Indian Economy

India’s Foreign Trade

Composition of Foreign Trade

Composition of trade refers to items of exports and imports. After independence, there has been as substantial change in the composition of India’s international trade. Following observations highlight the principal changes with regard to export and import items of India’s international trade:

1. Decline in Percentage Share of Agriculture Exports: There has been a significant decline in percentage share of agriculture items in total exports. It happened owing to the facts:
   (i) that India started using its farm products as raw material for its domestic industry, and
   (ii) that a substantial rise in India’s population has raised domestic requirement of farm products.

2. Decline in Percentage Share of Conventional Items: Conventional items of India’s exports include jute, tea, food grains and minerals. These items constituted the bulk of India’s exports at the time of independence. But with planned development programmes in place, domestic demand for the conventional items has tended to rise. Accordingly, their share in total exports has tended to fall.

3. Increase in Percentage Share of Manufactured Goods: Percentage share of manufactured goods in total exports has tended to rise. This points to the fact that planned development programmes (launched after independence have started yielding results.

These changes in the composition of India’s foreign trade suggest that Indian economy is no longer a static and backward economy, surviving on the performance and prosperity of primary sector. It is showing significant signs of structural transformation. There has been a perceptible transformation from the predominance of primary sector to that of secondary and tertiary sectors of the economy in the context of composition of exports.

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