India in International Trade Market
International trade is exchange of capital, goods, and services across international borders or territories. In most countries, it represents a significant share of gross domestic product (GDP). While international trade has been present throughout much of history (see Silk Road, Amber Road), its economic, social, and political importance has been on the rise in recent centuries. Trade and commerce have been the backbone of the Indian economy right from ancient times. Textiles and spices were the first products to be exported by India. The Indian trade scenario evolved gradually after the country’s independence in 1947. From the 1950s to the late 1980s, the country followed socialist policies, resulting in protectionism and heavy regulations on foreign companies conducting trade with India.
India’s major imports comprise of crude oilmachinery, military products, fertilizers, chemicals, gems, antiques and artworks. Imported goods are divided into the following categories:
Freely importable items: For these items, no import license is required. They can be freely imported by an individual or a firm.
Canalized items: These items can only be imported by public sector firms. For example petroleum products fall under this category.
Prohibited items: Items such as unprocessed ivory, animal rennet and tallow fat cannot be exported to India.
India Trade Promotion Organisation (ITPO), headquartered at Pragati Maidan, is the nodal agency of the Government of India under aegis of Ministry of Commerce and Industry (India) for promoting country’s external trade. ITPO is a Schedule-B Miniratna Central Public Sector Enterprise (CPSE) with 100 percent shareholding of Government of India.ITPO is going to organize 34th India International Trade Fair (IITF) 2014, at its known location Pragati Maidan during 14–27 November 2014, with “Women Entrepreneurs” theme. The charges for entry on Business days is kept at Rs.400 and for general days as Rs.50.
The government could also ride the booming market in FY2014-15 to bring profit-making unlisted companies such as ITPO, along with Cochin Shipyard & NEEPCO to the stock market through disinvestment.Karnataka Exhibition Authority (KEA) is in early discussions with ITPO to set up Pragati Haat in every district headquarters and one near Bangalore similar to that of Delhi’s Pragati Maidan. KEA has sought 20 acres of land in each district and 70 acres of land near Bangalore for the purpose.
- Automotives:Currently, India has the world’s sixth largest automobile industry after China, the USA, Germany, Japan and Brazil. The increase in the number of MNCs entering into the Indian market bears testimony not only to the potential of this market but also to the capacity of the country to serve as a manufacturing hub for automobiles and spare parts.
- Chemicals: The chemicals and petrochemicals industry is a key and growing sector of India’s economy. The Indian chemical industry is the second largest in Asia after China. India exported US$43.7 billion worth of chemicals and chemical products in 2013-14. The Indian chemical industry also attracts significant FDI, with a share of over 5 percent of total FDI for the period 2001-2014). It should be noted that the world’s largest refinery is located in Jamnagar, Gujarat, and is owned by Reliance Industries Limited.
- Petroleum Products: The Petroleum and Natural Gas sector accounts for over 15% of India’s GDP. With substantial increases in refining capacity in India, the country was able to increase the export of petroleum products from US$28.2 billion in 2009-10 to US$62.7 billion in 2013-14. The share of petroleum products in India’s total exports climbed from 15.7% in 2009-10 to 20.1% in 2013-14.
- Textiles and Garments: Textiles and garments are one of the most important export sectors in India, accounting for 4% of the country’s GDP and 10% of the country’s exports, accounting for US$31.4 billion in exports in 2013-14.
- Pharmaceuticals: The Indian Pharmaceuticals Industry is one of the most vibrant in the world. The most significant export market for Indian pharmaceuticals in the United States, which takes 30.7% of all pharmaceutical exports. Several African countries such as South Africa, Nigeria, and Kenya have emerged as important markets for Indian pharmaceutical products. India is one of the world’s largest producers of generic drugs and formulations.
- Capital Goods: The capital goods industry is a strategic sector for India’s manufacturing industry. Engineering goods are the second largest component of India’s merchandise exports, achieving total exports of US$19.7 billion in 2013-14.
In conclusion, it can be said that India has been engaged in a massive reform effort since 1991. The end of the License Raj and implementation of pro-market reforms have had far reaching implications for competitiveness in the Indian economy. Significant sectors of the economy have been opened up for private participation through Delicensing and allowing entry of private firms to industries previously reserved for the state-owned sector. Trade liberalization has also been considerable. In addition, many sectors of the economy have been opened to foreign ownership via Foreign Direct Investment.The new era of economic reforms and growth has several implications for the nation’s foreign policy. In an increasingly knowledge-based global economy, it is essential for the country to maintain and improve upon high levels of human resource development. Action needs to be taken to increase the quantity and quality of HR institutions such as schools and colleges.
Therefore, the nation’s foreign policy has to focus much more on commerce and trade than it did before 1991. Only then will the full benefits of reforms and trade liberalization accrue to India and its people.
I am confident that institutions such as this one and other similar institutions in the country will play an increasingly positive role in bringing about economic growth and development.