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Page 1: Global Trade

Recent trends in global trade

Chapter 1

Introduction

Importance/Role of foreign trade in economic development of countries

Introduction of foreign trade:

There is no country in the world today which produces all the commodities it needs. Every country, therefore, tries to produce those commodities in which it has comparative advantage. It exchanges part of those commodities with the commodities produced by other countries relatively more efficiently. The relative difference in factor endowments, technology, tastes etc, among the nations of the world have greatly widened the basis of international trade.Role of foreign trade in economic developmentThe role of foreign trade can be judged by the following faces:

Foreign trade and economic development.

Foreign trade plays very important role in the economic development of any country. Pakistan also exports a lot of agricultural product to other countries and imports the capital goods from other countries. Therefore, it is not wrong to say that economic development of a country depends of foreign trade.

Foreign exchange earning

Foreign trade provides foreign exchange which can be used to remove the poverty and other productive purposes.

Market expansion

The demand factor plays very important role in increasing the production of any country. The foreign trade expands the market and encourages the producers. In Pakistan home market is very limited due to poverty. So it is necessary chat we should sell our product in other countries.

Increase in investment

Foreign trade encourages the investor to increase the investment to produce more goods. So the rate of investment increases.

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Foreign investment

Besides the local investment, foreign trade provides incentives for the foreign investors to invest in those countries where there is a shortage of investment.

Increase in national income

Foreign trade increases the scale of production and national income of the country. To meet the foreign demand we increase the production on large scale so GNP also increases.

Decrease in unemployment

With the rise in the demand of goods domestic resources are fully utilized and it increases the rate of development in the country and reduces the unemployment in the world.

Price stability

Foreign trade helps to bring stability in price level. All those goods which are short and prices are increasing can be imported and those goods which are surplus can be exported. There by stopping fluctuation in prices.

Specialization

There is a difference in the quality and quantity of various factors of production in different countries. Each country adopts the specialization in the production of those commodities, in which it has comparative advantage. So all trading countries enjoy profit through international trade.

Remove monopolies

Foreign trade also discourages the monopolies. Where every any monopolist increases the prices, government allows the import of goods to reduce the prices in the country.

Removal of food shortage

India is also facing the food shortage problem. To remove the food shortage India has imported the wheat many times. So due to foreign trade we are solving this problem for many years.

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Agricultural development

Agricultural development is the back bone in our economy. Foreign trade has played very important role for the development of our agriculture sector. Every year we export rice, cotton, fruits and vegetables to other countries. The export of goods makes our farmer more prosperous. It inspires the spirit of development in them.

Import of consumer goods

India and Pakistan imports the various consumer goods from other countries, which are not produced inside the country. Today the shortage of any commodity can be removed through international trade.

To improve quality of local products

Foreign trade helps to improve quality of local products and extends market through changes in demand and supply as foreign trade can create competition with the rest of the world.

External economics

External economics can also be achieved through foreign trade. The industries producing foods on large scale in Pakistan and India are enjoying the external economics due to international trade.

Competition with foreign producers

We can compete with the foreign producers in foreign trade so it improves the quality and reduces the cost of production. It is also an advantage of foreign trade.

Useful for the world peace

Today all the countries are tied in trade relations with each other. So foreign trade also contribute to peace and prosperity in the world.

Import of capital goods and technology

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The inflow of capital goods and technology in the less developed countries has increased the rate of economic development, and this is due to foreign trade.

Import substitution

These countries not only produce import substitute, but also reduce deficit in balance of payment of their countries.

Better understanding

Foreign trade provides an opportunity to the people of different countries to meet, discuss, and exchange views and ideas related to their social, economic and political problems.

Dissemination of knowledge

Foreign trade is also responsible for dissemination of knowledge and learning from developed countries to under developed countries.

Interdependence

Foreign trade is responsible for creating economic depending and establishing economic interest in the economy of the countries having trade relations.

Factors productivity

Through foreign trade the productivity of labour and capital and organization increases. Demand make them mobile on national as well as international level which helps underdeveloped countries to develop and maintain a high level of growth of developed countries.

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Evolving structure of global trade

The global economy has grown continuously since the Second World War. Global growth has been accompanied by a change in the pattern of trade, which reflects ongoing changes in structure of the global economy. These changes include the rise of regional trading blocs, deindustrialization in many advanced economies, the increased participation of former communist countries, and the emergence of China and India.

Changes in the global economy the main changes in the global economy are:

1. The emergence of regional trading blocs, where members freely trade with each other, but erect barriers to trade with non-members, has had a significant impact on the pattern of global trade. While the formation of blocs, such as the European Union and NAFTA, has led to trade creation between members, countries outside the bloc have suffered from trade diversion.

