Professional Documents
Culture Documents
Composition and Direction of India's Foreign Trade
Composition and Direction of India's Foreign Trade
ON
COMPOSITION AND DIRECTION OF INDIA'S FOREIGN TRADE
Submitted for partial fulfilment of the requirements for the award of the degree
of
BACHELOR OF BUSINESS ADMINISTRATION
BY
SHALINI
(1810101070)
(ASSOCIATE PROFESSOR)
Invertis University, Bareilly,
1
CERTIFICATE
This is to certify that SHALINI student of BBA-VI th Semester in our Institute has
Successfully completed his project work entitled to “COMPOSITION AND DIRECTION
OF INDIA'S FOREIGN TRADE” for the partial fulfilment of degree of Bachelor of
Business Administration for the session 2018-2021.
2
Student Declaration
I SHALINI a Bonafide student of BBA in Invertis University, Bareilly would like to declare
that the project entitled “COMPOSITION AND DIRECTION OF INDIA'S FOREIGN
TRADE” submitted by me in partial fulfilment for the requirement in Degree of Bachelor of
Business Administration, is my original work.
Place: Bareilly
3
ACKNOWLEDGEMENT
Preservation, inspiration and motivation have played a key role in any venture. In the present
world of cutthroat competition project is likely a bridge between theoretical and practical
working, willingly I have prepared this project.
I feel highly delighted with the way dissertation report on the topic “COMPOSITION AND
DIRECTION OF INDIA'S FOREIGN TRADE” has been completed.
I express my utmost gratitude and indebtedness to god and to all who have contributed in
some way or the other and been linked with the project from day one.
From the core of my heart, I express my sincere thanks to MRS. SHILPI DIXIT (Head of
Department of BBA ) Mr. Tarun Gupta and Invertis
University for encouragement and guidance.
4
Table of contents
S.no. Particulars Page no.
1 Title Page 1
2 Certificate 2
3 Declaration 3
4 Acknowledgement 4
5 Table of Content 5
6 List of Table 6
7 List of Figure 7
13 Limitation/Conclusion 36
14 References 37
5
LIST OF TABLES
6
LIST OF FIGURES
7
CHAPTER I
INTRODUCTION
8
Composition of trade means a study of the goods and services of imports and exports of a
country. In other words, it tells about the commodities of imports and the commodities of
exports of a country. Therefore it indicates the structure and level of economic
development of a country. Developing countries export raw materials, agricultural products
and intermediate goods; developed countries export finished goods, machines, equipments
and technique.
Direction of trade means a study of the countries to whom the exports are made and from
whom the imports are made.
9
Composition of Imports of India-
Imports of India may be divided into three parts namely capital goods, raw materials and
consumer goods.
10
Direction or sources of imports of India
Sources of imports of India have undergone several important changes during the planning
period. Some important facts are as follows:
At the beginning of economic planning, we were importing from selected countries only.
Now the picture has changed. We import different goods and services from different
countries of the world. At present we get our imports from almost all the countries of the
world. For the purchase of machines and equipments, we depend mainly on OECD
(Organization for Economic Cooperation and Development) countries and East European
countries. For the supply of food grains and petroleum products, we depend on OPEC (Oil
Producing and Exporting Countries) countries. The OECD countries supply largest part of
our imports. In 1997-98 out of the total imports of Rs.1,51,553 crore, the imports of
Rs.75,593 crore were made (49.9%) from these countries. Other important suppliers of our
imports are USA, Belgium, Germany, Japan and Britain.
It includes the exports of tea, coffee, jute, jute products, iron ore, species, animal skin,
cotton, fish, fish products, mineral products etc. At the beginning of the planning era, their
items contributed about 80 percent of out total exports. Gradually, the contribution of these
items is declining and that of non-traditional items is increasing.
At present the contribution of traditional items is about 18.8% in our total exports.
