India's Trade

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India's merchandise trade has a long and rich history, dating back to the Indus Valley Civilization.

In ancient times, India was a major exporter of spices, textiles, and precious stones. Trade with other civilizations, such as Egypt, Mesopotamia, and China, flourished along the Silk Road and other trade routes.

During the Mughal era, India's trade with Europe expanded significantly. The British East India Company established a trading post in Surat in 1612, and by the 18th century, the company had become India's largest exporter.

After independence in 1947, India's trade policy was focused on import substitution industrialization. This meant that the government restricted imports of certain goods in order to encourage the development of domestic industries.

Import substitution industrialization was successful in some areas, such as steel and pharmaceuticals, but it also led to higher prices and shortages of consumer goods.

In the 1990s, India began to liberalize its economy, and this included opening up its trade sector. The government reduced tariffs, removed import quotas, and made it easier for foreign companies to invest in India.

Trade liberalization has helped to boost India's exports, and India is now a major exporter of goods such as software, pharmaceuticals, and textiles.

In FY2023, India's merchandise trade landscape was characterized by resilience amidst global economic uncertainties, and saw a record numbers in its exports and imports!

Export Performance

India's merchandise exports in FY2023 touched USD 448 billion, registering a growth of 6.16% over FY2022.

This growth was driven by strong performances in sectors like pharmaceuticals, engineering goods, and chemicals.

However, non-oil exports declined marginally by 0.5%, reflecting the impact of global economic slowdown and moderation in commodity prices.

Import Surge

Merchandise imports in FY2023 witnessed a significant jump of 16.8%, reaching USD 716 billion.

This surge was primarily attributed to rising imports of petroleum, coal, and transport equipment.

The global energy crisis and supply chain bottlenecks played a major role in driving up import costs.

Trade Deficit

The widening trade deficit in FY2023 stood at USD 268 billion, a substantial increase from USD 191 billion in FY2022.

This expansion of the trade deficit highlights the need for further diversification of India's export basket and reduction of import dependency.

Trade Partners Landscape

India's trade landscape is characterized by a diverse network of partners, with significant regional variations.

The United States remained India's top trading partner in FY2023, with bilateral trade valued at USD 130 billion. China was India's second-largest trading partner, with trade worth USD 115 billion.

Other key trading partners included the United Arab Emirates, Germany, and Singapore.

India's trade with Southeast Asia witnessed a notable growth in FY2023, with exports to the region increasing by 13%.

This growth was driven by India's Free Trade Agreements (FTAs) with ASEAN countries and its growing economic engagement with the region.

The Road Ahead

India's merchandise trade faces several challenges, including global economic uncertainties, supply chain disruptions, and rising protectionism.

However, the country also holds significant opportunities, such as its growing domestic market, expanding manufacturing sector, and increasing integration into global value chains.

The Indian government has implemented various policy initiatives to boost merchandise trade, including the production-linked incentive (PLI) scheme, the National Single Window System, and the expansion of FTAs.

These measures aim to enhance India's export competitiveness and attract foreign investment.