IOSR Journal of Economics and Finance (IOSR-JEF)

e-ISSN: 2321-5933, p-ISSN: 2321-5925.Volume 3, Issue 2. Ver. I (Mar. - Apr. 2014), PP 08-18
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Trends In India’s Exports: A Comparative Study Of Pre And

Post Reform Period
Dr. Priyanka Sahni
(Assistant Professor, University College, Kurukshetra University, Kurukshetra - 136119)

Abstract: This paper analyzes the trends in India’ s exports using the time series data for the
period 1980-81 to 2010-11. The Govt. of India introduced economic reforms since 1991 especially
in the trade sector, therefore, in order to see the impact of economic reforms on India’s export
behavior, the whole time period has been divided into two sub-periods 1980-81 to 1991-92 (pre-
reform period) and 1992-93 to 2010-11 (post-reform period). The study shows that India’s exports
performance improved significantly during the post -reform period and there has been a perceptible
change in the value, composition and direction of India’s exports. Though the volume and value of
exports has increased manifold, India’s share in the world exports is still not up -to the expectation.
Keyword: Economic Reforms, Economic Growth, India’s Exp orts, Liberalization, Openness.

I. Introduction
Exports have acquired added significance in the wake of liberalization wave sweeping
across the world. The trend towards market economy in almost all the countries of world has
increased the role of exports in developmental efforts. Therefore, exports constitute a key factor in
economic development of a country. For a developing country, it is essential to build up a sizeable
export surplus. The rate of economic growth is largely determined by the rate at which a country
can expand its export capacity. Higher rates of economic growth tend to be associated with higher
rates of export growth. A country that tries to promote growth while ignoring its export
performance may succeed in the short -run, but it will be hard- pressed to sustain growth over a long
period of time. Thus, it can be concluded that exports are a key factor in the growth process, not
one of political astrology but of empirical fact.
The major concern of the government in the past was restriction o f imports with a view to
controlling the trade deficit and protection of domestic industries against foreign competition.
Imports were, therefore were very much restricted by prohibition of imports of many few items,
import licensing, very high import duties and foreign exchange restrictions. The foreign trade
policy was characterized by the overtone of negativism. Beginning mid -1991, the Government of
India introduced a series of reforms to liberalize and globalize the Indian economy. Reforms in the
external sector of India were intended to integrate the Indian economy with rest of the world. In this
context, the Ninth five year plan (1997-2002) observed, “The process of globalization is a reality
which cannot be denied and also should not be avoided. Howe ver, it needs to be managed so that we
can derive the maximum advantage from the world markets”. Reforms of trade and exchange rate
policy were a critical element in the process of structural reforms. Since the initiation of economic
reforms, India‟s outward orientation has increased considerably.
The major trade policy changes in the post -1991 period included simplification of
procedures, removal of quantitative restrictions and substantial reduction in tariff rates. A
significant development in the current account of balance of payments in the 1990s was the
remarkable growth in the exports of invisibles to the rest of world. This was made possible by
unfrequented growth in information and communication related services like computer software,
hardware, internet, e - commerce and telecommunication sector. The economic reforms process
introduced since 1991 with focus on liberalization, openness, transparency and globalization has
enabled increased integration of the Indian economy with the rest of world. The growth rate of
India‟s trade is increasingly dependent on exogenous factors such as world trade growth (especially
those of the trading partners), international price changes and development in the competitor
countries. Cross currency exchange rates as well as dollar rupee exchange rate movements also get
reflected in the performance of India‟s trade.
India‟s approach to openness has been cautious, contingent on achieving certain pre -
conditions to ensure an orderly process of liberalization and ensuring macro -economic stability.
This approach has been vindicated in recent years with growing incidence of fina ncial crisis in the
world economy. Over and above, the entire policy regime in India with regard to liberalization of
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 Trends in India’s Exports: A Comparative Study of Pre and Post Reform Period

external sector has witnessed perceptible change in the post -reform period.

