CHAPTER-IV COMMODITY COMPOSITION OF INDIAN FOREIGN TRADE DURING THE POST- WTO PERIOD The changes in the composition of trade in goods work as a mirror to watch the developments taking place in the domestic structure of production over a period of time. For instance, an industrializing country import largely capital goods and export non-industrial products. A highly industrialized nation import raw materials and goods in which it does not have comparative advantage, and exports largely industrial goods. Therefore, the structure of foreign trade can enable us to know the level of development of a country and its economic structure. Since independence, India s foreign trade has undergone a complete transformation in terms of composition of commodities. The Indian exports cover a wide range of traditional and non-traditional products while imports mainly consist of capital goods, petroleum products, raw materials, intermediates and chemicals to meet the ever increasing industrial demands. With the introduction of new economic policy since and the formation of WTO (with effect from January 1, 19) the velocity of India s foreign trade has received a momentum. The simplified operational tariff policy has replaced the restrictive import licensing regime. Import licensing has been totally abolished with respect to imports of most of the machinery, equipment and manufactured intermediate products. In some sectors controls have been reduced on administrative prices. The policy focus has been primarily on liberalization of capital goods and inputs for industry, to encourage domestic and export-oriented growth. However, imports of consumer goods remained regulated. In the light of above discussion, this chapter has been designed to study the commodity composition of India s exports and imports during the Post-WTO Period. This chapter is divided into two sections. Section-I deals with the analysis of the commodity composition of India s exports during the post-wto period. The analysis
of data relating to commodity composition of Indian imports during the post-wto period has been discussed in the Section-II. SECTION-I 4.1 DYNAMICS OF COMMODITY COMPOSITION OF INDIAN EXPORTS DURING THE POST-WTO PERIOD Prior to the reforms, the prime commodity of Indian exports were the agricultural commodities and manufacturing commodities (like textiles, gems and jewellery), while in the Post Liberalization period, commodity composition has shifted to technology intensive manufacturing commodities such as engineering goods and chemicals (Report on Currency and Finance, 29). The following analysis of the commodity composition of Indian exports and imports reveals some interesting facts during the Post Liberalization period. The commodity composition of Indian exports during the Post-WTO period is presented in table 4.1. The amount of India s exports has been increased from Rs. 82674 crore in to Rs. 57475 crore in 21- during the post-wto period. The compound growth rate of Indian exports is 17.49 under the study period, which has been found statistically significant at 1 per cent probability level on the basis of the value of t-statistics. The items of composition of the Indian exports has been divided into four categories, namely, Primary products which are further divided into two main categories; Agricultural and Allied Products and Ores and Minerals; Manufactured Goods; Petroleum Products; and Others. The analysis of data in Table 4.1 reveals that the commodity composition of India s exports has undergone a major change during the Post-Liberalization period. 69
Table 4.1 Dynamics of Commodity Composition of Indian Exports During the Post-WTO Period Total Primary Products Agr & Ore allied & prod. min 82674 13269 16.5 16353 244 19.13 19-8817 24363 2.5 17-13 24626 18.93 18-1353 25387 18.16 19-1561 2431 15.23 2-1 2571 27288 13.4 31 3.75 393 3.69 4162 3.5 3943 3. 3759 2.69 3 2.49 5267 2.58 Total 6467 77.49 79433 74.68 87377 73.54 66 75.83 1856 77. 64 128761 8.7 156858 77.5 Lthr & mnf 557 6.12 5861 5.51 571 4.79 6157 4.73 67 4. 6891 4.31 8883 4.36 Chm &allied prds 3.65 122.31 1389.69 16339 12.56 16867 12.7 2 12.78 26889 13.2 Manufactured goods Eng goods 15 13.32 14688 13.81 17618 14.82 132 15.24 1878 13.44 22325 13. 35 15.3 Textiles & textile prds 22349 27. 26865 25.26 3657 25.8 33636 25.85 3731 26.69 42562 26.67 51555 25.32 Gems & jewel 1413 17.9 17644 16.59 16872 14.19 167 15.27 24945 17.85 3259 2.37 33733 16.57 Handicrafts 1213 1.47 1452 1.36 1689 1.42 14 1.5 2664 1.91 28 1.81 322 1.48 Other mnf gds 674.81 891.83 1.8 876.67 3.68 82.74 1626.79 ( Rs. Crore) Petrlm Others 139 926 1.58 1.12 1518 28 1.43 1.6 171 125 1.44 1.1 13 156 1.1 1.19 376 1725.26 1.23 169 2361.1 1.47 8542 5615 4.19 2.75 Contd... 7
