Major Items of Imports: Composition, Direction and Future Prospects

11th February 2020 0 By indiafreenotes


Just at the dawn of independence, the import basket of India was mostly consisting of grains, pulses, oils, machineries, hardware’s, chemicals, drugs, dyes, yarns, paper, non-ferrous metals, vehicles etc. With the introduction of planning and with its emphasis on the development of basic, capital goods and engineering industries, the country had to import a huge quantity of capital equipment’s along with its spares known as maintenance imports.

The following table shows the changes in the composition of imports in India since 1960-61

The above table reveals that for better analysis, the imports of the country have been broadly divided into four groups:

(i) Food and live animals chiefly for food

(ii) Raw materials and intermediate manufactures

(iii) Capital goods and

(iv) Other goods

The table further shows that in 1960-61 total value of imports was Rs. 1,795 crore consisting of the share of above four groups as Rs. 286 crore (15.9 per cent), Rs. 776 crores (43.2 percent), Rs. 560 crore (31.2 per cent) and Rs. 173 crore (9.7 per cent) respectively.

Again in 1970-71, total value of imports of the country was Rs. 1,634 crore and the share of the above four groups was 14.8 per cent, 54.3 per cent, 24.7 per cent and 6.2 per cent respectively. After 1970-71 total import bill of the country increased substantially due to a considerable hike in oil price by OPEC in 1973-74 and again in 1978-79.

The OPEC raised the prices of oil from $ 2.50 per barrel to $ 3 per barrel in 1973 and to 11.65 per barrel in 1974 and again $ 13.00 per barrel in 1978 and $ 35 per barrel in 1979. Due to this steep hike in the price of oil, total import bill of the country in 1980-81 increased sharply to Rs. 12,549 crore out of which expenditure on petroleum oil and lubricants (POL) only was Rs. 5,264 crore, i.e., 42 per cent of the total.

During the 1970s, POL imports recorded a considerable increase of about 44.2 per cent per annum as compared to that of 23.4 per cent per annum for all imports. Besides POL, higher rate of growth of imports was recorded by pearls, precious and semi-precious stones, fertilizers, iron and steel and capital goods in order of value during 1970s.

During 1980s, due to the introduction of import liberalization policy by the government, import bill of the country rose considerably to Rs. 19,658 crore in 1985-86 and to Rs. 43,193 crore in 1990- 91 and then finally to Rs. 1,22,698 crore in 1992-93. Although there was a slight fall on the import bill on POL in 1985-86 but since 1987-88, import of POL both in terms of quantity and value started to rise.

Total import of POL increased from 25.6 million tonnes in 1989-90 to about 29.3 million tonnes in 1990-91 and the total import bill on POL rose sharply to Rs. 10,816 crore in 1990-91. In 2008-2009 total import bill of the country rose to Rs. 13,74,476 crore and the bill on import of POL rose sharply to Rs. 4,19,946 crore.

Following are some of the important information about the compositions of Indian imports:

(a) Import expenditure on POL rose significantly from Rs. 136 crore in 1970-71 and then to Rs. 4,19,946 crore in 2008-09. Official projections say that imports of POL will further go up in the coming year since the demand for petroleum products is expected to grow from 57 million tonnes in 1992-93 to about 100 million tonnes in 2000-01 and to about 150 million tonnes by 2010-2011 A.D.

(b) Imports of different types of capital goods also rose significantly from Rs. 404 crore in 1970-71 to Rs. 2,16,511 crore in 2008-09 which amounted to about 15.7 per cent of total import in 2008-09.

(c) Import bill on pearls, precious and semi-precious stones also rose considerably from Rs. 25 crore in 1970-71 to Rs. 76,130 crore in 2008-09 and it amounted to nearly 5.5 per cent of total import in 2008-09.

(d) Import bill on fertilizer and fertilizer materials also rose considerably from Rs. 86 crore in 1970-71 to Rs. 59,569 crore in 2008-09 and amounted to nearly 4.33 per cent of the total imports in 2008-2009.

(e) Import bill on iron and steel rose considerably from Rs. 197 crore in 1960-61 to Rs. 45,531 crore in 2008-2009 and amounted to over 3.16 per cent of total imports in 2008-09.

Moreover, some other items which have been imported in India at low scale in recent years include food-grains and edible oil.


Direction of India’s imports has changed remarkably in the mean time. The table  shows the changes in the direction of India’s imports since 1960-61.

Table shows that direction of India’s imports. If we study block wise, then it can be seen that among the five blocks (i.e., OECD, OPEC, Eastern Europe, Developing countries and other countries) although the share of OECD countries in India’s imports was all along higher, but the same share gradually declined from 78 per cent in 1960-61 to 37.8 per cent in 2003-2004.

The share of OPEC in India’s total imports gradually increased from 4.6 per cent in 1960-61 to 7.2 per cent in 2003-2004. The share of Eastern European countries in India’s imports which was only 3.4 per cent in 1960-61, gradually rose to 13.5 per cent in 1970-71 but since then its share gradually declined to 1.6 per cent in 2003-2004.

The share of developing countries in India’s imports gradually rose from 12 per cent in 1960-61 to 18.4 per cent in 1990-91 and stood at 20.1 per cent in 2003-2004. The share of other countries in India’s imports also gradually increased from 2.0 per cent in 1960-61 to 33.3 per cent in 2003-2004.

Now if we look at country wise figures then it can be seen that the share of U.K. in India’s imports which was 20.8 per cent (135 crore) being the highest among all the countries, gradually declined to 8 per cent in 1970-71 and then to only 4.1 per cent in 200.3-2004. The share of USA in India’s imports although remained all along highest since 1960-61 its share gradually increased initially from 18 per cent in 1950-51 to 29 per cent in 1960-61 and since then the share gradually declined to 0.4 per cent in 2003-2004.

Thus, it is found that since 1970-71 direction of trade recorded a continuous change where India’s dependence for imports from USA and U.K. gradually declined with the opening and expansion of trading relations with other countries like USSR, Japan, Germany, Belgium, Saudi Arabia etc.

Another important trend that can be seen is that since 1960-61 India’s trading relations with socialist countries particularly with USSR was expanded. Accordingly, the share of U.S.S.R. in India’s imports which was only 1.4 per cent (Rs. 16crore) in 1960-61 gradually rose to 8.2 per cent (Rs. 1.014 crore) in 1980-81 and thus occupied third place.

Again in 1984-85, the share of USSR rose to 10.4 per cent and thus occupied first place in India’s imports. But the share of former USSR in India’s imports gradually declined to 6.0 per cent in 1990-91 and then to only 1.2 per cent in 2003-2004. In recent years, (i.e., 2003-2004) the other countries which have occupied a good share in India’s imports include Germany (3.7 per cent), Japan (3.4 per cent), Saudi Arabia, (0.9 per cent), Belgium (5.1 per cent), France (1.4 per cent) etc.