What is a Trade Gap

If you have read today's Indian express newspaper, you will find the top business news that our trade gap lowest. It is about 30 billion dollars. It is the level of difference between current import value and current export value. When we calculate the difference between imports and exports, trade gap will become balance of payment. If our imports will more than our exports, this will become our deficit balance of payment. For knowing all these terms, Govt of any country makes solid accounting system. Ministry of Commerce is responsible for maintaining this accounting records.


There are two types of Trade GAP

1. Highest Trade GAP 

When the GAP between Import and export will highest, then trade gap will also be highest. If you see above new picture, you will see in Sept. 2012, imports are showing 42.05 billion dollars and exports are just 24.90 billion dollars. Actually this is current govt. data in which our current position is showing better but if we compare this figure with our past figures, current and previous year both will be highest trade gap because our imports are always less than our exports and we were always in favorable position.

2. Lowest Trade GAP 

In above news picture, our imports are showing just 34.43  billion dollars which decreased by 18.1 by stopping the Gold import up to 82% and our exports has increased up to 11.1%. So, our exports has reached 27.68 billion dollars. So, we see low gap between import and export.

Trade gap's study is important for knowing the position of trade deficit. If we will take the steps to decrease the trade gap, it means we are taking steps to increase the stability of Indian rupees.