71 Total Primary Products Manufactured goods Petrlm Others Agr & allied prod. Ore & min Total Lthr & mnf Chm &allied prds Eng goods Textiles & textile prds Gems & jewel Handicrafts Other mnf gds 21-2 2918 28144 13.46 621 2.88 159146 76.13 9 4.36 28862 13.8 33183 15.87 48677 23.28 34845 16.67 2618 1.25 1852.88 7 4.83 56 2.67 255137 32473 12.73 6 3.78 194765 76.33 8945 3.5 368 14.14 43715 17.13 56221 22. 4371 17.13 381 1.48 232.9 12469 4.88 577 2.26 2-4 293367 34616.79 1885 3.71 222829 75. 39 3.39 4346 14.79 575 19.43 58779 2. 48586 16.56 22.78 2818. 163 5.58 864 2.94 24-5 37534 3878 1.14 22819 6.8 272872 72.69 1881 2.89 559 14.89 77949 2.76 696 16.22 61834 16.47 16.45 36. 3144 8.36 66 2.71 25-6 456418 4522 9.91 27288 5. 321261 7.38 944 2.61 6539 14.33 157 21.6 72618 15.91 68753 15.6 245.45 4355. 51533.29 6 2.43 26-7 571779 57392 1. 31686 5.54 384261 67.2 1365 2.38 78442 13.71 13379 23.39 78613 13.75 722 12.64 12.34 5489. 8452 14.78 1392 2.43 27-8 655864 7429.31 36717 5.59 4145 63.21 14 2.15 85328 13.1 15435 22.94 7829.92 79228 12.7 246.31 5252.8 4192 17.41 16147 2.46 28-9 84755 8649 9.59 35877 4.27 56642 67.37 16355 1. 14442 12.42 217482 25.87 9262 1.9 128575 15.3 1384.16 612.73 1233 14.67 34429 4.1 Contd...
Total Primary Products Agr & Ore allied & prod. min Total Lthr & mnf Chm &allied prds Manufactured goods Eng goods Textiles & textile prds Gems & jewel Handicrafts Other mnf gds Petrlm Others 29-1 845534 84136 41 546456 15946 18687 181572 94189 137568 167 7427 1328 4945 9. 4.86 64.63 1.88 12.85 21.47.13 16.26.13.88 15.17 4.84 21-57475 2522 48582 7658 17265 1328 3133 16216 185853 162 166 181 392 9.72 4.19 66.16 1.49.41 27.8 9.18 16.5.9.87 16.48 3.43 CAGR 17.49.94 21.9 16.14 8.14 18.3 23. 9.65 16.41-1.83 18.58 48.25 28.23 r 2.8.933.929.2.5.4.9.1.1.66..87.8 Adjusted.7.929.924.2.4.4.7....9.794.6 r 2 t-stat 34.86 * 14.47 * 13. * 44.4 * 31.13 * 51.74 * 26.23 * 28.5 * 27.92 * -1. 27.2 * 7.92 * 25.63 * Note: 1. Figures in dark refer to percentages 2. Handicrafts excluding handmade carpets 3. *refers to 1% level of Significance Source:- 1. Data collected from RBI, database (Handbook of Statistics of Indian Economy, 21-) and averages calculated by author. 2. Data for 29-1 are revised and data for 21- are provisional 72
I. PRIMARY PRODUCTS (i) Agricultural and Allied Products The principal item of Indian Exports has been represented by agricultural based commodities. The Agricultural and Allied products (includes, Tea; Coffee; Rice; Wheat; Cotton Raw Including Waste; Tobacco; Cashew including Cashew Nut Shell Liquid; Spices; Oil Meals; Fruits and Vegetables; Processed Fruits, Juices, Miscellaneous Processed Items; Marine Products; Sugar and Molasses; Meat And Meat Preparations; and Other Agriculture and Allied Products) is a major commodity group exported by India. The data reveals that primary products contributed in the range of 13-14 per cent of total exports. The share of agricultural & allied products was 16.5 per cent in which increased to 19.13 per cent in and 2.5 per cent in 19-. However, it declined to 18.93 per cent in 17-, 18.16 per cent in 18-, and 15.23 per cent in 19-2, which further declined to 13.4 per cent in 2-1. It slightly increased to 13.46 per cent in 21-2 as compared to the previous year, which again declined to 12.73 per cent in,.79 per cent in 2-4, 1.14 per cent in 24-5 and 9.91 per cent in 25-6. Its share improved for two consecutive years, namely, 1. per cent in 26-7 and.31 per cent in the year 27-8, which again declined to 9.59 per cent in 28-9, it slightly improved to 9. per cent in 29-1, which further declined to 9.72 per cent in 21-. So the study found that the share of agricultural commodities has declined during the post WTO period. The analysis of data reveals that the average compound growth rate of agricultural and allied products export remained.94 per cent under the post-wto regime. The same has been found statistically significant at 1 per cent probability level on the basis of the value of t-statistics. The growth of exports of this group is also shown graphically in figure 4.1A. Figure 4.1A Growth of Agricultural & Allied Products during the Post-WTO Period Agricultural & Allied Products 12 1 8 6 4 2 19-17- 18-19- 2-1 21-2 2-4 24-5 25-6 26-7 27-8 28-9 29-1 21- Agr & allied prod. 73