2. Like several advanced economies, the UK's trade in manufactured goods has fallen relative to its trade in commercial and financial services. Many of these advanced economies have experienced deindustrialization, with less national output generated by their manufacturing sectors.

3. The collapse of communism led to the opening-up of many former-communist countries. These countries have increased their share of world trade by taking advantage of their low production costs, especially their low wage levels.

4. Newly industrialized countries like India and China have dramatically increased their share of world trade and their share of manufacturing exports. China, in particular, has emerged as an economic super-power. China's share of world trade has increased in all areas, and not just in clothing and low-tech goods. For example, in 1995, the US had captured nearly 25% of global trade in hi-tech goods, while China had only 3%. By 2005, the US share had fallen to 15%, while China's share had risen to 15%.

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The Diffusion of Key Players in Global Trade

Changing Patterns of Global Trade outlines the factors underlying important shifts in global trade that have occurred in recent decades. The emergence of global supply chains and their increasing role in trade patterns allowed emerging market economies to boost their inputs in high technology exports and is associated with increased trade interconnectedness.

BRICS Economies for diffusing key players

Brazil, Russia, India and China, South Africa are combinedly referred to as BRICS countries by Goldman Sachs. These countries will start the next shift in balance of power in the global economy. It is expected that BRICS will be wealthier than most of the current major economic powers by 2050.

The BRIC thesis states that China and India will become the world's dominant suppliers of manufactured goods and services, respectively, while Brazil and Russia will become similarly dominant as suppliers of raw materials.

Goldman Sachs states that these countries may not make a formal trading association - but they have the potential to form a powerful economic bloc.

Due to lower labor and production costs, many companies also cite BRIC as a source of foreign expansion opportunity.

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Growing Trade Interconnectedness

Increased interconnectedness and interdependence of countries include two factors:

1. The opening of borders to increasingly fast flows of goods, services, finance, people and ideas across international borders; and

2. The changes in institutional and policy regimes at the international

and national levels that facilitate or promote such flows. Such inter connectedness has both positive and negative impacts on development.

Effects of interconnected trade:

Economic change: trade liberalization, deregulation, expansion of the global market place

Political change, redistribution of power from states to interstate bodies and the growth of global civil society

Social and cultural change

Technological change, including improved global telecommunications and transport links.

The increases in economic cross-border flows that have resulted in more

“open” economies are a result, in part, of World Trade Organization, International Monetary Fund and World Bank policies. All this change is supported by economic blocs like European Union, the Organization of Petroleum Exporting Countries, and the North American Free Trade Agreement. This trend benefits globalization, to the richer, more powerful nations.

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Major Current Trends in Foreign Trade

Major current trends in foreign trade are as follows:

Current trends are towards the increasing foreign trade and interdependence of firms, markets and countries.

Intense competition among countries, industries, and firms on a global level is a recent development owed to the confluence of several major trends. Among these trends are:

1) Forced Dynamism:

International trade is forced to succumb to trends that shape the global political, cultural, and economic environment. International trade is a complex topic, because the environment it operates in is constantly changing. First, businesses are constantly pushing the frontiers of economic growth, technology, culture, and politics which also change the surrounding global society and global economic context. Secondly, factors external to international trade (e.g., developments in science and information technology) are constantly forcing international trade to change how they operate.

2) Cooperation among Countries:

Countries cooperate with each other in thousands of ways through international organizations, treaties, and consultations. Such cooperation generally encourages the globalization of business by eliminating restrictions on it and by outlining frameworks that reduce uncertainties about what companies will and will not be allowed to do. Countries cooperate:

i) To gain reciprocal advantages,

ii) To attack problems they cannot solve alone, and

iii) To deal with concerns that lie outside anyone’s territory.

Agreements on a variety of commercially related activities, such as transportation and trade, allow nations to gain reciprocal advantages. For example, groups of countries have agreed to allow foreign airlines to land in

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and fly over their territories, such as Canada’s and Russia’s agreements commencing in 2001 to allow polar over flights that will save five hours between New York and Hong Kong.

Groups of countries have also agreed to protect the property of foreign-owned companies and to permit foreign-made goods and services to enter their territories with fewer restrictions. In addition, countries cooperate on problems they cannot solve alone, such as by coordinating national economic programs (including interest rates) so that global economic conditions are minimally disrupted, and by restricting imports of certain products to protect endangered species.

