India's trade has undergone a major change in the geographical direction since the global financial crisis that erupted in 2007. The US, which has been India's top trading partner till 2007-08, has since been relegated to the third position with the UAE and China assuming first and second positions in India's trade relations.

This position continued in 2009-10 and the first half of 2010-11. Figures for comparable periods show India's trade with the UAE in both 2009-10 and 2010-11 (April-September) were higher than its imports, while its exports to China were lower than imports.

Among its top 15 trading partners, India had bilateral trade surplus with five countries, namely the UAE, the US, Singapore, the UK and Hong Kong, in 2009-10 and the first half of 2010-11.

India's export-import ratio in the case of China is not only low but has been stagnating at around 0.3.

India ranked 21st in world merchandise exports in 2009 whereas China ranked first while in commercial services exports it ranked 12th compared to China's fifth.

Services exports reached $106 billion in 2008-09 with a moderate growth of 17.3 per cent over the previous year but declined to $95.8 billion in 2009-10. The share of software services declined to 45.7 per cent in the first half of 2010-11 from 50.8 per cent in the corresponding period of 2009-10. This is attributed to a moderate growth of 14.7 per cent in the first half of 2010-11 and the revival of non-software services exports.

Non-software services exports, which had registered a negative growth as high as (-) 41.2 per cent in 2008-09, increased their share to 29.5 per cent with high growth of 56.9 per cent. However, the falling services trade surplus is adding to the woes on the current account deficit front, instead of acting as a cushion as was the case earlier, the survey notes.

Trade policy measures taken by the government and the RBI in 2009-10 and 2010-11 focused on reviving exports and export-related employment besides mitigating the effect of inflation had its effect on reducing the country's trade deficit, the survey says.

The government followed a mix of policy measures, including fiscal incentives, institutional changes, procedural rationalisation, enhanced market access and diversification of export markets.

Exports from the special economic zones (SEZs) stood at Rs2,23,132.31 crore ($4,924.11 billion), generating total employment of  6,44,073 during first three quarters of the current fiscal, according to the survey.

World trade volume growth is expected to moderate in 2011 and 2012 to 7.1 per cent and 6.8 per cent, respectively, as per IMF projections. However, the trade growth in emerging and developing economies is expected to be more robust than that in the advanced economies in 2011 and 2012.

India's trade outlook also needs to be moderated on account of the recent developments in world trade, the Economic Survey adds.