📘 Export and Import in Economy – Complete Notes for Competitive Exams
(SSC, Banking, UPSC, JKPSC, JKSSB, NDA, UGC NET)
International trade is a crucial component of macroeconomics. It includes exports and imports, which directly affect GDP, foreign exchange reserves, employment, inflation, and economic growth.
🌍 1. Meaning of Export and Import
🔹 Export
Export refers to the sale of goods and services produced in a country to other countries.
Example: India exporting software services to the United States.
🔹 Import
Import refers to the purchase of goods and services from foreign countries for domestic use.
Example: India importing crude oil from Saudi Arabia.
📊 2. Types of Exports and Imports
A) On the Basis of Goods
Merchandise Trade (Visible Trade)
Physical goods such as oil, machinery, textiles.Services Trade (Invisible Trade)
IT services, tourism, banking, insurance.
📈 3. Importance of Exports
Earns Foreign Exchange
Improves Balance of Payments (BoP)
Creates Employment
Promotes Industrial Growth
Strengthens Currency
Encourages Specialization (Comparative Advantage)
📉 4. Importance of Imports
Provides essential raw materials
Access to advanced technology
Maintains supply of goods
Stabilizes prices
⚖ 5. Balance of Trade (BoT)
[
\textbf{BoT = Exports – Imports}
]
If Exports > Imports → Trade Surplus
If Imports > Exports → Trade DeficitExample: If exports = $500 billion and imports = $600 billion
Trade Deficit = $100 billion
💰 6. Balance of Payments (BoP)
BoP records all international transactions of a country.
Components:
Current Account
Trade in goods
Trade in services
Remittances
Capital Account
FDI
FPI
Loans
In India, BoP data is released by the Reserve Bank of India.
🏭 7. Terms Important for Exams
🔹 Trade Deficit
When imports exceed exports.
🔹 Trade Surplus
When exports exceed imports.
🔹 Current Account Deficit (CAD)
When total imports of goods, services & transfers exceed exports.
🔹 Dumping
Selling goods at lower price in foreign market to capture market share.
🔹 Devaluation
Government reduces currency value to boost exports.
🌐 8. India’s Trade Policy
India’s Foreign Trade Policy (FTP) aims to:
Increase exports
Reduce trade deficitPromote Make in India
Boost MSMEs
Implemented by Ministry of Commerce & Industry.
🛢 9. Major Items in India’s Trade
Major Exports
Petroleum products
Engineering goodsIT services
Pharmaceuticals
Textiles
Major Imports
Crude oil
GoldElectronics
Machinery
📉 10. Effects of Trade Deficit
Pressure on currency
Increase in foreign debt
Inflation risk
Impact on foreign reserves
📈 11. Advantages of Trade Surplus
Strong currency
More foreign reserves
Better global position
🧠 12. Important Concepts (Theory)
🔹 Comparative Advantage
Given by David Ricardo
Countries specialize in producing goods at lower opportunity cost.
🔹 Absolute Advantage
Given by Adam Smith
Country produces goods more efficiently than others.
📌 Exam-Oriented Important Points
Exports are included in GDP as:
GDP = C + I + G + (X – M)Increase in exports increases GDP.
Increase in imports reduces GDP (in calculation).
Services exports are called Invisible Exports.
Trade balance is part of Current Account.
📝 MCQs for Practice
Q1. Balance of Trade refers to:
A) Export + Import
B) Export – Import
C) Import – Export
D) Capital – Current
Answer: B
Q2. If imports exceed exports, it is called:
A) Trade Surplus
B) Balance of Payment
C) Trade Deficit
D) Capital Gain
Answer: C
Q3. Invisible trade includes:
A) Machinery
B) Oil
C) IT Services
D) Gold
Answer: C
Q4. Comparative advantage theory was given by:
A) Adam Smith
B) Keynes
C) David Ricardo
D) Milton Friedman
Answer: C
Q5. BoP data in India is released by:
A) SEBI
B) RBI
C) NITI Aayog
D) Finance Commission
Answer: B
Q6. Which of the following increases GDP?
