Professional Documents
Culture Documents
TABLE OF CONTENTS
1. Executive Summary..........................................................3
2. India’s Foreign Trade an Overview................................5
3. Structure of Indian Industry...........................................8
a) Tea and Coffee...................................................................10
b) Sugar...................................................................................12
c) Tobacco..............................................................................15
d) Beverage.............................................................................16
e) Leather................................................................................18
f) Gems & Jewellery..............................................................20
g) Cement................................................................................22
h) Textile.................................................................................24
i) Iron & Steel........................................................................26
j) Aluminum & Copper..........................................................27
k) Machinery...........................................................................28
l) Plastic.................................................................................29
m) Organic and In-Organic Chemical......................................31
n) Fertilizer.............................................................................32
o) Pharmaceutical...................................................................33
p) Cosmetic.............................................................................34
q) Electronic Goods................................................................35
4. Findings.............................................................................39
5. Bibliography......................................................................43
6. Annexure...........................................................................44
EXECUTIVE SUMMARY
As compared to a couple of decades earlier, however, the size of India's foreign trade
has noticeably expanded, both in absolute terms and relative to the country's GDP.
Exports have again picked up since 1999, when they showed a 13 percent growth.
Imports have also ballooned, showing an average of 20 percent growth per year
during 1992-2000. Total exports in 2001 are expected to be near US$46 billion and
total imports at US$51 billion. Petroleum constitutes the largest import item at more
than US$6 billion and accounts for 14 percent of total imports in 1999. Petroleum
imports may be as high as US$17 billion in 2001. Gems and jewelry constitute the
single largest export item, accounting for 16 percent of exports and earning about
US$4.5 billion in 1999. The top 3 export destinations of Indian goods were the United
States, Britain, and Germany, which together constituted one-third of total Indian
exports in 1999. In turn, the top 3 import sources were the United States, Britain, and
Belgium, together constituting 21 percent of total imported items.
Indian economy grew in 2006/07 at a pace that was stronger than most had expected.
The surge (of 20 per cent plus) in merchandise imports has continued into its fifth
year. Although merchandise exports have also grown at a similar pace, given that
imports are considerably larger than exports, the merchandise trade deficit has
continued to expand. In 2005/06 the merchandise trade deficit rose to (US) $46
billion, compared to $14 billion a couple of years ago (2003/04).
It is estimated that in 2006/07, merchandise exports will increase to $126 billion and
imports to $186 billion, thereby leaving merchandise trade deficit of $60 billion.
These estimates are compatible with the data releases of the Director General of
Commercial Intelligence & Statistics (DGCI&S).
4
Export
The moderation in the exports of primary products during April-December 2006 was
due to the decline in the exports of iron ore and cashew and also the deceleration in
wheat, rice and marine products. At the same time, exports of traditional agricultural
products such as sugar, raw cotton, tea, coffee, tobacco, spices and oil meal registered
strong growth.
In the manufactured exports, with the exception of engineering goods, all the other
major items (chemicals, gems and jewellery and textiles) showed a moderation in
export growth. Engineering goods recorded a growth of 38.0 per cent during April-
December 2006 (33.4 per cent a year ago) mainly due to the strong export
performance of machinery and instruments, and iron and steel. These two items
together contributed to 46 per cent of the growth in the exports of engineering goods.
The US, the UAE, Germany and Italy were the major markets for these products.
Gems and jeweler exports recorded a marginal growth (0.4 per cent) during April-
December 2006 as against 19.7 per cent registered a year ago. Exports of chemicals
and related products showed a deceleration in growth during April-December 2006.
Import
India’s merchandise imports posted a growth of 27.8 per cent during April-February
2006-07 (32.7 per cent a year ago) with the imports of petroleum, oil and lubricants
(POL) showing some moderation, while non-oil imports maintained the growth
momentum.
Industry-wise analysis shows that the imports of capital goods during April-December
2006 at 36.2 per cent showed a moderation in growth (41.0 per cent in the
corresponding period a year ago). However, within the capital goods, electrical
machinery and electronic goods maintained high growth. Exports of ‘mainly export
related items’ showed a decline during April-December 2006 with imports of
chemicals, and textile yarn showing a deceleration in growth and pearls, precious and
semi-precious stones and cashew nuts registering a decline.
Source-wise, China was the major source of imports during April-December 2006,
accounting for 9.4 per cent of total imports, followed by Saudi Arabia (7.6 per cent),
the US (5.7 per cent), UAE (4.8 per cent) and Iran (4.2 per cent). Region-wise imports
from OPEC countries showed marked rise during April-December 2006, mainly
reflecting imports of POL (for the previous year, country-wise break up of oil imports
was not furnished by DGCI&S).
5
Whole world has recognized India as super power of 21st century. India is youngest
county in the world growing a rate of more than 8 percent. Large population of India
provides market to the countries of the world. At the same time it provides
opportunities to India in terms of extracting the potentials of its manpower and other
resources to emerge as real super power. India's foreign trade should also reflect her
potentials to emerge as a super power
Figure 1.1
1
Exim Bank of India, www.eximbank.com
6
Export
Major part of India’s export goes to USA followed by United Arab Emirate and China
as shown in figure 1.2. In the FY2006 India export to USA of US $ 17,353.06 Million
and having a share of 17% of total India’s export (table a) and China with 8.3% share
at the second place.2
Export:Country-wise
JAPAN
ITALY
BELGIUM
GERMANY
Country
UK
HONG KONG
2005-06
SINGAPORE
CHINA 2004-05
U ARAB
USA
0 2 4 6 8 10 12 14 16 18
%Share
Figure1.2 Chart shows the major exporting countries of India3
UK 4.4066 4.3373
2
Director General of Foreign Trade, www.dgft.delhi.nic
3
DGCI&S, Kolkatta
7
Import
USA is the biggest importer for India, UAE and Germany are at second and third
place respectively. In Figure 1.3 Import from USA was US $ 9,454 million in
FY2006.4
30,000
25,000
20,000
US $ Million15,000
2004-05
10,000 2005-06
5,000
0
U N SP E C IF IE D C HIN A U S A S W IT Z E R LA N D U A E B E LG IU M T rad e to G E R M A N YA U ST R A LIA U K
U nsp ec if ied
C o untries
Country
Figure 1.3 Chart showing the major import of India
USA holds the major share in India’s total import i.e. 6.5%.as shown in figure 1.4.
