India's top 5 trade partners in 2017-18 were China, United States, United Arab Emirates, Saudi Arabia, and Switzerland. India had the largest trade deficit with China at $51.72 billion. The main exports to these countries included precious metals and stones, textiles, organic chemicals, machinery, and iron and steel products. Key imports included electrical equipment, machinery, crude oil, other petroleum products, and precious stones. Foreign trade is impacted by factors such as exchange rates, inflation rates, foreign GDP, and trade restrictions.

1. TOP 5 TRADE PARTNERS
OF INDIA
Submitted By:
AKHILESH KUMAR 19008
ARNAB DASGUPTA 19209
AISHMITA MAJI 19202
ADITI KAMLESH SHAH 19302
ABHISHEK PR 19006
BATCH 2018-20
ISB&M Pune

2. WHAT IS FOREIGN TRADE ?
Trade between two or more countries is called Foreign Trade or International Trade.
 FOREIGN TRADE POLICY
The Foreign Trade Policy (FTP) was introduced by the Government to grow the Indian export of goods
and services & use trade expansions as an effective tool for generating employment and increasing
value addition in the country.
The Government, through the implementation of the policy, seeks to develop the manufacturing and
service sectors.

3. FOREIGN TRADE POLICY
 In the Mid-Term Review of the Foreign Trade Policy (FTP) 2015-20 the Ministry of Commerce and
Industry has enhanced the scope of Merchandise Exports from India Scheme (MEIS) and Service
Exports from India Scheme (SEIS).
 As of December 2018, Government of India decided to set up trade promotion bodies in 15
countries to boost exports from Small and Medium Enterprises (SME) in India.
 In September 2018, Government of India increased the duty incentives for 28 milk items under the
Merchandise Export from India Scheme (MEIS)
 The Department of Commerce has announced increased support for export of various products
and included some additional items under the MEIS Scheme in order to help exporters to
overcome the challenges faced by them.
 The Central Board of Excise and Customs (CBEC) has developed an 'integrated declaration' process
leading to the creation of a single window for both importers and exporters.

4. ADVANTAGES OF FOREIGN TRADE
 Economics of Large Scale- The expansion of foreign trade leads to production of goods on large scale.
Example - India consumes around 20% of gold produced and exports 30% of Indian jewelry to USA
alone.
 Maximum Use of Natural Resources- Foreign trade helps each country to specialize in the production of
those goods, which best suits it environments. It, thus leads to maximum use of its natural resources.
Example - NTPC sell’s electricity to other countries like Nepal, Bhutan.
 Advance Equipment’s- The developing countries can import latest machinery and know how from the
developed world. Example:- India imports new technologies in field of defense from USA and Russia as a
deal in foreign trade.
 International Co-operation- Foreign trade brings the people of different countries close to each other. It
can bring better understanding and harmony among the various nations.
Example - USA placed sanctions on India in 1998 but after the sanctions ended trade relation
between India and USA increased which resulted in closer relations between both countries.

5. INDIA’S TOP 5 TRADE PARTNERS
India's largest trade partners with their total trade (sum of imports and exports) in billions of US dollars for
the financial year 2017–18
SL.NO COUNTRY EXPORT IMPORT TOTAL TRADE TRADE DEFICIT
1. China 16.34 68.06 84.4 -51.72
2. United States 48.6 25.7 74.3 22.9
3. United Arab Emirates 30.29 19.45 49.74 10.84
4. Saudi Arabia 6.39 20.32 26.72 -13.93
5. Switzerland 0.98 19.30 20.28 -18.32

6. FACTS
 India exports approximately 7500 commodities to about 190 countries, & imports around 6000
commodities from 140 countries.
 The Government of India's Economic Survey 2017-18 noted that five states — Maharashtra,
Gujarat, Karnataka, Tamil Nadu and Telangana — accounted for 70% of India's total exports.
 The top 1% of India's companies accounted for 38% of total exports like Bharat Petroleum, Tata
steel etc.
 Oil, Precious stones, Electronics , Heavy machineries are the most imported product by India.
 Gems, precious metals, Pharmaceuticals, Mineral fuels including oil are the most exported products
by India.

7. India exported US $302.84 billion and imported US $459.67 billion worth of commodities showing a Trade
Deficit of US $-156.83 in 2017-18.
Exports during 2017-18 are at US $ 302.84 Billion registering a growth of 9.78 per cent in dollar terms vis-
à-vis 2016-17.

8. INDIA-CHINA TRADE RELATION
 India & China signed a Trade Agreement in 1984 which provided for Most Favored Nation Treatment.
 The bilateral trade crossed US $13.6 billion in 2004.
 In 2006, with the initiation of the border trade between Tibet and India through Nathu La Pass,
reopened.
 Bilateral trade between India and China reached US $ 84.44 billion in 2017-2018 with 40 per cent
increase in Indian exports to China.
 In June 2018, a Memorandum of Understanding (MoU) was signed between the Governments of
India and China to export non-basmati rice to China. As of October 2018, total 24 mills got clearance
to export the same.

