International Trade – Old Year Questions

• In the Union Budget for 2020-21, Finance Minister Nirmala Sitharaman announced a new scheme called NIRVIK.
• This scheme will give small exporters better insurance and lower premiums.
• Its goal is to make it easier for businesses to get credit for their exports.

• On April 27, 2021, the Trade Ministers of India, Japan and Australia had a virtual meeting to officially start the Supply Chain Resilience Initiative.
• This Initiative is focused on helping a country keep their imports flowing, even if something unexpected happens.
• SCRI encourages countries to depend on more than one or two suppliers, so that if one fails, they have other options.

• The Indian Government’s Ministry of Commerce and Industry deals with India’s Foreign Trade Policy. Currently, Piyush Goyal is the Minister of Commerce and Industry.

• As per the India’s Foreign Trade Policy (2015-20), the longterm vision of the Department of Commerce was to make India a major player in the world trade by 2020 and assume a role of leadership in the international trade organizations commensurate with India’s growing importance.

• The Economic Survey 2021-22 reported that India’s exports in 2020-21 were $291.81 billion, compared to $313.36 billion in 2019-20, while imports were $394.44 billion (compared to $474.71 billion in 2019-20).
• This makes statement 1 correct. However, statement 2 is incorrect because imports of iron and steel, chemical fertilizers and machinery have increased in recent years.
• For services, exports were $206.1 billion in 2020-21 (compared to $213.2 billion in 2019-20), while imports were $117.5 billion (compared to $128.3 billion in 2019-20), making statement 3 correct.
• Lastly, statement 4 is correct because the current account deficit (CAD) averaged 2.2 percent of GDP in the past 10 years, due to a higher merchandise trade deficit.
• The Economic Survey 2021-22 reported a surplus of $23.9 billion (0.9 percent of GDP) in 2020-21, but this flipped to a deficit of $3.1 billion (0.2 percent of GDP) in the first half of 2021-22 due to a sharp rise in the merchandise trade deficit.
• This question has been cancelled in the official UPSC answer key.

• In the 2011-12 financial year, India’s external trade was 3811360 crore rupees.
• None of the given options matches this. According to the Ministry of Commerce and Industry’s press release in April 2022, India’s exports and imports are predicted to reach an all-time high in 2021-22.
• Exports are estimated to be 669.65 billion US dollars (419.65 billion in merchandise and 50 million in services), while imports are estimated to be 756.68 billion US dollars (611.89 billion in merchandise and 144.79 billion in services).
• Compared to the previous year, exports and imports are expected to increase by 34.50% and 47.80%, respectively.

• The Department of Commerce reported that India’s total external trade in 2011-12 was Rs. 3811360 crore.
• None of the options mentioned were correct.
• According to a press release by the Ministry of Commerce and Industry in April 2022, India’s overall exports and imports are estimated to reach record highs of US $669.65 billion and US $756.68 billion respectively in 2021-22.
• India’s exports and imports are expected to grow by 34.50% and 47.80% compared to the previous year.

• The Trade-to-GDP ratio is a measure of how much international trade impacts a country’s economy.
• According to World Bank data, India’s Trade-to-GDP ratio has been above 50% only four times since 2000, with the highest being in 2008.
• In 2019 it was 39.4%, but in 2020 it dropped to 37.9%. None of the given statements is true.

• Option (b) was the closest answer in the question period.
• The World Bank data shows that India’s trade in goods as a percentage of GDP was 28.2% in 2019 and 24.4% in 2020.

• Option (b) was the right answer in the question round. The World Bank data shows that the sum of imports and exports of goods (total merchandise trade) is equal to 24.4 percent of the GDP in 2020.

• In 2010-11, India’s exports and services made up about 22% of its Gross Domestic Product (GDP).
• The World Bank states that in 2020, India’s exports made up 18.66% of its GDP and imports made up 19.21%.

• In the 1990s, India’s share of international goods exports was between 0.5% and 0.7%.
• This makes option (a) the correct answer for the question period.
• According to the World Trade Statistical Review 2021 from the World Trade Organization, India’s share of total merchandise exports in the world was 1.6% in 2020, which was 1.7% in 2019.
• India ranked 21st in the world for exports and 14th for imports in 2020.

• In 2018 and 2019, India’s share of the world’s total merchandise exports was 1.7%.
• However, according to the World Trade Organization’s latest data, India’s share has now decreased to 1.6% in 2020.

• The Economic Survey 2015-16 reported that India’s services exports increased from $16.8 billion in 2001 to $155.6 billion in 2014, making India the 8th biggest services exporter in the world.
• The Economic Survey 2021-22 stated that India was still among the top ten services exporters (and importers) in 2020, with its share of the world’s commercial services exports increasing from 3.4% in 2019 to 4.1% in 2020.
• The Ministry of Commerce and Industry PIB press release on April 13th, 2022 estimated that India’s services exports would reach a targeted $250 billion during April-March 2021-22, which is a 21.31% growth from the fiscal year 2020-21.
• The World Trade Statistical Review 2021 released by the WTO revealed that India was the 7th largest exporter (with 4.1% share) of commercial services in the world in 2020, while India was 10th in terms of import of commercial services (with 3.3% share).

• In international trade, the United States used to have the biggest portion, but now China takes the lead. According to the WTO’s 2021 World Trade Statistical Review, the top 5 countries in merchandise exports/imports and services exports/imports in 2020 are the US, China, Germany, Japan, and other countries.

• Currently, Asia is India’s biggest trading partner. The 2021-22 Economic Survey states that India’s imports and exports are directed towards Asia.

                      Region Share in 2020-21 (%) Share in 2021-22 (P) (%)  
                   April – March April – November
                 Import Export Import Export

• • • • • • Asia                                                                  62.1 46.5 62.8 45.1
          • E. Asia (Oceania)                                       2.2 1.6 2.9 1.9
          • Asean                                                               12.0 10.8 11.0 10.2
          • Africa                                                               7.2 9.5 7.8 9.5
          • America 1                                                       1.9 23.2 12.2 24.0
          • North America                                            8.7 19.8 8.4 20.4
          • Latin America                                           3.2 3.5 3.8 3.7
          • Europe                                                            16.5 19.0 15.1 19.8
          • European Union (EU)                             10.1 14.2 8.5 14.8

• Europe is the largest provider of goods that are imported into India in terms of money.
• Many of the imported items, such as items for the home and luxury items, originate from Europe.

