Answer in detail
1) Explain the meaning and role of foreign trade.
Ans: Meaning of Foreign Trade:
Foreign Trade is traded between the different countries of the world. It is called International Trade or External Trade.
Role of foreign trade can be justified on the basis of the following points:
To earn foreign exchange: Foreign trade provides foreign exchange which can be used for very productive purposes. Foreign trade is a remarkable factor in expanding the market and encouraging the production of goods.
Encourages Investment: Foreign trade creates an opportunity for the producers to reach beyond the domestic markets. It encourages them to produce more goods for export. This leads to an increase in total investment in an economy.
Division of labour and specialization: Foreign trade leads to the division of labour and specialization at the world level. Some countries have abundant natural resources, they should export raw material and import finished goods from countries which are advanced in skilled manpower. Thus, foreign trade gives benefits to all countries thereby leading to the division of labour and specialization.
Optimum allocation and utilization of resources: Due to specialization, resources are channelized for the production of only those goods which would give the highest returns. Thus, there is rational allocation and specialization of resources at the international level due to foreign trade.
Stability in price level: Foreign trade helps to keep the demand and supply position stable which in turn stabilizes the price level in the economy.
2) Explain the recent trends in India’s exports.
Ans: Following are the recent trends in India’s exports:
Engineering goods: According to the Engineering Goods Export Promotion Council (EGEPC) Report, the share of engineering goods was 25% in India’s total exports in 2017-18. Within this category, some of the prominent exported items are transport equipment including automobiles and auto components, machinery and instruments. During the period 2010-11 to 2014-15, exports of transport equipment have grown from 16 billion dollars to 24.8 billion dollars.
Petroleum products: India’s petroleum capacity increased significantly since 2001-02, due to which India turned as a net exporter of petroleum refinery products. Petroleum products had a share of 4.3% in India’s total exports in 2000-01, which rose steadily to 20.1% in 2013-14.
Chemicals and chemical products: An important export item that has performed reasonably well over the last few years is chemicals and chemical products. The share of this item was 10.4% in 2014-15.
Gems and Jewellery: Gems and jewellery are one of the major contributors to export earnings in India, having a share of 13.3% in India’s merchandise export in 2014-15.
Textiles and readymade garments: Textiles and garment exports together accounted for 11.3% of India’s exports 97in 2014-15. In fact, India is one of the leading exporting countries of textiles and readymade garments in the world.