INTERNATIONAL

TRADE IN
INDIA
Abu Bashar
International trade is exchange
of capital, goods, and services
across international borders or
territories.
In most countries, it represents
a significant share of gross
domestic product (GDP). While
international trade has been
present throughout much of
history (see Silk Road, Amber
Road), its economic, social, and
political importance has been
on the rise in recent centuries.
The trade rote between
Northern and Southern
Europe were defined by
the amber trade.
Importance of International Trade
Without international trade, nations would be limited to the
goods and services produced within their own borders.
International trade is the backbone of our modern,
commercial world, as producers in various nations try to profit
from an expanded market, rather than be limited to selling
within their own borders.
There are many reasons that trade across national borders
occurs, including lower production costs in one region versus
another, specialized industries, lack or surplus of natural
resources and consumer tastes.
Buyer insolvency (purchaser cannot pay);
Non-acceptance (buyer rejects goods as different from the
agreed upon specifications);
Credit risk (allowing the buyer to take possession of goods
prior to payment);
Regulatory risk (e.g., a change in rules that prevents the
transaction);
Intervention (governmental action to prevent a transaction
being completed);
Political risk (change in leadership interfering with
transactions or prices); and
War and other uncontrollable events.
In addition, international trade also faces the risk of
unfavorable exchange rate movements

Trade and commerce have been the
backbone of the Indian economy right from
ancient times.
Textiles and spices were the first products to be
exported by India. The Indian trade scenario
evolved gradually after the countrys
independence in 1947.
From the 1950s to the late 1980s, the country
followed socialist policies, resulting in
protectionism and heavy regulations on
foreign companies conducting trade with
India.
Indias major imports comprise of crude oil machinery, military
products, fertilizers, chemicals, gems, antiques and artworks.
Imported goods are divided into the following categories:
Freely importable items: For these items, no import license is
required. They can be freely imported by an individual or a
firm.
Canalized items: These items can only be imported by public
sector firms. For example petroleum products fall under this
category.
Prohibited items: Items such as unprocessed ivory, animal
rennet and tallow fat cannot be exported to India.
Indian exports comprise mainly of engineering and textile
products, precious stones, petroleum products, jewelry, sugar,
steel chemicals, zinc and leather products. Most of the exported
goods are exempted from export duties.
India also exports services to several countries, primarily to the
US. In fact, India is among the worlds largest exporters of
services related to information and communication technology
(ICT). It is also the key destination for business process
outsourcing (BPO).
EXIM BANK
Set up by an act of parliament in
September 1981
Wholly owned by Government of India
Commenced operations in march, 1982
Established for providing financial assistance
to exporters and importers, and for functioning
as the principal financial institution for
coordinating the working of institutions
engaged in financing export and import of goods
and services with a view to promoting the
countrys international trade