A STUDY OF INDIA'S TRADE RELATIONS WITH THE SOVIET UNION, 1960-61 to 1979-80

Abstract

The present work is an attempt to study India's trade relations with the Soviet Union. It comprises of data collection, detailed analysis of the problem and visualization of the prospects of Indo-Soviet trade. The whole range of the subject of study is divided into six chapters. The results have been presented both in tabular and graphical forms. A chapter-wise summary of the thesis is given below: CHAPTER I Here, the research problem and its methodology have been introduced in the light of increasing importance of foreign trade in Indian economy, trends in India's foreign trade, and causes of sluggishness of India's exports. After examining different aspects of India's foreign trade through tables and graphs, it reveals increasing share of India's exports in net national product, changing pattern of India's exports towards non-traditional goods, changing pattern of imports from machinery to intermediate products, and important changes with the major trading partners. However, India's share in world exports has been declining which indicates that India's efforts have not been more fruitful than those of her competitors. Therefore, it has been stressed that India should thoroughly review her trade relations in the light of development strategy. CHAPTER II A comprehensive survey of literature on Indo-Soviet Ill trade has been presented. For this, various national and international sources have been used. The literature has been classified on the basis of analytical part of the study viz., bilateral trade and payment agreement, switch trade, export and import prices, terms of trade, trade prospects, and some allied issues. The survey of literature on the subject reveals the fact that relatively less work has been done on Indo-Soviet trade. These studies have not analysed the problem in-depth and also do not provide any effective trade strategy - what India should do. CHAPTER III It has been examined here whether India's exports to the Soviet Union are export diversion in character. After detailed investigation on the basis of aggregate and commoditywise analysis, export diversion to the Soviet Union has been estimated at about Rs.30.00 crores during the period, 1960-61 to 1979-80, though it is not a significant part of India's exports. This export diversion may be counted as a loss of foreign market and hard currency. The analysis also reveals that the tempo of growth of Indo-Soviet trade in seventies has declined in comparison to the rest of the world. CHAPTER IV The chapter comprises of emerging issues of IndoIV Soviet trade viz., switch trade, surplus trade, composition of trade, export and import prices, terms of trade, and rupeerouble exchange rate. Switch trade has been examined on the basis of sharp fluctuations in exports to the Soviet Union. Export fluctua tions have been examined on year to year and aggregate analysis basis which reveal that export fluctuations in case of the Soviet Union have been greater than the rest of the world. However, due to non-availability of necessary statis tical data, it is very difficult to determine that the Soviet Union is indulging in switch trade, i.e. re-export of Indian goods to the other markets to earn hard currency. Surplus trade has been analysed on the basis of balance of trade position. It shows that the magnitude of trade surplus has been increasing in favour of India especially in recent years and it is about Rs,1,500 crores. It is adversely affecting growth of Indo-Soviet trade. The analysis of composition of trade reveals that considerable changes have occurred in composition of Indo- Soviet trade, though these changes are not enough to fulfill the needs of both the economies. The analysis of export, import prices and terms 'of trade reveal^that after getting footholds in Indian market, —• i the Soviet Union has been getting advantages for paying for her imports lower prices to India in comparison to the rest I of the world especially in latter years, 1972-73 to 1979-80. On the other hand, India has paid higher unit value for her imports from the Soviet Union in comparison to the rest of the world. Consequently, the extent of unfavourableness of India's terms of trade is more in case of the Soviet Union than in case of the rest of the world. However, this comparison excludes imports of machinery and oil/petroleum products which constitute at least 82 per cent of India's total imports from the Soviet Union; As far as rupee-rouble exchange rate is concerned, the existing rupee-rouble exchange rate is not advantageous for India. CHAPTER V A 'trade strategy' comprising of various actions has been suggested for further increasing trade between the two countries on mutual benefit basis. The various actions suggested are new payment system, various measures for increasing exports and imports with the Soviet Union. New areas such as production cooperation, licencing of trade and involvement of Indian Private Sector have also been identified for further fostering trade between the two countries. In essence, the various conclusions derived from the present study reveal that different aspects of Indo-Soviet trade are being adversely affected by rupee payment system. Therefore, both India and the Soviet Union should try to change the existing rupee payment system to convertible