(ii) Ores and Minerals Minerals are a valuable natural resource being the vital raw material for infrastructure, capital goods and basic industries. As a major resource for development the extraction and management of minerals has to be integrated into the overall strategy of the country s economic development. The exploitation of minerals has to be guided by long-term national goals and perspectives. Just as these goals and perspectives are dynamic and responsive to the changing global economic scenario so also the national mineral policy has to be dynamic taking into consideration the changing needs of industry in the context of the domestic and global economic environment. Therefore, New Mineral Policy was launched by Indian government in 13. This sector was opened up to FDI in 13 after the announcement of this policy. The data on Ores and Minerals during the Post-WTO regime is presented in table 4.1. Ores and Minerals category includes, Iron Ore; Mica; and Other Ores and Minerals. The analysis of data reveals that the percentage share of Ore and Minerals in the total Indian exports has continuously declined during the first five years of WTO period. The annual growth rate of ore and minerals was 3.75 per cent in, which declined to 2.49 per cent in 19-2. However, annual growth rate of Ores and Minerals slightly increased from 2.58 per cent in 2-1 to 3.71 per cent in 2-4, which further increased to 6.8 per cent in 24-5. It declined to 5. per cent and 5.54 per cent in 25-6 and 26-7 respectively. The share of Ore and Minerals slightly improved to 5.59 per cent during the recession period of 27-8, which declined to 4.27 per cent in 28-9. In 29-1, its share increased 4.86 per cent, which again declined to 4.19 per cent in 21-. The compound growth rate of Ore and Minerals is 21.9 per cent during the study period, which has been found statistically significant at 1 per cent probability level. The trend of growth rate is shown in figure 4.1B. Figure 4.1B Growth of Ores & Minerals Products during the Post-WTO Period Ores & Minerals 6 5 4 3 2 1 19-17- 18-19- 2-1 21-2 2-4 24-5 25-6 26-7 27-8 28-9 29-1 21- Ore & min 74
II. MANUFACTURED GOODS The loss of agriculture sector is the gain of the industrial sector, whose share in the total exports has consistently grown from 1-51 till date. In 1-61, its share in the total goods exported was 45.33 per cent; it rose to 5.29 per cent in 1-71 and further increased from 55.83 per cent in 1-81 to 72.9 per cent in 1-91 (Mathur, 2). Therefore, it represent as a major commodity group exported by India. The consistent rise in the share of this commodity group can be attributed to many major commodities, like Gems and Jewellery, Ready Made Garments, Cotton Yarn and Fabrics, Leather and Leather Manufactures, Machinery and Electronic Goods etc. These exports have shown a remarkable increase during the span of 5 years (ibid, 2). The data on Manufactured Goods during the Post-WTO regime has been presented in table 4.1. The major items of Manufactured Goods include namely, Leather & Manufactures; Chemical & Allied Products; Engineered Goods; Textiles & Textile Products; Gems & Jewellery, Handicrafts, and Other Manufactured Goods. Chemical & Related Products category include four items such as Basic Chemicals, Pharmaceuticals & Cosmetics; Plastic and Linoleum Products; Rubber, Glass, Plants, Enamels Products; and Residual Chemicals and Allied Products. Engineering Goods include Iron & Steel; Manufacture of Metals; Machinery and Instruments; Transport Equipment; Electronic Goods and other Engineering Goods. Textiles & Textile Products category include nine items, namely, (i) Cotton Yarn, Fabrics, Made-ups, etc.(ii) Natural Silk Yarn, Fabrics, Made-ups, etc., Incl. Silk Waste (iii) Manmade Yarn, Fabrics, Made-ups, etc. (iv) Manmade Staple Fiber (v) Woolen Yarn, Fabrics, Made-ups, etc. (vi) Readymade Garments (vii) Jute & Jute Manufactures (viii) Coir & Coir Manufactures and (ix) Carpets which further categorizes into three items such as Carpet Handmade, Carpet Mill-made and Silk Carpets. The analysis presented in table 4.1 reveals that the annual average percentage of the share of Manufactured Goods in Indian exports was 77.49 per cent in, 74.68 per cent in, which further declined to 73.54 per cent in 19-. However, it improved during the next three consecutive years and reached to 75.83 75
per cent in 17-, 77.64 per cent in 18- and 8.7 per cent in 19-. It again declined for two consecutive years to 77.5 per cent in 2-1 and 76.13 per cent in 21-2. In, it slightly increased to 76.33 per cent. The share of Manufactured Goods again declined to 75. per cent in 2-4, 72.69 per cent in 24-5, 7.38 per cent in 25-6, 67.2 per cent in 26-7, which further declined to the level of 63.19 per cent in 27-8. From the analysis of data, the study found that the combined annual average share of Manufactured Goods declined from 77.49 per cent in to 66.16 per cent in 21-. The study further mentioned that the average share of manufactured goods as percentage of total exports during the post- WTO period declined to even less than the level which was attained during the period of 1-81 to 1-91 (i.e. 72.9 per un).. The compound growth rate of Manufactured Goods is 16.14 per cent during the study