Comment on the condition of Foreign trade at the time of Independence of India
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During the colonial rule, the British followed a discriminatory tariff policy under winch they imposed heavy tariffs (export duties) on India's export of handicraft products while allowing free export of India's raw material to Britain and free import of British products to India. (i) Volume of Trade The British policies made Indian handicrafts exports costlier and its international demand fell drastically. Consequently, India's export basket during the colonial rule comprised mainly of primary product s like sugar, jute, raw silk, indigo, wool, etc and the imports comprised of finished consumer goods like cotton silk and woolen clothes and capital goods like light machinery from Britain. India registered large export surplus during the colonial period. (ii) Direction of Trade As the monopoly power of India's export and import rested with Britain, so, more than half of India's trade was restricted to Britain and the remaining imports were directed towards China, Persia (Iran), and Ceylon (Sri Lanka) The opening up of Suez Canal further intensified the monopoly power of the British over India's foreign trade It led to the last movement of goods from India to Britain and vice-versa. The surplus generated from India's foreign trade was not invested in Indian Economy, rather it was used for administrative and war purposes. This led to the drain of Indian wealth to Britain.
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