India's international trade and foreign direct investment has grown substantially in recent years. Between 2002 and 2008, India's total merchandise trade increased from $95 billion to $391 billion, with exports growing at an average rate of 24.5% and imports growing 30.3% annually. Major trading partners for both exports and imports include the US, China, UAE, and Saudi Arabia. Trade has shifted towards developing Asian countries, with Asia's share of exports increasing from 39% to 52% during 2001-2008. Foreign direct investment inflows and outflows have also increased significantly.

1. INDIA’S INTERNATIONAL TRADE AND INVESTMENT
AN OVERVIEW

2. 2
India’s International Trade
Towards Increased Global Integration through Trade
India’s Merchandise Trade Turnover
Exports Imports Total
CAGR: 24.5% 30.3% 27.8% increased from US$95 bn in FY02 to
(2002-08) US$ 391 bn in FY08 (CAGR of 27.8%)
414
India’s Exports increased from US$44
312 bn in FY02 to US$ 163 bn in FY08
252 (CAGR of 24.5%)
195
251 India’s Imports increased from US$
142 186 51 bn to US$ 251 bn (CAGR of 30.3%)
114 149
95 112
61 78 Share in world merchandise exports
51 163
126
64 84 103 in 2007 – 1.04%; Rank – 26th
44 53
FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY 2008
Source: Ministry of Commerce & Industry.

3. 3
India’s Export: Shifting Southwards
India’s Export Market FY 2001 (US$44 bn) India’s Export Market FY 2008 (US$163 bn)
%
4.1
a
Africa
ri c
Asia
Af
38.7% 7.1%
North Asia
America 51.7% North
22.4% America
13.5%
LA
C
LAC 3.
Europe 5%
2.2% Europe
CIS & Baltics 25.9% CIS & 22.9%
2.3% Others Baltics Others
4.3% 1.1% 0.3%
Direction of exports moving towards the Southern countries, particularly Asia.
Share of Asia increased from 39% to 52% during 2001 – 2008.
Future trade flows to be geared towards the developing nations (buttressed by GOI policies).

4. 4
India’s Major Trading Partners
Top Export Markets (FY 2008, US$ bn) Top Import Sources (FY 2008, US$ bn)
USA China 27.1
20.7
UAE 15.6 USA 21.0
China 10.8 Saudi Arabia 19.4
Singapore 7.4 UAE 13.5
UK 6.7 Iran 10.9
HK 6.3 Germany 9.9
Netherlands 5.2 Switzerland 9.8
Germany 5.1 Singapore 8.1
Belgium 4.2 Australia 7.8
Italy 3.9 Kuwait
Total Exports: US$ 163 bn 7.7 Total Imports: US$ 251 bn
Source: Ministry of Commerce & Industry.

5. 5
India’s Trade Basket
Top Export Items (FY 2008, US$ bn) Top Import Items (FY 2008, US$ bn)
Petroleum Crude & Prod
79.6
Petroleum Prod 28.4
Electronic Goods 20.7
Gems & Jewellery 19.7
Transport equip 20.1
Machinery & Instr 9.1
Pharma & Fine Chem 7.6 Machin. excpt electrcl, electonic 19.9
RMG Cotton 7.5 Gold 16.7
Manuf. of metals 7.1 Iron & Steel 8.2
Tranport equip 7.0 8.0
Prls. Prec/Semi Prec Stones
Iron ore 5.8 7.9
Metalifer. ores & metal scrp
Cot. yarn & Fabrics 4.7 7.2
Organic chem
Prim & Semi-fin. Iron & Steel 4.2 6.4
Coal, Coke & Briquittes
Source: Ministry of Commerce & Industry.

6. 6
India’s Trade in Services
Total Trade in Services (US$ bn) …of which Software Exports
Exports Imports Total 40.3
CAGR: 31.3% 24.0% 28.2%
(2002-08) 31.3
2 .1%
138
R :3
23.6
121 C AG
92 17.7
50
12.9
71 44
9.9
35 7.7
44
38 28
31 88
17 76
14 17 58
27 43
17 21
FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY 2008 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008
Source: RBI. Source: NASSCOM.

7. 7
India’s Direct Investment Flows
Both foreign direct investment inflows & outflows Sectoral pattern of approved Indian OFDI
have shown an increasing trend (US$ mn) (April-June 2008)
FDI Inflows
32435
FDI Outflows
Manufactu-
Others
ring
32.3%
22079
36.9%
18369
13107
10073
Trading Non-
8961
15.3% Financial
6130
6051
Services
5043
5035
4029
4322
12.3% Financial
Services
1892
1770
1797
1490
1495
829
3.2%
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09*
* Apr-Jun
Source: RBI Bulletin, October 2008; Online Database on Indian Economy; Exim Bank Analysis.

8. 8
India’s Overseas Investment
Approved ODI across countries
Total : US$ 3.2 bn (Apr– June 2008) Destinational analysis of Indian
Saudi approved ODI stock reveals that
Arabia
Mauritius regional distribution is evenly
USA 2.5%
9.0%
11.2% Canada
UAE spread out across various
8.7% 2.1%
Netherlands countries.
Malaysia
22.9%
2.0%
Singapore, Netherlands and the
British
Virgin US were the largest destinations
Others Island
Singapore 6.1% 1.6%
for Indian approved ODI
32.5% accounting for 2/3rd of the total,
Switzerland
1.4% followed by Mauritius and UAE.
Source: RBI Bulletin, October 2008.

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