Finance & Economy | News & Insights

Drop in Imports of Non-Essential Goods

Published: November 7, 2023

Indian Government taking significant steps to reduce imports of non-essential products such as TV tyres, wallpaper, and AC gas compressors has yielded positive outcomes. The Commerce Ministry’s efforts to curtail the inbound shipments through various measures, including production-linked incentive schemes, import monitoring systems, and mandatory quality norms, have resulted in a considerable decline in imports.

The imposition of import restrictions on tyres alone led to a 74% reduction in inbound shipments, from $276 million in 2019-20 to $74 million in 2022-23. Similarly, imports of wallpapers decreased by 77% to $10 million from April to August of this year, compared to $44 million in the same period last year, following the implementation of the paper import monitoring system.

Furthermore, the mandatory import registration for 201 types of paper and paperboard, including wallpaper, has aided in controlling imports. The quality control order (QCO) for footwear resulted in a 54% decrease in imports, amounting to $75 million during the July to August period this year, as compared to $163 million in the previous year. These measures have successfully lowered imports from countries like China, Taiwan, Vietnam, Hong Kong, and Bangladesh.

Additionally, the implementation of the production-linked incentive (PLI) scheme for white goods, specifically AC components and LED lights, has contributed to a decline in imports by 10% to $177 million from April to August 2023, from $197 million in the corresponding period last year. The scheme, with an approved outlay of Rs 6,238 crore, aims at boosting domestic manufacturing of these goods.

The government’s collaborative efforts involve regular meetings of an inter-ministerial committee to explore ways to minimize imports of non-essential goods. The Ministry of Commerce and Industry has been actively engaging with other ministries to identify areas of competitiveness and potential for increased domestic manufacturing.

Subsequently, a heightened information flow among different ministries and departments has allowed for better analysis of data and the formulation of specific policy interventions such as the PLI scheme. Furthermore, the government has implemented several additional measures to reduce imports, including increased customs duties on gold and television imports, imposition of minimum import prices, and the introduction of schemes like the National Food Security Mission and blending of ethanol in oil.

Controlling imports is crucial for curbing trade deficits, as evidenced by the decline of the trade deficit from $140.83 billion in April-September last year to $116 billion in the same period this year. Crude oil imports alone accounted for over 29% of India’s total imports in 2022-23, at $209.42 billion. Successful reduction of imports will positively impact the country’s foreign currency exchange rates and overall current account deficit.

In conclusion, the government’s comprehensive measures, ranging from import restrictions to quality control orders and production-linked incentive schemes, have proven effective in reducing the imports of non-essential goods, contributing to lower trade deficits and promoting domestic manufacturing.

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