OBJECTIVES AND METHODOLOGY OF THE STUDY:

The main objective of the present study is to make a comprehensive analysis of India‟s
exports growth in the pre (1980-81 to 1991-92) and post-reform period (1992-93 to 2010-11). The
sub-objectives are as follows:-
1. To examine the trends in India‟s exports in terms of value, volume and price indices.
2. To examine the structural changes in composition of India‟s exports.
3. To examine the structural changes in Direction of India‟s exports.
4. To analyze the magnitude of changes that has taken place with respect to share of India‟s
exports in world exports.
To see the changes in India‟s exports regarding value, composition and direction regarding
pre-reform period and post-reform period we have calculated the compound growth rate. In order to
calculate the growth rate the following regr ession equation has been used:-
Y t = Y 0 (1 + r) t (1)
Where,
Y 0 = the beginning value of Y
Y t = Y‟s value at time t
r = the compound rate of growth of Y
Taking the natural log of above equation (1) on both sides we obtain: -
In Y t = In Y 0 + t In (1 + r) (2)
Let, bo = In Y 0
b 1 = In (1+ r)
Therefore, the equation (2) can be written as: -
In Y t = bo + b 1 t (3)

Now, If we add the error term Uto above equation, we obtain:-

In Y t = bo + b 1 t + U
We Know that, b 1 = In (1+ r)
Therefore, Antilog (b 1 ) = (1+ r)
r = (Antilog b 1 – 1)
And since r is the compound rate of growth, once we have obtained b 1 (the slope
coefficient) we can easily estimate the compound rate of growth of Y by using the following
formula:-
Compound Rate of Growth = (Antilog b 1 – 1). 100
The present paper has been divided into five sections. Section -I is devoted to survey of
literature. Section-II examines the trends in India‟s exports performance at aggregate level for the
period 1980-81 to 2010-11. In section-III an attempt has been made to study the exports
composition pattern. Section-IV analyses the direction of India‟s expo rts. The main conclusions and
policy implications emerging out of the study are presented in section -V.

II. Survey Of Literature

The literature on role of exports as one of the deterministic factors of economic growth is a
very old concept. Adam Smith and Da vid Ricardo argued in favor of international trade as an engine
of economic growth. Export sector is considered as a catalyst agent for sustaining and accelerating
process of economic growth (Aggarwal, 1982). Countries devote home resources to exports beca use
they can obtain more goods and services by international exchange than they would from the same
resources devoted to direct home production. Depending upon marginal propensity to consume and
propensity to import, exports have multiplier effect on Gross National Income (Bannock et al.,
1992). Exports, by fostering specialization help to benefit from comparative advantage; utilizing
the full capacity of plant size where domestic demand is less than full capacity production; getting
benefit of greater economies of scale due to large market; expanding aggregate demand; increasing
the rate of investment and technological changes; enabling import of essential raw materials and
capital goods, result industrialization and thus rapid economic growth in developin g economies
(Chennery, 1979; Kavoussi, 1984; Ram, 1987; and Moon, 1998). Trade reforms formed an integral
part of the overall structural reform process (RBI, 2001 -02). The multilateral aspect of India‟s trade
policy refers to India‟s commitments to the Wor ld Trade Organization (WTO) with regard to trade
in goods and services, Trade Related Investment Measures (TRIMs), Trade Related Intellectual
Property Rights (TRIPs). This open trade regime has been viewed as the least vulnerable form of
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 Trends in India’s Exports: A Comparative Study of Pre and Post Reform Period

globalization with enormous opportunities for higher growth emanating from higher exports
(Krueger, 1998). Exports, being a major part of India's foreign trade, have assumed a place of
paramount importance and play a significant role in economic development process through
generating investible surplus and financing imports by earning foreign exchange (Kaur, 1993).
Declining from respectable share of 2.00 per cent to 0.50 per cent during 1950 -60, and hovering
around 0.50 per cent during 1960-90, India‟s share in world merchandise export has increased from
0.56 per cent in 1991-92 to 1.0 per cent in 2005-06 and 1.6 percent in 2010-11. Trade policy
reforms in recent past with their focus on liberalization, openness, transparency and globalization as
well as creation of WTO have provided an export friendly environment with simplified procedure
for trade facilitation (Economic Survey, 2007 -08).

