sectoral analysis foreign trade

8/3/2019 Sectoral Analysis Foreign Trade

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Sectoral Analysis: Foreign Trade

Presented by:

Aditya Dole(07)

Hemant Dewangan(39)

Jasmeet Bhatia(41)

Manish Pashine(53)

Mayank Sharma(54)


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Agenda:

Foreign Trade

Importance of Foreign Trade

Compositions of Indias Foreign Trade

Pattern of Import Pattern of Export

Trend in Export & Import

Balance of Trade

Changing Structure of Exports

The Way Forward

How to Curtail Imports


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Foreign Trade

Foreign 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 , its economic,

social, and political importance has been on the rise in

recent centuries.


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The Importance of Foreign Trade

Without international trade, nations would be limited tothe 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.


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The Importance of Foreign Trade The fundamental identity

C + G + I + NX = GDPwhere:

"C" is equal to all private consumption, or consumerspending, in a nation's economy

"G" is the sum of government spending

"I" is the sum of all the country's businesses spending oncapital

"NX" is the nation's total net exports, calculated as totalexports minus total imports. (NX = Exports - Imports)

That simply is not true especially for the U.S., becausethe world is on a de facto dollar standard. Even for othercountries, a rise in exports, or a drop in imports, may notboost real GDP.


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The Importance of Foreign Trade Contd..

In the long run, the impact of changes in foreign trade onaggregate demand are minimal. Instead, the major

relationship occurs on the supply side: increasing

foreign trade boosts total GDP and productivity.

There are three main reasons for this:

1. Comparative advantage means each country

produces goods in which they are relatively efficient.

2. Foreign trade helps to keep inflation low and stable.

3. when imports rise in countries with major currencies,

inflows of foreign saving increase, boosting

investment.


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Pre Independence

1938-39 it was 321 crore 1947-48 it was 792 crore Cotton, tea, oilseeds and

food grains

Volume oftrade &

Composition

34% export to England 31% import from England The export of raw

material declinedDirection of

trade


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Post Independence

period can be divided into three sub-periods of1950-1970, 1971-1991 and post-1991

1950-1970, exports have grown at a very slowrate

policy of export pessimism and importsubstitution

established Indian Institute of Foreign Trade

post liberalization export and import growth

has picked contribution of foreign trade to GDP has

increased to 17.1 percent by 2000


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Estimated Exports, Imports and Trade Deficit

Source : Journal of Applied Economic Sciences,Volume III_Issue3 (5)_Fall2008

Year EstimatedExport

EstimatedImport

Deficit

2011 51348.81 66752.3 -15403

2012 52431.79 68157.02 -15725

2013 53514.78 69561.74 -16047

2014 54597.77 70966.46 -16369

2015 55680.76 72371.18 -16690

2016 56763.75 73775.9 -17012

2017 57846.73 75180.62 -17334


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Estimated Exports, Imports and Trade Deficit

0

10000

20000

30000

40000

50000

60000

70000

80000

2011 2012 2013 2014 2015 2016 2017

Export

Import

Deficit


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Pattern of Imports

Pattern ofimports

Bulk Import

Petroleum, crude and products

Bulk consumption goods(cereal, pulses, edible oil)

Other Items( fertilizers, non-ferrous metals, paper)

Non bulkimport

Capital goods (machine tools,transport equipment)

Artificial goods, chemicals,medical and pharma products

Export related Items( Preciousstones, yarn and fabric)

Persistent rise due to internal (Drought) and

external(oil price) factors


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Top 20 Commodities Imported by IndiaCommodity %Share

