Chapter 11. International Trade

• As no country is self-sufficient, international trade is mutually beneficial. In recent years, India’s international trade has changed dramatically in terms of volume, composition, and direction. Despite fact that India’s contribution to global trade is only 1% of total volume, it plays a vital role in global economy.
• In 1950-51, India’s external trade was worth ` 1,214 crore, which rose to ` 44,29,762 crore in 2016-17. Over time, nature of India’s overseas commerce has shifted. Despite fact that overall volume of imports and exports increased, value of imports remained larger than value of exports.
• Over previous few years, there has been a growth in trade deficit. spike in crude oil prices, which is a big component of India’s import list, is to blame for increase in deficit.

Changing Patterns of Composition of India’s Exports
• In recent years, a shift in composition of commodities in India’s international commerce has been seen. Agriculture and related items have lost market share, while petroleum and crude products, as well as other commodities, have gained market share. rise in petroleum prices and expansion of India’s petroleum refining capacity have boosted percentage of petroleum products.
• Due to fierce worldwide competition, traditional items such as coffee, spices, tea, legumes, & so on have seen a significant drop in exports. Though floricultural items, fresh fruits, marine products, and sugar, among other things, have seen a surge. However, manufacturing sector accounted for 73.6% of India’s overall export value in 2016-17.
• China and other East Asian countries are India’s main competitors. Apart from that, gems & jewellery are two other items that account for a significant portion of India’s international trade.

Changing Patterns of Composition of India’s Imports
• India had severe food shortages throughout 1950s and 1960s, forcing country to import enormous amounts of food grain, capital goods, machinery, and equipments.
• Despite all efforts at import substitution, balance of payment was negative since imports exceeded exports.
• Following success of green revolution in 1970s, food grain imports were phased out. However, due to rising petroleum prices, energy crisis of 1973 substituted import of food grains with fertilisers and fuel.
• Machines and equipment, special steel, edible oil, and chemicals were among other imported items.
• Petroleum products have seen substantial growth in imports, according to Economic Survey 2011-12. This is a petrochemical industry’s basic ingredient as well as a fuel. rise reflects speed with which world is becoming more industrialised and people’s living standards are growing.
• Another cause for this increase could be periodic rise in price of petroleum on international market.
• Imports of capital goods such as non-electrical machinery, transportation equipment, metals manufacturing, and machine tools have been steadily increasing. This rise could be attributed to rising demand in both export and local industrial sectors.
• Imports of food and related products decreased as a result of a sharp drop in edible oil imports.
• Other key imports for India include pearls and semiprecious stones, gold & silver, metalliferous ores and waste, non-ferrous metals, and electronic goods.

Direction of Trade
• India trades with majority of world’s countries and main economic blocs.
• Within next five years, India wants to double its share of global trade. To attain this goal, India has begun to implement appropriate measures such as import liberalisation, duty reductions, de-licensing, and shift from process to product patents.
• India has set an example in terms of Asia’s share in global trade, and ASEAN [Association of Southeast Asian Nations] has grown. In 2000-01, it was 33.3%, and by 2011-12, it had risen to 57.3%. In contrast, Europe & America’s share of market fell from 42.5% to 30.8%. This has aided India’s survival during European and American financial crisis.
• India’s trading share with other countries has changed as country’s trade direction has evolved. India’s main trading partner in 2003-04 was United States. UAE has now surpassed United States as India’s largest commercial partner in 2010-11.
• China is second largest trading partner after United Arab Emirates, with India maintaining this position from 2008-09 to 2010-11. United States has dropped to third place.
• Oceanic and air channels account for majority of India’s overseas trade. Foreign commerce by land route is confined to Nepal, Bhutan, Bangladesh, and Pakistan, who are all neighbours.

Sea ports as Gateways of International Trade
• Due to its vast coastline and proximity to sea on three sides, India has a long history of international trade via maritime ports. Water provides a flat surface and inexpensive transportation with no impediments.
• India’s coast offers a plethora of ports. suffix ‘pattan,’ which means port, is used to name these ports. It’s noteworthy to note that India’s west coast has more sea ports than its east coast.
• Indian ports have grown as worldwide commerce gateways following arrival of European traders and British conquest of country.
• There are some parts that have a very vast area of influence and some have a limited area of influence.

Major and Minor Ports
• India currently has 12 major ports and 200 minor or intermediate ports. national government is in charge of setting policies and regulating functioning of big ports, while state government is in charge of same functions for lesser ports.
• Main ports handle a greater proportion of total traffic; for example, in 2008-09, 12 major ports handled around 71% of India’s marine traffic.
• British exploited these ports to export India’s natural resources, particularly from its interior, but this practice ended after 1947.
• India has lost two vital ports to Pakistan and Bangladesh, namely Karachi and Chittagong [erstwhile East-Pakistan]. However, India was able to rebound from this setback by establishing a number of new ports, such as Kandla in west and Diamond Harbour in Kolkata on Hugli River in east.
• These Indian ports now handle a significant amount of both domestic and foreign traffic. infrastructure for modems is present in majority of ports.
• Previously, it was assumed that government agencies would be in charge of developing and modernising Indian ports. However, it was determined that more functions were required to bring local ports up to pace with international ports. As a result, private enterprises have been asked to participate in modernization of country’s ports.
• Indian ports’ cargo handling capacity has expanded from 20 million tonnes in 1951 to over 837 billion tonnes 2016.
• Previously, it was assumed that government agencies would be in charge of developing and modernising Indian ports. However, it was determined that more functions were required to bring local ports up to pace with international ports. As a result, private enterprises have been asked to participate in modernization of country’s ports.

