Foreign trade in India includes all imports and exports to and from India.
At the
level of the Central Government, trade is administered by the Ministry of Commerce
and Industry.[1] Foreign trade accounted for 48.8% of India's GDP in 2018.[2]
History
See also: Economic history of India and Indo-Roman trade relations
Even before independence, the Government of India maintained semi-autonomous
diplomatic relations. It had colonies (such as the Aden Settlement), who sent and
received full missions,[3] and was a founding member of both the League of
Nations[4] and the United Nations.[5] After India gained independence from the United
Kingdom in 1947, it soon joined the Commonwealth of Nations and strongly
supported independence movements in other colonies, like the Indonesian National
Revolution.[6] The partition and various territorial disputes, particularly that
over Kashmir, would strain its relations with Pakistan for years to come. During
the Cold War, India adopted a foreign policy of non-alignment policy itself with any
major power bloc. However, India developed close ties with the Soviet
Union and received extensive military support from it.
Around 100CE
The Periplus of the Erythraean Sea is a document written by an anonymous sailor
from Alexandria around 100 CE, describing trade between countries, including India.
Around 1500
In 1498, Portuguese explorer Vasco da Gama landed in Calicut (modern
day Kozhikode in Kerala), and was the first European to ever sail to India. The
tremendous profit made during this trip made the Portuguese eager for more trade
with India and attracted other European navigators and tradesmen.[7]
Pedro Álvares Cabral left for India in 1501 and established Portuguese trading posts
in Calicut and Cochin (modern day Kochi), returning to Portugal in 1501
with pepper, ginger, cinnamon, cardamom, nutmeg, mace, and cloves. The profits
made from this trip were substantial.[8]
1991 economic reform
Main article: Economic liberalisation in India
Prior to the 1991 economic liberalisation, India was a closed economy due to the
average tariffs exceeding 200 percent and the extensive quantitative restrictions on
imports. Foreign investment was strictly restricted to only allow Indian ownership of
businesses. Since the liberalisation, India's economy has improved mainly due to
increased foreign trade.[9] Reforms in India in the 1990s and 2000s aimed to increase
international competitiveness in various sectors, including auto
components, telecommunications, software, pharmaceuticals, biotechnology, resear
ch and development, and professional services. These reforms included reducing
import tariffs, deregulating markets, and lowering taxes, which led to an increase in
foreign investment and high economic growth. From 1992 to 2005, foreign
investment increased by 316.9%, and India's GDP grew from $266 billion in 1991 to
$2.3 trillion in 2018.[10][11]
Trade in services
See also: Business process outsourcing to India and Information technology in India
As of 2023, India is the seventh largest exporter of commercial services in the world,
[12]
accounting for 4.6% of global trade in services. India's service exports grew by
27%.[13] In September, India's prominent services industry experienced an
acceleration in growth, buoyed by robust demand in the sector. A recent survey also
indicated that businesses displayed the highest level of optimism in over nine years.
According to S&P Global's India services purchasing managers' index, there was an
increase to 61.0 last month from August's figure of 60.1. This surpassed projections
in a Reuters poll, which had anticipated a slight dip to 59.5.[14][15]
The spectrum of India's services exports encompasses a diverse array of sectors,
ranging from information technology (IT)[16] to the provision of medical services by
professionals overseas. The RBI, while not providing monthly disaggregated data on
services exports, periodically releases a classification of such exports as part of its
quarterly balance of payment data. This classification encompasses transport, travel,
construction, insurance and pensions, financial services,[17] telecommunications,
computer and information services, as well as personal, cultural, recreational
services, among other business services.