III. Trends In India’s Exports

The progress of Indian economy in terms of exporting goods has been remarkable since the
mid 1990s, especially compared with India‟s position in the early 1990s, with the outbreak of
hostilities in the Persian Gulf in 1990 and the consequent spiraling of oil prices, there was
tremendous pressure on India‟s foreign exchange reserves, aggravating on already weak bal ance of
payments situation. Following this, the country plunged into deep economic crisis. The rate of
inflation rose to a level much higher than what India had witnessed six months earlier. Foreign
exchange reserves declined to a level covering only three weeks of imports. To compensate for this
decline, India entered into a stand -by arrangement, together with a supplementary loan with
International Monetary Fund (IMF). Following the IMF conditionality‟s, various reform measures
were undertaken to raise the growth rate in a sustained way.
Reforms in domestic economy have been able to reduce excessive Government control of
decision making. In the manufacturing sector, most of the reforms were incorporated into the
industrial licensing policy of 1991, impleme nted subsequently through a series of Government
notifications. It was only from 1991 that exports were being seen as an integral part of industrial
and development policy. The policy, thereafter emphasized technological up -gradation, increase in
size of plants, freer imports and domestic and international competition for the entire industrial
sector as pre-requisite for export promotion. All these steps have helped the business environment
immensely and propelled growth in India‟s exports. In this section, we have computed the growth
rate of India‟s exports in terms of value, volume and unit value indices pre and post economic
reforms period.
TABL: 1.1
GROWTH RATE OF INDIA’S EXPORTS PRE AND POST ECONOMIC REFORMS PERIOD
COMPOUND GROWTH RATE COMPOUND GROWTH RATE
VARIABLE FOR PRE-REFORM PERIOD FOR POST-REFORM
(1980-81 TO 1991-92) PERIOD (1992-93 TO 2010-11)
India’s Exports 7.9% 14.8%
India’s Volume indices of Exports 6.1% 11.1%
India’s Unit Value Indices of Exports 10.6% 5.5%
Source:- Handbook of statistics on Indian Economy (various issues) & Author’s calculation
The above table (1.1) shows that Compound growth rate of India‟s exports is found to be
7.9 percent during the pre-reform period but it is found to be almost double (14.8 percent) during
the post-reform period. This implies that India‟s exports exhibited a sharp turnaround during the
post-reform period. Buoyancy in world demand, revival of world trade reflecting East Asian
recovery, bottoming out of some global commodity prices, coupled with trade policy initiatives
taken by the Government, inter alia, contributed to this export increase. A stable domestic
macroeconomic environment including low inflation and a relatively stable exchange rate in real
effective terms, may have also contributed to this turnaround in exports. The compound growth rate
of volume indices of India‟s exports is found to be 6.18 percent during the pre -reform period but it
is found to be almost double i.e. 11.18 percent during the post -reform period. It implies that the
volume indices of exports have registered an upward trend during the post -reform period mainly
because of the following facts:- Recovery in international commodity prices, movements in cross
currency exchange rates, a faster repatriation of exports proceeds, various policy initiatives for
export promotion and market diversification contributed to upsurge in export volume in post reform
period. But the Unit value indices of India‟s exports registered a sharp downward trend during post -
reform period mainly due to resurgence in international crude oil prices.This further implies that
competitiveness of Indian industry has increased in post -reform period.

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 Trends in India’s Exports: A Comparative Study of Pre and Post Reform Period

INDIA’S SHARE IN WORLD EXPORTS VIS- A- VIS INTERNATIONAL COMPARISON

The Annexure (1) & Fig (1) shows that India‟s share in world merchandise exports has
increased from 0.4 percent in 1980 to 1.7 percent in 2011. India‟s share in world merchandi se
exports has started rising since 2007 albeit a very slow 0.1 percentage point so as to reach 1.21
percent in 2008 and 1.25 percent in 2009. This was mainly due to the relatively slow rise or greater
fall in world export growth than India‟s. Recently, an nounced Foreign Trade Policy also set the
long-term policy, objective to double India‟s exports share in global exports by 2020. The annexure
further shows that India‟s share in the total world exports is not so good as compared to china
which is the outcome of the lack of competitiveness of Indian goods in the international market.
The increase in China‟s share of world exports between 2000 and 2008 at 5.1 percentage points is
slightly less than one half of the total increase in the share of developing cou ntries over this period.
Hong Kong, South Korea and Singapore, with higher values of exports than India in absolute terms
also registered high share in world exports as compared to India.

FIG:-1
INDIA’S PERCENTAGE SHARE IN WORLD EXPORTS VIS-À-VIS OTHER COUNTRIES
(1980-2011)

IV. Composition of India’s Exports

The changing structure of India‟s exports throws some interesting light on both the demand
pattern and supply factors that are increasingly influencing India‟s exports and the manner in which
its production structures, institutions, and policies are responding to it. Regarding changes in the
composition of exports since 1980s, it may be observed that the share of agriculture and allied
products has been declining while that of ores and minerals has remained more or less steady. Share
of manufactured goods has increased generally. Although the opening up of the Indian economy
since the early 1990s provided impetus for higher growth for most of the commodities, some
products gained more than the others. India‟s merchandise exports are predominated by the
manufacturing sector which accounted for more than three - fourth of its total exports during post -
reform period.

