Foreign trade means the exchange of goods and services between two or more countries/borders or territories. From the time of independence, India has been one of the important trading countries, exporting primary items like cotton, raw silk, sugar, wool, jute, indigo, etc. Moreover, it is an importer of finished consumer goods like woollen clothes, cotton, silk, and capital goods like light machinery manufactured in Britain.
During this period, Britain held the monopoly over India’s imports and exports. Therefore, most of the foreign trade was restricted only to Britain, while the rest half was allowed to trade with other countries like Ceylon (Sri Lanka), China, and Persia (Iran).
India was a large exporter in the colonial period. However, it did not affect the country’s economy. Commodities like food grains, clothes, kerosene, etc., hit the country hard with its scarcity.
Also read: Indian Industries during British rule
|Q.1. Discuss the state of India’s foreign trade during colonial rule.
Indicate the volume and direction of trade at the time of independence. (NCERT)
What do you understand by the drain of Indian wealth during the colonial period?
|● Since ancient times, India has been one of the important trading nations.
● However, the discriminatory tariff and trade policies adopted by the colonial government unpleasantly hampered the structure, volume, and composition of India’s foreign trade.
|Following was the state of India’s foreign trade during the colonial rule:
|Britain had monopoly control on foreign trade
|● Britain retained its monopoly control and ruled over India’s imports and exports.
● Half of India’s foreign trade was only authorised to Britain and the rest half was allowed to trade with other countries like Ceylon (Sri Lanka), China, and Persia (Iran).
● In 1869, the beginning of the Suez Canal increased the British authority over India’s foreign trade.
|Net exporter of raw material and importer of finished goods
|● Net exporter of raw material: India became an exporter of primary products (raw material) such as raw silk, cotton, wool, sugar, indigo, jute, etc.
● Importer of finished goods: India became an importer of finished consumer goods like cotton, silk, and woollen clothes, and capital goods like light machineries are produced in the factories of Britain.
|Drain of Indian wealth during British rule
|● Drain of wealth means that the main motive of economic policies in India was to snatch maximum benefits from India’s trade.
● Foreign trade of India during the colonial period generated a surplus export due to the excess exports.
● However, this surplus export did not flow any silver or gold into India.
● Rather, this surplus export was utilised to make payments for: i. The costs made for the office set up by the colonial government in Britain. ii. Expenses on the war fought by the British government. iii. Import of invisible items, etc.
● All of this led to the drain of Indian wealth.
|Q.2. Write a short note on the drain of India’s wealth during British rule.
|● Under the British rule, India became an exporter of raw materials and an importer of finished goods.
● There was a huge export surplus due to excess exports.
● However, the export surplus was used for: i. To make payments for administrative expenses incurred by the British government in Britain, ii. To meet expenses on the war fought by the British Government, iii. To import invisible items, etc.
|Q.3. What is the Suez Canal?
|● It is an artificial waterway running from north to south across the passage of Suez in North-Eastern Egypt.
|Q.4. When did trading through the Suez Canal come into operation?
|● Trading through the Suez Canal opened in 1869.
|Q.5. What is meant by draining wealth?
|● It means outflow of domestic wealth to other countries for their benefit.
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