From 2020 to 2021, Indian imports were valued at 388.92 billion dollars, an 18 percent drop from 2019 to 2020, when the country imported goods and services worth 474.71 billion dollars. In the last financial year, Indian exports stood at 290.18 billion dollars, down 7.4 percent from 313.36 billion dollars from 2019 to 2020.
In India’s foreign trade, imports have always outpaced exports, a fact illustrated by these figures from the past two years. Widespread economic disruptions caused by Covid 19 in 2020 did not change this reality.
The Indian government’s flagship Atmanirbhar Bharat Abhiyan strives to significantly improve domestic manufacturing and, thereby, reduce import dependence. But lowering India’s reliance on imports is easier said than done, especially when the processes for imports are ironically far better than those for exports, as admitted by the government in the Economic Survey.
Given the importance of foreign goods in the country, this video explores the top 10 imports of India and its top 10 import sources.
Top 10 imports of India
According to market and consumer data firm Statista, the top 10 commodities imported by India from 2020 to 2021 were: Crude petroleum with 21.6 percent of the country’s total importation
Gold is responsible for 5.9 percent of importation, Petroleum products for 5.8 percent, Coal, coke, and briquettes for 4.7 percent, Pearl, precious, and semi-precious stones accounting for 4.7 percent, Electronic components for 3.4 percent, Telecom instruments with 3 percent, Organic chemicals with 2.5 percent, Industrial machinery with 2.5 percent and Electric machinery and equipment with 2.3 percent.
Top 10 countries from which India imports
India’s top 10 trade partners from where it imported the above commodities in 2020 to 2021, according to Statista, were:
China with 13.7 percent, the United States of America with 7.5 percent,
The United Arab Emirates with 6.3 percent, Saudi Arabia with 5.6 percent,
Iraq with 5 percent, Hong Kong with 3.5 percent, Switzerland with 3.5 percent, South Korea with 3.3 percent, Indonesia with 3.1 percent and Singapore with 3.1 percent.
China toppled the US to become India’s top trading partner in 2020. Bilateral trade between the two Asian neighbors stood at 77.7 billion dollars. Imports from China accounted for the major share of this trade and were valued at 58.7 billion dollars. Exports to China stood at 19 billion dollars. Indian imports from China eclipsed imports from the US and UAE combined. India’s dependence on Chinese goods is large because they are cheap and easily available in abundant volumes.
Traditionally, India’s main imports from China are electrical machinery and equipment, and mechanical appliances such as telephone equipment, sound recording devices, TV cameras, video phones, automatic data processing machines, electronic circuits, transistors, and semiconductor devices. Other than these, it is also a major supplier of antibiotics, fertilizers, automobile components, and accessories.
Let’s take a look at each of the top imports and the trade facts around them:
Crude petroleum: Crude petroleum was India’s top import between 2020 to 2021. India is the third largest importer of this commodity. It depends on crude imports for 84 percent of its oil requirements. In February, India’s top supplier of crude oil was Iraq, followed by the US, Nigeria, and Saudi Arabia. Traditionally, India has sourced the majority of its crude oil from the Saudi Arabia-led Organisation of the Petroleum Exporting Countries also known as OPEC. However, last year, OPEC plus its allies drastically cut output in the face of plunging demand due to Covid 19. A year on, supply curbs as a result of the production cut remain in place, though they have since eased slightly. This has forced India to review its oil import contracts and look for crude suppliers from non-OPEC countries.
Gold: India imported 160 tonnes of gold worth 8.4 billion dollars in March 2021 a massive 471 percent jump year on year before dipping slightly in April. The import surge came after the government cut the import duty on the yellow metal to 10.75 percent from 12.5 percent in February, in an attempt to boost retail demand, which had tumbled due to the pandemic. With gold prices falling in the market, as a result of the duty cut, demand picked up. A large number of weddings, many of them delayed by last year’s Covid 19 restrictions, also drove demand. India is the second-largest consumer of gold after China and one of the largest importers of precious metal. It imports 800 900 tonnes of gold annually. Traditional suppliers include Switzerland, the US, the UAE, and Hong Kong, among others. In India, gold is a symbol of wealth, an essential part of rituals, and an investment source. Gold imports have a direct bearing on India’s current account deficit, which is the shortfall between the foreign exchange flowing in on account of exports and that flowing out due to imports.
Petroleum products: Apart from crude petroleum, India imports a large variety and volume of finished petroleum products such as liquefied petroleum gas, liquefied natural gas, petcoke, and fuel oil. While LPG is used as cooking gas, the other products mostly have industrial uses, including heating and power generation. India’s petroleum products import bill was 12.4 billion dollars from 2020 to 2021, down from 16-17 billion dollars in the previous two financial years. But despite the cheaper bill, import volume has remained at around the 62 million tonnes mark.
