Data from the Department of Commerce for the last 14 years tells us that the direction of Indian trade is changing. For the longest time (1997-2007) USA was India’s top trading partner (trade as measured by the sum of the value of exports and imports put together). But, between 2008 and 2010, UAE was India’s leading trade partner and last year it was displaced by China.*
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Well, one could perhaps argue that this shift was temporary and the underlying cause was the 2008 recession in the US and now that it the American economy is recovering it may soon be back as India’s leading trade partner. Possibly yes. But, there is evidence to suggest that the shift in the direction is not superficial. A presentation by the Export-Import Bank of India suggests that Indian exports are “moving towards the Southern countries, particularly Asia and Africa region”. It would be interesting to look at the direction of imports and classify them in a similar manner to see what is happening to the overall direction of trade. The data is available here and if someone does that and is willing to share the findings let me know!
*This is a minor point but note that we have a negative trade balance with China (this means imports from China are more than the exports to China), whereas, typically, India has maintained a positive trade balance with it’s top trading partner over the period 1997-2011 (except for a minor negative balance with USA in 2007).