Recent trends in global trade

Chapter 1
Introduction
Importance/Role of foreign trade in economic development of countries
Introduction of foreign trade:
There is no country in the world today which produces all the commodities it
needs. Every country, therefore, tries to produce those commodities in which
it has comparative advantage. It exchanges part of those commodities with the
commodities produced by other countries relatively more efficiently. The
relative difference in factor endowments, technology, tastes etc, among the
nations of the world have greatly widened the basis of international trade.
Role of foreign trade in economic development
The role of foreign trade can be judged by the following faces:

Foreign trade and economic development.

Foreign trade plays very important role in the economic development of any
country. Pakistan also exports a lot of agricultural product to other countries
and imports the capital goods from other countries. Therefore, it is not wrong
to say that economic development of a country depends of foreign trade.

Foreign exchange earning

Foreign trade provides foreign exchange which can be used to remove the
poverty and other productive purposes.

Market expansion

The demand factor plays very important role in increasing the production of
any country. The foreign trade expands the market and encourages the
producers. In Pakistan home market is very limited due to poverty. So it is
necessary chat we should sell our product in other countries.

Increase in investment

Foreign trade encourages the investor to increase the investment to produce

more goods. So the rate of investment increases.

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Foreign investment

Besides the local investment, foreign trade provides incentives for the foreign
investors to invest in those countries where there is a shortage of investment.

Increase in national income

Foreign trade increases the scale of production and national income of the
country. To meet the foreign demand we increase the production on large
scale so GNP also increases.

Decrease in unemployment

With the rise in the demand of goods domestic resources are fully utilized and
it increases the rate of development in the country and reduces the
unemployment in the world.

Price stability

Foreign trade helps to bring stability in price level. All those goods which are
short and prices are increasing can be imported and those goods which are
surplus can be exported. There by stopping fluctuation in prices.

Specialization

There is a difference in the quality and quantity of various factors of

production in different countries. Each country adopts the specialization in the
production of those commodities, in which it has comparative advantage. So
all trading countries enjoy profit through international trade.

Remove monopolies

Foreign trade also discourages the monopolies. Where every any monopolist
increases the prices, government allows the import of goods to reduce the
prices in the country.

Removal of food shortage

India is also facing the food shortage problem. To remove the food shortage
India has imported the wheat many times. So due to foreign trade we are
solving this problem for many years.
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Agricultural development

Agricultural development is the back bone in our economy. Foreign trade has
played very important role for the development of our agriculture sector.
Every year we export rice, cotton, fruits and vegetables to other countries. The
export of goods makes our farmer more prosperous. It inspires the spirit of
development in them.

Import of consumer goods

India and Pakistan imports the various consumer goods from other countries,
which are not produced inside the country. Today the shortage of any
commodity can be removed through international trade.

To improve quality of local products

Foreign trade helps to improve quality of local products and extends market
through changes in demand and supply as foreign trade can create competition
with the rest of the world.

External economics

External economics can also be achieved through foreign trade. The industries
producing foods on large scale in Pakistan and India are enjoying the external
economics due to international trade.

Competition with foreign producers

We can compete with the foreign producers in foreign trade so it improves the
quality and reduces the cost of production. It is also an advantage of foreign
trade.

Useful for the world peace

Today all the countries are tied in trade relations with each other. So foreign
trade also contribute to peace and prosperity in the world.

Import of capital goods and technology

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The inflow of capital goods and technology in the less developed countries
has increased the rate of economic development, and this is due to foreign
trade.

Import substitution

These countries not only produce import substitute, but also reduce deficit in
balance of payment of their countries.

Better understanding

Foreign trade provides an opportunity to the people of different countries to

meet, discuss, and exchange views and ideas related to their social, economic
and political problems.

Dissemination of knowledge

Foreign trade is also responsible for dissemination of knowledge and learning

from developed countries to under developed countries.

Interdependence

Foreign trade is responsible for creating economic depending and establishing

economic interest in the economy of the countries having trade relations.

Factors productivity

Through foreign trade the productivity of labour and capital and organization
increases. Demand make them mobile on national as well as international
level which helps underdeveloped countries to develop and maintain a high
level of growth of developed countries.

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Evolving structure of global trade

The global economy has grown continuously since the Second World War.
Global growth has been accompanied by a change in the pattern of trade,
which reflects ongoing changes in structure of the global economy. These
changes include the rise of regional trading blocs, deindustrialization in
many advanced economies, the increased participation of former
communist countries, and the emergence of China and India.