• Currently, Asia is India’s biggest trading partner. The 2021-22 Economic Survey states that India’s imports and exports are directed towards Asia.

                      Region Share in 2020-21 (%) Share in 2021-22 (P) (%)  
                            April – March April – November
                           Import Export Import Export

Asia                                                                  62.1 46.5 62.8 45.1
E. Asia (Oceania)                                       2.2 1.6 2.9 1.9
Asean                                                               12.0 10.8 11.0 10.2
Africa                                                               7.2 9.5 7.8 9.5
America 1                                                       1.9 23.2 12.2 24.0
North America                                            8.7 19.8 8.4 20.4
Latin America                                           3.2 3.5 3.8 3.7
Europe                                                            16.5 19.0 15.1 19.8
European Union (EU)                             10.1 14.2 8.5 14.8

• China is India’s biggest supplier of goods. In 2022, Chinese goods made up 35.6% of all the things India imported.
• India buys more from China than it sells to China.

• The Economic Survey 2021-22 showed that India did most of its importing from the Organization of the Petroleum Exporting Countries (OPEC).
• 62.1 percent of India’s imports came from Asia, and 27.4 percent of that came from North East Asia last year.

• The data from 2010-11 to 2011-12 showed that China and UAE had the biggest share in India’s foreign trade.
• The data from 2020-21 showed that China was India’s top trading partner, followed by the USA and UAE.
• The most recent data (April-February 2021-22) reveals that the USA, China, and UAE are India’s top three trading partners.

• In 2006-07, India’s major trading partners were the USA (9.8%), China (8.3%), UAE (6.6%) and Saudi Arabia (5.1%).
• In 2020-21, China was India’s largest trading partner (imports and exports combined), followed by the USA and UAE. As of 2021-22 (April-February), India’s biggest trading partners are the : 1. USA, 2. China, 3. UAE.

• The Ministry of Commerce’s website shows that the USA was India’s biggest trading partner in 2019-20, followed by China and the UAE.
• China was India’s top trading partner the following year. In 2021-22 (April-February), the USA has regained its position as India’s number one trading partner, with China and the UAE in 2nd and 3rd place.

• According to the Ministry of Commerce website, the United States was India’s top trading partner in 2019-20, followed by China and the United Arab Emirates.
• In 2020-21, China was India’s top trading partner, followed by the US and the UAE. In 2021-22 (April-February), the US regained the top spot as India’s largest trading partner.

• For the last year (2020-21) China was India’s biggest trading partner, but now (2021-22) the United States has taken that spot.

• India has the most trade surplus with the USA in the years 2019-20, 2020-21, and 2021-22.
• The USA is one of the few countries India has more money coming in from than going out.
• According to the 2021-22 Economic Survey, India had a trade surplus of $22.75 billion with the USA in 2020-21.
• According to US government data, the trade gap between the countries has risen to $33.13 billion in 2021 from $24.12 billion in 2020. India has the most trade deficit with China ($44.02 billion in 2020-21).

• Trade on current account is made up of buying and selling of goods and services both now and in the past. India’s biggest trading partner currently is the United States.

• In India’s fiscal year 2022, the most imported goods came from China, which made up more than 15%.
• The United Arab Emirates was the second largest contributor, accounting for over 7%.

• China is India’s biggest provider of goods. In 2022, China made up a bit more than 15% of India’s imports, with an average worth of around 94.5 billion dollars.
• From 2020 to 2022, China’s portion of India’s imports increased by 45.02% from 2020 to 2022.

• The amount of money traded between India and Sri Lanka has changed a lot in the past 10 years, going up and down.
• It wasn’t the same every year and so statement 1 is not true. Bangladesh is India’s biggest trading partner in South Asia, but India exported more than it imported from Bangladesh in 2020-21.
• This means statement 3 is wrong. Statement 3 is correct though because clothing makes up around 30% of India and Bangladesh’s trade.

• The question asked had only one correct answer, which was option C.
• China is currently India’s biggest supplier of imports, while India still relies heavily on Russia for its defense needs.
• According to the SIPRI Report from March 2022, the main countries supplying arms to India from 2017 to 2021 have been Russia (46%), France (27%) and the United States (12%).

• The United States is the largest recipient of India’s exports, valued at over $76 billion.

• In 2009-10, the UAE had the most exports from India.
• For more information, check out the answer to this question.

• Option (c) was the correct answer as asked.
• The Economic Survey 2021-22 reported that India’s total merchandise exports to the USA in 2020-21 were at 17.7%.
• For 2021-22 (April to November), this number is estimated to be 18.4%.

• India only had two years, 1972-73 and 1976-77, when its trade balance was positive, with the amount of Rs. 104 crore and Rs. 68 crore respectively.
• Other than that, India had a negative trade balance from 1949-50 to 2019-20, according to the Economic Survey 2021-22. India’s total exports and imports for 2020-21 are US $291808 million and US $394436 million respectively.

• India only had a positive trade balance in 1972-73 (Rs. 104 crore) and 1976-77 (Rs. 68 crore).
• The Economic Survey 2021-22 states that India’s trade balance was negative from 1949-50 to 2019-20, except those two years.
• For 2020-21, India’s total exports are US $291808 million and total imports are US $ 394436 million.

• India’s trade deficit was at its highest in 2012-13 at $195.66 billion. Since 2013-14, its deficit went down steadily to $112.44 billion in 2016-17.
• This was due to a decrease in both imports and exports. After 2016-17, the deficit rose again and was $157.51 billion in 2019-20 and $102.15 billion in 2020-21.

• Balance of Trade is a measurement of what a country exports and imports in a given period of time.
• When the value of exports and imports are equal, the BoT is balanced.
• If a country exports more than it imports, there will be a surplus.
• And if a country imports more than it exports, there will be a deficit.
• The BoT only takes into account visible items, whereas the Balance of Payments includes visible and non-visible items.

• Net exports is the amount of money made by a country from selling goods and services to other countries, minus the amount spent on buying goods and services from other countries.
• If the value is positive, then the country has a trade surplus, but if it is negative, then the country has a trade deficit.

• Foreign trade includes both imports and exports, so Balance of Payment isn’t just about the benefits of either.
• The amount of money a country makes from foreign trade increases when exports go up.
• Balance of Payment is a record of a country’s international business activities (including foreign trade) over a certain period of time (usually a year). Therefore, option (d) is the correct answer.

