Introduction & Context

International trade has been the pivot of India's economic transformation since 1991. India moved from a closed, import-substituting economy of the Licence Raj era to a globally integrated trading nation. Topic 26 covers four interconnected areas: the theory and practice of international trade, India's balance of payments dynamics, foreign investment flows (FDI and FPI), and foreign aid.

This is a Tier 4 topic in PYQ frequency (appeared in only 2 of 5 recent exams), but it has high potential for 2026. Several major developments have occurred since 2021 (when it last appeared): India's emergence as the largest remittance recipient, record forex reserves, UAE/Australia FTAs, RCEP exit implications, and the $2 trillion export target.

What to Prepare for 2026

• BoP components and structure
• FDI vs FPI distinction
• Current Account Deficit data
• India's top exports/imports
• Forex reserves
• EXIM Bank/LOC framework for foreign aid

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