Economy · X-Factor Notes
International Trade revision notes for UPPCS Prelims.
35 revision facts
| Concept | What to remember | Asked in UPPCS |
|---|---|---|
| Balance of Payments (BoP) | Represents the complete record of all economic transactions between the residents of a country and the rest of the world. | UPPCS (Pre) 1994, I.A.S. (Pre) 2013 |
| Current Account Deficit (CAD) | Caused by the excess of total imports over total exports during the year. It occurs when the value of exports of goods, services, and net income is less than imports. | Chhattisgarh P.C.S. (Pre) 2017, U.P. R.O./A.R.O. (Re-Exam) (Pre) 2016 |
| Balance of Trade (BoT) | The difference between the value of exports and the value of imports of goods (only visible items). | U.P. P.C.S. (Mains) 2016 |
| India’s Trade (2024-25) | India’s total exports (merchandise and services combined) reached a record USD 824.9 billion in FY 2024-25, a growth of 6.01% over USD 778.1 billion in FY 2023-24. Services exports hit a historic high of USD 387.5 billion, up 13.6% from USD 341.1 billion in the previous year. Merchandise exports excluding petroleum products rose to USD 374.1 billion, a 6.0% increase from USD 352.9 billion in FY 2023-24 — the highest ever annual non-petroleum merchandise exports. India's merchandise exports including petroleum products were approximately USD 442.6 billion in calendar year 2024. The goods trade deficit rose to USD 282.82 billion in FY 2024-25, against USD 241.14 billion in FY 2023-24 |
| Concept | What to remember | Asked in UPPCS |
|---|---|---|
| Largest International Trade Partner (Region) | Asia is the largest international trade partner of India. Asia and Oceania supply the maximum imported commodities in terms of rupee value. | UPPCS (Mains) 2009, I.A.S. (Pre) 1998, U.P. U.D.A./L.D.A. (Pre) 2010 |
| Largest Import Source | China has the largest share in total imports of India China- (15.6%) Russia: (9.10%) United Arab Emirates:(7.11%) United States:(6.04%) | UPPCS (Mains) 2010, U.P. U.D.A./L.D.A. (Pre) 2001 |
| Largest Export Destination | The United States of America (USA) is the largest destination for India's exports. US > UAE > Bangladesh > Vietnam > Netherland | UPPCS (Mains) 2010, UPPCS (Mains) 2002* |
| Largest Total Trade Partner (Recent) | US > China > UAE |
| Concept | What to remember | Asked in UPPCS |
|---|---|---|
| Top Five Import Items of India | Petroleum Fuels and Oils Electrical Machinery Gems and precious metals Electrical Machinery and Equipment Organic Chemicals | U.P. Lower Sub. (Spl.) (Pre) 2004, Chhattisgarh P.C.S. (Pre) 2013 |
| Top Five Export Items of India | Petroleum Products Gems and Jewellery Automobiles and Auto Components Pharmaceuticals Machinery Including Computers and Electronics | U.P.P.C.S (Mains) 2006, U.P.R.O./A.R.O. (Pre) 2014* |
| Largest Single Export Item (Historical) | Gems and Jewellery historically contributed the largest share to export earnings. | UPPCS (Mains) 2012, UPPCS (Mains) 2003 |
| West Texas Intermediate (WTI) | Refers to a grade of Crude oil. | I.A.S. (Pre) 2020 |
| Concept | What to remember | Asked in UPPCS |
|---|---|---|
| Closed Economy | An economy in which neither exports nor imports take place. | I.A.S. (Pre) 2011 |
| Globalization of Indian Economy | Means having minimum possible restrictions on economic relations with other countries, generally achieved by dismantling barriers in international trade. | UPPCS (Mains) 2017 |
| SEZ Policy Announcement | Announced in April, 2000. | UPPCS (Mains) 2017, UPPCS (Mains) 2014 |
| SEZ Act | Passed by the Parliament in 2005. | I.A.S. (Pre) 2010 |