Changes in the global economy the main changes in the global

economy are:
1. The emergence of regional trading blocs, where members freely trade with
each other, but erect barriers to trade with non-members, has had a significant
impact on the pattern of global trade. While the formation of blocs, such as
the European Union and NAFTA, has led to trade creation between members,
countries outside the bloc have suffered from trade diversion.
2. Like several advanced economies, the UK's trade in manufactured goods
has fallen relative to its trade in commercial and financial services. Many of
these advanced economies have experienced deindustrialization, with less
national output generated by their manufacturing sectors.
3. The collapse of communism led to the opening-up of many
former-communist countries. These countries have increased their share of
world trade by taking advantage of their low production costs, especially their
low wage levels.
4. Newly industrialized countries like India and China have dramatically
increased their share of world trade and their share of manufacturing exports.
China, in particular, has emerged as an economic super-power. China's share
of world trade has increased in all areas, and not just in clothing and low-tech
goods. For example, in 1995, the US had captured nearly 25% of global trade
in hi-tech goods, while China had only 3%. By 2005, the US share had fallen
to 15%, while China's share had risen to 15%.

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The Diffusion of Key Players in Global Trade

Changing Patterns of Global Trade outlines the factors underlying
important shifts in global trade that have occurred in recent decades. The
emergence of global supply chains and their increasing role in trade patterns
allowed emerging market economies to boost their inputs in high technology
exports and is associated with increased trade interconnectedness.
BRICS Economies for diffusing key players
Brazil, Russia, India and China, South Africa are combinedly referred to as
BRICS countries by Goldman Sachs. These countries will start the next
shift in balance of power in the global economy. It is expected that BRICS
will be wealthier than most of the current major economic powers by 2050.
The BRIC thesis states that China and India will become the world's dominant
suppliers of manufactured goods and services, respectively, while Brazil and
Russia will become similarly dominant as suppliers of raw materials.
Goldman Sachs states that these countries may not make a formal trading
association - but they have the potential to form a powerful economic bloc.
Due to lower labor and production costs, many companies also cite BRIC as
a source of foreign expansion opportunity.

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Growing Trade Interconnectedness

Increased interconnectedness and interdependence of countries include two
factors:
1. The opening of borders to increasingly fast flows of goods, services,
finance, people and ideas across international borders; and
2. The changes in institutional and policy regimes at the international
and national levels that facilitate or promote such flows.
Such inter connectedness has both positive and negative impacts on
development.
Effects of interconnected trade:
Economic change: trade liberalization, deregulation, expansion of
the global market place
Political change, redistribution of power from states to interstate
bodies and the growth of global civil society
Social and cultural change
Technological
change,
including
improved
global
telecommunications and transport links.
The increases in economic cross-border flows that have resulted in more
open economies are a result, in part, of World Trade Organization,
International Monetary Fund and World Bank policies. All this change is
supported by economic blocs like European Union, the Organization of
Petroleum
Exporting
Countries,
and
the
North
American
Free Trade Agreement. This trend benefits globalization, to the richer, more
powerful nations.

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Major Current Trends in Foreign Trade

Major current trends in foreign trade are as follows:
Current trends are towards the increasing foreign trade and interdependence
of firms, markets and countries.
Intense competition among countries,
industries, and firms on a global level is
a recent development owed to the
confluence of several major trends.
Among these trends are:
1) Forced Dynamism:
International trade is forced to succumb to trends that shape the global
political, cultural, and economic environment. International trade is a complex
topic, because the environment it operates in is constantly changing. First,
businesses are constantly pushing the frontiers of economic growth,
technology, culture, and politics which also change the surrounding global
society and global economic context. Secondly, factors external to
international trade (e.g., developments in science and information technology)
are constantly forcing international trade to change how they operate.
2) Cooperation among Countries:
Countries cooperate with each other in thousands of ways through
international organizations, treaties, and consultations. Such cooperation
generally encourages the globalization of business by eliminating restrictions
on it and by outlining frameworks that reduce uncertainties about what
companies will and will not be allowed to do. Countries cooperate:
i) To gain reciprocal advantages,
ii) To attack problems they cannot solve alone, and
iii) To deal with concerns that lie outside anyones territory.
Agreements on a variety of commercially related activities, such as
transportation and trade, allow nations to gain reciprocal advantages. For
example, groups of countries have agreed to allow foreign airlines to land in
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and fly over their territories, such as Canadas and Russias agreements
commencing in 2001 to allow polar over flights that will save five hours
between New York and Hong Kong.
Groups of countries have also agreed to protect the property of foreign-owned
companies and to permit foreign-made goods and services to enter their
territories with fewer restrictions. In addition, countries cooperate on
problems they cannot solve alone, such as by coordinating national economic
programs (including interest rates) so that global economic conditions are
minimally disrupted, and by restricting imports of certain products to protect
endangered species.
Finally, countries set agreements on how to commercially exploit areas
outside any of their territories. These include outer space (such as on the
transmission of television programs), non-coastal areas of oceans and seas
(such as on exploitation of minerals), and Antarctica (for example, limits on
fishing within its coastal waters).
3) Liberalization of Cross-border Movements:
Every country restricts the movement across its borders of goods and services
as well as of the resources, such as workers and capital, to produce them. Such
restrictions make international trade cumbersome; further, because the
restrictions may change at any time, the ability to sustain international trade
is always uncertain. However, governments today impose fewer restrictions
on cross-border movements than they did a decade or two ago, allowing
companies to better take advantage of international opportunities.
Governments have decreased restrictions because they believe that:
i)

ii)
iii)