Non-traditional items
It includes the export of sugar, engineering goods, chemicals, iron and steel electrical goods,
leather products, gems and jewellery. There is a significant change in the pattern of exports
of India during recent years. India has started to export a number of non-traditional items to
a number of countries of the world. Contribution of these items is gradually increasing in
total exports of India and shows a declining trend during some years also. Some facts to
illustrate the changes are given below:
11
Agriculture and allied products which constituted 20.4 percent of total exports in
1996-97, decreased to 18.8 percent in 1999-2000. ii) Ores and minerals which constituted
3.5 percent of total exports in 1996-97, decreased to 3 percent in 19992000. iii)
Manufactured good which contributed 73.4 percent of total exports in 199697, increased to
75.7 percent in 1999-2000. iv) Crude and petroleum products constituted 1.4 percent of total
exports in 1996-97 but decreased to 1.0 percent in
1999-2000. v) With regard to other items of exports which constituted 1.2 percent in 1996-
97 increased to 1.3 percent in 1999-2000.
OECD countries (Belgium, France Germany, U.K. North America, Canada, USA, Australia
and Japan). Our exports which constituted percent of the total exports in 1990-91 increased
to 55.7 percent in 1999-2000.
OPEC countries (Iran, Iraq, Kuwait, Saudi Arabia etc.). Our exports which constituted 5.6
percent of the total exports in 1990-91 increased to 10.0 percent in 1999-2000.
Eastern Europe (GDR, Romania, Russia etc.). Our exports which constituted 17.9 percent in
1990-91 decreased to 3.1 percent in 1999-2000.
Other LDC's (Africa, Asia, Latin America). Our exports onstitute 16.8 per cent in 1990-91,
increased to 28.2 percent in 1999-2000.
To sum up, during the last five decades, significant changes have been observed in the
volume, composition and direction of India's trade. Most of these changes have been in
consonance with the development needs of the economy.
12
BRICS" is a grouping acronym that refers to the countries of Brazil, Russia, India, China
and South Africa. U is typically rendered as "the BRICs" or "the BRIC countries" or
alternatively as the "Big Four". The BRICS group has existed as a concept since 2001 Jim
O'Neill'''^, a Goldman Sachs economist in his paper , identified the alliance of Brazil,
Russia. India and China as rising economic powers. The paper predicted that the BRIC
nations combined would assume an inexorably imperative part in the global economy.
Another paper by Goldman Sachs^'^in 2003 supported the prior findings. The paper has
argued that since the BRIC countries are the most fast developing emerging economies in
the world, it is anticipated that in the coming years, the BRIC economies could turn into a
significant power driving the global economy. With the inclusion of South Africa in the
group, the BRIC expanded to BRICS.
BRICS countries account for a share of about 30 % of the world GDP in PPP terms in
2013. This is expected to rise significantly in the near future. Significant positive changes
have taken place in all the BRICS countries over the last two decades (1990-2010). The
economic size in nominal terms (US dollars) has increased manifold. The increasing trend
in GDP is reflected further by a significant increase in per capita income over the last two
decades. These have brought inperceptive changes about the potential and importance of
BRICS in reshaping the globaleconomic order.' The BRICS now increasingly recognized
as engine of the global recoveryprocess and occupy a significant place in global economic
policy making.
13
Chapter II
LITERATURE REVIEW
14
2. LITERATURE REVIEW
2.1. Aggarwal Raj' (1999) in his book "Indian Foreign Trade" analyzed composition and
direction of Indian Foreign Trade for the period 1994-96. Significant variations in the
growth rates of exports of different categoriesbrought about a proclaimed change in the
composition of India's exports during April-September 1996 contrasted with the relating
period in 1995. An increment has been seen in the share of primary products in total exports
while decline in the share of manufactured goods over the years from 78.1 percent in 1994-
95 to 73.5 percent in April-September, 1996. The share of crude oil and petroleum products,
ores and minerals, and others stayed pretty much unaltered. High growth was seen in the
imports of manufactures and newsprint, paper board, fertilisers, edible oils, and capital
goods during the period under study. An increase of 29 percent has been registered in
imports of pearls, valuable and semi valuable stones in 1995-96. However, a sharp decrease
has been observed in the imports of cereals and transport equipment. Rapid growth in POL
imports account for increase in total imports bill. The study gives a clear indication towards
diversification in the direction of India's foreign trade during the study period.
