Foreign Trade
1. Introduction – India & Foreign Trade
- Foreign Trade = exchange of goods & services across national borders.
- India’s share in world merchandise exports (2023, WTO): 1.8 % (rank-18).
- India’s share in world commercial services exports (2023): 4.4 % (rank-7).
2. Basic Concepts & Formula
- BOT (Balance of Trade) = Value of Exports – Value of Imports.
- BOP (Balance of Payment) = Current Account + Capital Account + Balancing Item.
- Trade Deficit = Import > Export; Trade Surplus = Export > Import.
3. India’s Trade Position (2023-24, 1st RE, MoC&I)
| Parameter | Value (USD bn) | % Growth |
|---|---|---|
| Merchandise Exports | 437.1 | –4.7 % |
| Merchandise Imports | 677.2 | –5.9 % |
| Trade Deficit | –240.1 | –8.0 % |
| Services Exports | 341.1 | +11.4 % |
| Net Services Surplus | +143.0 | – |
| Overall Trade (Goods+Svcs) | 1,455 bn | –0.6 % |
4. Top 5 Trading Partners (FY 2023-24)
| Country | Total Trade (USD bn) | Share (%) | Major Item Exported | Major Item Imported |
|---|---|---|---|---|
| USA | 128.6 | 9.6 | Gems & jewellery, Pharma | Crude, Defence |
| China | 113.6 | 8.5 | Organic chemicals | Telecom, Electronics |
| UAE | 83.7 | 6.3 | Refined petroleum | Crude oil |
| Netherlands | 54.4 | 4.1 | Refined oil, Pharma | Gold, Scrap |
| Singapore | 49.8 | 3.7 | IT services, Pharma | Gold, Electronics |
5. Export Performance – Commodities
| Commodity Group (HS 2-digit) | FY 23-24 Exports (USD bn) | Share (%) |
|---|---|---|
| Petroleum products (27) | 84.2 | 19.3 |
| Gems & jewellery (71) | 32.7 | 7.5 |
| Drugs & pharma (30) | 27.9 | 6.4 |
| RMG-cotton (62) | 14.3 | 3.3 |
| Automobiles (87) | 23.1 | 5.3 |
6. Import Dependency
| Item | Import Dependency Ratio (2023) | Key Supplier |
|---|---|---|
| Crude oil | 87 % | Iraq 22 %, Russia 19 % |
| LNG | 55 % | Qatar 43 % |
| Gold | 100 % (no domestic mine) | Switzerland 41 % |
| Electronics (HS 85) | 53 % | China 44 % |
7. Foreign Trade Policy (FTP) – Milestones
- 1991 – Liberalisation; EXIM scrip abolished.
- 2004-09 – First integrated FTP; SEZ Act 2005.
- 2015-20 – Merchandise Exports from India Scheme (MEIS) + Services Exports from India Scheme (SEIS).
- 2021 – Remission of Duties & Taxes on Exported Products (RoDTEP) launched.
- 2023 – New FTP 2023 (effective 1 Apr 2023) – “Atmanirbhar Bharat” theme; removal of incentive ceiling; emphasis on districts-as-export-hubs.
8. Important Acts / Organisations
| Body | Year | Headquarter | Key Role |
|---|---|---|---|
| WTO (replace GATT) | 1995 | Geneva | Multilateral trade rules |
| EXIM Bank | 1982 | Mumbai | Export credit |
| ECGC (was ECGC Ltd.) | 1957 | Mumbai | Export insurance |
| DGFT (earlier DGCI&S) | 1991 | New Delhi | FTP implementation |
| SEZ Act | 2005 | – | Tax-free enclaves |
9. India’s Free-Trade Agreements (FTAs) – Quick List
- SAFTA – 2006 (South Asia)
- India-ASEAN FTA – Goods 2010, Services 2015
- India–Korea CEPA – 2010
- India–Japan CEPA – 2011
- India–Mauritius CECPA – 2021 (first African FTA)
- India–UAE CEPA – 1 May 2022 (target USD 100 bn bilateral trade by 2030)
- India–Australia ECTA – 29 Dec 2022
10. One-liner Rapid-Fire Facts
- India recorded its highest-ever merchandise export of USD 422 bn in FY 2021-22.
