FOREIGN TRADE by SWETHA

Foreign trade also called , international Trade Trade among countries is normal & desirable. The fact remains that the natural resources of earth are not evenly distributed. INTRODUCTION

Foreign trade also called , international

Trade

Trade among countries is normal & desirable.

The fact remains that the natural resources

of earth are not evenly distributed.

FOREIGN TRADE & ECONOMIC DEVELOPMENT FOREIGN TRADE is significant for the economic development of developing countries The process of industrialization To reduce the scarcity of consumer Goods.

FOREIGN TRADE is significant for the

economic development of developing

countries

The process of industrialization

To reduce the scarcity of consumer

Goods.

India & Global Trade: India had a significant share in the world trade at the time of independence. However, since then there was a secular decline in India’s share in the world exports till 1980. since from 1950 to 1980 the percentage declined from 2 to 0.4 . it has, how ever improved to about 0.8 by 1997 and is expected to reach one percent by 2000.

India had a significant share in the world trade at the time of independence. However, since then there was a secular decline in India’s share in the world exports till 1980. since from 1950 to 1980 the percentage declined from 2 to 0.4 . it has, how ever improved to about 0.8 by 1997 and is expected to reach one percent by 2000.

India’s Global share 1.4 Service imports 1.2 Service exports 0.8 Merchandise imports 0.7 Merchandise exports 0.5 FDI 5.45 GNP at purchasing power parity 1.50 GNP 16.78 Population 11.24 Arable land 2.47 Area India’s share (percentage) Factor

Extent of foreign trade The value of foreign trade of our country has been rising From year to year. It rose from Rs. 30,553 cr during 1985 – 86 to Rs. 8,38,575 cr during 2004 – 05, Representing an increase of six times.

The value of foreign trade of our country has been rising From year to year. It rose from

Rs. 30,553 cr during 1985 – 86 to Rs. 8,38,575 cr during 2004 – 05, Representing an increase of six times.

It is because of the high stakes involved in foreign Trade that the government of India has assumed Sweeping powers of control over our exports & imports. Extent of foreign trade Cont………..

It is because of the high stakes involved in foreign Trade that the government of India has assumed Sweeping powers of control over our exports & imports.

9.0 2002-03 8.7 2001-02 8.8 2000-01 8.5 1999-00 8.0 1998-99 8.4 1997-98 9.6 1996-97 7.2 1990-91 5.4 1980-81 3.8 1970-71 6.8 1960-61 In % Year EXPORTS as a % of national income

The break-up of foreign trade in terms of exports & import -125190 838575 481950 356625 2004-05 -62394 645558 353976 291582 2003-04 -42067 552343 297206 255137 2002-03 -25267 234297 132447 101850 1998-99 -25267 277839 151553 126286 1997-98 -1488 182734 97111 85623 1996-97 -16325 229031 122678 106353 1995-96 BOT TVOT Import Export Year

significance of exports Exports help to finance imports Export earnings helps service external debt Exports would make our economy highly vibrant

Exports help to finance imports

Export earnings helps service external

debt

Exports would make our economy

highly vibrant

12.14 3.71 3.31 Drugs 25.82 3.49 2.78 Machinery 29.62 13.71 10.57 Gems & jewellery 34.00 17.9 13.30 Software 90.34 6.79 3.57 Petroleum crude & products (%)change 2004-05 ($bn) 2003-04 ($bn) ITEMS EXPORTS: 5 FASTEST GROWING SECTORS (INDIA’S TOP EXPORT MARKET)

Export strategy Imports will increase and to finance them, we need higher exports earning It is not advisable to depend on external assistance to finance imports Debt – servicing burden is ever mounting, necessitating increased export earning

Imports will increase and to finance

them, we need higher exports earning

It is not advisable to depend on

external assistance to finance imports

Debt – servicing burden is ever

mounting, necessitating increased

export earning

11.94 3.65 3.26 Hong kong 15.45 13.27 11.49 US 38.48 7.10 5.13 UAE 55.20 4.59 2.96 China 78.63 3.80 2.12 Singapore (%)change 2004-05 ($bn) 2003-04 ($bn) COUNTRY 5 FASTEST GROWING EXPORT DESTINATION

TOP FIVE FASTEST GROWING NATIONS: 3.80 SINGAPORE 0.81 RUSSIA 4.58 CHINA 1.69 UK 7.09 UAE 1.75 GERMANY 13.26 US 2.03 JAPAN 17.25 EU 5.02 US 2004-2005 ($bn) 1994-95($ bn )

12.01 Textiles 1.06 Leather 12.67 Chemicals& related products 1.13 Marine products 13.70 Gems & jewellery 2.23 Cotton yarn, fabrics, made-ups 14.58 Engineering goods 2.28 Readymade garments 17.20 Software 4.50 Gems & jewellery 2004-05($bn) 1994-95 TOP 5 EXPORTS,THEN & NOW

WHY OUR EXPORTS LAGGING BEHIND Shortage of supply hampers growth Quality of goods and service Efficient trade information is non-existence Lack of competitive advantage too impedes exports

Shortage of supply hampers growth

Quality of goods and service

Efficient trade information is

non-existence

Lack of competitive advantage too

impedes exports

IMPORTS The value of imports has increased from rupees 608 cr in 1950-51 to rupees 353976 cr in 2003-04 In relation to national income, the imports during the first 30 years of planning varied between 6.5% and 8.5% of GDP the variation being minimal Again since 1979-80 this percentage varied between 8 & 12 signifying that ratio to GDP has been fairly stable