So-called open economies (having very few international

restrictions) will give consumers better access to a greater variety of
goods and services at lower prices,
Producers will become more efficient by competing against foreign
companies,
iii) If they reduce their own restrictions, other countries will do the
same.

4) Transfer of Technology:
Technology transfer is the process by which commercial technology is
disseminated. This will take the form of a technology transfer transaction,
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which may or may not be a legally binding contract, but which will involve
the communication, by the transferor, of the relevant knowledge to the
recipient. It also includes non-commercial technology transfers, such as those
found in international cooperation agreements between developed and
developing states. Such agreements may relate to infrastructure or agricultural
development, or to international; cooperation in the fields of research,
education, employment or transport.
5) Growth in Emerging Markets:
The growth of emerging markets (e.g., India, China, Brazil, and other parts of
Asia and South America especially) has impacted international trade in every
way. The emerging markets have simultaneously increased the potential size
and worth of current major international trade while also facilitating the
emergence of a whole new generation of innovative companies. According to
A special report on innovation in emerging markets by The Economist
magazine, The emerging world, long a source of cheap la, now rivals the rich
countries for business innovation.

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Chapter 2
Indias Trade Performance
Indias merchandise exports reached a level of US $ 312.61 billion during
2013-14 registering a growth of 4.06 percent as compared to a negative
growth of 1.82 percent during the previous year. Despite the recent setback
faced by Indias export sector due to global slowdown, merchandise exports
still recorded a Compound Annual Growth Rate (CAGR) of 15.79 per cent
from 2004-05 to 2013-14.

World trade scenario

As per IMFs World Economic Outlook April 2014, world trade recorded its
largest ever annual increase in 2010, as merchandise trade surged 14 per cent,
but in the year 2012, it declined to 2.6 per cent and showed only a marginal
improvement to 2.7 per cent in 2013. It however projects acceleration of world
trade in goods in 2014 and 2015 with forecasted growth rates of 4.3 per cent
and 5.3 per cent respectively. Growth in volume of world trade also increased
marginally to 3 per cent in 2013 over 2.8 per cent in 2012 and is projected to
accelerate further to 4.3 per cent and 5.3 per cent in 2014 and 2015
respectively. The IMF has put its growth projections of world output at 3.6
per cent in 2014. The advanced economies are expected to grow at 2.2 per
cent while the emerging and developing economies to grow at 4.9 per cent in
2014. The projected growth rates in different countries are expected to
determine the markets for our exports.
Exports
Exports recorded a growth of 4.06 per cent during Apr-Mar 2013-14. The
Government had set an export target of US $ 325 billion for 2013-14. The
merchandise exports have reached US $ 312.61 billion in 2013-14. Export
target and achievement from 2004-05 to 2013-14 is given in the Chart.
Imports
Cumulative value of imports during 2013-14 was US $ 450.07 billion as
against US $490.74 billion during the corresponding period of the previous
year registering a negative growth of 8.29 per cent in $ terms. Oil imports
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were valued at US $ 167.62 billion during 2013-14 which was 2.2 per cent
higher than oil imports valued at US $ 164.04 billion in the corresponding
period of previous year. Nonoil imports were valued at US $ 283.32 billion
during 2013-14 which was 13.3 per cent lower than non-oil imports of US $
326.7 billion in previous year
Trade Balance
The Trade deficit in 2013-14 was estimated at US $ 137.46 billion which was
lower than the deficit of US $ 190.34 billion during 2012-13. Performance of
Exports, Imports and Balance of Trade during 2004-05 to 2013-14 is given in
the table
Export target & Achievement

Trade Data for period 2004-05 to 2013-14

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Exports by Principal Commodities

Disaggregated data on exports by Principal Commodities, both in Rupee and
Dollar terms, available for the period 2013-14 as compared to 2012-13 are
given in Table 3.1 and Table 3.2 respectively. Exports of the top five
commodities during the period 2013-14 registered a share of 50.05 per cent
mainly due to significant contribution in the exports of Petroleum (Crude &
Products), Gems & Jewellery, Transport Equipment, Machinery and
Instruments and Drugs, Pharmaceuticals & Fine Chemicals. The share of top
five Principal Commodity Groups in Indias total exports during 2013-14 is
given at Chart
Share of Top Five Commodities in India's Export 2013-14

