Foreign Trade of India

Foreign trade involves the exchange of goods and services between countries. It is composed of exports (goods sold to other countries) and imports (goods bought from other countries). The 'Composition of foreign trade' refers to the types of goods and services being traded, while the 'Direction of foreign trade' refers to the countries we trade with. The Balance of Payments (BOP) is a systematic record of all economic transactions between residents of a country and the rest of the world over a period. It has two main components: the Current Account (which records trade in goods and services, and transfer payments) and the Capital Account (which records transactions in financial assets). Understanding these concepts is crucial for analyzing a country's external economic health.