PETROLEUM, CRUDE & PRODUCTS 32.03

GOLD 12.31

ELECTRONIC GOODS 6.71

MACHRY EXCPT ELEC & ELECTRONIC 6.35

PERLS PRCUS SEMIPRCS STONES 5.56

COAL,COKE & BRIQUITTES ETC. 3.8

METALIFERS ORES & METAL SCRAP 2.91

ORGANIC CHEMICALS 2.83

OTHER COMMODITIES 2.56

IRON & STEEL 2.08

VEGETABLE OILS FIXED (EDIBLE) 2

TRANSPORT EQUIPMENTS 1.92

PROJECT GOODS 1.57

ARTFCL RESNS,PLSTC MATRLS,ETC. 1.46

SILVER 1.41FERTILEZERS MANUFACTURED 1.21

NON-FERROUS METALS 1.18

PROFSNL INST,ETC EXCPT ELCTRNC 1.06

INORGANIC CHEMICALS 1.06

ELEC MACHRY EXCPT ELECTRONIC 0.98

0

5

10

1520

25

30

35

40

4543.56

5.569.88

1.57

39.44

Import of Principal CommoditiesGroups

%Share


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Top 10 Countries of Import

Rank Country Apr-Jan 2010 Apr-Jan 2011(P) %Growth %Share

1 CHINA P RP 25,226.27 33,355.36 32.22 11.96

2 U ARAB EMTS 14,286.42 21,207.17 48.44 7.6

3 SAUDI ARAB 13,757.17 16,403.66 19.24 5.88

4 SWITZERLAND 10,874.90 16,182.49 48.81 5.8

5 U S A 14,480.88 15,067.68 4.05 5.4

6 GERMANY 8,544.58 9,326.69 9.15 3.34

7 IRAN 9,379.57 8,809.96 -6.07 3.16

8 NIGERIA 5,460.83 8,633.49 58.1 3.1

9 AUSTRALIA 10,051.64 8,318.59 -17.24 2.98

10 KOREA RP 6,910.55 8,060.51 16.64 2.89


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Export By Commodity Wise

Commodities Share

ENGINEERING GOODS 23.75

PETROLEUM PRODUCTS 16.75

GEMS & JEWELLERY 14.80

CHEMICALS & RELATED PRODUCTS 12.43

TEXTILES 8.84

AGRI & ALLIED PRDTS 7.14

ORES & MINERALS 4.24

UNCLASSIFIED EXPORTS 3.80

ELECTRONIC GOODS 3.54

LEATHER & MNFRS 1.50

COTTON RAW INCL WASTE 1.13

MARINE PRODUCTS 1.01

PLANTATION 0.52

CARPETS 0.39

HANDICRAFTS 0.07

SPORTS GOODS 0.06

PROJECT GOODS 0.02

Source: Government of India Ministry of commerce and Industry Website: http://commerce.nic.in


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Percentage Share of Commodities to Export


PLANTATION1%

AGRI & ALLIED PRDTS

7% MARINEPRODUCTS

1%ORES & MINERALS

4%

LEATHER & MNFRS2%

GEMS & JEWELLERY15%

SPORTS GOODS0%

CHEMICALS &RELATED PRODUCTS

12%

ENGINEERINGGOODS24%

ELECTRONIC GOODS4%

PROJECT

GOODS0%

TEXTILES9%

HANDICRAFTS0%

CARPETS0%

COTTON RAW INCLWASTE1%

PETROLEUMPRODUCTS

17%

UNCLASSIFIEDEXPORTS4%


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Total Exports & Growth

Year

Total Exports (In Rs.

Crore)

Growth

(%)

2006 456417.86 21.60

2007 571779.28 25.28

2008 655863.52 14.71

2009 840755.05 28.19

2010 845533.64 0.57

2011 1147816.86 35.75

Source: Government of India Ministry of commerce and Industry Website:


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Total Exports Comparison Year Wise

456417.86

571779.28

655863.52

840755.05845533.64

1147816.86

0

200000

400000

600000

800000

1000000

1200000

1400000

2006 2007 2008 2009 2010 2011

Year

Total Exports (In Rs.Crore)



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Growth in Export (Year Wise)

