations in the price of oil globally, the state of
the economy, geopolitical events, and outside shocks like the COVID-19 epidemic. In the
context of the area or industry being studied, it is imperative to consider the drivers and outside
events affecting the non-oil and oil product sectors. In conclusion, this data shows how the
values of both oil and non-oil products are dynamic and change over time due to a complex
interaction between external, market, and economic factors.

4.3 RESEARCH OBJECTIVE – II:

Objective: To predict the forecast value of exports and imports in India from 2024 to 2028.
53
Introduction: The aspect of foreign trade has played a significant role in shaping the Indian
economy. And forecasting the foreign trade based on a few parameters might give us a rough
idea of the changes in the global trend from the view of Indias foreign trade.

Table 4.6 Forecasting of Exports in India

YEAR EXPORTS (in crores)

65
 2024 3804079.464
2025 3987527.927
2026 4170976.391
2027 4354424.855
2028 4537873.318

Chart 4.1 Forecast of Exports

FORECAST OF EXPORTS

5000000
EXPORTS (IN CRORES)

4000000

3000000

2000000

1000000

0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
YEAR

EXPORT Forecast(EXPORT) Linear (EXPORT)

The above table and chart show the trend and forecasting of the exports for the
upcoming 5 years. The data shows a positive outlook for export performance in the coming
years (2024 to 2028). Each year's projection indicates an increase in exports compared to the
previous year, suggesting a consistent upward trend in export values. This outlook assumes
that economic conditions, market demand, and other factors will be favorable for the country's

66
exports during this period. However, it's important to keep in mind that these are forecasts and
are subject to change based on evolving economic conditions, trade policies, and global events.
It will be crucial for policymakers and businesses to monitor these projections and adapt
strategies as needed to achieve and sustain export growth.

Table 4.7 Forecasting of Imports in India

YEAR IMPORTS (in crores)

2024 6039383.465
2025 6344807.93
2026 6650232.395
2027 6955656.861
2028 7261081.326

Chart 4.2 Forecast of Imports

FORECAST OF IMPORTS
8000000
7000000
IMPORTS (IN CRORES)

6000000
5000000
4000000
3000000
2000000
1000000
0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
YEARS

IMPORT Forecast(IMPORT) Linear (IMPORT)

The above table and chart show the trend and forecasting of the imports for the
upcoming 5 years. The data shows a positive outlook for import performance in the coming
years (2024 to 2028). Each year's projection indicates an increase in imports compared to the
previous year, suggesting a consistent upward trend in import values. This outlook assumes

67
that economic conditions, market demand, and other factors will lead to an increase in imports
during this period. It's important to note that these are forecasts and are subject to change based
on evolving economic conditions, trade policies, and global events. Import projections are
essential for assessing the demand for foreign goods and raw materials, but they should be
monitored and analyzed alongside export projections to evaluate the trade balance and its
implications for the country's economy.

Table 4.8 Forecasting Exports of Oil Products

YEAR EXPORT OF OIL PRODUCTS

(in crores)
2024 811890.1636
2025 842036.3273
2026 872182.4909
2027 902328.6545
2028 932474.8182

Chart 4.3 Forecast of Export of Oil Products

FORECAST OF EXPORT OF OIL PRODUCTS

1000000
900000
EXPORT OF OIL PRODUCTS

800000
700000
600000
500000
400000
300000
200000
100000
0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
YEAR

OIL PRODUCTS Forecast(OIL PRODUCTS ) Linear (OIL PRODUCTS )

Over the course of the five years, the data clearly demonstrates a rising tendency in the
export of oil products. The values are rising year after year, suggesting expansion in the oil

68
product export sector. Growing demand for oil products on the domestic or foreign market, or
both, may be indicated by rising oil product exports. This trend may be influenced by variables
such as rising economic growth, heightened industrial activity, or modifications in consumer
behavior. The economy will probably benefit from an increase in oil product exports. It may
result in more income, the development of jobs, and even a trade surplus for the nation, all of
which would be beneficial to the outlook for the economy businesses and decision-makers
should utilize this information to create long-term plans that complement the anticipated
expansion of the market for oil product exports. This might entail market diversification,
sustainable business practices, and infrastructural development. In conclusion, the data points
to an encouraging and steady trend in the export of petroleum products. However, to guarantee
sustainable growth in this business, players must maintain vigilance and adjust to shifting
market conditions and outside influences.

