International Trade

India's Exports and Imports: Major Exports (2022–23): • Engineering goods: Machinery, equipment, auto components — India's largest export category (~27% of total). • Petroleum products: Refined petroleum (India refines imported crude and re-exports) — ~20%. • Gems and jewellery: Cut and polished diamonds, gold jewellery — India is the world's diamond polishing capital (~8%). • Pharmaceuticals: India is the 'pharmacy of the world' — generic drugs exported globally (~5%). • IT and software services: India's largest service export — $230+ billion annually. • Textiles and garments: Cotton yarn, fabrics, readymade garments. • Agricultural commodities: Rice (largest rice exporter), spices, marine products, cotton. • Chemicals. Major Imports (2022–23): • Petroleum crude and products: India's largest import (~28%) — India imports ~85% of its oil. • Gold: India imports ~800–1,000 tonnes of gold annually (cultural demand, jewellery) — second largest import. • Electronic goods: Mobile phones, computers, components — China-dominated supply chains. • Machinery: Capital goods for industry. • Fertilisers: India imports significant urea and DAP. • Coal: Coking coal for steel; thermal coal for some power plants. • Defence equipment. Change in Trade Pattern Since 1991: Before 1991: • Imports dominated by capital goods and oil. • Exports: Primarily raw materials and semi-processed goods — textiles, gems, tea, iron ore. • Restrictive import regime — high tariffs, licensing. After 1991 Liberalisation: • Diversification of exports: IT services, pharmaceuticals, engineering goods added. • Manufactured exports grew rapidly — India became a services exporter. • Import liberalisation: Tariffs reduced; capital goods and electronics imports grew. • Trade grew as % of GDP: From ~15% (1991) to ~40%+ (2022). • Trade partners diversified: Less UK/USA dominance; ASEAN, China, Middle East became important.

India's Major Trading Partners: Top Export Destinations (Goods, 2022–23): 1. USA: India's largest goods export destination — $78 billion. Pharmaceuticals, engineering, textiles, IT services. 2. UAE: $28 billion — petroleum products, gems, machinery. 3. Netherlands: $17 billion — petroleum products (Rotterdam hub), chemicals. 4. China: $15 billion — iron ore, cotton, organic chemicals. 5. Bangladesh: $12 billion — cotton, machinery. Top Import Sources (Goods, 2022–23): 1. China: $98 billion — India's largest import source. Electronics, machinery, chemicals. Massive trade deficit with China. 2. UAE: $53 billion — gold, petroleum. 3. USA: $42 billion — machinery, aircraft, defence. 4. Saudi Arabia: $43 billion — crude oil. 5. Russia: $55 billion (post-2022) — crude oil (India bought Russian oil at discounts after Ukraine war). Key Bilateral Relationships: 1. India–USA: • Largest export destination; major FDI source; IT outsourcing market. • Trade disputes: USA has designated India 'developing country' but challenged its agricultural subsidies and price controls at WTO. • H-1B visa issue: Indian IT workers. 2. India–China: • Largest bilateral trade partner overall. • Trade deficit: ~$85 billion — India imports far more from China than it exports. • Concern: Dependence on Chinese electronics, APIs (pharmaceutical raw materials), solar panels. • Post-Galwan (2020): India banned TikTok and 250+ Chinese apps; raised import barriers; but trade continued. 3. India–UAE: • India–UAE Comprehensive Economic Partnership Agreement (CEPA, 2022): Comprehensive free trade agreement — reduced tariffs on hundreds of products. 4. India–ASEAN: • ASEAN–India Free Trade Agreement (AIFTA): But India chose not to join RCEP (2020) — fearing Chinese dumping. 5. India–UK and India–EU: • FTA negotiations ongoing. South-South Trade: • Growing trade with Africa, Southeast Asia, Latin America — diversifying away from traditional North-South trade.

Problems of India's Foreign Trade: 1. Trade deficit: • India runs a persistent trade deficit — imports exceed exports. • Goods trade deficit: ~$260 billion (2022–23). • Partially offset by services surplus (IT exports) and remittances. 2. Import dependence on critical goods: • Oil: India imports ~85% of its oil — making it highly vulnerable to oil price volatility. • Gold: India's appetite for gold is a major drain of foreign exchange. • Electronics: Dependence on China for smartphones, electronic components. • Defence: India imports ~60–65% of its defence equipment — among the world's largest defence importers. 3. Narrow export base: • Despite growth, India's export basket is still relatively narrow — dominated by a few sectors. • India underperforms in manufactured goods exports relative to its size and population. 4. Tariff and non-tariff barriers in export markets: • Indian textile exports face anti-dumping duties; farm exports face sanitary regulations. 5. Logistics costs: • India's domestic logistics costs are high — port congestion, poor road quality, multiple tax checkposts (historically). Prospects: • 'China+1' strategy: Global companies seeking to diversify supply chains out of China — India is a major beneficiary candidate. • Apple, Samsung manufacturing in India — reducing China dependence. • IT services: India's IT services exports growing at 15%+/year. • Pharmaceuticals: Post-COVID, India's pharma sector has enormous global demand. • Renewable energy equipment: Solar panels, batteries. India's Trade Policy: • Foreign Trade Policy (FTP) 2023–28: Focus on reaching $2 trillion in exports (goods + services) by 2030. • 'AtmaNirbhar Bharat': Self-reliance — promoting domestic production of critical goods (semiconductors, defence, electronics) through PLI (Production-Linked Incentive) schemes. • Free trade agreements: Active FTA negotiations with EU, UK, Canada, GCC. • Export promotion: MEIS, RoDTEP — export incentive schemes.