Finally, countries set agreements on how to commercially exploit areas outside any of their territories. These include outer space (such as on the transmission of television programs), non-coastal areas of oceans and seas (such as on exploitation of minerals), and Antarctica (for example, limits on fishing within its coastal waters).

3) Liberalization of Cross-border Movements:

Every country restricts the movement across its borders of goods and services as well as of the resources, such as workers and capital, to produce them. Such restrictions make international trade cumbersome; further, because the restrictions may change at any time, the ability to sustain international trade is always uncertain. However, governments today impose fewer restrictions on cross-border movements than they did a decade or two ago, allowing companies to better take advantage of international opportunities. Governments have decreased restrictions because they believe that:

i) So-called open economies (having very few international restrictions) will give consumers better access to a greater variety of goods and services at lower prices,

ii) Producers will become more efficient by competing against foreign companies,

iii) iii) If they reduce their own restrictions, other countries will do the same.

4) Transfer of Technology:

Technology transfer is the process by which commercial technology is disseminated. This will take the form of a technology transfer transaction,

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which may or may not be a legally binding contract, but which will involve the communication, by the transferor, of the relevant knowledge to the recipient. It also includes non-commercial technology transfers, such as those found in international cooperation agreements between developed and developing states. Such agreements may relate to infrastructure or agricultural development, or to international; cooperation in the fields of research, education, employment or transport.

5) Growth in Emerging Markets:

The growth of emerging markets (e.g., India, China, Brazil, and other parts of Asia and South America especially) has impacted international trade in every way. The emerging markets have simultaneously increased the potential size and worth of current major international trade while also facilitating the emergence of a whole new generation of innovative companies. According to“A special report on innovation in emerging markets” by The Economist magazine, “The emerging world, long a source of cheap la, now rivals the rich countries for business innovation”.

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Chapter 2

India’s Trade Performance

India’s merchandise exports reached a level of US $ 312.61 billion during

2013-14 registering a growth of 4.06 percent as compared to a negative growth of 1.82 percent during the previous year. Despite the recent setback faced by India’s export sector due to global slowdown, merchandise exports still recorded a Compound Annual Growth Rate (CAGR) of 15.79 per cent from 2004-05 to 2013-14.

World trade scenario

As per IMF’s World Economic Outlook April 2014, world trade recorded its largest ever annual increase in 2010, as merchandise trade surged 14 per cent, but in the year 2012, it declined to 2.6 per cent and showed only a marginal improvement to 2.7 per cent in 2013. It however projects acceleration of world trade in goods in 2014 and 2015 with forecasted growth rates of 4.3 per cent and 5.3 per cent respectively. Growth in volume of world trade also increased marginally to 3 per cent in 2013 over 2.8 per cent in 2012 and is projected to accelerate further to 4.3 per cent and 5.3 per cent in 2014 and 2015 respectively. The IMF has put its growth projections of world output at 3.6 per cent in 2014. The advanced economies are expected to grow at 2.2 per cent while the emerging and developing economies to grow at 4.9 per cent in 2014. The projected growth rates in different countries are expected to determine the markets for our exports.

Exports

Exports recorded a growth of 4.06 per cent during Apr-Mar 2013-14. The Government had set an export target of US $ 325 billion for 2013-14. The merchandise exports have reached US $ 312.61 billion in 2013-14. Export target and achievement from 2004-05 to 2013-14 is given in the Chart.

Imports

Cumulative value of imports during 2013-14 was US $ 450.07 billion as against US $490.74 billion during the corresponding period of the previous year registering a negative growth of 8.29 per cent in $ terms. Oil imports

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were valued at US $ 167.62 billion during 2013-14 which was 2.2 per cent higher than oil imports valued at US $ 164.04 billion in the corresponding period of previous year. Nonoil imports were valued at US $ 283.32 billion during 2013-14 which was 13.3 per cent lower than non-oil imports of US $ 326.7 billion in previous year

Trade Balance

The Trade deficit in 2013-14 was estimated at US $ 137.46 billion which was lower than the deficit of US $ 190.34 billion during 2012-13. Performance of Exports, Imports and Balance of Trade during 2004-05 to 2013-14 is given in the table

Export target & Achievement

Trade Data for period 2004-05 to 2013-14

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Exports by Principal Commodities

Disaggregated data on exports by Principal Commodities, both in Rupee and Dollar terms, available for the period 2013-14 as compared to 2012-13 are given in Table 3.1 and Table 3.2 respectively. Exports of the top five commodities during the period 2013-14 registered a share of 50.05 per cent mainly due to significant contribution in the exports of Petroleum (Crude & Products), Gems & Jewellery, Transport Equipment, Machinery and Instruments and Drugs, Pharmaceuticals & Fine Chemicals. The share of top five Principal Commodity Groups in India’s total exports during 2013-14 is given at Chart

Share of Top Five Commodities in India's Export 2013-14

The export performance (in terms of growth) of top five commodities during 2013-14 vis-a vis the corresponding period of the previous year is shown in Chart

Plantation Crops

Export of Plantation crops during 2013-14, decreased by 8.17 per cent in US $ terms compared to 2012-13. Export of Coffee registered a negative growth

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of 7.81 per cent, the value decreasing from US $ 866.13 million to US $ 798.49 million. Export of Tea also decreased by 8.54 per cent.