21.60

25.28

14.71

28.19

0.57

35.75

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

2006 2007 2008 2009 2010 2011

Growth



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Export By Region

21%

6%

15%

54%

1% 3%

Europe Africa

America Asia & ASEAN

CIS & Baltics Unspecified Region

Region Year 2010

Europe 182228.21

Africa 48832.17

America 127005.72

Asia & ASEAN 456178.16

CIS & Baltics 7978.02

Unspecified

Region 23311.35



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Trend in Export & Import

Indias exports increased three and a half times during the

five year period 2002-03 to 2008-09 but declined by 3.6% in

2009-10

During (2002-07), growth in world trade and output

witnessed a significant upswing

Despite the robust growth of exports, Indias merchandise

trade deficit has risen, and continues to rise, as import

growth has regularly outpaced export growth

The trade deficit has increased from a meager US $ 8.7

billion at the beginning of the Tenth Plan in 2002-03 to US $

118.3 billion in 2008-09


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Balance of Trade

Year Balance of Trade

2002-03 -8.7

2003-04 -14.3

2004-05 -28

2005-06 -46.1

2006-07 -59.3

2007-08 -88.5

2008-09 -118.3

2009-10 -108.2

0

20

40

60

80

100

120

8.7 14.3 2846.1 59.3

88.5118.3

108.2

Balance of Trade


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Changing Structure of Exports

Continuous Decline in share of Agricultural raw materials

and allied products

Reason: Continuous increase in population &

consequent increase in domestic consumption

Non traditional Items Export

Tremendous Export Potential (Handicrafts, Engineering

goods, Ready mades)


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State of Indias Foreign Trade

India Ranks 13th in the World in-terms of Foreign Trade

Indias Share of World Trade = 2.2% i.e. 606.7 Bn $

India ranks 21st in the World in-terms of Exports

Indias share of exports is 225.6 Bn $

European Union,13.65

United States, 11.70

China, 10.55

Germany, 8.71

Japan, 5.09

France, 4.02

UnitedKingdom,

3.53

Italy, 3.34

Netherlands,3.32

South Korea, 3.22

Hong Kong, 2.99

Canada, 2.88

Singapore, 2.43 Russia, 2.35 India,2.20


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Indias FTP 2009 - 2014

Objectives:

To double Indias exports of goods and services by2014 i.e. 500 Bn $

To double Indias share of World Trade by 2020

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

2013-14

BOT -8.7 -14.3 -28 -46.1 -59.3 -88.5 -118.3 -108.2 -114 -155.8 -210.5 -281.8

Merchandise Imports 61.4 78.1 111.5 149.2 185.7 251.6 303.6 286.6 360 448.7 559.2 696.9

Merchandise Exports 52.7 63.8 83.5 103.1 126.4 163.1 185.3 178.6 246 292.9 348.7 415.1

0

200

400

600

800

1000

1200

Bn

$

Chart Title


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The Way Forward

Product Strategy

Chemicals-

Pharmaceuticals and Generic Drugs

Engineering Goods-

Transport Equipment

Electronics

Value Added Textiles-

High end clothing


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Market strategy

Retain presence and market share in ourold developed country markets;

Move up the value chain in providingproducts in these old developed countrymarkets; and

Open up new vistas, both in terms ofmarkets and new products in these newmarkets.

The Way Forward


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Technology and R&D

Pharmaceuticals: Entering in a big way in theformulations market and expanding the genericsbase as more drugs come off-patent.

Electronics: Establishing at least one fabricationfacility in the next three years, which, in turn, willspawn a large growth in the domestic electronicsindustry.

The Way Forward


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Technology and R&D

Automobiles: Upgrading auto-componentproduction to higher value-addition, andprogressively expanding it from the small, to the

medium car segment, by becoming internationallycompetitive.

Computer and software based smart engineering.

Environmental products; green technology andhigh-value engineering products.

High end areas in electronics, aerospace, andengineering products.

The Way Forward


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Agriculture: An aggressive policy reformpackage with medium term objectives toincrease yields and domestic productionneeds to be put in place immediately

Fertilizers: Rationalise fertilizer pricing andproduction policy to encourage efficiencyin use, consumption and production; a by-

product will be reduced dependence onimports.

To Curtail Imports


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Electronics: Establish a domesticfabrication facility and dramatically expanddomestic production of down-streamindustries

Pharmaceutical Industries: Resuscitationand resurgence of domestic production ofActive Pharmaceutical Ingredients (API)

Engineering: An across-the-board focus onelectronics, automotive and metals

To Curtail Imports


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Coal: Domestic policy reform is essentialto provide adequate domestic supplies ofcoal

Petroleum: Rationalized pricing to promoteefficiency in use, promote conservation,and temper the growth in demand forpetroleum products.

To Curtail Imports


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The Presentand the Future


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THANK YOU

sectoral analysis foreign trade

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