Foreign Trade in India [2024]: Overview, Key Statistics, Trends, and Key Players

Introduction: Foreign Trade in India

Foreign Trade refers to the exchange of goods, services, and capital between countries. It involves importing products from other nations and exporting domestically produced goods to international markets. Foreign trade is crucial for a country’s economic growth as it allows access to resources, technology, and markets that may not be available domestically.

Example: India is a significant player in global trade. For instance, India imports crude oil from countries like Saudi Arabia and Iraq to meet its energy needs, as domestic production is insufficient. On the export side, India is a leading exporter of software services, with companies like TCS and Infosys providing IT solutions to clients worldwide, particularly in the United States and Europe. This trade not only fulfills domestic requirements but also brings in foreign exchange, contributing to India’s GDP growth.

Foreign Trade in India

• Definition: Foreign trade includes all imports and exports to and from India, managed by the Ministry of Commerce and Industry (MoCI).
• Key Agencies:
  • Ministry of Commerce and Industry (MoCI): Oversees foreign trade in India.
  • Directorate General of Foreign Trade (DGFT): Promotes and facilitates trade, issues authorizations to exporters, and monitors obligations through regional offices.
• Trade Performance (FY 2023-24):
  • Overall Exports:
    • Value: $776.68 billion (Merchandise and Services combined).
    • Merchandise Exports: $447.46 billion.
    • Services Exports: $339.62 billion (4.3% growth over FY 2022-23).
  • Overall Exports: $62.42 billion (July 2024).

Trading Partners of India

Country	Details
USA	– Largest trading partner for India – Bilateral trade (FY23): USD 128.78 billion – Indian exports to the US (FY23): USD 78.54 billion – American exports to India (FY23): USD 50.24 billion – 3rd largest investor in India (FDI inflows: USD 62.24 billion from April 2000 to September 2023)
UAE	– 3rd largest trading partner for India – 2nd largest export destination for India – Bilateral trade (FY23): USD 84.84 billion – 7th largest investor in India (FDI inflows: USD 16.67 billion from April 2000 to September 2023) – Home to 3.5 million Indians, the largest expatriate community in the UAE
China	– 3rd largest trading partner for India as of 2022-23 – Bilateral trade (2022): USD 136.26 billion – 21st in FDI equity inflows into India (USD 2.50 billion from April 2000 to September 2023)
Saudi Arabia	– 4th largest trading partner for India – 18% of India’s crude oil imports sourced from Saudi Arabia – Bilateral trade (2022-23): USD 52.76 billion – 19th in FDI equity inflows into India (USD 3.22 billion from April 2000 to September 2023)

Trade Infrastructure in India

• Maritime Trade:
  • Volume: 95% of India’s merchandise trade by volume is via maritime transport.
  • Major Port: Jawaharlal Nehru Port Trust (JNPT) in Maharashtra handles 55% of container cargo.
  • Inland Container Depots & Freight Stations: 290 nationwide (including those under implementation).
  • Sagarmala Programme:
  • Goal: Reduce logistics costs, and promote port-led industrial development.
  • Developments:
    • 6 new major ports.
    • 14 coastal economic zones.
  • Pillars: Port modernization, better connectivity, port-led industrialization, and coastal community development.
• Road Connectivity:
  • National Highways: World’s 2nd largest road network.
  • Bharatmala Pariyojana:
    • Launched in 2015 to enhance connectivity.
    • Phase I: Develop 50 industrial corridors, add 34,800 km of road network, and connect 550 districts.
• Railways:
  • Freight: Indian Railways transported over 1.4 billion tonnes of cargo in 2023-24.
  • Freight Corridors: 6 high-capacity, high-speed freight corridors under development.

