Book: India — People and Economy | Unit-IV | Chapter 8
International Trade
1. Learning Objectives
After reading these notes, you will be able to:
1
Understand the growth and changing pattern of India’s foreign trade.2
Know the changing composition of India’s exports and imports.3
Study the direction of India’s trade with world regions.4
Learn about India’s major seaports, their hinterlands, and airports.2. India’s Foreign Trade — Growth
International trade is mutually beneficial as no country is self-sufficient. India’s contribution to world trade is only about 1% of total volume, yet it plays a significant role in the world economy.
₹1,214 cr
India’s External Trade (1950-51)
₹77,19,796 cr
India’s External Trade (2020-21)
- Reasons for the sharp rise: manufacturing sector momentum, liberal government policies, market diversification.
- Despite rising volume, the value of imports has continued to exceed exports — a persistent trade deficit.
📊 Table 8.1 — India’s Foreign Trade (₹ Crore)
| Year | Exports | Imports | Trade Balance |
|---|---|---|---|
| 2004-05 | 3,75,340 | 5,01,065 | -1,25,725 |
| 2009-10 | 8,45,534 | 13,63,736 | -5,18,202 |
| 2013-14 | 19,05,011 | 27,15,434 | -8,10,423 |
| 2016-17 | 18,52,340 | 25,77,422 | -7,25,082 |
| 2021-22 | 31,47,021 | 45,72,775 | -14,25,753 |
3. Changing Composition of Exports
📊 Table 8.2 — Composition of Exports (% Share)
| Commodity | 2015-16 | 2016-17 | 2020-21 | 2021-22 |
|---|---|---|---|---|
| Agriculture & allied products | 12.6 | 12.3 | 14.3 | 11.9 |
| Ore and Minerals | 1.6 | 1.9 | 3.2 | 2.0 |
| Manufactured goods | 72.9 | 73.6 | 71.2 | 67.8 |
| Crude & petroleum products | 11.9 | 11.7 | 9.2 | 16.4 |
| Other commodities | 1.1 | 0.5 | 2.1 | 1.9 |
- Manufacturing sector alone accounted for 67.8% of total export value in 2021-22; engineering goods & gems/jewellery show strong growth.
- Share of agriculture and manufactured goods has declined over time; crude petroleum and other commodities have increased; ore/minerals share stayed roughly constant.
- Decline in traditional agri-exports (e.g., cashew) due to tough international competition — but growth in floriculture, fresh fruits, marine products, sugar.
- China and other East Asian countries are India’s major competitors.
📌 Table 8.3 — Export of Principal Commodities (2021-22, ₹ crore)
Agriculture & allied: 3,75,742 | Ores & Minerals: 63,754 | Manufactured goods: 21,32,296 | Mineral fuels & Lubricants: 5,15,3104. Changing Composition of Imports
India faced serious food shortages in the 1950s-60s, so foodgrain, capital goods, machinery & equipment dominated imports — the balance of payment was adverse. After 1970s, the Green Revolution ended foodgrain imports, but the 1973 energy crisis made petroleum the major import item.
📊 Table 8.4 — Composition of Imports (% Share)
| Commodity Group | 2015-16 | 2016-17 | 2020-21 | 2021-22 |
|---|---|---|---|---|
| Food & allied products | 5.1 | 5.6 | 4.5 | 4.4 |
| Fuel (Coal, POL) | 25.4 | 26.7 | 25.1 | 31.6 |
| Fertilisers | 2.1 | 1.3 | 1.9 | 2.3 |
| Paper board & newsprint | 0.8 | 0.9 | 0.8 | 0.7 |
| Capital goods | 13.0 | 13.6 | 12.7 | 10.1 |
| Others | 38.1 | 37.0 | 41.6 | 38.5 |
- Rising petroleum import reflects both fuel use and industrial raw material need, growing industrialisation, and rising living standards.
- Capital goods import has shown a steady decline; food import has also declined.
- Other major imports: pearls, precious/semi-precious stones, gold, silver, non-ferrous metals.
📌 Table 8.5 — Import of Principal Commodities (2021-22, ₹ crore)
Petroleum, oil & lubricants: 12,07,803 | Chemical products: 3,08,882 | Pearls & precious stones: 2,31,279 | Non-ferrous metals: 4,99,766 | Edible oils: 1,41,532 | Iron & steel: 94,053 | Fertilisers: 1,05,796 | Medicinal/Pharma: 67,545 | Pulp & waste paper: 11,9345. Direction of Trade
India has trade relations with most countries and major trading blocs. It aims to double its share in international trade within five years, adopting measures like import liberalisation, reduced import duties, delicensing, and shifting from process to product patents.