• The Balance of Payments (BoP) is a record of the transactions between the people living in a certain country and the people living outside of that country in a set amount of time (usually one year).
• It includes both the current account and the capital account.
• The current account tracks the buying and selling of goods and services and any payments sent or received, while the capital account looks at the buying and selling of assets like money, stocks, and bonds.

• The Balance of Payments (BoP) is a record of all the trading activities between people living in a country and people living in other countries.
• This includes imports and exports of goods and services, as well as money and assets being bought and sold.
• The BoP is divided into the current and capital accounts, which keeps track of different types of transactions.

• The balance of payments (BOP) is a record of all the money traded between a country and other countries over a certain amount of time.
• It is also known as the balance of international payments.

• The Balance of Payment includes everything from what is bought and sold (visible trade), services and money transfers (invisible trade), and borrowed money (borrowings).
• Visible items are physical goods that can be seen, counted, and weighed at customs.
• Invisible items are services, transfer payments, etc. Both of these are noted under the current account.
• The capital account records foreign investments and borrowings.

• The Current Account of the Balance of Payments is made up of two types of transactions: visible (import and export of goods) and invisible (trade in services and transfer payments).
• Balance of Trade is the difference between the value of the goods exported and imported by a country over a certain period of time.
• The Current Account is made up of the Balance of Trade and the Balance of Invisibles.

• The current account is a record of a country’s dealings with the rest of the world in a given period.
• It includes net trading of goods and services, earnings from investments abroad, and money sent or received in the form of transfers.
• If a country spends more money than it takes in from trade, services, transfers, and income, it is said to have a Current Account Deficit (CAD).
• This happens when a country imports more than it exports. A is correct but R is incorrect.

• The current account is a record of a country’s international transactions, including its imports and exports of goods and services, as well as its earnings from investments in other countries and payments made to other countries.
• A Current Account Deficit (CAD) is when a country spends more money than it makes from these activities. Statement A is true, but statement R is false.

• The agricultural commodities exported from India fall broadly in three categories :

1. Traditional export items – These products are cashew nuts/shelled, coffee, tea, fruits, spices, castor oil, raw cotton, sugar and tobacco unmanufactured.
2. Non-traditional items with uncertainty – These items are raw wood, raw jute, gums, resins and lac, essential and non-essential vegetable oils (excluding castor oil).
3. Non-traditional items with good prospects – These items are meat and meat preparations, floriculture products, processed fruits and juices, processed vegetables, wheat, rice, HPS groundnut, shellac, oil meals, sesame and niger seeds.

• Year Net availability of Edible Oils from all Domestic Import

Sources
(lakh tonnes)        (lakh tonnes)

• • 2011-12             89.57 99.43
  • 2012-13            92.19 106.05
  • 2013-14            100.80 109.76
  • 2014-15            89.78 127.31
  • 2015-16            86.30 148.50
  • 2016-17            100.99 153.17
  • 2017-18            103.80 145.92
  • 2018-19            103.52 155.70
  • 2019-20           106.55 134.16
• The table shows that India imports more edible oils than it produces.
• India is a major producer of oilseeds and contributes 10% of the world’s production.
• But the demand for edible oils is more than the domestic production, meaning India needs to import more.
• The government is reducing the import tax on edible oils to make sure domestic prices stay low.

• In 2000-01, pearls, gems, and other valuable stones were the most expensive items imported, accounting for 8.3% of all imports.

• Currently, India spends the most money on foreign exchange to buy petroleum products.
• In 2020-21, the total cost of the imports was 82684 million US dollars (611353 crore rupees).
• This accounted for 21.0% of India’s total imports.
• In 2019-20, the cost of these imports was 27.5% (925168 crore rupees) of India’s total imports.

• Fuel and oil products are the most valuable things India imports.
• India only produces 20% of the crude oil it needs, so it has to import 80% of it.
• This makes up about 22% of India’s total imports.

• Among the given options, petroleum has been the most important item in the total imports of India in recent years. As per the Economic Survey 2021-22, the percentage share of these items in total imports is as follows :
  Commodity
  Percentage Share in Imports
  2020-21 2019-20 2021-22 (P)
  (Apr.-Sep.)
  • Chemicals 7.9 6.6 7.8
  • Fertilizers 1.9 1.6 1.9
  • Petroleum, Oil & Lubricants 21.0 27.5 25.6
  • Edible oils 2.8 2.0 3.2
  • Iron & Steel 2.1 2.3 2.0

• As per the question period, and at present petroleum products and capital goods jointly are the largest items of import in India. According to the Economic Survey 2021-22, the percentage share of major imports is as follows :
• Commodity
  Percentage Share in Imports
  2020-21 2019-20 2021-22 (P)
  (Apr.-Sep.)
• Fuel 25.1 32.2 30.0
• Petroleum, Oil & Lubricants 21.0 27.5 25.6
• Coal 4.1 4.7 4.4
• Capital Goods 12.7 13.7 9.7
• Food and allied products 4.5 3.5 4.6
• Fertilizers 1.9 1.6 1.9
• Chemicals 7.9 6.6 7.8
• Pearls, precious and
• semi-precious stones 4.8 4.7 5.4
• Gold & Silver 9.0 6.5 9.0

• India imported a huge amount of crude petroleum in the last fiscal year, which was 105% more than the amount imported the year before.
• 35% of the petroleum products India uses come from other countries, like Iran, Kuwait, Iraq, and Saudi Arabia.

• According to the information from 2020-21, option (a) is the correct answer. To view the most recent percentage of main imports, please refer to the explanation of the above question.

• In 2001-02, India imported around 27.2% of their total imports in terms of crude and petroleum products.
• This was a decrease of 1.6% from the previous year. According to Economic Survey 2021-22, this number has gone down to 21.0% in 2020-21.
• India’s exports have also decreased in the years 2019-20 and 2021-22 by 5.1% and 6.9% respectively, compared to the previous ones.

• As per the question period, sequence given in option (c) was the correct answer. According to the Economic Survey 2021- 22, import values (in Rs. cr.) of these items in recent years are as follows :

Import value (Rs. cr.)

