Concept of Economic Territory

For the purpose of economic calculations such as GDP, GNP, GVA etc. the concept of economic territory is used in place of political or geographical territory. The Economic territory of India includes the following:

• Political / geographical boundaries of India including territorial waters and air space within which persons, goods, services and capital move freely
• Territorial enclaves such as embassies, consulates, military bases, scientific bases etc. which are located abroad but excluding similar conclaves of other countries within the political boundaries of India.
• Ships, aircrafts etc. operated by the Indian residents between two or more countries
• Fishing vessels, oil and natural gas rigs etc. operated by the resident Indians in the international waters or other areas over which the country enjoys the exclusive rights or jurisdiction such as territorial waters and exclusive economic zone, continental shelf etc.

The above makes it clear that economic territory does not include extraterrestrial enclaves (i.e. the parts of the countries own geographic territory used by general government agencies of other countries, by the Institutions of the European Union or by international organisations under international treaties or agreements between states). This implies that Indian embassy in US comes in economic territory of India while embassy of US in India is in economic territory of United States.