Composition of Exports of Indian Foreign Trade

The principal exports of India may be grouped into: (i) Agriculture and allied products, (ii) Ores and minerals (excluding coal), (iii) Manufactured goods, (iv) Mineral fuels and lubricants (including coal), and (v) Others.

The following observations are made regarding the changing structure of imports of India over the years.

1. Agriculture and Allied Products:

The importance of agriculture and allied products in India’s exports has been declining. The share of agriculture and allied products in total exports has declined substantially from 44 per cent in 1960-61 to 30.7 per cent in 1980-81 and further to 17.6 per cent in 1992-93. This implies that gradually India is becoming less and less a primary goods exporting country.

2. Manufactured Goods:

The importance of manufactured goods in India’s exports is increasing day-by-day. The share of manufactured goods in India’s total exports has increased from 45 percent in 1960-61 to nearly 56 per cent in 1980-81 and further to 76.1 per cent in 1992-93. This reflects the changing production structure of Indian economy. It suggests that India is on the march towards becoming a more vibrant industrial economy.

In the beginning of the planning era, India’s exports mainly consisted of jute, tea and cotton textiles. Their combined share was more than 50 per cent in the country’s total exports. This has come down to 10 per cent in 1992-93. On the other hand, the share of engineering products went up from 3.4 per cent in 1960-61 to 13.2 per cent in 1992-93. This reflects upon the industrial progress made by India.

3. Non-Traditional Items:

In recent years, export of readymade garments has emerged as an important foreign exchange earner. The export value of ready-made garments has increased from a meagre Rs. 29 crores in 1970-71 to Rs. 6,931 crores in 1992-93. Similarly, export of chemicals and allied products has also increased from Rs. 29 crores in 1970-71 to Rs. 3,991 crores in 1992-93. Likewise, export value of leather and leather goods amounted to Rs. 3,700 crores in 1992-93.

Besides, exports of Indian handicrafts and jewelleries have substantially expanded during the last two decades. The export value of Indian handicrafts has increased from Rs. 70 crores in 1970- 71 to Rs. 8,346 crores in 1991-92. So also the value of exports of gems and jewelleries has increased to Rs. 6,750 crores in 1991-92.

In short, India’s exports have considerably become diverse in recent years. Many new and non-traditional items have appeared on the scene. Today, India is exporting nearly 3,000 items as against just 50 items at the inception of planning era in 1951. Nonetheless, the star performers of Indian export scene have traditionally been fabrics, garments, gems and jewellery, leather goods, chemicals and engineering products.

4. Direction of India ‘s Foreign Trade :

Direction of India’s foreign trade is studied in relation to the country’s proportion of exports to different countries and her proportionate imports from different countries. To study India’s direction of foreign trade, her trading partners have been grouped into five major categories: (i) Organisation for Economic Co-operation and Development (OECD) countries; (ii) Organisation of Petroleum Export Countries (OPEC); (iii) Eastern Europe (EE); (iv) Less Developed Countries (LDCs)-(excluding OPEC); and (v) Others.

1. The OECD is the largest trading partner of India.

2. The share of this group in India’s total exports accounted for over 60 per cent in 1960-61. This had, however, declined to 46 per cent in 1980-81. Thereafter, it again rose to 53.5 per cent in 1990-91 and further to over 60 per cent in 1992-93.

3. The U.S.A. is a major trading partner of India. The share of the U.S.A. in India’s total exports was 13.5 per cent in 1960-61 which has increased to 18.1 per cent in 1980-81 and further to 18.8 per cent in 1992-93.

4. The share of OECD in India’s imports was 78 per cent in 1960-61. This, however, declined to 45.7 per cent in 1980-81. It again picked up to 55.5 per cent in 1992-93.

5. The share of the U.S.A. in India’s imports was over 29 per cent in 1960-61. This, however, declined to 12.9 per cent in 1980-81 and remained steady at this level thereafter.