Table 4.9 Forecasting of Exports of Non-Oil Products

YEAR EXPORT OF NON-OIL PRODUCTS

(in crores)

2024 2966766.647
2025 3105598.222
2026 3244429.796
2027 3383261.371
2028 3522092.946

69
 Chart 4.4 Forecast of Export of Non-Oil Products

FORECAST OF EXPORT OF NON-OIL PRODUCTS

4000000
EXPORT OF NON-OIL PRODUCTS

3500000
3000000
2500000
2000000
1500000
1000000
500000
0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
YEAR

NON-OIL PRODUCTS Forecast(NON-OIL PRODUCTS ) Linear (NON-OIL PRODUCTS )

Over the course of the five-year period, the data indicates a distinct and steady increase
trend in the projected exports of non-oil items. Every year, the value rises over the year before,
showing a trajectory of growth. We may compute the percentage increase in exports year over
year to get an idea of the growth pace. For instance, it is predicted that exports will rise by
about 4.68% between 2024 and 2025 (3,105,598.222 - 2,966,766.647) / 2,966,766.647] * 100).
This suggests that the growth rate is comparatively constant. Opportunities for investment in
non-oil product-related industries may arise from rising exports. This increasing demand may
be advantageous to investors and companies in these industries. The data, taken together, points
to a favorable picture for non-oil product exports, implying prospects for economic expansion
and growth in the nation or area. Nonetheless, to maintain and optimize the advantages of this
trend, it's critical to keep an eye on a few variables and put the right regulations in place.

Table 4.10 Forecasting of Import of Oil Products

YEAR IMPORT OF OIL PRODUCTS

(in crores)

2024 1699309.66
2025 1762314.865
2026 1825320.071
2027 1888325.276

70
 2028 1951330.481

Chart 4.5 Forecast of Import of Oil Products

FORECAST OF IMPORT OF OIL PRODUCTS

2500000
IMPORT OF OIL PRODUCTS

2000000

1500000

1000000

500000

0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
YEAR

OIL PRODUCTS Forecast(OIL PRODUCTS) Linear (OIL PRODUCTS)

According to the data, the import of oil products increased steadily and consistently
throughout the course of the five years. The annual increase in import numbers suggests that
there is a rising need for oil goods in this area. Importing more oil products can have a big
impact on the economy. It can imply an increasing reliance on imported energy, which could
influence a nation's trade balance and energy security. Furthermore, changes in the price of oil
globally might affect the cost of imports and, in turn, the economy. Companies in the oil and
energy industry can use this information to evaluate market trends and make well-informed
choices about investment, production, and distribution in this area. The increasing trend in
imports of oil products can offer chances for investment in the transportation, energy, and
infrastructure sectors. Investors ought to take these areas' growth potential into account. It is
noteworthy that these observations are predicated solely on the data that has been provided.
Additional background information on the area, its economic circumstances, energy policies,
and global oil market patterns would be necessary for a more thorough examination.

