trends foeign trade since 1991

8/8/2019 Trends Foeign Trade Since 1991

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PROJECT ON:PROJECT ON:--

TRENDS IN FOREIGNTRENDS IN FOREIGN

TRADE IN INDIATRADE IN INDIA

AFTER 1991AFTER 1991MADE BY:MADE BY:--

ANSHUL,DEEPAK,SIMRAN,EKTA,GEETIKA,DEVIKAANSHUL,DEEPAK,SIMRAN,EKTA,GEETIKA,DEVIKA


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INDEX

Overview of before 1991Indias exports and imports before 1991

Restrictions on foreign tradeConditions of Indian Economy in 1991Important reform measuresChanges in exportsChanges in importsChanges in trade deficitsForeign collaboration policiesForeign investment policies

Indian Joint Ventures AbroadImpact of New Policy and Future Directionmeasures taken for export promotion

conclusion


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ACKNOWLEDGEMENT

We would like to convey our heart felt thanks toMr D. K. Das who always gave valuable

suggestions and guidance for completion of theproject . He helped us in understanding and

remembering important details of the project thatwould have otherwise been lost . This project has

been a success only because of his guidance .


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OVERVIEW OF BEFORE1991

The country was under socialist-basedpolicies for an entire generation from the

1950s until the 1980s. The economy

suffered from extensive regulation,protectionism, and public ownership,

leading to pervasive corruption and slow

growth. Elaborate licenses, regulationsand the accompanying red tape,

commonly referred to as License Raj,were required to set up business in India

between 1947 and 1990.


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Indias exports & imports before 1991

YEAREXPORTS Growth

Rate%

IMPORTS Growth

Rate%

Trade

Balance

1 2 3 4 5 6

1970-71 1535 8.6 1634 3.3 -99

1980-81 6711 4.6 12549 37.3 -5838

1981-82 7806 16.3 13608 8.4 -5802

1982-83 8803 12.8 14293 5.0 -5490

1983-84 9771 11.0 15831 10.8 -6060

1984-85 11744 20.2 17134 8.2 -5390

1985-86 10895 -7.2 19658 14.7 -8763

1986-87 12452 14.3 20096 2.2 -7644

1987-88 15674 25.9 22244 10.7 -6570

1988-89 20232 29.1 28235 26.9 -8003

1989-90 27658 36.7 35328 25.1 -7670

1990-91 32553 17.7 43198 22.3 -10645


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Conditions of Indian economy in 1991

Foreign currency reserves plummeted toalmost $1billion

Inflation was at a rate of 17%

High fiscal deficits

Foreign investors and NRIs had lostconfidence in Indian Economy

Capital was flying out of economyDefaulting of loans


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Changes in exports

As a proportion of GDP, the share of exports,

which had grown from 5.8 per cent in 1990-91 to 12.2 per cent in 2004-05, grew furtherto 13.1 per cent in 2005-06.

However, from 1980 onwards, Indian exportshave been rising at one and a half times thepace of growth in world exports. In 1993,India ranked 33rd in top exporting countries

and 32nd in top importing countries.The government has slashed down its export

growth target to 3 per cent for the currentfiscal


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Changes In Imports

The corresponding rise in imports wasfrom 8.8 per cent in 1990-91 to 17.1 percent in 2004-05 and further to 19.5 per

cent in 2005-06.Out of 21 major items, nearly 50 per cent

have a relative unit value of one or more,that is the increase in the value of imports

is more than the increase in volumes.Many items have shown an increase in the

relative unit value payments from prereform to post reform period.


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CHANGES IN TRADE DEFICIT

Thus, trade deficit as a proportion of GDP, which had declined from3.0 per cent in 1990-91 to 2.1 per cent in 2002-03, widened to 4.9per cent in 2004-05 and further to 6.4 per cent in 2005-06.