Import: Country-wise
25
20
15
%Sha re
2004-05
10
2005-06
0
U NSPE C IF IE D C HIN A U S A SW IT ZE R LA ND U A E B E LG IU M T rade to G E R M A NY A U ST R A LIA U K
U nspecified
C o untries
Country
Figure 1.4 Chart showing the share of countries in Indian import
4
www.dgft.delhi.nic.in
8
The tea industry has an important and special place in the Indian economy. Tea is the
country's primary beverage, with almost 85% of total households in the country
consuming tea. India is the world's largest producer and consumer of tea, with India
accounting for 27% of the world tea production. India's expenditure on beverages and
processed foods accounts for 8% of food expenditure in rural areas, and 15% in urban
areas. India is also an important tea exporter, accounting for around 12-13% of world
tea exports. Further, certain varieties of tea (for example Darjeeling) are grown only
in India and are in great demand across the world. All Darjeeling teas possess the
lightness of flavors and fine coloring that set them apart from all other teas.
India's tea industry exports were estimated at US $ 905.11 million during FY2006,
accounting for 0.4% of India’s exports. In value terms, tea ranks as the fourth-largest
agricultural product export item from India, with exports of around US$410 million in
2004. In terms of employment, the tea industry employs around 1.27 million people at
tea plantations and 2 million people indirectly, of which 50% are women. The last fact
is particularly important when we consider that tea industry, to a large extent, drives
the economies of the regions where the tea gardens are concentrated, for example
Assam.
Tea is the prime beverage consumed in India, and private final consumption
expenditure (PFCE) on tea, coffee and cocoa aggregated Rs. 134.96 billion in
FY2005, accounting for around 2% of India's PFCE on food, and 0.7% of India's
PFCE. The latest available data indicates that tea accounts for 90.6% for India's
consumption of stimulants (tea, coffee, and cocoa beans), followed by coffee (7.7%),
and cocoa beans (1.7%).
1,400
1,200
1,000
800
Value in US $ Million
600
400
200
0
2003 2004 2005 2006 2007 2008 2009
upto
Sep.
Year
Figure 1.6 Showing the India’s export of Tea and Coffee in value
Above chart showing the continuous increase in export of tea and coffee in value from
India in last three years and forecasting is also reflecting the same. And figure 1.6
shows the export in volume.
800,000
700,000
600,000
500,000
Qty in Thousands 400,000
300,000
200,000
100,000
0
2003 2004 2005 2006 2007 2008 2009
upto
Sep.
Year
Figure 1.7 Showing the India’s export of Tea and Coffee in Volume
In spite of accounting for around 27% of world's tea production, India accounts for
only 12% of world's tea exports. India's international competitiveness in tea exports
has been on a decline. From being a pre-eminent supplier of the world's tea, India has
lost ground in virtually every export market. In the early 1980s, Indian tea exports
accounted for around 40% of the domestic production. By the end of 1980s, the share
of the tea exports fell to 30%. The decline continued till 1994 when exports accounted
for only 20% of the domestic production of tea. Thereafter, the proportion of exports
improved to around 24% of the domestic production during 2003.
In recent years, the tea industry has accounted for a declining share of gross bank
credit (GBC) of scheduled commercial banks (SCBs). With GBC of Rs. 13.55 billion
in March 2005, the tea industry accounted for 0.37% of industry GBC of SCBs in
March 2005, as compared with 1.08% in March 1995.
12
Sugar is a prime requirement of the diet in every household in India, accounting for
around 5.5% of India’s private final consumption expenditure (PFCE) on food, and
2% of India’s PFCE. In terms of PFCE, the share of sugar and gur (solidified cane
juice) in total food expenditure remained at around 6-7% during the 1980s and 1990s.
The share declined sharply during FY2004 because of significant decline in sugar
prices.
With an estimated production of 18.6 mt in sugar year or (Sugar Year) SY2006 (sugar
year is from October-September), India is the second largest sugar producer in the
world (after Brazil), accounting for around 10-12% of world’s sugar production.
Sugar is India’s second largest agro-processing industry.
In recent years, the sugar sector has accounted for a declining share of gross bank
credit (GBC) of scheduled commercial banks (SCBs), largely because of decline in
credit during FY2005. With GBC of Rs. 60.30 billion in March 2005, the sugar
industry accounted for 1.65% of industry GBC of SCBs in March 2005, as compared
with 1.91% in March 2000.
India was the world’s second largest producer of sugar during 2005-06. Although the
raw material cost (estimated to account for 75% of the operating cost of the sugar
manufacturers) is regulated in the Indian sugar industry, scale economies do have the
potential of affecting the operating cost structures of sugar manufacturers.
6
www.icra.in
13
Export of Sugar
1,400,000
1,200,000
1,000,000
800,000
Qty in Thousand
600,000
400,000 Sugar
200,000
0
2003 2004 2005 2006 upto
Sep.
Year
Figure 1.8 Showing Export of Sugar in Volume
India’s sugar exports are expected to decline during FY2007 because of the July 2006
notification by the GoI to ban sugar exports till March 2007. The ban would,
however, not be applicable to sugar exports on preferential quota to the US and the
EU. Sugar exports to the US and the EU would be permitted only through the Indian
Sugar Exim Corporation Ltd.
Export of Sugar
600
500
400
Value in
300
US $ Million
200 Sugar
100
0
2003 2004 2005 2006 upto
Sep.
Year
Figure 1.8 Showing the Export of Sugar in Value
14
Sugar
2,000,000
1,500,000
500,000 Sugar
0
2003 2004 2005 2006 upto
Sep.
Year
Figure1.9 Showing the Import of sugar in Volume
Sugar
300
250
200
Value in
150
US $ Million
100 Sugar
50
0
2003 2004 2005 2006 upto
Sep.
Year
Figure 1.10 Showing the Import of Sugar in Value
7
DGCI&S, GOI
15
The tobacco industry estimates that globally, 33 million people are engaged in
tobacco cultivation. However, this figure includes not only farmers who rely entirely
on tobacco, but also farmers who grow other crops besides tobacco, seasonal laborers,
family members and other part-time workers. Of these 33 million, approximately 15
million are in China and 3.5 million in India.
