When we talk about international trade relations, it means the exchange of goods and services over the medium of money. When this trading system is being done internationally, this is called foreign trade. International trade deals with exports and imports. Both individual and government can be involved in foreign trade. Import is purchasing the goods and services from outside the country and when we sale the goods and services to another country is known as export. This phenomenon of international trade is not new to India; it has been followed since BC. A document called ‘The Periplus of the Erythraen Sea” had written by an anonymous sailor in about AD100 talked about the trading system between the countries including India. Also, since 1948 the Europeans are doing the trade with India. However, FDI or other foreign investments were restricted as from 1947-1991 Indian economy became a closed economy as high taxes were levied on imports. But after liberalization, foreign trade improved.
Direction and Composition of International Trade Relations
A country needs direction of foreign trade and composition of foreign trade to run a foreign Trade. In direction of trade, we are dealing with our trading partners like customers and suppliers and our relations are to be seen. For example, when we see the relations between India and China, it has been mentioned in Direction of Trade. Before independence, India’s foreign trade was somehow restricted to U.K, U.S.A, and commonwealth countries as we were under British era. But after independence, India expanded its scope of foreign trade with many organizations, under which four major organizations are:
- Organization of Petroleum exporting countries: DPEC takes in countries, Iran, Kuwait, Saudi Arabia, United Arab Emirates and Indonesia.
- Organization of Development Countries and Economic Co-operation: Including West and Japan, this organization developed the countries.
- Developing Countries: Asian countries but excluding Japan and parts of Africa.
- Eastern Europe: Countries like former USSR, Poland, Romania, and Bulgaria.
Presently, U.S.A is India’s largest trading partner in foreign trade which has been followed by China and UAE. When we look at our India’s export share to other countries, we see that there is U.S.A, UAE and then china. And in imports there is first China, U.S.A, and then U.A.E.
In composition of trade which things or raw materials are to be traded are mentioned in Composition of Trade. What goods are exported and imported. In general, countries export and import of different commodities to other countries.
Major Importing commodities
- Crude petroleum products
- Capital goods
- Organic and inorganic chemicals
Countries to which India imports the most
- China PRP
- USA
- UAE
- Saudi Arabia
- Iraq
- Switzerland
- Hong kong
- Korea RP
- Singapore
- Indonesia
Major exporting commodities
- Agriculture and its allied products
- Gems and jewellery
- Finished petroleum products
Countries to which India exports the most
- USA
- UAE
- China PRP
- Hong kong
- Singapore
- UK
- Netherland
- Germany
- Bangladesh PR
- Nepal
Who regulate export trade in India?
Director General of Foreign Trade with its regional offices and under the Ministry of commerce and Industry, Government of India, they all regulate the export trade in India. DGFT announce the policies and procedures necessary to be followed for exports from time to time.
International Trade Relations of India
India has friendly trade relations with almost every nation. After 1990’s India became successful in maintaining peaceful relations with many other countries who helped in doing the trade internationally. The strong allies of India are USA, UAE, UK and many others.
India’s mostly export goes to United States. United States is the largest investment partner of India. US investor community deals with IT, telecom Industry, Infrastructure, biotechnology, etc. Indian economy has the liberal and stable views because of which America’s interest in India is growing wherein other nations are facing chaos.
UK is another strong ally of India in which small enterprises and private companies of India has a vital role in UK economy. Also, UK has shown its interest in associating with India to develop smart cities in Pune, Indore and Amravati.
Canada and India are holding bilateral trade talks on Comprehensive Economic Partnership Agreement, because of which there will be an improvement in trade relations. Therefore, India and Canada maintains to have a healthy trade relation.
If we talk about Australia, India was one of the first trading partners of Australia during the time of East India Company. Australia has good export of education services as many Indian students are studying in Australia. However, India and Australia have failed to reach a free trade agreement.
Conclusion
The magnitude of trade and commerce from one country to another actually determines the international trade relations. Countries have to be contingent on other countries also because it is not possible to have all the resources in one country. Every country is somehow dependent upon other countries. India’s merchandise exports are less than its imports and the export services of India is more than Import services. However, it is very important to maintain healthy trade relationships with other countries.
Know More: Foreign Exchange Management Act and Non-Resident Indians