FIG: 2 COMPOSITION OF INDIA’S EXPORTS (2010 -11)

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 Trends in India’s Exports: A Comparative Study of Pre and Post Reform Period

I.) AGRICULTURE AND ALLIED PRODUCTS:-

Agricultural products like tea, coffee, rice, tobacco and spices are important items of
India‟s exports and hence foreign exchange earnings. Agriculture is also the source of raw material
for agro-based industries including textiles, jute, sugar , paper and processed foodstuffs. Moreover,
agricultural sector provides market for capital goods inputs and light consumer goods. The growth
rate of India‟s exports of agriculture and allied products pre and post economic reforms period has
been presented in the following table (1.2):-

TABLE: - 1.2
GROWTH RATE OF INDIA’S EXPORTS OF AGRICULTURE AND ALLIED PROD UCTS
PRE AND POST ECONOMIC REFORMS PERIOD
COMPOUND GROWTH RATE COMPOUND GROWTH RATE
COMMODITY FOR PRE-REFORM PERIOD FOR POST-REFORM PERIOD
(1980-81 TO 1991-92) (1992-93 TO 2010-11)
I.)Agriculture & Allied products 1.9 9.7
1. Tea 0.8 3.0
2. Coffee -2.5 3.1
3. Rice -0.4 10.0
4. Tobacco -4.4 10.6
5. Marine Products 5.7 5.4
II.) Ores & Minerals 2.2 17.5
Source:- Handbook of statistics on Indian Economy (various issues) & Author’s calculation
The above table (1.2) reveals that The compound growth rate of India‟s exports of
agriculture and allied products is found to be only 1.9 percent during the pre -reform period but it is
found to be higher i.e. 9.7 percent during the post -reform period. It implies that the exports of
agriculture and allied products has been rising during post reform period due to the factors such
as:-Adoption of a National Agricultural policy (NAP) by the Government of India, Establishment of
Agriculture Export Zones (AEZs), VisheshKrishi and Gram UdyogYojna (VKGUY) and Opening of
Agriculture under W.T.O.

1. TEA:
Tea has been the most important traditional commodity in our exports. The Indian tea
industry is a profile source of foreign exchange for the central and state Governments. India has the
largest average as well as the highest production of tea in the world. It even occupied first position
in our export items in the few years of sixties. The compound growth rate of India‟s exports of tea
is found to be only 0.8 percent during pre -reform period which indicates very poor performance of
tea exports due to the factors such as: - Increase in domestic demand for tea faster than expansion in
its production, Rise in price of tea in domestic market vis -à-vis international prices, Competition
from East Africa, China, Lanka and Bangladesh, Low yield rate, Increase in cost of production,
Heavy fiscal burden and Progressive tax policy of Government. But the C.G.R is found to be 3.0
percent during post-reform period which is greater as compared to pre -reform period. It implies a
rise in exports of tea during post reform period because of factors such as: Improvement in the
production of North Indian tea, Firming up of tea price in the world market, Rise in unit value
realization and Failure of Kenya‟s tea crop.

2. COFFEE:-
Coffee is another important traditional commodity in India‟s export basket. The C.G.R of
India‟s exports of coffee is found to be negative during the pre -reform period. It implies very poor
performance of coffee exports due to fall in exports of coffee to USA and EEC. But the exports of
coffee have shown some improvement during post -reform period as C.G.R is found to be positive.
This rise in exports of coffee may be attributed to the factors such as: Failure of Brazilian coffee
crop, Increase in India‟s competitiveness in coffee.

3. RICE:-
The C.G.R of India‟s exports of rice is found to be negative during pre -reform period. The
fall in export volume, in face of the buoyant market conditions is due to decline in domestic
availability following the drought conditions and because of ban placed on exports of non -basmati
rice to augment domestic supply. But during the post -reform period exports of rice has shown a
remarkable growth as C.G.R is found to be 10.08 percent. The adjustments in the exchange rate of
rupee, attractive premium on exim-scrip and inclusion of exports of certain varieties of rice in the
open general license made the exports of rice competitive. Bulk of these exports found their ways to

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 Trends in India’s Exports: A Comparative Study of Pre and Post Reform Period

the gulf region and the USA. Further, recover y in agriculture also facilitated an increase in rice
exports during post-reform period.

4. TOBACCO:-
Tobacco has been yet another highly playing traditional exportable item and its relative
share in the country‟s exports, like that of other traditional e xportable has been marginal and has
moved in a narrow direction in eighties. India‟s exports of tobacco experienced a negative growth
rate during pre-reform period mainly due to the reasons such as: - Anti-smoking drive, Increased
competition from other tobacco producing countries, Higher price as compared to Brazil and South
Korea, Decline in exports to China and USSR, Drought conditions prevailing in the country,
Stagnant yield and Use of traditional methods of cultivation, Pressure for internal consumptio n,
Failure to produce quality tobacco and Increase in the cost of production. But the exports of tobacco
have shown a rapid growth during post -reform period as the C.G.R is found to be 10.6 percent. This
is mainly due to higher unit value realization. Furt hermore, the rapid growth of exports of tobacco
during post- reform period is a welcome development in view of the value -added being generated
within the country.

