India’s Involvement in World Business(India’s foreign trade and foreign investments)
India is now the 10th largest economy in the world and the fastest growing economy, next only to China. As per the Goldman Sach Report 2004.India accounts for a small share in world trade, its exports and imports constitute major economic activities for the country. India is poised to be the second largest economy by 2050. Despite these features, India’s involvement with international business is not very impressive. India’s share in world trade in 2003 was abysmally low i.e., just 0.8 per cent as compared to those of other developing countries such as Hong Kong (3.0 per cent),China (5.9 per cent), , South Korea (2.6 per cent), Singapore (1.9 per cent),Malaysia (1.3 per cent), , and Thailand (1.1 per cent) . Due to faster growth achieved at the external front, share of foreign trade in the country’s Gross Domestic Product (GDP) has considerably increased from 14.6 per cent in 1990-91 to 24.1 per cent in 2003-04. In absolute terms, both the exports and imports have witn essed phenomenal growth over the years. India’s total merchandise exports were Rs. 606 crores in 1950-51 which got increased to Rs. 2,93,366 crores in 2003-04, representing an increase of around 480 times over the last five decades or so. Composition wise, textiles and garments, jewellery and gems, engineering products and chemicals and related products and agricultural and allied products are India’s major items of India’s exports. India even holds the distinct position of being the largest exporter in the world in select commodities such as basmati rice, tea, and ayurvedic products. So far as imports are concerned, products likes crude oil and petroleum products, capital goods (i.e., machinery), electronic goods, pearl, precious and semi-precious stones, gold, silver and chemicals constitute major items of India’s imports. Data relating to India’s foreign investments – both inward and outward.It can be seen that there has been a phenomenal increase in foreign i nvestments flow into and from India. While the inward foreign investments have grown more than 750 times from just Rs. 201 crores in 1990-91 to Rs. 1,51,406 crores in 2003-04, India’s investments abroad have also increased over 4,926 times- from Rs. 19 crores in 1990-91 to Rs. 8,3,616 crores in 2003-04. India’s trades in services have also grown diverse over the years. Both the exports and imports of services relating to foreign travel, transportation and insurance have increased spectacularly during the last four decades. What is more remarkable is the change in the composition of services exports. Software and other miscellaneous services (including professional technical and business services) have emerged as the main categories of India’s exports of services. While the relative share of travel and transportation has declined from 64.3 per cent in 1995-96 to 29.6 per cent in 2003-2004, the share of software exports has gone up from 10.2 per cent to around 49 per cent in the corresponding period.