Structural Changes Since 1991: Volume, Direction and Services
Chapter Sixty-Seven
Syllabus topic 4.1, "India's Foreign Trade: Structural changes since 1991"
Pages 458 to 466 of 556
In one line
India trades many times more than it used to, mostly with Asia, and it now earns more from selling services than from anything else it does abroad.
In the wording a student can write in an exam: since 1991 the volume of India's trade has grown many fold and its share of world merchandise exports has risen from 0.5 per cent in 1990 to 1.8 per cent, and its share of world commercial services exports has more than doubled to 4.3 per cent; the direction of trade is now dominated by Asia, which takes about two fifths of exports and supplies about three fifths of imports, with America and Europe next; and the outstanding structural change is the growth of services exports and of remittances, which together finance the greater part of a merchandise trade deficit that has itself grown very large.
Volume
India's merchandise trade, in millions of US dollars.
| Year | Exports | Imports | Trade balance |
|---|---|---|---|
| 1990-91 | 18,143 | 24,075 | minus 5,932 |
| 2000-01 | 44,076 | 49,975 | minus 5,899 |
| 2010-11 | 249,816 | 369,769 | minus 119,954 |
| 2020-21 | 291,808 | 394,436 | minus 102,627 |
| 2024-25 | 437,705 | 721,200 | minus 283,496 |
The arithmetic. Exports are 24 times their 1990-91 level and imports 30 times. And the deficit is 48 times larger.
Both halves of that sentence have to be in the answer. Trade has expanded enormously, which is the success. The merchandise deficit has expanded faster, which is why the rest of the account matters so much.
Share of world exports, from the Survey's own comparison of India's exports with world exports:
| Year | India's share of world merchandise exports |
|---|---|
| 1980 | 0.4 per cent |
| 1990 | 0.5 per cent |
| 2000 | 0.7 per cent |
| 2005 | 1.0 per cent |
| 2010 | 1.5 per cent |
| 2015 | 1.6 per cent |
| 2020 | 1.6 per cent |
| 2022 | 1.8 per cent |
And in services, from chapter 4 of the Survey: India's share of world commercial services exports has more than doubled between 2005 and 2024, from 2 per cent to 4.3 per cent, while its share of merchandise exports over the same period roughly doubled from 1 per cent to 1.8 per cent.
Compare the two lines. India's share of the world's services trade is more than twice its share of the world's goods trade. That single comparison is the structural change of the whole period, and it is what makes India's external position unlike that of the East Asian economies, which industrialised by exporting goods.
Direction
Where India's trade goes and comes from, 2024-25.
| Region | Share of India's exports | Share of India's imports |
|---|---|---|
| Asia | 39.8 per cent | 61.6 per cent |
| America | 25.5 per cent | 10.7 per cent |
| Europe | 22.5 per cent, of which the European Union about 8.4 on the import side | 13.1 per cent, European Union 8.4 |
| Africa | 9.8 per cent | 5.4 per cent |
| Commonwealth of Independent States and the Baltics | 1.5 per cent | 9.1 per cent |
| Unspecified | 0.9 per cent | 0.1 per cent |
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