Indicate the volume and direction of trade at the time of independence.

Question

Accepted Answer

India has been an important trading nation since ancient times. But the restrictive policies of commodity production, trade and tariff pursued by the British government adversely affected the structure, composition and volume of India's foreign trade. The state of India's foreign trade on the eve of independence was as follows:

1. **Net exporter of raw materials and importer of finished goods**: India became an exporter of primary products such as raw silk, cotton, wool, sugar, indigo and jute, and an importer of finished consumer goods like cotton, silk and woollen clothes and capital goods like light machinery produced in the factories of Britain. The UK was the chief supplier to India, contributing to over 31 percent of the total imports at the time of independence. The principal item of import was food grains, and by 1947 food grain imports had touched the level of 3 million tonnes.

2. **Britain had monopoly control on foreign trade**: The opening of the Suez Canal in 1869 served as a direct route for the ships operating between India and Britain. The canal connected Port Said on the Mediterranean Sea with the Gulf of Suez and provided a direct trade route for ships operating between European or American ports and ports located in South Asia, East Africa and Oceania. It reduced the cost of transportation and made access to the Indian market easier, which meant that the exploitation of the Indian market became easier. The British maintained monopoly control over India's foreign trade, with more than half of India's foreign trade restricted to Britain. Trade was allowed with a few other countries like China, Ceylon (Sri Lanka) and Persia (Iran).

3. **Large export surplus**: India generated a huge export surplus due to excess exports. However, this surplus was not used for the development of the Indian economy. It was used to make payments for the expenses incurred by the colonial government's office in Britain, to meet the expenses of wars fought by the British government and to import invisible items. This led to the drain of Indian wealth, as no gold or silver flowed back into the country.

Thus, the volume and direction of India's trade were completely oriented to serve the interests of Britain, reducing India to a supplier of raw materials and a market for British finished goods.