Items 2020-21 2019-20

• • Capital goods                                                              406644 485797
  • Petroleum (POL)                                                       611353 925168
  • Pearls, precious and semiprecious stones            139024 159066
  • Chemical elements and compounds                      209326 199974
  • Iron & Steel                                                                 61288 75855

• Qatar is India’s biggest source of liquefied natural gas (LNG). India imports gas from Qatar and also looks for other ways to get their own natural gas.
• BP’s Statistical Review of World Energy shows that India imported 36 billion cubic metres (bcm) of LNG in 2020, mostly from Qatar (14 bcm), UAE (5 bcm), Nigeria (4 bcm), USA (3 bcm) and Angola (3 bcm).
• U.S. Energy Information’s data from May 2020 shows that since 2011, India has been the fourth-largest importer of LNG in the world.

• WTI is a type of crude oil. It is one of three major kinds of oil traded in the market, along with Brent and Dubai crude.

• The Port of Haldia is a large port and city with industry in the West Bengal region.
• Products coming into the port include fertilizers, grains, sugar, paper, coal, oil, coke, soda ash, iron, steel, limestone, machines, scrap, vegetables, and other goods.

• Once the paperwork is done and the importer has enough foreign currency to pay for the goods, the next step is to place an order.
• This order is called an Indent and it marks the start of the import process.

• The Importer’s bank (Issuing Bank) creates a written agreement (Letter of Credit) promising to pay the Exporter (Beneficiary) a certain amount of money within a certain time period when they receive certain documents.
• After the two parties agree on the sale of goods, the Importer asks their bank to issue the Letter of Credit to the Exporter.

• When two parties (the Importer and the Exporter) agree to a sale of goods, the Importer’s bank (the Issuing Bank) promises to pay the Exporter (Beneficiary) up to a certain amount of money within a certain amount of time if the proper documents are presented.
• This promise is known as a Letter of Credit (L/C).

• As per the question period as well as at present, manufactured goods have the largest share in total exports of India. According to the Economic Survey 2021-22, percentage share of major exports is as follows :

• The fact that manufactured goods are now making up a bigger portion of our exports shows that our economy is becoming more modern.
• At first, we usually exported agricultural products and imported manufactured goods.
• The rise of industrial production and exports of manufactured items suggests that the Indian economy is changing in a positive way as it moves toward modernization.

• As per the question period and at present option (b) is the correct answer. According to the Economy Survey 2021-22, value of principal exports (in US $ million) from India are as follows :

Item 2020-21 2019-20

• Agricultural and allied products 41714 35012
• Textiles and clothing 29877 33379
• Gems and Jewellery 26023 35898
• Chemicals and allied products 31165 31314
• Engineering Goods 76720 78704
• Mineral fuels and lubricants 26838 42671
• As per the data of Ministry of Commerce and Industry
• As per the data of Ministry of Textiles
• From the above table, it is clear that engineering goods has
• highest value and share in exports from India.

• • Agricultural and allied products 41714 35012
  • Textiles and clothing 29877 33379
  • Gems and Jewellery 26023 35898
  • Chemicals and allied products 31165 31314
  • Engineering Goods 76720 78704
  • Mineral fuels and lubricants 26838 42671

As per the data of Ministry of Commerce and Industry As per the data of Ministry of Textiles From the above table, it is clear that engineering goods has highest value and share in exports from India.

• In 2022, India exported engineering goods worth more than 8.4 trillion rupees.
• This includes things like iron and steel items, non-ferrous metals, industrial machinery, and cars.

• As per the Economic Survey 2021-22, the percentage share of major exports in recent years is as follows :
• Commodity Percentage share 2020-21 2019-20
• Agricultural and allied products 14.3 11.2
• Gems & Jewellery 8.9 11.5
• Machinery & Instruments 8.5 8.6

Textiles & Clothing in which 10.2* 10.7*

1. Readymade Garments 4.2 4.9
2. Cotton yarn, fabrics, made-ups etc. 3.0 2.8

• Chemicals and allied products 9.9 10.0
• Electronic goods 3.5 3.5
• Tea & Coffee 0.5 0.5
• Leather & Footwear 1.2 1.6
• Manufacture of metals 5.6 4.9
• Transport equipments 6.2 6.8
• As per the data of Ministry of Textiles

• India’s main exports were clothing and jewelry. For more information, see the answer to the above question.

• The most exported items from India are readymade clothes and jewelry. For updated information, refer to the above question.

• In fiscal year 2022, petroleum products had the largest share of India’s exports, around 16%. This is an increase from the previous year, where petroleum exports accounted for 21.1% of total exports.

• In 2010, India exported around 18% of gems and jewellery.
• The Economic Survey 2021-22 reported that in 2020-21, gems and jewellery accounted for 8.9% of India’s commodity exports.

• Option (b) was the correct answer in the question period.
• In the past few years, the highest value of agricultural exports from India has been from cereals.
• The Economic Survey 2021-22 stated that some of the major goods exported by India are cereals, marine products, vegetables and fruits, tea and mate, coffee and substitutes, spices, and meat and meat preparations.

• India exported 3.0% of meat and meat preparations in 2017.
• However, the Economic Survey 2021-22 states that India’s export of meat and meat preparations decreased to 2.5% in 2018.

• India earns the most money from other countries by selling textiles.
• The Ministry of Commerce and Industry has reported that in 2019-20, India earned $34.22 billion from textile exports, which is lower than the $37.50 billion earned in 2018-19.

• India is known for being the biggest supplier of polished diamonds in the world, according to the Gem and Jewellery Export Promotion Council.
• India’s gem and jewelry sector has been a major contributor to the country’s foreign exchange earnings.
• This is due to the availability of professionals who are skilled in cutting and polishing the imported diamonds. India is the main hub for the global jewelry market because of its low costs and skilled labor.
• The country has a cutting and polishing industry that is supported by government policies.
• The Indian government allows 100% foreign direct investment in the sector.
• In 2019-20, India exported a total of 18.66 billion US dollars worth of cut and polished diamonds.

• India imports fruits, dry fruits and palm oil from the arid and semi-arid countries in middle east.

• Tiruppur (or Tirupur), located in Tamil Nadu, India, is known as the “Manchester of South India” and is famous for its textiles.
• It produces a large amount of hosiery, knitted garments, casual wear and sportswear, and exports most of it to other countries.
• The city is responsible for an amazing 90% of India’s cotton knitwear export.

• Data from World Integrated Trade Solution (WITS) shows that the United States is the biggest buyer of Indian textiles.
• In 2019, India sent the most textiles to the US (23.82%), followed by the UAE (6.88%), the UK (6.07%), Bangladesh (5.80%) and Germany (4.27%).