Agriculture and Allied Products

Agriculture and Allied Products as a group include Cereals, Pulses, Tobacco, Spices, Nuts and Seeds, Oil Meals, Guar gum Meal, Castor Oil, Shellac, Sugar & Molasses, Processed Food, Meat & Meat Products, etc. During 2013-14, exports of commodities under this group registered a growth of 0.81 per cent with the value of exports increasing from US $ 32,017.27 million in 2012-13 to US $ 32,277.59 million during 2013-14.

Ores and Minerals

Exports of Ores and Minerals were estimated at US $ 5,604.22 million during 2013-14 registering a negative growth of 0.48 per cent over 2012-13. Sub groups viz. Iron Ore, and mica have recorded a negative growth of 5.45 per cent and 0.57 percent respectively. Processed minerals, other ores and minerals and coal registered a growth of 1.76 per cent, 1.59 per cent and 0.4 per cent respectively.

Leather and Leather Manufactures

Export of Leather and Leather Manufactures recorded a growth of 16.49 per cent during 2013-14. The value of exports increased to US $ 5,687.63 million in 2013-14 from US $ 4,882.35 million in 2012-13. Exports of Leather and Manufactures have registered a growth of 13.71 per cent and Leather Footwear registered a growth of 20.35 per cent.

Gems and Jewellery

The export of Gems and Jewellery during 2013-14 decreased to US $ 41,100.13 million from US $43,344.85 million in 2012-13 showing a negative growth of 5.18 per cent.

Chemicals and related Products

During the period 2013-14, the value of exports of Chemicals and Related Products increased to US $ 43,755.48 million from US $ 41,504.68 million in 2012-13 registering a growth of 5.42 per cent. Rubber, Glass & Other Products, Basic Chemicals, Pharmaceuticals & Cosmetics, Plastic and

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linoleum and residual chemicals & allied products have registered a positive growth.

Engineering Goods

Items under this group consist of Machinery, Iron & Steel and Other Engineering items. Export from this sector during the period 2013-14 stood at US $ 61,623.50 million compared with US $ 56,796.94 million in 2012-13, registering a positive growth of 8.5 per cent. The growth in export of Residual engineering items stood at 22.79 per cent, Aluminum other than products stood at 28.6 per cent, Primary & Semi-finished iron & steel stood at 23.95 per cent, Transport equipment stood at 16.47 per cent and Machinery and Instrument 5.93 per cent.

Electronic Goods

During the period 2013-14, exports of Electronic Goods as a group was estimated at US $7,690.68 million compared with US $ 8,442.77 in 2012-13, registering a negative growth of 8.91 per cent

Textiles

During the period 2013-14, the value of Textiles exports was estimated at US $ 30,379.55 million compared with US $26,362.39 million in 2012-13, recording a positive growth of 15.24 per cent. The export of Natural Silk Textiles, Wool and Woolen manufactures and Jute manufactures registered negative growth of 8.95 per cent, 7.15 per cent and 3per cent respectively. However, Readymade Garments, Cotton yarn/Fabrics/Made-ups etc., Manmade Textiles & Made Ups etc, Coir and coir manufactures registered a positive growth of 15.53 per cent, 18.11 per cent, 12.85 per cent and 16.89 per cent respectively.

Handicrafts and Carpets

Exports of Handicrafts increased to US $ 277.13 million during 2013-14 from US $ 203.76 million in 2012-13 registering a positive growth of 36.01 per cent. Export of carpets increased to US $ 1037.11 million from US $ 988.14 million during the same period last year registering a growth of 4.96 per cent.

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Project Goods

During 2013-14, the export of Project Goods were estimated at US $ 39.65 million compared with US $ 145.97 million in 2012- 13 registering a negative growth of 72.84 per cent.

Petroleum Products

Export of Petroleum Products increased to US $ 62,685.29 million during 2013-14, as compared with US $ 60,859.81 million in 2012-13 recording a positive growth of 3 per cent.

