New Delhi: While faltering economic growth in the US and recession in Europe have forced India to look to the developing markets to boost exports, they have also prompted the country to diversify its import sources along the same lines.
The share of India’s imports from Europe fell to 17.32% in 2012-13 from 19.32% in 2009-10, and from the US to 4.94% from 5.89% earlier, show new data released by the commerce ministry.
India’s merchandise exports contracted 1.76% in 2012-13 to $300.6 billion, while imports grew only by 0.44% to $491.5 billion.
While the imports of electronic items from the US increased to $2.1 billion with a share of 6.8% in 2012-13, rising from 6.42% in 2009-10, imports of transport equipment and machinery declined, leading to a fall in the overall share of imports from the country.
China has been a major beneficiary of this, taking a significant share in India’s import basket, though India’s imports from the neighbouring country contracted 5.6% to $54.3 billion in 2012-13.
China’s share in India’s import of transport equipment rose to 13.8% in 2012-13 from 8.2% in 2009-10, while its share in iron and steel rose to 66.5% from 22.7% and in fertilizer to 56.4% from 43.9%.
The shift in India’s imports is the result of a restructuring in global production facilities and supply chains moving eastward, said Biswajit Dhar, director-general at the New Delhi-based think tank, Research and Information System for Developing Countries.
The share of countries such as Australia and South Africa in India’s import basket is falling because India has shifted most of its gold imports from such countries to Switzerland, with which it has the second highest trade deficit, at $28.8 billion in 2012-13, only after the $40.8 billion deficit with China.
The shift is taking place because Switzerland has the best quality gold refiners who ensure responsible and conflict-free gold supplies, said Pankaj Parekh, vice-chairman at the Gem and Jewellery Export Promotion Council.
“South Africa and Australia are mostly gold miners and not gold refiners. Indian government has allowed canalising agencies to import gold from refiners on a consignment or loan basis without upfront payments, which is why gold imports from Switzerland have increased,” Parekh said.
Gold was the second largest commodity in India’s import basket at $53.8 billion in 2012-13, after crude oil imports at $169.3 billion in the same year.
The increase in the import share of countries such as Kuwait, Qatar, Venezuela and Nigeria is explained by a surge in petroleum imports from such countries, with India being forced to reduce its oil imports from its traditional supplier, Iran, because of sanctions imposed by the US. The share of Iran in India’s import basket declined from 4% in 2009-10 to 2.36% in 2012-13.
Imports from Japan have increased mostly because of a pick-up in the imports of machinery, transport equipment, and iron and steel, while Malaysia gained a larger share in India’s imports because of a shift in the import of vegetable oils from Indonesia.
The share of imports from Singapore and South Korea has also been falling on account of slowing imports of electronic items from such countries.
The share of imports from European Union countries such as Germany, Italy, France and the UK, is dropping because these were badly hit by the global economic downturn, said T.S. Vishwanath, a trade expert and principal adviser at APJ-SLG Law Offices.
“Because EU countries mostly supply either intermediary or finished products, and not raw materials, imports from such countries remain volatile, depending on economic conditions,” he said.