Important Ports
• following are some of India’s ports and their surrounding areas:

Mumbai Port
• It is India’s largest port and a natural harbour.
• This port’s location is closer to broad routes from Middle East, Mediterranean countries, North Africa, North America, and Europe, which account for majority of country’s overseas trade.
• With 54 berths and country’s largest oil terminal, this port spans a huge region with a length of 20 km and a width of 6-10 km.
• Madhya Pradesh, Maharashtra, Gujarat, Uttar Pradesh, and parts of Rajasthan are port’s key hinterlands.

Kandla Port
• This port is located near mouth of Kutch Gulf. main goals of this big port are to service demands of country’s Western and North-Western ports, as well as to relieve pressure on Mumbai’s port.
• This port is primarily intended for receipt of massive amounts of petroleum, petroleum products, and fertilisers.
• An offshore facility dubbed Vadinar has been planned to relieve pressure at Kandla port.
• hinterland of one port may overlap with hinterland of other due to a misunderstanding of boundary demarcation.

Jawaharlal Nehru Port
• Nhava Sheva is location of this satellite port. It was created in order to reduce congestion at Mumbai port. This is India’s largest container port.

Marmagao Port
• This is situated near mouth of Zuari estuary, which is a natural harbour in state of Goa. After being remodelled in 1961 to handle iron-ore exports to Japan, it acquired prominence.
• construction of Konkan railway extended its hinterland, which includes Karnataka, Goa, & Southern Maharashtra.

New Mangalore Port
• It primarily exports iron ore and iron concentrates, as well as fertilisers, petroleum products, edible oils, coffee, tea, wood pulp, yarn, granite stone, molasses, & other goods. This is in Karnataka, and it is major hinterland of this port.

Kochchi Port
• port is recognised as ‘Queen of Arabian Sea’.
• It’s a natural harbour at mouth of Vembanad Kayal.
• port of Kochchi is near Suez-Colombo route.
• Kerala, Southern-Karnataka, and South-west Tamil Nadu are served by it.

Chennai Port
• Chennai’s artificial harbour is one of eastern coast’s oldest ports. It was constructed in 1859. This is not appropriate for huge ships because of shallow water along coast. Its hinterland is made mostly of Tamil Nadu and Puducherry.

Ennore Port
• This freshly built port is located 25 kilometres north of Chennai. It was created in order to reduce amount of pressure at Chennai port.

Tuticorin Port
• This is a new port that was built to relieve strain on Chennai’s port.
• Coal, salt, food grains, edible oils, sugar, chemicals, and petroleum products are all handled at this port.

Paradip Port
• port is around 100 kilometres from Cuttack and is located in Mahanadi delta. It has advantage of having deepest harbour, making it ideal for handling very large vessels. It mostly deals with large-scale iron-ore exports. Its hinterland includes Odisha, Chhattisgarh, and Jharkhand.

Vishakhapatnam Port
• This is a landlocked harbour in Andhra Pradesh, India. It has a waterway that runs through solid rock and sand that connects it to sea.
• An outer harbour has been built to accommodate diverse commodities such as iron ore, gasoline, & general goods.
• Andhra Pradesh is port’s main hinterland.

Kolkata Port
• This port is located on Hugli river, 128 km inland from Bay of Bengal. British built this port since it was previously capital of British India.
• Because of diversion of exports to other ports such as Vishakhapatnam, Paradwip, & satellite port of Haldia, port has lost a lot of its importance. It has to deal with silt buildup in Hugli river, which obstructs river’s connection to sea.
• Uttar Pradesh, Bihar, Jharkhand, West Bengal, Sikkim, & North-Eastern states make up its hinterland. It provides port facilities to our neighbouring land-locked countries such as Nepal and Bhutan.

Haldia Port
• It’s 105 kilometres downstream of Kolkata. It was built to relieve congestion on port of Kolkata. It transports iron ore, coal, petroleum, petroleum products, and fertilisers, as well as jute, jute products, cotton, & cotton yarn.

• Air transport is very important in a country’s foreign trade.
• benefits are as follows:
(1) When transporting high-value or perishable items across vast distances, air transport is quite advantageous.
(2) Transporting freight takes less time.
• disadvantages are as follows:
(1) Air travel is extremely expensive.
(2) This is not designed for carrying of large, bulky items.
• As a result of these drawbacks, air transportation is not/less preferable for international trade than maritime methods. There are now 25 major airports in country. Ahmedabad, Amritsar, Bengaluru, Chennai, Delhi, Goa, Guwahati, Hyderabad, Kochi, Kolkata, Mumbai, & Thiruvananthapuram and many other major cities or states capitals have presence of international airports. In addition to these, India has 112 domestic airports.

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