NIOS Economics (318) Notes/Answer| Chapter-33| Direction and composition of India’s Foreign trade

NIOS Economics (318) Notes/Answer| Chapter-33| Direction and composition of India’s Foreign trade. Important questions for NIOS Economics (318) Questions Answers brings you latest queries and solutions with accordance to the most recent pointers SOS . Students will clear all their doubts with regard to every chapter by active these necessary chapter queries and elaborate explanations that area unit provided by our specialists so as to assist you higher. These queries can facilitate students prepare well for the exams thanks to time constraint . NIOS Economics (318) Notes/Answer| Chapter-33| Direction and composition of India’s Foreign trade

HS 2nd years Solutions (English Medium)

NIOS Economics (318) Notes/Answer| Chapter-33| Direction and composition of India’s Foreign trade

Intext Question 

1. State whether the following statements are true or false: 

(a) Foreign trade includes both exports and imports. 

Ans. True 

(b) Buying goods from other countries is called export. 

Ans. False 

(c) No problems arise in foreign trade on account of difference in currencies 

Ans. False

 2. Fill in the blanks 

(a) Imports meet the difference between ___________ and domestic supply. 

Ans. domestic demand 

(b) Imports can be helpful in___________ the quality of domestic production 

Ans. improving 

(c) Exports increase___________and ___________

Ans. income, employment 

(d) Export is an important source of earning ___________

Ans. foreign exchange

 (d) Both___________ and ___________sectors engaged in foreign trade in India

Ans. public, private 350

3. Fill in the blanks:

 (a) The share of petroleum product s in total imports in 1995-96 was  ___________

Ans. 20% 

(b) The share of capital goods in total imports in the year 1995-96 was ___________

Ans. 28%

(c) On the eve of independence India mainly exported ___________.products. 

Ans. Agriculture

(d) The most important item of manufactured goods in India is___________

Ans. gems and jewellery 

(e) The share of exports of manufactured goods in total exports in 1995-96 was ___________

Ans. 75%

 4. Fill in the blanks:

 (a) Much of India’s trade before Independence was with___________

 Ans. Britain

 (b) We used to export nearly___________percent of our total exports to less developed countries. 

Ans. 26% 

(c) The share of India in world exports in the year 1994 was ___________ percent. 

Ans. 0.6% 

(d) The share of India in world trade in the year 1994 was___________ percent. 

Ans. 0.61% 

Terminal Exercise 

1. Explain the meaning of foreign trade. 

Ans. Foreign trade refers to trade with foreign countries. It means buying and selling of goods by one country with other countries. Foreign trade or international trade means the trade which is spread beyond the boundaries of a country. It involves exchange of goods and services between the citizens of two or more countries. It consists of imports and exports. The inflow of goods in a country is called import trade whereas outflow of goods from a country is called export trade. Foreign trade basically takes place for mutual satisfaction of wants and utilities of resources.

 2. Why is foreign trade important for a country like India?

 Ans. Foreign trade has got an important place in the economic development of a country. There is no country in the world today which produces all the commodities it needs. Every country, therefore, tries to produce those commodities in which it has comparative advantage. It exchanges part of those commodities with the commodities produced by other countries relatively more efficiently. 

Foreign trade in India includes all imports and exports to and from India.. The importance of these imports and exports for a country like India are as follows 

(a) Importance of Imports 

Imports are of great importance for country like India in the following ways: 

(i) Help in development of the economy 

Capital goods like machinery and equipment for industrial development. Industrial development also depends upon infrastructural facilities like power, transport etc. 

Agriculture also requires machines like tractors, harvesters etc. for faster growth. Fertiliser, pesticides etc. play a key role in agriculture development. A developing country like India does not have sufficient resources or knowhow to produce such goods or even if it is producing these goods, the production may not be sufficient. This deficiency can be made by importing these goods. Thus imports can increase the productive capacity of a country.

 (ii) To meet shortage 

Imports can fill the gap between domestic demand and domestic supply of essential goods like food, cooking oil etc. for example, in early tears after Independence there was food shortage in our country. So large quantities of foodgrains like wheat and rice were imported. Even now our country does not produce vegetable oils enough to meet our requirements. Hence their import continues. 

(iii) Import for better living standards 

The developing countries may not be producing luxury and semi-luxury items such as television, motorcars etc. The rising income level in developing countries create demand for such goods. A country can get these goods from other countries

 (iv) Improving quality of production 

The import of good may help in improving the quality of domestic production. When faced with competition from foreign goods, the domestic producer try to improve the quality of their product.