Although tobacco is grown in more than 100 countries, just four countries (Brazil,
China, India and the United States) account for two-thirds of total global production
and only two countries, Malawi and Zimbabwe, are significantly dependent on export
earnings from tobacco.1 Out of the 141 countries that export tobacco, only 18 derive
more than one percent of their total export earnings from tobacco. In only four of
those 18 countries do tobacco exports account for more than five percent of total
export earnings. Export of tobacco from India has increase in the FY2005 and
FY2006 after the decline in the FY2004.
Tobacco
180,000
160,000
140,000
120,000
Volume in 100,000
Quantity 80,000
60,000
40,000 Tobacco
20,000
0
2003 2004 2005 2006 upto
Sep.
Year
Tobacco
350
300
250
Value in 200
US $ Million 150
100 Tobacco
50
0
2003 2004 2005 2006 upto
Sep.
Year
Figure 1.12 Showing the value of Tobacco Exported
16
Beverage industry’s export of India is growing with the rate of 13-16% p.a. as shown
in the table b. Both in the term of volume and value it is becoming the important to
the Indian economy
Table b: Showing the Export of Indian Beverage Industry over the last few years
90,000
80,000
70,000
60,000
50,000
Qty in Thousands 40,000
30,000
20,000 Beverage
10,000
0
2003 2004 2005 2006 upto
Sep.
Year
Some sectors which have recorded Moderate and single digit growth
are – Food & Beverage (8%) , Bread (7.5%), Bread/ Organized (8%) ,
Culinary products/Snack
food(8%),Fruits and vegetables(5%) , Milk and Dairy products
(4.5%), Milk (4.5) , Milk liquid /packaged(5%), Milk Products(8%),
Milk powder including infant milk(7%), Ghee(5.5%),Cheese/
Panner(8%) , Chocolates (8%), Sugar Confectionary/Gums(4%) ,
Health Beverages/Malted Food(8%) , Tea (7%) .
60
50
40
Value in
30
US $ Million
20 Beverage
10
0
2003 2004 2005 2006 upto
Sep.
Year
Figure 1.14 Showing the export of Beverage Industry in value
19
The global leather industry is valued at about US$ 85 billion. Most of the producing
countries are developing countries, while developed markets such as the US are major
consumers of leather products China and Italy are the leading producing and
exporting nations in the world with exports worth US$ 19 billion and US$ 13 billion
respectively. India, with an output of US$ 4 billion and exports of US$ 2.4 billion, is
placed third.
India has a 2.32 per cent share in the global leather trade and ranks eighth in the world
in terms of the country’s foreign exchange earnings from the industry. The
composition of exports has also been changing, with more and more value added
products being exported. In 2004-05, for example, value added finished products
constituted around 80 per cent of the total exports from the industry. India has plans to
double its leather exports over the next 5 years. It has been estimated that India has
the capacity to meet nearly 10 per cent of global leather requirement.
The Indian leather industry comprises the following key sub-sectors - tanning and
finishing, footwear, footwear components, leather garments and leather goods and
accessories. A large part (nearly 60-65 per cent) of the production is done by the
small/cottage sector.
Leather and leather products production is centred in southern, northern and eastern
India. Key production units are located in Tamil Nadu, West Bengal, Uttar Pradesh,
Punjab, Karnataka, Andhra Pradesh, Haryana and Delhi. Tamil Nadu is the biggest
leather exporter in the country with the south accounting for 43 per cent of the
country’s share. The industry uses primarily indigenous natural resources with little
dependence on imported resources.
Figure 1.16 Showing the Total Export of India’s Leather Industry in volume
In the above charts we can see the export of leather industry is varying in both the
volume and value, but in the value term it is increasing in a constant manner and
volume-wise it will fluctuate in the future also.
21
The two major segments of the GJ business in India are gold jewellery and diamond
jewellery. While a predominant portion of gold jewellery manufactured in India is for
domestic consumption, a predominant portion of rough, uncut diamonds processed in
India in the form of either polished diamonds or finished diamond jewellery is
exported. Preference for gold dominates the domestic jewellery demand. The
domestic demand for gold jewellery is estimated at Rs. 390 billion in 2005,
accounting for an estimated 80% of the Indian jeweler market of Rs. 490 billion. The
balance comprises diamond jewellery (Rs. 80 billion), and other fabricated jewellery
(Rs. 20 billion).
The GJ industry has an important role in the Indian economy. While a predominant
portion of gold jeweler manufactured in India is for domestic consumption, a
predominant portion of rough, uncut diamonds processed in the form of either
polished diamonds or finished diamond jewellery is exported. With an estimated
consumption of 722 tonnes during calendar year or CY2005 (including jewellery
consumption of 587 tonnes), India is the largest consumer of gold in the world. India
is also estimated to hold nearly 14,000 tonnes of gold, accounting for nearly 9% of the
world's cumulative mine production. Apart from its historical religious significance,
gold is valued as an important savings and investment vehicle.
The bulk of the Indian GJ exports comprise import of rough diamonds, cutting and
polishing in India, and re-export. As per data released by the Gems & Jewellery
Export Promotion Council (GJEPC), cut & polished diamonds (CPDs) accounted for
71.1% of India's GJ exports of Rs. 733 billion during FY2006, followed by gold
jewellery (23.2%), rough diamonds (3.4%), and others (2.3%). Thus, two items-CPDs
and gold jewellery-account for around 95% of India's GJ exports.
With the increase in exports in recent years, the GJ industry has also accounted for an
increased share of gross bank credit (GBC) of scheduled commercial banks (SCBs).
With GBC of Rs. 198.66 billion in March 2006, the industry accounted for 3.61% of
industry GBC of SCBs in March 2006, as compared with 2.7% in March 2000.
2005
Year
2003
2005
Year
2003
Figure 1.16 and 1.17 shows the export of Gems and Jewellery from the FY2003, in
spite of being a precious commodity its export has decline in past few years in term of
volume but value is increasing in the same manner as volume is decreasing. This
decrease in volume is of in these years diamond is exported maximum as compared
with other stones and gold, and diamond is much costly than other stones and gold.
Although exports of gold jewellery have increased from Rs. 52.20 billion during
FY2001 to Rs. 170.15 billion during FY2006, the export business has been
constrained by an inability to compete in global markets on basis of price and superior
design capabilities.
