| Economy of India has made great strides in the years since independence. In 1947 the country was poor and shattered by the violence and economic and physical disruption involved in the partition from Pakistan. The economy had stagnated since the late nineteenth century, and industrial development had been restrained to preserve the area as a market for British manufacturers.
In fiscal year 1950, agriculture, forestry, and fishing accounted for 58.9 percent of the gross domestic product (GDP--see Glossary) and for a much larger proportion of employment. Manufacturing, which was dominated by the jute and cotton textile industries, accounted for only 10.3 percent of GDP at that time.
India's new leaders sought to use the power of the state to direct economic growth and reduce widespread poverty. The public sector came to dominate heavy industry, transportation, and telecommunications. The private sector produced most consumer goods but was controlled directly by a variety of government regulations and financial institutions that provided major financing for large private-sector projects. Government emphasized self-sufficiency rather than foreign trade and imposed strict controls on imports and exports. In the 1950s, there was steady economic growth, but results in the 1960s and 1970s were less encouraging.
Beginning in the late 1970s, successive Indian governments sought to reduce state control of the economy. Progress toward that goal was slow but steady, and many analysts attributed the stronger growth of the 1980s to those efforts. In the late 1980s, however, India relied on foreign borrowing to finance development plans to a greater extent than before. As a result, when the price of oil rose sharply in August 1990, the nation faced a balance of payments crisis.
The need for emergency loans led the government to make a greater commitment to economic liberalization than it had up to this time. In the early 1990s, India's post-independence development pattern of strong centralized planning, regulation and control of private enterprise, state ownership of many large units of production, trade protectionism, and strict limits on foreign capital was increasingly questioned not only by policy makers but also by most of the intelligentsia.
India's population continues to grow at about 1.8% per year and is estimated at one billion. While its GDP is low in dollar terms, India has the world's 13th-largest GNP. About 62% of the population depends directly on agriculture.
Industry and services sectors are growing in importance and account for 26% and 48% of GDP, respectively, while agriculture contributes about 25.6% of GDP. More than 35% of the population live below the poverty line, but a large and growing middle class of 150-200 million has disposable income for consumer goods.
India embarked on a series of economic reforms in 1991 in reaction to a severe foreign exchange crisis. Those reforms have included liberalized foreign investment and exchange regimes, significant reductions in tariffs and other trade barriers, reform and modernization of the financial sector, and significant adjustments in government monetary and fiscal policies.
The reform process has had some very beneficial effects on the Indian economy, including higher growth rates, lower inflation, and significant increases in foreign investment. Real GDP growth was 6.8% in 1998-99, up from 5% in the 1997-98 fiscal year. Growth in 1999-2000 is expected to be around 6%. Foreign portfolio and direct investment flows have risen significantly since reforms began in 1991 and have contributed to healthy foreign currency reserves ($32 billion in February 2000) and a moderate current account deficit of about 1% (1998-99). India's economic growth is constrained, however, by inadequate infrastructure, cumbersome bureaucratic procedures, and high real interest rates. India will have to address these constraints in formulating its economic policies and by pursuing the second generation reforms to maintain recent trends in economic growth.
