International Journal of Foreign Trade and International Business 2020; 2(2): 08-10

E-ISSN: 2663-3159
P-ISSN: 2663-3140
Impact Factor: RJIF 5.22 Growth and structure of India’s foreign trade since
IJFTIB 2020; 2(2): 08-10
Received: 25-04-2020 the post reform period
Accepted: 12-06-2020

Damitha Amarasena Damitha Amarasena

Faculty of Management
Studies and Commerce,
University of Jaffna, Sri Abstract
Lanka In 1991, the Gulf War led India to a recession in the balance of payments. The people started to lose
confidence in current policy. Together these trends undermined investor confidence in the Indian
economy, which culminated in a fall in the country's credit ranking on the international capital market.
Trade reforms, which are an integral part of the broader structural reform process, were essential at the
moment. In an attempt to improve the efficiency and competitiveness of Indian industries 'New
Economic Policy' was introduced to open the economy for rest of the world. The present paper has
been compiled with a view to analyze the change and progress in exports and imports in post economic
reform period from 1990-91 to 1917-18.

Keywords: foreign trade, WTO, exports, imports

Introduction
Foreign trade has been one of the most important determinant for calculating economic
growth and development of any country. The foreign trade consist of exchange of goods and
services from one country to another. For an economy like India it is an effective tool for
employment generation and poverty alleviation [1]. The policies introduced by the
Government Of India in recent times like make in India, startup India, contribution of
MSME etc. makes the concept very clear that if India wants to grow they will have to boost
their exports and imports. The country lacks in tools and equipments which can be bought
from outside world and can be a big support for the manufacturing firms in the country.
In 1991 the government introduced some changes in its economic policy of the country in
terms of trade, foreign investment, tariffs and excise under the formation of “New Economic
Reforms”. The main reason behind these reforms has been liberalization, privatization, and
export promotion. India’s foreign trade has changed significantly in post reforms period. It is
the manufacturing sector that has played a major role in increasing the GDP of our economy
and contributing towards enhancing the trade volume [2].

Review of literature
Adam Smith and David Ricardo argued in favor of international trade as an engine of
economic growth. Irrespective of whether it is exports or imports but for the development of
any economy, the country needs to strengthen both. Export sector is considered as a catalyst
agent for sustaining and accelerating process of economic growth (Aggarwal, 1982) [6].
Countries commit home capital to exports as, by foreign trade, they can get more goods and
services than they can from the same resources dedicated to direct domestic development.
Exports continue to benefit from the comparative edge by promoting specialization; use the
maximum capacity of the plant where domestic production is less than full capacity
Production; benefiting from higher economies of scale due to the wide market; rising
consumer demand; growing investment levels and technical changes; allowing the
importation of critical raw materials and capital goods, resulting in industrialization and thus
rapid economic growth in developing economies. Kumar and Dhawan (1991) [1] found
negative relationship between exchange rate volatility and foreign trade of India. Depending
Correspondence upon marginal propensity to consume and propensity to import, exports have multiplier
Damitha Amarasena effect on Gross National Income. Trade reforms formed an integral part of the overall
Faculty of Management structural reform process. The multilateral aspect of India's trade policy is in reference to
Studies and Commerce, India's commitments to the World Trade Organization (WTO) with regard to trade in goods
University of Jaffna, Sri
Lanka
and services, Trade Related Investment Measures (TRIMs), Trade Related Intellectual

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International Journal of Foreign Trade and International Business

