The Hindu Editorial Analysis- 17th March 2023 | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly - UPSC PDF Download

Why in News?

India’s goods exports fell for the third time in five months during February. The $33.8 billion of shipments marked an 8.8% drop from a year ago. In recent times of generally exuberant export growth, the only steeper decline was recorded in October 2022. A sharp 29% collapse in oil exports, a 12% fall in chemical shipments and a 10% contraction in engineering goods outflows — accounting for almost half of India’s merchandise exports — propelled February’s decline.

What is Foreign Trade?

• International trade in goods and services is the oldest and most prominent type of international division of labour.
• Foreign trade is defined as the purchasing and selling of items beyond the national borders of different countries. It's also known as international trade or external trade.
• The concept of trade refers to the purchase and sale transactions that enable manufactured commodities and services to be provided to consumers.
• The concept of overseas trade is represented by these purchases and sales transactions with foreign countries.
• For example, a country may be rich in iron and steel but deficient in aluminium. As a result, it must source aluminium from countries that have a surplus of metal.
• Not only that, but countries with excess production of particular commodities find it advantageous to sell them to other countries and purchase items from others in which they are deficient.

Characteristics of Foreign Trade

• Export from the originating country and an import to the receiving country is a product that is transferred or sold from a party in one country to a party in another.
• In the balance of payments, imports and exports are accounted for in the current account.
• Consumers and countries may be exposed to new markets and products as a result of global trade.
• Food, clothing, spare parts, oil, jewellery, wine, stocks, currencies, and water are just a few examples of products available on the international market.
• Tourism, banking, consultancy, and transportation are all examples of services that are traded.
• The international trade system is influenced by advanced technology (particularly transportation), globalisation, industrialization, outsourcing, and multinational enterprises.

Foreign Trade In India

• In India, doing business in foreign countries is nothing new. Even in BC, India was used to trading with other countries.
• The Periplus of the Erythraean Sea is a text on trade between countries, including India, written by an unnamed sailor from Alexandria around AD 100.
• Europeans have been trading with the kings of India via the sea route since 1498. Spices including pepper, ginger, cinnamon, cardamom, nutmeg, mace, and cloves were the most popular exports at the time.
• Between 1947 and 1991, India's economy remained essentially closed. Imports were subjected to high tariffs. FDI (foreign direct investment) was restricted.
• Foreign trade, on the other hand, improved dramatically after 1991's liberalisation.

Exports and Imports

• India now exports over 7500 commodities to approximately 190 countries and buys approximately 6000 commodities from approximately 140 nations.
• Exports and imports aren't limited to just commodities (merchandise).
• Service is another significant export/import component.

India's Foreign Trade Policy

• In line with the 'Make in India,' 'Digital India,' 'Skill India,' 'Startup India,' and 'Ease of Doing Business' initiatives, the Foreign Trade Policy (2015-20) was launched on April 1, 2015.
• It provides a framework for increasing exports of goods and services, creating jobs, and increasing value addition in the country.
• The foreign trade policy statement outlines the market and product strategy as well as the steps needed to promote trade, expand infrastructure, and improve the entire trade ecosystem.
• It aims to help India respond to external problems while staying on top of fast-changing international trading infrastructure and to make trade a major contributor to the country's economic growth and development.

Conclusion

International trade is therefore critical to a country's economy, as it contributes significantly to its Gross Domestic Product (GDP). Above all, it is in charge of enabling both growth and economic development that is not limited to a single country. Taking advantage of the possibilities of international trade has been easier thanks to the advancement of new technologies, improved communication, and improved infrastructure.