9. US-CHINA TRADE WAR:
INDIA’S COTTON EXPORTS TO CHINA MAY SEE A FIVEFOLD JUMP
 India’s cotton exports to China may see a fivefold jump to 4 million bales in the marketing year
starting October 1 (2018-19), after the neighboring country slapped a 25% additional duty on
imports of the fiber from the US on July 6, amid the trade standoff between the world’s two
biggest economies.
 Indian traders have already entered into a forward contract with Chinese buyers to deliver about
1.2 million bales between November and January.
 China is set to return as a major cotton importer from India, taking 10 to 15 million bales each year
by 2019-20.

10. MAJOR EXPORTS & IMPORTS
EXPORTS IMPORTS
Ores Electrical Equipment & Machinery
Slag & Ash Nuclear Reactors
Iron & Steel Cement, Boilers
Plastics Mineral Fuels
Organic Chemicals Silk
Cotton Oils

11. INDIA-US TRADE RELATION
 India US Trade Relations is the significant aspect of the global and strategic partnership.
 In 2006, The India US Trade Relation has reached to US $ 31.917 billion.
 Since 2017, Bilateral trade of goods and services between India and US has gone up by 119%,
touching UD $126.2 billion in 2017-2018
 According to the data, exports were valued at US $49.4 billion and imports were worth US
$76.7 billion.
 In August 2018, US upgraded India’s status as a trading partner on par with its North Atlantic
Treaty Organization (NATO) allies.

12. US-INDIA FREE TRADE NEGOTIATIONS
US eyeing better trade deals with India
 Trump has referred to India as “tariff king” and raised a low-volume export– Harley-Davidson
motorbikes – to call attention to India’s import duties.
 India and the US are negotiating several trade issues, including retaliatory tariffs imposed by both,
market access and intellectual property rights (IPR).
 US President Donald Trump described ties with India as a “bulwark for freedom, prosperity and
peace”, spoke of his friendship with Prime Minister Narendra Modi and, trying to lighten bilateral
trade talks, said Indians are “very good negotiators”.

13. MAJOR EXPORTS & IMPORTS
EXPORTS IMPORTS
Precious Metals And Gems, Jewellery Machinery, Precious Stones And Metals
Textiles Organic Chemicals
Organic Chemicals And Engineering Goods Optical And Medical Instruments
Mineral Fuels Aircraft And Aviation Machinery
Optical And Medical Instruments
IT And Agricultural Products
Pharmaceuticals

14. INDIA-UAE TRADE RELATION
 India and the United Arab Emirates enjoy strong bonds of friendship based on age-old cultural, religious
and economic ties between the two nations
 India primarily import mineral oil and fuels from UAE, however also exports natural pearls and precious
stones. India and UAE has durable international business relation. India has trade surplus with UAE by
7.4 billion USD in financial year 2017-18.
 India ranks 2nd among countries that import products from the UAE, which accounted US$ 11.3 million.
 India and the UAE are each other’s largest trade partners, with over US$50 billion in annual bilateral
trade. In 2017, India’s foreign direct investment into the UAE stood at US$6.6 billion, while the UAE’s
investment in India was US$5.8 billion.
 The United Arab Emirates is the 10th largest investor in India in terms of FDI.

15. INDIA-UAE TO DROP US DOLLAR TRADE
AND REVERT TO OWN CURRENCIES
 In a growing trend of deleveraging trade from the US dollar and the associated US controlled
global payments system, India and the United Arab Emirates (UAE) have signed a currency swap
agreement to boost trade and investment without the involvement of the US dollar.
 The swap is for an amount of two billion UAE dirham or 35 billion Indian rupees (US$495 million),
according to the Indian Embassy in Abu Dhabi.
 The EU has recently come up with a proposal to reduce dependence on the US dollar, while other
countries such as China, Russia, and Central Asian nations are also looking at creating new
payment systems to move away from US dollar trade.

16. MAJOR EXPORTS & IMPORTS
EXPORTS IMPORTS
Natural or Cultured Pearls & Precious Stones Crude Petroleum Oil
Mineral Fuels & Oils Other Petroleum Products & Mineral Fuels
Articles Of Apparel & Clothing Accessories,
Knitted Or Crocheted
Diamonds & Gold
Articles Of Apparel & Clothing Accessories, Not
Knitted Or Crocheted
Natural Or Cultured Pearls & Precious Stones
Ships, Boats & Floating Structures Salt, Sulphur & Plastering Materials
Machinery, Nuclear Reactors, Boilers, Etc. Plastics
Cereals

17. INDIA-SAUDI ARABIA TRADE RELATION
 In 1955, India and Saudi Arabia agreed to shape their relationship based on the “Five Principles of
Peaceful Co- existence”
 In January 2006, Both nation signed "Delhi Declaration.“
 In 2006–07 bilateral trade stood at US$ 16 billion.
 Two-way trade during 2016-17 stood at US$ 25.079 billion: India’s imports from Saudi Arabia reached
$19.94 billion, whereas exports to the kingdom stood at $5.13 billion. In terms of global exports of
India, Saudi Arabia’s share stood at 1.86% during 2016-17 , while the kingdom was the source of
5.19% of India’s global imports during the same period.