The export performance (in terms of growth) of top five commodities during
2013-14 vis-a vis the corresponding period of the previous year is shown in
Chart
Plantation Crops
Export of Plantation crops during 2013-14, decreased by 8.17 per cent in US
$ terms compared to 2012-13. Export of Coffee registered a negative growth
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of 7.81 per cent, the value decreasing from US $ 866.13 million to US $

798.49 million. Export of Tea also decreased by 8.54 per cent.
Agriculture and Allied Products
Agriculture and Allied Products as a group include Cereals, Pulses, Tobacco,
Spices, Nuts and Seeds, Oil Meals, Guar gum Meal, Castor Oil, Shellac, Sugar
& Molasses, Processed Food, Meat & Meat Products, etc. During 2013-14,
exports of commodities under this group registered a growth of 0.81 per cent
with the value of exports increasing from US $ 32,017.27 million in 2012-13
to US $ 32,277.59 million during 2013-14.
Ores and Minerals
Exports of Ores and Minerals were estimated at US $ 5,604.22 million during
2013-14 registering a negative growth of 0.48 per cent over 2012-13. Sub
groups viz. Iron Ore, and mica have recorded a negative growth of 5.45 per
cent and 0.57 percent respectively. Processed minerals, other ores and
minerals and coal registered a growth of 1.76 per cent, 1.59 per cent and 0.4
per cent respectively.
Leather and Leather Manufactures
Export of Leather and Leather Manufactures recorded a growth of 16.49 per
cent during 2013-14. The value of exports increased to US $ 5,687.63 million
in 2013-14 from US $ 4,882.35 million in 2012-13. Exports of Leather and
Manufactures have registered a growth of 13.71 per cent and Leather
Footwear registered a growth of 20.35 per cent.
Gems and Jewellery
The export of Gems and Jewellery during 2013-14 decreased to US $
41,100.13 million from US $43,344.85 million in 2012-13 showing a negative
growth of 5.18 per cent.
Chemicals and related Products
During the period 2013-14, the value of exports of Chemicals and Related
Products increased to US $ 43,755.48 million from US $ 41,504.68 million in
2012-13 registering a growth of 5.42 per cent. Rubber, Glass & Other
Products, Basic Chemicals, Pharmaceuticals & Cosmetics, Plastic and

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linoleum and residual chemicals & allied products have registered a positive
growth.
Engineering Goods
Items under this group consist of Machinery, Iron & Steel and Other
Engineering items. Export from this sector during the period 2013-14 stood at
US $ 61,623.50 million compared with US $ 56,796.94 million in 2012-13,
registering a positive growth of 8.5 per cent. The growth in export of Residual
engineering items stood at 22.79 per cent, Aluminum other than products
stood at 28.6 per cent, Primary & Semi-finished iron & steel stood at 23.95
per cent, Transport equipment stood at 16.47 per cent and Machinery and
Instrument 5.93 per cent.
Electronic Goods
During the period 2013-14, exports of Electronic Goods as a group was
estimated at US $7,690.68 million compared with US $ 8,442.77 in 2012-13,
registering a negative growth of 8.91 per cent
Textiles
During the period 2013-14, the value of Textiles exports was estimated at US
$ 30,379.55 million compared with US $26,362.39 million in 2012-13,
recording a positive growth of 15.24 per cent. The export of Natural Silk
Textiles, Wool and Woolen manufactures and Jute manufactures registered
negative growth of 8.95 per cent, 7.15 per cent and 3per cent respectively.
However, Readymade Garments, Cotton yarn/Fabrics/Made-ups etc.,
Manmade Textiles & Made Ups etc, Coir and coir manufactures registered a
positive growth of 15.53 per cent, 18.11 per cent, 12.85 per cent and 16.89 per
cent respectively.
Handicrafts and Carpets
Exports of Handicrafts increased to US $ 277.13 million during 2013-14 from
US $ 203.76 million in 2012-13 registering a positive growth of 36.01 per
cent. Export of carpets increased to US $ 1037.11 million from US $ 988.14
million during the same period last year registering a growth of 4.96 per cent.