5. MARINE PRODUCTS:-
The C.G.R of exports of marine products is found to be 5.76 percent dur ing pre-reform
period and 5.44 percent during post-reform period. Improved catch position because of the
operation of chartered vessels, coupled with better infrastructural facilities like cold storage,
transport, etc. and quality control gave apparently a boost to these exports.

II) Ores and Minerals:-

The C.G.R of exports of ores and minerals is found to be only 2.22 percent during pre -reform
period due to the cyclone in Andhra Pradesh. But during the post -reform period C.G.R is found to
be very high i.e. 17.59 percent. The surge in exports of ores and minerals is contributed mainly by
expansion in exports of iron ore (which more than doubled) during post -reform period.

III) MANUFACTURED GOODS:-

This a major commodity group exported by India, whose share in the total exports of our
country has consistently grown. The growth rate of India‟s exports of manufactured goods pre and
post economic reforms period has been presented in the following table (1.3): -

TABLE: 1.3
GROWTH RATE OF INDIA’S EXPORTS OF MANUFACTURED GOODS PRE AND POST
ECONOMIC REFORMS PERIOD
COMMODITY COMPOUND GROWTH RATE COMPOUND GROWTH RATE
FOR PRE-REFORM PERIOD FOR POST-REFORM PERIOD
(1980-81 TO 1991-92) (1992-93 TO 2010-11)
III. Manufactured Goods 12.3 13.6
1.Leather & Manufactures 14.2 6.0
2.Engineering Goods 9.4 19.6
3.Gems &Jewellery 15.4 13.8
4.Chemical& Related products 20.5 16.0
5.Petroleum Products 24.6 37.7
Source:- Handbook of statistics on Indian Economy (various issues) & Author’s calculation
The above table (1.3) shows that Compound Growth Rate of India‟s exports of
Manufactured goods is found to be 12.3 percent during pre -reform period but it improved slightly
i.e. 13.6 percent in post-reform period which implies that the exports of manufactured goods have
shown an improved performance in post-reform period. However, the consistent rise in the share of
this commodity group can be attributed to many commodities, whose exports have shown a
remarkable increase. Category wise export performance of manufactured goods is as follows:-

1. LEATHER AND MANUFACTURES:-

The Leather industry occupies a very vital place in Indian economy by virtue of its wide
spread, sizeable employment and exports potential. Leather is an export worthy product and unlike
gems and jewellery; it has very little import content. The C.G.R of India‟s exports of leather and
manufactures is found to be 14.2 percent during pre -reform period. But the exports of leather and
manufactures declined sharply during post -reform period as C.G.R is found to be only 6.0 percent
due to the factors such as: Demand contraction in developed countries resulting from global
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 Trends in India’s Exports: A Comparative Study of Pre and Post Reform Period

recession, Sharp drop in exports of finished leather and footwear components mainly due to the
break- up of former USSR, Depressed market conditions for leather in European union countries
and delay in clearance of imported consignment etc. In view of competition from developed
countries, the Government has set up an inter -ministerial committee to provide a single window
clearance to enable leather exports to meet their requirements of imported raw materials, machinery
etc. on a priority basis. The export base of this item has been strengthened by the change in the
composition of exports wherein there has been an increase in the share of finished pr oducts and
items with higher value additions. The leather exports promotion council has also taken steps to
improve the skills of technical personnel and to promote the development, fabrication and
distribution of improved tools for tanning etc.

2. ENGINEERING GOODS:-
The C.G.R of exports of engineering goods is found to be 9.4 percent during pre -reform
period but almost doubled during post-reform period as period as C.G.R is found to be 19.6 percent
due to the factors such as: Rising demand from countries i n East Asia and China, Growing
industrial base of the country, Fixation of minimum value addition levels and Stream ling of
procedures for ensuring optimal use of funds under IPRS i.e. International Price Reimbursement
Scheme. Finally, the sharp rise in the engineering goods exports indicates that despite rising
protectionism in the developed countries and strong competition in international market from the
newly industrialized countries these items have achieved acceptable quality and quantity standards.