period, which has been found statistically significant at 1 per cent probability level. The trend in the growth rate is sown in figure 4.2. Figure 4.2 Growth of Total of Manufactured Products during the Post-WTO Period Total of Manufactured Goods 1 8 6 4 2 19-17- 18-19- 2-21- 1 2 2-4 24-5 25-6 26-7 27-8 28-9 29-21- 1 Total of Manufactured Goods (i) Leather and Leather Manufactures The data reveals that share of Leather and Leather Manufactures in the total exports was 6.12 per cent in, which declined to 1.49 per cent in 21-. The calculated compound growth rate of Leather and Leather Manufactures is 8.14 per cent (1 per cent significance level) during the post-wto regime. The trend in growth is shown in figure 4.2A. 76
Figure 4.2A Growth of Leather and Manufacture Products during the Post-WTO Period Leather & Manufactures 2 15 1 5 19-17- 18-19- 2-1 21-2 2-4 24-5 25-6 26-7 27-8 28-9 29-1 21- Leather & Manufactures (ii) Chemicals and Allied Products The share of Chemicals and Allied Products in the total exports was.65 per cent in, which slightly declined to.41 per cent in 21-. The calculated compound growth rate of Chemicals and Allied Products increased to 18.13 per cent (1 per cent significance level) during the study period. The trend in growth is shown in figure 4.2B. Figure 4.2B Growth of Chemicals & Allied Products during the Post-WTO Period Chemicals & Allied Products 14 12 1 8 6 4 2 19-17- 18-19- 2-1 21-2 2-4 24-5 25-6 26-7 27-8 28-9 29-1 21- Chemicals and Related Products (iii) Engineering Goods The data on Engineering Goods reveals that the share of Engineering Goods to total exports increased to 27.8 per cent in 21- from 13.32 per cent in. The compound growth rate of Engineering Goods is 23. per cent, which has been found significant at 1 per cent during the study period. The trend in growth rate is shown in figure 4.2C. 77
Figure 4.2C Growth of Engineering Products during the Post-WTO Period Engineering Goods 35 3 25 2 15 1 5 19-17- 18-19- 2-1 21-2 2-4 24-5 25-6 26-7 27-8 28-9 29-1 21- Engineering Goods (iv) Textile and Textile Products The annual average share of Textile and Textile Products which was 27. per cent in, sharply declined to 9.18 per cent in 21-. So the study found that textile and textile products, which is the key industry of Indian economy has suffered during the post-wto period due to tuff competition at the global level. The trend in growth rate is shown in figure 4.2D Figure 4.2D Growth of Textile & Textile Products during the Post-WTO Period Textile & Textile Products 12 1 8 6 4 2 19-17- 18-19- 2-21- 1 2 2-4 24-25- 5 6 26-7 27-28- 8 9 29-21- 1 Textile & Textile Products (v) Gems and Jewellery Gems and Jewellery is considered as the growth potential export sector which contained diamonds, coloured gemstones, gold jewellery, perals, non-gold jewellery, synthetic stones and costume/fashion jewellery. This product group made significant contribution to India s overall export earnings and foreign exchange earnings. In, Gems and Jewellery exports were valued at Rs. 1413, which rose to Rs. 185853 crore in 21-. The share of this commodity group has increased consistently and continuously over the period of 5 years. In 1-61, its share was less than 1 per cent 78
i.e..16, it grew at 2.93 per cent in 1-71, which sharply rose to 9.21 per cent in 1-81 and 16. per cent in 1-91 (Mathur, 2). The share of this group to total exports reached to 17.9 per cent in, which slightly declined to 16.5 during the study period. The compound annual average growth rate of Gems and Jewellery is 16.41 per cent (1 per cent significance level) under the WTO regime. The trend in growth rate is graphically shown in figure 4.2E. Figure 4.2E Growth of Gems & Jewellery Products during the Post-WTO Period Gems & Jewellery 2 15 1 5 19-17- 18-19- 2-1 21-2 2-4 24-5 25-6 26-7 27-8 28-9 29-1 21- Gems & Jew ellery (vi) Handicrafts and Others Manufactured Products The annual average share of Handicrafts (excluding Handmade Carpets) was 1.47 per cent in, which declined to.9 per cent in 21-. In case of Other Products, the annual average share was.81 per cent in, which slightly improved to.87 per cent in 21-. The compound growth rate of Handicrafts was found negative (1.83) and, of other products is 18.58 per cent and found significant at 1 per cent level of significance during the post-wto period. The trend in growth rates is graphically shown in figure 4.2F and 4.2G. Figure 4.2F Growth of Handicrafts (Excluding Handmade Carpets) Products during the Post- WTO Period Handicrafts (excluding Handmade Carpets) 4 3 2 1 19-17- 18-19- 2-1 21-2 2-4 24-5 25-6 26-7 27-8 28-9 29-1 21- Handicrafts 79