2.2. Alessandrini Michele, Fattouh Bassam and Scaramozzino Pasquale^(2007) in their work
"The changing pattern of foreign trade specialization in Indian manufacturing" examined
that since the mid-1980s, products with low-technology commanded the categories for
which India showed the largest level of trade specialization. By difference, high-technology
items were transcendent among the categories for which India was import-subordinate.
Essentially, India encountered a change in the level of specialization in probably the most
element divisions of global trade.
2.3. Bhat T.P" (2011) in his study "Structural Changes in India's Foreign Trade" made an
analysis of changes in India's foreign trade structure. The study reveals that in the post-
reform period increase in imports being more than the increase in exports resulted in
tremendous deficits in India's current account. Till 1995-96, little changes took place in
India's export composition yet some critical changes have happened in the later years. The
15
movement has not been radical. The export of agriculture and related products declined
while share of clothing chemicals and engineering products increased; then again, these
movements are not extensive. Food products, precious jewellery and textile products keep
on representing a large portion of India's merchandise exports. This structure shows early
phases of industrialization. India's trade in manufacturing experienced constrained basic
changes over the last two decades and it is still in view of customary complementarities
2.4. Chandran Sarath^'* (2010) in his work "Trade Complementarity and Similarity between
India and ASEAN Countries in the context of the RTA" used Trade Intensity Index(Til) and
Revealed Comparative Advantage (RCA) Index to see trade complementarity and Similarity
between India and ASEAN countries. India had advantage in some manufactured items like
chemicals, iron and steel, gems / jewellery and can export them to many ASEAN countries.
ASEAN has comparative advantage in Electrical and Electronic components and India can
import them from ASEAN.
2.5. Das and Pradhan^' (2014) in their paper "India-Gulf Trade Relations" analyzed
comparative advantage of India with the Gulf region using the SITC Classification. The
RCA 24 analysis suggests that India and the Gulf countries do not compete in many areas of
merchandise trade except the petroleum and chemical sectors, and thus that there are
potential economic benefits to be gained from specialization following bilateral trade
liberalization.
2.6. Dikshit Pratima^^(2002) in her work "Dynamics of Indian Export Trade" studied the
structural changes in direction of India's exports for the period 1960-61 to 1998-99. The
striking feature of direction of Indian exports was, that in spite of all efforts to diversify the
directional content of exports, 50 percent of the exports still went to the developed countries
including the East European countries and of this, U.S.A was the biggest partner. India's
exports to the developing countries has been growing steadily and exports to the countries of
S-E Asian countries- Indonesia, Malaysia, Hong Kong, South Korea, Singapore, Thailand
and Taiwan constituted 11.1 percent of the total exports in 1991-92, which increased to 15.6
percent in 199596. Apart from the structural change in India's exports with reference to their
16
direction to various countries, there has been a structural change in the commodity
composition of exports to these countries. The basic reason for this change could be the
change in the structure of output with the growing importance of the secondary sector and
decline in that of the primary sector as a concomitant of the process of industrialization and
economic development.
2.7. Economic Survey"'^ (2008-09) explained the changes in the directional pattern of
India's trade during the decade. In terms of export destination. United States was the top
destination accounting for 12.0 per cent of India's total exports in 2008-09 (April-February),
followed by UAE (10.8 per cent), China (5.1 per cent), Singapore (4.8 percent), Hong Kong
(3.7 per cent) and U.K. (3.6 percent). Region-wise, over half of India's exports were to Asia
(including ASEAN). During 2008-09 (April-February), exports to Asia (including ASEAN)
grew by 6.9 percent, to Europe by 10.2 per cent and to the United States by (-) 1.6 per cent.
