FOREIGN TRADEINDIAN PERSPECTIVE

HISTORY OF FOREIGN TRADE

• Pre- independence era• The period 1900/ 1914 saw expansion in India’s foreign trade. The rise in the

output of such crops as oilseeds, cotton, jute and tea was largely due to a flourishing export trade. The First World War was a serious setback to India’s foreign trade.

• India’s foreign trade was severely hit by the great depression of 1930s due to decline in consumer’s purchasing power and discriminatory trade policies.

• During the Second World War, India achieved huge export surplus.• License raj period Import & export neglected by govt., GDP decreased, restriction on new lisence• Post liberalization Era• New licensing rule, modified export import policy.GDP increased from 8.8% in1990

to 12.5% in 1997

TRADE POLICY 2015/ 20 TO PUSH UP EXPORT

• FTP aims to increase India's export to % 900 billion by 2020.• Union budget 2015/ 16 and new FTP focuses on manufacturing and

service exports and and improves the Ease Of Doing Business.• Forthcoming e/ Governance Initiatives with different policies like fiscal

incentive, enhance market access, process rationalization. • E/ commerce export• Currency devaluation• Strengthening of Make in India,Digital India campaigns.

Import substitution based strategy.

CONTRACTIONARY MONETARY POLICYIncrease Interest Rate

Encourage foreign investors to invest in India

Strengthen the international value of Indian rupees Increase import

Decrease export

Trade balance moves toward deficit

Employment may decrease , Inflation may decrease

EXPANSIONARY MONETARY POLICYDecrease Interest rate

Discourage foreign financial investment in India

Weaken the international value of rupees

Decrease import Increase export

Trade balance moves toward surplus

Employment may increase , inflation may increase

Recent Measures Of Trade Facilitation•Govt. has reduced the number of madatory ducuments•Customs single window initiatives•24*7 customs clearance •Move towards paperless and digitalization•Training/certification programme for exporters

WTO negotiation and India

•Elimination of export subsidies on agritultural exports has commited by devloped countries within 2018.

•Flexibility on marketing, transport and fisheries subsidies.•53 WTO countries aggreed on eliminating tarrifs on 200 IT products,duty-free

foreign market access for all the members.•So far, India has signed 10 FTAs and 6 preferential trade aggrement with a

mixed bag outcome.

TPP and it's implication for India

•Huge export gain(appx. 500bn/yr) by joining expanded TPP enable a free trade zone•Openness to market with lower barrier than OECD countries• Import Competition •Overall devlopement by enhence innovation,productivity and standerd of living.

EXPORT PERFORMANCE OF INDIA

• India exports approximately 7500 commodities to about 190 countries, and imports around 6000 commodities from 140 countries. India exported US% 318.2 billion and imported % 462.9 billion worth of commodities in 2014.

EXPORT COMPOSITION AND SECTORAL PERFORMANCE

1990- 91 2000- 01 2013- 14 CAGR (2000-2012)

Growth rate(2013-14)

Primary Products

23.8 16.0 15.6 16.9 4.7

a.Agri & allied products

18 14 13.8 17 5.1

b. Ores and minerals

5.8 2 1.8 16.5 1.4

Manufactured goods

71 78.8 63.7 15.1 4.6

Petroleum, crude products

2.9 4.2 20..1 33.5 3.0

Total 100 100 100 17.2 4.1

DIRECTION OF EXPORT

• Diversified market with all OPEC countries• Shift towards developing countries of Asian and African market from

the developed market due to Free/ trade agreement with South Asian countries.

INDIA'S IMPORT GROWTH

BALANCE OF TRADE

• India has been recording sustained trade deficits since 1980 mainly due to the high growth of imports, particularly of crude oil, gold and silver.

• Is trade deficit bad??

CHALLENGES

• Import and export restrictions• Study of foreign markets• Risk in transit• Lack of information about foreign businessmen• Secondary market and stock exchange

CONCLUSION

India is now significantly more integrated with the global economy than 15 years ago. Foreign trade today plays an important part in the Indian economy. ‘Make in India’, ‘Digital India’ and ‘Skills India’ will provide a framework for increasing exports of goods and services as well as generation of employment and increase value addition in the country. The FTP for 2015/ 2020 is encouraging the export of labor intensive products, Agricultural products, high tech products with high export earning potential and eco/ friendly and green products and work on focused market diversification.