July 2nd, 2021
India is one of the world’s largest economies. With a population of 1.39 billion, India stands as the second-largest country in terms of population only after China. The growth prospects of this country are huge.
By Aks Kuldeep Singh
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According to the World Bank, India’s GDP is expected to grow at 8.3% in 2021, which makes it one of the fastest-growing economies in the world. India being a growing economy attracts foreign investment and is a lucrative destination for foreign investors and startups.
In 2020, India ranked 63rd out of 190 countries in the World Bank’s Ease of Doing Business Index. It ascended 17 notches from its previous rank in 2019. And with that, India’s startup ecosystem is also growing tremendously.
Today, the Indian startup ecosystem is home to approximately 38,815 active startups which is inclusive of both funded and bootstrapped startups. As the launch of new startups pushes the culture of entrepreneurship forward, one cannot ignore the investors either. India is also home to over 5,694 active investors.
India’s recent success can be largely attributed to its prominence in international trade. India is a country that is heavily reliant on international trade. Since 2015, India has made new trading partners as well as improved relations with existing ones tremendously.
India’s Trade Relationship With Top Trading Partners
India imports and exports a multitude of products and services and it’s an important trading partner for many countries.
In terms of the total volume of trade, its top trading partners are the United States, China, Saudi Arabia, United Arab Emirates, Hong Kong, Singapore, and Germany. Together these countries account for about 42% of Indian exports as well as 41% of Indian imports.
India’s largest destination for its exports is the United States it accounting for over 16% of Indian exports. The top commodities are Diamonds and packaged medicaments. Other commodities include refined petroleum, jewelry, and cars.
UAE stands as the 2nd largest destination for Indian exports accounting for over 9% of Indian exports. The main commodities of export to UAE are refined petroleum and items of jewelry.
Other major destinations for Indian exports are China ( 4.8%), Hong Kong (4.2%), and Singapore (3.2%).
In terms of commodities imported, China stands as India’s biggest source of imports averaging approximately $66 billion from 2015- 2021 with a share of over 15% in Indian imports during the same time frame.
The main commodities of import were integrated circuits, telephones, and computers. It is interesting to note that despite China being India’s largest source of imports by far, it does not have any significant share in the top commodities imported by India. Which means that it exports a little of everything to India.
The United States stands as the 2nd largest source of Indian imports with it averaging imports of approximately $28 billion from 2015- 2021 from the United States. Its share in Indian imports is well over 6%. The main commodities of import are crude petroleum and articles of gold.
Other major partners of India in terms of imports are UAE (5.7%), Saudi Arabia (5.1%), and Switzerland (4%).
Major Commodities of Indian Export
India averaged exports of around $290 billion per year from 2015- 2021. The major commodities of Indian export were refined petroleum (11.9%), Diamonds (7.5%), packaged medicaments
( 4.5%), jewellery (3.9%) and cars ( 2.1%).
Together these commodities made up approximately 30% of Indian exports. This shows that India exports a variety of products. Indian services are also very highly regarded in the service sector.
Apart from packaged medicaments, all the other commodities showed a significant slump in terms of both volume and value of trade from 2019- 2020.
This can be largely attributed to the slump in economic growth due to the pandemic and the shutdown of economic activity that followed. Despite this, the health industry got a major boost and the exports of packaged medicaments improved from $14.6 billion in 2019- 2020 to $15.8 billion in 2020- 2021 (Apr- Feb).
But, during the same period, total exports fell significantly from $313 billion in 2019- 2020 to $256 billion in 2020- 2021. This was a historic slump in exports.
India has very little oil reserves of its own but still, refined petroleum stood as the largest commodity in terms of share in total exports. It is largely due to the quality of the Indian refineries. India has world-class refineries that refine the imported oil from countries such as Iraq and Saudi Arabia and export it to the entire world.
Major Commodities of Indian Import
India averaged imports of around $427 billion from 2015- 2021. India’s share of imports has always exceeded its share of exports. Every year India suffers a huge deficit because of this.
The major commodities imported by India were crude petroleum (19.2%), gold (7%), diamonds (5%), coal Briquettes (4.3%), and petroleum gas (3.4%).
Together these commodities accounted for approximately 39% of Indian imports.
Crude petroleum stands as the largest commodity in terms of share in Indian imports. It is largely attributed to India’s lack of oil reserves of its own and its heavy dependency on oil. India is one of the largest car markets. With a very little percentage of the cars being electric, India is heavily reliant on oil.
Saudi Arabia used to be India’s largest exporter of oil back in 2015 and 2016 but Iraq has taken its place as India’s number one supplier of crude petroleum. Iraq has held onto this position since 2017 with it accounting for approximately 19.6% of Indian imports of crude oil.
UAE, Nigeria and Iran are also very important suppliers of crude oil to India.
All the commodities registered a massive slump in terms of both volume and value of trade in 2020. Total imports went down by well over $100 billion from $475 billion in 2019- 2020 to just $345 billion in 2020- 2021 (Apr- Feb).
The pandemic stunted India’s growth very badly but the country has already started showing signs of revival.
The remarkable progress made, and a long way to go.
Countries like Switzerland, Venezuela, Nigeria, and Korea are very important trading partners of India. Gold is India’s second-largest commodity in terms of share in total imports and Switzerland is its largest supplier to India with a share of over 50% in its total imports of gold from 2015- 2021. Who would’ve thought?
When most people talk about India’s trade they immediately go to countries like China and the United States. And although they are very important trading partners for India, India’s trade portfolio is much more diverse.
Throughout the years India has made strong ties with many countries such as Iraq, Israel, South Africa, Venezuela, and Mexico among others. These relationships are crucial for India’s growth and with its international presence increasing every year, India is sure to become a giant in terms of trade in the upcoming years if government policies are effective.
The views expressed in this article are those of the author alone and not the WorldRef.
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