A) Increase in imports
B) Increase in exports
C) Increase in taxes
D) Decrease in savings
Answer: B
Q7. Dumping means:
A) High tariff
B) Selling goods at very low price abroad
C) Import ban
D) Currency appreciation
Answer: B
📚 Quick Revision Table
| Concept | Meaning |
|---|---|
| Export | Sale to foreign country |
| Import | Purchase from foreign country |
| BoT | Export – Import |
| BoP | Record of all foreign transactions |
| CAD | Current Account Deficit |
| Surplus | Exports > Imports |
| Deficit | Imports > Exports |
Exports and imports are backbone of global trade. A balanced trade improves economic stability, foreign reserves, and GDP growth. Excessive trade deficit may weaken currency and increase economic pressure.
📌 Export & Import – PYQs
Q1. (SSC CGL 2025)
India’s total merchandise exports in 2024-25 were approximately:
A) $330 Billion
B) $322 Billion
C) $303 Billion
D) $350 Billion
Answer: B
Explanation: Merchandise exports during April–December 2024 were US$ 322.41 Billion.
Q2. (Bank PO 2024)
Balance of Trade is calculated as:
A) Exports – Imports
B) Imports – Exports
C) Total Foreign Reserves – Debt
D) Exports + Imports
Answer: A
Q3. (UPSC Prelims 2023)
Which of the following is considered “invisible export”?
A) Textiles
B) Oil
C) IT Services
D) Engineering goods
Answer: C
Q4. (JKSSB 2025)
If India imports $600 billion and exports $500 billion, the trade balance will be:
A) Surplus of $100 Bn
B) Deficit of $100 Bn
C) Surplus of $200 Bn
D) Deficit of $200 Bn
Answer: B
Q5. (SSC CHSL 2022)
Which sector is the largest contributor to India’s services exports?
A) Tourism
B) Banking & Insurance
C) IT & Software Services
D) Transport
Answer: C
Q6. (IBPS PO 2023)
India’s trade deficit during April–December 2025 was:
A) $88.43 Billion
B) $96.58 Billion
C) $100 Billion
D) $75.23 Billion
Answer: B
Q7. (NDA 2022)
Which country is one of India’s top export destinations by growth in 2025?
A) Chile
B) USA
C) Brazil
D) Saudi Arabia
Answer: B
Explanation: USA, China, UAE, Spain, and Hong Kong were top export destinations April–December 2025.
Q8. (SSC CGL 2023)
Non-petroleum exports growth in April–December 2025 was:
A) 2.44%
B) 4.33%
C) 5.51%
D) 6.46%
Answer: C
Q9. (UPSC 2021)
India’s services trade surplus during April–December 2025 was:
A) $135.52 Bn
B) $96.58 Bn
C) $151.74 Bn
D) $88.43 Bn
Answer: C
Q10. (JKPSC 2024)
Electronic Goods exports in December 2025 grew by:
A) 11.73%
B) 16.78%
C) 30.16%
D) 5.65%
Answer: B
Q11. (Bank Clerk 2023)
India’s total exports (merchandise + services) in December 2025 showed:
A) Positive growth 1.01%
B) Negative growth 1.01%
C) Positive growth 6.17%
D) Negative growth 6.17%
Answer: B
Q12. (SSC MTS 2022)
Which of the following reduces India’s trade deficit?
A) Increase in imports
B) Increase in exports
C) Increase in foreign debt
D) Reduction in foreign reserves
Answer: B
🔹 Tips to Remember PYQs
Merchandise exports → Approx $330 Bn
Services exports growth → ~6.46%
Trade deficit → ~$96 Bn
Non-petroleum exports growth → ~5.51%
Top export destinations → USA, China, UAE, Spain, Hong Kong
Major growth commodities → Electronics, Meat & Dairy, Pharmaceuticals