• As per the question period as well as in 2019-20, Maharashtra contributed maximum to India’s export. India’s top exporting States and value of their exports (in US $ million) in recent years are as follows :
  • State 2018-19 2019-20
  • Maharashtra 72809.28 64906.06
  • Gujarat 67412.15 63448.40
  • Tamil Nadu 30525.91 30014.55
  • Uttar Pradesh 16289.17 16989.21
  • Karnataka 17341.29 16639.45
• Note : As per NITI Aayog’s ‘Export Preparedness Index 2021’ (Released in March, 2022), the top 3 exporter States (and their share in country’s total exports) in 2020-21 are as follows :

1. 1. 1. Gujarat (20.83%)
      2. Maharashtra (20.06%)
      3. Tamil Nadu.

• The Economic Survey 2021-22 showed that total exports decreased by 6.9 percent in 2020-21 compared to the year before.
• Iron, steel, coffee, textiles, and marine products also experienced a decrease in growth during this time period. Option (d) was the correct answer for the question period.

• Japan buys a lot of iron ore from India’s Bailadila mines. India also sends leather goods to Russia and cotton fabrics to the United States. This is why option (b) is the correct answer.

• In 2003-04, China was the biggest buyer of India’s iron and steel exports with a 23.0% share.
• In 2018, Nepal was the biggest market for India’s steel with 20%, followed by Italy (9%), Belgium (7%), UAE (7%) and Vietnam (5%).
• During 2019-20, India exported the most amount of finished steel to Vietnam, with UAE and Italy following.
• India’s finished steel exports in 2020-21 were 10.78 million tonnes, up from 8.3 million tonnes in 2019-20.

• Currently, the United States is the biggest buyer of Indian leather and leather products.
• According to the 2021-22 Economic Survey, India’s total exports for these products was US $3.3 billion last year.
• The most important markets for Indian leather products from April 2019 to March 2020 were the US (17.22%), Germany (11.98%), UK (10.43%), Italy (6.33%) and France (5.94%).

• India’s export registered a high growth rate of about 18 percent in 1994-95.
• According to the Economic Survey 2021-22, export growth rate in 2019-20 and 2020-21 were at (–) 5.1 percent and (–) 6.9 percent (due to COVID-19 Pandemic) respectively.

• The Economic Survey 2007-08 showed that Indian exports grew the most in 2004-05 (30.8%).
• The Economic Survey 2021-22 stated that exports from India increased by 8.7% in 2018-19, however, they decreased by 5.1% and 6.9% in 2019-20 and 2020-21 due to the COVID-19 Pandemic

• In 2015, India became the biggest exporter of rice, taking Thailand’s spot at the top.
• According to United States Department of Agriculture data from April 2021, India remains the biggest exporter of rice in 2020, with Vietnam, Thailand, Pakistan, and the USA following behind.

• Currently, Kenya is the leading tea exporter in the world. According to the Tea Board of India, the top four tea exporting countries in 2019 and 2020 were Kenya, China, Sri Lanka, and India.

• Japan has been the biggest producer of sea pearls for more than 100 years and has developed advanced techniques for growing oysters and making pearls.
• This industry started with Kokichi Mikimoto who had a dream of making beautiful pearls from the Akoya Oyster (a type of mollusc).

• The United States of America currently produces and exports more long staple cotton than any other country in the world.
• In 2018-19 and 2019-20, the top four countries producing long staple cotton were the USA, India, Egypt, and China.
• According to OECDFAO Agricultural Outlook 2019-2020, the USA is the biggest exporter of cotton (long and medium staple) worldwide, making up 31% of the global export.
• India is the top producer of cotton (long and medium staple) followed by China, the USA, Brazil, and Pakistan.

• Currently, IT & Software services is the biggest foreign currency earner for India.
• Exports of software services, including services provided by foreign companies belonging to India, grew by 2.1% in 2020-21 and totaled US$ 148.3 billion.
• Excluding exports through commercial presence, the exports of software services were estimated at US$ 133.7 billion in 2020-21, showing a 4.0% increase from the previous year.
• India’s exports of software services grew by 9.1% in 2019-20.

• During the question period, the Indian software industry and software exports had been growing at over 50% each year.
• During the IX Plan (1997-2002), software industry grew 52% each year and the software export industry grew at 57%.
• This growth in exports was mainly because India was cheaper and offered high quality software solutions with the latest technology.
• As per International Data Corporation (IDC), India’s software market was worth $7.0 billion in 2020, growing 13.4% compared to 2019. It is expected to continue growing at a rate of 11.6% each year until 2025.

• The Reserve Bank of India stated in September 2021 that in 2020-21, India exported software services amounting to $133.7 billion, which was a 4.0% increase from the previous year.
• 65.3% of these exports came from computer services, while 34.7% were from ITES/BPO services.
• The USA was the biggest importer of these software services, getting 54.8% of the total exports.
• Europe, which had a 30.1% share, was primarily made up of exports to the UK.

• When discussing the economy, the people who traveled to India to watch the XIX Commonwealth Games are considered to be exports.
• The money they spent on their trip is called tourism, which is an export but not something you can physically see.

• In the Economy, exporting services is called invisible export.
• This does not involve any physical goods or objects, but mostly involves services like tourism, banking, insurance, software services, financial services, and advertising.

• Entrepot, also known as a trans-shipment port and in the past as a port city, is a place where goods can be brought in, stored, or exchanged before being sent out, without any extra processing or taxes.

• Tariffs are taxes put on items coming from other countries.
• In the past, they were used to make money for governments, but now they are mainly used to help domestic businesses compete with international ones.
• Tariffs make the cost of imported goods go up, and people buy less of them, which leads to more goods being made in the country and higher prices for customers.

• Duty drawback means getting money back for taxes paid on the materials and services used to make products that are exported.

• India is having difficulty increasing its portion of international merchandise exports to 2%.
• Factors like high prices, foreign competition, and low quality goods are making progress difficult.
• Other issues, such as a lack of technological adaptability, no technology-focused foreign investments, and expensive labor and capital, are holding back India’s exports.

• In 1992, the Exim Policy was set for five years.
• The new Foreign Trade Policy was announced in April 2015 and was set to last until 2020.
• Because of the COVID-19 Pandemic, the Government extended the policy until March 2022 and then again until September 2022.