India's trade has increased significantly since reforms began in 1991, largely as a result of staged tariff reductions and elimination of non-tariff barriers. The outlook for further trade liberalization is mixed. India has agreed to eliminate quantitative restrictions on imports of about 1,420 consumer goods by April 2001 to meet its WTO commitments. On the other hand, the government has imposed "additional" import duties of 5% on most products plus a surcharge of 10% over the past 2 years. The U.S. is India's largest trading partner; bilateral trade in 1998-99 was about $10.9 billion. Principal U.S. exports to India are aircraft and parts, advanced machinery, fertilizers, ferrous waste and scrap metal, and computer hardware. Major U.S. imports from India include textiles and ready-made garments, agricultural and related products, gems and jewelry, leather products, and chemicals. Significant liberalization of its investment regime since 1991 has made India an attractive place for foreign direct and portfolio investment. The U.S. is India's largest investment partner, with total inflow of U.S. direct investment estimated at $2 billion (market value) in 1999. U.S. investors also have provided an estimated 11% of the $18 billion of foreign portfolio investment that has entered India since 1992. Proposals for direct foreign investment are considered by the Foreign Investment Promotion Board and generally receive government approval. Automatic approvals are available for investments involving up to 100% foreign equity, depending on the kind of industry. Foreign investment is particularly sought after in power generation, telecommunications, ports, roads, petroleum exploration and processing, and mining. As India moved into the mid-1990s, the economic outlook was mixed. Most analysts believed that economic liberalization would continue, although there was disagreement about the speed and scale of the measures that would be implemented. It seemed likely that India would come close to or equal the relatively impressive rate of economic growth attained in the 1980s, but that the poorest sections of the population might not benefit.
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India's population is estimated at more than 1.1 billion and is growing at 1.3% a year. It has the world's 12th largest economy--and the third largest in Asia behind Japan and China--with total GDP of around $1 trillion ($1,000 billion). Services, industry, and agriculture account for 55%, 27%, and 18% of GDP respectively. Nearly two-thirds of the population depends on agriculture for its livelihood. 700 million Indians live on $2 per day or less, but there is a large and growing middle class of 325-350 million with disposable income for consumer goods.
India is continuing to move forward with market-oriented economic reforms that began in 1991. Recent reforms include liberalized foreign investment and exchange regimes, industrial decontrol, significant reductions in tariffs and other trade barriers, reform and modernization of the financial sector, significant adjustments in government monetary and fiscal policies and safeguarding intellectual property rights.
Real GDP growth for the fiscal year ending March 31, 2007 was 9.4%, up from 9.0% growth in the previous year. Growth for the year ending March 31, 2008 is expected to be between 8.5-9.0%. Foreign portfolio and direct investment inflows have risen significantly in recent years. They have contributed to $255 billion in foreign exchange reserves by June 2007. Government receipts from privatization were about $3 billion in fiscal year 2003-2004, but the privatization program has stalled since then.
However, economic growth is constrained by inadequate infrastructure, a cumbersome bureaucracy, corruption, labor market rigidities, regulatory and foreign investment controls, the "reservation" of key products for small-scale industries and high fiscal deficits. The outlook for further trade liberalization is mixed. India eliminated quotas on 1,420 consumer imports in 2002 and has announced its intention to continue to lower customs duties. However, the tax structure is complex with compounding effects of various taxes.
The United States is India's largest trading partner. Bilateral trade in 2006 was $32 billion. Principal U.S. exports are diagnostic or lab reagents, aircraft and parts, advanced machinery, cotton, fertilizers, ferrous waste/scrap metal, and computer hardware. Major U.S. imports from India include textiles and ready-made garments, Internet-enabled services, agricultural and related products, gems and jewelry, leather products, and chemicals.
The rapidly growing software sector is boosting service exports and modernizing India's economy. Software exports crossed $28 billion in FY 2006-2007, while business process outsourcing (BPO) revenues hit $8.3 billion in 2006-2007. Personal computer penetration is 14 per 1,000 persons. The cellular/mobile market surged to 140 million subscribers by November 2006. The country has 54 million cable TV customers.
The United States is India's largest investment partner, with a 13% share. India's total inflow of U.S. direct investment is estimated at more than $9 billion through 2006. Proposals for direct foreign investment are considered by the Foreign Investment Promotion Board and generally receive government approval. Automatic approvals are available for investments involving up to 100% foreign equity, depending on the kind of industry. Foreign investment is particularly sought after in power generation, telecommunications, ports, roads, petroleum exploration/processing, and mining.
India's external debt was $155 billion in 2006-2007, up from $126 billion in 2005-2006. Foreign assistance was approximately $3 billion in 2006-2007, with the United States providing about $126 million in development assistance. The World Bank plans to double aid to India to almost $3 billion a year, with focus on infrastructure, education, health, and rural livelihoods.
