3.9. India’s Foreign Trade

After moderating in the two years following the global economic crisis, world trade in both goods and services in the financial year 2013-14 reached and surpassed pre-crisis levels in 2011. However, the deceleration in world growth and trade in 2012 and forecast of only a gradual upturn in global growth by international institutions portend a weak and slow recovery for world trade.

India's merchandise trade increased exponentially in the 2000s decade from US$ 95.1 billion in 2000-1 to US$ 620.9 billion in 2010-11 and further to US$ 793.8 billion in 2011-12. India's share in

Commodity Composition of India’s Imports

global exports and imports also increased from 0.7 per cent and 0.8 per cent respectively in 2000 to 1.7 per cent and 2.5 per cent in 2011 as per the WTO. Bolstered by the measures taken by the government to help exports in the aftermath of the world recession of 2008 and the low base effect, India's export growth in 2010-11 reached an all time high since Independence of

40.5 per cent. Though it decelerated in 2011-12 to 21.3 per cent, it was still above 20 per cent and higher than the compound annual growth rate (CAGR) of 20.3 per cent for the period 2004- 5 to 2011-12.

India faced serious food shortage during 1950s and 1960s. The major item of import at that time was food grain, capital goods, machinery and equipments. The balance of payment was adverse as imports were more than export in spite of all the efforts of import substitution. After 1970s, food grain import was discontinued due to the success of green revolution but the energy crisis of 1973 pushed the prices of petroleum, and import budget was also pushed up. Food grain import was replaced by fertilisers and petroleum. Machine and equipment, special steel, edible oil and chemicals largely make the import basket.

The export-import ratio highlights the direction of trade between the two countries. Most of the countries want to maintain this ratio greater than one in order to boost their exports and reduce dependency on imports. A look at the trade share and export-import ratio of India with its major trading partners is as follows: