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The structure of Indias imports has undergone change since the opening up of the Indianeconomy.

In the post liberalisation phase, the tolerance level of imports has undergonea significant upward revision in the face of greater avenues for foreign exchange inflows,thereby unshackling the hitherto dormant economic growth potential. With the movea w a y from import substitution and towards promotion of t r a d e b a s e d o n d y n a m i c advantage, the policy distinction between essential imports and otherwise has graduallysubsided. Commodity-wise analysis reveals that while petroleum still continues to have adominant presence in Indias imports, capital goods and other intermediary products for export purposes have emerged as key items of imports in the 1990s.T h e r e have been a number of subtle compositional shifts w i t h i n t h e b r o a d l e v e l o f aggregation during the last decade that need to be recognised. For instance, within the petroleum imports, there has been a shift from import of petroleum products towardsc r u d e i m p o r t s f o l l o w i n g a l a r g e s c a l e i n c r e a s e o f r e f i n e r y c a p a c i t y o v e r t i m e . Furthermore, India has transformed itself from a net importer of finished petroleum products to net exporter of the same in 2001-02.Another significant development during the 1990s has been the channellising of importsof gold through official routes. Since 1997 when banks were allowed to import gold, theimport of gold through passenger baggage has declined significantly.The position of major gainers and losers in terms of imports since 1990-91 provides amirror reflection of the changing growth pattern of the economy. The industries that haves h o w n t h e l e a s t i m p o r t p r o p e n s i t y since the 1990s and thereby have gradually b e e n phased out from the import commodity basket were mainly under the medium to lowtechnology labour intensive sectors where Indian industry itself has acquired

comparativeadvantage. Similarly, the industries that have registered the highest growth rate in terms of imports during the last decade have been mo s t l y t h o s e w i t h m e d i u m t o h i g h technology content and intermediary products needed for exports.Subsequent to the opening up, Indias imports are being sourced from a wider range of c o u n t r i e s . T r a d i t i o n a l l y i m p o r t a n t t r a d i n g p a r t n e r s l i k e G e r m a n y , J a p a n , U K a n d Australia have subsided in terms of their market share and new import partners fromA f r i c a a n d E a s t A s i a ( i n c l u d i n g C h i n a ) h a v e e m e r g e d a n d a r e i n c r e a s i n g l y g a i n i n g importance. In recent years, Belgium, from where India imports its major export orientedi t e m o f g e m s a n d j e w e l l e r y , h a s e m e r g e d a s o n e o f t h e p r i n c i p a l s o u r c e s o f i m p o r t s . Another interesting feature has been the gradual dissipation of the Commonwealth of Indepedent States (CIS) countries as major sources of Indias imports. Recent Features The commodity-structure of Indias imports has also shown marked changes, reflecting,

inter alia
, the impact of trade policy, the movements in i n t e r n a t i o n a l p r i c e s a n d t h e pattern of domestic demand. The share of oil imports in Indias total imports increased from 17.1 per cent during 1987-90 to 23.9 per cent during 1992-97 and further to 27.2 per c e n t i n 2 0 0 1 - 0 2 . W h i l e t h e share and absolute value of these imports showed s h a r p fluctuations over the years mainly on account of the large movements in international crude prices, the volume of such imports has grown significantly on account of increasein domestic consumption and the stagnation in domestic crude oil production. Given thelarge swings in international crude prices, as also a trend

rise in the oil import bill, therei s a n e e d f o r a c o m p r e h e n s i v e review of energy policy of the country coveri ng t h e demand-supply aspects, as well as the price policy. Renewed efforts to improve energys u p p l y f r o m d o m e s t i c s o u r c e s b y e n c o u r a g ing explorations, and stepping up of production and refining capacities are necessary to bring about a structural change in thisarea.Reflecting the impact of a series of policy measures undertaken in the post-reform yearsstarting with the repeal of the Gold Control Order in 1991 for liberalising the imports of gold and silver, these imports showed a sharp pick-up from 1992-93. The imports of gold and silver (including passenger baggage) rose from a meagre US $ 6 million in 1991-92to US $ 1.3 billion in 1992-93 and further to US $ 5.9 billion in 1997-98. A large part of the increase in these imports could be due to a switchover from the unofficial channel tothe official channel, initially through the NonResident Indian (NRI) baggage route andsubsequently through the OGL route.

In the subsequent years, however, these imports have stabilised and, in fact, declined to US $ 4.6 billion in 2001-02.Imports of capital goods registered sharp increases in the initial reform years from US $4.5 billion in 1992-93 to US $ 10.3 billion in 1995 -96, but exhibited a declining trend thereafter. The share of these imports, which had declined from 29.5 per cent in 1987-88to 24.2 per cent in 1990-91, rose in the post-reform period to 28.2 per cent in 1995-96 butdropped to 18.1 per cent in 2001-02, reflecting the lack of investment demand associated14 with the sluggish pace of domestic industrial act ivity. Among other import items, therelative shares of fertilisers, non-ferrous metals, metalliferrous ores and metal scrap andiron and steel generally showed a declining trend.There are noticeable changes in the sources of Indias imports and in country shares. Theshare of the

OECD countries and the Eastern Europe in Indias imports declined betweenthe years 1987-88 and 1999-2000 while that of the developing countries and the OPECgroup increased during the same period. The share of Indias imports from the OPECregion rose significantly to 25.9 per cent in 1999 -2000 from 16.3 per cent in 1990-91,mainly on account of the increase in the oil imports. Merchandise imports also caught the global downswings in the second half of 2008-09,offsetting some of the adverse impact of contracting exports. The growth in Indias importsplunged sharply during the third quarter of 2008-09, and subsequently contracted from thelast quarter of 2008 -09 to 2009-10 (AprilOctober). A massive weakening of imports was witnessed in the case of crude oil, capital goods, and gold and silver (Table 6.16) There have been a number of subtle compositional shifts in imports within the broadaggregation during the past decade that need to be recog n i s e d . F o r i n s t a n c e , w i t h i n petroleum imports, there has been a shift from petroleum products to crude oil, following thelarge-scale increase in refinery capacity within the country. Further, since 2001-02, India hastransformedi t s e l f f r o m a n e t importer of petroleum products to a net exporter of the same. A n o t h e r significant development during the 1990s has been the channelising of gold imports throughofficial routes (Table 6.17). Since 1997 when banks were allowed to import gold, the import of gold through passenger baggage has declined significantly. Industries that have shownthe least import propensity since the 1990s and, thereby have gradually been phased out of the import commodity basket, were mainly in the medium to low-technology, labour-intensivesectors. Similarly, industries with the highest growth rate of imports in the past decade havebeen largely those with a medium - to high-technology content that produced intermediaryproducts needed for exports