Figure 4.2G Growth of Manufactured Products during the Post-WTO Period Other Manufactured Goods 12 1 8 6 4 2 19-17- 18-19- 2-1 21-2 2-4 24-5 25-6 26-7 27-8 28-9 29-1 21- Other Manufactured Goods III. PETROLEUM PRODUCTS Table 4.1 reveals that the share of Petroleum Products in the total exports was 1.58 per cent in, 1.43 per cent in, which rose to 16.48 per cent in 21-. The analysis reveals that the share of petroleum products has shown a declining trend during the period from to 19-. However, the share of petroleum products increased from 4.19 per cent in 2-1 to 17.41 per cent in 27-8, which declined to 14.67 per cent during the post recession period of 28-9. Its share slightly improved from 15.17 per cent in 29-1 to 16.48 per cent in 21-. The compound growth rate of Petroleum Products is 48.25 per cent, which has been found significant at 1 per cent level of significance. The trend in growth rate is graphically shown in figure 4.3. Figure 4.3 Growth of Petroleum Products during the Post-WTO Period Petroleum 25 2 15 1 5 19-17- 18-19- 2-1 21-2 2-4 24-5 25-6 26-7 27-8 28-9 29-1 21- Petroleum IV. OTHERS PRODUCTS Table 4.1 reveals that the share of Other Products in the total exports was 1.12 per cent in, which increased to 3.43 per cent in 21-. The compound 8
growth rate of Other Products is 28.23 per cent, which has been found significant at 1 per cent level of significance. Figure 4.4 Growth of Others Products during the Post-WTO Period Other Products 5 4 3 2 1 19-17- 18-19- 2-1 21-2 2-4 24-5 25-6 26-7 27-8 28-9 29-1 21- Others The analysis of data based on commodity composition of Indian exports during the post WTO period reveals that Indian export sector has remained under pressure. Several policy reforms have been introduced to strengthen the base of Indian exports which could not improve the performance of exports during the post WTO period. SECTION-II 4.2 DYNAMICS OF COMMODITY COMPOSITION OF INDIAN IMPORTS DURING THE POST-WTO PERIOD An attempt has also been made to study the performance of Indian imports during the post-wto period. It has been observed that the structure of India s imports has undergone a major change during the post WTO period. After independence, Indian government took keen interest to develop its own industries. However, the desire for rapid industrialization necessitated large quantity of imports of machinery, capital equipment, transport goods and project goods. It is pertinent to mention that the Commodity Composition of Indian is peculiar in the sense that few items of imports accounts for approximately 9 per cent of our total imports during the post-wto period. Important among the major imports include, petroleum products, 81
capital goods, pearls and precious stones, iron and steel, gold and silver, chemicals and edible oils. The data of the Commodity Composition of Indian during the post- WTO regime is presented in Table 4.2. The amount of India s imports has been increased from Rs. 871 crore in to Rs. 165315 crore in 21- during the post-wto period. The compound growth rate of Indian exports has been found 19. per cent during the study period, which has been found statistically significant at 1 per cent significance level. The items of composition of the Indian imports have been divided into two main categories, namely, Bulk and Non-Bulk. 82
Total Table 4.2 Commodity Composition of Indian During the Post-WTO Period Total of Bulk 871 35545 39.51 Petroleum, Crude and Products 18613 2.69 Bulk Bulk Consumption Goods 3592 3. Other Bulk 1334 14.83 Total of Non-Bulk 54426 6.49 Non-Bulk Capital Mainly Goods Export Related Items 232 26.66 13554 15.6 (Rs. Crore) Others Non- Bulk 1689 18.77 122678 47881 25174 3244 19464 747 34554 17586 22657 39. 2.52 2.64 15.87 6. 28.17 14.34 18.47 19-13892 58 35629 431 18158 8824 35223 2179 238 41.82 25.65 3.1 13.7 58.18 25.35 15.69 17.14 17-154176 547 341 5513 193 29 3647 25693 3719 35.65 19.68 3.58 12.4 64.35 23.61 16.66 24.7 18-178332 5566 26919 1619 18121 122672 42341 31 53 31.21 15.9 5. 1.16 68.79 23.74 16.82 28.22 19-215237 85132 54649 1473 21 1315 3885 38 51747 39.55 25.39 4.87 9.3 6.45 18.5 18.36 24.4 2-1 23873 714 6593 175 135778 4847 36815 586 41.19 3. 2.86 7.37 58.81 17.69 15. 25.17 Contd... 83
Total Total of Bulk Petroleum, Crude and Products Bulk Bulk Consumption Goods Other Bulk Total of Non-Bulk Non-Bulk Capital Mainly Goods Export Related Items Others Non- Bulk 21-2 2452 638 6677 45 2124 148561 4713 39393 627 39.41 27.23 3. 8.21 6.59 19.22 16.7 25.3 226 75 85367 668 2563 178 65325 414 64369 39.57 28.72 3.93 6.92 6.43 21. 16.79 21.66 2-4 35918 13538 9452 1412 2674 223727 834 58436 812 37.7 26.32 3.93 7.45 62.3 23.39 16.27 22.64 24-5 5165 3 13494 13 42469 31552 2936 76813 1284 38. 26.76 2.78 8.48 61. 22.54 15.33 24. 25-6 6649 2745 19464 12249 63561 38 166762 8253 14668 4. 29.47 1.85 9.62 59.5 25.25 12.5 21.3 26-7 8456 3826 258572 19431 1458 458446 2126 8869 164591 45.46 3.76 2.31 12.38 54.54 25.34 9.62 19.58 27-8 2312 453918 32655 18521 4743 558394 282269 83615 19251 44.84 31.68 1.83.33 55.16 27.88 8.26 19.2 28-9 1374436 627486 41 22883 184636 746949 3384 14686 265 45.65 3.56 1.66 13.43 54.35 24.4 1.69 19.62 Contd... 84
