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Direction of Foreign Trade – Discussed!


Direction of foreign trade means those countries with which India has trade ties.

Direction of Indian foreign trade has undergone a considerable change after independence.

Direction of foreign trade can be discussed as follows:


1. Organisation of Petroleum Exporting Countries (OPEC):

OPEC includes countries Kuwait, Iran, Saudi Arabia, United Arab Emirates (UAE) and Indonesia. India was exporting 11% of her total exports to these countries in 1989-81 and it has gone to 12% in 2001-02. But during this period, our imports have steadily declined from these countries i.e. from 27.8% to 5.8%. India’s oil export was 27.8% in 1980-81 and due to domestic production of oil, our import decreased.

2. Eastern Europe:

Countries of East Europe like erstwhile USSR, Poland, Romania, Bulgaria, Yugoslavia, East Germany and Czechoslovakia are included in this group. Our exports to these countries were 8% and imports were 4% in 1960-61. Our trade increased with Russia after 1971 treaty.


India’s co-operation and friendship grew with these countries. India’s exports to these countries were 22.1% and imports were 10.3%. Nearly 84% of the trade was with Russia. After the fragmentation of USSR our trade declined. In 2001-02 out exports were 2.3% and imports were 1.4%.

3. Organisation of Economic Co-operation and Development Countries:

In this organisation developed countries of the West and Japan are included. India’s exports with these countries were 46.6% of total exports in 1980-81 and its share increased to 49.3% in 2001-02. Our exports with USA have increased from 11.1% to 19.4%.

Our exports to Japan have decreased. India’s exports to European Union during the said period have remained more or less constant. India’s imports have declined from 45.8% in 1980-81 to 40.1% in 2001-02. Specially our imports have declined significantly from USA in this period.


4. Developing Countries:

Asian countries excluding Japan and OPEC, Latin American countries and Africa fall in this category. Our trades with these countries have been increasing. In 1980-81, Indian exports were 18.9% and imports 15.7%. In 2001-02 out exports increased to 28% and imports to 19.1%. Asian countries contribute 65 to 70% of trade with India. India’s foreign trade with Africa and South America is very small.


(i) In 1947, U.K. was the main partner in foreign trade with India. India’s exports and imports were 34% and 30% respectively. After independence, India got new trade with USA, Germany, Japan, the OPEC and USSR. It helped India to diversify her industries.

(ii) India has diversified her exports to match its imports on the eve of independence; UK was the main country for exports. But now USA has become the biggest buyer of Indian goods. Along with UK and USA, Germany and Japan buy Indian goods. OPEC is also main buyers of Indian goods.

(iii) India has vast requirements of industrialisation. So it purchases from U.K., USA, and USSR and from many other countries.

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