Explain any four points of the role of foreign trade in India.

Answer: Foreign trade helps India earn foreign exchange, import capital goods and technology, widen the market, use resources fully, generate employment and stabilise prices.

1. Earning foreign exchange: Exports earn foreign exchange which is used to pay for imports of essential goods like petroleum, machinery and technology.
2. Import of capital goods and technology: Imports of machinery, equipment and modern technology help industrialisation and economic growth.
3. Market expansion: Foreign trade widens the market for Indian goods, which encourages large scale production and economies of scale.
4. Optimum use of resources: Through specialisation according to comparative advantage, the country’s natural and human resources are used fully.
5. Employment generation: Export-oriented industries such as textiles, IT services, gems and jewellery create employment.
6. Price stability: Shortages can be met through imports and surpluses can be exported, which helps keep prices stable.
7. Help in emergencies: Foodgrains and essential goods can be imported during famine, floods or other crises.
8. Improvement in standard of living: Consumers get a wide variety of goods at reasonable prices.