Total Total of Bulk Petroleum, Crude and Products Bulk Bulk Consumption Goods Other Bulk Total of Non-Bulk Non-Bulk Capital Mainly Goods Export Related Items Others Non- Bulk 29-1 1363736 592784 4649 42759 138376 772 312485 148355 3 43.47 3.19 3.14 1.15 56.53 22.91 1.88 22.74 21-165315 685 482714 332 162664 9225 326352 22617 367682 42.68 3.7 2.48 1.13 57.32 2.33 14.9 22.9 CAGR 19. 21.34 23.59 15.35 18.58 19.12 19.67 16.68 2.23 r 2..8.3..846.3.935.2.3 Adjusted.9.6.2.91.836.2.931.1.2 r 2 t-stat 27.33 * 21.35 * 23.39 * 12.9 * 9.8 * 29.77 * 14.71 * 23. * 29.8 * Note: 1. Figures in dark refer to percentages 2. Handicrafts excluding handmade carpets 3. *refers to 1% level of Significance Source: - 1. Data collected from RBI, database (Handbook of Statistics of Indian Economy, 21-) and averages calculated by author. 2. Data for 29-1 are revised and data for 21- are provisional 85
I. BULK IMPORTS Bulk category includes Petroleum; Bulk Consumption Goods; and Other Bulk imports. The data on Bulk reveals that it constitutes about 5 per cent of total imports bill of India. The compound annual growth rate of Bulk Items of Indian imports comes to be 21.34 per cent during the post-wto period, which has been found statistically significant at 1 per cent probability level based on the value of t-statistics. The annual average percentage share of Bulk to total imports was 39.51 per cent in, which rose to 42.68 per cent in 21-. A considerable variation has been found in the annual growth rate of Bulk of India. The annual percentage changes in Bulk varied from a low share of 31.21 per cent in 18- to a high share of 45.65 per cent in 28-9. The trend in growth of bulk imports is shown in figure-4.2i. Figure 4.2I Growth of Total of Bulk Products during the Post-WTO Period Total of Bulk 8 7 6 5 4 3 2 1 19-17- 18-19- 2-1 21-2 2-4 24-5 25-6 26-7 27-8 28-9 29-1 21- Total of Bulk (i) Petroleum and Other Petroleum Products A distinctive feature of Indian imports is that there has been a compulsion of petroleum products imports during a span of almost 6 years since independence. In other words, the demand for petroleum products has increased many times over the period of time. Another factor which has contributed to substantial increase of this group s share is the continuous increase in the prices of these products. The data on Petroleum Products is presented in table 4.2. The data reveals that the share of Petroleum, Crude and related Products imported in total imports of India in was 2.69 per cent, which rose to 3.7 per cent in 21-. The data further reveals that it constitutes about 2-3 per cent of total imports. The calculated compound annual average growth rate of Petroleum Products has been found 23.59 per cent and found significant at 1 per cent level of significance during the post-wto period. The trend in growth is shown in figure 4.2IA. 86
Figure 4.2IA Growth of Petroleum, Crude and Products during the Post-WTO Period Petroleum, Crude and Products 6 5 4 3 2 1 19-17- 18-19- 2-21- 1 2 2-24- 4 5 25-26- 6 7 27-8 28-29- 21-9 1 Petroleum, Crude and Products (ii) Bulk Consumption Goods Bulk Consumption goods are further divided into four categories i.e. Cereals and Cereal Preparations; Edible Oils; Pulses; and Sugar. The data reveals that the annual average percentage share of Consumption Goods to total imports was 3. per cent in, which declined to 2.48 per cent in 21-. The compound annual growth rate of Bulk Consumption Goods of Indian imports has been found to be 15.35 per cent and found significant at 1 per cent level of significance during the post-wto period. The data reveals that there has been a considerable variation in the annual average growth rate of Bulk Consumption products. The annual percentage changes in Bulk Consumption Goods varied from a higher level of 5. per cent in 18- to a lower level of 1.66 per cent in 28-9. The trend in growth of bulk consumption goods is shown in figure- 4.2IB. Figure 4.2IB Growth of Bulk Consumption Products during the Post-WTO Period Bulk Consumption Goods 5 4 3 2 1 19-17- 18-19- 2-1 21-2 2-4 24-5 25-6 26-7 27-8 28-9 29-1 21- Bulk Consumption Goods 87
