India's Foreign Trade Essay

2045 words - 8 pages

Imports OverviewCommoditywiseFive major commodities, led by petroleum crude and products, account for 66 percent of country's total imports. Other product groups include pearls, machinery, gold and silver, electronic goods and organic & inorganic chemicals. In six years (1994-95 to 2000-01) share of petroleum and other petro products in India's total imports increased by 10.84 percent; pearls by 3.97 percent; and electronic goods by 6.43 percent. Share of gold and silver in country's total imports during this period dropped by 6.79 percent at 8.24 percent and organic & inorganic chemicals by 2.55 percent at 4.91 percent.Movements have been quite varied in the four principal categories of imports (oil, non-oil bulk, export-related and other imports). While oil imports have fluctuated quite significantly, as is to be expected, and rose to relatively high levels in 1996-97 and 1999-00 to 2000-01, export related imports have shown a low but consistent rate of increase since 1994-95. Non-oil bulk imports, on the other hand, have stagnated till the mid-1990s, risen by a small amount during 1995-97 and stagnated once again thereafter.The really striking feature of the experience is the increase in "other imports" between 1991-92 and 1998-99, after which they have stagnated. We must note here, that the segment of imports most affected by liberalisation was the large category of "other imports", which includes most manufactured imports directed towards production for or direct sale in the domestic market. The share of that category, which stood at 40 per cent in 1990-91, rose to 47 per cent in 1995-96 and 52 per cent in 1998-99, before falling to 43 per cent in 2000-01One reason why the other imports category did not rise even further as a result of the liberalisation was the fact that capital goods imports which rose from $4.2 billion in 1991-92 to $10.3 billion in 1995-96, stagnated thereafter, fluctuating between $9 and $10 billion till 1998-99.After 1998-99, when industry began its slide into near-recessionary conditions, capital goods imports fell below $9 million in 1999-00 touching $8.8 billion in 2000-01. Since capital goods constitute an important component of other imports, though its share fell from 60.4 per cent in 1995-96 to 40.4 per cent in 2000-01, this trend would have substantially influenced movements in the `other imports' category.In the meanwhile, a contained deficit, combined with large inflows of remittances, deposits, debt and investment have created a situation where India's foreign exchange reserves have increased substantially to touch the record levels at which they stand at present.A combination of consecutive normal or good monsoons and a slow growth in demand that has substantially eased the availability of many food items, especially foodgrains, reducing the need for imports to meet shortfalls.To sum up, despite liberalisation and the stagnation or slow growth of India's exports since the mid-1990s, India's balance...

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