23
The cement industry has witnessed substantial reorganization of capacities during the
last couple of years. Some examples of the consolidation witnessed during the recent
past include: Gujarat Ambuja taking a stake of 14% in ACC; Gujarat Ambuja taking
over DLF Cements and Modi Cement; India Cement taking over Raasi Cement and
Sri Vishnu Cement; Grasim's acquisition of the cement business of L&T; Indian
Rayon's cement division merging with Grasim; Grasim taking over Sri Dig Vijay
Cements; L&T taking over Narmada Cements; ACC taking over IDCOL.
Cement has been one of the most important areas of operations for the Indian private
sector. Unlike much of heavy industry and utilities, cement was not deemed to be the
exclusive preserve of the State sector in the post-independence development strategy.
Cement was also the industry of choice of many corporate diversifying away from the
troubled traditional areas of jute and textiles.
Over the years, the share of the public sector in cement production has declined.
While the private sector (large companies) accounts for around 95% of the total
installed capacity, the share of public sector companies has declined from a level of
11% in FY1996 to around 4.4% in FY2006. The share in production of the public
sector companies is even lower at 1.2% in FY2006 as compared to 6.5% in FY1996.
The cement industry accounts for approximately 1.3% of GDP and employs over 0.14
million people. It is a significant contributor to the revenue collected by both the
central and state governments through excise and sales taxes. For example, central
excise collections from cement industry aggregated Rs. 45.23 billion in FY2005 and
accounted for 4.3% of total excise revenue collected by the government. Cement has
consistently figured among the top 5-7 commodities. It is a heavily taxed commodity
and the duties amount to around 30% of the selling price of cement.
India is the second largest producer of cement in the world. In 2005, India produced
142 mt of cement, accounting for 6.4% of global production of 2.22 billion tonnes.
India is the second largest producer-behind China (1,000 mt), but ahead of the US (99
mt) and Japan (66 mt). India's cement industry-both installed capacity and actual
production-has grown significantly over the past three decades, with production
increasing at an average rate of 8.1% per year between 1981 and 2004-05.
In recent years, the cement sector has accounted for a declining share of gross bank
credit (GBC) of scheduled commercial banks (SCBs), largely because of decline in
credit during FY2004. With GBC of Rs. 61.12 billion in March 2005, the cement
industry accounted for 1.67% of industry GBC of SCBs in March 2005, as compared
with 1.81% in March 2000.
As cement is a low value, high bulk commodity, freight cost becomes a significant
factor in determining the landed cost of cement. This has resulted in a very low
volume of international trade in cement. World cement trade has averaged just around
6-7% of the total production.
Although, world trade in cement is limited because of high freight costs, there are
countries, which either import a significant share of their total consumption or export
a major share of their total production. Countries, which import a significant share of
their consumption, appear to be falling in the developing world category, where the
public expenditure on infrastructure projects is very high. The Middle East countries
(although not falling in the developing world category) have huge requirements of
cement because of construction work in projects in the oil sector. Also in these
countries, unfavorable conditions (for example, inadequate cement limestone
reserves) have discouraged cement capacity creation.
The cotton textiles industry has a large importance to the economy in terms of
employment, contribution to the government exchequer and foreign exchange
earnings. The textiles industry accounts for around 14% of India’s industrial
production, 4% of GDP, and 16% of its total merchandise exports. Besides, it
provides direct employment to around 35 million people. Cotton is the most important
fibre of the Indian textiles industry, accounting for around 57% of the domestic fibre
consumption and 90% of its exports. Further, substantial production is from the small-
scale sector, whereby the industry wealth is distributed in greater number of people.
The past two decades have also witnessed a significant growth in the exports of textile
goods and readymade garments from India. However, even now, India has a mere
3.3% share of the global trade of US$450 billion in textiles and clothing; the figure
for India was as low as 1.8% in 1980. Exports of textiles and textiles products
witnessed an acceleration during April 2005-January 2006 (10MFY2006), led by
strong demand in the major markets of the US and Europe. Exports increased 22.2%
(year on year or yoy) to US$13.06 billion during April 2005-January 2006.
Figure 1.20 Showing the India’s Exports of Textiles and Textiles Products and Share of Total Exports
The failure to provide quality value-added fabrics and garments and the near absence
of contemporary designing facilities as also quota constraints are some of the major
causes for India producing low value added yarns and fabrics, even as other countries
have moved up the value chain.
The Indian textile and clothing market is estimated to be Rs. 2.15 trillion during 2004.
While the domestic market accounts for 61%, the technical textiles accounts for
around 9%. The balance 30% is exported in the international market. The ratio of
usage of cotton to man-made fibers/filament yarn was around 56:44 in FY2005.
The manmade fiber (MMF) industry comprises fiber and filament yarn manufacturing
units of cellulosic and non-cellulosic origin. The value added by manmade fibers
(MMF) sector accounts for around Rs. 55 billion or 0.2% of GDP. The sector
contributes excise duties of around Rs. 23 billion to the exchequer, which is around
3.5% of the total excise duties. The total assets in the sector are estimated to be
around Rs.100 billion. In the last downturn, some companies were also referred to the
Board of Industrial and Financial Reconstruction (BIFR). The MMF sector is also a
26
In the cotton dominated Indian textile industry, manmade fibres account for an around
44% share as against 50% globally. However, in FY2005, with large volumes of
cotton being exported in various forms of textiles and apparel (accounting for nearly
43% of the domestic cotton production), the share of manmade fibres in the domestic
textiles market stood at over 50%.
Figure 1.21 Showing India’s Manmade Fibre, Yarn, Fabrics, and Madeups and Share of Total Exports
Another part of textile industry is wool and man made staple fabrics which plays an
important role in India’s total export Figure 1.21 shows the export of wool and man
made staple fabrics.
500,000
400,000
300,000
Qty in Thousands
200,000
Wool
100,000
Man-Made Staple Fabrics
0
2003 2004 2005 2006
upto
Sep.
Year
Figure 1.22 Showing the export of wool and man-made staples from India
The Indian steel sector was the first core sector to be completely removed from the
licensing regime as well as pricing and distribution controls. This was done primarily
because of the inherent strengths and capabilities demonstrated by the Indian iron and
steel industry. The growth rate in 1995-96 was a phenomenal 20%. During 1996-97,
finished steel production shot up to a record 22.72 million tonnes with a growth rate
of 6.2%, while in 1997-98, the finished steel production increased to 23.37 million
tonnes, which was 2.8% more than the production of the preceding year. The growth
rate decreased drastically in 1997-98 and 1998-99 being 2.8% and 1.9% respectively.