Key Terms in International Trade and Their Definitions

Term	Definition	Example
Import	Buying goods or services from another country.	India imports crude oil from the Middle East.
Export	Selling goods or services to another country.	India exports software services to the United States.
Balance of Trade	Difference between a country’s exports and imports.	If India exports more than it imports, it has a trade surplus; otherwise, it has a trade deficit.
Trade Law	Laws governing trade between countries.	The World Trade Organization (WTO) oversees international trade laws to ensure fair trade practices.
Trade Pact	Agreement between two or more countries to facilitate trade.	The North American Free Trade Agreement (NAFTA) was a trade pact between the US, Canada, and Mexico.
Trade Bloc	A group of countries that work together to promote trade.	The European Union (EU) is a trade bloc where member countries have free trade agreements with each other.
Export Orientation	Strategy focusing on producing goods for export.	South Korea’s economy grew rapidly by focusing on exporting electronics and automobiles.
Import Substitution	Replacing foreign imports with domestic production.	India promoted manufacturing within the country by restricting imports in the 1960s and 1970s.
Trade Route	Path taken by goods as they move from one country to another.	The Silk Road was a historic trade route connecting Asia to Europe.
Domestic Trade	Trade within a country’s borders.	Trading goods between states within India, such as selling tea from Assam in Delhi.

Trade Barriers and Related Measures: Definitions and Examples

Term	Definition	Example
Trade Barriers	Government-imposed restrictions on trade.	Tariffs, quotas, and import bans are examples of trade barriers.
Tariffs	Taxes on imported goods to protect domestic industries.	The US imposed tariffs on steel imports to protect its domestic steel industry.
Non-Tariff Barriers	Trade restrictions that don’t involve taxes.	Strict import regulations, standards, or licensing requirements are non-tariff barriers.
Import Quotas	Limits on the quantity of goods that can be imported.	A country may limit the number of cars imported to protect its domestic auto industry.
Tariff-Rate Quotas	Allowing a certain amount of imports at a reduced tariff rate, after which higher tariffs apply.	The EU allows a fixed amount of sugar to be imported at a lower tariff rate, and any amount beyond that is taxed at a higher rate.
Import Licenses	Permits required by a government to import certain goods.	A country may require an import license for hazardous materials to control their entry.
Customs Duties	Taxes levied on goods when they cross international borders.	India imposes customs duties on imported electronics to generate revenue and protect local manufacturers.
Export Subsidies	Financial support from the government to encourage exports.	The Indian government provides subsidies to promote the export of textiles.
Exchange Rate Controls	Government regulations on currency exchange rates.	Some countries fix their currency’s exchange rate to prevent fluctuations that could affect trade.
Embargo	An official ban on trade with a specific country.	The US has had an embargo on trade with Cuba for several decades.
Safeguards	Measures to protect domestic industries from sudden import surges.	India may impose temporary tariffs on imported steel if there’s a sudden increase in imports that threatens domestic producers.
Countervailing Duties	Additional tariffs to offset subsidies provided by foreign governments to their exporters.	The US imposed countervailing duties on Chinese solar panels to counteract Chinese government subsidies.
Anti-Dumping Duties	Tariffs on imports priced below fair market value.	The EU imposed anti-dumping duties on Chinese steel to protect its steel industry.

Economic Theories and Policies in Global Trade

Term	Definition	Example
Mercantilism	European nations in the 16th and 18th centuries practiced mercantilism to build wealth and power.	European nations in the 16th -18th centuries practiced mercantilism to build wealth and power.
Protectionism	Economic theory focuses on accumulating wealth by maximizing exports and minimizing imports.	The US implemented protectionist tariffs on Chinese goods to protect its domestic manufacturing sector.
Laissez-faire	Economic theory advocating minimal government intervention in trade.	The US in the 19th century had a largely laissez-faire approach to trade, with few regulations.
Free Trade	Trade policy that allows imports and exports with no restrictions.	The North American Free Trade Agreement (NAFTA) promoted free trade between the US, Canada, and Mexico.
Economic Nationalism	The economic policy of restricting imports to protect domestic industries.	“Make in India” is an initiative aimed at encouraging companies to manufacture within India.

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