However, countries must ensure that trade agreements are fair and equitable, and that the benefits of trade are evenly distributed across their societies.
International trade is a key factor in economic growth because it gives nations access to a greater range of commodities and services, permits manufacturing to be specialized, and promotes competitiveness, innovation, and efficiency. As nations trade goods with one another, everyone benefits.
The India Story:
The story of 21st century India cannot be written without mentioning its exploits in furthering trade through deft handling of foreign affairs. The entire establishment has been proactively working on furthering trade relations and as a result we have seen a marked improvement in this field. To talk about just a few facts, according to RBI’s data, Indian service exports were $31,287 million in December 2022, a stellar increase of 19.11% from December 2021 wherein IT and telecom services were the topmost contributors. This is indicative of how international trade is touching new heights and aiding in the nation’s resilient economy. But what is bringing about this massive change? Well, let’s understand-
- Increased access to resources and markets: Access to markets and resources is increased thanks to trade, which gives nations access to resources that may be in short supply or unavailable domestically. To boost their businesses and exports, for instance, nations with few natural resources can import raw materials from other nations. Government schemes such as Production Linked Incentive Scheme helps in boosting exports and aids in re-establishing the government’s Make in India scheme.
- Specialization in production: International trade allows countries to specialize in the production of goods and services that they are best suited to produce, based on their natural resources, labor force, and technological capabilities. This can lead to increased efficiency and productivity, and ultimately economic growth. India’s top exports includes petroleum products, pharmaceuticals, jewellery, grains etc. With infrastructure programs such as Gati Shakti, Bharatmala, Sagarmala, India seeks to lower logistics costs to increase competitiveness of its goods. Also, the year 2023 has been declared by the United Nations as proposed by India, as the International Year of Millets. This could enable India to position itself as the global hub for millets.
- Increased foreign investment: Foreign investment may be attracted by international trade, and this may result in the growth of new industries and infrastructure as well as the transfer of knowledge and skills. For instance, foreign investment has aided the growth of the industrial and high-tech sectors in nations like Singapore and South Korea. India’s G20 presidency offers an external impetus to connect its foreign trade strategy with its external trade positioning in order to increase its credibility as a reliable trading partner and, consequently, its legitimacy in driving trade discussions on the international stage.
In recent years, India has worked to liberalise its trade practises in an effort to boost economic growth and boost its competitiveness on the international stage. The Union Budget 2023–24’s top targets included cutting customs taxes on imports that are necessary for manufacturing, encouraging R&D, continuing to put emphasis on expanding infrastructure, and streamlining tax systems. International commerce can play a crucial part in reaching India’s aim of becoming a $5 trillion economy, which calls for consistent and substantial economic growth. India can use global trade to its advantage through encouraging exports, luring foreign investment, diversifying trade, boosting competitiveness, and correcting trade imbalances.
India also brings to the table the capacity to bring people together, the voice to speak for developing and growing markets, as well as its own interests and a changing domestic trade environment. These three elements give India the ability to present actual trade pledges for consideration by the international community and foster consensus on the circumstances of international trade.
Overall, international trade plays a crucial role in promoting economic development, and many countries have benefited from the opportunities it offers. However, it is important for countries to ensure that trade agreements are fair and equitable, and that the benefits of trade are shared widely within their societies.