An Analytical Enquiry into the Import Intensity of Indian Manufacturing Sector

Abstract

The present article tries to measure the import intensity of Indian manufacturing sector and to highlight the vulnerability of our manufacturing output and exports. The article is divided into four sections. Section I provides information on foreign country’s share of value addition in exports of different products of our economy. Section II analyses the trade pattern of top 10 manufacturing product imports towards India. Section III deals with calculations of import intensity of our manufacturing sector. Twelve manufacturing products were selected to calculate the imported raw materials consumed, imported capital goods, forex spending on interest, dividend and royalty, export earnings as per cent of total sales, etc. The findings stood in favourable terms with the existing literature. Although the export of Indian manufacture has increased manyfold after liberalisation, the imported raw material content of Indian manufacturing has been ever increasing over the years. Section IV explains the concluding remarks of the study. The major contributor to the increase in share of imports was fuels and mineral oils, which was followed by precious pearls and stones. The forex spending on interest rate were higher for automobiles, non-electrical machinery, textiles and construction. Permanent steps needed to curb the unproductive imports of luxury items and promote only exports of products with higher domestic value added for imported items.JEL Classification: F14