(iii) Other Bulk Items Other Bulk Items are divided into seven categories, namely, (i) Fertilizers which further categorized into Crude; Sulphur and Unroasted Iron Pyrites and Manufactured; (ii) Non-Ferrous Metals; (iii) Paper Boards, Manufactures including News Prints; (iv) Crude Rubber, including Synthetic and Reclaimed; (v) Pulp and Waste Paper; (vi) Metalliferrous Ores, Metal Scrap etc.; and (vii) Iron and Steel. The data shows that the annual average percentage share of Other Bulk Items to total imports was 14.83 per cent in, which declined to 1.13 per cent in 21-. The compound annual average growth rate of Other Bulk Items of Indian imports has been found to be 18.58 per cent and found significant at 1 per cent level of significance during the post-wto period. The trend in growth of bulk consumption goods is shown in figure-4.2ic. Figure 4.2IC Growth of Other Bulk Products during the Post-WTO Period Other Bulk Items 2 15 1 5 19-17- 18-19- 2-1 21-2 2-4 24-5 25-6 26-7 27-8 28-9 29-1 21- Other Bulk II. NON-BULK IMPORTS Non-Bulk of India includes Capital Goods, Mainly Export Related Items and Others. The annual average percentage share of Non-Bulk to total imports was 6.49 per cent in, which declined to 57.32 per cent in 21-.The compound annual average growth rate of Non-Bulk Items of Indian imports has been found to be 19.12 per cent and found significant at 1 per cent level of significance during the post-wto period. It implies that the share of non-bulk imports has also increased during this period. The trend in growth of bulk consumption goods is shown in figure- 4.2II. 88
Figure 4.2II Growth of Non-Bulk Products during the Post-WTO Period Total of Non-Bulk 1 8 6 4 2 19-17- 18-19- 2-1 21-2 2-4 24-5 25-6 26-7 27-8 28-9 29-1 21- Total of Non-Bulk (i) Capital Goods of Capital Goods include Manufactures of Metals; Machine Tools, Machinery except Electrical and Electronic; Electrical Machinery except Electronic; Electronic Goods; Computer Goods; Transport Equipment; and Project Goods. Table 2 reveals that the annual average percentage share of Capital Goods to total imports was 26.66 per cent in, which declined to 2.33 per cent in 21-. The annual percentage changes of Capital Goods varied from 28.17 per cent in to 17.69 per cent in 2-1. The compound annual average growth rate of Capital Goods of Indian imports has been found to be 19.67 per cent and found significant at 1 per cent level of significance during the reference period. The trend in growth of bulk consumption goods is shown in figure-4.2iia Figure 4.2IIA Growth of Capital Goods during the Post-WTO Period Capital Goods 35 3 25 2 15 1 5 19-17- 18-19- 2-1 21-2 2-4 24-5 25-6 26-7 27-8 28-9 29-1 21- Capital Goods (ii) Export Related Items Export Related Items includes four major items, namely, Pearls, Precious and Semi-Precious Stones; Organic and Inorganic Chemicals; Textile Yarn, Fabrics, Made- 89
Ups, etc.; and Cashew Nuts. The annual average percentage share of Export Related Items to total imports was 15.6 per cent in, which slightly declined to 14.9 per cent in 21-. The compound annual average growth rate of Export Related Items of Indian imports has been found to be 16.68 per cent and found significant at 1 per cent level of significance during the post-wto period. The trend in growth of bulk consumption goods is shown in figure-4.2iib Figure 4.2IIB Growth of Mainly Export Related Products during the Post-WTO Period Mainly Export Related Items 25 2 15 1 5 19-17- 18-19- 2-1 21-2 2-4 24-5 25-6 26-7 27-8 28-9 29-1 21- Mainly Export Related Items (iii) Other Non-Bulk Items Other items of imports includes Gold and Silver; Artificial Resins and Plastic Materials, etc.; Professional, Scientific Controlling Instruments, Photographic Optical Goods; Coal, Coke and Briquettes, etc.; Medicinal and Pharmaceutical Products; Chemical Materials and Products; Non-Metallic Mineral Manufactures; and Others. Liberal policy towards the gold and silver s imports has led to increase in its imports from $3.2 billion in 17- to $4.9 billion in 18-, thus raising the share of these imports in total imports from 7.6 per cent in 17- to.6 per cent in 18-. The major share of this increase was on account of the shift in these imports from the NRI baggage route, the erstwhile preferred route, to the DGCI&S reporting system (Mathur, 2). The Gold Deposit Scheme 19 was announced in the Union Budget 19- to reduce the import of gold in the long run and to draw out privately held gold stocks and to reduce India s dependence on imports. The share of other items of imports to total imports was 18.77 per cent in, which increased sharply to 22.9 per cent in 21-, due to a sharp increase in imports of gold and silver. The compound annual growth rate of other items of imports of Indian imports has been found to be 2.23 per 9
