Answer in Brief
Explain any four features of composition of India's foreign trade.
India’s foreign trade has undergone a drastic change in terms of composition over the last 70 years.
The main features of composition of India’s foreign trade are as follows:
- Increasing share of gross national income: In 1990-91, the share of India’s foreign trade (i.e., import and export) in gross national income was 17.55%, which then increased to 25% during 2006-07 and to 48.8% during 2016-17.
Year Share of foreign trade in gross national income 1990-91 17.55% 2006-07 25% 2016-17 48.8%
- Increase in volume and value of trade: Since 1990-91, the volume and value of India’s foreign trade have significantly gone up. Today, India exports and imports goods which are several times more in terms of their value (amount) and volume (no. of goods).
- Change in the composition of exports: Prior to Independence, India used to export primary products such as jute, cotton, tea, oil-seeds, leather, food grains, cashew nuts and mineral products. Since Independence, the composition of the country’s export trade has undergone a change. The manufactured items such as readymade garments, gems and jewellery, electronic goods, especially computer hardware and software now occupy an important place in India’s exports.
- Change in the composition of imports: Prior to independence, India used to import consumer goods such as medicines, cloth, motor vehicles, electrical goods etc. Now, India mainly imports capital goods like high-tech machinery, chemicals, fertilizers, steel etc. It also imports petrol and petroleum products.
- Oceanic trade: Most of India’s trade takes place through sea routes. India has good trade relations with its neighbouring countries such as Nepal, Afghanistan, Myanmar, Sri Lanka etc. The share of India’s oceanic trade is around 68% of total international trade.
- Development of new ports: Earlier, India depended mostly on Mumbai, Kolkata and Chennai ports for its foreign trade and these ports were overburdened. Recently, India has developed new ports at Kandla, Cochin, Vishakhapatnam, Nhava Sheva etc. to reduce the burden on existing ports.
Concept: Composition of India’s Foreign Trade
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