Chapter 8 — International Trade

India's external trade was worth Rs. 1,214 crore in 1950-51. By 2020-21 it had risen to Rs. 77,19,796 crore, driven by manufacturing momentum, liberal government policies, and diversification of markets.

India's contribution in world trade is as low as one per cent of the total volume, yet the chapter notes it plays a significant role in the world economy.

India's trade balance has been consistently unfavourable — imports have always exceeded exports. The trade deficit widened from Rs. -1,25,725 crore in 2004-05 to Rs. -14,25,753 crore in 2021-22.

In 2021-22, manufactured goods led at 67.8%, followed by crude and petroleum products at 16.4%, agriculture and allied products at 11.9%, ores and minerals at 2.0%, and other commodities at 1.9%.

After the Green Revolution's success, foodgrain imports were discontinued post-1970s. The energy crisis of 1973 pushed up petroleum prices, so petroleum and fertilisers replaced foodgrains as the dominant imports. Machines, equipment, special steel, edible oil and chemicals also became major import items.

Fuel (Coal, Petroleum, Oil and Lubricants) is the largest import category at 31.6% in 2021-22. Petroleum is imported both as a fuel and as an industrial raw material, reflecting rising industrialisation and better living standards.

India has 12 major ports and 200 minor or intermediate ports. The central government decides policy and plays a regulatory role for major ports, while state governments regulate the minor ports. Major ports handle a larger share of total traffic.

Mumbai is a natural harbour and the biggest port in India. It is 20 km long and 6-10 km wide with 54 berths and has the country's largest oil terminal. Its hinterland covers M.P., Maharashtra, Gujarat, U.P. and parts of Rajasthan.

Jawaharlal Nehru Port at Nhava Sheva is the largest container port in India. It was developed as a satellite port to relieve the pressure at Mumbai port.

At partition, Karachi port went to Pakistan and Chittagong port went to erstwhile East Pakistan (now Bangladesh). To compensate, new ports were developed — Kandla in the west and Diamond Harbour near Kolkata on the river Hugli in the east.

Paradwip Port is situated in the Mahanadi delta about 100 km from Cuttack. It has the deepest harbour, specially suited to handle very large vessels, and was developed mainly to handle large-scale export of iron-ore. Its hinterland includes Odisha, Chhattisgarh and Jharkhand.

Visakhapatnam is a land-locked harbour, connected to the sea by a channel cut through solid rock and sand. An outer harbour handles iron-ore, petroleum and general cargo. Andhra Pradesh and Telangana form its main hinterland.

Air transport is used for high-value or perishable goods over long distances because it takes the least time. However, it is very costly and unsuitable for heavy and bulky commodities, which limits its share in international trade compared to sea routes.

India has adopted import liberalisation, reduction in import duties, delicensing, and a change from process to product patents, aiming to double its share in international trade within five years.

The capacity of Indian ports increased from 20 million tonnes of cargo handling in 1951 to more than 837 million tonnes in 2016. Previously developed and modernised by government agencies, ports have since invited private entrepreneurs to bring them to par with international standards.

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