Cotton Raw including Waste

There was a negative growth in the exports of Cotton Raw including waste by 3.33 per cent from US $ 3,747.73 million in 2012-13 to US $3,622.89 million during 2013-14.

Imports by Principal Commodities

Disaggregated data on imports by principal commodities, both in Rupee and Dollar terms, available for the period 2013-14, as compared 2012-13 are given in Table 3.5 and Table 3.6 respectively. Imports of the top five commodities during the period 2013-14 registered a share of 60.58 per cent mainly due to significant imports of Petroleum (Crude & Products), Electronic Goods, Gold, Pearls, precious and semi-precious stones and Machinery except electrical and electronic. The share of top five Principal Commodity in India’s total imports during 2013-14 is given at Chart

Share of Top Five Commodities in India's Imports 2013-14

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The import performance by growth of top five Principal commodities during 2013-14 Vis-a vis the corresponding period of the previous year is shown at Chart

Growth of Top Five Imports during 2012-13 & 2013-14

Fertilizers

During 2013-14, import of Fertilizers decreased to US $ 6,469.27 million from US $ 9,074.95 million in 2012-13 recording a negative growth of 28.71 per cent.

Petroleum Crude & Products

The import of Petroleum Crude & Products stood at US $ 165,148.10 million during 2013- 14 as against US $ 164,040.56 million in 2012- 13 registering a growth of 0.68 per cent.

Pearls, Precious and Semi-Precious Stones

Import of Pearls and Precious and Semiprecious Stones during 2013-14 increased to US $ 24,001.39 million from US $ 22,666.61 million in 2012-13 registering an increase of 5.89 per cent.

Capital Goods

Import of Capital Goods, largely comprises of Machinery, including Transport Equipment and Electrical Machinery. Import of Machine Tools,

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Machinery other than electrical, Electrical Machinery and Transport Equipment registered a negative growth of 25.56 per cent, 14.32 per cent, 2.06 per cent, and 12.86 per cent respectively.

Organic and Inorganic Chemicals

During 2013-14, import of Organic and Inorganic Chemicals increased to US $ 20,213.03 million from US $ 19,319.84 million in 2012-13, registering a growth of 4.62 per cent. Import of Medicinal and Pharmaceutical Products decreased to US $ 2,973.83 million in 2013-14 from US $ 3,117.96 million in 2012-13 registering a negative growth of 4.62 per cent.

Coal, Coke & Briquettes

During 2013-14, import of Coal, Coke & Briquettes decreased to US $ 16,431.87 million from US $ 16,995.89 million in 2012-13, registering a negative growth of 3.32 per cent.

Gold & silver

During 2013-14, import of Gold and Silver decreased to US $ 33,430.94 million from US $ 55,793.71 million in 2012-13 registering a negative growth of 40.08 per cent.

Direction of India’s Foreign Trade

The value of India’s exports and imports from major regions/ countries both in Rupee and Dollar terms are given in Table. Share of major destinations of

India’s Exports and sources of Imports during 2013-14 are given in Chart 3.7 and 3.8 respectively. During the period 2013-14, the share of Asia comprising of East Asia, ASEAN, West Asia, Other West Asia, North East Asia and

South Asia accounted for 49.67 per cent of India’s total exports. The share of Europe and America in India’s exports stood at 18.65 per cent and 17.35 per cent respectively of which EU countries (27) comprises 16.5per cent. During the period, USA (12.53 per cent) has been the most important country of export destination followed by UAE (9.76 per cent), China P RP (4.76 per cent), Hong Kong (4.07 per cent) and Singapore (4 percent). Asia accounted for 60.87 per cent of India’s total imports during the period followed by

Europe (15.7per cent) and America (12.91 per cent). Among individual countries the share of China stood highest at (11.33 per cent) followed by

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Saudi Arabia (8.12 per cent), UAE (6.47 per cent), USA (4.96 per cent) and Switzerland (4.31 per cent)

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India's percentage share of the trade to the world trade

The export target for the year 2013-14 was fixed at 325 US $ Billion. India's percentage share of the trade to the world trade for the year 2013 is 2.07%. India's share in world trade is given below: Year Total Trade: Value in US $ Billion Percentage share of India in World Trade World India2011 36830 767.4 2.082012 37012 785.4 2.122013 37658 778.3 2.07Source: World Trade Organisation (Calendar Year)

With a view to increase our share of trade in global trade, the Government of India continuously monitors the export performance of different sectors and takes need based measures from time to time, keeping in view the financial and overall economic implications. Review of Foreign Trade Policy is a part of this strategy, and Annual Supplements to the Foreign Trade Policy (2009-14) were announced time to time. The last Annual Supplement was announced on 18.4.2013.

