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SSC CGL - Detailed Guide 2025

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Foreign Trade and International Organisations

Reference: Lucent GK, NCERT Class 6–12

1. India's Foreign Trade – Imports/Exports Composition

Key Points:

  • India follows a mixed economy model with liberalized trade policies post-1991.
  • Trade is managed by the Ministry of Commerce and Industry.
  • India's foreign trade accounts for ~40% of GDP (2023 estimate).

Export Composition (Major Items):

Category Products
Petroleum Products Refined petrol, diesel
Engineering Goods Machines, tools, auto components
Gems and Jewellery Diamonds, gold jewellery
Textiles and Apparel Cotton, readymade garments
Chemicals & Pharmaceuticals Generic drugs, fertilizers
Agricultural Products Basmati rice, tea, spices, marine items

Import Composition (Major Items):

Category Products
Crude Oil & Petroleum Largest import
Gold and Precious Stones For consumption and re-export (jewellery)
Electronics Mobiles, semiconductors
Machinery Industrial equipment
Chemicals & Fertilizers Raw materials for industries
Coal and Natural Gas For power and industrial use

Major Trade Partners:

Exports:

  • USA
  • UAE
  • Netherlands
  • Bangladesh

Imports:

  • China
  • USA
  • UAE
  • Saudi Arabia

2. Balance of Payments (BoP) and Trade Deficit

Balance of Payments (BoP):

  • A statement that records all economic transactions between India and the rest of the world.
BoP Account Components
Current Account Trade of goods/services, transfers, income
Capital Account FDI, FII, ECBs, loans, NRI deposits

Managed by RBI.

Trade Deficit:

  • Occurs when imports > exports.
  • India traditionally runs a trade deficit.
  • Trade deficit contributes to current account deficit.

Current Account Deficit (CAD):

  • CAD = Trade Deficit + Net income/transfers.
  • High CAD can affect currency value and forex reserves.
Illustration of Early Vedic Period

3. Foreign Direct Investment (FDI)

Definition:

Investment made by a foreign entity into the capital/assets of Indian companies.

Types:

Type Example
Automatic Route No prior govt. approval (most sectors)
Government Route Requires prior approval (defense, media)

Key Sectors Receiving FDI:

  • Services (IT, finance, telecom)
  • Construction & infrastructure
  • Retail and e-commerce (Amazon, Walmart)
  • Manufacturing (especially electronics, automobiles)
Illustration of Early Vedic Period

FDI Benefits:

Capital inflow

Technology transfer

Employment generation

Boost to Make in India

FDI Regulator: Department for Promotion of Industry and Internal Trade (DPIIT)

4. WTO, IMF, World Bank, BRICS, ADB

WTO (World Trade Organization):

  • Established: 1995
  • HQ: Geneva, Switzerland
  • Aim: Promote free and fair global trade
  • Functions: Trade negotiations, dispute resolution, trade monitoring
  • India's Interests: TRIPS (IPR), agricultural subsidies

IMF (International Monetary Fund):

  • Established: 1944 (Bretton Woods)
  • HQ: Washington, D.C.
  • Aim: Ensure global monetary stability
  • Key Roles:
    • Lending to countries in crisis
    • Surveillance and economic guidance
    • Technical assistance

World Bank:

  • Established: 1944
  • HQ: Washington, D.C.
  • Components: IBRD, IDA(part of World Bank Group)
  • Focus: Long-term development aid
  • Key Projects in India: Education, sanitation, water supply, rural roads

BRICS:

  • Founded: 2009 (South Africa joined in 2010)
  • Focus: Multilateral cooperation, reform of global institutions
  • Institutions: New Development Bank (NDB)
  • India's Role: Promoting multipolar global order

ADB (Asian Development Bank):

  • Established: 1966
  • HQ: Manila, Philippines
  • Mandate: Socio-economic development of Asia-Pacific
  • India: Major recipient of loans for infrastructure, health, urban reforms

5. Trade Agreements and Economic Diplomacy

Types of Trade Agreements:

Type Example
Bilateral Trade Agreement India–UAE CEPA, India–Japan CEPA
Regional Trade Agreement ASEAN–India FTA, SAFTA
Multilateral Trade Agreement WTO agreements

India's Major Trade Agreements:

  • India–ASEAN Free Trade Agreement
  • India–UAE CEPA (2022)
  • India–Australia ECTA (2022)
  • Ongoing negotiations: India–EU FTA, India–UK FTA

Economic Diplomacy:

  • Using trade, investment, and aid to enhance foreign relations.
  • Managed by Ministry of External Affairs (MEA) & Ministry of Commerce.
  • Focus on:
    • Energy security (e.g., Middle East, Russia)
    • Supply chains diversification (e.g., Quad)
    • Export promotion councils and overseas missions
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