Economy
GDP (FY 2007): $1 trillion ($1,000 billion).
Real growth rate (2006-2007 est.): 9.4%.
Per capita GDP (FY 2006-2007): $909.
Natural resources: Coal, iron ore, manganese, mica, bauxite, chromite, thorium, limestone, barite, titanium ore, diamonds, crude oil.
Agriculture: 18% of GDP. Products --wheat, rice, coarse grains, oilseeds, sugar, cotton, jute, tea
Industry: 27% of GDP. Products --textiles, jute, processed food, steel, machinery, transport equipment, cement, aluminum, fertilizers, mining, petroleum, chemicals, and computer software.
Services and transportation: 55% of GDP.
Trade: Exports (FY 2006-2007)--$127 billion; engineering goods, petroleum products, precious stones, cotton apparel and fabrics, gems and jewelry, handicrafts, tea. Software exports --$22 billion. Imports (FY 2006-2007)--$192 billion; petroleum, machinery and transport equipment, electronic goods, edible oils, fertilizers, chemicals, gold, textiles, iron and steel. Major trade partners --U.S., China, EU, Russia, Japan.
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LIST OF TRADE ASSOCIATION in INDIA
- Agarwoods Exporters Association
- Ahmedabad Electrical Merchants & Contractors Association
- Ahmedabad Tiles Mfrs Association
- Ajmer Electric Association
- All India Air Conditioning & Refrigerator Association
- All India Brick & Tile Manufacturers Federation
- All India Chain Association
- All India Coated Steel Manufacturers Association
- All India Electric Motor Manufacturers Association
- All India Glass Manufacturers Federation
- All India Importers Association
- All India Instrument Manufacturers & Dealers Association
- All India Iron & Steel Exporters Association
- All India Manufacturers Organisation
- All India Metal Forging Association
- All India Pottery Manufacturers Association
- Association of Sanitary & Domestic Engg (I) Ltd.
- Baroda Electrical Contractors & Merchants Association
- Bengal Brickfield Owners Association
- Bengal Glass Mfrs Association
- Bhavanagar Electric Merchants Association
- Bombay Bolts & Nuts Merchants'Association
- Bombay Canvets & Tarpaulin Merchants Association
- Bombay Cutley, Toys, Glass, Beads & Sundry Merchants'Association
- Bombay Ferrous & Non.Ferrous Manufacturers Association
- Bombay Firewood & Timber Commision Agents Association
- Bombay Hardware Merchants'Association
- Bombay Housing & Area Development Board Contractors Association
- Bombay Marble & Tile Merchants'Association
- Bombay Pipes & Fittings Merchants Association
- Bombay Sanitaryware Association
- Bombay Society of Model Engineers
- Bombay Tarpaulin Merchants'Association
- Bombay Timber Merchants Association
- B.P.T. Constractors Association
- Builders Association of India
- Bukdhana Dist Constractors Association
- C.P. & Berar Electrical Contractors Association
- Calcutta Cabinet Makers'& Furnitures'Association
- Calcutta Electric Traders Association
- Calcutta Goods Transport Association
- Calcutta River Transport Association
- Cast Iron Spun Pipe Mfrs Association
- Cement Manufacturers Association
- Cement Research Institute of India
- Cement Tiles Manufacturers Association
- Chandigarh Dealers & Contractors Association
- Cochin Coir Merchants Association
- Concrete Association of India
- Deccan Manufacturers Association
- Delhi Electric Merchants Association
- Delhi Electric Traders Association
- Earthmoving Equipment Parts Association of Eastern India.
- East Indian Bolt & Nut Dealers Association
- Eastern India Air Conditioning & Refrigerator Association
- Eastern Regional Electrical Contractor's Association (India) Ltd.
