Page 103 - VIRANSH COACHING CLASSES
P. 103
the market and encouraging the production Try this :
of goods.
Name the goods exported to and imported
2) Encourages Investment : Foreign trade from India to China and Japan in recent years
creates an opportunity for the producers by India.
to reach beyond the domestic markets. It
encourages them to produce more goods Composition and Direction of India’s foreign
for export. This leads to an increase in total trade :
investment in an economy. Over the last 70 years, India’s foreign trade
3) Division of labour and specialization : has undergone a complete change in terms of
Foreign trade leads to division of labour composition and direction. Main feature of
and specialization at world level. Some composition of India’s foreign trade are as
countries have abundant natural resources, follows :
they should export raw material and import 1) Increasing share of Gross National
finished goods from countries which are Income : In 1990-91, share of India’s foreign
advanced in skilled manpower. Thus, trade (import-export) in gross national
foreign trade gives benefits to all countries income was 17.55%. It increased to 25%
thereby leading to division of labour and during 2006-07 and to 48.8% during 2016-17
specialization.
2) Increase in volume and value of trade :
4) Optimum allocation and utilization of Since 1990-91, the volume and value of
resources : Due to specialization, resources India’s foreign trade has gone up. India
are channelized for the production of only now exports and imports goods which are
those goods which would give highest several times more in value and volume.
returns. Thus, there is rational allocation
and specialization of resources at the 3) Change in the composition of exports :
international level due to foreign trade. Since Independence, the composition of
export trade of India has undergone a
5) Stability in price level : Foreign trade helps
to keep the demand and supply position change. Prior to Independence, India used
stable which in turn stabilizes the price to export primary products like jute, cotton,
level in the economy. tea, oil-seeds, leather, foodgrains, cashew
nuts and mineral products. With the passage
6) Availability of multiple choices : Foreign of time, manufactured items like readymade
trade provides multiple choices of imported
commodities. As foreign trade is highly garments, gems and jewellery, electronic
competitive it also ensures a good quality goods, especially computer hardware and
and standard products. This raises the software occupy a prime place in India’s
standard of living of people. exports.
7) Brings reputation and helps earn 4) Change in the composition of imports :
goodwill : Exporting country can earn Prior to independence, India used to import
reputation and goodwill in the international consumer goods like medicines, cloth,
market. For example, countries like Japan, motor vehicles, electrical goods etc. A
Germany, Switzerland etc. have earned a part from petrol and petroleum, India is
lot of goodwill and reputation in foreign now importing mainly capital goods like
market for their qualitative production of high-tech machinery chemicals, fertilizers,
electronic goods. steel etc.
94
