India’s Foreign Policy

History of India’s foreign trade

 Indus valley civilisation - that flourished between 2800 BC to 1800
BC boasted of an advanced and thriving economic system.
 Its citizens practiced agriculture, domesticated animals, made sharp
tools and weapons from copper, bronze and tin and traded with
other cities.
 Harappa, Lothal, Mohenjo-daro and Rakhigarhi reveals their
knowledge of urban planning.
 They eventually over used their resources, and slowly died out.
 Family business -In the joint family system, members of a family
pooled their resources to maintain the family and invest in business
ventures
History of India’s foreign trade (contd.)
 Organizational entities -Nigama, pani and sreni are the economic
organizations of merchants, craftspeople and artisans .
 Coinage -Punch marked Silver Ingots, in circulation around 5th
century BC .
 Exports - shawls of Kashmir, steel and iron works, silk, and other
textiles and handicrafts to europe & middle east for gold & silver.
 GDP estimates -India had the world's largest economy from the 1st
century to 11th century, with a 32.9% share of world GDP.
Maurya & mughal empire
 The GDP of India in the 16th century was estimated at about 24.5%
of the world economy.

 uniform customs and tax administration system was enforced.

 The improved infrastructure combined with increased security,

greater uniformity in measurements, and increasing usage of coins
as currency enhanced trade.
British rule
 They created a well developed system of railways, telegraphs and a
modern legal system.

 The GDP of India in 1875 was estimated at about 30 per cent that of
China.

 Tata and Godrej begin to dominate textile, mining and durable

goods industries in 1925.

 By the end of the colonial rule India inherited an economy that was
one of the poorest in the world .
 Republic of India
 The Hindu rate of growth is used to refer to the low annual
growth rate at around 3.5% from 1950s to 1980s .
 per capita income growth averaged extremely low 1.3% a year.
 Before independence a large share of tax revenue was
generated by the land tax only.
 Farmers as well as industrialists were ham-strung with controls
(License Raj) on their freedom to run their businesses .
 Major problems -a flood of refugees from East Pakistan in
1971; droughts in 1965, 1971, and 1972; currency devaluation
in 1966; and the first world oil crisis, in 1973-1974 affected the
economy.
Post –Liberalisation period

 Prime Minister Narasimha Rao along with his finance minister

Manmohan Singh initiated the economic liberalisation of 1991

 The reforms did away with the Licence Raj.

 allowing automatic approval of foreign direct investment in many

sectors.

 Privatisation took place

sectors affected after liberalisation.
 Agriculture- India ranks second worldwide in farm
output. Agriculture and allied sectors like forestry,
logging and fishing accounted for 16.6% of the GDP in
2007, employed 60% of the total workforce .

 Industry -Industry accounts for 27.6% of the GDP and

employ 17% of the total workforce. Textile manufacturing
is the second largest source for employment after
agriculture and accounts for 26% of manufacturing
output
 sectors affected after
liberalisation(contd.).
 Services- India is fifteenth in services output. It provides
employment to 23% of work force, and it is growing fast,
growth rate 7.5% .
 Finance- The State Bank of India (SBI) become the
India's largest bank .These reforms have opened up the
banking and insurance sectors to private and foreign
players.
 Natural resources- India has the world's 3rd largest
coal reserves. India's total cultivable area is 1,269,219
km² (56.78% of total land area).
 sectors affected after
liberalisation(contd.).
 Infrastructure -India's low spending on power,
construction, transportation, telecommunications and
real estate, at $31 bn or 6% of GDP in 2002 had
prevented India from sustaining higher growth rates.
 Currency- The exchange rate as of November 18, 2008
is about 49.27 to a US $, 64.01 to a Euro, and 80.45 to
a UK pound.
 Companies-34 Indian companies have been listed in
the Forbes Global 2000 ranking for 2008 .
 
