Economy
International Trade
Welcome to the International Trade study hub, an indispensable section within your UPSC Economy preparation. International Trade, at its core, involves the exchange of goods, services, and capital across national borders.
70 articles in this topic
Articles on International Trade
Surging Exports Narrow India’s Trade Deficit
Context According to the Ministry of Commerce and Industry, the country’s trade deficit contracted by more than 54% to $9.9 billion, compared to $21.7 billion in August 2024, due to a sharp rise in merchandise exports. What is Trade Deficit? If a country imports more goods and services from other countries than it exports to them, it is said to have a trade deficit.
India’s Outward FDI goes to ‘Tax Havens’
In News Indian companies are increasingly channeling their outward foreign direct investment (FDI) through low-tax jurisdictions—commonly referred to as tax havens—to expand their global footprint. Present Scenario The companies are routing their foreign investments through low-tax jurisdictions (tax havens) such as Singapore, Mauritius, UAE, the Netherlands, UK, and Switzerland. According to data ,56% of India’s outward FDI in 2023-24 (₹1,946 crore of ₹3,488.5 crore) went to these jurisdictions
A Complex Turn in India’s FDI Story
India continues to attract significant foreign direct investment (FDI), but rising profit repatriations, disinvestments, and outward Indian FDI have diluted the long-term growth impact.
PM Modi Emphasised on the Interests of Farmers, Livestock Rearers & Fisherfolk
Context Amid US Tariffs, Prime Minister Modi said that the government would never compromise the interests of India’s farmers, livestock rearers and fisherfolk. Background Trade negotiations between India and the US have stalled, with the US (under Donald Trump administration) pressuring India to: Open its domestic market to American farm produce.
World Trade War: Why Hasn’t This Risk Raised an Alarm So Far?
As the global trade landscape undergoes seismic shifts and the President of the United States reintroduces aggressive tariffs — some reaching as high as 50% (framed as ‘reciprocal tariffs’) — the world has responded with strategic restraint.
US 25% Tariff Likely to Hit Seafood Exports from Andhra Pradesh
Context U.S. President Donald Trump announced a 25% tariff on Indian products; the aquaculture sector in Andhra Pradesh is likely to be severely affected. About Indian exporters are presently paying 10% tariffs and additional anti-dumping duty of 4.5% and countervailing duty of 5.8%.
India Emerges as World’s 5th Biggest Aviation Market in 2024
In News India has become the world’s fifth-largest aviation market, handling 211 million passengers in 2024, as per the latest World Air Transport Statistics (WATS) released by the International Air Transport Association (IATA). Key findings of the report According to IATA, India saw a growth of 11.1 per cent compared to 2023, ahead of Japan, which handled 205 million passengers. The US remains the world’s biggest aviation market with 876 million passengers in 2024, growing 5.2 percent year-on-y
China's Clampdown on Rare Earths Has Prompted India to Explore Options
Context Chinas suspension of rare earth magnet exports to India since April 2025 has disrupted key sectors like EVs, electronics, and drones, highlighting Indias heavy reliance on Chinese supplies. What are Rare Earth Magnets? Rare earth magnets are powerful permanent magnets made using rare earth elements, including 17 different elements from the periodic table.
Boost to India’s Seafood Exports to the UK after CETA
Context The Comprehensive Economic and Trade Agreement (CETA) between India and UK removes import tariffs on a wide range of seafood products, enhancing Indian exporters competitiveness in the UK market. India’s Seafood Industry India is the third-largest fish and aquaculture-producing country. It accounts for 8% of the total global fish production.
Drop in Net Foreign Direct Investment (FDI)
In News Net FDI inflows in India dropped by 98.2% to about $40 million in May 2025, compared to $2.2 billion in May 2024. Reasons for Decline Increased repatriation and divestment by foreign investors. Higher outward FDI by Indian companies.
India-EU Trade Deal Negotiations: Differences over Food Safety Rules Persist
In News India and EU have exchanged offers on goods and services in the 12th round of FTA talks, marking key progress on risk assessment and regionalization, but harmonization and dispute resolution remain unresolved. Background The India-EU relationship can be traced back to the early 1960s, with India being amongst the first countries to establish diplomatic relations with the European Economic Community. Relationships developed over the years, culminating in a formal Strategic Partnership in
CIMMYT Seeks India's Support to Sustain Global Agricultural Innovation
Context The International Maize and Wheat Improvement Center (CIMMYT) is currently facing a severe funding crisis and is turning to India for financial support to sustain its global agricultural research efforts. Background USAID, which administered foreign aid on behalf of the U.S. government, contributed approximately $83 million to CIMMYT in 2024 — nearly 40% of its $211 million annual budget.
‘Invisible Hand’ in India’s Foreign Trade
In News Indias foreign trade dynamics have shifted significantly over the past two decades, with invisibles—exports of services and remittances from Indians abroad—now playing a more crucial role than physical goods. India’s Service Sector India’s services sector covers a wide variety of activities such as trade, hotel and restaurants, transport, storage and communication, financing, insurance, real estate, business services, community, social and personal services, and services associated with
How India’s Toy Industry Became a Global Exporter?
In News Indias toy industry has undergone a major transformation and is now manufacturing domestically and exporting to 153 countries. Toy Sector of India: Historical Linkages Indias toy-making tradition dates back to the Indus Valley Civilisation (c. 2500 BCE), with early toys made from clay, wood, and cloth reflecting cultural and social values.
State of South Asian Economic Integration
South Asia, despite being home to over a fifth of the world’s population having cultural and historical linkages, remains one of the least economically integrated regions in the world.
Steering the Indian Economy Amidst Global Troubles
As the global economy faces trade wars, geopolitical tensions, and supply chain disruptions, India’s ability to navigate these will depend on strategic recalibration by both policymakers and industry leaders.
India’s Rare Earth Magnets Crisis
Context Amidst China’s export curbs on rare earth magnets, India’s automobile sector are raising alarms over potential production disruptions. What are Rare Earth Magnets? Rare earth magnets are powerful permanent magnets made using rare earth elements, including 17 different elements from the periodic table.
India’s Farm Trade and Impact of FTAs with US, EU and UK
In News India is negotiating trade agreements with the United States and European Union, which are both seeking tariff reductions and greater market access for their agricultural products. Status of India’s farm trade India’s agriculture exports rose by 6.4% to $51.9 billion in 2024–25, while overall goods exports remained nearly flat. However, agriculture imports surged by 17.2% to $38.5 billion, widening the trade gap.
India's Outward remittances Decreases under Liberalised Remittance Scheme
Context India’s outward remittances under the Liberalised Remittance Scheme (LRS) moderated by 6.85 percent year-on-year (YoY) to $29.56 billion in FY25, after reaching an all-time high of $31.73 billion in FY24. What is Outward Remittance? Outward remittance refers to the transfer of money in foreign currency by a resident of India to a person or entity outside India, for purposes such as education, travel, medical treatment, investment, or gifting.
Net FDI slumps 96% in FY25 to $353 mn
Context As per the RBI, the Net foreign direct investment (FDI) into India crashed by more than 96% to just $353 million in 2024-25 as compared to the previous year. Why Net FDI Matters? Positive Net FDI: Indicates more foreign investment is coming in than going out, often seen as a sign of economic attractiveness.