Previously a closed economy, India's trade has grown fast. Indiacurrently accounts for 1.5% of World trade as of 2007 according to

the WTO. According to the World Trade Statistics of the WTO in 2006, India's

total merchandise trade (counting exports and imports) was valuedat $294 billion in 2006 and India's services trade inclusive of exportand import was $143 billion.

Thus, India's global economic engagement in 2006 covering bothmerchandise and services trade was of the order of $437 billion, upby a record 72 percent from a level of $253 billion in 2004.

India's trade has reached a still relatively moderate share 24% ofGDP in 2006, up from 6% in 1985.


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Foreign Collaboration Policies

India's effort to accelerate industrialisation &improve international competitivenessreceived a boost with the announcement

of the New Industrial Policy in July 1991. Akey element of the Industrial Policy & animportant component of the reformprogram is the fresh approach towardsforeign investment & technological tie-ups.The Policy changes were designed toattract significant & sustained capitalinflows into India, while encouragingtechnological collaboration between Indian

& foreign companies.


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Foreign Investment Policies Majority foreign equity, even upto 100%, is allowed in several sectors .

Foreign investment upto 51% in 35 high priority areas is eligible forautomatic approval, provided by Reserve Bank of India, within 2 weeks ofapplication.

Use of foreign brand names & trademarks for sale of goods in India isallowed.

Foreign companies are allowed to open branch offices in India. Hotels & tourism related industries are also eligible for automatic approval

for direct foreign investment with upto 51% equity. Foreign Institutional Investors (FIIs) have been allowed to invest in the

Indian capital market. Foreign investment has been allowed in off-shorefunds promoted by Indian Financial Institutions.

Indian companies have been allowed to float Global Depository receipts(GDRs), which are traded in major international stock exchanges.

There is now a market determined exchange rate for the rupee. Foreign

exchange is freely available for a number of purposes like payment ofroyalties, lump sum fees, dividends, business travel abroad etc.

Other proposals for foreign equity investment shall also be considered oncase-to case basis for clearance by Secretariat for Industrial Approvals.


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Indian Joint Ventures Abroad

Indian joint ventures (Jvs) & wholly owned

subsidiaries are an important instrument forpromoting exports, trade expansion &economic cooperation.India's foreign investment is the highest

amongst 3rd world countries & is dispersedover 70 countries.As on 31st December 1994, there were 524joint ventures, of which 177 were in

operation & 347 at different stages ofimplementation.The Indian equity in the 177 Jvs was Rs.1,817 million in Dec 1994 & the approved

Indian equity in the 347 Jvs was Rs 13,952


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Impact ofNew Policy and Future

Direction

Dramatic change in the foreign currencyreserves of the Government of India -taking it to US$ 20.8 billion at end-March1995.

7,200 foreign collaboration proposals wereapproved in the post-policy period from

August 1991 to September 1995.


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Some of the measures taken for export promotion

are :-

Rupee has been made convertible on the currentaccount Exporters & units in Export Processing Zones, SoftwareTechnology Parks, are now allowed to retain a higherpercentage of their forex earnings

National Centre forTrade Information has beenlaunched to facilitate greater access to trade information

The World Trade Organization (WTO) agreement hasbeen signed

Pass Book Scheme has been introduced for all ExportHouses/Trading Houses/StarTrading Houses/Super Star

Trading Houses. A harmonized system of commodity classification known

as Indian Trade Classification has been introduced.


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CONCLUSION

India currently accounts for 1.2% of World trade as of2006 according to the WTO.International trade as a proportion of GDP reached 24%by 2006, up from 6% in 1985 and still relatively moderate.India was evaluated by the World Trade Organization in2008 as more restrictive than similar developingeconomies, such as Brazil, China, and Russia.The WTO also identified electricity shortages andinadequate transportation infrastructure as significantconstraints on trade.

India still has a long way to go - it's share in worldexports was a mere 0.65% in 1994-95. India importedRs.887 billion of goods in 1994-95, and exported Rs.823billion.


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INDIAS GDP GROWTH RATE


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trends foeign trade since 1991

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