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In 2020-21, India imported $388.92 billion worth of goods and services, down 18 percent from $474.71 billion in 2019-20. Indian exports totaled $290.18 billion in the previous fiscal year, down 7.4% from $313.36 billion in 2019-20. Imports have always outperformed exports in India’s foreign commerce, as these numbers from the last two years demonstrate. Covid-19’s widespread economic disruptions in 2020 did not change this reality.
The flagship Atmanirbhar Bharat Abhiyan (Self-Reliant India Mission) of the Indian government is to increase domestic manufacturing and reduce import dependency. But, as the government admits in the Economic Survey, reducing India’s reliance on imports is easier said than done, especially when the processes for imports are ironically considerably better than those for exports.
Given the country’s reliance on imported goods, this article examines India’s top ten imports as well as its top ten import sources.
The top ten commodities imported by India in 2020-21, according to market and consumer data firm Statista, were:
Petroleum in its purest form (21.6 percent )
The precious metal gold (5.9 percent )
Products derived from petroleum (5.8 percent )
Briquettes, coal, and coke (4.7 percent )
Precious and semi-precious stones, including pearls (4.7 percent )
Components for electronics (3.4 percent )
Instruments for telecommunication (3 percent )
Chemicals that are made up of organic compounds (2.5 percent )
Machines used in industry (2.5 percent )
Machines and equipment powered by electricity (2.3 percent )
Note that the percentage percentages in brackets represent the commodity’s share of overall imports in India. India imports the most from the following ten nations.
According to Statista, India’s top 10 trading partners from which it imported the above commodities in 2020-21 were:
China is a country that has a (13.7 percent )
America, the United States of (7.5 percent )
Emirates of the United Arab Emirates (6.3 percent )
Saudi Arabia is a country in the Middle East (5.6 percent )
Iraq is a country in the Middle East (5 percent )
Hong Kong is a city in Hong Kong (3.5 percent )
Switzerland is a country in Europe (3.5 percent )
South Korea (South Korea) (3.3 percent )
Indonesia is a country in Southeast Asia (3.1 percent )
Singapore is a city-state in Southeast (3.1 percent )
Note: The percentage percentages in brackets represent the share of India’s total imports by each foreign trading partner.
In 2020, China will overtake the United States as India’s largest commercial partner. The two Asian neighbours’ bilateral commerce was valued at $77.7 billion. China’s imports accounted for the majority of this commerce, with a total value of $58.7 billion. The value of exports to China was $19 billion. India’s imports from China outnumber those from the United States and the United Arab Emirates combined. India’s reliance on Chinese commodities stems partly from the fact that they are inexpensive and readily available in big quantities.
Electrical machinery and equipment, as well as mechanical appliances such as telephone equipment, sound recording devices, TV cameras, video phones, automatic data processing machines, electronic circuits, transistors, and semiconductor devices, have traditionally been India’s main imports from China. It is also a key supplier of antibiotics, fertilisers, vehicle components, and accessories, among other things.
An examination of India’s top ten imported goods.
Let’s look at each of the top imports, as well as the trade statistics around them:
1. Petroleum crude
India’s main import in 2020-21 was crude petroleum. India is the commodity’s third-largest importer. For 84 percent of its energy needs, it relies on crude imports. Iraq was India’s main crude oil supplier in February, followed by the United States, Nigeria, and Saudi Arabia. Traditionally, India has gotten the majority of its crude oil from the Organization of Petroleum Exporting Countries, which is led by Saudi Arabia (OPEC). Last year, however, OPEC and its allies substantially reduced supply in response to falling demand caused by Covid-19. Supply restrictions imposed as a result of the output drop are still in force a year later, albeit they have eased marginally. As a result, India has been compelled to evaluate its oil import contracts and hunt for crude suppliers outside of OPEC. OPEC’s share of India’s crude oil imports fell to 72 percent in the first three months of 2021, down from approximately 80 percent previously. The demand for imported crude in India is only anticipated to grow. According to the International Energy Agency, demand will rise to 6 million barrels per day by 2024, up from 4.4 million barrels per day in 2017, representing an annual growth rate of 3.9 percent, far higher than the global average of 1.2 percent.
