COMPOSITION OF EXPORTS

By-
Ravinder Bairagi
Manjari Sen
Amulya Jain
Amrish
Poonam Rani
Current Trends

2009- 10 Economic Survey

 World Trade Volumes

 Fall in Trade volumes due to deepening of

world recession.
India’s Export Growth
Broad Trends
 Trend for Primary Products
Share in the total Exports in percentage
Category 1987-90 1990-91 1992-97 1997-02
Primary Products 24.2 23.8 21.9 18.5

 The share of primary products has declined

over the years.
 Trends in Manufactured Goods
Share in the total Exports in percentage
Category 1987-90 1990-91 1992-97 1997-02
Manufactured goods 70.7 71.6 75.3 77.4
of which:
Leather 7.5 8.0 5.8 4.6
Handicrafts, gems & 22.6 18.9 19.7 20.1
jewellery
Readymade garments 11.2 12.3 12.0 12.2
Textiles 8.0 8.5 10.9 11.2

 The share of manufactured exports increased till

2002, then declined and again increased in 2009-10.
Trends in Manufactured Goods
 Trends in POL
Category 1987-90 1990-91 1992-97 1997-02

Petroleum Products 3.1 2.9 1.8 2.1

 The share of petroleum, crude and products was

in single digits till 2002, however, in the recent
past, it has shown a considerable increase.
 Current Trends in POL

 The share of petroleum, crude and products fell

from 17.8 % in 2007-08 to 14.9 % in 2008-09 &
14.2 % in the first half of 2009-10.
Commodity Composition
changes within major groups
 Trends within Primary goods

 The share of ores and minerals has declined

over the years.
 Trends within Primary goods
 The export of sugar and molasses drastically
reduced from 3245 thousand tonnes in 2008
to 46 thousand tonnes in 2009.
 The export of oil cakes also decreased from
3138 thousand tonnes in 2008 to 1900
thousand tonnes in 2009.
 Trends within Manufactured
goods
Category 1987-90 1990-91 1992-97 1997-02

Engineering 11.0 12.4 13.8 14.7

goods

 Share of Engineering goods has shown an

increase, but decreased in 2009-10 slightly.
 Trends within Manufactured
goods
 India’s exports of manufactures to the US
market grew by only 2.2 percent.
 The accentuation of the negative growth in
textiles exports and the growth in gems &
jewellery exports to the US turning negative
resulted in a mere 2.2 % growth of export
manufactures to U.S.
Trends

1985 to 1990-91
Commodity Years
Division/Group (US $ million)
1985 1990-91
World India India’ World India India’
share share
(%) (%)

Rice 2916 162 5.6 3995 254 6.4

 World trade increased by 37% in year 1990-

91 from year 1985.and
 India’s trade increased by 56% during same
period.
 India’s share in total world trade is increased
by 14%.
Commodity Years (US $ million)
Division/Group 1985 1990-91
World India India’ World India India’
share share
(%) (%)

Pearls, precious and semi- 12073 1165 9.6 27577 2710 9.8
precious stones

 World trade increased by 128.41 % in year

1990-91 from year 1985.and
 India’s trade increased by 132.61 % during
same period.
 This results in change in India’s share in
total world trade only by increase of 2 %.
Commodity Years (US $ million)
Division/Group 1985 1990-91
World Indi India’ World India India’
a share share
(%) (%)

Iron and steel ores 61891 46 0.1 106342 283 0.3

 World trade increased by 71.81 % in year

1990-91 from year 1985.and
 India’s trade increased by great amount of
515 % during same period.
 During this period India’s share in total world
trade in Iron & steel sector increased by 200
%.
Commodity Years
Division/Group (US $ million)
1985 1990-91
World India India’ World India India’
share share
(%) (%)

Raw cotton ----- 68 ----- ----- 128 -----

P0L ----- 135 ----- ----- 696 ------

 India’s trade increased by 90% in year 1990-

91 from year 1985.
 India’s trade increased by more than 400%
in year 1990-91 from year 1985.
Main reasons……..

 Iron & ores export suffers substantial decrease in year 1988-89 was due to
unnecessary interventions by Romania and erstwhile GDR and supply
dislocation from Bailadila. And also cyclone in Andhra Pradesh affected its
movement .
 But , we realized Increase in rice and ores export in year 1990-91 due to
Unit value realization in dollar terms had fallen during 1990-91 for large
no. of commodities like rice, spices ,ores and jute manufactures etc.
 The difficult law & order situation in Assam adversely affect the production
of tea .
 International coffee agreement had been extended up-to sept. 1992 which
promoted its export.
Main reasons……..
 India suffered setback in export of gems and jewellery due lack of
specialization in this sector in small & medium size diamonds .

 But, To encourage gems & jewellery export, the new policy had
introduced REP(Replenishment licences freely transferable) facility in
this sector and more liberal wastages norms. And also Govt. approved
setting up of jewellery units in Free Trade Zones.

