India’s Foreign Trade and Impact of Exports on Foreign Exchange Reserves in India


  • Linsa Mariyam Reji


With the advent of World Trading Organisation [WTO] India, entered into the era of  trade reforms in 1991 and is moving towards an open economy. It is widely believed that export and import growth is crucial in providing the impetus for economic growth in developing countries and imports provide the important ‘virtuous’ link between trade and output growth. Therefore ,our aim here, is to address the export/import-led growth and growth-driven export/import hypotheses for India. In spite of some ambiguity ,the results clearly show that exports and imports granger cause GDP, both individually and jointly ,lending support to the export/import lead’s to growth hypotheses .There is also some indication of GDP and exports jointly granger causing imports, and GDP and GDP and import jointly granger causing exports, but the growth driven export/import hypotheses seem implausible. A possible reason for the results is the favourable trade environment of India. In India ,both Export and Import plays a major role in Indian Economy. We also found that the evidence of unidirectional causality running from export to import, it means in long term export lead to import does not lead to export.This study has determined the relationship between both exports and imports.This study also develops the methodology for the comparative analyse of foreign trade.This study suggests that exports and economic growth of Indian Economy in last years.The purpose of this research  was to explore exports in India .This paper has examined the various impacts of exports on foreign exchange rate of India.Findings leads to conclude the relationship between foreign exchange and exports in Indian economy.