6. Since independence till the sixties, the UK was a major trading partner of India. The share of U.K. in India’s total exports was nearly 27 per cent in 1960-61 which sharply declined to about 6 percent in 1980-81. It marginally improved to 6.5 percent in 1990-91.

Likewise, the share of the U.K. in India’s imports also declined to 6.7 per cent in 1990-91 as against that of 19.4 per cent in 1960-61.

7. India’s trade relations with Japan have improved over the years. The share of Japan in India’s exports has increased about two-fold from 5.5 per cent in 1960-61 to 9.3 per cent in 1990-91.

Likewise, the share of Japan in India’s imports increased from 5.4 per cent in 1960-61 to 7.5 per cent in 1992-93 and further to 8.5 per cent in 1992-93.

8. Over the years, India’s trade relations with OPEC have improved considerably.

The share of OPEC in India’s exports has more than doubled between 1960-61 and 1980-81. But, due to a rise in oil prices and India’s growing imports of oil, the share of OPEC in India’s imports has increased almost seven-fold.

In 1992-93, the share of OPEC in India’s exports was 9.6 per cent and its share in India’s imports was 21.7 per cent.

9. India’s trade with Eastern Europe sharply increased between 1960-61 and 1980-81, but it declined sharply by 1992-93. The share of Eastern Europe in India’s exports came down to 4.2 per cent in 1992-93 from the high of 22.1 per cent in 1980-81. Similarly, its share in India’s import declined from 10.3 per cent in 1980-81 to 2.5 per cent in 1992-93. This has been largely due to the disintegration of the Soviet blocs and the collapse of the socialist economic system, especially in Russia in the early nineties.

India’s trade relations with the erstwhile U.S.S.R., Yugoslavia, Bulgaria, Romania, etc. now Commonwealth of Independent Slates are undergoing a severe change in recent years.

Exports to Russia came down to 3 per cent in 1992-93 from 16 per cent of India’s total exports in 1990-93.

10. Over the years, India’s trade relations with the less developed countries of Asia and Africa have improved. Especially, the share of Asian countries in India’s exports has increased from about 7 per cent in 1960-61 to 17 per cent in 1992-93.

11. India’s exports to the Rupee Payment Area (mainly markets of erstwhile Soviet Union) declined to 42 per cent in 1991-92 and further to 62 per cent in 1992-93. On the other hand, India’s exports to General Currency Area (GCA) increased by 10.8 per cent in dollar terms during 1992-93 which was a distinct improvement over about 6 per cent growth in 1991-92.

12. In recent years, India’s exports to selected East Asian countries such as Malaysia, Hong Kong, South Korea, Singapore, Thailand and Taiwan have boomed. As mentioned in the Economic Survey 1993-94, the percentage export growth in these countries is about three times of their overall export growth.

Concluding Remarks :

Export-led growth is the current strategy of India’s economic policy towards globalisation of the economy. Indian exports should acquire a high degree of competitiveness in the world markets. For this, adequate supplies of exportable need to be assured, besides the pursurance of sound fiscal and monetary policies.

To push up exports India needs a further diversification of foreign trade. Over 40 per cent of India’s exports have been concentrated among a few countries such as USA, Japan, UK and West Germany, while, over 60 per cent of our imports are from 10 countries, including France, Hong Kong, Singapore, Iraq, Iran and Saudi Arabia. Asia and Oceanic, which continue to be the largest market for our exports accounting for over 30 per cent.

Trade statistics reveal that India depends more on the developed countries for its major proportion of exports as well as imports. India’s exports and imports from developing countries do not grow at a significant rate. Further, while trading with developed countries, India’s terms of trade are mostly unfavourable.

Hence, India is rather a losing partner in its trade with developed countries. As such, larger trade with developed countries would mean more exploitation or resource drain and this cannot be an engine of growth.

What is wanted is that India should concentrate more on improving trade relations with the developing countries. In fact, developing countries do possess problems like non-tariff barriers, inadequate tariff-concessions and with a strong political will for economic integration. India can succeed in developing good trade relations with developing countries of the south and neighbouring areas.