Further in order to boost Exports, Government has taken a number of measures, which, inter alia, include the following:

Two percent Interest Subvention Scheme, which was available for certain export sectors viz. Handicrafts, Carpet, Handlooms, SMEs, Readymade Garments, Processed Agriculture Products and Toys, was widened to include 134 tariff lines of Engineering Sector w.e.f 1st January, 2013. Government enhanced the rate of Interest Subvention from 2% to 3 % with effect from 1 August 2013. As part of product diversification and market diversification strategy, 47 new items were added to Market Linked Focus Product Scheme (MLFPS) and 122 new items were added to the Focus Product Scheme (FPS). Government also notified 153 hi-tech products on 10 July 2013 under Focus Product Scheme making them eligible for duty script at the rate of 2%

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India’s trade with top most countries

India - US Trade

Trade and commerce form a crucial component of the rapidly expanding and multi-faceted relations between India and U.S. From a modest $ 5.6 billion in 1990, the bilateral trade in merchandise goods has increased to $ 66.9 billion in 2014 representing an impressive 1094.6% growth in a span of 24 years. India's merchandise exports to the U.S. grew by 2.93% from $ 26.32 billion during the period January - July 2014 to $ 27.09 billion during the period January - July 2015. US exports of merchandise to India grew by 11.95% from $ 11.54 billion during the period January - July 2014 to $ 12.92 billion during the period January - July 2015. India - U.S. bilateral merchandise trade during the period January - July 2015 was $ 40.01 billion.

Trade during the year the period January - July 2015

i) Major items of export from India to USSelect major items with their percentage shares, are given below.

a) Textiles (17.1%) b) Precious stones & metals (20.1%) c) Pharmaceutical products (12.5%) d) Mineral Fuel, Oil (7.2%) e) Machinery (5.5%) f) Organic chemicals (4.5%) g) Articles of Iron and Steel (3%) h) Vehicles, excluding railway (3%)

ii) Major items of export from US to India

Select major items with their percentage shares, are given below

a) Precious stones & metals (31.6%) b) Machinery (9.8%) c) Mineral Fuel, Oil etc (6.5%) d) Electrical machinery (6.4%) e) Aircraft, spacecraft, Parts (6.2) f) Optical instruments & equipment (6%)

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g) Organic chemicals (3.7%) h) Plastic Products (3%)

Trends with respect to the major items of bilateral trade during the past two years are as follows.

India's exports to US Trends in the top 10 items of India's Exports to the U.S.:

During the period January - July 2015, exports of Cut and polished diamonds and jewelry exports amounted to $ 5532 million as compared to $ 5168 million during the period January - July 2014 which is an increase of 7%.

Pharmaceutical products exports grew by 11% to $ 3383 million, from $ 3049 million.

Mineral Fuel oil exports fell by 38.3% to $ 1940 million from $ 3145 million.

Machinery exports increased by 18.6% to $ 1500 million from 1265 million.

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Miscellaneous Textile articles grew by 12.9% from $ 1213 million to $ 1369 million.

Woven apparel exports increased by 7.4% from $ 1258 million to $ 1351 million.

Organic Chemicals exports fell by 7.7% accounting for $ 1232 million compared to $ 1335 million.

Exports of Knitted apparel exports increased by 12.3% to $ 1003 million from $ 893 million.

Articles of Iron and Steel grew by 22.1% to $ 806 million from $ 660 million.

Vehicles except railway exports grew by 19.5% to $ 798 million from $ 668 million

US exports to India Trends in the top 10 items of US exports to India:

During the period January - July 2015 exports of Cut and polished diamonds and jewelry exports amounted to $ 4082 million as compared to $ 2719 million during the period January - July 2014 which is a growth of 50.1%.

Machinery exports grew by 5.1% from $ 1205 million to $ 1267 million.

Mineral Fuel, oil grew by 11% to $ 840 million from $ 757 million. Electrical Machinery exports grew by 9.6% to $ 824 million from $

752 million. Aircraft and parts exports fell by 41.6% to $ 807 million from $ 1381

million. Optical & Medical Instruments exports grew by 5.9%, accounting for

$ 770 million from $ 727 million. Organic Chemicals exports grew by 15% from $ 413 million to $ 475

million. Plastic Products decreased by 0.8% from $ 387 million to $ 383 million. Edible fruits and nuts exports grew by 32.6% to $ 349 million from $