• The aim of the Exim Policy 2002-2007 was to increase exports to at least 1% of the global trade by 2007.
• Electronic Hardware Technology Park units were allowed to sell goods in the Domestic Tariff Area up to 50% of the FOB value of exports, as long as they met the policy’s requirements for net foreign exchange earnings and paid the necessary duties.
• The New Foreign Trade Policy 2015-20 wanted to increase India’s exports from $466 billion in 2013-14 to $900 billion by 2019-20 and its share of world exports from 2% to 3.5%.

• The Indian Government’s Foreign Trade Policy was originally meant to last from April 2015 to March 2020, but due to the COVID-19 pandemic, it was extended to March 2021 and then to September 2021.
• Then, it was extended again for six months until March 2022 and now it has been extended until September 2022.

• In 2004, the Union Government announced the Foreign Trade Policy 2004-09 with the goal of doubling India’s share of global merchandise trade by the end of the policy.
• This policy focused on improving the economy and creating jobs.
• In 2015, a new policy was announced that aimed to increase India’s exports of merchandise and services to US $900 billion by 2019-20 and to raise India’s share in world exports from 2% to 3.5%.
• This new policy also aims to increase exports, create jobs and add value to the country to help meet the ‘Make in India’ vision.

• The aim of the Foreign Trade Policy 2004-09 was to make India’s portion of world trade higher by 2009 – up to 1.5%.
• Therefore, option (c) was the right solution for the given question.
• The Foreign Trade Policy 2015-20 worked to increase India’s share of world exports from 2% to 3.5% by the end of 2019-20.

• In August 2009, India’s Foreign Trade Policy 2009-14 was announced by Anand Sharma, who was the Minister of Commerce at the time.
• The policy aimed to double India’s share of global trade by 2020, double India’s exports of goods and services by 2014, and increase exports by 15% each year, with a target of US$200 billion by 2011 and 25% growth in the following three years until 2014.

• Exporters are grouped into four levels based on their past performance: Export House, Trading House, Star Trading House, and Super Star Trading House, from least to most successful.
• The highest level, Star Trading House, is given to exporters who have done well for many years.

• The EXIM Policy 2002-07 made trade more open, based on market forces, and helpful for international trade.
• The GATT and WTO were created and have had a big effect on making the economy more open. Both the statement and the reason are true, but the reason does not explain the statement correctly.

• In 2009-14, 21 towns were added to the list of ‘Towns of Export Excellence’.
• Now, in the Foreign Trade Policy 2015-20, the list has grown to 39 towns. Noida, from Uttar Pradesh, was recently added in February 2021 as the 39th Town of Export Excellence for apparel products.

• A closed economy is one that does not do business with any other countries.
• It is completely self-sufficient, meaning nothing comes in or leaves the country.

• Globalization is the term used to express the connection between the world’s economies, cultures, and people, which has been caused by goods and services being exchanged between countries, the use of technology, and investments, people, and information moving around.
• Globalization means that there is more freedom of trade between countries and that restrictions on international trade are being removed.

• Globalization means bringing our nation’s economy into the world economy by trading, investing, and migrating.
• It also means having fewer restrictions on our economic relations with other nations.
• So, when we talk about globalization of the Indian economy, it means having as few rules as possible when it comes to our dealings with other countries.

• Globalization of the economy means lowering taxes on imports, getting rid of the need for permits to import, and allowing foreign investments to come in more easily.
• It does not mean getting rid of public companies, which is a big part of making the economy more free and open.

• Globalization is linked to foreign investments and big businesses, which has caused a feeling of hope among small business owners in India. The other statements about globalization are correct.

• Liberalization is the removal of government control over economic activities, allowing businesses to make their own decisions and reducing government interference.
• In 1991, India adopted a new economic policy which caused a big change in the economy.
• One way to liberalize the economy is to reduce import taxes on capital goods, so that capital can move freely.
• This enables local entrepreneurs to use better technology to compete in the global marketplace. Both of these statements are correct and explain one of the ways to liberalize the Indian economy.

• In 1991, India began to become more liberalized when Prime Minister P.V. Narsimha Rao implemented a new economic policy.

• The growth of large international companies in India is linked to the government’s policies of privatization, globalization, and freeing up of markets.

• In 1991, agriculture was responsible for almost 30% of India’s total GDP, but in 2017 it only accounted for 17%.
• According to WTO data, India’s share of exports in the world’s trade in 2020 was 1.6%, but in 1990 and 2000 it was only 0.5% and 0.7%, respectively.
• FDI into India went from $4,029 million in 2000-01 to $45,148 million in 2014-15 and $81,722 million in 2020-21.
• Additionally, India’s foreign exchange reserves increased from $1.1 billion in 1991 to $300 billion in 2014 and $606.48 billion in 2022. Therefore, statements 2, 3, and 4 are correct.

• A free trade policy is an agreement between two or more countries to make it easier for products and services to be bought and sold between them.
• This means that the governments involved reduce taxes, limits, payments, or bans on trading, so it can happen without any restrictions.

• In India, certain zones have been set up to help businesses that export goods. In these zones, goods can be brought in, stored, worked on, and then sent to other countries without having to pay any import taxes.

• In India, certain areas have been set up to encourage exports called Free Trade Zones (SEZs/FTWZs).
• These zones allow goods to be brought in, stored, changed, and shipped out without paying a customs tax.

• In India, the SEZ policy was first established on April 1, 2000.
• It was created to attract foreign investment and provide an efficient environment for exporting.
• The purpose of this policy was to increase the country’s exports and make sure that domestic businesses had the same opportunities as their international competitors.

• The Special Economic Zone policy in India was created in April 2000 in order to attract foreign investment and create a smooth environment that would make exports easier.
• The purpose was to help make exports from India more competitive and give domestic companies the same opportunities as their global competitors.

• In May 2005, the Special Economic Zone (SEZ) Act was passed by Parliament and was approved by the President on June 23, 2005. This Act and its rules, which became effective on February 10, 2006, greatly simplified procedures and provided single-window clearance for both central and state governments. The purpose of this Act is to achieve the following goals.

1. Generation of additional economic activity
2. Promotion of exports of goods and services
3. Promotion of investment from domestic and foreign sources
4. Creation of employment opportunities
5. Development of infrastructure facilities.

• In May 2005, the Indian Parliament passed the Special Economic Zones Act.
• The President agreed to it on June 23rd, 2005 and the SEZ Rules were made official on February 10th, 2006.