3. GEMS AND JEWELLERY:-

Gems and Jewellery comprising diamonds, gold jewellery, silver jewellery etc. constitute a
growth potential export sector. The product group of gems and jewellery makes significant
contribution to country‟s overall export earnings and remains in forefront of foreign exchange
earners. The C.G.R of exports of Gems and Jewellery is found to be 15.4 percent during pre -reform
period but during the post reform period, exports of gems and jewellery declined slightly due to
non-availability of good quality rough gemstones, breaking of single channel supply and growing
competition, Demand contraction in developed countries resulting from global recession etc.

4. CHEMICAL AND RELATED PRODUCTS:-

The C.G.R of exports of Chemical and Related products is found to be 20.5 percent during
pre-reform period which indicates the impressive performance of exports of Chemical and related
products. But the exports of chemicals and related p roducts declined slightly during post -reform
period. This decline in exports of chemicals in post -reform period may be attributed to demand
contraction in developed countries resulting from global recession.

5. PETROLEUM PRODUCTS:-
The compound growth rate of India‟s exports of petroleum products is found to be 24.6
percent during pre-reform period 37.7 percent during post-reform period. This implies that India‟s
exports of petroleum products have shown a remarkable performance in both the peri ods especially
in post-reform period. Enhanced domestic refining capacity developed with a supportive tariff
structure is mainly responsible for surge in exports of petroleum products in post -reform period.

V. Destination/Direction of India’s Exports (1980-81 To 2010-11)

Direction of foreign trade refers to the relative share of various countries or country group
in our imports and exports. Not only the composition of India‟s foreign trade has undergone
substantial changes, there has also been marked c hange in the relative share of our exports and
imports to various countries signifying the emerging new economic relationships. In the present
section, we have discussed the direction of India‟s exports. The growth rate of India‟s exports to
major regions/ countries has been shown in the following table (1.4): -

DIRECTION OF INDIA’S EXPORTS

EASTERN DEVELOPING
OECD OPEC
EUROPE
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COUNTRIES
 Trends in India’s Exports: A Comparative Study of Pre and Post Reform Period

TABLE: 1.4 GROWTH RATE OF INDIA’S EXPORTS TO MAJOR REGIONS/COUNT RIES

PRE AND POST ECONOMIC REFORMS PERIOD
COMPOUND GROWTH COMPOUND GROWTH
COUNTRY RATE FOR PRE-REFORM RATE FOR POST-REFORM
PERIOD PERIOD (1992-93 TO 2010-
(1980-81 TO 1991-92) 11)
A. Organization for Economic Co -operation and 11.1 11.1
Development (OECD)
1. European Union (EU) 12.5 12.4
2. North America 15.2 11.1
3. Asia and Oceania 8.9 6.1
4. Other OECD Countries 6.8 11.1
B. Organization of Petroleum Exporting 0.6 20.5
Countries (OPEC)
C. Eastern Europe 3.6 5.0
D. Developing Countries 8.3 18.2
1. Asia 10.9 17.8
2. Africa -2.1 19.4
3. Latin American countries 21.1 23.3
Source:- Handbook of statistics on Indian Economy (various issues) & Author’s calculation

A. EXPORTS TO OECD COUNTRIES:-

Twenty countries originally signed the convention on the Organization for Economic Co-
operation and Development (OECD) on 14 December 1960. Since then the fourteen countries have
become the members of organization. Today, our 34 member countries span the globe, from North
and South America to Europe and Asia Pacific region. They include many of the world‟s most
advanced countries but also emerging countries like Mexico, Chile and Turkey. OECD region also
work closely with emerging giants like China, India and Brazil and developing countries like
Africa, Asia, Latin America and the Caribbean. In May 2007, OECD countries agreed to invite
Chile, Estonia, Israel, Russia and Slovenia to open discussions for membership of the organization
and offered enhanced engagement to Brazil, China, India, Indonesia and South Africa. The C.G.R of
India‟s exports to OECD is found to be 11.1 percent in pre -reform period as well as in post- reform
period. This implies that India‟s exports to OECD region have not shown an improved performance
during post-reform period reflecting the general slowdown in demand in this region. The decline in
exports may be on account of reduction in India‟s exports to EU, North America and Asia and
Oceania within the group. The C.G.R of India‟s exports to EU is found to be 12.5 percent during
pre-reform period but the exports to EU declined slightly during post -reform period mainly due to
global factors such as the crisis in the euro -zone, sluggish demand in Western Europe and global
crisis that began in Greece, quickly engulfed the entire euro region, reducing confidence i n the
European economy as a whole. The table (1.5) further shows that the C.G.R of India‟s exports to
North America is found to be 15.2 percent during pre -reform period. But our exports to North
America have shown a declining growth rate in post -reform period on account of fall in exports to
United States of America (U.S.A.). India‟s exports to Asia and Oceania have also shown a sharp
decline in post reform period mainly because of fall in exports to Japan within the region.

