Do you know reasons for Indian trade deficit?

The broad picture of India’s import and export behaviour.

Total Value of Export was $294,364 million

whereas Import was $ 444, 052 million.

The country has exported 4418 products to 219 countries and imported 4317 products from 213 countries.

Exports from India declined 1.1 per cent year-on-year to USD 26.38 billion in October of 2019, mainly due to lower shipments of petroleum products (-14.6 per cent); RMG of all textiles (-2.1 per cent); cotton yarn and products (-6.1 per cent); and plastic and linoleum (-11 per cent).

On the other hand, sales went up for engineering goods (1.2 per cent); gems and jewellery (6 per cent); chemicals (0.9 per cent); drugs and pharmaceuticals (12.6 per cent); and electronic goods (38.4 per cent).

Exports in India averaged 5715.36 USD Million from 1957 until 2019, reaching an all-time high of 32550 USD Million in March of 2019 and a record low of 59.01 USD Million in June of 1958.  source: Ministry of Commerce and Industry, India

Trade deficit of India
INDIA’S TRADE DEFICIT

Here is the list: –

Software and Services (ICT) 

This is by far India’s largest export. At $111 Billion, ICT export outstrips 2nd placed item by almost 2 times. India is also the 2nd largest ICT exporter behind Ireland.

Gems and Jewellery 

This is India’s most visible export. At $43 Billion it makes sure India’s remains the world’s manufacturing hub for precious/semi-precious gems and jewellery including diamond cutting and polishing.

Petroleum and Petroleum products

India operates the world’s largest crude oil refining facility at Jamnagar, Gujarat owned by Reliance Industries. At $33 Billion, Petroleum and products are the 3rd largest export by India.

Cotton, Textile, Clothes, Knitwears

India is the 2nd largest textile exporter in the world behind China. Textiles account for $30 Billion in exports. For China, textile exports account for $110 Billion.

Iron and Steel & Products

India is the 2nd largest steel producer in the world behind China. It is also the 2nd largest steel exporter in the world at $16 Billion. India produces about 110 Million Tonnes of Steel, China produces 810 Million Tonnes, about 8 times that of India.

Organic Chemicals & other chemical products

They account for $16 Billion in exports.

Automobiles (Cars, Trucks, Bikes) and Auto Components

Some of the biggest automobile companies manufacture cars, trucks, bikes, scooters and auto components in India. They also export the same. Value of those exports $15 Billion.

Sundaram Fasteners is one such name. Motherson Sumi is another star. Hyundai, GM, Ford, Suzuki, etc. all export from India.

Nuclear Reactors, Boilers, Machinery & Appliances

No one would have thought that India is exporting Nuclear reactors to the world. At $14.5 Billion, it is the 5th largest export by India.

Pharmaceutical Products

India is one of the very few countries with a very active and stable pharmaceutical industry. With $13 Billion in exports, the pharmaceutical industry in India ranks 3rd in the world terms of volume and 14th in terms of value.

Cereals

India is the world’s 2nd largest food producer in the world. It has the largest arable land of any country. Cereals like Wheat, Rice, etc. account for $10 Billion in exports. But for India, it’s mainly Rice with Basmati and Non-Basmati.

Electronics, Consumer Durables

They account for $8.5 Billion in exports.

Seafood

India has over 7,000 km of coastline. It over 10 central and state universities, colleges, R&D institutions dedicated to Fishers. No wonder Seafood accounts for $6 Billion in exports.

Plastics & Articles of Plastics – It accounts for $5.5 Billion in exports.

Ships, Boats and other Floating Structures

One of the key indices of advanced economies is the Ship Building Industry. It is unfortunate it took 70+ years and Modi Govt. to give Ship Building an Infrastructure Industry tag. It accounts for about $5 Billion in exports.

Aluminium and associated articles

India is the 4th largest aluminium producing country in the world. It accounts for $3.5 Billion in exports.

Meat

It accounts for $4 Billion in exports. India is the largest exporter of beef in the world. Beef in India is Buffalo meat as Cow slaughter is banned.

Spices

India is by far the largest producer of spices in the world. It produces 71 of the 109 listed spices as recognized by ISO. The largest exporter of spices in the world with around $4 Billion in exports.

Aircraft, Parts, Accessories – India exports about $2 Billion worth of Aircraft, parts and products.

Leather and Leather Products

India is the 9th largest exporter of Leather and Leather-based products. It exports about $1.9 Billion worth of products.

Tea and Coffee – India exports about $1.5 Billion worth of Tea and Coffee.

In 2017, India generated a surplus subtotal worth $65.1 Billion with the following 10 trading partners. United States: US$22 billion (Up 389% since 2010) United Arab Emirates: $6.9 billion (Reversing a -$3.5 billion deficit) Bangladesh: $6.6 billion (Up 148.9%) Nepal: $5.1 billion (Up 264.8%) United Kingdom: $4.6 billion (Up 263.5%) Singapore: $4.4 billion (Up 141.3%) Hong Kong: $4 billion (Up 131.2%) Vietnam: $3.97 billion (Up 168%) Turkey: $3.8 billion (Up 149.4%) Sri Lanka: $3.75 billion (Up 34.6%).

Even with all the booming market and robust trade, India ran a trade deficit of $193 Billion in 2017.

Top The 10 major imports responsible for trade deficit are: –

1. Crude oil: -US$82 Billion – India imports 80% of Crude Oil it requires annually which makes India highly susceptible to Oil Shock. Small changes in Oil Price or value of Dollar makes huge impact on India’s Budget, Trade Deficit and Current Account Deficit.

2. Gold: -$33.9 Billion 

India is the 2nd largest consumer of gold. Which demands averaging 840 Tonnes for last 10 years. It is said, Gold held in form of Jewellery in India is enough to wipe off its debt many times over.

3. Coal, solid fuels made from coal: -$20 billion

4. Phones including Mobile Phones : -$19.6 billion

5. Petroleum gases: -$12.9 billion

6. Palm oil: -$6.8 billion

7. Computers, optical readers: -$5.4 billion

8. Solar power diodes/semi-conductors: -$4.9 billion

9. Copper ores, concentrates: -$3.9 billion

10. Dried shelled vegetables: -$3.7 billion

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