18. MAJOR EXPORTS & IMPORTS
EXPORTS IMPORTS
Oils Oil
Cereals Organic Chemicals
Machinery Plastics
Iron Or Steel Products Fertilizers
Organic Chemicals Gems, Precious Metals
Meat Aircraft, Spacecraft
Vehicles Inorganic Chemicals
Ceramic Products Aluminium
Electronic Equipment Copper
Clothing (Not Knit Or Crochet) Other Chemical Goods

19. INDIA-SWITZERLAND TRADE RELATION
 India is Switzerland's third largest trading partner in Asia and the largest in South Asia.
 In 1851 the Swiss trading company Volkart Winterthur established itself as Volkart Brothers in
Bombay.
 In 2017, The trade stood at US $20.28 billion.
 Switzerland's close and dynamic relations with India are manifested in numerous agreements and
treaties and in frequent, high-level diplomatic visits.
 Switzerland and India are partner countries that cooperate in a wide range of areas including trade,
science, education and culture.

20. KEY ASPECTS OF DIPLOMATIC RELATIONS
 India is one of Switzerland's principal trading partners in Asia. Relations between the two countries
have been strengthened through regular high-level visits.
 Switzerland and India have signed numerous bilateral agreements in areas such as trade, development
cooperation, basic education and vocational skills development, visas, migration, air transport,
investment, finance, taxation and scientific and technological cooperation.
 In 2018, Switzerland and India are celebrating the 70th anniversary of the signing of the bilateral
Treaty of Friendship between Switzerland and India.

21. MAJOR EXPORTS & IMPORTS
EXPORTS IMPORTS
Textiles And Garments Machinery And Equipment
(Electrical And Mechanical)
Organic Chemicals Precision Instruments
Precious Stones And Jewellery Pharmaceutical Products Dyes
Dyestuffs Chemicals
Leather Products Fertilizers
Machinery And Parts Watches
Shoes And Shoe Uppers
Cotton, Plastics
Coffee
Hand-knitted Carpets

22. FACTOR’S THAT IMPACT FOREIGN TRADE
 Exchange Rate - Higher exchange rate fluctuation tend to reduce export.
 Inflation Rate - Increases in domestic inflation lead to higher prices for exported goods and a decrease in exports as foreign
consumers substitute in favor of lower priced alternatives produced within their own country or imported from elsewhere.
 Foreign GDP - If incomes abroad rise, foreigners will buy more products. This may enable the country to export more.
Example – Economic meltdown during 2008 in USA lead to 15% down in exports to USA from India.
 Trade Restrictions - Trade tariffs on countries put them under high pressure due to low export and import and affects other
countries also. Example – Sanctions on Iran have affected Indian import of crude oil and dropped the refinery process in
India which leads to losses to Indian companies.
 Other Barriers - India aimed to bring 100,000 megawatts of solar based power generation till 2022 and promote solar
module manufacturing in India. USA challenged India in WTO in illegal trade practices after India mandated multinational
companies to make solar cells and module in India.

23. CONCLUSION
 India’s trade deficit has been to five year low at $17.39 billion. When India imports more than
it exports, it is also converting the rupee into a foreign one. Ironically enough, a widening trade
deficit could actually help stimulate exports. Conversely, a weaker currency will make domestic
goods more expensive, leading to a rise in inflation. In fact, the Indian government has tried to
keep the rupee relatively weaker for this very reason. India’s future in international trade lies in
the sub-continent with countries like Sri-Lanka, Bangladesh. India also needs to realize that
trade with its neighbors is much easier than trade with countries of the West or the far east.

24. ROAD AHEAD
 India is presently known as one of the most important players in the global economic landscape.
Its trade policies, government reforms and inherent economic strengths have attributed to its
standing as one of the most sought after destinations for foreign investments in the world. Also,
technological and infrastructural developments being carried out throughout the country augur
well for the trade and economic sector in the years to come.
 Boosted by the forthcoming FTP, India's exports are expected reach US$ 750 billion by 2018-2019
according to Federation of India Export Organization (FIEO). Also, with the Government of India
striking important deals with the governments of Japan, Australia and China, the external sector is
increasing its contribution to the economic development of the country and growth in the global
markets. Moreover, by implementing the FTP 2014-19, by 2020, India's share in world trade is
expected to double from the present level of three per cent.