 Gulf war had also affected the world trade.

Commodity Years
Division/Group (US $ million)
1985 1990-91
World India India’ World India India’
share share
(%) (%)

Leather, leather 6444 534 8.3 13226 832 6.3

manufactures & dressed fur
skins
 World trade increased by 105.24 % in year
1990-91 from year 1985.and
 India’s trade increased by 55.8 % during
same period.
 But India’s share in total world trade is
reduced by 24.09%.
Commodity Years (US $ million)
Division/Group 1985 1990-91
World India India’ World Indi India’
share a share
(%) (%)

Machinery specialized for 54707 97 0.17 118617 236 0.19

particular industries

 World trade increased by 116.82 % in year

1990-91 from year 1985.and
 India’s trade increased by 143.29 % during
same period.
 This increase in India’s trade brings little
change in it’s share by 11.76% in total world
trade.
Commodity Years (US $ million)
Division/Group 1985 1990-91
World Indi India’ World Indi India’
a share( a share(%
%) )

Electrical machinery, 75739 121 0.2 185364 241 0.1

apparatus and appliances

 World trade increased by 144 % in year

1990-91 from year 1985.and
 India’s share increased by 100 % during
same period.
 In-spite of that India’s share in total world
trade reduced by 50%.
Commodity Years (US $ million)
Division/Group 1985 1990-91
World India India’ World Indi India
share a ’
(%) shar
e
(%)

Metal-working machinery 12696 55 0.4 31051 58 0.2

 World trade increased by 144.57% in year

1990-91 from year 1985.and
 India’s trade increased by 5.45 % during
same period.
 But India’s share in total world trade reduced
by 50%.
Commodity Years (US $ million)
Division/Group 1985 1990-91
World India India’ World India India’
share( share
%) (%)

Automobiles sector 157446 126 0.1 31255 344 0.1

0

 World trade increased by 50 % in year 1990-

91 from year 1985.and
 India’s share increased by 173 % during same
period.
 During this period India’s share in total world
trade remain same.
Main reasons……..
 To promote leather industry , various measures like easy access to
essential inputs and continuous duty free import of machinery and raw
materials under OGL of hides & skins and leather & concessional
duties.
 Automobiles sector had been made eligible for the grant of flexibilities
to encourage its export at higher levels under both the normal REP
scheme and the Duty Free Schemes.
 Export of engineering goods continued to perform well in 1990-91 at a
growth of 18.8% but it was lower than in 1989-90 when it was over
42%.
 Main reasons……..

 Significant and sustained increase in garment export come because of

bilateral agreement under MFA ( multifibre agreement), which is liberalized
and directed towards to non-quota countries.
 Diversification of fabric base leading to export of higher value added items
of synthetic , silk and woolen fabrics etc.
 Manufacturing sector export is encouraged due to depression in domestic
market conditions and various initiatives taken by govt. to promote
manufacturing export.
 Export also fall in some sector like machinery sectors due to highly labour
intensive in content.
 Main reasons……..

 Registered exporters can avail of the Duty Exemption Scheme under which
they can obtain essential inputs for export production without payment of
custom duty.
 This Scheme covers three category of licences :
1. Advanced licences
2. intermediary advanced licences
3. special imprest licences
 99 machinery items had been added to list of Open General Licences.
 Export-Import pass book scheme had been extended to manufacturing
sector.
Commodity Years
Division/Group (US $ billion)
1985 1990-91
World India India’ World India India’
share share
(%) (%)

IT & Software ----- .34 ----- ----- 4 -----

 India’s trade increased by 414% in year

1990-91 from year 1985.

 Average annual growth was about 49 %

from 1985 to 1990.
Main reasons……..
 To promote export in service sector subsidy is provided by Govt. to set
offices abroad up-to five years.
 Export earning also increases due to appreciation in unit value
realization.
 Export licences which were earlier valid for 45 days, their validity had
been extended to six months.
 The contribution of IT & software sector to the GDP, in year 1990 was
0.3% of GDP & in year it was 1.2% of GDP and it increased to 5.5% of
GDP in 2007-08,
 Now it is contributing more than 12% of GDP where as service sector is
contributing more than 54% of India’s GDP.
SCENARIO DURING 1980s-1990s
 GDP had hit the 5.6 percent mark in the 1980s.

 the policy changes in the mid- and late-1980s.

 tentative moves to encourage capital-goods imports, relax industrial

regulations, and rationalize the tax system.

 Official encouragement of entrepreneurial activities during 1980s.

 expansion of the Open General Licensing list and implementation

strategy
CONT.
 the reforms in the 1980s were limited in scope and without a clear
roadmap.

 the reforms in the 1990s were systematic and systemic.

 the 1980s growth was unsustainable, “fuelled by a build up of external

debt that culminated in the crisis of 1991.”

 acceptance of the idea that entrepreneurs and markets were to be

given priority over government in the conduct of economic activity.

