Bank of Baroda Reports Decline in Import Dependence, Highlighting Success of Make in India Initiative in Key Sectors
India’s recent efforts to enhance domestic manufacturing capabilities are showing positive results, as highlighted in a Bank of Baroda research report. The report indicates a decline in import dependence across crucial sectors, including electricals, chemicals, capital goods, and consumer durables. Specifically, the import-to-net-sales ratio for India Inc is now at 22.3% in FY25, a slight decrease from 22.9% in FY19. Notably, sectors like electricals and chemicals have observed substantial reductions in import ratios, with the electricals sector improving its ratio from 22.7% to 13.7%. This shift is attributed to strategic policy initiatives aimed at fostering self-reliance and strengthening supply chains in the face of ongoing global tensions, particularly the crisis in West Asia.
This reduction in import dependence is significant for the common citizen as it suggests increased availability of domestically produced goods, potentially leading to better price stability and enhanced job opportunities in manufacturing. The findings also alleviate concerns regarding the economy’s resilience against external shocks, especially in the context of escalating global commodity prices due to geopolitical conflicts. With certain consumer-oriented sectors maintaining lower import intensity, it is anticipated that essential goods will remain more readily available, mitigating some of the inflationary pressures stemming from rising input costs.
For the long-term outlook, the government and RBI are likely to continue their focus on promoting domestic industries through programs such as Make in India and the Electronics Components Manufacturing Scheme. The gradual reduction in import dependence signals a strategic pivot toward a more self-reliant economy, which could be crucial in defending against future supply chain disruptions. However, close monitoring of high import-dependent sectors like industrial gases and fuels will remain critical amid ongoing volatility in global markets. Policymakers will need to devise targeted strategies to support vulnerable sectors while encouraging resilient supply chains across the economy.
Source: The Hindu
(Expert Note: This report was independently prepared by the Wealthova Economy team.)