India's merchandise exports to South Asian countries declined by 5.2 per cent. In 2008-09
(AprilFebruary), Asia and ASEAN continued to be the major source of India's imports
accounting for 61.7 per cent of total imports. Country-wise, imports from UAE and China
recorded high growth of 39.1 per cent and 13.3 per cent respectively.
2.8. Hazra Pralay and Sirohi Smita"*^ (2007) through their study "Capitalizing on Trade
Prospects in Asian Markets for Exports of Indian Dairy Products" examined the export of
India's dairy products in the Asian market. The analysis was based on HS-4 and -8 digit
level 25 data of the India's export to 40 Asian countries during 1991-2004. The paper also
examined the import demand and relative price elasticity of the Indian dairy products. The
consumption of milk and milk products as well as the import of dairy products increased in
Asia. In recent years Indian dairy product export increased and found market especially in
South and East Asia and in the Gulf region. Prominent and emerging new markets were
China, South Korea, Lebanon, Myanmar, Israel and Iran. To capitalize the trade prospects in
Asia, there was a need for a comprehensive strategy for increased production of quality
dairy products and intensification of efforts for diversifying the export basket of dairy
products.
17
2.9. H. Mane Vinod'*' (2011) through his study "Direction and Composition Of India's
Foreign Trade" analyzed India's direction and composition of foreign trade especially after
1991. India's major exports included manufacturing and engineering goods. There has been
a gradual increase in India's export and imports trade and also an increase in trade deficit.
India's exports with Asia and ASEAN countries accounts for more than fifty percent of total
Indian export. India's total import trade are about sixty percent from these countries. As far
as India's composition of foreign trade is concerned it has undergone major changes after
independence. India's economy in its earlier phase was agricultural economy. India's major
requirement used to be food grains. With rapid industrialization, the composition of India's
imports changed in favour of chemicals, fertilizers and machinery that were essentially
required for the developmental purposes. In the composition of export agricultural products
like tea, spices, and other raw materials were sold. India now exports machinery chemicals
and marine products. Thus, it could be said that India now exports the same items which
once were imported.
2.10. Kaur Amandeep^* (2012) in her study "Pattern of India's Foreign Trade In Pre And
Post Reform Era: An Empirical Investigation" made an empirical study for India's foreign
for the period 1960-2010. India's share in world's exports has shown an increasing trend. Its
share was only 0.5 percent in 1991. During the period from 1991 to 1997 its share
continuously rose from 0.5 percent to 0.62 percent and period of 2009-10 its share rose to
1.25 percent. This increase implies that Indian exports have become more competitive in the
global trade. Similarly, India's share in world imports has also shown an increasing trend.
The composition of India's trade has shown a significant change. The exports of tea, coffee,
spices, tobacco, leather, iron and ore, petroleum and chemicaJ products have shown an
increasing trend. The imports of 26 petroleum and crude products, fertilizers, paper boards,
textile yam, transport equipment have increased significantly. Food products and consumer
goods imports have shown a declining trend.
18
CHAPTER III
RESEARCH OBJECTIVES /
RESEARCH METHODOLOGY / RESEARCH
DESIGN.
19
3. RESEARCH OBJECTIVES / METHODOLOGY / DESIGN.
3.3.Research Design
Research design is the framework of research methods and techniques chosen by a
researcher. The design allows researchers to hone in on research methods that are suitable
for the subject matter and set up their studies up for success.
In this project I used Descriptive research design.
3.4.Data Collection
The relevant data will be collected from Secondary sources.
20
3.4.1. Sources of collection of secondary data
• Articles • Annual Reports
• Internet, etc.
