Indias Stand In

Global Trade

Overview

International Trade Meaning &

Importance
Trade in India : 1) Imports
2) Exports
Foreign Trade Policy ( FTP 2015-2020).
Trade Deficit Meaning & Causes.
Balance of Trade .
Balance of Payment.
Impact of Chinese Yuan devaluation on
India.

International Trade Meaning

International trade is exchange of capital,

goods, and services across international borders
or territories. In most countries, it represents a
significant share of gross domestic product (GDP).
Trading globally gives consumers and countries
the opportunity to be exposed to new markets
and products. Almost every kind of product can
be found on the international market: food,
clothes, spare parts, oil, jewellery, wine, stocks,
currencies and water. Services are also traded:
tourism, banking, consulting and transportation.

Importance of
International Trade

Trade can help boost development and

reduce poverty by generating growth
through increased commercial
opportunities and investment.
Trade enhances competitiveness by
helping developing countries reduce the
cost of inputs, acquire finance through
investments, increase the value added
of their products and move up the global
value chain.

Importance of
International Trade

Trade creates employment opportunities by

boosting economic sectors that create stable jobs
and usually higher incomes, thus improving
livelihoods.
Trade facilitates export diversification by allowing
developing countries to access new markets and
new materials which open up new production
possibilities.
Trade expands choice and lowers prices for
consumers by broadening supply sources of goods
and services and strengthening competition.

Trade in India

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.Trade in
India is done by the way of Exports and
Imports.

India Trade: Imports

India accounts for 2.12% of imports for

merchandise trade and 3.31% of imports for
commercial services trade worldwide.
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.
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.

Import Volume

Imports:
466billion: merchandise imports
$124.6billion: services imports
$590.6billion: Total (2013)
Indias main importers:
China(11.1%)
European Union(10.6%)
Saudi Arabia(7.9%)
United Arab Emirates(7.1%)
Switzerland(5.3%)

Composition of Imports

Indian Trade : Exports

Since liberalisation, the value of India's

international trade has increased sharply,
with the contribution of total trade in goods
and services to the GDP rising from 16% in
199091 to 47% in 200810.
According to the WTO, in merchandise trade,
India was the 19th largest exporter in the
world with a share of 1.7percent in 2013.
In commercial services, India was the 6 th
largest exporter in the world with a share of
3.2 percent in 2013.

Export Volume

Exports : $313.2 billion: merchandise

exports
$150.9 billion: services exports
$464.2 billion: Total (2013)
Main export partners :
European Union(16.7%)
United States (12.5%)
United Arab Emirates (10.1%)
China (4.9%)
Singapore (4.2%)

Composition of Exports

Foreign Trade Policy (20152020)

What is Foreign Trade Policy?

1.

2.

The Union Commerce Ministry, Government of India

announces the integrated Foreign Trade Policy FTP in
every five year. This is also called EXIM policy. This
policy is updated every year with some modifications
and new schemes. New schemes come into effect on
the first day of financial year i.e. April 1, every year.
Objectives :
To provide a stable and sustainable policy
environment for foreign trade in merchandise and
services.
To provide a mechanism for regular appraisal in order
to rationalise imports and reduce the trade imbalance

3.
4.

5.

The vision is to make India a significant

partner in the world trade by 2020
To link rules, procedures and incentives for
exports and imports with other initiatives
such as Make in IndiaDigital India and
Skills India to create an Export
Promotion Mission for India.
To raise Indias share in world exports from
2 percent to 3.5 percent. Government
aims to increase Indias exports of
merchandise and services from USD 465.9
billion in 2013-14 to approximately USD
900 billion by 2019-20.

Cost and
Quality
High cost
Low quality
Growing
Competition

Modest
growth of
Exports

Rising Imports
Large increase in
Developmental
Imports
Large size in
imports of
petroleum

Import restrictions

in Foreign
countries
Low world
Demand

Trade Deficit - Causes

Balance of trade & Balance of payment

Balance of Trade refers to difference in the

export and import of goods.
Balance of Payment refers to systematic record
of all economic transactions between the
residents of a country and rest of the world in a
year.
Sr.
No Balance of Trade
Balance of Payment
1.

It records transactions
relating to trade of goods
only.

It records transactions relating

to both goods and services.

2.

Balance of trade account

does not record
transactions of capital
nature.

BoP account records

transactions of capital nature
also.

3.

It is a part of current
account of the balance of
payments.

It is more comprehensive and

has three accounts of which
BoT is a part.

Impact of Chinese Yuan

devaluation on India.

Dumping of Chinese goods: There's fear that the sharp

devaluation in yuan will help China dump goods into the
Indian market, which will impact domestic manufacturers.
The fear is already playing out on the Dalal Street with
tyre stocks and steel makers falling sharply.
Rupee volatility: The sharp fall in the rupee has already
rattled stock markets. If the rupee continues to fall sharply,
imports will become costlier, stoking inflation. This will force
the Reserve Bank to hold on to high interest rates, which
will hamper the ongoing economic recovery. Since India
runs a trade deficit (imports are more than exports),
chances are the current account deficit will also rise, which
will further pressure the rupee. Falling rupee is bad for those
companies that have dollar-denominated loans and also for
foreign flows because stock market returns become
unattractive.

Impact of Chinese Yuan

devaluation on India.

Pressure on Exports: The fact that

China and India compete for several
export items such as textiles, gems and
jewellery, etc. will also go against
domestic exporters. The economic
slowdown in China - which is among the
top five countries for Indian exports - is
another negative for Indian exporters,
analysts say.

Presented to you by :

Kalindi Bhatia 104

Harmanjeet 120
Karan Gupta
Shagufta Sayed 146
Dinesh Sharma 153
Aashita Thakur 158