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International Trade – Class 12 Geography notes, important questions and MCQs

NCERT Class 12 Geography, chapter 8. Notes, key terms, important questions with answers and MCQs.

Chapter overview

International trade is the exchange of goods and services between countries. It arises because countries differ in resources, production, population and stages of development. The balance of trade compares exports and imports. Trade can be bilateral or multilateral, and the World Trade Organization regulates global trade. This chapter covers world trade patterns and India's foreign trade and ports.

Basis and features of international trade

Trade exists because of differences in natural resources, population factors, stages of economic development, foreign investment and transport.
Aspects of trade include its volume, composition (types of goods and services), direction and balance of trade.
A favourable balance of trade means exports exceed imports; an unfavourable balance means imports exceed exports.

Organisations and trading blocs

The WTO, set up in 1995 replacing GATT, sets rules for global trade and settles disputes.
Regional trade blocs promote trade among neighbouring countries, such as the EU, ASEAN, SAFTA, NAFTA (now USMCA) and MERCOSUR.
Critics argue that free trade can harm small producers in developing countries if not managed fairly.

India's international trade and ports

India's exports include engineering goods, petroleum products, gems and jewellery, chemicals, pharmaceuticals, textiles and IT services; imports include crude oil, gold, electronic goods, machinery and edible oils.
India's major trading partners include the USA, China, the UAE and the European Union; services, especially software, form a large share of exports.
About 95% of India's trade by volume moves by sea; major ports on the west coast include Kandla (Deendayal), Mumbai, Jawaharlal Nehru, Mormugao, New Mangalore and Kochi, and on the east coast Tuticorin, Chennai, Visakhapatnam, Paradip and Kolkata–Haldia; airports handle high-value, light goods.

Key terms

International trade: exchange of goods and services between countries
Balance of trade: the difference between the value of exports and imports
Bilateral trade: trade between two countries
Multilateral trade: trade among many countries
Port: a place on a coast where ships load and unload goods

Important questions with answers

What is the balance of trade?2 marks

The balance of trade is the difference between the value of a country's exports and imports of goods and services. It is favourable when exports exceed imports and unfavourable when imports exceed exports.

Why does international trade take place?3 marks

International trade takes place because countries differ in natural resources, climate, population, skills and technology, and stages of economic development. No country produces everything it needs, so countries specialise in what they produce efficiently and exchange surpluses for goods they lack.

Describe the main features of India's international trade.5 marks

India's international trade has grown rapidly since economic reforms in 1991, with both exports and imports increasing in volume and value. The composition of trade has changed: traditional exports such as tea, coffee, spices, cotton and jute have declined in share, while engineering goods, petroleum products, gems and jewellery, chemicals, pharmaceuticals, ready-made garments and agricultural products like rice have become important; India is also a leading exporter of services, especially information technology and business services. Imports are dominated by crude oil and petroleum products, gold and precious stones, electronic goods, machinery, chemicals, fertilisers and edible oils. India usually has an unfavourable balance of merchandise trade because of large oil and gold imports, partly offset by service exports and remittances. India's major trading partners include the USA, China, the UAE, Saudi Arabia, and countries of the European Union and ASEAN. About 95% of India's trade by volume moves through seaports, so ports are vital; major ports include Kandla (Deendayal), Mumbai, Jawaharlal Nehru Port, Mormugao, New Mangalore and Kochi on the west coast and Tuticorin, Chennai, Ennore, Visakhapatnam, Paradip and Kolkata–Haldia on the east coast, while airports handle high-value, perishable goods. India participates in the WTO and in regional agreements to expand trade.

Quick revision

Basis of trade; volume, composition, direction.
Favourable and unfavourable balance of trade.
WTO 1995; regional trade blocs.
India's trade partners, goods and ports.

Exam tips

Make two lists: India's major exports and imports.
Mark major ports of India on both coasts.

Practice MCQs

Exchange of goods between countries is called
1. internal trade
2. retail trade
3. barter only
4. international trade
Show answer
Answer: (d) international trade. It crosses national boundaries.
The WTO was set up in
1. 1947
2. 1985
3. 1995
4. 2005
Show answer
Answer: (c) 1995. It replaced GATT.
When exports exceed imports, the balance of trade is
1. unfavourable
2. favourable
3. zero always
4. negative
Show answer
Answer: (b) favourable. It earns surplus foreign exchange.
Trade between two countries is called
1. bilateral trade
2. multilateral trade
3. regional trade bloc
4. dumping
Show answer
Answer: (a) bilateral trade. Many countries trade multilaterally.
Which is a major port on the east coast of India
1. Kandla
2. Paradip
3. Mormugao
4. Kochi
Show answer
Answer: (b) Paradip. It is in Odisha.
The largest item in India's imports by value is usually
1. tea
2. crude oil and petroleum products
3. cotton
4. jute
Show answer
Answer: (b) crude oil and petroleum products. India imports most of its oil.
Why does most of India's foreign trade move by sea
1. air is cheaper
2. roads cross oceans
3. there are no airports
4. sea transport is cheapest for bulky goods and India has a long coastline
Show answer
Answer: (d) sea transport is cheapest for bulky goods and India has a long coastline. Ports handle most cargo.
Regional trade blocs mainly aim to
1. increase tariffs among members
2. stop all trade
3. promote trade among member countries by reducing barriers
4. fix world prices of gold
Show answer
Answer: (c) promote trade among member countries by reducing barriers. Examples are ASEAN and the EU.

All chapters of Class 12 Geography

Written by Kundali IQ from standard, well-established facts to help with revision. This is not an official NCERT publication; always read your textbook too.