21
CHAPTER IV
DATA ANALYSIS
22
Table 4.1 India’s Export to Whole world(2009-2020)
2010 220.40$
2011 301.48$
2012 289.56$
2013 336.61$
2014 317.54$
2015 264.38$
2016 260.32$
2017 294.36$
2018 322.49$
2019 323.25$
2020 275.48$
23
Data Reporting: The above graph shows that in 2010 export was 220.40 Billion Dollar and
in 2020 was 275.48 Billion Dollar.
Data Interpretation: On the basis of above table 4.1 observed that the growth of export of
India is overall 50 Billion Dollar.
Table 4.2 India’s Import To whole world.
Year Total Export(Billion $)
2009 266.40$
2010 350.02$
2011 462.40$
2012 488.97$
2013 466.04$
2014 459.36$
2015 390.74$
2016 356.70$
2017 444.052$
2018 507.615$
2019 478.88$
2020 367.98$
24
Data Reporting: The above graph shows that in 2010 import was 350.02 Billion Dollar and
in 2020 was 367.98 Billion Dollar.
Data Interpretation: On the basis of above table 4.2 observed that the growth of import of
India is overall 128 Billion Dollar.
China 3.7%
Singapore 3.5%
United 3.1%
Kingdom
Germany 2.6%
Bangladesh 2.5%
Other 52.9%
Fig 4.3 Graphical Representation of India’s Export with all other countries(2009-2020)
Data Reporting: The above graph shows that India mainly export to United States of
America.
25
Data Interpretation: On the basis of above table 4.3 observed that USA and UAE are the
main Business partner of India. Who import products from India.
U Arab 6.03%
Switzerlan 4.795
d
USA 4.53%
Iraq 3.61%
Qatar 3.51%
Kuwait 3.4%
Nigeria 3.35%
Fig 4.4 Graphical Representation of India’s Import with all other countries(2009-2020)
26
Data Reporting: The above graph shows that India mainly import from China however
Galwani Ghati clash will impact on it.
Data Interpretation: On the basis of above table 4.4 observed that China, Saudi Arab, USA
are the main exporter for India.
4.5 India’s imports products
Products Total Import(%)
Electronics 7%
Gold 6%
Jewellery stones 5%
Machinery 5%
Chemicals 6%
Plastics
Coal 4%
Transport 3%
Equipment’s
Crude 37%
Other 22%
Fig 4.5 Graphical Representation of India’s Importing products with all other
countries(2009-2020)
Data Reporting: The above graph shows that India mainly import Crude Oil from different
countries and electronics has a big part in it.
27
Data Interpretation: On the basis of above table 4.5 observed that India is a lot more
dependent on other countries for crude oil and other electronics equipment’s.
Fig 4.6 Graphical Representation of India’s Import with Brazil (Mainly crude oil)
Data Reporting: The above graph shows that India has great relation with brazil and import
a major amount of crude oil.
28
Data Interpretation: On the basis of above table 4.6 observed that India is increasing the
import with brazil from 0.5 Billion Dollar to 1.7 Billion Dollar in 2020.
Data Reporting: The above graph shows that India export to brazil little more than brazil.
Data Interpretation: On the basis of above table 4.7 observed that India’s export to brazil is
varying alternatively.
29
Table 4.8 India Import from USA
Data Reporting: The above graph shows that India increasing its importing with USA.
30
Data Interpretation: On the basis of above table 4.8 observed that India’s import with USA
in 2010 was 33 Billion Dollar and in 2020 was 54 Billion Dollar.
Data Reporting: The above graph shows that day by day India is increasing its exporting
capacity with USA Mainly from 2018.
Data Interpretation: On the basis of above table 4.9 observed that India’s export to USA
has been increased drastically. From 12 billion dollar to 35 billion dollar.
31
Table 4.10 India’s Export Import with China
Data Reporting: The above graph shows that China is our important share holder in Indian
import but from 2015 India is becoming independent from China’s imports.
Data Interpretation: On the basis of above table 4.10 observed that India’s import with
china was 43 billion dollar and after 2015 was 25 Billion dollar.