Table 4.11 Forecasting of Import of Non-Oil Products

YEAR IMPORT OF NON-OIL PRODUCTS

(in crores)

71
 2024 4206494.854
2025 4417267.745
2026 4628040.636
2027 4838813.527
2028 5049586.418

Chart 4.6 Forecast of Import of Non-Oil Products

FORECAST OF IMPORT OF NON-OIL PRODUCTS

6000000
IMPORT OF NON-OIL PRODUCTS

5000000

4000000

3000000

2000000

1000000

0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
YEAR

NON-OIL PRODUCTS Forecast(NON-OIL PRODUCTS ) Linear (NON-OIL PRODUCTS )

The data demonstrates a yearly rise in non-oil product imports. The import values climb
steadily between 2024 and 2028, increasing annually in crores. The import value is expected
to grow to 5,049,586.418 crores by 2028, which is a significant sum. This could be the result
of things like rising customer demand, shifting market dynamics, or trade-related government
regulations. Import values may also be impacted by shifts in inflation rates and currency values.
Inflation and currency rate variations could influence an increasing import trend. It's critical to
consider the precise non-oil products that are being imported. Various variables, such as shifts
in global supply chains, technological improvements, or changes in customer preferences,
could be responsible for the growth. Businesses and policymakers should prepare carefully,
considering potential risks and uncertainties in the global economy, such as geopolitical
tensions, economic crises, or unanticipated occurrences that could impede trade, even though
this data indicates growth. Overall, the data points to a favorable trend in non-oil product
imports, and it can be a useful tool for decision-making and forecasting market dynamics for
firms and policymakers in the years to come.

72
 CHAPTER V
85
FINDINGS AND CONCLUSION:

This chapter deals with the summary of the findings and conclusions of the study.

96
FINDINGS OF THE STUDY:

The major findings of the study are:

• The exports of the country had a steady decrease in the rate util 2015, and there was a
gradual increase from then on. This was due to the implications of the Foreign Trade
39
Policy 2015. This policy merged various schemes into a single Merchandise Export
from India Scheme (MEIS) and simplified the nomenclature of Export Houses. The
policy also introduced incentives for Special Economic Zones and recognized
successful business leaders as Status Holders.The avrage of the exports is 4141466.182.
The standard deviation remains at 620341.2548. The correlation of the variation is
0.149787835. The CAGR was also calculated to find the change over the years, and the
CAGR of the exports stands at 11.24%
• The imports also have the same case similar to that of the exports of the nation. There
is a steaady incresase in the rate of imports post 2015 but there is clear decline during
2019 –20 and the year after, this is clearly due to the covid pandemic. There is aso a
clear increase post the covid pandemic this show that the country has gradualy
recovered from the pandemic. The avrage of the imports is 6127246.545. The standard
deviation remains at 1035937.432. The correlation of the variation is 0.16907063. The
CAGR was also calculated to find the change over the years, and the CAGR of the
imports stands at 12.66%.

73
• The trade balance of the country, that is the exports over the imports, has shown a deficit
balance throughout the decade. This is not only the case for this decade, but the deficit
balance problem has also prevailed for years going back. The deficit balance of trade
clearly implies that the country is still developing and not self-sufficient. This can also
be due to the problem of excessive population prevailing in the country. But the most
noticeable trend is the substantial increase in trade deficits in the last two years (2021-
22 and 2022-23). These deficits are notably larger compared to earlier years. Trade
deficits can impact a country's overall economic balance, as they may require financing
through borrowing or drawing down foreign exchange reserves. Policymakers often
monitor trade balances closely to assess economic health and trade policy effectiveness.
• The data shows notable variations in the exports of both oil and non-oil items during
the ten-year period from 2013–14 to 2022–23. Exports of oil products were rather
unstable in prior years, but they saw substantial growth in 2021–2022. Exports of goods
other than oil showed more consistent growth, with a notable uptick in 2022–2023. The
Compound Annual Growth Rate (CAGR) for oil products and non-oil products in both
categories was approximately 18.88% and 18.85%, respectively, indicating steady
long-term growth. On the other hand, non-oil goods' standard deviation and coefficient
of variation showed increased year-to-year variability. The dynamism of export
movements and their potential for a range of economic effects are highlighted by this
data.
• The data shows notable fluctuations in imports of both non-oil and oil across the ten-
year period from 2013–14 to 2022–23. Imports of oil products fluctuated, with a notable
increase in 2021–2022 that resulted in a 17.20% Compound Annual Growth Rate
(CAGR). Imports of non-oil products increased more steadily, with a CAGR of 24.15%.
This data highlights how the economy is changing, with a discernible trend toward
diversification and a decrease in reliance on imports related to oil. The noteworthy
increase in non-oil imports indicates how important they are becoming in influencing
the dynamics of imports and promoting sustainability and economic stability.
• The forecast for both the exports and imports shows a steady increase in the next five
years. This still means that there is a possibility for the deficit in the trade balance to
continue further in the upcoming years too. But, however, it's important to keep in mind
that these are forecasts and are subject to change based on evolving economic
conditions, trade policies, and global events. It will be crucial for policymakers and

