DIRECTION OF INDIA'S FOREIGN TRADE DURING GLOBALIZATION PERIOD

Globalization can be defined as integration of an economy with the world economy. In present time globalization has emerged as important forces, which help in integrating the world economy. Globalization is a process through which the diverse world is unified into a single society. In India, the seeds of globalization were sown in the early 1980s, but the real thrust was provided by the New Economic Policy (NEP) 1991. In this policy India started the process of dismantling trade barriers along with abolishing quantitative restrictions (QRs) phase-wise. During post-independence period especially after adopting the liberalization, privatization and globalization (LPG) policy India’s foreign trade has undergone a complete change in terms of composition and direction. Direction of India’s foreign trade means the countries to which India exports its goods and the countries from which it imports. Thus direction of trade consists of destination of our exports and source of our imports. In the pre-independence period India’s trade relations were mainly determined by Britain and other commonwealth countries, not according to the comparative cost advantages of India. A major part of India’s trade was either directly with Britain or its colonies or allies. But after independence when political and economic relations developed with other countries of world new trade relationships were established. The situation has changed very much since, and now after 65 years and especially after initiation of globalization process, the trading relations exhibit marked changes. Now USA has emerged as our most important trading partner, followed by China, UAE, Japan, Germany and U.K.