• In May 2005, Parliament passed the Special Economic Zone (SEZ) Act, which was approved by the President on June 23, 2005. This Act, along with the SEZ Rules, began on February 10, 2006 to make it easier for Central and State Governments to process paperwork and give approval all in one place. The main goal of the SEZ Act is to..

1. Generation of additional economic activity
2. Promotion of exports of goods and services
3. Promotion of investment from domestic and foreign sources
4. Creation of employment opportunities (5). Development of infrastructure facilities.

• Making money, selling things to other countries, giving people jobs, getting money from inside and outside the country, building roads and other things, making it easier for businesses to operate, and making sure everything runs smoothly.

• India was the first Asian country to introduce the Export Processing Zone (EPZ) model for exporting.
• To make the process easier, the Exim Policy of 2000 started the process of setting up Special Economic Zones (SEZs).
• The Special Economic Zone (SEZ) Act, 2005 made more changes to the country’s SEZ policy.
• Many EPZs were changed to SEZs, including in Kandla and Surat (Gujarat), Santacruz (Mumbai), Cochin (Kerala), Chennai (Tamil Nadu), Falta (West Bengal), Visakhapatnam (Andhra Pradesh), Indore (Madhya Pradesh) and Noida (Uttar Pradesh).
• Currently, there are 268 operational SEZs and Tamil Nadu has the most at 50.

• India was the first Asian country to create export processing zones in 1965, which were set up in Gujarat’s Kandla.
• The Exim Policy of 2000 made way for the development of Special Economic Zones (SEZs) to provide an international competitive and hassle-free environment for exports.
• In 2005, the Special Economic Zone Act was introduced to amend the SEZ policy. EPZs in Gujarat, Mumbai, Kerala, Tamil Nadu, West Bengal, Andhra Pradesh, Madhya Pradesh and Uttar Pradesh were converted to SEZs.
• As of January 27, 2022, there are 268 operational SEZs in India, with Tamil Nadu having the most (50).

• India was the first Asian country to introduce a model called Export Processing Zone (EPZ) to help with exports.
• This first EPZ was set up in 1965 in Kandla, Gujarat.
• In 2000, the Exim Policy was introduced to create Special Economic Zones (SEZs).
• This policy was changed in 2005 with the Special Economic Zone (SEZ) Act. EPZs were converted into SEZs, with many being in Gujarat, Mumbai, Kerala, Tamil Nadu, West Bengal, Andhra Pradesh, Madhya Pradesh, and Uttar Pradesh.
• Currently, there are 268 operational SEZs (according to the SEZ Act 2005) in India, with Tamil Nadu having the most (50).

• At the time the question was asked, Thiruvananthapuram (Kerala) did not have any EPZ/SEZ.
• But now, all of the cities mentioned have operational SEZs.
• In 2006, two SEZs began working in Thiruvananthapuram.

• Statements 1, 2 and 3 are correct, while Statement 4 is incorrect because Panna in Madhya Pradesh is famous for diamonds mining, not for gold mines.

• The Surat Special Economic Zone was the first of its kind in India to be owned by the private sector.
• It began in 1997 as the Surat Export Processing Zone and was changed to a Special Economic Zone in November of 2000.
• It is a major part of the Diamond and Gem Development Corporation Limited (DGDC).

• In 2007, the government in West Bengal decided to give the Salim Group permission to build a chemical factory in Nandigram, a rural area in the Purba Medinipur district.
• The villagers strongly opposed this plan, however.

• The most significant growth in exports from Special Economic Zones (SEZs) occurred in 2007-08. The exports from active SEZs are listed below.
  • • Year Exports (value in Rs. crore)  Growth over Previous Year (INR)
      2004 – 05 1814 32%
      2005 – 06 22840 25%
      2006 – 07 34615 52%
      2007 – 08 66638 93%
      2008 – 09 99689 50%
      2009 – 10 220711 121.40%
      2010 – 11 315868 43.11%
      2011 – 12 364478 15.39%
      2012 – 13 476159 31%
      2013 – 14 494077 4.0%
      2014 – 15 463770 – 6.13%
      2015 – 16 467337 0.77%
      2016 – 17 523637 12.05%
      2017 – 18 581033 11%
      2018 – 19 701179 21.00%
      2019 – 20 796669 13.62%
      2020 – 21 759524 – 4.66%
• SEZs have touched new heights in terms of performance in Exports, Investment and Employment viz. Export of Rs. 22,840 crore in 2005-06 has increased to Rs. 7,59,524 crore in 2020-21; Investment of Rs. 4035.51 crore in 2005-06 has increased to Rs. 6,17,499 crore (cumulative basis) by 2020-21 and employment provided to 1,34,704 persons in 2005-06 has increased to 23,58,136 persons (cumulative basis) in 2020-21.

• Andhra Pradesh (combined) had the largest number of approved as well as operational Special Economic Zones as on June 2012. At present Tamil Nadu has the largest number of approved as well as operational SEZs in India. As on 27.01.2022 there are 425 formal approved SEZs and 268 operational SEZs in India. Distribution of approved,  notified and operational SEZs in given States as on 27.01.2022 is mentioned below :
• States
  Approved SEZs Notified Operational
  Formal In-principle SEZs SEZs
  • Uttar Pradesh 24 1 23 14
  • Andhra Pradesh 33 4 28 24
  • Tamil Nadu 56 5 58 50
  • Maharashtra 51 12 46 37
  • Telangana 64 0 57 35

• In January 2017, the Ministry of Commerce and Industry released the SEZ India mobile app.
• This app offers information about Special Economic Zones (SEZs).
• This app was released as part of the ministry’s e-Governance initiatives.

• All of the above organizations are responsible for channelizing exports and imports of India.

• The Export-Import Bank of India (Exim Bank) was created by the Indian government in 1982 to give financial help for exports.
• Exim Bank helps industries and small businesses with products and services like getting new technology, making products for export, selling them, and investing overseas.

• ECGC Ltd. (formerly known as Export Credit Guarantee Corporation of India Limited) offers different types of insurance to protect Indian exporters from any financial losses from exporting goods and services.
• STC (State Trading Corporation of India Limited) and MMTC (Mineral and Metals Trading Corporation Limited) both help to promote foreign trade.

• ECGC Ltd., which is owned by the Indian government, was created in 1957 to encourage exports from the country.
• It does this by offering insurance and other services for export credit.
• It has also introduced different insurance plans to fit the needs of Indian exporters and banks providing export credit.

