The salient features of India’s foreign trade are as under:
1. More Share of GNP:
India’s foreign trade has great significance for its GNP. In 1980-81, India’s foreign trade constituted 12% of its G.N.P. In 2001-02 it increased to 23.4% of gross national product.
2. Less Percentage of World Trade:
India’s share in world trade has been sliding down. In 1950-51, India’s share in total import trade of the world was 1.8% and in total export trade was 2%. In 2001-02, it came down to 0.5% in import trade and to 0.2% in export trade.
3. Change in Composition of Exports:
After independence, there was change in the composition of India’s export trade. Before, independence, India used to export agricultural products and raw materials. Now on export side, various types of finished products have been added to the number of export commodities.
4. Change in the Composition of Imports:
In the post independence era, composition of India’s import trade has also undergone a change. Prior to independence, India used to import finished products comprising of medicines, cloth, motor vehicles, electrical goods, iron and steel etc. But now, its imports comprises of largely petrol, machines, chemical fertilizers, oilseeds, raw materials, steel, oil etc.
5. Dependence on Few Ports:
India’s foreign trade is handled mainly by Bombay, Calcutta, Madras ports. Therefore, these ports remain over busy. During planning period Government of India has developed three more ports viz; Kandla, Cochin and Vishakhapatnam.
6. Balance of Trade:
Prior to independence, India’s balance of trade was favourable. But soon after independence, it became unfavourable. In 1995-96, balance of trade was Rs. 42 crore which was favourable. From 1995-96 to onwards, it became unfavourable. Ending 1998-99, deficit of balance of trade was of Rs. 28580 crore and Rs. 36181 in 2000-01. It is again expected to decline to Rs. 26014 crore in 2001-02.
7. Foreign Trade by Government:
In order to conduct foreign trade smoothly, Government has set up many corporations like State Trading Corporation (1946), Minerals and Metal Trading Corporation (1963) etc.
8. Oceanic Trade:
Most of India’s foreign trade is by sea routes. India has very little trade relations with neighboring countries like Nepal, Afghanistan, Burma, Sri Lanka etc. About 68% of India’s trade is by sea.
9. Export Import Ratio:
Export import ratio refers to the percentage of total bill that can be paid out of export earnings. In 1991-92, export-import ratio was 92%. It means that. 8% of total imports were paid either by foreign loans or by drawing from foreign exchange resources. In 1999-2000, export-import ratio has increased to 95.4 per cent.
10. Dependent Trade:
India’s foreign trade depends mostly on foreign shipping companies, insurance companies and banks. After independence, government has been paying special attention towards these aspects of foreign trade.