India’s trade to GDP ratio stands at 41.7 per cent according to the data of World Bank and its total trade equals to around 40 per cent of the GDP.
Donald Trump has recently announced his intention to withdraw India’s Generalised System Preferences (GSP) benefit status, due to lack of reciprocity. Amid this, India is again being questioned for its anti-trade policies. However, an analysis shows that even after defying global standards of liberal trade, India has emerged as a big trading nation.
Indian economy is becoming fairly trade dependent and stands right in the middle of world’s seven largest country in terms of trade to GDP ratio — even ahead of China, said Richard Rossow, a senior advisor. Richard Rossow is Wadhwani Chair of US-India Policy Studies at Centre for Strategic and International Studies, and is a former deputy director of the US-India Business Council (USIBC).
Modi government has from time to time shown a reluctance to pursue liberal trade policies, Rossow said in a Twitter post. In 2014, the government delayed the implementation of Trade Facilitation Agreement and also refused to remove farm subsidies, under the World Trade Organisation (WTO). Further, the government has withdrawn various pending trade deals, increased customs duty and imposed import-substitution rules.
However, these steps have not deterred India’s progress in trade integration, said Rossow. India’s trade to GDP ratio stands at 41.7 per cent according to the data of World Bank and its total trade equals to around 40 per cent of the GDP.
Moreover, India’s overall exports in April-January 2018-19 are estimated to be $439.98 billion, showing a positive growth of 9.07 per cent over the same period last year, according to Ministry of Commerce. The growth is primarily on the back of increased exports of chemicals, drugs and pharmaceuticals, ready-made garments, gems and jewellery and engineering goods. Moreover, India is the world leader in information technology services market.
Further, overall imports in April-January 2018-19 are estimated to be $530.55 billion, showing a positive growth of 10.74 per cent over the same period last year, according to the commerce ministry.
Speaking of the impact of withdrawal of GSP status, commerce secretary Anup Wadhawan had said: “The move might have an affect on India-US trade, however, its impact on Indian exports would be minimal.”
The Foreign Trade Policy (FTP) 2015-20 aims to expand the country’s exports and use trade expansion as an effective instrument of economic growth and employment generation. Its implementation is expected to double the share of India in world by 2020, from the current three per cent. Moreover, the Modi government in the mid-term review of the Foreign Trade Policy (FTP) 2015-20 has taken various steps to give push to trade.