The composition of commodities in India’s international trade has been undergoing, a change over the years, Examine, the statement with examples.
Ans.
The composition of commodities in India’s international trade has indeed been undergoing significant changes over the years, reflecting shifts in global demand, domestic production capacities, economic policies, and technological advancements. Here are some key trends and examples that illustrate the changing composition of India’s international trade:
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Shift from Agricultural to Industrial Goods: Historically, India’s international trade was dominated by agricultural commodities such as spices, tea, cotton, and jute. However, with the process of industrialization and economic reforms, there has been a gradual shift towards trading in industrial and manufactured goods. Today, industrial products such as machinery, automobiles, electronics, chemicals, and pharmaceuticals constitute a significant portion of India’s exports and imports.
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Emergence of Services Trade: India has emerged as a global hub for services trade, particularly in sectors such as information technology (IT), software development, business process outsourcing (BPO), and professional services. The export of services, including software, IT-enabled services, and skilled manpower, has become a key driver of India’s international trade, contributing significantly to foreign exchange earnings and economic growth.
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Diversification of Export Basket: India has been diversifying its export basket to include a wider range of goods and services, reducing dependence on traditional commodities. While sectors such as textiles, gems and jewelry, and agriculture continue to play important roles in India’s exports, there has been a concerted effort to promote high-value-added products, niche industries, and knowledge-based services in global markets.
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Focus on High-Technology Products: India has been increasingly focusing on exporting high-technology products, including IT services, software solutions, engineering goods, pharmaceuticals, and biotechnology products. The country’s growing expertise in research and development, innovation, and technology-driven industries has enabled it to compete in global markets and capture a larger share of exports in high-value sectors.
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Integration into Global Value Chains: India has been integrating into global value chains (GVCs) through increased participation in manufacturing and trade networks. This involves sourcing components, raw materials, and intermediate goods from global markets, adding value through production processes, and exporting finished products to destination markets. The expansion of GVCs has enabled India to enhance its competitiveness, diversify its export base, and attract foreign direct investment (FDI) in strategic sectors.
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Challenges and Opportunities: While India’s changing trade composition presents opportunities for economic growth, job creation, and industrial development, it also poses challenges related to trade imbalances, infrastructure constraints, regulatory barriers, and global competition. Addressing these challenges requires concerted efforts to enhance export competitiveness, promote innovation and technology adoption, improve trade facilitation, and strengthen market access for Indian goods and services.