Property Rights (TRIPs). Indian Economy Statistics Handbook 2013, released by the
Prusa and Skeath (2002) [3] also pointed out that anti- Indian Reserve Bank [3]. The study is based on secondary
dumping actions in India may be retaliatory. It may have its sources of data available from various publications at the
negative effects in the long run. Neena Malhotra (2008) [4], national level brought out by the concerned organizations,
says that the ratio of exports to imports, have improved over and consultations with export promotion councils, and other
a period of time, and the fear that liberalization will organizations and industrial units. The time period
adversely affect the trade of an economy, doesn't seem to be examined is from 1990-91 to 2017-18.
valid. No the other hand, enormous export opportunities
have opened to export the commodities and surplus to the Table 1: Trend in Exports of India from 1990-91 to 201
outside world and the citizens are taking advantage of these Percentage Growth
opportunities. The structure of imports shows that major Year Primary Manufactured Petroleum
categories of import are of yarn fabric, coal, news print, iron Others Total
Products Goods Products
& steel which will promote and aid in manufacturing 1990-91 ----- ------- -------- -------- -------
concern. This will even demand a change in the cropping 1991-92 10.21 24.97 -4.21 -32.03 35.27
pattern in agriculture and manufacturing in a big way to 1992-93 2.96 11.62 23.95 16.41 24.18
reduce import dependence. Government should provide 1993-94 24.51 20.37 -17.72 44.00 27.54
appropriate facilities in the form of transportation and 1994-95 -3.43 9.99 -4.46 0.30 18.53
storage, infrastructure, packaging and branding, and also 1995-96 35.40 14.49 6.27 11.62 28.64
quality testing centres for matching our products with 1996-97 7.43 5.71 4.51 -0.89 11.72
international quality standards. Thus, domestic marketing 1997-98 -8.03 8.62 -28.09 21.43 9.50
reforms must be there with liberalisation to explore the 1998-99 -5.56 3.92 -73.46 2.34 7.42
external market. 1999-00 -5.86 15.44 -56.41 32.75 14.17
2000-01 13.82 15.76 47.08 130.04 27.58
Jeevan Kumar Khundrakpam (2009) [5] in his paper
2001-02 2.77 -0.21 8.28 14.19 1.91
investigated the exchange rate domestic prices in India
2002-03 18.39 19.51 25.98 -15.91 22.98
during the post-economic reform period, and found fairly 2003-04 4.88 8.39 26.73 44.31 14.98
robust evidence of a rise in until recent years. This is in 2004-05 29.16 13.50 81.18 11.31 27.94
contrast to a decline observed in several countries since the 2005-06 10.99 12.62 57.45 4.91 21.60
1990s. When a large domestic economy liberalized gets 2006-07 12.88 12.36 54.12 17.68 25.28
increasingly integrated with the global economy, the 2007-08 13.86 3.09 27.43 9.41 14.71
influence of the external sector, including the exchange rate 2008-09 -6.75 27.62 -0.36 96.60 28.19
movement, could become substantial during the transition. 2009-10 -5.69 -4.24 1.54 12.12 0.57
By removing or reducing various types of controls within 2010-11 6.93 22.73 38.15 89.95 36.47
the economy it could also affect the way the external sector 2011-12 35.91 13.96 23.91 -2.44 27.04
influences the inflationary process in the economy. 2012-13 3.73 6.76 13.38 -41.29 11.55
A. P. Singh, (2014) has observed the trend and composition Source: Computed from the Secondary Data obtained from Hand
of foreign trade since 1991 and also examined the impact of Book of Statistics on Indian Economy – 2013-14
trade on the economic growth of India. The study reveals
that since post liberalization exports and imports both have Table 1 reveals the trend in growth of exports in India
increased but the growth rate of imports is more than the during the period from 1990-91 to 2012-13 India’s total
growth rate of exports. It is also found that exports is mainly exports have increased from Rs. 825.16 Cr. in 1991 to Rs.
from the manufactured sector and petroleum and crude Cr. in [Link], the increase is not uniform during
products contribute major portion of imports. The study also the years of study. Initially the support was from the
describes that imports have a negative impact on economic domestic industrial policy due to which India’s export
growth as it increases the burden of debts whereas exports performance was remarkable [4, 5]. After that it increased but
and economic reforms have positive influence on economic at a reducing rate till [Link] was a steep hike in
growth of an economy as it results into surplus. exports in the year 1999-2000 due to favorable terms of
S. N. Mehta, (2015) has examined the trend of India’s trade for non-oil exporting countries and improved profit
exports, imports and total trade during the pre and post margin from domestic market. But the environment did not
economic reforms. This study also analyzed the impact of last for long when in 2001-02 the growth rate of export
economic reforms on exports, imports and total trade. This decline to 1.91%. Again in 2002-03 there was a robust
study suggests that in spite of high growth rate of imports in growth in exports of 22.98% Year 2009-10 showed the least
comparison to growth rate of exports, there was positive growth of 0.57% due to the negative growth in exports of
impact on the economy of India as we have moved towards primary products and as well as manufacturing products.
promotion of technology, infrastructure, education etc. The study also reveals that the government does not sit
silently and because of its regress efforts the results were
Objective of the study seen in the next year itself when the growth rate was
The present paper has the following objective of the study maximum in the year 2010-11 [6, 7].
1. To study the growth of exports and imports in India The India’s exports for oil has decreased from 3832.48 Cr.
during the post reform period. In 2013-14 to 2413.80 Billion. In 2017-18 whereas the non-
2. To analyze the changes in the composition of India’s oil products exports have increased from 15217.63 in 2013-
exports & imports during the post reform period. 14 to 1714.61 Billion. In 2017-18 therefore, there is an
increase in total exports from Rs. 19050.11 in 2013 to Rs
Research Methodology and Sources of Data 19555.41 Billion. In 2017-18 in oil and non-oil exports
Time series data for this analysis is collected from the (Source: Directorate general of common commercial

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International Journal of Foreign Trade and International Business

intelligence and statistics). Nagarjuna University, Guntur 1993.