74
 businesses to monitor these projections and adapt strategies as needed to achieve and
sustain export growth.
• The forecast shows a steady upward trend in oil product exports over the five-year
period, indicating sector expansion. This probably means that demand is rising because
of things like economic expansion and changes in consumer habits. A rise in exports of
this kind could strengthen the economy by creating jobs, revenue, and a trade surplus.
Businesses and decision-makers should think about tactics like market diversification,
sustainability, and infrastructure development to take advantage of this potential trend.
In summary, although the data presents a positive image of the oil product export
market, sustainable growth depends on the ability to adjust to changing market
conditions.
• Over the course of the five years, the data indicates a consistent and steady increase in
the import of oil goods, indicating increased demand. The trade balances and energy
security may be impacted by this increase in reliance on imported energy. The economy
may also be impacted by changes in the price of oil globally. This data can be used by
companies in the oil and energy sector to make strategic decisions about infrastructure,
energy, and transportation developments. However, further background information on
the region's economic circumstances, energy regulations, and developments in the
world oil market would be necessary for a more thorough examination.

CONCLUSION:
91
In conclusion, the study on the impact of foreign trade on the Indian economy highlights
the significant role that international trade plays in shaping the economic landscape of India.
Over the years, India has experienced both benefits and challenges stemming from its
engagement in global trade. On one hand, foreign trade has facilitated economic growth, job
creation, and access to a wider range of goods and services for its citizens. On the other hand,
it has also exposed the Indian economy to external shocks and vulnerabilities.

The findings of this study emphasize the need for a balanced and strategic approach to
foreign trade policy. India must continue to harness the opportunities presented by
globalization while actively addressing issues such as trade imbalances, protectionism, and

75
environmental sustainability. Moreover, investments in infrastructure, technology, and skill
development will be essential to enhance India's competitiveness in the global marketplace.

In an increasingly interconnected world, foreign trade will remain a cornerstone of

India's economic development. Therefore, policymakers, businesses, and stakeholders must
work together to ensure that trade policies are adaptive, inclusive, and aligned with the broader
goals of sustainable economic growth and prosperity for all segments of society.

76
 BIBLIOGRAPHY

• Priyanka Karmaka, Suvan Taso Lepcha, Growth and Impact of India’s Foreign Trade
–Engine of Economic Development. Department of Economics Bijoy Krishna Girls’
College, West Bengal. June 2022, Vol. 3 Issue. 1, PP. 27-39.
• Diptibala R. Solanki, International Trade and Economic Growth. International Journal
of Education, Modern Management, Applied Science & Social Science (IJEMMASSS)
23 ISSN: 2581-9925, Impact Factor: 6.340, Volume 04, No. 01(III), January - March
2022, pp.23-26.
• Ajay Sood, Impact of Economic Reforms on Directions of India’s Foreign Trade: An Evaluation of Three Decades. Assistant

Professor (Economics) Himachal Pradesh University, Shimla. International Journal of Humanities Social Science and Management

(IJHSSM), Volume 2, Issue 1, pp: 206-215.

