Trade deficit up 22 times since economic liberalisation began
India's foreign trade rose over 18 times since the launch of economic liberalisation programme in 1991 while the trade deficit widened by more than 22 times.
The country's foreign trade (export and import) has increased with an annual average growth rate of 13.42 per cent from $42 billion in 1990-91 to $765 billion in 2013-14.
However, trade deficit, the difference between imports and exports, jumped to $136 billion in 2013-14 from $6 billion in 1990-91, according to official data. Experts attributed declining growth of manufacturing sector to the widening of trade deficit.
"The growth of India's manufacturing sector' declined continuously. From 23-24 per cent share in the GDP, it came down to about 15 per cent currently. This was the main reason for ballooning trade gap," Ajay Sahai, Director General & CEO of the Federation of Indian Export Organisations (FIEO) said. He said that free trade agreements too have impacted the country's trade balance. Rise in imports, including oil, has contributed to rise in the country's trade deficit.
India had trade deficit with as many as 80 countries, including China, Australia and Iraq in 2012-13.
In the last few years, global economic crisis, the sovereign debt crisis in Europe and the slowdown in developed economies have adversely impacted demand for India's exports.
Further, the countries with which India has favourable trade balance in 2013-14 includes the US, Singapore, Bangladesh, Hong Kong, the Netherlands, Sri Lanka, UK, Kenya, Nepal and Vietnam.
Whereas in 1990-91, countries which have imported more from India than exported includes USSR, Hong Kong, Bangladesh, Thailand, Sri Lanka, Egypt, Mauritius, Spain, Afghanistan and Nigeria. During April-November this fiscal, India's imports were up 4.65 per cent to $316.37 billion, while exports were up 5.02 per cent to $215.75 billion.