International Trade

Learning Outcomes:

1. Understanding the transformation of India’s international trade in terms of volume, composition, and direction.
2. Analyzing the trends in exports and imports and recognizing key commodities in India’s trade.
3. Identifying India’s major sea ports and their significance in international trade.
4. Comprehending the role of air transport in trade and recognizing major airports in India.

India’s international trade has transformed significantly over the years. From a modest trade worth Rs. 1,214 crore in 1950-51 to Rs. 44,29,762 crore in 2016-17, this dramatic increase can be attributed to factors like the growth of manufacturing sectors, government’s liberal policies, and market diversification. Despite its relatively small share in global trade, India plays a significant role in the world economy. The following sections detail the changing patterns of India’s foreign trade.

Changing Pattern of the Composition of India’s Exports

India’s export composition has shifted, with notable changes in the types of goods being exported over the years.

1. 1950s-1960s: Traditional items such as foodgrain, capital goods, machinery, and equipment were prominent exports. The Green Revolution reduced the need for foodgrain imports, but petroleum and other energy-related products became significant due to the 1973 oil crisis.
2. 2016-17: Key export commodities included agriculture and allied products, manufactured goods, crude and petroleum products, and other commodities.
   • Agriculture’s contribution to exports decreased, while manufactured goods rose to dominate, contributing 73.6% of exports.
   • Commodities like fresh fruits, marine products, and sugar have witnessed growth in exports, whereas traditional agricultural exports such as coffee and cashew have declined due to global competition.
3. Global Competition: China and other East Asian countries have emerged as major competitors, particularly in the manufacturing sector.

Important Note: The steady decline of traditional exports like coffee and cashew highlights the shifting global market, pushing India towards more competitive sectors like manufacturing and high-tech products.

Changing Pattern of India’s Imports

India’s imports have also evolved, reflecting changes in domestic demand and the global economy.

1. 1970s: The need for foodgrain imports diminished due to the success of the Green Revolution. Fertilizers and petroleum imports replaced food imports, driven by the country’s growing energy needs.
2. 2016-17:

• Petroleum products became a crucial import, reflecting India’s growing industrialization and improved living standards.
• Capital goods like machinery and transport equipment saw a steady increase in imports due to expanding industrial sectors.
• Food and allied products imports, especially edible oils, grew despite India’s strong agricultural base, due to high domestic consumption.

1. Principal Imports: Major imports include pearls, semi-precious stones, gold, silver, metal ores, and non-ferrous metals.

Comparative Table of Imports and Exports (2009-2017)

Direction of Trade

India maintains trade relationships with various countries and major trading blocs across the globe. Most of the country’s international trade is conducted via sea routes, with a smaller portion transported over land to neighboring countries like Nepal, Bhutan, Bangladesh, and Pakistan.

1. 2016-17 Trade Partners: India’s trade primarily involves regions such as Europe, North America, Africa, and Asia (including ASEAN nations). Table 11.6 shows India’s regional imports:

Ports: Gateways of International Trade

India, surrounded by seas on three sides, has a long tradition of sea-faring and port development. These ports serve as critical points for international trade.

1. Kandla Port: Located in the Gulf of Kuchchh, it caters to the needs of western and north-western India and reduces pressure on the Mumbai port.
2. Mumbai Port: A natural harbor and the largest port in India, it handles a significant portion of India’s overseas trade, with major hinterland regions including Maharashtra, Gujarat, Madhya Pradesh, and Uttar Pradesh.
3. Jawaharlal Nehru Port (Nhava Sheva): Developed to relieve congestion at Mumbai port, it is India’s largest container port.
4. Visakhapatnam Port: Located in Andhra Pradesh, this port handles iron-ore, petroleum, and other general cargo. It is connected to the sea via a man-made channel.

Comparison of Major Ports

Important Note: India’s ports face challenges such as silt accumulation, overcrowding, and the need for modernization. Government initiatives, along with private sector involvement, are being introduced to address these issues.

Air Transport in International Trade

Air transport is a crucial component of international trade, especially for transporting high-value or perishable goods over long distances. While air transport is fast, it remains expensive and impractical for heavy or bulky commodities.

• India has 25 major airports that handle both domestic and international flights, such as those in Ahmedabad, Bengaluru, Chennai, Delhi, Kolkata, and Mumbai.
• Air Routes: India’s air routes converge in cities like Delhi, Mumbai, Kolkata, and Chennai, driven by their economic importance and connectivity.

Important Note: Air transport, despite its high cost, is indispensable for time-sensitive goods, but oceanic routes continue to dominate for bulk trade due to lower costs.

MCQ

What is the largest container port in India?
Answer: Jawaharlal Nehru Port (Nhava Sheva)

By understanding the changes in India’s international trade composition, the role of key sea ports and air transport, and the evolution of imports and exports, one gains a comprehensive picture of India’s evolving trade landscape.