Saturday, January 20, 2007

The changing face of India’s foreign trade

The last 5 years data for International Trade, depicts a clear trend. India’s key trade partners are changing rapidly. First of all, the volume of international trade has expanded rapidly from $95 billion in 2001-02 to $252 billion in 2005-06. This is a remarkable growth (21.5% CAGR) and is one of the key drivers of economic growth. International trade in value terms is still about 1/3 of the GDP, so there is considerable room for continued expansion of International trade.

A look at some of the leading trade partners during this period shows the remarkable growth in trade with China. China, from nowhere, is now the second most important trade partner for India (figures in $ millions).




It looks likely that in another 5 years China will be as important as The US for India as a trading partner. The diagram below shows the increase in trade with some of the leading partners.







Clearly China, Korea, Singapore are integrating much faster with India, than the erstwhile mainstays – USA, Japan and UK. The USA, is of course such a large partner, and the base effect in its case was higher. However, the trends clearly show an increased Eastward focus. This is even more apparent when one starts looking at the figures for other ASEAN countries.

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