Indian Trade and Commerce

Indian Trade and Commerce

Trade and Commerce

Ancient Indian Trade

• Indian trade was extremely developed during ancient times.

Trade with Britain (1600–1757)

• After the British East India Company was established in 1600, the trade between India and Britain was in India's favor till 1757. At that time, the East India Company used to purchase clothes and spices in exchange for costly metals.

British Policies and Decline of Indian Industry

• The British government decided to impose a heavy duty on the clothes to destroy the structure of the industries.

• During the later part of the 18th century, after the Industrial Revolution in Britain, there was heavy production of cheap items. To sell those cheap items in the world market, the tradition of colonization began.

• British companies established a monopoly on the sale of cotton. As a result, the Indian weaver got costly raw material, and thus Indian products became costly. By 1813, the Indian handloom business was completely ruined.

Beginning of Modern Industries in India

• In the later part of the 19th century, the establishment of modern industries on the basis of power machines started. The first time in India, the textile industries came into being.

Trade Performance

India's global trade (sum of merchandise and services exports and imports) reached USD 1,674.41 billion in FY 2022-23.

India's overall exports (merchandise and services combined) during the period were USD 776.40 billion, exhibiting a positive growth of 14.76% over the same period last year. Overall imports (merchandise and services combined) were USD 898.01 billion, exhibiting a positive growth of 18.15% over the same period last year.

In FY 2023-24:

• The overall exports (merchandise and services combined) in April-September 2023 were estimated at USD 376.29 billion, exhibiting a negative growth of (-) 2.96% over the same period last year.

• Overall imports (merchandise and services combined) in April-August 2023 were estimated at USD 416.20 billion, showing a negative growth of 10.15% in the same period last year.

Merchandise Exports

According to the WTO Global Trade Outlook and Statistics, in 2022, India ranked 18th in the leading exporters of merchandise trade in the world with a share of 1.8%.

• In FY 2022-23, India's merchandise exports reached a new peak of USD 451.07 billion, registering a growth of 6.89%.

• The cumulative value of exports for the period April-August 2023 was USD 172.95 billion as against USD 196.33 billion during the period April-August 2022, registering a negative growth of (-) 11.91%.

Major Product Categories (FY 2022-23)

• Petroleum products (21.61%)

• Pearl, precious and semi-precious stones (5.59%)

• Drug formulations, biologicals (4.31%)

• Iron and steel (2.97%)

• Telecom instruments (2.85%)

Major Export Destinations (FY 2022-23)

• USA (17.41%)

• UAE (7.01%)

• Netherlands (4.79%)

• China (3.40%)

• Bangladesh (2.71%)

Merchandise Imports

According to WTO Global Trade Outlook and Statistics, in 2022, India ranked 9th in the leading importers of merchandise trade in the world with a share of 2.8%. During FY 2022-23, India's merchandise imports were valued at USD 715.97 billion, registering an increase of 16.79%.

The cumulative value of imports for the period April-August 2023 was USD 271.83 billion, as against USD 309.19 billion during the period April-August 2022, registering a negative growth of (-) 12.08%.

Top 5 Import Categories (FY 2022-23)

• Petroleum crude (22.66%)

• Coal, coke, briquettes, etc. (6.95%)

• Petroleum products (6.59%)

• Gold (4.89%)

• Pearl, precious, semi-precious stones (4.29%)

Major Import Sources (FY 2022-23)

• China (13.76%)

• UAE (7.44%)

• USA (7.10%)

• Russia (6.45%)

• Saudi Arabia (5.87%)

FDI Inflows into the Services Sector

The services sector is the largest recipient of FDI inflows in India. According to the World Investment Report 2021 by UNCTAD, India was the fifth-largest recipient of FDI in 2020, improving its rank by four places from ninth position in 2019.

• In 2020-21, India registered the highest-ever annual FDI inflows of US$81.97 billion.

• The country received US$43.12 billion in FDI inflows in the first six months of 2021-22.

• FDI equity inflows (i.e., FDI inflows minus reinvested earnings) were US$ 31.15 billion during April-September 2021, growing by 3.8% over the corresponding period last year.

During H1 2021-22, the services sector received US$ 16.73 billion in FDI equity inflows, which is 29% lower than the FDI equity inflows into services in the corresponding period last year.

Services Trade

According to WTO Global Trade Outlook and Statistics, in 2022, India ranked 7th in the leading exporter of commercial services in the world with a share of 4.4% and ranked 8th in the leading importer of commercial services with a share of 4%.

• Services exports in 2022-23 stood at USD 325.33 billion, up from USD 254.53 billion recorded in 2021-22, exhibiting a positive growth rate of 27.82%.

• Services imports in 2022-23 stood at USD 182.05 billion, up from USD 147.01 billion recorded in 2021-22.

• The estimated value of services export for April-August 2023 was USD 133.38 billion as compared to USD 126.85 billion in April-August 2022, registering a positive growth of 5.14%.

• The estimated value of services imports for April-August 2023 is USD 71.98 billion as compared to USD 74.31 billion in April-August 2022, registering a negative growth of (-) 3.14%.

Services Sector Growth Rate of GVA at Basic Prices

• 2019-20: 8.4

• 2020-21: -7.8

• 2021-22: 9.1

• 2022-23 (1st AE): 6.3

IT-BPM Services

• The Information Technology-Business Process Management (IT-BPM) sector is a major segment of India's services.

• During 2020-21, according to NASSCOM's provisional estimates, IT-BPM revenues (excluding e-commerce) reached US$ 194 billion, growing by 2.26% YoY, adding 1.38 lakh employees.

Ports, Shipping, and Waterways Services

• Development of ports is crucial for the economy. Ports handle around 90% of export-import cargo by volume and 70% by value in India.

• The total cargo capacity of all the ports increased to 1,246.86 million tonnes per annum (MTPA) as of March 2021 from 1,052.23 MTPA as of March 2014.

• Hit by disruptions caused by Covid-19, cargo traffic at India's ports decreased by 5.4% during 2020-21, to 1,246.86 MT from 1,317.73 MT during 2019-20.

• Port traffic picked up in 2021-22, registering a growth of 10.16% during April-November 2021 over the same period last year.

• Major ports handled traffic of around 465.4 million tonnes during April-November 2021, growing by 12% over the same period last year.

Final Thoughts

India has a long history of trade, from flourishing ancient networks to being reshaped under British rule when heavy duties and monopolies ruined local industries like the handloom. The late 19th century saw the rise of modern textile industries powered by machines.

In recent years, India’s trade has grown significantly, with global trade touching USD 1,674.41 billion in 2022-23, though the first half of 2023-24 saw a slight decline. India ranked 18th in merchandise exports and 9th in imports worldwide, with petroleum, gems, and drugs among the top exports, while crude oil, coal, and gold led imports.

The services sector plays a massive role, making India the 7th largest services exporter, especially in IT-BPM, which alone adds billions and creates jobs. Ports handle 90% of trade cargo, showing how vital infrastructure is for growth.

Foreign investment has also flowed strongly into services, reflecting India’s potential as a global hub. Together, these shifts highlight how India’s trade journey blends deep history with modern growth.