Indian Economics - FOREIGN TRADE IN INDIA

Overview

• In 1950, India’s share in total world trade was 1.78 %. By 2002 this had dropped to 0.8 %
• India has a total foreign trade of around USD 489 billion. Of this imports accounted for USD 303 billion and exports USD 185 billion
• Based on 2008-2009 data, India’s largest trading partner is the UAE (total trade USD 48 billion)
• India exports the maximum to UAE (USD 24 billion) and imports the most from the People’s Republic of China (USD 32 billion)
• Foreign trade in India falls under the purview of the Department of Commerce under the Ministry of Commerce and Industry

Top trading partners

Rank	Country	Exports (USD billion)	Imports (USD billion)	Total trade (USD billion)
1	UAE	24.4	23.8	48.2
2	PRC	9.3	32.4	41.8
3	USA	21.1	18.5	39.7
4	Saudi Arabia	5.1	19.9	25.0
5	Germany	6.3	12.0	18.3

Special Economic Zones (SEZ)

• India was one of the first countries in Asia to recognize the effectiveness of Export Processing Zones (EPZ)
• The first Export Processing Zone (EPZ) in Asia was established in Kandla (Gujarat) in 1965
• The Special Economic Zone (SEZ) Policy was announced in 2000
• The main objectives of SEZs are
  • Generation of additional economic activity
  • Promotion of goods and services
  • Promotion of investment from domestic and foreign sources
  • Creating of employment opportunities
  • Development of infrastructure facilities
• SEZs function under the Department of Commerce (Ministry of Commerce and Industry)

S. No.	SEZ	Location	Type
1	Kandla SEZ	Gujarat	Multi product
2	SEEPZ	Mumbai	Electronics, gems and jewellery
3	Noida SEZ	Uttar Pradesh	Multi product
4	MEPZ	Chennai	Multi product
5	Cochin SEZ	Kerala	Multi product
6	Falta SEZ	West Bengal	Multi product
7	Visakhapatnam SEZ	Andhra Pradesh	Multi product

Trade Agreements

Agreement	Contracting parties	Notes
Agreement of Cooperation with Nepal to control unauthorised trade	India, Nepal	Established in 2009 The agreement aims to restrict and prevent unlawful activities relating to traffic in narcotics, foreign exchange etc
Agreement on South Asia Free Trade Area (SAFTA)	India, Pakistan, Sri Lanka, Nepal, Bhutan, Bangladesh, Maldives	Established in 2007 Afghanistan, which became SAARC member in 2007, is set to become latest SAFTA member India, Pakistan, Sri Lanka are categorised Non-Least Developed Contracting States (NLDCS) Bhutan, Bangladesh, Nepal, Maldives are Least Developed Contracting States (LDCS) NDLCS to reduce tariffs for LDCS products to 0-5 % in 3 years from contract
Asia Pacific Trade Agreement (APTA)	Bangladesh, China, India, South Korea, Sri Lanka	Established 2005
Comprehensive Economic Cooperation Agreement between the Republic of India and the Republic of Singapore	India, Singapore
India Chile Preferential Trade Agreement (PTA)	India, Chile	Signed 2005 India offers tariff preference of 10-50 % on 178 tariff lines (including meat, fish, salt, iodine, Copper, chemicals, leather, newsprint, paper, wool, wood etc) Chile offers preference of 10-100 % on 296 tariff lines (includes agricultural products, chemicals, pharmaceuticals, dyes and resins, plastic, rubber, leather, textiles, footwear, industrial products)
India Afghanistan PTA	India, Afghanistan	Afghanistan grants preferential tariff to 8 products from India including black tea, ayurvedic and Homeopathic medicine, other medicine, sugar, cement India grants preferential tariff to 38 products from Afghanistan, mainly agricultural products like dry fruits
India Bhutan Trade Agreement	India, Bhutan
India Korea CEPA	India, South Korea
India MERCOSUR PTA	India, MERCOSUR	MERCOSUR is a trading bloc in Latin America that comprises Brazil, Argentina, Uruguay and Paraguay MERCOSUR offers tariff concession on 452 products India offers tariff concession on 450 products The major products covered in Indian offer list are meat products, chemicals, dyes and pigments, raw hides and skins, leather, wool, cotton, glass, iron and steel, machinery, optical and photographic equipment The major products in MERCOSUR offer list include food, organic chemicals, pharmaceuticals, essential oils, plastics, rubber, tools and implements, machinery
India Sri Lanka FTA	India, Sri Lanka

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