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Project Goods
During 2013-14, the export of Project Goods were estimated at US $ 39.65
million compared with US $ 145.97 million in 2012- 13 registering a negative
growth of 72.84 per cent.
Petroleum Products
Export of Petroleum Products increased to US $ 62,685.29 million during
2013-14, as compared with US $ 60,859.81 million in 2012-13 recording a
positive growth of 3 per cent.
Cotton Raw including Waste
There was a negative growth in the exports of Cotton Raw including waste by
3.33 per cent from US $ 3,747.73 million in 2012-13 to US $3,622.89 million
during 2013-14.
Imports by Principal Commodities
Disaggregated data on imports by principal commodities, both in Rupee and
Dollar terms, available for the period 2013-14, as compared 2012-13 are given
in Table 3.5 and Table 3.6 respectively. Imports of the top five commodities
during the period 2013-14 registered a share of 60.58 per cent mainly due to
significant imports of Petroleum (Crude & Products), Electronic Goods, Gold,
Pearls, precious and semi-precious stones and Machinery except electrical and
electronic. The share of top five Principal Commodity in Indias total imports
during 2013-14 is given at Chart
Share of Top Five Commodities in India's Imports 2013-14

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The import performance by growth of top five Principal commodities during

2013-14 Vis-a vis the corresponding period of the previous year is shown at
Chart
Growth of Top Five Imports during 2012-13 & 2013-14

Fertilizers
During 2013-14, import of Fertilizers decreased to US $ 6,469.27 million
from US $ 9,074.95 million in 2012-13 recording a negative growth of 28.71
per cent.
Petroleum Crude & Products
The import of Petroleum Crude & Products stood at US $ 165,148.10 million
during 2013- 14 as against US $ 164,040.56 million in 2012- 13 registering a
growth of 0.68 per cent.
Pearls, Precious and Semi-Precious Stones
Import of Pearls and Precious and Semiprecious Stones during 2013-14
increased to US $ 24,001.39 million from US $ 22,666.61 million in 2012-13
registering an increase of 5.89 per cent.
Capital Goods
Import of Capital Goods, largely comprises of Machinery, including
Transport Equipment and Electrical Machinery. Import of Machine Tools,
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Machinery other than electrical, Electrical Machinery and Transport

Equipment registered a negative growth of 25.56 per cent, 14.32 per cent, 2.06
per cent, and 12.86 per cent respectively.
Organic and Inorganic Chemicals
During 2013-14, import of Organic and Inorganic Chemicals increased to US
$ 20,213.03 million from US $ 19,319.84 million in 2012-13, registering a
growth of 4.62 per cent. Import of Medicinal and Pharmaceutical Products
decreased to US $ 2,973.83 million in 2013-14 from US $ 3,117.96 million in
2012-13 registering a negative growth of 4.62 per cent.
Coal, Coke & Briquettes
During 2013-14, import of Coal, Coke & Briquettes decreased to US $
16,431.87 million from US $ 16,995.89 million in 2012-13, registering a
negative growth of 3.32 per cent.
Gold & silver
During 2013-14, import of Gold and Silver decreased to US $ 33,430.94
million from US $ 55,793.71 million in 2012-13 registering a negative growth
of 40.08 per cent.
Direction of Indias Foreign Trade
The value of Indias exports and imports from major regions/ countries both
in Rupee and Dollar terms are given in Table. Share of major destinations of
Indias Exports and sources of Imports during 2013-14 are given in Chart 3.7
and 3.8 respectively. During the period 2013-14, the share of Asia comprising
of East Asia, ASEAN, West Asia, Other West Asia, North East Asia and
South Asia accounted for 49.67 per cent of Indias total exports. The share of
Europe and America in Indias exports stood at 18.65 per cent and 17.35 per
cent respectively of which EU countries (27) comprises 16.5per cent. During
the period, USA (12.53 per cent) has been the most important country of
export destination followed by UAE (9.76 per cent), China P RP (4.76 per
cent), Hong Kong (4.07 per cent) and Singapore (4 percent). Asia accounted
for 60.87 per cent of Indias total imports during the period followed by
Europe (15.7per cent) and America (12.91 per cent). Among individual
countries the share of China stood highest at (11.33 per cent) followed by

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Saudi Arabia (8.12 per cent), UAE (6.47 per cent), USA (4.96 per cent) and
Switzerland (4.31 per cent)

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India's percentage share of the trade to the world trade

The export target for the year 2013-14 was fixed at 325 US $ Billion. India's
percentage share of the trade to the world trade for the year 2013 is 2.07%.
India's share in world trade is given below: Year Total Trade: Value in US
$ Billion Percentage share of India in World Trade World India2011
36830 767.4 2.082012 37012 785.4 2.122013 37658 778.3 2.07Source: World
Trade Organisation (Calendar Year)
With a view to increase our share of trade in global trade, the Government of
India continuously monitors the export performance of different sectors and
takes need based measures from time to time, keeping in view the financial
and overall economic implications. Review of Foreign Trade Policy is a part
of this strategy, and Annual Supplements to the Foreign Trade Policy (200914) were announced time to time. The last Annual Supplement was announced
on 18.4.2013.
Further in order to boost Exports, Government has taken a number of
measures, which, inter alia, include the following:
Two percent Interest Subvention Scheme, which was available for certain
export sectors viz. Handicrafts, Carpet, Handlooms, SMEs, Readymade
Garments, Processed Agriculture Products and Toys, was widened to include
134 tariff lines of Engineering Sector w.e.f 1st January, 2013. Government
enhanced the rate of Interest Subvention from 2% to 3 % with effect from 1
August 2013. As part of product diversification and market diversification
strategy, 47 new items were added to Market Linked Focus Product Scheme
(MLFPS) and 122 new items were added to the Focus Product Scheme (FPS).
Government also notified 153 hi-tech products on 10 July 2013 under Focus
Product Scheme making them eligible for duty script at the rate of 2%

