Abstract:
Economic liberalisation in the early 1990's and implementation of the provisions of the
WTO after 2004, have had far reaching consequences for India. While it did spur economic growth, as
far as trade was concerned India was moving from a controlled trade regime with restrictions on the
exchange rate of the rupee. In this study an attempt has been made to examine India's trade
performance both with respect to exports and imports to the major trading regions of the world, viz.,
the EU, North America, Asia, the Gulf region, Japan and Australia. In addition to growth rates, a
Markov model has been fitted to study the dynamics of India's exports and imports. Overall India's
trade performance against its trading partners has been very small and has not progressed much
after the WTO regime . India's share of trade has concentrated on the Gulf countries with share of
6.82 percent of the exports and 9.56 percent of the imports mainly accounted for by oil. From the
results it could be seen that India's share of imports for Australia has increased quite substantially in
recent years. Barring trade with the EU and North America, the trade deficit were large particularly
with Australia (68%) and the Gulf (42%) counties. Overall while trade grew at the rate of about 8
percent in the pre-WTO period and it increased to around 19 percent per annum in the WTO regime.
It is noteworthy that trade growth to Asia and Japan which was low in the pre WTO era grew
significantly in the WTO period.
Export market stability was witnessed with EU, North America and the Gulf countries as indicated by
the Markov chain analysis. So far as imports from India were concerned, most of the countries
including Asia and Japan were dependable suppliers. This goes to show a degree of ad hocism with
regard to export strategy, which does not augur well for the development of exports from India in the
long run, calling for a stable export policy for the Country. Further, a policy to boost exports and
reverse the current account deficit is the need of the hour, else it could have far reaching effects on
the economy and exchange rate of the Rupee.