The growth rate in 2001-2002 was 4.29% with the total production touching 31.63
million tonnes. The production of finished steel during April –December, 2002 has
been 23.83 million tonnes, which is 6.3% higher than the production during the
corresponding period of 2001-02.
The general policy and procedures for export and import of iron and steel, ferro alloys
and ferro scrap are at present decided by the Ministry of Commerce in consultation
with the Ministry of Steel. In a momentous move to push exports aggressively,
Government of India has announced several measures in the new Five-year Exim
policy (2002-07), which is in effect from 1st April 2002. These include the removal of
quantitative restrictions on exports save in respect of a few sensitive items; permission
for setting up overseas banking units in Special Economic Zones (SEZ); retention of
duty-neutralization instruments including Duty Entitlement Pass Book (DEPB) and
other export promotion schemes.
Export of Iron and Steel in the FY 2005 was decline by 0.34% as compared with last
year figure 1.22 shows the following.
7,000,000
Volume Qty. in thousand
6,000,000
5,000,000
4,000,000
Iron and Steel
3,000,000
2,000,000
1,000,000
0
2003 2004 2005 2006 upto
Sep.
Year
Figure 1.23 showing the export of iron and steel from India
The Indian Aluminum Industry has a moderate importance in the Indian Economy.
While it has a number of applications across several sectors (such as power,
automobiles, packaging, construction etc.) Its turnover is just around Rs. 120 billion
(0.35% of GDP). In the trade term, export of aluminum and articles thereof
aggregated Rs. 22.95 billion in FY2005, accounting for 0.6% of India’s Exports.
Import aggregated Rs. 20.65billion during FY2005, accounting for 0.4% of India’s
imports.
India accounts for less than 3% of the global capacity for aluminum, and thus has
limited influence on aluminum prices on the London Metal Exchange (LME).
However, prices on the LME do have an effect on domestic prices, since, on the one
hand, they determine the margin of Indian exporters and, on the other, influence the
landed prices of imported metal. However the correlation is limited because of the
duty a protection against imports and the low cost structure of Indian aluminum
producers.
The Indian Copper Industry has a moderate importance in the Indian Economy. While
it has a number of application across several sectors (such as telecom, power,
construction, transportation, handicraft, Engineering, Consumer durables, defense
etc.). Figure 1.23 shows the export of Aluminum and copper during the period of
2003-06.
400,000
Volume Qty. in thousand
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
2003 2004 2005 2006 upto Sep.
Year
Figure 1.24 showing the export of aluminum and copper
The performance of heavy engineering sector is directly linked to the industry, which
in turn depends on the performance of the overall economy. Industry, being the key
end user, drives the performance of this sector. In the FY2002 the performance of the
heavy engineering industry was affected due to an economic downswing, but
sustained improved performance of the overall economy from FY2003 onwards has
resulted in an upswing for this sector. The industrial performance has been even better
in the FY2005 and the Index of Industrial Production is expected to increase by 7.6%
this year, while the growth was 7.0% for FY2004. The revival of the economy and
increase in demand has resulted in major capacity expansions to match the growing
demand across all the sectors.
Heavy engineering companies that serve only the domestic market are sensitive to the
performance of Indian economy, while exports lead to diversification of the end-user
market.
Machinery
500,000
Volume Qty. in thousand
450,000
400,000
350,000
300,000
250,000 Machinery
200,000
150,000
100,000
50,000
0
2003 2004 2005 2006 upto
Sep.
Year
Figure 1.25 Showing export of Indian machinery industry
India exported nearly US$532 mn worth plastic products during FY2004 (1st half
FY2005 exports US $ 295 mn). With substantial capacity additions leading to over-
capacity in domestic markets during FY2001 and beyond, polymer exports have
increased significantly. However, on account of lower competitiveness of the plastic
products industry, polymers have been exported directly.
Amongst various plastic products—films, plates and sheets accounted for largest
share of over 40% during FY2004 (refer following figure). Plastic products for
packaging (apart from films etc.) accounted for a share of 27% which includes woven
sacks that accounted for 13% of the total plastic product exports.
Though Indian exports of plastic products have increased over the past decade, Indian
exports of plastic products, however, still continue to account for a minuscule share in
31
the world trade (only around 0.47%). The low presence of the organized large-scale
sector and consequently, low economies of scale prevent Indian players from
becoming cost competitive in the international market.
32
Inorganic chemicals are mostly used in detergents, glass, soap, fertilizer and alkalis
India’s inorganic chemicals industry is one of the fastest growing sectors, with an
average growth rate of 9 per cent per annum during the last decade.
Organic chemicals cover a wide range items such as methanol, formaldehyde, acetic
acid, phenol, acetone etc. The organic chemicals industry in India is also concentrated
mostly in western India.
Figure 1.28 is showing the export of organic and in-organic chemicals from India
Figure 1.29 is showing the export of organic and in-organic chemicals in volume
33
India is one of the largest producers of pesticides in Asia. Total world pesticide
exports from all countries increased from US$10.27 billion in 2002 to US$12.42
billion in 2003, caused by higher pesticide usage. Amongst the developing countries,
India is the second-largest exporter of pesticides, behind China. India accounted for
3% of the world export of pesticides in 2003, as compared with 5.9% for China. In
terms of market share of exports of various pesticide products, Indian exports of
insecticides aggregated US$313 million during 2003, accounting for 10.4% of total
worldwide insecticide exports of US$3,011 million. India’s share has declined from
11.4% during 2002.
34
The Indian Pharmaceutical Industry today is in the front rank of India’s science-
based industries with wide ranging capabilities in the complex field of drug
manufacture and technology. A highly organized sector, the Indian Pharma
Industry is estimated to be worth $ 4.5 billion, growing at about 8 to 9 percent
annually. It ranks very high in the third world, in terms of technology, quality and
range of medicines manufactured. From simple headache pills to sophisticated
antibiotics and complex cardiac compounds, almost every type of medicine is now
made indigenously
The Indian Pharmaceutical sector is highly fragmented with more than 20,000
registered units. It has expanded drastically in the last two decades. The leading
250 pharmaceutical companies control 70% of the market with market leader
holding nearly 7% of the market share. It is an extremely fragmented market with
severe price competition and government price control.