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Indias trade with top most countries

India - US Trade
Trade and commerce form a crucial component of the rapidly expanding and
multi-faceted relations between India and U.S. From a modest $ 5.6 billion in
1990, the bilateral trade in merchandise goods has increased to $ 66.9 billion
in 2014 representing an impressive 1094.6% growth in a span of 24 years.
India's merchandise exports to the U.S. grew by 2.93% from $ 26.32 billion
during the period January - July 2014 to $ 27.09 billion during the period
January - July 2015. US exports of merchandise to India grew by 11.95% from
$ 11.54 billion during the period January - July 2014 to $ 12.92 billion during
the period January - July 2015. India - U.S. bilateral merchandise trade during
the period January - July 2015 was $ 40.01 billion.
Trade during the year the period January - July 2015
i) Major items of export from India to US
Select major items with their percentage shares, are given below.
a) Textiles (17.1%)
b) Precious stones & metals (20.1%)
c) Pharmaceutical products (12.5%)
d) Mineral Fuel, Oil (7.2%)
e) Machinery (5.5%)
f) Organic chemicals (4.5%)
g) Articles of Iron and Steel (3%)
h) Vehicles, excluding railway (3%)
ii) Major items of export from US to India
Select major items with their percentage shares, are given below
a) Precious stones & metals (31.6%)
b) Machinery (9.8%)
c) Mineral Fuel, Oil etc (6.5%)
d) Electrical machinery (6.4%)
e) Aircraft, spacecraft, Parts (6.2)
f) Optical instruments & equipment (6%)
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g) Organic chemicals (3.7%)

h) Plastic Products (3%)

Trends with respect to the major items of bilateral trade during the past
two years are as follows.
India's exports to US Trends in the top 10 items of India's Exports to the
U.S.:

During the period January - July 2015, exports of Cut and polished
diamonds and jewelry exports amounted to $ 5532 million as compared
to $ 5168 million during the period January - July 2014 which is an
increase of 7%.
Pharmaceutical products exports grew by 11% to $ 3383 million, from
$ 3049 million.
Mineral Fuel oil exports fell by 38.3% to $ 1940 million from $ 3145
million.
Machinery exports increased by 18.6% to $ 1500 million from 1265
million.

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Miscellaneous Textile articles grew by 12.9% from $ 1213 million to $

1369 million.
Woven apparel exports increased by 7.4% from $ 1258 million to $
1351 million.
Organic Chemicals exports fell by 7.7% accounting for $ 1232 million
compared to $ 1335 million.
Exports of Knitted apparel exports increased by 12.3% to $ 1003
million from $ 893 million.
Articles of Iron and Steel grew by 22.1% to $ 806 million from $ 660
million.
Vehicles except railway exports grew by 19.5% to $ 798 million from
$ 668 million

US exports to India Trends in the top 10 items of US exports to India:

During the period January - July 2015 exports of Cut and polished
diamonds and jewelry exports amounted to $ 4082 million as compared
to $ 2719 million during the period January - July 2014 which is a
growth of 50.1%.
Machinery exports grew by 5.1% from $ 1205 million to $ 1267
million.
Mineral Fuel, oil grew by 11% to $ 840 million from $ 757 million.
Electrical Machinery exports grew by 9.6% to $ 824 million from $ 752
million.
Aircraft and parts exports fell by 41.6% to $ 807 million from $ 1381
million.
Optical & Medical Instruments exports grew by 5.9%, accounting for $
770 million from $ 727 million.
Organic Chemicals exports grew by 15% from $ 413 million to $ 475
million.
Plastic Products decreased by 0.8% from $ 387 million to $ 383 million.
Edible fruits and nuts exports grew by 32.6% to $ 349 million from $
263 million.
Miscellaneous Chemical products exports fell by 1.8% to $ 337 million
from $343 million