• Niraj Kumar Assistant professor Department of Economics C.M College Darbhanga,

Bihar (India), Himanshu Shekhar Professor Department of Economics Lalit Narayan
Mithila University, Darbhanga, Bihar (India), A Study on the Pre-& Post
Liberalizations of Indian Economy and Its Impact on the Foreign Trade. 2022 IJCRT,
Volume 10, Issue 11 November 2022, ISSN: 2320-2882.
• Shaifali R. Puri, Dr. Saurabh Kumar, Analyzing the Role of Foreign Trade on Economic
Development of Nation. Associate Professor, Department of Education/English,
Himalayan University, Ita Nagar (Arunachal Pradesh)
• S. Suriaganth, A. Mohamed Abdullah, Impact of Foreign Trade on the Economic
Growth of India. The Rajah’s College (Autonomous), (Affiliated to Bharathidasan
University), Pudukkottai, Tamil Nadu, India. Indian Journal of Economics and
Business Vol. 20 No. 1 (January-June 2021) Copyright@ Ashwin Anokha Publications
& Distributions

77
• Nirmala Mani N, Associate Professor, Department of Economics, A.N.U. Ongole
Campus, Ongole., Trends of India’s Foreign Trade in the Post economic Reforms
Period. 2021 IJCRT | Volume 9, Issue 5 May 2021 | ISSN: 2320-2882.
• Govindan P, A Study on Growth and Impacts of India’s Foreign Trade - An Engine for
Entrepreneurship and Economic Development. Applied Econometrics and International
Development Vol. 20-2 (2020) 161.
• Radha Raghuramapatruni, Reddy V. Surya Chaitanya, An Appraisal of the Impact of
International Trade on Economic Growth of India- through the ARDL Approach.
Submitted 19/02/20, 1st revision 11/03/20, 2nd revision 28/03/20, accepted 25/04/20,
International Journal of Economics and Business Administration Volume VIII, Issue 2,
2020.
• Rijesh R, International Trade and Productivity Growth in Indian Industry: Evidence
from the Organized Manufacturing Sector. Journal of South Asian Development 14(1)
1–39, 2019© The Author(s) 2019Sage Publications India Private Limited Reprints.
• Adarsh Choubey, B. Tech (Chemical) IIT, BHU. WTO and Its Impact on Indian
Economy. 2019 JETIR January 2019, Volume 6, Issue 1 (ISSN-2349-5162).
• Pournima Dhume, Ms. Vitiksha Venji, Impact of Exchange Rate Fluctuations on
India’s Foreign Trade. Assistant Professor, Department of Commerce, Goa
University, Taleigao Goa, India. 2019 IJRAR March 2019, Volume 6, Issue 1.
• Kritika Pathak, Divya MV, India: Impact of Globalization. Christ University,
Bannerghatta Road Campus, Bangalore, India. International Journal of Management
and Commerce Innovations ISSN 2348-7585 (Online) Vol. 7, Issue 1, pp: (752-755),
Month: April 2019 - September 2019.
• A. Gopalakrishnan, A. Mahalakshmi, A Study on Impact of Foreign Trade in India in
The Post Liberalizations Era. Associate Professor & Research Advisor, Department of
Economics Periyar E.V.R. College (Autonomous), Tiruchirappalli, Tamil Nadu,
India. Volume: 6 Issue: 3 Month: June Year: 2018 ISSN: 2319-961X
• Radha Krishnan H, Nivetha V, Role of WTO in Promoting International Trade After
Marrakesh Agreement. International Journal of Pure and Applied Mathematics
Volume 120 No. 5 2018, 3271-3282 ISSN: 1314-3395 (on-line version).
• Mini P. Thomas, Impact of Services Trade on India’s Economic Growth and Current
Account Balance: Evidence from Post-Reform Period. PhD Candidate in Centre for

