A STUDY OF EXPORT PATTERN OF INDIAN TRADE TO WEST ASIA-WITH SPECIAL REFERENCE TO ENGINEERING GOODS (1951 to 1978)

Abstract

There has been persistent and high demand of foreign exchange in India during the last three decades to meet its various import requirements like that of food grains, capital goods and services, oil and petroleum products along with repayment of foreign debt and debt servicing. In the medium-term context, exports would continue to be as essen tial in India as they have hitherto been. In Asia (India's largest trade partner since ages), recently West Asia has emerged as her major export market specially for engineering goods and services. In the wake of World-wide energy crisis, West Asia has attained crucial importance. In view of its continuous dependence on imports of goods and technical know-how (due to weak industrial and agricultural base), India's geographical proximity with the region coupled with its well established industrial base and cheap wages prevailing in the country, West Asian region constitutes a growth point for Indian exports. Besides taking advantage of the growing opportunities offered by these markets, the need for organising and increasing exports from India arises mainly due to India's continued dependence on these oil exporting countries for the crude petroleum imports. Though it is claimed in certain quarters that India would become self-sufficient in this field up to the end of this decade. However, growing imports into the West Asian region notwithstanding, India's share in its total imports has been negligible so far. This has been mainly due to inadequate attention paid to the region by the Government, industry and trade. In addition, certain malpractices of some Indian exporters operating in these markets have created a credi bility-gap which needs to be bridged at the earliest. Main objectives of the Study were to examine the nature of India's export concentration and the pattern of import-demand in West Asian countries to identify marketing opportunities for Indian engineering products/services/joint ventures etc. in the region, to locate various constraints hindering the growth of exports to the region and to suggest remedial measures for them. A comprehensive analysis of recent trends and changing pattern of India's export trade with special reference to West Asian countries was carried out in the present study using econometric techniques such as regression analysis and analysis of variance to arrive at definite conclusions and to confirm the results alongwith making projections. Over the past decade, against a four-fold increase in India's total exports, engineering exports have registered an eight-fold increase, emerging as the top exporting group in the country. At the same time the percentage share of engineering goods in her total exports has also increased from 7.5 percent to 13.6 percent. However, growing imports into the West Asian region notwithstanding, India's share in its total imports has been negligible so far. This has been mainly due to inadequate attention paid to the region by the Government, industry and trade. In addition, certain malpractices of some Indian exporters operating in these markets have created a credi bility-gap which needs to be bridged at the earliest. Main objectives of the Study were to examine the nature of India's export concentration and the pattern of import-demand in West Asian countries to identify marketing opportunities for Indian engineering products/services/joint ventures etc. in the region, to locate various constraints hindering the growth of exports to the region and to suggest remedial measures for them. A comprehensive analysis of recent trends and changing pattern of India's export trade with special reference to West Asian countries was carried out in the present study using econometric techniques such as regression analysis and analysis of variance to arrive at definite conclusions and to confirm the results alongwith making projections. Over the past decade, against a four-fold increase in India's total exports, engineering exports have registered an eight-fold increase, emerging as the top exporting group in the country. At the same time the percentage share of engineering goods in her total exports has also increased from 7.5 percent to 13.6 percent. The Study has established that Indian engineering goods industry is now capable of playing the role of leading sector in the Indian economy and consequently to minimize the need of foreign aid. It is not possible in India to meet the entire demand of foreign exchange only through foreign aid and the exbort of traditional goods. But one of the strate gies established in this study for meeting the country's high demand of foreign exchange for various purposes is through export of value-added engineering goods/projects/services, especially to the developing countries among which the West Asian region seems to be the most potential area for expanding these exports. Various constraints responsible for low export earnings of Indian engineering goods/services, particularly in the context of West Asian countries, have been identified in this study and suitable remedial measures have also been suggested. It was also established in this study that there has been significant increase in India's engineering exports during last two decades among which most significant increase was observed in the case of capital and heavy engineering goods and consumer durables as compared to that of other groups. Thus the relative importance of commodities in India's export composition has altered. A definite shift in the direction of Indian exports has also been established in this study from export of traditional goods to developed countries, to export of non-traditional goods to developing countries. India has made significant progress in diversifying her export markets of engineering goods. A highly significant growth of India's engineering exports to Asia over other regions has also been established. Although the volume of exports to both South East and West Asia has consistently grown during the last three decades, there has been a marked rise in exports of engineering goods to West Asia compared to South East Asia. The major limitation of the Study was lack of detailed and up-to-date information/data regarding importdemand of various engineering products in West Asian countries. At the same time limited data/information available in India regarding the progress/performance/effect of Indian joint ventures abroad including West Asia, has been another limitation of the Study.. The Study has identified certain potential areas for future work in this direction which are listed in the last