2.The colour gold
In March 2021, India imported 160 tonnes of gold worth $8.4 billion, a whopping 471 percent increase year on year, before falling somewhat in April. The increase in imports occurred when the government reduced the import duty on yellow metal from 12.5 percent to 10.75 percent in February, in an effort to bolster retail demand, which had fallen owing to the pandemic. Demand increased when gold prices fell in the market as a result of the tariff reduction. Demand was also fueled by a high number of weddings, many of which were postponed due to last year’s Covid-19 restrictions. With new limitations in place in the wake of a second deadly wave of the coronavirus, gold imports are expected to slow in the coming months before resuming up in the second half of the year. India is the world’s second-biggest gold consumer, after China, and one of the world’s major gold importers. Every year, it imports 800-900 tonnes of gold. Switzerland, the United States, the United Arab Emirates, and Hong Kong are among the traditional suppliers. Gold is a symbol of riches, an important part of ceremonies, and a good investment in India. Imports of gold have a direct impact on India’s current account deficit, which is the difference between the foreign exchange flowing in from exports and the foreign exchange flowing out from imports.
India imports a wide range of finished petroleum products, including liquefied petroleum gas (LPG), liquefied natural gas (LNG), petcoke, and fuel oil, in addition to crude petroleum. While LPG is used for cooking, the other products are mostly used in industry, such as heating and power generation. In 2020-21 (up to February), India’s petroleum import cost was $12.4 billion, down from $16-17 billion in the preceding two fiscal years. Despite the lower bill, import volume has remained consistent at roughly 62 million tonnes. The price decline in imported petroleum products is partly related to a drop in international hydrocarbon prices. LPG imports, among the many petroleum products that are imported, grew rapidly in 2020-21. This was partly due to the government’s Covid-19 relief package, which included free cooking gas cylinders for low-income homes. Petroleum imports (including crude and refined) account for 19 percent of India’s overall imports.
4.Briquettes, coal, and coke
India is significantly reliant on imported coal despite possessing the world’s fourth largest coal deposits and being the second greatest producer of the mineral fuel. This is mostly due to the lower quality of domestic coal, which is mostly mined by the state-owned Coal India Limited. This is particularly true with coking coal, which is used to manufacture coke and is a raw material in the steel industry. India’s electricity sector is the country’s largest coal consumer. Steel, cement, fertilisers, and textiles are among the other industries that rely on coal. According to the Coal Ministry, India produced 715.95 million tonnes of coal in 2020-21 and imported 196 million tonnes. The volume of imports is down slightly from prior years, when imports topped 200 million tonnes. Indonesia accounts for more than three-fifths of India’s coal imports. The United States, Australia, and South Africa are among the country’s other trading relationships. By increasing domestic output, the government hopes to reduce its coal import expense. Importers, on the other hand, anticipate a rise in demand for international coal, citing logistical difficulties in obtaining domestic coal. According to the Adani Group, which handles approximately a third of India’s coal imports, sourcing coal from abroad and having it shipped by sea is easier than relying on domestic supplies, which is hampered by “rail transportation issues.” Coal imports should remain strong in the coming years, with India’s coal demand predicted to rise to 1,123 million tonnes by 2023 from the current 700 million tonnes.
5.Precious and semi-precious stones, including pearls
In 2017-18, India’s imports of pearls, precious and semi-precious stones reached a high of $33.3 billion. It has declined drastically since then, yet it remains among India’s top ten imports. Between April 2020 and February 2021, the country imported $13.98 billion in products. Natural and cultured pearls accounted for 2.25 percent of the overall import value, while precious stones (diamonds) and semi-precious stones accounted for 97 percent. The United States was India’s top provider, followed by Singapore, Hong Kong, China, and the United Arab Emirates, among others. Rough diamonds are a major importer for India, accounting for 53.3 percent of total gems and jewellery imports in 2019-20. India is also known for being the largest diamond cutting and polishing centre in the world. In India, 14 out of every 15 diamonds produced are cut and polished. The majority of rough diamonds imported into India are processed in India’s small and large diamond processing operations, notably the country’s main diamond hub in Surat, Gujarat. The completed diamonds are then exported in enormous quantities. India exports seventy-five percent of the world’s polished diamonds. The country exported cut and polished diamonds worth $18.66 billion in 2019-20.