 (b) Importance of Exports Exports are importance in the following ways:

 (i) Help in growth of the economy 

Exports help in increasing production: Export help in selling surplus production. For example, in our county demand for tea is less than its potential production. If we had not been exporting tea, our total production of tea would have been smaller. Thus export to European markets has helped expand our tea production.

Expansion of related market: Expansion of one industry help in the expansion of other industries. 

Overall increase in demand for other good: Exports generate more income and employment in the economy. Expansion of income leads to greater purchasing power in hands of people who in turn spend this income on goods produced in the economy. This increase in demand for goods cause on increase in production, income and employment. In this way the growth of the economy takes place. 

(ii) Source of foreign exchange: 

Exports are an important source of earning foreign exchange (foreign exchange mean foreign currency). Any country needs foreign exchange to pay for its imports. This foreign exchange can be earned through exports. 

3. State the composition of India’s foreign trade for the year 1995-96. 

Ans. Composition of foreign trade means goods that we are exporting and goods that we are importing. Therefore composition of trade consists of composition of exports as well as composition of imports 

(A) Composition of imports

Composition of imports means goods that we are buying from other countries. 

Commodity Group-wise Composition of India’s Imports 

Table given below gives information regarding composition of our imports for the year 1995-96. 

Table given below gives information regarding composition of our imports for the year 1995-96. 

 1. Food and allied product 

This commodity includes cereals, pulses, edible oil etc. For the year 1995-95 this commodity group accounted for 3.6% in our total imports.

 2. Fuel 

Coal and POL (Petroleum, Oil and Lubricants) are important sources of energy. After Independence with growth of industry and trade, the requirement of POL has increased very fast. Our domestic production is not sufficient. Now India imports petroleum goods in such large quantities that their share account for over one-fifth of our total imports. The share of coal and POL taken together for the year 1995-95 was 23% in our total imports. 

3. Fertilisers

Fertilizes are very important input of agriculture. Our domestic production of fertilisers falls short of our requirement. This commodity-group accounted for 4.6% of our total import for the year 1995-95.

 4. Paper boards manufactures and newsprints 

This commodity group accounted for 1.3% in our total imports for the year 1995-95 

5. Capital goods 

Capital goods includes machinery, transport equipment, electronic goods etc. With the growing requirement of India’s rapidly developing economy, import of capital goods continue to have a very high share of our total imports. For the year 1995-95, its share in total imports was 27.8% (i.e. over one fourth of total imports).

6. Other bulk item.

 This commodity group includes items like chemicals, pearls and precious stones iron and steel and non-ferrous metal etc. Its share for the year 1995-95 was 23.5% in our total imports. 

7. Unclassified items 

Many other items imports which have not been covered in above categories constitute unclassified items whose share for the year 1995-95 was 16.2% in our total imports. 

NIOS Class 12th Economics (318) Notes/Question Answer

Chapter Chapters NameLink
Chapter 1Economy and Its ProcessClick Here
Chapter 2Basic Problems of an EconomyClick Here
Chapter 3Economic Development and Indian EconomyClick Here
Chapter 4Statistics: Meaning and ScopeClick Here
Chapter 5Making Statistical Data MeaningfulClick Here
Chapter 6Presentation of Statistical DataClick Here
Chapter 7Statistical MethodsClick Here
Chapter 8Index Numbers (Meanings and Its Construction)Click Here
Chapter 9Index Numbers (Problem and Uses)Click Here
Chapter 10Income FlowsClick Here
Chapter 11National Income: ConceptsClick Here
Chapter 12National Income: MeasurementClick Here
Chapter 13Uses of National Income EstimatesClick Here
Chapter 14What micro EconomicsClick Here
Chapter 15What affects demandClick Here
Chapter 16What affects supplyClick Here
Chapter 17Price determinationClick Here
Chapter 18CostClick Here
Chapter 19RevenueClick Here
Chapter 20Profit maximizationClick Here
Chapter 21Government budgetingClick Here
Chapter 22Money supply and its regulationClick Here
Chapter 23Need for planning in IndiaClick Here
Chapter 24Achievements of planning in IndiaClick Here
Chapter 25Recent economic reforms and the role of planningClick Here

Optical Module – I

Chapter 26AgricultureClick Here
Chapter 27IndustryClick Here
Chapter 28Independence of Agriculture and IndustryClick Here
Chapter 29Transport and CommunicationClick Here
Chapter 30EnergyClick Here
Chapter 31Financial InstitutionsClick Here
Chapter 32Social Infrastructure (Housing, Health and Education)Click Here

Optical Module – II

Chapter 33Direction and composition of India’s Foreign tradeClick Here
Chapter 34Foreign exchange rateClick Here
Chapter 35Balance of trade and balance of paymentsClick Here
Chapter 36Inflow of capital (Foreign Capital and Foreign Aid)Click Here
Chapter 37New trade policy and its implicationsClick Here
Chapter 38Population and economic developmentClick Here
Chapter 39Population of IndiaClick Here

(B) Composition of exports 

Composition of exports means goods that we are selling to other countries 

Commodity Group-wise Composition of India’s Exports 

Table given below gives information regarding composition of our exports for the year 1995-96.

