India’s Trade, Exports and Imports
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Although India has steadily opened up its economy, its tariffs continue to be high when compared with other countries and its investment norms are still restrictive. This leads some to see India as a “rapid globalizer” while others still see it as a “highly protectionist” economy.
Although India has steadily opened up its economy, its tariffs continue to be high when compared with other countries and its investment norms are still restrictive. This leads some to see India as a “rapid globalizer” while others still see it as a “highly protectionist” economy.
Till the early 1990s, India was a closed economy: average tariffs exceeded 200 percent, quantitative restrictions on imports were extensive, and there were stringent restrictions on foreign investment. The country began to cautiously reform in the 1990s, liberalizing only under conditions of extreme necessity.
Since that time, trade reforms have produced remarkable results. India’s trade to GDP ratio has increased from 15 percent to 35 percent of GDP between 1990 and 2005, and the economy is now among the fastest growing in the world.
India however retains its right to protect when need arises. Agricultural tariffs average between 30-40 percent, anti-dumping measures have been liberally used to protect trade, and the country is among the few in the world that continue to ban foreign investment in retail trade. Although this policy has been somewhat relaxed recently, it remains considerably restrictive.
Nonetheless, in recent years, the government’s stand on trade and investment policy has displayed a marked shift from protecting ‘producers’ to benefiting ‘consumers’. This is reflected in its Foreign Trade Policy for 2004/09 which states that, “For India to become a major player in world trade …we have also to facilitate those imports which are required to stimulate our economy.”
India is now aggressively pushing for a more liberal global trade regime, especially in services. It has assumed a leadership role among developing nations in global trade negotiations, and played a critical part in the Doha negotiations.
India’s Trade Indicators at a Glance (2010)
Current Account Balance: US$181.7 billion or 4.9% of GDP
Primary exports: petroleum (16.6%), gems and jewelry (13.8%), transport equipment (7.6%), machinery (4.9%), drugs and pharmaceuticals (4.3%)
Primary exports partners: UAE (12.4%), United States (10.4%), China (7.9%), Singapore (4.0%), Hong Kong (3.9%)
Primary imports: petroleum and crude products (29.6%), gold (8.6%), precious stones (7.94%), machinery (6.7%), electronics (6.3%)
Primary imports partners: China (12.0%), UAE (7.6%), Saudi Arabia (5.9%), Switzerland (5.5%), United States (5.3%)
