What is Visible and Invisible Trade?

What is Visible and Invisible Trade with Examples

Visible trade refers to the exchange of physical goods between countries, while invisible trade involves services like banking, insurance, and tourism that don’t result in tangible products crossing borders. Distinguish between visible and invisible trade.

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Context: India’s “invisibles” trade is today bigger than the “visible” merchandise trade account in its external balance of payments.

What is Visible and Invisible Trade?

Visible Trade (Goods/Merchandise)

Involves the export and import of physical goods.
Includes items like textiles, leather, steel, aluminium, machinery, oil, electronics, etc.

Invisible Trade (Non-Merchandise)

Comprises transactions that do not involve physical goods.
Key components:
- Services exports – IT/software, business, financial, R&D, consultancy, communication.
- Private transfers – Remittances from Indians working abroad.
- Investment flows (FDI, FPI) – Though not included in gross invisible receipts here.

India’s Foreign Trade Status (2024–25)

Visible Trade (Merchandise Trade)

Merchandise Exports: $441.8 billion
- Slightly lower than the previous year ($456.1 billion in 2022–23).
Merchandise Imports: $729 billion
- Driven by imports of crude oil, electronics, gold, machinery, etc.
Goods Trade Deficit: $287.2 billion
- India’s highest-ever merchandise trade deficit.

Invisible Trade (Non-Merchandise)

Gross Invisible Receipts: $576.5 billion
- Includes services exports and private remittances.
Services Exports: $387.5 billion
- Led by software, business, financial, communication, and consultancy services.
Remittances (Private Transfers): $135.4 billion
- Money is sent by Indian workers and NRIs from abroad.
Services Trade Surplus: $188.8 billion
- Services exports ($387.5B) minus services imports ($198.7B).
Net Invisible Surplus: $263.8 billion
- Includes both services and private transfers; helped offset the merchandise trade deficit.
Current Account Deficit (CAD): $23.4 billion
- Lower than the $32.3 billion CAD recorded in 2013–14 due to strong performance in invisibles.

India’s Foreign Trade Comparison with China (2024)

Indicator	India (2024–25)	China (2024)	Insights
Goods Exports	$441.8 billion	$3,409 billion	China is a manufacturing/export powerhouse
Goods Imports	$729 billion	$2,641 billion	India imports more than it exports; China has a strong trade surplus
Merchandise Trade Balance	– $287.2 billion	+ $768 billion	India has a deficit, China a large surplus
Services Exports	$387.5 billion	$384 billion	India slightly leads
Services Imports	$198.7 billion	$613 billion	China imports far more services
Net Services Trade	+ $188.8 billion	– $229 billion	India has a significant surplus
Net Invisibles (Total)	+ $263.8 billion	– $344.1 billion	India earns from invisibles; China spends more
Current Account Balance	– $23.4 billion (deficit)	+ $423.9 billion (surplus)	China’s surplus is sustained by goods trade; India cushions the deficit via invisible