78
 Economic Studies and Policy, Institute for Social and Economic Change (ISEC),
Bangalore, India.
• Harish K. Raman, The World Trade Organization and Its Impact on Indian
Businesses. Symbiosis Law School, Pune (Constituent of Symbiosis International
University).
• Attahir Babaji Abubakar, An Appraisal of the Impact of International Trade on
Economic Growth of India, Department of Economics, MSc. Econometrics Student,
SRM University Kattankulathur. Annamalai Journal of Management, Special Issue
April 2015.ISSN-0974-0406, Page 30-35.
• Pushpalata Singh. A, Assistant Professor, Department of Economics, Cachar College,
Silchar-1, Performance of Foreign Trade in India in the Post Liberalization Era.
International Journal of Humanities Social Sciences and Education (IJHSSE) Volume
1, Issue 10, October 2014, PP 11-17 ISSN 2349-0373 (Print) & ISSN 2349-0381
(Online).
• Shubhada Sabade, India’s Foreign Trade and Socio-Economic Development Trio of
WTO compliance, Currency Depreciation and Global Crisis. Symbiosis Institute of
Management Studies Annual Research Conference (SIMSARC13), Associate
Professor, Symbiosis Institute of Management Studies, Symbiosis International
University, Pune.
• Kanagasabapathy K, Vishakha G Tilak, Krishnaswamy R., A Rethink on India’s
Foreign Trade Policy, Economic & Political Weekly EPW August 3, 2013, vol
XLVIII no 31.
• Prabir De, Global Economic and Financial Crisis: India’s Trade Potential and
Prospects, and Implications for Asian Regional Integration. Journal of Economic
Integration 25(1), March 2010; 32-68.
• Óscar Afonso, The Impact of International Trade on Economic Growth. CEMPRE,
Faculdade de Economia do Porto Rua Dr. Roberto Frias 4200-464 Porto, Portugal
• David M. Malone President International Development Research Centre and Rajeev
Chaturvedy Jawaharlal Nehru University, New Delhi, Impact of India’s Economy on
its Foreign Policy Since Independence, November 2009.
• Grzegorz BYWALEC, PhD, Professor UL Faculty of International and Political
Studies, University of Lodz, Dynamics and Determinants of Trade Exchange Between
the European Union and India. DOI: 10.15290/oes.2020.03.101.10

79
• Nomfundo P. Vacu , Nicholas M. Odhiambo the Determinants of Import Demand: A
Review of International Literature ISSN: 2065-0175
• Siti Aisah Ahmad, Shivee Ranjanee Kaliappan, Normaz Wana Ismail, Determinants
of Service Export in Selected Developing Asian Countries. International Journal of
Business and Society, Vol. 18 No. 1, 2017, 113-132
• Fayaz, Mohd Sandeep, Kaur Bhatia, Trends, Patterns and Determinants of Indian
Current Account Deficit, Applied Econometrics and International Development Vol.
16-1 (2016).
• Mini Thomas P, Estimation of the Key Economic Determinants of Services Trade:
Evidence from India, ISBN 978-81-7791-204-3,2015, Copyright Reserved the
Institute for Social and Economic Change, Bangalore

80
 Similarity Report ID: oid:22828:45446631

27% Overall Similarity

Top sources found in the following databases:
24% Internet database 8% Publications database
Crossref database Crossref Posted Content database
16% Submitted Works database

TOP SOURCES
The sources with the highest number of matches within the submission. Overlapping sources will not be
displayed.