| SEZ Objectives | Include generating additional economic activity, promoting exports/investment (domestic and foreign), and creating employment opportunities. It does not aim to discourage foreign investment. | U.P. Lower Sub. (Pre) 2009 |
| First EPZ (Export Processing Zone) | Established in Kandla in 1965, the first in Asia. | UPPCS (Mains) 2011, UPPCS (Mains) 2012 |
| EPCG Full Form | Export Promotion Capital Goods. This scheme facilitates the import of capital goods duty-free for manufacturing high-quality exportable goods. | |
| ECGC Function | Export Credit and Guarantee Corporation (ECGC) provides insurance against various risks to exporters. | UPPCS (Mains) 2009, 2005, UPPCS (Spl.) (Mains) 2004 |
| Letter of Credit (L/C) | Produced/requested by an importer. | UPPCS (Mains) 2009, U.P. Lower Sub. (Pre) 2013 |
| Foreign Trade Policy (2025) | FTP 2025 aims to increase exports to USD 2 trillion by 2030. Major initiatives include District Export Hubs and Towns of Export Excellence to widen export bases beyond major cities. |
| Concept | What to remember | Asked in UPPCS |
|---|---|---|
| Rupee Convertibility (Current Account) | Indian Rupee was made fully convertible on the Current Account in August, 1994. This allows freedom to convert rupees for current transactions (trade in goods and services, and invisibles). | U.P.R.O./A.R.O. (Mains) 2017, UPPCS (Pre) 1995, I.A.S. (Pre) 2000 |
| Capital Account Convertibility (CAC) | Implies that the Indian Rupee can be exchanged for any major currency for the purpose of trading financial assets. India currently follows partial capital account convertibility The S.S. Tarapore Committee was related to fuller CAC. | I.A.S. (Pre) 1998, I.A.S. (Pre) 2007 |
| Devaluation Effect | The outcome is an increase of exports and a decrease of imports in the country. This is because domestic items become cheaper in the foreign market, thus promoting export. | U.P.R.O./A.R.O. (Pre) 2014, UPPCS (Spl.) (Mains) 2008, U.P. Lower Sub. (Pre) 2004 |
| FEMA (Foreign Exchange Management Act), 1999 | Came into force on June 1, 2000, and was finally implemented/fully in effect in 2002. Its objective is to facilitate external trade and payments. | UPPCS(Pre) 2013 |
| Concept | What to remember | Asked in UPPCS |
|---|---|---|
| WTO and IMF Functions | WTO generally forbids the use of quantitative restrictions in trade. IMF provides finance to correct equilibrium in the balance of payments. IDA (International Development Association) sanctions soft loans. | UPPCS (Pre) (Re-Exam) 2015 |
| Special Safeguard Mechanism (SSM) | A tool of the World Trade Organization (WTO) that allows developing countries to raise tariffs temporarily to deal with import surges or price falls. | I.A.S. (Pre) 2010 |
| TRIMs | Stands for Trade-Related Investment Measures. It restricts preference given to domestic firms. | |
| TRIPS | Trade-Related Aspects of Intellectual Property Rights. Subjects include Trade Marks, Industrial designs, and Geographical Indications. | U.P. U.D.A./L.D.A. (Pre) 2001 |
| SDR | Special Drawing Right (SDR) is an artificial currency created by the IMF. | I.A.S. (Pre) 2010 |
| Import Cover | Defined as the number of months of imports that could be paid for by a country's forex reserves. | I.A.S. (Pre) 2016 |
| WTO Headquarters | Geneva, Switzerland. | UPPCS (Mains) 2004 |
| 'World Economic Outlook' | Published by the International Monetary Fund (IMF). | I.A.S. (Pre) 2014, |
| 'Global Financial Stability Report' | Published by the International Monetary Fund (IMF). | I.A.S. (Pre) 2016 |