• ECGC Ltd. (formerly Export Credit Guarantee Corporation of India Ltd.), owned by the Indian government, was established in 1957 to help promote exports from India by providing credit risk insurance and other services.
• It has created different insurance plans to meet the needs of Indian exporters and banks that offer export credit. Therefore, option (d) is the best choice.

• The Export Credit Guarantee Corporation (ECGC) is an Indian business that gives insurance to Indian exporters exporting goods.
• It was set up in 1957 by the government to help increase exports. This company is located in Mumbai, Maharashtra.

• The Export Credit Guarantee Corporation of India (ECGC) is a company owned by the government that helps protect Indian exporters from financial risk.
• It was created in 1957 to help increase the amount of exports from India.

• EPCG stands for Export Promotion Capital Goods.
• This program helps to bring in capital goods for making quality products and to give India’s exports a competitive edge.
• It allows the import of capital goods used in the pre-production, production, and post-production stages without having to pay customs duty.
• But, the scheme requires that the exports should have a value that is 6 times the duty saved when importing these capital goods, within 6 years of getting the authorization.

• The India Brand Equity Fund/Foundation (IBEF) was started in 1996 by the Department of Commerce, Ministry of Commerce and Industry.
• Its purpose is to help promote and spread awareness of Indian products and services in other countries.
• IBEF works to make sure the “Made in India” label is known around the world.

• In 1998, Morgan Stanley rated India as one of the most promising emerging markets, placing it third after Brazil and Mexico.
• According to a report in February 2021, Morgan Stanley is now ‘most bullish’ on India compared to other emerging markets due to a positive Union Budget that has improved India’s outlook.

• India is a large country, but its tourism industry is not well developed, since the infrastructure needed to attract tourists is not up to par.

• Option (a) is the right answer for both the question period and 2019.
• In 2019, the most visited country by tourists worldwide was France (89 million), according to the International Tourism Highlights report of the UNWTO.
• Spain, the USA, China, and Italy came after France in terms of popularity.

• The United Nations World Tourism Organization’s Report for 2010 said that France was the most visited country in the world.
• To find out what the situation is now, look at the explanation for this question.

• The question period showed that option (b) was the correct answer. The ‘India Tourism Statistics at a Glance-2021’ showed that the top 5 countries visited by Indian Nationals Departures (IND) in 2020 were:

S.N. Destination Country IND % Share

1. United Arab Emirates 2477531 33.96
2. United States of America 592901 8.13
3. Saudi Arabia 550353 7.54
4. Qatar 305421 4.19
5. Singapore 289287 3.97

• According to the ‘India Tourism Statistics at a Glance-2021’, Foreign Tourists Arrivals (FTAs) in India and percentage change over previous year is as follows :

Year FTAs in India Percentage Change (in Million) over Previous Year

1. 2006 4.45 13.5
2. 2007 5.08 14.3
3. 2008 5.28 4.0
4. 2009 5.17 – 2.2
5. 2010 5.78 11.8
6. 2016 8.80 9.7
7. 2017 10.04 14.0
8. 2018 10.56 5.2
9. 2019 10.93 3.5
10. 2020 2.74 – 74.9

The data in the table shows that the number of FTAs decreased from 2009 to 2020, with the decrease especially noticeable in 2020 due to the effects of the COVID-19 Pandemic.

• Right now, option (c) is the right answer to the question. According to data from the ‘India Tourism Statistics at a Glance-2021’, the top 5 States/UTs of India in terms of the number of Foreign Tourist Visits in 2020 are the following:

Rank States/UTs Foreign Tourist Visits in 2020 Number Percentage share (%)

1. Maharashtra 1262409 17.6
2. Tamil Nadu 1228323 17.1
3. Uttar Pradesh 890932 12.4
4. Delhi 681230 9.5
5. West Bengal 463285 6.5

• According to the question period, option (a) was the correct answer.
• According to the ‘India Tourism Statistics at a Glance-2021’, the five states/UTs that had the most domestic tourist visits in 2020 were Tamil Nadu (23.0%), Uttar Pradesh (14.1%), Karnataka (12.7%), Andhra Pradesh (11.6%) and Telangana (6.6%).

• In 2009, Udaipur (India) was chosen as the world’s best city for tourism by the renowned magazine ‘Travel + Leisure’.
• In 2021, the same magazine’s survey has placed San Miguel de Allende (Mexico) at the top of the ’25 Best Cities in the World’ list, with Udaipur coming in second.
• The other Indian city to make the list is Jaipur (Rank 17).

• Nathu La is a mountain pass in the Himalayas which connects Sikkim to China’s Tibet Autonomous Region.
• It was closed for almost 40 years after China put down a Tibetan revolt in 1959.
• In 2006, the pass was opened again to reduce the distance to important Hindu and Buddhist religious sites in the area and help increase trade between India and China.
• Now, Nathu La is one of the three trading border posts between India and China and is known for its stunning scenery and great atmosphere.

• On February 16, 2011, India and Japan signed the Free Trade Agreement (CEPA) in order to make trading goods and services between them easier and to create more investment opportunities.

• India and Malaysia signed a Comprehensive Economic Partnership Agreement (CEPA) in the Putrajaya city of Malaysia on 18th February 2011.

• In 2002, China and Bangladesh made a deal to work together economically and trade freely. This was called a Free Trade Agreement.

• Dumping is when a country exports goods at a lower price than it usually would. This is an unfair practice that affects international trade. Anti-dumping measures are used to correct this situation. The World Trade Organization (WTO) allows the use of anti-dumping measures to promote fair competition. The WTO has data on anti-dumping measures in certain countries.

Country Number of Anti-dumping measures 1995 – 2005 2005 – 2015

1. USA 240 137
2. China 78 119
3. European Union 218 111
4. India 318 272

In 2017 and 2018, India was the number one and two in the world in terms of using the most Anti-Dumping measures.

• The U.S. Department of State’s ‘Super 301’ process is a yearly event that looks for foreign countries that have practices that could stop U.S. exports.
• The U.S. Trade Representative (USTR) creates a report called the Special 301 Report which looks for any trade barriers that stop U.S. businesses and products from being exported.
• This report is made based on Section 301 of the U.S. Trade Act of 1974 and the Omnibus Trade and Competitiveness Act of 1988.