B. EXPORTS TO OPEC:-
India had relatively old trade connections with Organization of Petroleum Exporting
Countries. In the 1950s, it was India‟s turn to be placed in a more advantageous position where it
had more to offer to these countries than to buy them. The C.G.R of India‟s exports to OPEC is
found to be only 0.6 percent during pre -reform period but it is found to be much greater (20.5
percent) during post-reform period. This implies that our trade with OPEC during post -reform era
has improved substantially as its share in Indian exp orts has increased. Prevalence of high
international crude oil prices and the consequent gains in terms of trade have increased the share of
India‟s exports with OPEC region.

C. EXPORTS TO EASTERN EUROPE:-

The C.G.R of India‟s exports to Eastern Europe is found to be only 3.6 percent during pre -
reform period but improved slightly during post -reform era and rose to 5 percent in post-reform
period. This implies that India‟s exports to Eastern Europe witnessed a turnaround, during post
reform period mainly due to the new institutional arrangements set up to improve the bilateral
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 Trends in India’s Exports: A Comparative Study of Pre and Post Reform Period

economic relations. In addition, the sharp increase in exports to Eastern Europe was associated with
the repayment of technical credits as trade agreements which govern trade with countries drew to a
close.

D. EXPORTS TO DEVELOPING COUNTRIES:-

The C.G.R of India‟s exports to developing countries is found to be 8.33 percent during pre -
reform period. But exports to developing countries have shown a remarkable performance during
post-reform period as C.G.R is found to be 18.29 percent. The rising share of developing countries
in India‟s export basket in post-reform period indicates a directional shift in exports from North to
South. The increase in exports to developing countries during post -reform period is mainly
contributed by higher exports to Asia, Africa and Latin American countries. The exports to Asia
have shown a remarkable improvement during post -reform period as compared to pre-reform period
mainly because of following factors: -
a. The growing economic prosperity in South-East Asia.
b. Greater trade co-operation among Asian countries particularly South Asian countries.
c. Recovery from the crisis by East Asian countries.
d. The series of FTAs/CECAs signed by India with countries from Asia Region.
e. India‟s “Look East Policy” and sustained efforts to develop strong relations with Asian
countries.
The table (1.4) further reveals that the C.G.R of India‟s exports to Africa is found to be
negative during pre-reform period but exports to Africa have shown a remarkable improvement
during post reform period as C.G.R is found to be 19.48 percent. The sharp rise in India‟s exports to
Africa during post-reform period may be due to the “Focus Africa” program me of Government.
Table (1.4) further shows India‟s exports to Latin American countries increased slightly during
post-reform period. With a view to enhancing our exports to Latin America Region, the Government
has initiated a process for expansion of Ind ia-Chile Preferential Trade Agreement (PTA) and India -
MERCOSUR (trade bloc of Brazil, Argentina, Paraguay and Uruguay) trade Agreement. In addition
to this, the „focus‟ program me launched by Government of India within a view to increase our
trade with Latin America are in force for supporting and encouraging Indian exporters to explore
new markets of this region.

FIG: 3 DIRECTION OF INDIA’S EXPORTS

VI. Conclusions & Policy Implications

India‟s exports performance improved significantly during the post -reform period and there
has been a perceptible change in the value, composition and direction of India‟s exports. Though
the volume and value of exports has increased manifold, India‟s shar e in the world exports is still
not up-to the expectation. The share of manufactured goods as well as the proportion of high value
and differential products, petroleum products has increased in India‟s export basket reflecting that
Indian economy is being diversified and non-traditional items of exports are gaining importance.
The most remarkable change in the direction of India‟s exports during post -reform era has been the
increasing share of developing countries, OPEC, Latin America, Africa and Asia. It i s expected that
exports would grow at an average of 25 percent over the next few years. India‟s entry into new
markets and robust performance in engineering goods, gems and jewellery and textile segments are
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 Trends in India’s Exports: A Comparative Study of Pre and Post Reform Period

the reason behind the growth spurt.