Electronic components, consumer electronics, industrial electronics, and office and telecom equipment account for a large portion of India’s electronic imports. In 2019-20, India’s total import cost for electronic components was INR1.15 lakh crore. China was responsible for 37% of these imports. Foreign electronic components are a major driver of India’s electronic goods imports, according to the Reserve Bank of India (RBI), with imports more than doubling from $5.7 billion in April-December 2016 to $11.5 billion in April-December 2018. A long-running border issue between India and China typically dictates trade between the two countries. The dispute became serious in 2020, when 20 Indian soldiers were killed in a border confrontation. Following the incident, India withdrew from the Regional Comprehensive Economic Partnership (RCEP), a massive free trade agreement backed by Beijing, and banned the use of more than 50 Chinese apps in the country. Given domestic manufacturing difficulties, it fell short of banning electronic component imports. It did, however, suggest looking into additional markets and lessening reliance on China. Singapore, Malaysia, Taiwan, and the United States, according to the World Trade Centre in Mumbai, might be successful partners for electronic components.
Telecom equipment is another significant contributor to India’s electronic goods imports. According to the RBI, its share of India’s electronic products imports increased by 10% between 2011 and 2018. According to the Telecom Regulatory Authority of India, imports meet the majority of India’s telecom equipment needs (TRAI). China is not only the world’s largest importer of office and communications equipment, but it is also a significant provider to India. Telephone instruments and video phones have topped the list of Chinese imports to India for the last six years, according to a study published in The Print on 1 April 2021, with an import value of $9.7 billion. Since 2015-16, smartphone components have been the main driver of telecom instrument imports. India’s smartphone component imports totaled INR56,039 crore in 2019-20, with China accounting for 45 percent of the total. Imports of mobile phones, on the other hand, have decreased. This is primarily owing to the Make in India program’s push for indigenous manufacture, as well as a prohibition on select Chinese handsets and tighter quality clearances for Chinese-made telecom devices. In 2018, the Telecom Regulatory Authority of India (TRAI) suggested that India aim for zero telecom equipment imports by 2022. However, with India’s demand for electronic goods expected to reach $400 billion by 2025 and domestic production capable of supplying only a third of that need, this will be a difficult task.
Heterocyclic nitrogen compounds and antibiotics are the most often imported organic chemicals in India (penicillin and its salts, for example). Both of these raw ingredients are significant in the pharmaceutical business. The country’s supply is virtually entirely reliant on China. Consider the following: China, the world’s biggest manufacturer of APIs, supplies 70% of the active pharmaceutical ingredients (APIs) required by Indian pharmaceutical companies. In addition, organic chemicals make about 12% of India’s overall imports from China. The government is concerned about India’s near-total reliance on China for these bulk pharmaceuticals, as a supply disruption might result in a serious scarcity of medicines in the country. After the Covid-19 outbreak in China in late 2019, this worry became a reality. Despite these worries, China’s organic chemical imports have remained stable for the previous three years, owing to the fact that Chinese imports are the cheapest in the world. It would be less cost-effective to switch entirely to other suppliers, such as Saudi Arabia, Switzerland, Ireland, and Belgium.
9.Industrial machinery, electric machinery, and equipment
Industrial machinery and electric machinery and equipment round out India’s top ten imports list. Both are capital commodities, which are basically man-made assets that are utilised to produce goods and services. They include tools, structures, and cars, as well as machinery and equipment. Industrial machinery, electric machinery and equipment, and auto and auto components are the three primary sub-sectors of capital goods imports in India. In all three sub-sectors, China is India’s primary capital goods supplier. It accounts for 43.4 percent of India’s textile machinery imports, as well as 41.1 percent of agricultural machinery, 30.2 percent of food processing machinery, and 29 percent of electrical machinery. Automatic data processing machines (valued at $3.1 billion) and diodes, transistors, and other semiconductor devices (valued at $2.3 billion) were China’s leading exports to India in the six years between 2014-15 and 2019-20 in the electrical machinery and equipment sub-sector. Electric integrated circuits and microassemblies, transmission gear for televisions, cameras, cordless telephones, and radiotelephony, electrical transformers, static converters, and inductors, and television receivers are also prominent Chinese exports.
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