The value of imports has increased from

rupees 608 cr in 1950-51 to rupees

353976 cr in 2003-04

In relation to national income, the imports

during the first 30 years of planning varied

between 6.5% and 8.5% of GDP the

variation being minimal

Again since 1979-80 this percentage

varied between 8 & 12 signifying that

ratio to GDP has been fairly stable

Top Import (Products) 4.08 -21.37 30,061.51 India Import Of –pearls n jewel 5 7.63 43.37 56,216.24 India Import Of machinery 4 7.97 37.35 58,704.81 India Import Of - GOLD 3 8.86 25.32 65,281.46 India Import Of –electronic goods 2 32.10 34.47 236,601.84 India Import Of –crude oils 1 Value (INR in Crores) Value (INR in Crores) Value (INR in Crores) %Share %Growth Export Value of Goods Apr 2006 - Feb 2007 Name of Commodity Rank

0.19 - 1,417.61 India Import of- Wheat 10 2.48 -22.47 18,258.34 India Import Of - OTHER COMMODITIES 9. 2.49 19.77 18,363.64 India Import Of - COAL, COKE & BRIQUITTES etc 8. 3.04 18.93 22,405.24 India Import Of - ORGANIC CHEMICALS 7. 3.31 40.20 24,413.75 India Import Of – IRON & STEEL 6

INDIA’S EXPORT-IMPORT STATISTICS 1 crore = 10 million ** Excluding US$ 2800 million of gold and US$ 2 million of Special Drawing Rights (SDRs) reserves as on November 24, 2000. ** Including US$ 5500 million deposit mobilized by the State Bank of India through India Millennium Deposit. Figures in bracket indicate year-on-year difference 35058 (18.75) 29522 (13.65) 25975 (16.13) 22367 (31.23) 17044 (-18.09) 20809 (38.10) US$ in Million 152924 (21.94) 124412 (22.34) 102507 (27.54) 80368 (37.50) 58446 (-11.45) 66006 (39.58) Rs in Crore* Forex ** Reserves 47212 (12.79) 41858 (0.90) 41484 (6.00) 39133 (6.70) 36678 (28.0) 28654 (22.94) US$ in Million 204583 (16.17) 176099 (14.21) 154176 (10.98) 138920 (11.69) 122678 (36.35) 89971 (23.04) Rs in Crore Imports 37599 (11.70) 33659 (-3.84) 35006 (4.60) 33470 (4.50) 31797 (20.76) 26330 (18.40) US$ in Million 162925 (15.06) 141604 (8.84) 130101 (9.49) 118817 (11.71) 106353 (28.64) 82674 (18.52) Rs in Crore Exports 1999-00 1998-99 1997-98 1996-97 1995-96 1994-95 Foreign Trade

1 crore = 10 million

** Excluding US$ 2800 million of gold and US$ 2 million of Special Drawing Rights (SDRs) reserves as on November 24, 2000.

** Including US$ 5500 million deposit mobilized by the State Bank of India through India Millennium Deposit.

Figures in bracket indicate year-on-year difference

Indices of Global Competitiveness 13 9 4 43 10 44 11 38 10 Switzerland 8 15 22 54 26 16 10 40 9 UK 20 18 8 11 1 45 25 2 8 Hong Kong 3 13 11 47 29 7 12 42 7 Canada 7 2 2 46 17 43 8 52 6 Finland 10 8 1 4 2 1 15 13 2 Singapore 1 1 7 41 15 26 5 25 1 USA 51 38 54 14 59 5 49 19 49 India E- commerce Technological sophistication Overall infrastructure Investment rates Average tariff Export promotion Regulatory standard Govt Growth competitiveness

India’s Global share 1.4 Service imports 1.2 Service exports 0.8 Merchandise imports 0.7 Merchandise exports 0.5 FDI 5.45 GNP at purchasing power parity 1.50 GNP 16.78 Population 11.24 Arable land 2.47 Area India’s share (percentage) Factor

India’s Rank 1 Tea production 4 GNP at purchasing power parity 2 Tobacco production 12 GNP 2 Wheat production 19 Service imports 2 Rice production 22 Service exports 2 Nitro fertiliser consumption 26 Merchandise imports 2 Tractors in use 31 Merchandise exports 1 Irrigation area 2 Sugar production 2 Arable land 1 Butter and ghee production 7 Area 1 Milk production 2 Population Rank Factor Rank Factor

India’s share of Developing Countries 3.07 Merchandise imports 2.42 Merchandise exports 1.6 FDI 12.13 GNP at purchasing power parity 7.43 GNP 19.72 Population India’s share (performance) Factor

REGULATION OF FOREIGN TRADE

The foreign trade (DEVELOPMENT AND REGULATION),ACT 1992 , empowers to regulate imports and augment exports The government announces its foreign trade policy once in 5 years popularly called EXIM POLICY The latest policy was announced in march 2007

The foreign trade (DEVELOPMENT

AND REGULATION),ACT 1992 ,

empowers to regulate imports and

augment exports

The government announces its

foreign trade policy once in 5 years

popularly called EXIM POLICY

The latest policy was announced

in march 2007

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