External trade and investment
 India currently accounts for 1.2% of World trade as of 2006
according to the WTO.
 Since liberalisation, the value of India's international trade has risen
to Rs. 63,080,109 crores in 2003–04 from Rs.1,250 crores in 1950–
51.
 India's major trading partners are China, the US, the UAE, the UK,
Japan and the EU.
 The exports during April 2007 were $12.31 billion up by 16% and
import were $17.68 billion with an increase of 18.06%
 Although India is still a net importer, since 1996–97, its overall
balance of payments has been positive .
India Export Trade Statistics to Various Countries
PRODUCT MAJOR MARKETS
 FLORICULTURE U.S.A., NETHERLANDS, U.K., GERMANY,JAPAN
 FRUITS & VEGETABLE SEEDS PAKISTAN, PHILIPPINES, U.S.A., BANGLADESH, ITALY
 FRESH ONIONS BANGLADESH, MALAYSIA, U.A.E., SRI LANKA, NEPAL
 OTHER FRESH VEGETABLES PAKISTAN, U.A.E. U.K, NEPAL, SAUDI ARABIA
 WALNUTS SPAIN, NETHERLANDS, FRANCE, EGYPT, USA
 FRESH MANGOES U.A.E, U.K, BANGLADESH, NEPAL, SAUDI ARABIA
 FRESH GRAPES NETHERLANDS, U.K, BANGLADESH, U.A.E, GERMANY
 OTHER FRESH FRUITS U.A.E, BANGLADESH, NETHERLANDS, , SAUDI ARABIA, NEPAL
 DRIED & PRESERVED VEGETABLES GERMANY, U.S.A, BANGLADESH, FRANCE ,SPAIN
 MANGO PULP SAUDI ARABIA, NETHERLANDS, YEMEN ARAB REPU, U.A.E.
 PICKLES & CHUTNEYS RUSSIA, U.S.A, BELGIUM, FRANCE, ESTONIA
 OTHER PROCESSED FRUITS & Veg. U.S.A., U.K., SAUDI ARABIA, NETHERLANDS, U.A.E.
 PULSES PAKISTAN, ALGERIA, U.A.E, SRI LANKA, EGYPT
 BUFFALO MEAT VIETNAM, MALAYSIA, PHILIPPINES, ANGOLA, SAUDI ARABIA
 SHEEP / GOAT MEAT SAUDI ARABIA, U.A.E, QATAR, GERMANY, OMAN
 POULTRY PRODUCTS KUWAIT, AFGHANISTAN, OMAN, JAPAN, DENMARK
 DAIRY PRODUCTS BANGLADESH, U.A.E, EGYPT, CHINA , ALGERIA
 ANIMAL CASINGS VIETNAM, ITALY, SOUTH AFRICA, PORTUGAL, SPAIN
 PROCESSED MEAT VIETNAM, MALAYSIA, AUSTRALIA, NEW ZEALAND, GHANA
 NATURAL HONEY U.S.A, GERMANY, BELGIUM, U.K., SAUDI ARABIA
 SWINE MEAT VIETNAM, U.A.E, ITALY, BANGLADESH, TURKEY
 GROUNDNUTS INDONESIA, PHILIPPINES, MALAYSIA, UKRAINE, U.K.
India’s Export & Import
Inaugural Session of US -India Trade
Policy Forum
 The establishment of the Trade Policy Forum was announced
during the visit to U.S. Indian Prime Minister Dr. Manmohan Singh.
 Multilateral issues such as the ongoing Doha Development Round
negotiations were featured in the Forum. The Trade Policy Forum
will be part of the overall Economic Dialogue between India and
the United States.
 The agenda for this first meeting of the Forum included
discussions on Tariff and Non-Tariff Barriers; Agriculture;
Investment; Services; Intellectual Property; and the Doha Round.
 The two sides agreed to establish focus groups on Agriculture,
Tariff/Non-Tariff Barriers/Services, Investment and Innovation &
Creativity.
 The next meeting of the Trade Policy Forum will take place in
2006 in Washington D.C.
 Features of India US Trade Relations
 The Next Steps in Strategic Partnership provides a more transparent U.S.
licensing arrangements for Indian imports of sensitive items and technology.
 The India US Trade Relations was further boosted with the conclusion of an
Open Skies Agreement between the two nations in the year 2005.
 The US-India Agricultural Alliance agreed upon on 2005, between the two
countries concentrates on promoting teaching, research, service and
commercial linkages.
 The main export items from India to US are like precious gems and jewelry,
textiles, organic chemicals and engineering goods, IT and agricultural
products.
 In 2006, it is found that the total amount of Indian exports to the US
increased by 16.07%.
 Conti..
 The Indian Agro Exports to US were at over Rs. 11,000
crore, or US $ 2.75 billion in 1997-98 which amounts to about
10% of total exports from the country.
 The total export of agricultural products to the United
States during 2003-04 was found to be worth Rs 82,260 lakh.
 accounting for over 35% of GDP and employing around 65%
of the population.
 The United States Educational Foundation in India or the
USEFI, is one of the most important institutions which
promotes academic and cultural exchanges between India
and USA.
 Indian Agro Exports to US has changed over the years with
the development of E-commerce and globalization.
Features of India US Trade Relations ( Conti..)
 The main items of Indian Agro Exports to US are:
 · Rice and rice products
 · Fresh vegetables
 · Fresh fruits like mangoes, mango pulp, and grapes
 · Vegetable seeds like dried nuts,
 · Floriculture
 · Pickle
 · Chutney
 · Livestock products
 · Poultry products
 · Dairy products
 · Processed meat
 · Groundnuts
 · Jaggery and confectionery
 · Cocoa products
 · Tea
 · Coffee
 · Cashew
 · Oilseeds
 · Cereal preparations
 · Spices
 · Alcoholic and non alcoholic beverages
Impediments in the India-US Trade relations

 Some obstacles that have an adverse

effect on the India-US Trade relations as
US criticizes India for certain reasons like
 High tariff rates on imports
 High surcharges and taxes on a variety of
imports
 Non-tariff barriers on US exports to India
Export of Basmati and Non-Basmati Rice from India during
1991-92 to 2001-02

7000

6000 1-1991-92
2-1992-93
5000 3-1993-94
4-1994-95
4000 5-1995-96
6-1996-97
3000 7-1997-98
8-1998-99
2000 9-1999-00
10-2000-01
1000 11-2001-02

0
Basmati Non-Basmati Total