shanlax.com
1 2%
Internet

core.ac.uk
2 1%
Internet

irgu.unigoa.ac.in
3 1%
Internet

fayllar.org
4 1%
Internet

ashwinanokha.com
5 <1%
Internet

researchpublish.com
6 <1%
Internet

mafiadoc.com
7 <1%
Internet

journals.sagepub.com
8 <1%
Internet

Sources overview
 Similarity Report ID: oid:22828:45446631

isec.ac.in
9 <1%
Internet

repozytorium.uwb.edu.pl
10 <1%
Internet

ijraset.com
11 <1%
Internet

docplayer.net
12 <1%
Internet

e-jei.org
13 <1%
Internet

researchgate.net
14 <1%
Internet

dj.univ-danubius.ro
15 <1%
Internet

suntextreviews.org
16 <1%
Internet

ebooks.lpude.in
17 <1%
Internet

tpnsindia.org
18 <1%
Internet

jetir.org
19 <1%
Internet

arsdcollege.ac.in
20 <1%
Internet

Sources overview
 Similarity Report ID: oid:22828:45446631

pdfslide.net
21 <1%
Internet

shanlaxjournals.in
22 <1%
Internet

coursehero.com
23 <1%
Internet

ilkogretim-online.org
24 <1%
Internet

business-dimensions.org
25 <1%
Internet

acadpubl.eu
26 <1%
Internet

The University of the South Pacific on 2022-05-10

27 <1%
Submitted works

raijmr.com
28 <1%
Internet

gorteria.com
29 <1%
Internet

ijbs.unimas.my
30 <1%
Internet

oai.repec.org
31 <1%
Internet

tandfonline.com
32 <1%
Internet

Sources overview
 Similarity Report ID: oid:22828:45446631

Glyndwr University on 2023-05-01

33 <1%
Submitted works

baadalsg.inflibnet.ac.in
34 <1%
Internet

American InterContinental University on 2023-10-08

35 <1%
Submitted works

Universita' Telematica Internazionale Nettuno on 2022-11-18

36 <1%
Submitted works

iGroup on 2019-07-06
37 <1%
Submitted works

IUBH - Internationale Hochschule Bad Honnef-Bonn on 2023-07-05

38 <1%
Submitted works

byjus.com
39 <1%
Internet

ncat.edu
40 <1%
Internet

La Trobe University on 2023-10-03

41 <1%
Submitted works

cordyceps.us
42 <1%
Internet

De Montfort University on 2023-09-20

43 <1%
Submitted works

kipdf.com
44 <1%
Internet

Sources overview
 Similarity Report ID: oid:22828:45446631

University of East London on 2009-05-04

45 <1%
Submitted works

imf.org
46 <1%
Internet

Bennett University on 2021-07-24

47 <1%
Submitted works

www-economist-com.ezproxy01.rhul.ac.uk
48 <1%
Internet

Hidayatullah National Law University, Raipur on 2021-01-03

49 <1%
Submitted works

psasir.upm.edu.my
50 <1%
Internet

inspirajournals.com
51 <1%
Internet

scribd.com
52 <1%
Internet

Oleksii Kalivoshko, Alla Myrvoda, Volodymyr Kraevsky, Nadia Paranytsi...