263 million. Miscellaneous Chemical products exports fell by 1.8% to $ 337

million from $343 million

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India – UAE Trade

Economic and Commercial cooperation with the UAE is a key aspect of overall bilateral relationship. The traditionally close and friendly India-UAE bilateral relationship has evolved into a significant partnership in the economic and commercial sphere. Indians have emerged as important investors within the UAE and India as an important export destination for the UAE manufactured goods. India-UAE trade, valued at US$180 million per annum in the 1970s is today around US$60 billion making UAE, India’s third largest trading partner for the year 2014-15 after China and US. Moreover, UAE was the second largest export destination of India with an amount of over US$ 33 billion for the year 2014-15. For UAE, India was the largest trading partner for the year 2013 with an amount of over US$ 36 billion (non-oil trade). India's major export items to UAE include petroleum products; precious metals, stones, gems and jewellery; minerals; food items (cereals, sugar, fruits & vegetables, tea, meat, and seafood); textiles (garments, apparel, synthetic fibre, cotton, yarn); engineering & machinery products and chemicals. India’s major import items from UAE include petroleum and petroleum products; precious metals, stones, gems & jewellery; minerals; chemicals; wood & wood products. With respect to oil trade, UAE was the sixth largest import source of crude oil for India in 2014-15.

With respect to bilateral investments, total FDI from UAE to India is estimated to be US$3.01billion (Jan. 2015) and ranked as tenth biggest investor in India. At the first meeting of India-UAE High Level Task Force on Investment (HLTFI) held on February 18, 2013 in Abu Dhabi, Abu Dhabi Investment Authority (ADIA) announced its plans of investing US$ 2 billion in Indian Infrastructure sector. The second meeting of HLTFI was held in

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March 2014. Also several joint working groups were set up to address issues of mutual interest in sectors including infrastructure, energy & investment.

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India – EU trade

India has embarked on a process of economic reform and progressive integration with the global economy that aims to put it on a path of rapid and sustained growth. However, India's trade regime and regulatory environment remains comparatively restrictive India still maintains substantial tariff and non-tariff barriers that hinder trade with the EU. In addition to tariff barriers to imports, India also imposes a number of non-tariff barriers in the form of quantitative restrictions, import licensing, mandatory testing and certification for a large number of products, as well as complicated and lengthy customs procedures.

With its combination of rapid growth, complementary trade baskets and relatively high market protection, India is an obvious partner for a free trade agreement (FTA) for the EU.

The parameters for an ambitious FTA were set out in the report of the EU-India High Level Trade Group in October 2006, which was tasked with assessing the viability of an FTA between the EU and India. Other studies have reinforced the economic potential of an FTA between the EU and India, notably a sustainability impact assessment was carried out by the EU.

Negotiations for a comprehensive FTA were started in June 2007 and are ongoing. This would be one of the most significant trade agreements, touching the lives of 1.7 billion people.

India enjoys trade preferences with the EU under the Generalised Scheme of Preferences.

To assist India in its efforts to better integrate into the world economy – with a view to further enhancing bilateral trade and investment ties – the EU is providing trade related technical assistance to India. This is part of the EU's assistance programmes with India.

Trade picture

India is an important trade partner for the EU and an emerging global economic power. The country combines a sizable and growing market of more than 1 billion people.

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The value of EU-India trade grew from €28.6 billion in 2003 to €72.5 billion in 2014.

EU investment stock in India is €34.7 billion in 2013. Trade in commercial services quadrupled in the past decade,

increasing from €5.2billion in 2002 to €23.7 billion in 2013.

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India –China Trade

Indian Exports to China is an integral part of the bilateral trade relations between the two Asian countries, India and china. Indian Exports to China focus on mainly primary products. In 1984, India and China signed a trade agreement, providing for Most Favored Nation treatment, to foster greater cooperation between each other. Moreover, the year 2006 was celebrated as Friendship Year between India and China.

Items of Indian Exports to China

The principal items of Indian exports to China comprise of ores, slag and ash, iron and steel, plastics, organic chemicals, and cotton. In order to increase the extent of exporting Indian goods to China, however, there should be a special emphasis on investments and trade in services and knowledge-based sectors.

At present, iron ore constitutes about 53% of the total Indian exports to China. The other items that have potentials are marine products, oil seeds, salt, inorganic chemicals, plastic, rubber, optical and medical equipment, and dairy products. Not only this, great potential exists in areas like biotechnology, IT and ITES, health, education, tourism, and the financial sector - all of which will contribute to the services and knowledge based sectors.