cent, which has been found significant at 1 per cent level during the period under study. The trend in growth of bulk consumption goods is shown in figure-4.2iic. Figure 4.2IIC Growth of Other Non-Bulk Products during the Post-WTO Period Others Non-Bulk 4 35 3 25 2 15 1 5 19-17- 18-19- 2-1 21-2 2-4 24-5 25-6 26-7 27-8 28-9 29-1 21- Others Non-Bulk It is clear from the above analysis that the changes, which have taken place in the world economy, have influenced the Indian foreign trade during the post-wto period. The analysis of data reveals that the structure of India s exports and imports has drastically changed during the Post-WTO period. The analysis of the data further reveals that the commodity composition of the Indian exports has undergone a major change during the Post-Liberalization period. The analysis reveals that the share of agricultural and allied products has declined during the post WTO period. The study found that the share of Manufactured Goods has increased from Rs. 6467 crore in to Rs. 7658 crore in 21- during the study period. The analysis shows that the compound growth rate of all the principal commodities of Indian exports has been found significant at 1 per cent level except handicrafts. Handicraft sector of Indian exports is a major foreign exchange earning sector, therefore, there is need to give more impetus to this sector. Moreover, several steps are also required to facilitate the other important foreign exchange earning sectors of India, namely cottage, gems and jewellery, electronic and the computer software, engineering and consultancy. A considerable variation has been found in the annual growth rate of Bulk of India. The data reveals that the share of Petroleum, Crude and related Products imported in total imports of India in was 2.69 per cent, which rose to 3.7 per cent in 21-. The share of non-bulk imports has also increased during this period. The 91
share of others non-bulk imports to total imports has sharply increased during the study period. The analysis of data on the commodity composition of Indian exports during the post WTO period reveals that Indian export sector has remained under pressure. Several policy reforms were introduced in the Indian Foreign Trade Policy, but it could not improve the performance of exports during the process of trade liberalization. The analysis of commodity composition of Indian exports and imports during the post-wto period reveals that the share of Indian exports in value terms has increased from to 21-. This increase has been found statistically significant at 1 per cent level of significance. As the compound growth rate of Indian exports has been found 17.49 per cent during this period. The analysis of data further reveals that the commodity composition of Indian exports has undergone a major change during the post-wto period. The growth of agricultural and allied products shows an increasing trend during this period. However, the Compound growth rate of agricultural and allied products exports remained.9 per cent, which is less than the overall growth rate of Indian exports in value terms. The compound growth rate of ores and minerals is 21.9 per cent, which has also been found significant at 1 per cent level of significance, though the share of this component as percentage of total exports remained on the lower side. The study further found that there is consistent increase in the share of manufactured goods during the post-wto period, which was 77.49 per cent in which reached to 8.7 per cent in 19-. However, it starts declining and reached to the level of 63.19 per cent in 27-8, which may be the reason of the continuous recession of this decade. It reached to the level of 66.16 per cent in the year 21- which is lower than even the level of 1-91. The analysis of data further reveals that there is increasing trend of exports in value terms in all the commodities of exports except handicrafts and other manufactured products, which increased from and reached to the peak level in but start declining and reached to level in 21-. The analysis of commodity composition of Indian imports during the post-wto period reveals some interesting facts. The commodity composition of Indian imports is peculiar in the sense that few items of imports accounts for approximately 9 per cent our 92
total imports during the post-wto period. Within the bulk imports category, the share of petroleum products has shown a dominant position during the post-wto period. This has happened due to number of factors, namely, the continuous increase in the international prices of petroleum products; the continuous depreciation of Indian rupee on account of devaluation as well as due to market pressure has contributed to the increase in the total value of imports of this category. The foregoing analysis of all the components of imports reveals that the rate of growth has increased during the post-wto period, which has contributed ultimately to the higher rate of increase in the value of imports during the period under study. 93