Short essay on the Composition of Foreign Trade

The Pattern of Import:

The main feature of India’s import pattern was as follows:

(1) Rapid growth of import of capital goods, technical know-how, raw materials to meet the requirement of industrialisation.

(2) Growing import of petroleum products for meeting industrial and consumption requirement.

(3) Growing imports of raw materials on the basis of liberalization of import for export promotion.

(4) Decline in imports of food grains and consumer goods due to adoption of HYV technology in Indian agriculture and growth of consumer durables producing industrial units in the country.

Pattern of Export:

The pattern of export has also changed significantly over the years. India has diversified itself from traditional to non-traditional terns of export the main feature of export during the period are as follows:

(1) Growth of both traditional and non-traditional items of export.

(2) Large expansion of engineering goods particularly to the middle-east, which have imported infrastructural projects like road, railways, telecommunication and etc. and turn-key projects like complete industries,

(3) The price of export items has increased due to increased demand for both traditional and non-traditional exportable items.

(4) ‘While some commodities have good export potential (handicrafts, engineering product, readymade) other items (sugar, jute, iron and steel) fluctuated considerably.

Direction of India’s Foreign Trade:

The main Ganges in the direction of India’s foreign trade can be mentioned as follows:

(1) New Trading Partners:

Prior to independence, India’s foreign trade was concentrated around U.K. while after independence it has opened id expanded trade channels throughout the length id the breadth of the country. India has also versified its export, with specialization in certain good and securing new market for her products.

(2) Larger Sources of Import:

The import of India’s industrial products could not be met by U.K or U.S.A. alone. Hence it has to import capital goods from a large number of developed countries furthering aid and grants from some countries willing to help India in her planning effort. The concessional assistance and aid from international monetary institutions helped India to purchase its import from cheaper sources through global tenders.

(3) Larger and Attractive Outlets for Export:

India has diversified her exports to various new countries in order to match her imports. Germany, Japan along with U.S.A. and U.K. constituted the four major countries absorbing 43% of her export. The demands for both traditional and non-traditional items of exports have increased in these countries over the period. Recently Middle East countries have provided a good market for India’s export and it has absorbed 22% of India’s exportable items.

Scope for Direction:

In order to expand its export in the coming period, India has to design its new export policy. The market for traditional goods (jute, sugar, tea, coffee, steel) has to be found in new countries like South America and African countries and the market for non-traditional goods (garments, pearls, precious stones, etc.) has to be increased in the traditional trading countries. With the African and South American countries, India has to expand its trade base along with the Middle East Asia in the coming years.