Trade In India
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Trade and commerce have been the backbone of the Indian economy right from ancient times. Textiles and spices were the first products to be exported by India. The Indian trade scenario evolved gradually after the country’s independence in 1947. From the 1950s to the late 1980s, the country followed socialist policies, resulting in protectionism and heavy regulations on foreign companies conducting trade with India. India’s international trade situation improved when Prime Minister Rajiv Gandhi reformed the trade policies in the late 1980s.
Trade and commerce have been the backbone of the Indian economy right from ancient times. Textiles and spices were the first products to be exported by India. The Indian trade scenario evolved gradually after the country’s independence in 1947. From the 1950s to the late 1980s, the country followed socialist policies, resulting in protectionism and heavy regulations on foreign companies conducting trade with India. India’s international trade situation improved when Prime Minister Rajiv Gandhi reformed the trade policies in the late 1980s. With tax reforms, deregulations and privatization initiatives, India has attracted the global market’s attention.
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India Trade: Market Share
A significant boost to India’s trade in the late twentieth century resulted in the country getting the tag of an “emerging economy.” According to a report published by the World Trade Organization (WTO) in May 2007, India’s share in the global market for merchandise and services rose from 1.1% in 2004 to 1.5% in 2006. Commerce and Industry Minister Kamal Nath expects this figure to cross 2% in 2009.
According to leading management consultancy McKinsey & Co, the growth of India’s economy can match that of China (about 10% per annum) if the former eliminates the main impediments to trade.
India Trade: Exports
Indian exports comprise mainly of engineering and textile products, precious stones, petroleum products, jewelry, sugar, steel chemicals, zinc and leather products. Most of the exported goods are exempt from export duties. Duties are levied on processed agricultural products, sheep, goat and bovine leather.
India also exports services to several countries, primarily to the US. In fact, India is among the world’s largest exporters of services related to information and communication technology (ICT). It is also the key destination for business process outsourcing (BPO). According to the Information Economy Report 2007-2008, the ICT industry accounted for 5.4% of India’s GDP in 2006, up from 4.8% in 2005. Backed by ICT-related exports, the services sector accounted for 37% of the country’s total exports in 2006, up from 18% in 1995.
India Trade: Imports
India’s major imports comprise of crude oil, machinery, military products, fertilizers, chemicals, gems, antiques and artworks. Imported goods are divided into the following categories:
- Freely importable items: For these items, no import license is required. They can be freely imported by an individual or a firm.
- Licensed imports: These imports comprise of precious and semi-precious stones, firearms, pharmaceuticals, insecticides, and plants and animals.
- Canalized items: These items can only be imported by public sector firms. For example petroleum products fall under this category.
- Prohibited items: Items such as unprocessed ivory, animal rennet and tallow fat cannot be exported to India.
India Trade: Critical Ports
Ports that are critical to India’s trade are:
- Alang (Gujrat)
- Beypore (Kerala)
- Kalicut (Kerala)
- Goa
- Mumbai
- Chennai and Ennore (Chennai)
