Foreign Trade of India, Before independence, During Planning Period

Foreign trade plays a vital role in the Indian economy. India is a major player in the global trade arena, and its foreign trade has been steadily increasing over the years. The foreign trade of India can be analyzed in terms of its exports and imports.

Foreign trade has been an integral part of India’s history for centuries. India has a rich trading history, and it was a major trading center for spices, textiles, and other goods in ancient times. During the colonial period, India’s foreign trade was dominated by the British Empire, which controlled India’s economy for over 200 years.

After gaining independence in 1947, India pursued a policy of import substitution, which aimed to promote domestic production by restricting imports of certain goods. However, in the 1990s, India adopted a policy of economic liberalization and opened up its economy to foreign trade and investment.

In recent years, India’s foreign trade has been growing steadily, and the country has emerged as a major player in the global trade arena. India’s merchandise exports increased from $19 billion in 1990-91 to $330 billion in 2019-20. Similarly, India’s merchandise imports increased from $26 billion in 1990-91 to $514 billion in 2019-20.

India’s major trading partners are the United States, China, the United Arab Emirates, Saudi Arabia, and Switzerland. India’s exports include a wide range of products, such as agricultural products, textiles, gems and jewelry, engineering goods, chemicals, and pharmaceuticals. India’s imports include crude oil, machinery, electronic goods, gold, and pearls.

India’s foreign trade policy aims to promote exports, enhance the competitiveness of Indian goods and services, and increase foreign investment in India. The policy includes various measures such as export promotion schemes, trade facilitation measures, and tariff reductions on certain goods.

Exports:

India is one of the largest exporters of goods and services in the world. India’s exports include a wide range of products, such as agricultural products, textiles, gems and jewelry, engineering goods, chemicals, and pharmaceuticals.

The major export destinations for Indian goods are the United States, the United Arab Emirates, China, Hong Kong, and Singapore. In recent years, India has also been increasing its exports to Africa and Latin America.

Imports:

India is also a major importer of goods and services, and its imports include crude oil, machinery, electronic goods, gold, and pearls. The major sources of imports for India are China, the United States, the United Arab Emirates, Saudi Arabia, and Switzerland.

Foreign Trade Policy:

India’s foreign trade policy is aimed at promoting exports, enhancing the competitiveness of Indian goods and services, and increasing foreign investment in India. The policy includes various measures such as export promotion schemes, trade facilitation measures, and tariff reductions on certain goods.

Challenges:

Despite its impressive growth in foreign trade, India faces several challenges, such as a high trade deficit, inadequate infrastructure, complex regulatory environment, and limited access to certain markets. The Indian government has been taking steps to address these challenges by promoting ease of doing business, improving infrastructure, and negotiating trade agreements with other countries.

Foreign Trade of India Before independence

Foreign trade has been an integral part of India’s history for centuries, and even before independence, India was a major trading center for spices, textiles, and other goods.

During the ancient period, India had extensive trade links with the Roman Empire, Southeast Asia, and China. The port cities of the west coast of India, such as Calicut, Surat, and Bombay, were major trading centers for spices, textiles, and other goods. The east coast of India, particularly the Coromandel Coast, was known for its textiles and rice.

The arrival of European powers in India in the 16th century, such as the Portuguese, Dutch, French, and British, had a significant impact on India’s foreign trade. These powers established trading posts and factories along the Indian coast and engaged in the trade of spices, textiles, and other goods.

The British East India Company, which arrived in India in the early 17th century, gradually gained control over India’s economy and established a monopoly over India’s foreign trade. The company controlled the export of raw materials such as cotton, silk, and indigo, and the import of finished goods such as textiles.

India’s foreign trade during the colonial period was characterized by a trade imbalance, as India exported raw materials and imported finished goods. This trade imbalance had a negative impact on India’s economy and contributed to the impoverishment of the country.

In conclusion, India’s foreign trade before independence was shaped by its rich trading history and the arrival of European powers, particularly the British. India’s foreign trade during the colonial period was dominated by the British East India Company, which established a monopoly over India’s foreign trade. The trade imbalance had a negative impact on India’s economy and contributed to the impoverishment of the country.

Foreign Trade of India during Planning Period

The planning period in India started with the First Five-Year Plan in 1951 and lasted until the end of the Eleventh Five-Year Plan in 2012. During this period, India’s foreign trade policy underwent significant changes.

In the early years of planning, India followed a policy of import substitution, which aimed to promote domestic production by restricting imports of certain goods. The policy was based on the assumption that developing domestic industries would reduce dependence on imports, create employment opportunities, and promote economic growth. The government introduced a system of import licensing, which required companies to obtain licenses to import certain goods.

However, in the 1990s, India adopted a policy of economic liberalization and opened up its economy to foreign trade and investment. The policy aimed to integrate India’s economy with the global economy, promote exports, and increase foreign investment in India. The government introduced a series of measures such as reducing tariffs, simplifying import procedures, and encouraging foreign investment.

During the planning period, India’s foreign trade grew significantly. India’s merchandise exports increased from $0.6 billion in 1950-51 to $313 billion in 2011-12. Similarly, India’s merchandise imports increased from $1.1 billion in 1950-51 to $489 billion in 2011-12. The balance of trade, which was negative in the early years of planning, became positive in the 2000s.

India’s major trading partners during the planning period were the United States, China, the United Arab Emirates, Saudi Arabia, and Switzerland. India’s exports included a wide range of products, such as agricultural products, textiles, gems and jewelry, engineering goods, chemicals, and pharmaceuticals. India’s imports included crude oil, machinery, electronic goods, gold, and pearls.

Here is a table showing India’s merchandise exports, imports, and balance of trade (BOT) during the planning period from 1951-52 to 2011-12:

As we can see from the table, India’s merchandise exports and imports increased significantly during the planning period. However, India was import-deficient in most of the years, and the balance of trade was negative. It was only in the 2000s that India’s balance of trade turned positive. In the last two years of the planning period (2010-11 and 2011-12), India’s merchandise exports and imports reached their highest levels, but the balance of trade remained negative.

Foreign Trade of India policy

India’s foreign trade policy has evolved over the years, and it has undergone significant changes in response to various internal and external factors. Here are some of the major foreign trade policies of India:

• Import substitution policy (1950s-1960s): In the initial years after independence, India followed an import substitution policy to promote domestic industries and reduce dependence on imports. The policy aimed at restricting imports through tariffs, quotas, and licensing requirements.
• Liberalization policy (1990s): In 1991, India launched a new economic policy that shifted the focus from import substitution to export promotion. The policy aimed at liberalizing the Indian economy and attracting foreign investment. The government reduced tariffs, abolished licensing requirements, and opened up various sectors of the economy to foreign investment.
• Exports-oriented policy (2000s): In the 2000s, India’s foreign trade policy focused on promoting exports. The government introduced various schemes to incentivize exports, such as the Export Promotion Capital Goods (EPCG) scheme, Duty-Free Import Authorization (DFIA) scheme, and Merchandise Exports from India Scheme (MEIS).
• Make in India policy (2014): In 2014, the government launched the Make in India policy, which aimed at promoting domestic manufacturing and attracting foreign investment. The policy focused on 25 sectors, including automobiles, aviation, defense, and electronics.
• Atmanirbhar Bharat policy (2020): In 2020, the government launched the Atmanirbhar Bharat policy, which aimed at promoting self-reliance in various sectors of the economy, including foreign trade. The policy focused on reducing dependence on imports, promoting domestic manufacturing, and encouraging exports.

Major Goods Exported by India (in US$ billion)

Major Goods Imported by India (in US$ billion)