India's international trade has undergone a sea change in recent years in terms of volume, composition, and direction. Although India's contribution to world trade is about one per cent of the total volume, it plays a significant role in the world economy.
In 1950-51, India's external trade was worth Rs. 1,214 crore, which rose to Rs. 77,19,796 crore in 2020-21 due to momentum in manufacturing, liberal government policies, and market diversification.
Though there has been an increase in the total volume of imports and exports, the value of imports continues to be higher than that of exports, leading to a trade deficit.
| Year | Exports | Imports | Trade Balance |
|---|---|---|---|
| 2004-05 | 3,75,340 | 5,01,065 | -1,25,725 |
| 2009-10 | 8,45,534 | 13,63,736 | -5,18,202 |
| 2013-14 | 19,05,011 | 27,15,434 | -8,10,423 |
| 2016-17 | 18,52,340 | 25,77,422 | -7,25,082 |
| 2021-22 | 31,47,021 | 45,72,775 | -14,25,753 |
The composition of commodities in India's international trade has been undergoing a change over the years. The share of agriculture and allied products and manufactured goods has decreased, whereas the share of crude petroleum and products and other commodities has increased.
| Commodities | 2015-16 | 2016-17 | 2020-21 | 2021-22 |
|---|---|---|---|---|
| Agriculture and allied products | 12.6 | 12.3 | 14.3 | 11.9 |
| Ore and Minerals | 1.6 | 1.9 | 3.2 | 2.0 |
| Manufactured goods | 72.9 | 73.6 | 71.2 | 67.8 |
| Crude and petroleum products | 11.9 | 11.7 | 9.2 | 16.4 |
| Other commodities | 1.1 | 0.5 | 2.1 | 1.9 |
| Commodities | 2021-22 |
|---|---|
| Agriculture and allied products | 3,75,742 |
| Ores and Minerals | 63,754 |
| Manufactured goods | 21,32,296 |
| Mineral fuels and Lubricants | 5,15,310 |
The decline in traditional items is largely due to tough international competition. Amongst agricultural products, there is a decline in the export of traditional items like cashew, though an increase has been registered in floricultural products, fresh fruits, marine products, and sugar.
The manufacturing sector alone accounted for 67.8 per cent of India's total value of export in 2021-22. Engineering goods have shown significant growth. Gems and jewellery also contribute a large share of India's foreign trade.
India faced serious food shortages during the 1950s and 1960s. The major items of import at that time were foodgrains, capital goods, machinery, and equipment. After the 1970s, foodgrain imports were discontinued due to the success of the Green Revolution.
| Commodity Group | 2015-16 | 2016-17 | 2020-21 | 2021-22 |
|---|---|---|---|---|
| Food and allied products | 5.1 | 5.6 | 4.5 | 4.4 |
| Fuel (Coal, POL) | 25.4 | 26.7 | 25.1 | 31.6 |
| Fertilisers | 2.1 | 1.3 | 1.9 | 2.3 |
| Paper board manufacturing and news print | 0.8 | 0.9 | 0.8 | 0.7 |
| Capital goods | 13.0 | 13.6 | 12.7 | 10.1 |
| Others | 38.1 | 37.0 | 41.6 | 38.5 |
| Commodities | 2021-22 |
|---|---|
| Fertilisers and fertiliser manufacturing | 1,05,796 |
| Edible oils | 1,41,532 |
| Pulp and waste paper | 11,934 |
| Non-ferrous metals | 4,99,766 |
| Iron and steel | 94,053 |
| Petroleum, oil and lubricants | 12,07,803 |
| Pearls, precious and semi-precious stones | 2,31,279 |
| Medicinal and Pharma products | 67,545 |
| Chemical products | 3,08,882 |
There is a continuous rise in the import of petroleum products, which are used as fuel and industrial raw materials. This indicates the tempo of rising industrialisation and better standards of living. Conversely, the import of capital goods has maintained a steady decline.
India has trade relations with most countries and major trading blocks of the world. Asia and ASEAN constitute the largest share of India's import trade.
| Region | 2016-17 | 2021-22 |
|---|---|---|
| Europe | 4,03,972 | 6,40,577 |
| Africa | 1,93,327 | 3,68,156 |
| North America | 1,95,332 | 3,78,041 |
| Latin America | 1,15,762 | 1,61,995 |
| Asia and ASEAN | 15,44,520 | 29,18,577 |
India aims to double its share in international trade within the next five years by adopting measures such as import liberalisation, reduction in import duties, delicensing, and changing from process to product patents.
Most of India's foreign trade is carried through sea and air routes. A small portion is carried through land routes to neighbouring countries like Nepal, Bhutan, Bangladesh, and Pakistan.
India is surrounded by sea on three sides and is bestowed with a long coastline. Water provides a smooth surface for very cheap transport. At present, India has 12 major ports and 200 minor or intermediate ports.
The capacity of Indian ports increased from 20 million tonnes of cargo handling in 1951 to more than 837 million tonnes in 2016.
Air transport plays an important role in international trade by taking the least time for carriage and handling high-value or perishable goods over long distances. However, it is costly and unsuitable for carrying heavy and bulky commodities.
There were 25 major airports functioning in the country (Annual Report 2016-17). Under the UDAN scheme launched in 2017, a total of 73 unserved/underserved airports, including 9 heliports and 2 water aerodromes, have been operationalised.