The pharmaceutical industry in India meets around 70% of the country's demand
for bulk drugs, drug intermediates, pharmaceutical formulations, chemicals,
tablets, capsules, orals and inventible. There are about 250 large units and about
8000 Small Scale Units, which form the core of the pharmaceutical industry in
India (including 5 Central Public Sector Units). These units produce the complete
range of pharmaceutical formulations, i.e., medicines ready for consumption by
patients and about 350 bulk drugs, i.e., chemicals having therapeutic value and
used for production of pharmaceutical formulations.
Pharmaceutical
Volume Qty in Thousand
4,000.00
3,500.00
3,000.00
2,500.00
2,000.00 Pharmaceutical
1,500.00
1,000.00
500.00
0.00
2003-04 2004-05 2005-06 2006 up to
Sep.
Year
Figure 1.31 Showing the Export of Pharma Products
35
Many of the world’s popular cosmetics brands entered the Indian market in the 1990s
as the Indian market opened up to foreign companies. The cosmetics and personal
care industry has been growing at an average rate of 15-20 percent for the last few
years. Growth has come mainly from the low and medium-priced categories, which
account for 90 percent of the cosmetics market in terms of volume. Even though
mass-market products still constitute the major portion of the India cosmetics and
toiletries market, increased disposable income has led to growth in demand for
premium products. The urban population in particular, with its rising purchasing
power, is the main force that drives the demand for various cosmetic products in
India.
The reasons for the growing demand for cosmetic products in India also include:
greater access to television, which has created a growing awareness of the western
world; increased advertising in general; and greater product choice and availability.
The success of contestants from India at various well known international beauty
pageants in the last few years has also contributed to making Indian women more
conscious of their appearance and more aware of western cosmetic products and
brands. Also, a boom in the Indian fashion world has contributed to the rise in
demand for professional beauty care products.
Even with double-digit growth rates, the market penetration of cosmetics and
toiletries products in India is very low. Current per capita expenditure on cosmetics is
approximately $0.68 cents, as compared to $36.65 in other Asian countries. This low
market penetration for cosmetics and personal care products in India can be viewed as
an opportunity for more significant growth down the road in this country of 1 billion
people.
The current size of India’s cosmetic and toiletries market is about $950 million. The
fastest growing segment is color cosmetics, accounting for around $60 million of the
total market. Nail enamels and lipstick account for about round 65 percent of the
color cosmetic segment. Revlon and L’Oreal dominate the small premium lipsticks
and nail enamels niches. Lipstick sales account for nearly a third of the market at $21
million, while the market for nail enamels is about $23 million. Lakme, a brand
originally introduced by the Tata Group of India, but now owned by Hindustan Lever
(HLL) of the Unilever group, Tips & Toes, and Revlon dominate the color cosmetics
market. The color cosmetics segment is very competitive and has a high penetration
level, compared to other market segments.
120,000
100,000
80,000
Qty in Thousand 60,000
40,000
20,000
0
Forecasted 2003 2004 2005 2006 2007 2008 2009
Year
Figure 1.32 Showing the export of cosmetic industry
700
600
500
Value in US $ 400
Million 300
200
100
0
2003 2004 2005 2006 2007 2008 2009
Forecasted
Year
The Electronics industry has emerged as the fastest growing segment of the Indian
industry both in terms of production and exports. This growth has had significant
economic and social impacts. Today the local and global impact of the electronics
industry has been due to its modern incarnation viz., the Information Technology (IT)
Industry. By definition the IT industry includes the hardware “backbone” from the
electronics industry and software.
The consumer durables industry appears to have two clearly differentiated segments.
The MNCs have an edge over their Indian counterparts in terms of technology
combined with a steady flow of capital. The domestic companies compete on the basis
of their well-acknowledged brands, an extensive distribution network and an insight
into local market conditions.
Demand is Cyclical and seasonal. Demand is high during festive season and is
generally dependent on good monsoons. Purchase necessarily is done only during the
harvest, festive and wedding seasons — April to June and October to November in
North India and October to February in the South.
Rural India, which accounts for nearly 70% of the total number of households, offers
plenty of scope and opportunities for the white goods industry. The urban consumer
durable market for products including TV is growing annually by 7 to 10 % whereas
the rural market is zooming ahead at around 25 % annually.
Increasing consumer awareness and preference for new models have added to the
demand. Products like air conditioners are no longer perceived as luxury products but
are treated as necessities in the changed socio-economic environment with changed
life styles.
2009
2008
2007
Year
2006
2005
2004
2003
0 500,000 1,000,0001,500,0002,000,0002,500,0003,000,0003,500,0004,000,0004,500,000
Qty in thousand
Forecasted
Figure 1.29 shows the export of electronic industry, in last few years’ electronic
goods and consumer durables industry has shown a great increase in export, because
companies like Sansui, Samsung, Whirlpool, LG has set up there manufacturing plant
in India and they are exporting these good from India to the neighboring countries and
other western countries. This shows that this growth rate will continue due to great
participation of real estate industry. Same as in table f we can see the increasing value
of electronic goods industry.
The sectors which have recorded excellent growth rates of more than 20 per cent in
terms of quantity produced are Air Conditioners (25 per cent), Split Air Conditioners
(42.6 per cent) Micro Wave Woven (27.3 per cent), DVDS (25 per cent) VCD/MP3
(20per cent), Color Picture Tube (23 per cent,).
The sectors which have recorded high growth rates between 18 and 28 per cent in
April-March 2004-05 over the corresponding previous period are Color Television
(12%), Window Air Conditioners (18.8 per cent ), Washing Machines (18.1 per cent
Watch (10%), Frost Free Refrigerators (13.8%).
Some sectors which have recorded moderate growth of 0 to 10 per cent are
refrigerators (5 per cent),), clock (8 per cent), Direct Cool Refrigerator (2.8 per
cent).
The Air-Conditioners Industry has reached at 1.2 million units during 2004-05
with a growth of 25 per cent from 9.8 lakh units in 2003-04.
Washing Machines is estimated to have grown by 18.1 per cent from 1.35
million units in 2003-04 to 1.6 million units in 2004-05.
Microwave oven has grown by 27.3 per cent growth with 3.5 lakh units
compared to 2.75 lakh units in 2003-04.
The Indian Color Television industry has grown by 12.1 per cent in 2004-05
by reaching 9.25 million units in 2004-05 from 8.25 million units in 2003-04.
