INDIAN EXPORT

INTRODUCTION

India’s trade figures have improved. This is

especially true for the period following
reforms. Although there were few reforms in
the 1980s, comprehensive reformsin the true
sense of the word started in earnest in 1991.
The effect of reforms on India’sexternal sector
has been positive considering the following
facts
 India’s trade deficit as a percentage of
GDP fell from 4.6 per cent in 1980/81to 3
per cent in 1990/91 .
 Since 1947 the rupee value of exports
increased more than 10 per cent in each
of the three successive periods (financial
year): 1972/73 to 1976/77; 1981/82 to
1984/85; and 1986/87to 1996/97.
India’s share in world
merchandise exports
increased from a mere 0.4
percent in 1981 to 0.5 per
cent in 1991 and further to
0.91 per cent in 2006.
 India’s exports figure crossed the $100
billion mark in 2005/06. There has been
an increase in both the volume and the
value of exports.

During 2005/06,exports in terms

of volume increased by a record 45.4 per
cent.
 It is evident that India’s
progress in terms of exporting
goods and services has been
remarkable since the mid-
1990s, especially compared
with India’s position in the
early 1990s.
 It is evident that India’s
progress in terms of exporting
goods and services has been
remarkable since the mid-
1990s, especially compared
with India’s position in the
early 1990s.
 Reforms in the domestic economy have
been able to reduce excessive
government control of economic decision-
making.
There are almost no sectors in which
the entry of the private sector is
restricted by discretionary central
government policy. Budget
pronouncements since 1991 have
ensured this.
 The further liberalization of FDI
inflows awaits political consensus, but
there are no serious business restrictions.
Additionally, reforms in the capital
market have lowered the borrowing cost
of capital. All these steps have helped the
business environment immensely and
propelled growth in India’s exports.
FACTORS AFFECTING
EXPORTS
Exports are influenced mainly through
two channels

Ø Demand-side factors
Ø Supply-side factors
Major factors affecting Indian exports
 Supply
 Demand
 Potential
 Price
 Trade
 Infrastructure Procedural
 demand
 competitiveness
 barriers
 bottlenecks
 Relative
 Domestic price Competitors
 exchange-rate
 domestic price
 adjustment
Demand-side factors
 Price competitiveness
Exports of price-sensitive items,
such as agricultural and textile products,
have witnessed a fall in recent years. For
example, between 2004 and 2005, the
growth of agricultural and textile
products,
 Potential demand
The GDP of importing economies is
also considered to be an important
variable for estimating export demand
functions (Goldstein and Khan, 1978;
Magee, 1975). imports by India’s major
trading partners are based on derived
demand, demand for Indian exports refers
to potential rather than actual demand.
Trade barriers
The major export items of India
that face these restrictions in the United
States, European Union and Japan
primarily fall under four categories. Using
the two-digit Harmonized
Supply-side factors

 Factor productivity
From the supply-side perspective,
growth in exports can be an outcome of
improved factor productivity. During the
previous decade to 4.5 per cent in the
period 1993-1999. The agricultural sector
lagged behind, with output per worker
rising to only 2.4 per cent from1993 to
1999, compared with 1.5 per cent during
the previous decade.
Procedural bottlenecks
 Exporters face a maze of
government orders, regulations, rules and
procedures, which raise the cost of
production and hence affect exports.
Enforcing a contract in India takes an
average of 1,420 days and involves 56
different procedures
Infrastructure
To sustain the rapid growth of
exports, it is necessary to have a well-
functioning infrastructure, including
electric power, road and rail connectivity,
telecommunications, air transport, and
efficient ports
CONCLUSIONS

The recent growth in Indian

exports is primarily led by
an increase in factor
productivity, growth in
world trade, increase in
intra-industry trade and
external sector reforms.