53 <1%
Crossref

arcjournals.org
54 <1%
Internet

Liverpool John Moores University on 2023-10-25

55 <1%
Submitted works

O. P. Jindal Global University on 2023-06-25

56 <1%
Submitted works

Sources overview
 Similarity Report ID: oid:22828:45446631

University of Hull on 2023-07-15

57 <1%
Submitted works

University of Wales Institute, Cardiff on 2020-02-26

58 <1%
Submitted works

wps.fep.up.pt
59 <1%
Internet

University of Leeds on 2023-09-14

60 <1%
Submitted works

assets.vmou.ac.in
61 <1%
Internet

dokumen.pub
62 <1%
Internet

University of South Africa (UNISA) on 2023-07-12

63 <1%
Submitted works

Bournemouth University on 2023-05-26

64 <1%
Submitted works

Gujarat National Law University on 2015-09-23

65 <1%
Submitted works

aid.dfat.gov.au
66 <1%
Internet

Berlin School of Business and Innovation on 2023-04-06

67 <1%
Submitted works

Manukau Institute of Technology on 2021-04-11

68 <1%
Submitted works

Sources overview
 Similarity Report ID: oid:22828:45446631

vdocuments.mx
69 <1%
Internet

cup.edu.in
70 <1%
Internet

The University of Manchester on 2023-09-04

71 <1%
Submitted works

isid.org.in
72 <1%
Internet

University of Birmingham on 2019-09-11

73 <1%
Submitted works

Westminster International College - Kuala Lumpur on 2015-02-20

74 <1%
Submitted works

ageconsearch.umn.edu
75 <1%
Internet

dspace.uohyd.ac.in
76 <1%
Internet

papers.ssrn.com
77 <1%
Internet

Broward Community College on 2023-09-16

78 <1%
Submitted works

Embry Riddle Aeronautical University on 2023-09-10

79 <1%
Submitted works

Los Angeles Pierce College on 2023-06-25

80 <1%
Submitted works

Sources overview
 Similarity Report ID: oid:22828:45446631

Manipal University on 2023-08-10

81 <1%
Submitted works

Md Zobraj Hosen. "Aggregated imports and expenditure components i...

82 <1%
Crossref

dspace.dtu.ac.in:8080
83 <1%
Internet

ijhssm.org
84 <1%
Internet

Rivers State University of Science & Technology on 2016-09-28

85 <1%
Submitted works

South Eastern Kenya University on 2021-08-09

86 <1%
Submitted works

defence.pk
87 <1%
Internet

asiapacific.ca
88 <1%
Internet

civilsdaily.com
89 <1%
Internet

iesd.org.in
90 <1%
Internet

American Public University System on 2020-12-13

91 <1%
Submitted works

Eiffel Corporation on 2021-12-02

92 <1%
Submitted works

Sources overview
 Similarity Report ID: oid:22828:45446631

Southern New Hampshire University - Continuing Education on 2023-0...

93 <1%
Submitted works

Universiti Teknologi MARA on 2018-12-19

94 <1%
Submitted works

ca.reuters.com
95 <1%
Internet

icaindia.info
96 <1%
Internet

mvc on 2023-09-22
97 <1%
Submitted works

downtoearth.org.in
98 <1%
Internet

socialresearchfoundation.com
99 <1%
Internet

De Montfort University on 2023-02-01

100 <1%
Submitted works

Polytechnic of Namibia on 2021-02-19

101 <1%
Submitted works

The University of the South Pacific on 2023-10-13

102 <1%
Submitted works

University of Bristol on 2023-05-09

103 <1%
Submitted works

University of College Cork on 2023-04-11

104 <1%
Submitted works

Sources overview
 Similarity Report ID: oid:22828:45446631

ijcrt.org
105 <1%
Internet

icsi.edu
106 <1%
Internet

legalera.in
107 <1%
Internet

publishingindia.com
108 <1%
Internet

zenodo.org
109 <1%
Internet

ASU Preparatory Academy on 2023-07-31

110 <1%
Submitted works

Bournemouth University on 2023-08-31

111 <1%
Submitted works

Chester College of Higher Education on 2023-07-28

112 <1%
Submitted works

Coventry University on 2023-08-07

113 <1%
Submitted works

Hult International Business School on 2017-07-10

114 <1%
Submitted works

Jamia Milia Islamia University on 2014-07-11

115 <1%
Submitted works

Management Development Institute Of Singapore on 2023-04-24

116 <1%
Submitted works

Sources overview
 Similarity Report ID: oid:22828:45446631

Riverside Community College on 2023-05-02

117 <1%
Submitted works

St Xaviers University Kolkata on 2021-05-13

118 <1%
Submitted works

Taylor’s Education Group on 2022-06-01

119 <1%
Submitted works

Toronto Business College on 2023-09-02

120 <1%
Submitted works

University of North Carolina - Wilmington on 2023-03-03

121 <1%
Submitted works

University of Surrey on 2023-05-16

122 <1%
Submitted works

businessdocbox.com
123 <1%
Internet

cmclnmu.ac.in
124 <1%
Internet

conference.isleijle.org
125 <1%
Internet

ideas.repec.org
126 <1%
Internet

hindustantimes.com
127 <1%
Internet

Sources overview