Table given below gives information regarding composition of our exports for the year 1995-96.

1. Agriculture and allied products 

This commodity group includes tea,coffee, spices, tobacco,oil meals, fruits and vegetables, marine products and raw cotton etc. For the year 1995-95, this commodity group accounted for about 19% of our total exports.

 2. Ores and minerals 

This commodity group includes iron ore, processed mineral and other ores and minerals like mica etc. For the year 1995 95, this commodity group accounted for 3.7% of our exports.

 3. Manufactured goods 

This group includes leather and leather products, gems and jewellery, machinery and transport equipment, electronic goods, drugs, pharmaceuticals, cotton yarn and fabrics, readymade garments and handicraft etc. For the year 1995-95 this group accounted for 75.4% (i.e. approximately 3/4″) of our total exports. Within this commodity group the largest share is of gems and jewellery i.e. 16.6% and readymade garments i.c. 11.6% of total exports respectively. 

4. Crude and petroleum products 

This commodity group was at one time an important part of India’s exports. However, with setting up of our own oil refineries, their export is very significant. For the year 1995 95 its share was only 1.4% of our total exports. 

5. Other unclassified items 

Items that have not been included in any of the above categories are included in this list. It constitutes a very insignificant proportion of total exports i.e. only 0.3% of our total exports for the year 1995-96.

4. State the direction of India’s foreign trades for the year 1995-96. 

Ans. Direct foreign trade means the countries the countries to which exports its goods and the countries which it imports

(A) Direction of India’s Imports

 Direction of imports means the countries from which we import goods. Before Independence most of our imports were from Britain. After Independence, we are now from other countries such as USA, Germany, France, Japan etc 

Table given below gives information regarding sources of our imports for the year 1995-96. 

Table given below gives information regarding sources of our imports for the year 1995-96. 

As a single country, USA is the largest source of India’s imports whose share was 10.5% in the year 1995-96. Other importance sources of imports are other European countries, Germany, UK, japan etc.

In Asia, japan is an important source of India’s imports. In 1995 96, its share was about 6.6% of the total imports. Russia which at one time was India’s major trading partner has now gone down very low in our import list accounting for about 2.3% of India’s imports in 1995-96. Other Eastern European countries like Romania, Poland, Hungary etc. accounted for 1.06% of our imports.

The increasing requirement of POL imports has resulted in large imports from OPEC countries OPEC (Organisation of Petroleum Exporting Countries) includes Saudi Arabia, Kuwait, Iran, Iraq, etc. The share of OPEC in our imports was 20.9% (or about 1/5th) in the year 1995-96. 

Other less developed countries (LCD’s) includes the developing nations of Asia, Africa and South America with whom we have increased our trading relationship. These countries accounted for about 18.3% of our imports in 1995-96.

(B) Direction of India’s Exports

Before Independence, Britain had largest share of our exports. After Independence, share of Britain in our total exports declined and USA emerged as the largest single buyer of our goods. 

Table given below gives information regarding sources of our exports for the year 1995-96.

Table given below gives information regarding sources of our exports for the year 1995-96.

As a single country, USA is the largest source of India’s imports whose share was 10.5% in the year 1995-96. Other important sources of imports are other European countries, Germany, UK, Japan etc.

In Asia, Japan is an important source of India’s imports. In 1995-96, its share was about 6.6% of the total imports. Russia which at one time was India’s major trading partner has now gone down very low in our import list accounting for about 2.3% of India’s imports in 1995-96. Other Eastern European countries like Romania, Poland, Hungary etc. accounted for 1.06% of our imports.

The increasing requirement of POL imports has resulted in large imports from OPEC countries OPEC (Organisation of Petroleum Exporting Countries) includes Saudi Arabia, Kuwait, Iran, Iraq, etc. The share of OPEC in our imports was 20.9% (or about 1/5) in the year 1995-96.

Other less developed countries (LCD’s) include the developing nations of Asia, Africa and South America with whom we have increased our trading relationship. These countries accounted for about 18.3% of our imports in 1995-96.

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