India (Republic of India) is a country located in South Asia is the world’s largest democracy with 1.4 billion of population and seventh largest country by land size. It is bounded by the Indian Ocean in the south, south East Asian nations and Bay of Bengal in the east and Middle East and the Arabian Sea in the west. India has a huge coastline of 7500 kms which makes its sea reach to a wide area of the world. It shares it land borders with Pakistan, Bhutan, China, Sri Lanka, Bangladesh, Maldives and Afghanistan (IndiaGov, n.d.).
India is a member of several trade groups including bilateral, trilateral, and multilateral groups including WTO, SAARC, ASEAN, Bricks, SCO, Commonwealth, G20, G8, UN. India is known to be a peace seeker and an effective moderator in the world (IndiaGov, n.d.). It has an image of non alignment against the wars and flagbeared a group named Non Alignment Movement of which 167 countries are partners (IndiaGov, n.d.). This image of India has made its trade easy and smooth throughout the world, save some rare tensions. The people of India are a big consumer of its own goods and services and many countries have their eyes on the emerging Indian middle class today.
Foreign trade of India is administered by ministry of commerce and industry and is accounted for 48.8 % of India’s GDP in 2017 (OEC, 2019). The nominal GDP of India stands at 3.2 t $. India was the 8th highest exporter of the commercial services in the world which was 3.4 % of total global services trade (MOSPI, 2020). Before the corona pandemic India service trade was growing at a speed of roughly 6 % per annum. India exports around 7500 commodities to 190 countries and import around 6000 commodities form 140 countries (MOSPI, 2020). The exports of India in 2018 were 445 b $ of goods and services and imports were stood at 612 b $ which is a trade deficit of 167 B dollars (OEC, 2019). In the month of march Indian economy experienced a contraction of 24 % due to the corona pandemic as Indian exports have fallen in all the sectors like textiles, meat, cereals, chemicals and petroleum products etc (MOSPI, 2020), these commodores have been a major driver of India’s export growth. The top trading partners of India as of 2018 in the descending order are UAE, China, USA, Saudi Arabia, Switzerland, Singapore, Germany, Hong Kong, Indonesia, Iraq.
A trading model is a set of policies which are clearly defined and scheduled, step by step and rule based structure which governs the trading strategies of a country. The basic concept of the trading models and its benefits vary according to the present conditions between two or more countries with various factors such as price moves, exchange rates, profit opportunities, optimum utilization and distribution of resources and goods. These factors if carefully examined can offer meaningful insights into trading choices, however customized polices, strategies and alterations are also possible in the model. The two main factors of business models in recent times for India have been its strong desire to make India a manufacturing hub and secondly to make India a 5 T $ economy by 2025 (Priya & Kumar, 2014).
India current foreign trade is largely with three trading partners which are EU, USA and china. India’s economic growth has fast grown in the recent times and share in world trade has expanded, which means a greater pace as compared to world. India has one of the largest populations in the world only second after china, and this is why after such a growth India faces some serious challenges to maintain economic growth, employment generation and to raise the per capita income and standard of people. India’s left leaning congress government is inclined towards trading with the socialist countries and the right leaning NDA government is making currently stronger ties with the capitalist nations for their trade (Priya & Kumar, 2014). Thus India has recently made strategic changes with USA to iron out the key challenges in trade between the two countries.
US remains the top trading partner of India in 2019-20, which showed increasing trade ties between the two, which was 89 b $ (Commerce.gov, 2020). Another reason of US being a major choice of India is that USA is among a few countries in the world with which India has a trade surplus (Commerce.gov, 2020). China before 2018 was the top trading partner of India and India is having a heavy trade imbalance with it. China is a big producer of goods with very competitive rates, sometimes India has to impose anti dumping duty on Chinese products. India is also considering some steps as technical regulations and quality control norms to cut imports from china and boost manufacturing (Priya & Kumar, 2014).
India and UAE are very strong trading partners and UAE is a part of India’s strategy of making it a 5 T $ economy by 2024-25 (Commerce.gov, 2020). UAE is the fourth largest energy supplier to India which is an energy starving country looking at the developing stage of India. Indi9a intends to sustain the momentum of trade between two countries (Priya & Kumar, 2014). Trade between both the countries in 2018-19 stood at 60 b $. Recently UAE announced a 75 b $ investment into India for its manufacturing dreams (Commerce.gov, 2020).
