Recently, PHD Research Bureau has conducted an analysis on ‘Structural Changes in India ’s Direction of Foreign Trade’ (Attached). The study was released to media on 1st March, 2014. It was very much accepted by media and covered extensively. The study analyses that India ’s direction of foreign trade has exhibited a structural shift during the last decade. Trade volume and trade share of emerging and developing economies has increased while the share of conventional trading partners has showed a declining trend.
China has become India ’s top trading partner followed by USA and UAE. India-China foreign trade has reached at US$49.5bn with 8.7% share in India ’s total trade followed by USA at US$46bn with 8.1% share and UAE at US$45.4bn with 8% share during the first nine months (April-Dec 2013) of the current financial year 2013-14. India ’s trade (exports and imports) with China was only of US$7bn in 2004 which increased to US$38bn in 2008 and to US$65bn in 2013.
However, with the revival of demand in advanced economies, USA has emerged India ’s top exports destination once again. India ’s exports to USA during the first nine months (April-Dec 2013) of the current financial year 2013-14 were at US$29.3bn followed by UAE at US$22.3bn and China at US$10.8bn. Last year, FY 2012-13, UAE was the top exports destination followed by USA and Singapore .
UK and Germany have shifted downwards, while Belgium , Italy eventually disappeared from the top ten export destinations. On the other hand, Saudi Arabia and Netherlands have entered the top ten export destinations.
These shifts amongst India’s trading partners are the result of several external factors including volatile economic environment in the advanced economies, huge imports of POL commodities, rising imports from China including electronic goods, machinery, organic chemicals, project goods and fertilizers etc. China has emerged the major source of imports for India during the recent years. In 2004, imports from china were only of US$4bn which surged to US$27bn in 2008 and to US$52bn in 2013. China ’s share in India ’s imports has also doubled within the last decade from 5% in 2004 to about 11% in 2013 and this has led China to replace USA as India ’s major import source.
Besides USA , several other countries Belgium , UK , Korea and Japan have also shown declining trend and finally disappeared from India ’s the top ten sources of imports. One significant development in India ’s import scenario is the emergence of Saudi Arab, UAE Kuwait, Qatar , Iraq and Switzerland amongst India ’s top ten import sources.
Full report attached
We welcome your suggestions and comments for the same.
Warm regards,
Dr. S P Sharma
Chief Economist