- Mundra Port (Gujarat) handles ~45 % of India’s container traffic.
- Engineering goods overtook petroleum to become #1 export basket in FY 2022-23.
- Tuticorin (Tamil Nadu) is the major port for marine exports.
- ICEGATE – e-filing portal of Customs & DGFT.
- RoDTEP replaced MEIS from 1 Jan 2021.
- Export Preparedness Index 2023 – Top State: Tamil Nadu (NITI Aayog).
- Town of Export Excellence (TEE) – Surat (Diamond), Tiruppur (Knitwear), etc.
- India’s first trans-shipment port – Vizhinjam (Kerala) – operational 2024.
- Currency of export earnings – mostly in US Dollars (81 %), followed by Euro (12 %).
- India is 3rd largest consumer of oil but produces only ~15 % of its requirement.
- SEZ rule – Minimum area 50 hectares; 100 % Income-tax holiday for 15 yrs.
- “Dual-use” item – requires SCOMET (Special Chemicals, Organisms, Materials, Equipment & Technologies) licence.
- India’s first Export Promotion Council – set up for Handicrafts (1965).
- “Services Exports from India Scheme” benefits both services exporters & hotels.
11. Quick-Reference Tables
Table-1: India’s Trade Balance (USD bn)
| Year | Export | Import | Deficit |
|---|---|---|---|
| 2018-19 | 330.1 | 514.1 | –184.0 |
| 2019-20 | 313.4 | 474.7 | –161.3 |
| 2020-21 | 291.8 | 394.4 | –102.6 |
| 2021-22 | 422.0 | 613.0 | –191.0 |
| 2022-23 | 451.1 | 716.0 | –264.9 |
| 2023-24 | 437.1 | 677.2 | –240.1 |
Table-2: India’s Export Destinations – Share 2023-24
| Region | Share (%) |
|---|---|
| Americas | 21.7 |
| Europe | 20.4 |
| Asia (excl. NE) | 33.1 |
| NE Asia | 12.5 |
| Africa | 9.8 |
| Oceania | 2.5 |
12. Practice MCQs (RRB Pattern)
1. Which port handles the largest share of India’s containerised foreign trade?
Ans: Mundra Port, Gujarat
2. The scheme that replaced MEIS from 1 Jan 2021 is:
Ans: RoDTEP
3. India’s largest merchandise trading partner in FY 2023-24 was:
Ans: USA
4. The first Free Trade Agreement signed by India with an African country is:
Ans: India-Mauritius CECPA
5. What is India’s share in world commercial services exports (2023)?
Ans: 4.4 %
6. Which commodity group topped India’s merchandise exports in FY 2023-24?
Ans: Petroleum products
7. The headquarters of WTO is located at:
Ans: Geneva, Switzerland
8. India recorded its highest-ever merchandise exports in which fiscal year?
Ans: 2021-22
9. Which state topped the Export Preparedness Index 2023?
Ans: Tamil Nadu
10. The minimum area required for setting up a multi-product SEZ is:
Ans: 50 hectares
11. The currency in which the largest share of India’s exports is invoiced:
Ans: US Dollar
12. Which of the following is NOT a Town of Export Excellence?
Ans: Panipat (Panipat is TEE for handlooms/carpets; all others are TEEs)
13. India’s import dependency on crude oil is approximately:
Ans: 87 %
14. The EXIM Bank of India was established in:
Ans: 1982
15. The new Foreign Trade Policy 2023 came into force on:
Ans: 1 April 2023
16. Which of the following is a capital account transaction in BOP?
Ans: FDI inflow
17. SCOMET list is related to:
Ans: Export control of dual-use items
18. The current rank of India in world merchandise exporters (WTO 2023) is:
Ans: 18th
Revise → Rehearse → Rock the Railway Exams!
BETA