- Electrical Cable Dev Association
- Electrical Lamp & Component Manufacturers Association of India.
- Electric Dealers Association
- Electric Traders Association
- Electrical Contractors & Merchants Association
- Electrical Contractors Association
- Electrical Contractors Association of Eastern India
- Electrical Contractors Association of Maharashtra
- Electrical Contractors, Merchant & Manufacturers Association
- Electrical Dealers & Contractors Association
- Electrical Merchants Association
- Electrical Research & Development Association
- Engineers Association of Northern India
- Estate Agents Association of India
- Federation of Electricity Undertakings of India
- Federation of Indian Export Organisations
- Federation of Indian Plywood & Panel Industry
- Indian Hot Dip Galvanizers Association
- Indian Institute of Landscape Architects
- Indian Institute of Road Transport
- Indian Lamp Factories Association
- Indian National Group of the Institutional Association for Bridge & Structural Engg.
- Indian Paint Association
- Indian Pest Control Association
- Indian Plywood Industries
- Indian Pump Manufacturers Association
- Indian Roads & Transport Dev Association (Northern Region)
- Indian Rope Mfrs Association
- Indian Society of Engineers
- Indian Society of Lighting Engineers
- Indian Water Works Association
- Indian Wire Industrial Association
- Indian Wire Ropes Mfrs Association
- Indore Electric Merchants & Contractors Association
- Institution of Public Health Engineers, India
- Institute of Export Information
- Institute of Town Planners India
- Institution of Engineers (India) West Bengal State Centre
- Institution of Milftery Engs
- Institutional of Chartered Engineers
- Jaipur Electric Association
- Jamshedpur Electrical Contractors Association
- Jodhpur Electric Association
- Junagarh Electrical Merchants Association
- Kanpur Constructors Association
- Karnataka Metal Merchants & Manufacturers Association
- Licensed Electrical Contractors of Mysore
- M.P. Paints & Chemical Industries Association
- Madras Electric Traders Association
- Madras Electric Traders Association
- Madurai Electrical & Machinery Dealers Association
- Magnet Wires & Cables Manufacturers Association
- Maharashtra Chamber of Commerce & Industries
- Morbi Roofing Tiles Manufacturers Association
- National Council for Cement & Building Materials
- The Institution of Engineers (India)
- Mysore Engineers Association
- Orissa Glass Manufacturers Association
- Overseas Construction Council of India
- Plywood Manufacturers Association of India
- Plywood Manufacturers Association of West Bengal
- Precision Screw Manufacturers Association
- Promoters & Builders Association of Poona
- Institution of Milftery Engs
- Institutional of Chartered Engineers
- Jaipur Electric Association
- Jamshedpur Electrical Contractors Association
- Jodhpur Electric Association
- Junagarh Electrical Merchants Association
- Kanpur Constructors Association
- Karnataka Metal Merchants & Manufacturers Association
- Licensed Electrical Contractors of Mysore
- M.P. Paints & Chemical Industries Association
- Madras Electric Traders Association
- Madurai Electrical & Machinery Dealers Association
- Magnet Wires & Cables Manufacturers Association
- Maharashtra Chamber of Commerce & Industries
- Morbi Roofing Tiles Manufacturers Association
- National Council for Cement & Building Materials
- Orissa Glass Manufacturers Association
- Overseas Construction Council of India
- Plywood Manufacturers Association of India
- Plywood Manufacturers Association of West Bengal
- Precision Screw Manufacturers Association
- Promoters & Builders Association of Poona
- Town & Country Planning Organisations
- U.P. Barbed Wire Manufacturers Association
- U.P. Concrete Pipe Manufacturers Association
- U.P. Electrical Contractors & Merchants Association
- U.P. Glass Manufacturers Syndicate
- Vidarbha Electric Contractors Association
- Vidarbha Industries Association
- Vijaywada Electric Dealers Association
- Wiring Contractors Association
- Wood Furniture Makers Association
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Kundali