The exports of principle commodities like Tea, Coffee, 3. Prusa TJ, Skeath. The Economic and Strategic Motives
Rice, Cereals, Tobacco, Spices, Oil Seeds, Fruits, Iron Ore, of Anti-Dumping Filings, Weltwirtschaftliches Archiv
Leather, Drugs, Electronic Goods, and Textile etc. have also 2002,138.
shown an increase from Rs. 19050.1 billion in 2013 to 4. Neena Malhotra. “Growth, Structure and Instability of
19555.4 Billion in 2017-18. Agricultural Exports and Imports of India,” Anvesak
2008;38:1.
Table 2: Trend in Imports of India from 1990-91 to 2012-13 5. Jeevan Kumar Khundrakpam. “Have Economic
Percentage Growth of Imports Reforms Affected Exchange Rate Pass-Through to
YEAR
Bulk Imports Non Bulk Imports Total Prices in India? “Economic and Political Weekly
1990-91 ------ --------- --------- 2009,71-79.
1991-92 -4.65 -0.92 -2.60 6. Aggarwal MR. Export Earning Instability and
1992-93 21.60 21.70 21.66 Economic Development in Less Developed Countries:
1993-94 -7.01 14.25 4.88 A Statistical Verification, Indian Economic Journal
1994-95 77.03 11.36 37.03 1982;29(3):60-70.
1995-96 -21.01 25.93 2.22 7. Aksoy MT, Tang H. “Imports, Exports and Industrial
1996-97 12.57 0.26 5.06 Performance in India: 1970-88”, Policy Research
1997-98 -11.26 15.13 4.09 Working Paper No. 969, August, World Bank 1992,1-
1998-99 -6.29 14.43 7.05 41.
1999-00 48.35 2.87 17.06 8. Anoruo Emanuel, Yusuf A. “Openness and Economic
2000-01 8.05 0.95 3.76 Growth: Evidence from Selected ASEAN Countries”,
2001-02 -1.50 6.06 2.95 Indian Economic Journal 2000;47(3):110-117.
2002-03 17.31 16.55 16.85
2003-04 10.95 20.05 16.45
2004-05 33.12 31.31 31.99
2005-06 36.20 20.48 26.46
2006-07 32.75 10.48 19.60
2007-08 12.06 14.88 13.60
2008-09 27.46 23.34 25.19
2009-10 -10.94 -2.69 -6.46
2010-11 6.70 18.63 13.44
2011-12 38.34 22.08 28.73
2012-13 12.30 0.44 5.65
Source: Computed from the Secondary Data obtained from Hand
Book of Statistics on Indian Economy – 2013-14

Table 3 shows the trend in the growth of imports in India

during the period from 1991 to 2013-14. India’s total
imports have increased from Rs. 1094.73 Billion in 1991 to
---- Billion in [Link] increase was not uniform and
has faced certain ups and downs in the entire years of study.
Imports are generally a matter of concern for any
government and in Indian trade they have been negative
only in 2 years. I.e. 1991-92 and 2009-10 the table shows
that there has always been an upward trends in India’s
import [8].
The oil imports have decreased from Rs.9978.85 Cr. In
2013-14 to 7003.20 Cr. In 2017-18. The reverse can be seen
in non-oil producds which have increased from Rs.17175.48
Cr. In 2013-14 to 23006.95 Cr. In 2017-18. Therefore the
overall increase in imports is from rs 27154.34 Cr. In 2013
to Rs. 30010.16 in [Link] increase in imports futher
increase the trade deficits by Rs.2350.52 Cr. (Source:
Directorate general of common commercial intelligence and
statistics) Imports of principle commodities like pulses,
cotton raw and waste, yarn fabric, coal, news print, iron &
steel etc. have also increased from Rs. 27154.3 billion to
30010.2 billion in 2017-18.

References
1. Kumar R, Dhawan R. “Exchange Rate Volatility and
Pakistan’s Exports to the Developed World World
Development 1974-75;19:1225-1240.
2. Suravinda Ch. India’s Trade Relations with Major
Countries of Arab League, Ph.D thesis submitted to

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