The need is to shift the focus from primary exports to the export of diverse range of high value added products, including -

Auto engine components and automobiles Organic and inorganic products Pharmaceuticals Metal and metal based products like alloy steel bars and rods Agricultural products like grains, tobacco and oilseeds Engineering goods like diesel engines and compressors Marine foods Fresh and processed fruits and vegetables Medical and optical diagnostic equipment and laboratory equipment Consumer durables Textile yarns

Such diversification of Indian exports to China clearly indicates that there exists a steady demand for these products in the Chinese.

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Chinese exports to India focuses on resource based exports as well as the exports of manufactured products. China has emerged as a global manufacturing center and India as the most lucrative market in the world.

In 2004, the Chinese exports to India stood at US$ 5926.67 million. However, it industrialists in India were not in favor of China being given free access to the domestic markets. But bilateral trade relations between India and China have increased over the years, reaching US$18.7 billion in 2005 from US$ 4.8 billion in 2002. However, the bilateral trade is to be increased further to US$ 20 billion by 2008 and further to US$30 billion by 2010.

Items of Chinese Exports to India

The main items to be exported from China to India are electrical machinery and equipment, organic chemicals, nuclear reactors, boilers, machinery, silk, mineral fuels, and oils. Value added items also dominate Chinese exports to India, like machinery, specially electrical machinery, which forms about 36% of Chinese exports to India.

Recent developments regarding Chinese Exports to India

In the beginning, Chinese firms were keen on exporting cheap electronic items, garments, and toys to the Indian markets. But recently, Chinese exporters have been focusing on the cement market. Two Chinese cement companies, Yingde Dragon Mountain Cement company Ltd. and Longkou Fanlin Cement Company have been authorized to sell cement in Indian market. The reasons behind the sudden interest of the Chinese cement companies in penetrating the Indian market are that China is the world's largest cement producer and that the per capita cement consumption is relatively low in India - around 150 kilogram per annum, less than one-third of China's per capita consumption, as in 2006. An Ahmadabad-based textile company is acting as the local agent of the Chinese firms in India.

The prospects for Chinese exports to India have been enhanced from 2006, with the opening of the prospective Indo China border trade. Trade has been initiated between Tibet, an autonomous region of China, and India through Nathu La Pass, reopened after 44 years. From then onwards, nearly 15 items are being exported from China to India.

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CHAPTER 3

CONCLUSION

The global trade landscape has changed over the past few decades. This has lead to increased interconnectedness and strengthened trade spillover channels.

The relative importance has changed from large advanced economies such as japan and the United Kingdom to EMEs such China and India. Importantly, china is now on par with the United States ranking first in systemic importance not only in terms of size but also in terms of significant bilateral trade relations. This has important implications on trade spillovers as the sources of demand shift from advanced countries to EMEs.

India's exports grew by 3.98 per cent to $312.35 billion in FY 2013-14 while imports fell by 8.11 per cent during the period. Imports declined to $450.94 billion, narrowing the trade deficit to $138.59 billion in the last fiscal. In FY 2012-13, trade deficit stood at $190.33 billion. However, in March exports contracted by 3.15 per cent to $29.57 billion and imports fell by 2.11 per cent to $40 billion as compared to the same period last year. Trade deficit during the month was at $10.5 billion as against $10.4 billion in March 2013.In FY 2012-13, the country's merchandise exports had aggregated at $300.4 billion. The overall shipments in 2013-14 fell short of the target of $325 billion fixed by the government for the period.

Initially, a trade deficit is not a bad thing. It raises the standard of living of a country's residents, since they now have access to a wider variety of goods and services for a more competitive price. It can reduce the threat of inflation, since the products are priced lower. A trade deficit can also indicate that the country's residents are feeling confident, and wealthy, enough to buy more than the country produces.

Over time, however, a trade deficit can cause jobs outsourcing. That's because, as a country imports certain goods rather than buying domestically, the local companies start to go out of business. The domestic business itself will lose the expertise needed to produce that good competitively. As a result, fewer jobs in that industry are created in the home country. Instead, the foreign companies hire new workers to keep up with the demand for their exports.

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For this reason, many leaders propose reducing the trade deficit to increase jobs. They often blame trade agreements for causing deficits. A great example is the world's largest agreement, the North American Free Trade Agreement, or NAFTA. A response to trade deficits is often to raise import tariffs, or other forms of trade protectionism. However, these rarely work. That's because the industry is usually already moribund, and the skills lost, by the time these policies are suggested. For more, see Pros and Cons of Trade Agreements.

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BIBILIOGRAPHY

Economics of Global Trade and Finance – Manan Prakshan & Sheth Publication

http://www.ecb.europa.eu

http://commerce.nic.in

http://www.yourarticlelibrary.com/foreign-trade/5-major-current-trends-in-foreign-trade

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