 1981-82 to 1987-88, we get an average growth rate of only 4.8 and

unusually high growth rate of 7.6 percent during 1988-91.
CONT.
 two broad factors --First, liberalization ---Second, both external and
internal borrowing.

 plight of industrialists .

 improved export performance and remittances from overseas workers

in the Middle East had led to the accumulation of a comfortable level of
foreign-exchange reserves

 exports, which had grown annually at a paltry 1.2 percent rate during
1980-85, registered the hefty annual growth of 14.4 percent during
1985-90
FIVE MAJOR REFORMS
 First, the OGL list was steadily expanded. The number of capital
goods items included in the OGL list expanded steadily reaching 1007 in
April 1987, 1170 in April 1988 and 1,329 in April 1990.

 The second source of liberalization was the decline in the share

of canalized imports. Between 1980-81 and 1986-87, the share of
these imports in total imports declined from 67 to 27 percent. This
change significantly expanded the room for imports of machinery and
raw materials by entrepreneurs.

 Third, several export incentives were introduced or expanded,

especially after 1985, which helped expand imports directly when
imports were tied to exports and indirectly by relaxing the foreign
exchange constraint. It further included:
REFORMS CONT.
 Exporters were given REP licenses in amounts that were approximately
twice their import needs.

 In the 1985 budget, 50 percent of business profits attributable to exports

were made income tax deductible; in the 1988 budget this concession was
extended to 100 percent of export profits.

 The interest rate on export credit was reduced from 12 to 9 percent.

 In October 1986, duty-free imports of capital goods were allowed in

selected "thrust" export industries.

 Exporters were given an assurance that the incentives announced in the

export-import policy would not be reduced for a period of three years.
 
REFORMS CONT.
 The fourth source of liberalization was a significant relaxation of
industrial controls and related reforms. Several steps were:-
 De-licensing
 Broad banding
 In 1986, firms that reached 80 percent capacity utilization in any of the
five years preceding 1985 were assured authorization to expand
capacity up to 133 percent of the maximum capacity utilization reached
in those years.
 Firms that came under the purview of the Monopolies and Restrictive
Trade Practices (MRTP) Act were subject to different rules could not
take advantage of the above liberalizing policy changes.
 The final and perhaps the most important source of external
liberalization was a realistic exchange rate.
Trends

1970-1971
 Trends (1970-1971)
 Impressive increase of 6.5% in overall
index of agricultural production.
 The index of industrial production was
higher by 6.2% as compared to previous
year.
 Tremendous improvement in the export of
manufactured goods like (textile fabrics,
cotton yarn, readymade garments and
machinery including iron and steel).
Trend in Agricultural Export
Trends in industrial goods
 Some Observations
 High degree of improvement in the exported
quantity of agricultural products like (coffee,
oilcakes, sugar, cashew kernels and fish
products).
 Great decline in the export of Jute
manufactures including twist and yarn.
 Sharp rise in the export of items like iron ore,
textile products and machinery equipments.
 Total export increase by 138% in 1970-71
compared to 1960-61 in value terms.
Possible reasons
 Favorable seasonal conditions with
sustained growth of irrigation and
newer technology.
 Establishment of agricultural finance
corporation and financing by
commercial banks.
 Issuing of new industrial licenses to
private sector small scale firms.
A comparison

1970 with 1975

Commodity Years (US $ million)
Division/Gro 1970 1975
up
World India India’ World India India’
share share
(%) (%)

Leather, 1047 95 9.1 2380 200 8.4

leather
manufactures
& dressed fur
skins
 World trade increased by 127.31 % in year 1975 from year
1970.and

 India’s trade increased by 110.52% during same period.

 But India’s share in total world trade reduced by 7.7%.

Commodity Years (US $ million)
Division/Gro 1970 1975
up
World Indi India’ World India India’
a share share
(%) (%)

Iron and steel 14540 132 0.9 40789 116 0.3

 World trade increased by 180.52 % in year 1975 from year

1970.and

 India’s trade reduced by 121.21% during same period.

 Thus, India’s share in total world trade reduced by 66.66%.

Commodity Years (US $ million)
Division/Gro 1970 1975
up
Worl India India’ share World India India’
d (%) share
(%)
Sugar, sugar 2700 26 1.0 11663 554 4.8
preparations
and honey

 World trade increased by 331.96 % in year 1975 from year

1970.and

 India’s trade increased by 2030.71 % during same period.

 Which results in increase India’s share in total world trade by

380%.
Commodity Years (US $ million)
Division/Gro 1970 1975
up
World India India’ World India India’
share share
(%) (%)

Medicinal and 2687 11 0.4 6503 29 0.4

pharmaceutical
products

 World trade increased by 142 % in year 1975 from year

1970.and

 India’s trade increased by 163.63 % during same period.

 This could not bring significant change in India’s share in

total world trade.
Thank You!