India with Saudi Arabia shares a strong partnership in trade as 20 % of energy needs of India are filled by Saudi Arabian imports. Though the trade gap is huge, the old economic partnership and people to people ties between both countries made a solid and strong platform of trade. Trade between the two stood at 33 b $ in 2019 (Commerce.gov, 2020).
India is among several countries to benefit from US china trade war with 3.5 increases in exports to USA. Also to discourage imports from china, USA has allowed several commodities banned on quality norms and eased tariffs on other ones (Cader, 2020). India also wants to lessen its dependence of imports from china of various commodities and wants USA to invest into India’s manufacturing plans.
The recent demand by Australia of an enquiry into covid spread in china has sparked china with a repercussion of banning several imports from Australia. In retaliation India Japan and Australia have come together to make an altogether new supply chain which will reduce the dependence on china (Martin, 2020). Australia wants to reduce its trade dependence on china and is supporting India on various fronts like trade and military against china. New avenues of trade between India and Australia are expected now. India and Australia have also signed a military pact in June 2020 which gives India a high hand in Indian and Australasian region (Cader, 2020).
India’s economy was heavily affected by the lockdowns of covid 19 and the economic impact of the covid 19 has been very disruptive in India. Growth of India in the quarter 4 of fiscal year 2020 went down to 3.1 % (MOSPI, 2020) as the chief economic advisor of India confirmed this number is due to the corona pandemic in India. India also has been experiencing a slow before the pandemic and according to the (Gupta & Sharma, 2020) the current pandemic has increased India’s economic outlook risks that were existing. In September, the economy started to revive, during the lock down, more than 45 % of households have reported a drop of income in this pandemic (Gupta & Sharma, 2020). Indian government lost 320 billion Rupees everyday in lockdown. The governme3nt of India have announced a variety of measures to handle the situation and make economy normal as soon as possible. From food securities, extra funds, healthcare support, incentives and waiver in taxes and cuss, extensions of moratorium on loans. Till March the relief measures for common people announced worth $ 24 billion. In addition to this, the reserve bank of India also announced financial measures worth 52 b $ to be available in the country’s financial system (MOSPI, 2020).The world Bank, ADB, BRICS’ NDB all provided support to India recovery, India’s overall package announced was of $ 280 b which is 10 % of its GDP (Gupta & Sharma, 2020). Also in April, Indian government announced a change in its FDI policy to stop the opportunistic acquisitions of Indian companies especially by China.
Cader, A (2020). India may be the solution to australia’s reliance on china. Retrieved from http://www.internationalaffairs.org.au/australianoutlook/india-may-be-australias-solution-to-vulnerable-reliance-on-china/
Commerce.gov.in (2020). Foreign trade territorial division. Retrieved from https://commerce.gov.in/InnerContent.aspx?Id=70
Dhankhar, P. (2018). India's foreign trade and impact of exports on foreign exchange reserves of india. Impact Journal 6(2): 127-194.
Gupta, P. & Sharma, D. (2020). How India can get its growth back on track after the coronavirus pandemic. Retrieved from https://www.worldbank.org/en/news/opinion/2020/09/15/how-india-can-get-its-growth-back-on-track-after-the-coronavirus-pandemic
India.gov.in (n.d.). Know india. Retrieved from https://www.india.gov.in/
Martin, S. (2020). What the australian government's $17bn coronavirus stimulus package means for you. Retrieved from https://www.theguardian.com/business/2020/mar/12/what-australian-governments-coronavirus-stimulus-package-means-for-you-explainer
MOSPI (2020). Press note on provisional estimates of annual national income 2019-2020 and quarterly estimates of gross domestic product for the fourth quarter (q4) of 2019-2020. Retrieved from http://www.mospi.gov.in/sites/default/files/press_release/PRESS%20NOTE%20PE%20and%20Q4%20estimates%20of%20GDP.pdf
OEC (2019). India. Retrieved from https://oec.world/en/profile/country/ind
Priya, S. & Kumar, A. (2014). Review of trade policies of india's major trading partners. Retrieved from http://wtocentre.iift.ac.in/FA/Review%20of%20Trade%20Policies%20of%20India's%20Major%20Trading%20Partners.pdf
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