Sectoral Diversification of India’s Foreign Trade Portfolio:Exploring the Commodity Composition of India’s Trade-Basket

The growth trajectory of the economic development of a country depends to a large extent upon the success of its foreign trade policy. Having a favorable or minimize the unfavorable trade balance is a daunting task for the Indian economy which at present is suffering from negative trade balance. However, this objective of a country's foreign trade policy can be achieved only by undertaking suitable efforts to accelerate the volume of exports while shrinking the unnecessary imports to the maximum possible extent. This study is of immense use for policy planners to get a trade snapshot of India for identifying the role of export and import growth in generating the favorable status of India's trade balance. The common financial theory of portfolio diversification for reducing risk also holds true in context of foreign trade portfolio and this study will prove extremely valuable for economists to examine whether or not the structure of India's foreign trade portfolio is diversified enough to minimize the associated risk.