📊 Table 8.6 — Direction of India’s Import Trade (₹ crore)
| Region | 2016-17 | 2021-22 |
|---|---|---|
| Europe | 4,03,972 | 6,40,577 |
| Africa | 1,93,327 | 3,68,156 |
| North America | 1,95,332 | 3,78,041 |
| Latin America | 1,15,762 | 1,61,995 |
| Asia and ASEAN | 15,44,520 | 29,18,577 |
Most foreign trade moves via sea and air routes; a small portion goes overland to neighbours — Nepal, Bhutan, Bangladesh, Pakistan.
6. Sea Ports as Gateways of Trade
India has 12 major and ~200 minor/intermediate ports. Major ports are governed by the Central Government; minor ports by state governments. Port capacity grew from 20 million tonnes (1951) to 837+ million tonnes (2016). India’s west coast has more ports than the east coast.
📌 Do You Know?
Partition took away two key ports — Karachi to Pakistan and Chittagong to Bangladesh — leading to new ports like Kandla (west) and Diamond Harbour (east) being developed.| Port | Key Facts | Hinterland |
|---|---|---|
| Deendayal (Kandla) | Head of Gulf of Kuchchh; handles petroleum & fertiliser; reduces Mumbai pressure; offshore terminal at Vadinar. | Western & NW India |
| Mumbai | Natural harbour, biggest port; largest oil terminal; 20 km long, 54 berths. | M.P., Maharashtra, Gujarat, U.P., Rajasthan |
| Jawaharlal Nehru (Nhava Sheva) | Satellite port to Mumbai; India’s largest container port. | — |
| Mormugao | Natural harbour, Zuari estuary (Goa); iron-ore exports to Japan; boosted by Konkan Railway. | Karnataka, Goa, S. Maharashtra |
| New Mangalore | Iron ore/concentrate export; also fertilisers, petroleum, coffee, tea. | Karnataka |
| Cochin | “Queen of the Arabian Sea”; near Suez-Colombo route. | Kerala, S. Karnataka, SW Tamil Nadu |
| Shyama Prasad Mookerjee (Kolkata) | On Hugli river, 128 km inland; faces silt accumulation; serves landlocked Nepal & Bhutan too. | U.P., Bihar, Jharkhand, W. Bengal, Sikkim, NE states |
| Haldia | 105 km downstream of Kolkata; reduces Kolkata congestion; handles iron ore, coal, petroleum. | — |
| Paradwip | Mahanadi delta; deepest harbour; mainly iron-ore export. | Odisha, Chhattisgarh, Jharkhand |
| Visakhapatnam | Land-locked harbour (channel-cut); iron-ore, petroleum, general cargo. | Andhra Pradesh, Telangana |
| Chennai | One of oldest ports (artificial harbour, 1859); shallow waters limit large ships. | Tamil Nadu, Puducherry |
| Kamarajar (Ennore) | 25 km north of Chennai — relieves Chennai’s pressure. | — |
| V.O. Chidambaranar (Tuticorin) | Relieves Chennai; handles coal, salt, foodgrains, edible oils, chemicals. | — |
7. Airports
- Air transport takes the least time and handles high-value/perishable goods over long distances, but is costly and unsuitable for heavy/bulky commodities — hence smaller role vs. oceanic routes.
- India had 25 major airports (2016-17): Ahmedabad, Bengaluru, Chennai, Delhi, Goa, Guwahati, Hyderabad, Kolkata, Mumbai, Thiruvananthapuram, Srinagar, Jaipur, Calicut, Nagpur, Coimbatore, Cochin, Lucknow, Pune, Chandigarh, Mangaluru, Vishakhapatnam, Indore, Patna, Bhubaneswar, Kannur.
- Since 2017, the UDAN scheme has operationalised 73 unserved/underserved airports, including 9 heliports and 2 water aerodromes.
Summary — Quick Revision
1
Trade Growth: From ₹1,214 crore (1950-51) to ₹77+ lakh crore (2020-21); imports consistently exceed exports.
2
Exports: Manufacturing dominates (67.8% in 2021-22); agriculture’s share declining, crude petroleum rising.
3
Imports: Fuel (POL) is the largest single group (31.6% in 2021-22); capital goods declining.
4
Direction: Asia & ASEAN dominate India’s import trade, followed by Europe.
5
Ports: 12 major + ~200 minor ports; Mumbai is the biggest; west coast has more ports than east.
6
Airports: 25 major airports; UDAN scheme boosting regional/remote connectivity since 2017.
Important Terms to Remember
- International Trade: Trade between two or more countries.
- Trade Balance: The difference between the value of exports and imports.
- Trade Deficit: When imports exceed exports in value.
- Hinterland: The inland area served by/economically linked to a port.
- Port: A place where ships load and unload cargo/passengers.
- Harbour: A sheltered stretch of water suitable for anchoring ships.
- Land-locked Harbour: A harbour connected to the sea via a cut channel (e.g., Visakhapatnam).
- Import Substitution: Producing domestically what was previously imported.
- UDAN: Regional Connectivity Scheme for affordable air travel to underserved areas.