Unit 1 Indias Foreign Trade

In  this  unit,  you  will  learn  the role  of  foreign  trade  in  the  economic development, trends  in  India's  foreign  trade  and  compo- sition  and  direction  of  exports  and  imports.  You  will  be'also  acquainted with  the  problems  of India's  foreign  trade.

Role of foreign trade in economic development

The role of foreign trade can be judged by the following faces:

Foreign trade and economic development.

1.Foreign exchange earning

2.Market expansion

3.Increase in investment

4.Foreign investment

5.Increase in national income

6.Decrease in unemployment

7.Price stability

8.Specialization

9.Removal of food shortage

10.Agricultural development

11.Import of consumer goods

12.To improve quality of local products

13.External economics

14.Competition with foreign producers

15.Useful for the world peace

16.Import of capital goods

17.Import substitution

18.Better understanding

19.Dissemination of knowledge

20.Interdependence

21.Factors productivity

SUMMARY

Trade  facilitates  the  flow  of  capital  and  speed  up  the  acquisition  of  new  technology.  Exports not  only  contribute  directly  to  economic  growth  but  more  important,  also  pennit  more imports,  and  a  rapid  modernisation  of  production.  The result  is  an  efficient  domestic  industry fully  geared  to  international  competition. In  the  50's  expolts  largely  comprised  agricultural  products.  During  the third  plan,  several  new products  principally  in  the  engineering  and  chemical  fields  emerged  ?or  the  first  time  and  this trend  continued.  The  70s  saw  a  significant  diversification  of  exports,  Handicrafts  emerged  as tlie  single  largest  foreign  exchange  earner.  Indian  exports  now  include  engineering  goods, electronics  and  co~nputer sohare, chemical and  chemical  products,  leather  and  leather manufactures,  garments,  cotton  fqbrics,  rayon  and  wollen  textiles,  gems  and jewellery, handicrafts,  Irand-made  carpets,  processed  foods  and  marine  products.  Emphasis  at  the  same tittle  has  also  bee11 laid  on  the  export  of  traditional  items  Iike  agricultural  con~modities, ores and  minerals  and  plantation  crops. There  has  been  significant  changes  in  the  composition  of  imports.  The  share  of  capital  goods has  iiiereased  in  absolute  amount  but  their  relative  share  has  declined,  After  the  hike  in  oil- price  in  1979, the  share  of  imports  in  tlie  total  import  bill  has  been  rising. The  major  Indian  rnarkets  are:  USA,  UK,  Germany  and  Japan.  India's  major  imports  come  from USA,  UK,  Belgium,  Japan,  Germany  and  Saudi  Arabia.