The B&W TV has recorded a negative growth of 16.7 per cent from 3 million
units in2003-04 to 2.5 million units in 2004-05.
39
Watch and clock have registered growth of 10 per cent and 8 per cent from
20.6 mn units and 26.3 million units in 2003-04 to 22.6 mn units and 28.4 mn
units in 2004-05. The VCD/MP3 industry has registered 20% growth and has
achieved production of 8.4 million units.
Findings
Major part of India’s export goes to USA followed by United Arab Emirate
and China and this study shows this will also in the future as shown in figure
1.30.
E x p o rt: C o u n try -w is e
JA P A N
ITA L Y
B E L G IU M
GE RM A NY
2 00 8
U K
2 00 7
2 00 6
HO NG K ONG
2 00 5
2 00 4
S IN G A P O R E
C H IN A
UA E
U S A
0 .00 5 00 0. 0 0 1 00 00 .00 1 50 00 .0 0 2 00 00 .0 0 25 0 00 .0 0
India’s Tea and Coffee industry has largest share in world’s export in its
category, but then also it is losing its share during last few years and this
fluctuation will also continue over the year. Tea and coffee industry depends
on the monsoon and over the last few years the global warming has affected
the monsoon and this may affect to the production of tea and coffee.
800,000
700,000
600,000
500,000
Qty in Thousands 400,000
300,000
200,000
100,000
0
2003 2004 2005 2006 2007 2008 2009
upto
Sep.
Year
Figure 1.36 Showing the export of Tea and coffee industry
41
Sugar Industry has seen great variation in both export and import, in India
maximum sugar is produce in area of Uttar Pradesh and GOI has ban the
export of sugar due to rise in price of sugar in world market and not having
enough stock to meet the domestic consumption . This ban has its limitation
up to march 2007, but ban does not include EU and USA.
Tobacco is grown in more than 100 countries, just four countries (Brazil,
China, India and the United States) account for two-thirds of total global
production and only two countries, Malawi and Zimbabwe, are significantly
dependent on export earnings from tobacco.1 Out of the 141 countries that
export tobacco, only 18 derive more than one percent of their total export
earnings from tobacco. In only four of those 18 countries do tobacco exports
account for more than five percent of total export earnings . India is second
largest export of the world and holds round 6.5% of total export of tobacco of
the world.
Beverage industry’s export of India is growing with the rate of 13-16% p.a. as
shown in the table b. Both in the term of volume and value it is becoming the
important to the Indian economy.
The export of leather industry is varying in volume, but in the value term it is
increasing in a constant manner and volume-wise it will fluctuate in the future
also.
In the cotton dominated Indian textile industry, manmade fibres account for an
around 44% share as against 50% globally. However, in FY2005, with large
volumes of cotton being exported in various forms of textiles and apparel
(accounting for nearly 43% of the domestic cotton production), the share of
manmade fibers in the domestic textiles market stood at over 50%.As shown
in the chart below.
Export of Iron and Steel in the FY 2005 was decline by 0.34% as compared
with last year; The Indian Copper Industry has a moderate importance in the
Indian Economy. While it has a number of application across several sectors
(such as telecom, power, construction, transportation, handicraft, Engineering,
Consumer durables, defense etc.)
Indian exports of plastic products have increased over the past decade, Indian
exports of plastic products, however, still continue to account for a minuscule
share in the world trade (only around 0.47%). The low presence of the
organized large-scale sector and consequently, low economies of scale prevent
Indian players from becoming cost competitive in the international market.
Rural India, which accounts for nearly 70% of the total number of households,
offers plenty of scope and opportunities for the white goods industry. The
urban consumer durable market for products including TV is growing annually
by 7 to 10 % whereas the rural market is zooming ahead at around 25 %
annually.
44
Bibliography
♦ A book on Indian Trade and Industry Classification, by Kumar and Garg.
Published by BDP, Publishing year 2003
♦ Hand book of the year 2003-2004, Reserve Bank of India, Study of Indian
economy and foreign trade.
♦ http://strategis.ic.gc.ca/epic/site/imr-ri.nsf/en/gr126985e.html,
www.strategis.ic.gc.ca
♦ National Stock Exchange, www.nseindia.com/members/directory/htm
♦ www.indiamart.com
♦ www.jimtrade.com
♦ www.dgciskol.nic.in
♦ www.tradeinfo.com
♦ Balance of Payments Release of Dec. 29, 2006 and Statement 43, India’s
Balance of Payments in Dollars, Monthly Bulletin, Reserve Bank of India,
December 2006 and previous issues, www.rbi.org/monthlybulletin/bop