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India UAE Trade

Economic and Commercial cooperation with the UAE is a key aspect of
overall bilateral relationship. The traditionally close and friendly India-UAE
bilateral relationship has evolved into a significant partnership in the
economic and commercial sphere. Indians have emerged as important
investors within the UAE and India as an important export destination for the
UAE manufactured goods. India-UAE trade, valued at US$180 million per
annum in the 1970s is today around US$60 billion making UAE, Indias third
largest trading partner for the year 2014-15 after China and US. Moreover,
UAE was the second largest export destination of India with an amount of
over US$ 33 billion for the year 2014-15. For UAE, India was the largest
trading partner for the year 2013 with an amount of over US$ 36 billion (nonoil trade). India's major export items to UAE include petroleum products;
precious metals, stones, gems and jewellery; minerals; food items (cereals,
sugar, fruits & vegetables, tea, meat, and seafood); textiles (garments, apparel,
synthetic fibre, cotton, yarn); engineering & machinery products and
chemicals. Indias major import items from UAE include petroleum and
petroleum products; precious metals, stones, gems & jewellery; minerals;
chemicals; wood & wood products. With respect to oil trade, UAE was the
sixth largest import source of crude oil for India in 2014-15.

With respect to bilateral investments, total FDI from UAE to India is

estimated to be US$3.01billion (Jan. 2015) and ranked as tenth biggest
investor in India. At the first meeting of India-UAE High Level Task Force
on Investment (HLTFI) held on February 18, 2013 in Abu Dhabi, Abu Dhabi
Investment Authority (ADIA) announced its plans of investing US$ 2 billion
in Indian Infrastructure sector. The second meeting of HLTFI was held in

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Recent trends in global trade

March 2014. Also several joint working groups were set up to address issues
of mutual interest in sectors including infrastructure, energy & investment.

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Recent trends in global trade

India EU trade
India has embarked on a process of economic reform and progressive
integration with the global economy that aims to put it on a path of rapid and
sustained growth. However, India's trade regime and regulatory environment
remains comparatively restrictive India still maintains substantial tariff and
non-tariff barriers that hinder trade with the EU. In addition to tariff barriers
to imports, India also imposes a number of non-tariff barriers in the form of
quantitative restrictions, import licensing, mandatory testing and certification
for a large number of products, as well as complicated and lengthy customs
procedures.
With its combination of rapid growth, complementary trade baskets and
relatively high market protection, India is an obvious partner for a free trade
agreement (FTA) for the EU.
The parameters for an ambitious FTA were set out in the report of the EUIndia High Level Trade Group in October 2006, which was tasked with
assessing the viability of an FTA between the EU and India. Other studies
have reinforced the economic potential of an FTA between the EU and India,
notably a sustainability impact assessment was carried out by the EU.
Negotiations for a comprehensive FTA were started in June 2007 and are
ongoing. This would be one of the most significant trade agreements, touching
the lives of 1.7 billion people.
India enjoys trade preferences with the EU under the Generalised Scheme of
Preferences.
To assist India in its efforts to better integrate into the world economy with
a view to further enhancing bilateral trade and investment ties the EU is
providing trade related technical assistance to India. This is part of the EU's
assistance programmes with India.
Trade picture

India is an important trade partner for the EU and an emerging global

economic power. The country combines a sizable and growing market
of more than 1 billion people.

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Recent trends in global trade

The value of EU-India trade grew from 28.6 billion in 2003 to 72.5
billion in 2014.
EU investment stock in India is 34.7 billion in 2013.
Trade in commercial services quadrupled in the past decade, increasing
from 5.2billion in 2002 to 23.7 billion in 2013.

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Recent trends in global trade

India China Trade

Indian Exports to China is an integral part of the bilateral trade relations
between the two Asian countries, India and china. Indian Exports to China
focus on mainly primary products. In 1984, India and China signed a trade
agreement, providing for Most Favored Nation treatment, to foster greater
cooperation between each other. Moreover, the year 2006 was celebrated as
Friendship Year between India and China.
Items of Indian Exports to China
The principal items of Indian exports to China comprise of ores, slag and ash,
iron and steel, plastics, organic chemicals, and cotton. In order to increase the
extent of exporting Indian goods to China, however, there should be a special
emphasis on investments and trade in services and knowledge-based sectors.
At present, iron ore constitutes about 53% of the total Indian exports to China.
The other items that have potentials are marine products, oil seeds, salt,
inorganic chemicals, plastic, rubber, optical and medical equipment, and dairy
products. Not only this, great potential exists in areas like biotechnology, IT
and ITES, health, education, tourism, and the financial sector - all of which
will contribute to the services and knowledge based sectors.
The need is to shift the focus from primary exports to the export of diverse
range of high value added products, including

Auto engine components and automobiles

Organic and inorganic products
Pharmaceuticals
Metal and metal based products like alloy steel bars and rods
Agricultural products like grains, tobacco and oilseeds
Engineering goods like diesel engines and compressors
Marine foods
Fresh and processed fruits and vegetables
Medical and optical diagnostic equipment and laboratory equipment
Consumer durables
Textile yarns

