Initially, India's foreign trade followed a pattern common to all underdeveloped countries: exporting raw materials and food in exchange for manufactured goods. The only difference in India's case was that it also exported processed textiles, yarn, and jute goods. Until the late 1980s, the government's strongly import substitution-oriented industrial policy limited the significance of exports for the Indian economy, and while exports have become more important, they remain only about 8% of national income. With imports exceeding exports almost continuously in the 1970s and 1980s, India registers a chronic trade deficit. Stabilization and structural adjustment measures taken in 1991, including a 50% currency devaluation, have improved the country's balance of trade position by depressing imports and making exports more competitive in the world market. Given the country's relatively well-developed manufacturing base, items like textile goods, gems and jewelry, engineering goods, chemicals, and leather manufactures now comprise the country's leading exported items, replacing jute, tea, and other food products that dominated its export base in the 1960s and early 1970s.
In 1999 India's imports were distributed among the following categories:India's exports are dominated by textiles, followed by agricultural products, gems and jewelry, and engineering goods. Major imports include petroleum and petroleum products, gold and precious stones, machinery, chemicals, and fertilizers.
Principal trading partners in 1999 (in millions of US dollars) were as follows:
|China (inc. Hong Kong)||3,025||2,105||920|
|United Arab Emirates||2,074||2,333||-259|