POLICY IMPLICATIONS:
The major policy implications emerging out of the present study are as follows: -
1. For India to become a leading exporter in the world trade it will have to achieve at -least 2
percent share of world exports by the year 2020. Based on the past trends in world trade and
new developments in global economic scenario envisaged over the next few years,
aggregate world exports are likely to cross 25,000 billion dollars by 2020. India‟s exports
should, therefore, exceed 500 billion dollars to acc omplish this vision. However, there
seems to be a controversy between economists and policy - makers. For one group of
economists this target might appear to be too ambitious to achieve and one might dismiss it
as an exercise in wishful thinking. We feel th at this target can be achieved provided global
environment in external trade becomes favorable.
2. Deepening of reforms into specific export sectors would stimulate India‟s exports; result
compositional and geographical diversification; help to remove supply bottlenecks
operating in the economy and help in improving export competitiveness. More emphasis on
rapidly increasing markets in the context of the behavior of price and income elasticity‟s
would positively affect the demand for export, and further would eliminate the negative
market distribution and commodity composition effects.
3. The Government should make special efforts to increase the High Technology exports Such
as aerospace, computers-office machine, scientific instruments, electrical machinery,
pharmacy etc. as India‟s performance on high tech manufacturing trade front is not at par
with other leading exporters of high technology products.
4. India needs to reorient the pattern of its exports to switch to more skill -intensive and more
knowledge-intensive goods and services of competitive international quality. Further,
diversification of exports and the development of new export markets should be viewed as
part of a wider effort to enlarge the country‟s foreign trade and expand commercial and
economic relations with other countries.

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ANNEXURE:-1 SHARE IN WORLD EXPORTS OF SELECTED COUNTRIES (1980-2011)

Country 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994
China 0.9 1.1 1.2 1.2 1.4 1.4 1.5 1.6 1.7 1.8 1.8 2.0 2.2 2.4 2.8
Hong Kong 1.0 1.1 1.1 1.2 1.5 1.6 1.7 2.0 2.3 2.5 2.3 2.8 3.2 3.6 3.5
Malaysia 0.6 0.6 0.6 0.8 0.8 0.8 0.6 0.7 0.7 0.8 0.8 0.9 1.0 1.2 1.3
Indonesia 1.1 1.3 1.2 1.2 1.1 0.9 0.7 0.7 0.7 0.7 0.7 0.8 0.9 0.9 0.9
Singapore 1.0 1.0 1.1 1.2 1.3 1.2 1.1 1.2 1.4 1.5 1.5 1.6 1.7 1.9 2.2
Thailand 0.3 0.3 0.3 0.3 0.4 0.3 0.4 0.4 0.5 0.6 0.6 0.8 0.8 0.9 1.0
India 0.4 0.4 0.5 0.5 0.5 0.4 0.4 0.4 0.4 0.5 0.5 0.5 0.5 0.5 0.5
Korea 0.9 1.1 1.2 1.4 1.5 1.6 1.7 2.0 2.2 2.1 1.9 2.0 2.0 2.2 2.2
Developing 34.5 35.3 33.7 33.0 32.5 31.6 28.3 29.0 29.0 30.3 28.3 28.6 28.5 31.0 31.9
Countries
World 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Contd.
ANNEXURE:-1 SHARE IN WORLD EXPORTS OF SELECTED COUNTRIES (1980-2011) (II)
Country 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

China 2.9 2.8 3.3 3.3 3.4 3.9 4.3 5.1 5.9 6.6 7.4 8.0 8.8 8.9 9.7 9.9 10.5
Hong 3.4 3.3 3.4 3.2 3.0 3.1 3.1 3.1 3.0 2.9 2.8 2.6 2.5 2.3 2.6 2.7 2.7
Kong
Malaysia 1.4 1.4 1.4 1.3 1.4 1.5 1.4 1.5 1.3 1.4 1.4 1.3 1.3 1.3 1.3 1.3 1.2
Indonesia 0.8 0.9 0.9 0.9 0.8 1.0 0.9 0.9 0.8 0.8 0.8 0.9 0.8 0.9 1.0 1.0 1.1
Singapore 2.3 2.3 2.2 2.0 2.0 2.1 2.0 1.9 1.9 2.0 2.7 2.7 2.7 2.1 2.2 1.6 1.9
Thailand 1.1 1.0 1.0 1.0 1.0 1.0 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.2 1.2 1.2
India 0.6 0.6 0.6 0.6 0.6 0.6 0.7 0.7 0.7 0.8 0.5 1.0 1.0 1.2 1.2 1.5 1.7
Korea 2.4 2.4 2.4 2.4 2.5 2.6 2.5 2.5 2.6 2.8 2.2 2.3 2.2 2.6 2.9 3.0 3.0
Developing 32.0 32.8 33.7 32.0 32.3 37.3 26.8 37.9 38.7 40.7 43.8 45.3 45.0 37.9 37.0 34.6 35.9
Countries
World 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Source:- International Financial Statistics Yearbook (Various issues )

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