CHANGING TRADE PATTERN IN INDIA

Submitted by: Varun Yadav

(1270)

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 India’s International Trade:
2008-09

 Exports in August 2008- US$ 16.0 billion- growth of

26.9% (18.2% previous year).

 Imports in August 2008- US$ 29.9 billion- increase

of 51.2% (34.2% previous year).

 POL imports during April-August 2008-

US$ 46.1 billion- growth of 60% (17.9% previous
year).

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Trade : marine sector

Fisheries exempted from maintenance

of average EO under EPCG Scheme
(along with 7 sectors) however
Fishing Trawlers, boats, ships and
other similar items shall not be
allowed for this exemption.

Additional flexibility under Target

Plus Scheme (TPS) / Duty Free
Certificate of Entitlement (DFCE)
Scheme for the marine sector.

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Trade for agro export

Introduction of a single window

system to facilitate export of
perishable agricultural produce
with an aim to reduce transaction
and handling cost.

This system will involve creation

of multi-functional nodal
agencies. These agencies will be
accredited by APEDA.

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Trade : gems and jewelry sector

Duty Drawback is allowed on Gold

Jewellery exports to neutralize duty
incidence.

Plan to establish "Diamond Bourse (s)

with an aim to make India and
International Trading Hub announced.

Introduction of a new facility to allow

import on consignment basis of cut &
polished diamonds for the purpose of
grading/ certification.

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 Trade Reforms to Date

• Prior to 1991, India was the archetypical import

substituting regime with one of the most
complicated and protectionist regime in the world.

• India’s, simple average tariff rate has come down

significantly from 128 percent in 1991 to about 34
percent in 2000

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• The trade-weighted tariffs declined from 87 percent
in 1991 to around 30 percent by 2000.

• slight increase in the trade-weighted tariffs from a

low of 25 percent in 1996 to 30 percent by 2000.

• Taxes on international trade as a proportion of total

tax revenue far exceeded most of the Developing East
Asian (DEA) countries

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• While India continues to have one of the world’s most
restrictive external sectors, significant progress has been made
in recent years towards a compression and simplification of
tariff structures; the tariff structures have become more
uniform across goods, as observed by a decline in the
dispersion of tariff rates over 1990-98.

• India’s export dependence on primary products, as indicated

by its average share in India’s total merchandise exports,
declined over the period (from 24 percent in 1988-90 to about
20 percent in 1998-2000)

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• manufactured products increased slightly (from 71
percent in 1988-90 to 77 percent by 1998-2000).

• the manufactured exports during the 1998-2000

period, the largest share of exports consisted of
handicrafts, primarily gems and jewellery (18.0
percent), engineering goods (14.0 percent)

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 Emergence of the Services Sector in India

• First, in many service activities, problems of

asymmetric information are especially acute as the
purchaser does not know the quality of a
professional service being purchased until after it
has been paid for and consumed.

• Second, services trade requires the consumer and

service provider to interact simultaneously

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• value added by the services sector as a proportion of
GDP during the pre-reform period of 1980-89 was
about 40 percent in India, it increased steadily over
the post-reform years to a high of 45 percent in 1998.

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 Information and Communication Technology (ICT)

• Information and Communication Technology

(ICT) and related services were viewed as being no
tradable just a few years ago.

• they have in fact been the main thrust of rapid

expansion of services trade in India, accounting for
nearly 58 15 percent of service exports and about
16 percent of total exports in 1998

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Growth of India’s International Trade

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India’s Trading Partners

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India’s Trade Basket

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 India’s International Trade: 2008-09

Items 2007-08 2008-09P

Exports 60.1 81.3
  (19.3) (35.3)
Oil Exports* 4.7 9.0
  (6.2) (91.5)
Non-Oil Exports* 26.0 39.1
  (5.5) (50.3)
Imports 94.6 130.5
  (34.2) (38.0)
Oil Imports 28.8 46.1
  (17.9) (60.0)
Non-Oil Imports 65.8 84.5
  (42.7) (28.3)
Trade Balance -34.6 -49.3
Oil Trade Balance* -12.3 -20.5
Non-Oil Trade Balance* -13.5 -9.0
* : Figures pertain to April-June
P: Provisional
Note : All figures in US$ billion. Figures in parentheses show percentage change over the previous year.
Source : DGCI & S

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Source: DGFT, Annual Report 2007-08

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 India’s Export: 2008-09
(Percentage Shares)
Commodity Group 2006-07 2007-08 2008-09
Primary products 15.6 17 16.2
1. Agriculture and      
  allied products 10.0 11.4 11.4
2. Ores and minerals 5.5 5.7 4.8

Manufactured goods 67.2 63.6 58.3

1. Leather and      
  manufactures 2.4 2.2 1.8
2. Chemicals and      
  related products 13.7 12.9 11.4
3. Engineering goods 23.4 23.1 24.1
4. Textile and textile      
  products 13.7 12.0 10.4
5. Gems and jewellery 12.6 12.4 9.7
Petroleum products 14.8 15.6 18.7
Others 2.4 3.8 6.8
Total exports 100.0 100.0 100.0
Source: Compiled from DGCI & S data.

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India’s Import: 2008-09

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 Services Trade
• Services trade shares about 9% of GDP.

• Services export growing much faster than world

services exports; In 2000-2006-
India: 38.22%, World: 12.84%.

• Services trade contributes about 2.64% of world

services trade.

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Services Trade

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Services Export

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Service Import

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 Conclusion
• Significant contribution to growth of economy.

• Creation of foreign currency pool.

• Local factors- political interests, culture & values

• Oil imports & unstable oil prices- negative trade

balance.

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Thank You

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