32
CHAPTER-V
RESEARCH FINDINGS
33
1. The trend in total trade has shown the significant rise in terms of both India's exports and
imports with other BRICS countries. India's exports to other BRICS countries have risen almost 429
times, from US$ 71.517 million in 1991 to touch US$ 30690.09 million in 2013. India's total imports
from other BRICS countries have also risen from US$ 219.89 million in 1991 to US$ 66633.16 million
in 2013, showing a 303 times rise. The imports being more than the exports India has a negative
trade balance with BRICS.
2. The share of India's exports in BRICS total imports increased from 0.31 percent in 1991 to
1.18 percent in 2013 while share of India's imports in BRICS total exports increased from 0.7
percent in 1991 to 2.17 percent in 2013. On the other hand, the share of BRICS countries in India's
total exports has ranged from 0.4 percent to 9.1 percent and the share of BRICS countries in India's
total imports has ranged from 1.12 percent to 14.30 percent for the study period. Further, the sub
period analysis reveals that in the first decade of reforms (1991-2000), India's trade with other
BRICS countries was not very high; it is only during the second decade of reforms (2001-2013) that
India's trade with other BRICS countries gained a momentum.
3. Considering India's export/ import with BRICS only, country-wise analysis shows that in
2013, within BRICS group, approx. 53 percent of Indian exports go to China followed by Brazil with
20 percent share, South Africa by 19 percent share and Russia by less than 8 percent share. India's
imports within BRICS group are also dominated by China with 78 percent share. South Africa
accounts for U percent share of India's imports within BRICS group. Brazil and Russia's share in
India's imports within BRICS group is 5.75 percent and 5.72 percent respectively. Except Brazil, India
has a negative trade balance with all other BRICS countries.
4. At a more disaggregated level, it has been observed that in 2013, top 10 sub-sections
having comparative advantage in India's merchandise exports are rice, cotton, pearls/ precious
stones, Jute/bast fibre raw and spices, Synth org colour agents. Cine film developed, Veg text fibre
except cotton/jute, Textile yam and Crustaceans molluscs.
34
Research scope
The present study assesses the trends in trade and competitiveness between India and rest of the
BRIGS countries. The results indicate a complementarity in export and import products which can
provide opportunities for enhanced India-BRICS trade. However, to maximize the gains from trade,
it is essential to examine the tariff structure among them. Further, in order to fully realize the trade
potential for Indian products in rest of the BRIGS countries, the competition from the world market
also need to be examined. The scope of the study is limited to merchandise trade. The scope of
trade in services between India and rest of the BRIGS countries should also be examined
35
Conclusion
BRICS trade bloc is an emerging feature of world trade. BRICS countries are among the
biggest and fastest growing emerging markets. In recent years, trade and investment among
BRICS economies are growing. Since it is anticipated that, BRICS group would assume an
inexorably imperative and persuasive part in the global economy, India should focus on
expansion of IndiaBRICS trade to be a significant part of the power that would drive the
global economy in future. The present study has been taken from India's perspective. Trade
volume between India and other BRICS countries has increased significantly in the past. The
growing trade suggests a promising future for trade cooperation. However, there still exists
enormous undiscovered potential that must be tapped. In order to analyze the scope of trade
expansion, it is essential to assess the opportunities that exist between India and the other
BRICS countries. The main focus in this study is to examine the trends and composition of
India's foreign trade with rest of the BRICS countries. To identify the potential areas for
further trade expansion, the study has also examined the complementarity in the trade
structure of India's exports with rest of the BRICS countries imports. The main aim of this
chapter is to highlight the main findings of the study and give pragmatic suggestions.
36
Bibliography
11. https://tradingeconomics.com/india/
12. https://www.business-standard.com/article/economy-policy/china-s-share-in-imports-
grows-steadily-115111900053_1.html
37
PROJECT GUIDE COMMENT
2. Sincerity of student -
a. Very good
b. Average
c. Poor
4. Ability to learn
a. Very Good
b. Average
c. Poor
5. Any other –
38
39