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India’s International Macroeconomic Environment Coursework

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Updated: Oct 13th, 2021


The Republic of India is a Constitutional Democracy located in South Asia, bordering the Arabian Sea and the Bay of Bengal, between Burma and Pakistan. It has an area of one third the area of United States. The country is made up of 28 states and seven union and national territories. The constitution came into force on 26th January 1950 and she is known for the largest democratic country in the world. The country is now ruled by Indian National Congress led- United Progressive Alliance (UPA) headed by Prime Minister Dr. Manmohan Singh, who is generally acknowledged as one of the main architects of India’s economic reform program which began in the early 1990.

Foreign relations

As regards the Foreign Relations are concerned, the country has been constantly trying to keep good relations with the rest of the world. Since Independence in 1947, it has been seeking to position itself as a major international player. In addition to that, it has been at the forefront of the activities of developing countries. The country is a major power in the South Asia and has got the status of full dialogue partner with ASEAN and has been admitted as a member of the ASEAN Regional Forum. The country is also a member of the East Asian Summit along with Australia and New Zealand. (Web.)

The relationship with United States of America has been a major concern for the country for economical and security reasons. The recent visit of the former President of the U.S. Mr. George.W.Bush and its aftermath underscore the bilateral relationship that both the countries aim at for the past several years. The historic civil nuclear agreement between the two countries paved the way for a strategic partnership, which is closer than ever before.

Economic Overview

The Indian Economy is characterized by a wide spectrum of activities. Its economy is comprised of many areas ranging from information technology to agriculture. Basically, the country is an agricultural one and for the last few years it has been facing severe problems in Agriculture and allied activities. The agriculture crisis which took shape in the country recently affected the rural economy, which is said to be the backbone of the country. But, the other areas like information technology have been flourishing which resulted in becoming the country one of the largest economic players in the world. Over the last two decades, the economy structure has changed from manufacturing-led development model to service-led development model. Despite these changes and resultant progress in economic growth, certain factors still troubles the economic well being of the country. High fiscal deficit, high inflation rate, etc are some of the factors which have become a headache for the government. The following table gives a glimpse at the crucial economic indicators of the country for the last Five Years.

Table Showing the Major Economic Indicators for Five Consecutive Fiscal Years:

The Major Economic Indicators

The above table illustrates that the country has been growing at a faster rate for the last five fiscal years. The growth rate of GDP, which is the main index of economic growth, reveals that the country has been flourishing except the last fiscal year, i.e., 2004- 2005. But, rising inflation rate has always been a concern for the country because; the interest rate is determined by the inflation rate prevalent. The current account balance, which is the measure of efficiency in the foreign trade, is also unsatisfactory or little bit dangerous as the position is decreasing year by year. But, the rising export of goods and services is something which the country can rejoice.

India’s Global Merchandise Trade Relationship

India has been engaged in international trade for many years. The principal countries where goods are exported to and the countries from where goods are imported are exhibited in the following table.

Table Showing India’s Principal Export Destinations and Import Sources, 2007:

Principal Export Destinations

Major Reasons for the Pattern of Export Import Relations with the above countries

Trade relations with European Union

For the past decade India’s trade relations has increased manifold especially in the food and beverages sector because of the following reasons.

  1. Emerging Indian economy in the world food trade and the overall trade with Europe, which has grown by 80 per cent since 2000
  2. The product cost in the Indian market has reduced considerably, which results in a pilling pressure on European Companies to cut the prices and thereby increased competition.
  3. Indian consumers have increasingly started to adopt Western diet trends. (Trade Relations Between India and Eu on the Rise, Says Report ).

Trade relations with Africa

“India has been actively promoting trade with Africa in recent years. To boost the country’s trade with the Sub-Saharan African region, the Government of India launched the “Focus: Africa” programme under the EXIM Policy 2002-07.” (India Boosting Trade with Africa: Indian Companies Promote Their Products in African Market).

  1. India’s Exim Bank has extended Lines of Credit (LOCs) to support export of eligible goods to Africa on deferred payment terms.
  2. The southern Indian state of Andhra Pradesh has signed a preliminary deal with Kenya and Uganda to send 500 farmers to cultivate land in the East African nations.
  3. Indian government opened a business centre in Durban to help cut the red tape in deals between the two nations.
  4. India Govt. ha initiated measures to provide duty-free access to products from the least developed countries of Africa.

Trade relations with U.S.A

India government is pursuing a “strategic partnership” with the U.S. in both economic and trade relations. India is in the midst of rapid economic expansion and many companies in the U.S. are looking forward to take the opportunities in India, which are likely to emerge in the years to come. To further improve the trade relations, the following major measures have helped booth the countries:

  1. The country has simplified its import policies by lowering its tariffs, reducing the variation in tariff rates.
  2. Eliminated import licensing requirements. (India U.S Economic and Trade Relations. CRS Report for Congress).

Works Cited

: Indian Companies Promote Their Products in African Market. Africa Business Pages: Promoting Trade To And From Africa. 2008. Web.

India Export Import Trade Statistics-Region. Info Drive India. 2008. Web.

. CRS Report for Congress. 2007. Web.

Trade Relations Between India and Eu on the Rise, Says Report. Export to India: The Trade Council of Denmark. 2008. Web.

Year Book: India. UN Comtrade Publication. 2008. Web.

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IvyPanda. "India's International Macroeconomic Environment." October 13, 2021. https://ivypanda.com/essays/indias-international-macroeconomic-environment/.


IvyPanda. 2021. "India's International Macroeconomic Environment." October 13, 2021. https://ivypanda.com/essays/indias-international-macroeconomic-environment/.


IvyPanda. (2021) 'India's International Macroeconomic Environment'. 13 October.

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