♦ Monthly Foreign Trade Statistics of India (principal commodities &
countries), Imports and Exports & Re–exports, Directorate General of
Commercial Intelligence & Statistics, Government of India, September 2006,
www.dgcis.kol.nic
45
Tables
2003- 2004-
S.No. Country %Share %Share %Growth
2004 2005
1 USA 11,490.11 17.9975 13,765.75 16.4788 19.81
2 U ARAB EMTS 5,125.61 8.0285 7,347.88 8.7961 43.36
3 CHINA P RP 2,955.10 4.6287 5,615.88 6.7227 90.04
4 SINGAPORE 2,124.84 3.3282 4,000.61 4.7891 88.28
5 HONG KONG 3,261.83 5.1091 3,691.82 4.4194 13.18
6 UK 3,023.27 4.7355 3,681.09 4.4066 21.76
7 GERMANY 2,544.57 3.9857 2,826.25 3.3833 11.07
8 BELGIUM 1,805.73 2.8284 2,509.71 3.0043 38.99
9 ITALY 1,729.41 2.7089 2,285.99 2.7365 32.18
10 JAPAN 1,709.30 2.6773 2,127.91 2.5473 24.49
11 FRANCE 1,280.89 2.0063 1,680.94 2.0122 31.23
12 BANGLADESH PR 1,740.75 2.7266 1,631.12 1.9526 -6.3
13 NETHERLAND 1,289.12 2.0192 1,604.86 1.9212 24.49
14 SRI LANKA DSR 1,319.20 2.0663 1,413.18 1.6917 7.12
15 SAUDI ARAB 1,123.31 1.7595 1,412.06 1.6904 25.71
16 SPAIN 1,002.59 1.5704 1,389.37 1.6632 38.58
17 INDONESIA 1,127.21 1.7656 1,332.60 1.5952 18.22
18 IRAN 918.11 1.4381 1,231.39 1.4741 34.12
19 MALAYSIA 892.77 1.3984 1,084.06 1.2977 21.43
20 KOREA RP 764.86 1.198 1,041.68 1.247 36.19
21 ISRAEL 723.98 1.134 1,005.76 1.204 38.92
22 SOUTH AFRICA 539.35 0.8448 984.04 1.178 82.45
23 THAILAND 831.69 1.3027 901.39 1.079 8.38
24 CANADA 763.2 1.1954 866.8 1.0376 13.57
25 NEPAL 669.36 1.0484 743.14 0.8896 11.02
26 TURKEY 563.34 0.8824 723.7 0.8663 28.47
27 AUSTRALIA 584.3 0.9152 720.25 0.8622 23.27
28 BRAZIL 275.62 0.4317 678.17 0.8118 146.05
29 NIGERIA 565.49 0.8858 644.68 0.7717 14
30 RUSSIA 713.76 1.118 631.26 0.7557 -11.56
31 TAIWAN 532.45 0.834 618.51 0.7404 16.16
32 VIETNAM SOC REP 410.44 0.6429 555.96 0.6655 35.46
33 SWITZERLAND 449.87 0.7046 540.89 0.6475 20.23
34 PAKISTAN IR 286.94 0.4494 521.05 0.6237 81.59
35 EGYPT A RP 367.49 0.5756 444.73 0.5324 21.02
36 KENYA 229.48 0.3594 426.64 0.5107 85.91
37 KUWAIT 319.09 0.4998 421.44 0.5045 32.07
38 PHILIPPINES 321.53 0.5036 412.23 0.4935 28.21
39 UNSPECIFIED 209.38 0.328 373.82 0.4475 78.54
40 MEXICO 264.43 0.4142 368.58 0.4412 39.39
41 COLOMBIA 95.31 0.1493 330.71 0.3959 246.97
42 SUDAN 107.38 0.1682 317.45 0.38 195.64
43 GREECE 200.04 0.3133 306.34 0.3667 53.14
44 DENMARK 241.9 0.3789 305.74 0.366 26.39
46
Exchange rate:
2003-2004: 1US$ = Rs. 45.9513
2006-2007(Apr-
S.No. Country 2005-2006 %Share %Share
Sep)
1 USA 17,353.06 16.8328 9,385.25 15.3477
2 U ARAB EMTS 8,591.79 8.3342 6,183.81 10.1124
3 SINGAPORE 5,425.29 5.2626 3,504.92 5.7316
50
Exchange rate:
2005-2006: 1US$ = Rs. 44.2735
Exchange rate:
2003-2004: 1US$ = Rs. 45.9513
Table 4: Import of India Country-wise for the year 2005-2006 to 2006-2007 (up
to Sep.) in US $ Million with there share in the total import of the country and
growth rate.
2006-2007(Apr-
S.No. Country 2005-2006 %Share %Share
Sep)
1 CHINA 10,868.05 7.2859 7,991.95 9.146
2 SAUDI ARAB 1,632.34 1.0943 7,193.43 8.2322
3 USA 9,454.74 6.3384 5,066.65 5.7983
4 U ARAB EMTS 4,354.08 2.919 4,422.37 5.061
5 SWITZERLAND 6,555.80 4.395 3,933.64 4.5017
6 NIGERIA 72.46 0.0486 3,891.39 4.4533
7 IRAN 702.46 0.4709 3,824.82 4.3771
8 GERMANY 6,023.63 4.0382 3,586.45 4.1043
9 AUSTRALIA 4,947.91 3.3171 3,398.68 3.8895
10 IRAQ 2.05 0.0014 2,969.50 3.3983
11 KUWAIT 461.85 0.3096 2,892.07 3.3097
12 SINGAPORE 3,353.77 2.2484 2,698.23 3.0879
13 MALAYSIA 2,415.61 1.6194 2,562.51 2.9325
14 KOREA RP 4,563.85 3.0596 2,400.91 2.7476
15 JAPAN 4,061.10 2.7225 2,144.93 2.4547
16 BELGIUM 4,725.14 3.1677 1,950.80 2.2325
17 UK 3,930.30 2.6349 1,911.99 2.1881
18 INDONESIA 3,008.11 2.0166 1,760.63 2.0149
19 SOUTH AFRICA 2,471.80 1.6571 1,288.74 1.4748
20 ITALY 1,855.63 1.244 1,248.17 1.4284
21 HONG KONG 2,206.98 1.4795 1,221.42 1.3978
22 QATAR 901.62 0.6044 1,123.71 1.286
23 YEMEN REPUBLC 10 0.0067 1,109.86 1.2701
24 FRANCE 4,113.30 2.7575 974.73 1.1155
25 EGYPT A RP 220.44 0.1478 935.22 1.0703
26 SWEDEN 1,172.20 0.7858 898.4 1.0281
27 RUSSIA 2,022.19 1.3557 869.42 0.995
28 TAIWAN 1,382.96 0.9271 813.59 0.9311
29 THAILAND 1,211.58 0.8122 812.33 0.9296
30 CHILE 434.5 0.2913 778.93 0.8914
31 CANADA 919.87 0.6167 574.04 0.6569
32 ARGENTINA 754.04 0.5055 541.83 0.6201
33 UKRAINE 792.39 0.5312 521.78 0.5971
34 NETHERLAND 1,049.55 0.7036 512.35 0.5863
35 ISRAEL 1,031.19 0.6913 497.1 0.5689
36 MYANMAR 525.96 0.3526 395.44 0.4525
37 BRAZIL 893.06 0.5987 377.17 0.4316
38 FINLAND 583.48 0.3912 315.24 0.3608
39 KOREA DP RP 56.57 0.0379 309.26 0.3539
40 SPAIN 573.46 0.3844 302.38 0.346
41 OMAN 265.59 0.178 279.69 0.3201
42 MEXICO 97.61 0.0654 268.31 0.3071
43 SRI LANKA DSR 577.7 0.3873 265.51 0.3039
44 MOROCCO 456.37 0.3059 250.58 0.2868
45 UNSPECIFIED 24,807.23 16.6307 233.03 0.2667
46 JORDAN 442.33 0.2965 232.78 0.2664
61
Exchange rate:
2005-2006: 1US$ = Rs. 44.2735