India’s foreign trade performance can be analysed in terms of three aspects: volume of trade, composition of trade and direction of trade. Direction of trade denotes the nations with which India traded. In the period 1950-1966, India’s exports hardly increased.
In 1966, the Indian rupee was devalued to bring domestic prices alignment with international prices. However, exports did not grow immediately. Exports picked up only after 1972-73. Since 1986-87, a sharp rise in exports has taken place. In 1950-51 exports as a percentage of India’s national income was 6.8; in 1960-61 it was 4.2; in 1970-71 it fell to 3.8; it increased to 5.4 percentage, in 1980-81 and 6.9 in 1990-91.
India’s exports as a percentage of world exports was 2.2 in 1950-51,1 per cent in 1960-61,0.64 per cent in 1970-71, 0.42 per cent in 1980-81, and 0.52 per cent in 1990-91. This shows that although India’s exports grew over this period, world exports grew much faster. This means that India could not seize the opportunity for export led-growth especially over 1960-1990.
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Over the period 1951 -1990, the composition of India’s exports has undergone a remarkable change. In the beginning of the period, exports consisted largely of primary products like tea. Over the period, processed gems and jewellery, engineering goods, and textiles sharply increased their share in the export basket.
As far as imports are concerned, the government had adopted the import control policy. This included measures like import licensing, quotas, banning of some imports, as well as tariffs (that is, taxes on imports). The initial objective behind these policies was to conserve foreign exchange and protect domestic industries.
Employment generation can take place through expansion of industries large, small and cottage industries. Also the agriculture and service sectors create job: for people. However, in India employment generation has been slower than the growth in labour force. Large investment in the public sector helped in creation of employment in the organised public sector.
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The slow growth in employment has been because of many factors such as slow growth in agricultural production, slow expansion of the manufacturing sector, and concentration of investment in the capital goods industry. This has resulted in unemployment in the economy.