Such diversification of Indian exports to China clearly indicates that there

exists a steady demand for these products in the Chinese.
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Recent trends in global trade

Chinese exports to India focuses on resource based exports as well as the

exports of manufactured products. China has emerged as a global
manufacturing center and India as the most lucrative market in the world.
In 2004, the Chinese exports to India stood at US$ 5926.67 million. However,
it industrialists in India were not in favor of China being given free access to
the domestic markets. But bilateral trade relations between India and China
have increased over the years, reaching US$18.7 billion in 2005 from US$ 4.8
billion in 2002. However, the bilateral trade is to be increased further to US$
20 billion by 2008 and further to US$30 billion by 2010.
Items of Chinese Exports to India
The main items to be exported from China to India are electrical machinery
and equipment, organic chemicals, nuclear reactors, boilers, machinery, silk,
mineral fuels, and oils. Value added items also dominate Chinese exports to
India, like machinery, specially electrical machinery, which forms about 36%
of Chinese exports to India.
Recent developments regarding Chinese Exports to India

In the beginning, Chinese firms were keen on exporting cheap

electronic items, garments, and toys to the Indian markets. But recently,
Chinese exporters have been focusing on the cement market. Two
Chinese cement companies, Yingde Dragon Mountain Cement
company Ltd. and Longkou Fanlin Cement Company have been
authorized to sell cement in Indian market. The reasons behind the
sudden interest of the Chinese cement companies in penetrating the
Indian market are that China is the world's largest cement producer and
that the per capita cement consumption is relatively low in India around 150 kilogram per annum, less than one-third of China's per
capita consumption, as in 2006. An Ahmadabad-based textile company
is acting as the local agent of the Chinese firms in India.

The prospects for Chinese exports to India have been enhanced from
2006, with the opening of the prospective Indo China border trade.
Trade has been initiated between Tibet, an autonomous region of China,
and India through Nathu La Pass, reopened after 44 years. From then
onwards, nearly 15 items are being exported from China to India.

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Recent trends in global trade

CHAPTER 3
CONCLUSION
The global trade landscape has changed over the past few decades. This has
lead to increased interconnectedness and strengthened trade spillover
channels.
The relative importance has changed from large advanced economies such as
japan and the United Kingdom to EMEs such China and India. Importantly,
china is now on par with the United States ranking first in systemic importance
not only in terms of size but also in terms of significant bilateral trade
relations. This has important implications on trade spillovers as the sources of
demand shift from advanced countries to EMEs.
India's exports grew by 3.98 per cent to $312.35 billion in FY 2013-14 while
imports fell by 8.11 per cent during the period. Imports declined to $450.94
billion, narrowing the trade deficit to $138.59 billion in the last fiscal. In FY
2012-13, trade deficit stood at $190.33 billion. However, in March exports
contracted by 3.15 per cent to $29.57 billion and imports fell by 2.11 per cent
to $40 billion as compared to the same period last year. Trade deficit during
the month was at $10.5 billion as against $10.4 billion in March 2013.In FY
2012-13, the country's merchandise exports had aggregated at $300.4 billion.
The overall shipments in 2013-14 fell short of the target of $325 billion fixed
by the government for the period.
Initially, a trade deficit is not a bad thing. It raises the standard of living of a
country's residents, since they now have access to a wider variety of goods
and services for a more competitive price. It can reduce the threat of inflation,
since the products are priced lower. A trade deficit can also indicate that the
country's residents are feeling confident, and wealthy, enough to buy more
than the country produces.
Over time, however, a trade deficit can cause jobs outsourcing. That's because,
as a country imports certain goods rather than buying domestically, the local
companies start to go out of business. The domestic business itself will lose
the expertise needed to produce that good competitively. As a result, fewer
jobs in that industry are created in the home country. Instead, the foreign
companies hire new workers to keep up with the demand for their exports.

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For this reason, many leaders propose reducing the trade deficit to increase
jobs. They often blame trade agreements for causing deficits. A great example
is the world's largest agreement, the North American Free Trade Agreement,
or NAFTA. A response to trade deficits is often to raise import tariffs, or other
forms of trade protectionism. However, these rarely work. That's because the
industry is usually already moribund, and the skills lost, by the time these
policies are suggested. For more, see Pros and Cons of Trade Agreements.

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BIBILIOGRAPHY

Economics of Global Trade and Finance Manan Prakshan & Sheth

Publication
http://www.ecb.europa.eu
http://commerce.nic.in
http://www.yourarticlelibrary.com/foreign-trade/5-major-current-trends-inforeign-trade

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