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The war in the Middle East has showcased our latest vulnerability- our extreme dependency on imports to run our economy. Though India is now ranked as the world’s fourth-largest economy with a nominal GDP of $4.51 trillion, as per World Bank data the growth has been on the assumption of consistent imports that allow us to do the same.
India currently does not have all the resources required to address the growing needs of its 1.4 billion people, the largest in the world. With domestic production not meeting the growing demands, imports remain the only solution to keep our homes, offices, factories running.
Crude oil
India imports 85%+ crude to power transport, petrochemicals, and industryHow much do we need to import? Over 85%
Why?
Current domestic output covers just a fraction of the demand, even as crude oil remains a crucial component for transport (petrol, diesel, aviation turbine fuel) and other petrochemicals required for manufacturing paints, plastics and a host of other products. India has widely diversified its crude oil supply base, with most coming from the Middle East, Russia and America, as a hedge against supply shocks.
Liquefied Petroleum Gas (LPG)
Over 65% LPG imports are due to rising household and commercial demandHow much do we need to import? Over 65%
Why?
India’s domestic LPG output is insufficient for its growing needs, even as the government has openly encouraged the use of LPG connections across the country. Though many cities have developed a cheaper Piped Natural Gas (PNG) infrastructure, this has remained insufficient for our domestic and commercial needs, forcing us to import LPG mostly from the Middle East.
Coal
We are forced to import high-grade coal for steel and cement despite large reservesHow much do we need to import? About 25%
Why?
Though we have large reserves of coal, the quality is only suitable for electricity generation. Most of the coal imported is used in the steel and cement industry, making India the second largest coal importer. Most of the coal imported is coking and non coking coal, with Indonesia, Australia and South Africa being the major suppliers.
Gold
98% gold has to be imported as demand surges for jewelry and safe investmentsHow much do we need to import? Over 98%
Why?
India has negligible gold mines, even though demand for the yellow metal has skyrocketed as an investment vehicle. With gold continuing to be seen as a safe haven asset, the jewellery industry remains one of the leading sources of consumption, even as India continues to remain the second largest consumer of gold.
Rare earths
We are heavily reliant on China for processed rare earths used in EVs and techHow much do we need to import? Over 90%
Why?
Though India has sizeable rare earth reserves, we lack the processing capacity that convert these rare earths into industry-ready raw materials. As a result, we import almost all of our processed rare earths minerals from China, which are required for our EV, renewable, defence and electronics industries.
producing the rice, wheat, pulses or oils that go into the dish. This is the case in point for the pharmaceutical industry, where many of the core ingredients needed to manufacture these medicines come from abroad, specifically China.
Though domestic production of APIs is being encouraged, we still import almost 70-75% of our APIs from China, and even more in many cases considering the complexity of production processes.
Urea
Subsidized demand forces India to import large volumes of fertilizerHow much do we need to import? About 22%
Why?
As a key fertilizer, the government subsidizes urea for farmers. With lower prices and higher demand, India remains the world’s largest urea importer, with domestic plants not being able to keep up with demand. Russia and China provide about 35% of the imports, even as domestic capacity expansion remains limited due to the reliance on LNG for production and supply chain issues.
Edible oils (palm, soybean, sunflower)
We have a 60% import dependency for essential edible oils due to weak domestic oilseed productionHow much do we need to import? About 60%
Why?
India’s domestic oilseed yields have struggled to meet demand, forcing us to rely on imports from South America, Russia and Southeast Asia for palm oil, soybean oil or sunflower oil. That dependence directly impacts food inflation with weather shocks or unexpected geopolitical challenges directly affecting India’s food security.
Electronic components
We are forced to import over 50% of semiconductors, ICs, and advanced electronics parts due to a lack of expertise and capacityHow much do we need to import? Over 50%
Why?
Though many consumer durables are now made locally, many critical components still come from abroad- especially semiconductors, complex engineered components, ICs and displays for which we don’t yet have the expertise. We may be the world’s second largest smartphone exporter, but that has depended on electrical component imports from China and Hong Kong, accounting for over half of our imports in that regard by value. Though domestic manufacturing of components has been started in earnest, India has still a long way to go for high end manufacturing that includes owning the design and capabilities to do so.
Active Pharmaceutical Ingredients (APIs)
A lack of expertise and manufacturing capacity forces us to rely on imports for key drug ingredients despite pharma dominanceHow much do we need to import? About 40%
Why?
Following a recipe to prepare a dish remains the easier part than actuallyhe growing demand, resulting in almost 60% of our edible oils coming from abroad. The supply of palm oil (used in cosmetics, FMCG and cooking), sunflower oil (used for cooking) and soybean oil (also for cooking) remains conditional to weather patterns and yields in South America, Russia and South East Asia, even as alternatives to these remain limited.
Pulses
We have to rely on imports for pulses as domestic yields do not meet demandHow much do we need to import? Over 15%
Why?
India’s diet is heavy on pulses, with domestic production unable to meet demand due to erratic monsoon, yield gaps and a persistent demand supply deficit. Imports from Canada, Myanmar and Africa have been filling the gap, even though the same climate challenges and yield gaps exist there as well.
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