Coal, coke, and briquettes: Despite having the world’s fourth-largest coal reserves and being the second-largest producer of mineral fuel, India is heavily dependent on imported coal. This is primarily because domestic coal mostly mined by state-owned Coal India Limited is of inferior quality. This is especially true for coking coal, which is used to make coke and is used as a raw material in the steel industry. The power sector is India’s biggest coal consumer. Other sectors dependent on coal include steel, cement, fertilizers, and textiles. From 2020 to 2021, India produced 715.95 million tonnes of coal and imported 196 million tonnes, according to the Coal Ministry. The import volume is a slight dip from previous years when imports crossed the 200 million tonne mark. Over three-fifths of India’s coal imports come from Indonesia. Other trading partners include the US, Australia, and South Africa. The government is keen on reducing its coal import bill by boosting domestic production. But importers expect demand for foreign coal to increase, citing logistical challenges in procuring domestic coal.
Pearl, precious and semi-precious stones: Indian imports of pearls, precious and semi-precious stones peaked at 33.3 billion dollars from 2017 to 2018. Since then, it has dropped significantly but remains among the top 10 imports of India. The country imported 13.98 billion dollars worth of products between April 2020 and February 2021. Precious stones like diamonds and semi-precious stones accounted for 97 percent of the total import value while natural and cultured pearls made up 2.25 percent. The US remained India’s largest supplier, followed by Singapore, Hong Kong, China, and the UAE, among others. India is a major importer of rough diamonds, which made up 53.3 percent of its total gems and jewelry imports from 2019 to 2020. India is also known as the world’s largest diamond-cutting and polishing center. Of every 15 diamonds produced in the world, 14 are cut and polished in India. Most of the rough diamonds imported into India are processed at its small and large diamond units, including its major diamond hub in Surat, Gujarat. A large chunk of the finished diamonds is then exported. Seventy-five percent of the world’s polished diamonds are exported from India. From 2019 to 2020, the country exported 18.66 billion dollars worth of cut and polished diamonds.
Electronic components: A major chunk of India’s electronic imports which includes electronic components, consumer electronics, industrial electronics, and office and telecom equipment come from China. India’s import bill for just electronic components was INR1.15 lakh crore from 2019 to 2020. China accounted for 37 percent of these imports. According to the Reserve Bank of India, foreign electronic components are a major driver of India’s electronic goods imports, having more than doubled from 5.7 billion in April December 2016 to 11.5 billion dollars from April to December 2018. Trade between India and China is often dictated by a long-running border dispute. In 2020, the feud turned violent with a border clash that left 20 Indian soldiers dead. In its aftermath, India walked out of the Regional Comprehensive Economic Partnership, a mega free trade agreement backed by Beijing, and banned the use of more than 50 Chinese apps in India. It stopped short of banning the import of electronic components, given manufacturing constraints at home. However, it proposed looking at newer markets and reducing dependence on China. The World Trade Centre, Mumbai, suggested that Singapore, Malaysia, Taiwan, and the US could be effective partners for electronic components.
Telecom instruments: Another major contributor to Indian imports of electronic goods is telecom equipment. Its share in India’s electronic goods imports grew 10 percentage points between 2011 and 2018, according to the RBI. Most of India’s requirements for telecom gear are met by imports, says the Telecom Regulatory Authority of India. While China is the world’s largest importer of office and telecom equipment, it is also a major supplier of the same to India with an import value of 9.7 billion dollars.
Organic chemicals: India’s most widely imported organic chemicals are heterocyclic nitrogen compounds and antibiotics also known as penicillin and its salts, for example. Both are important raw materials used in the pharmaceutical industry. The country depends almost wholly on China for its supply. Consider this: Indian pharma firms source 70 percent of the active pharmaceutical ingredients they need to make drugs from China, which is the world’s leading producer of APIs. Furthermore, organic chemicals account for 12 percent of India’s total imports from China.
Industrial machinery, electric machinery, and equipment: Rounding off the list of India’s top 10 imports are industrial machinery and electric machinery and equipment. Both belong in the category of capital goods, which are essentially man-made assets used to produce goods and services. They include machinery and equipment as well as tools, buildings, and vehicles. Capital goods imports in India have three major sub-sectors namely: industrial machinery, electric machinery and equipment, and auto and auto components. China is India’s dominant supplier of capital goods in all three sub-sectors. Its share in India’s textile machinery imports stands at 43.4 percent while the figure is 41.1 percent for agricultural machinery, 30.2 percent for a food processing machinery, and 29 percent for electrical machinery. In the electrical machinery and equipment sub-sector, China’s top exports to India in the six years between 2014 to 2015 and 2019 to 2020 were automatic data processing machines which is valued at 3.1 billion dollars, and diodes, transistors, and other semiconductor devices 2.3 billion dollars. China is also a major supplier of electric integrated circuits and micro assemblies; transmission apparatus for TVs, cameras, cordless telephones, and radiotelephony; electrical transformers, static converters and inductors; and television receivers.