Import of project goods falls, points to likely slowdown in infrastructure creation

Imports in the current financial year till December takes a hit of more than 24%

India’s import of project goods has been adversely affected by the ongoing downturn in global trade and, in turn, may point to a slowdown in the infrastructure sector.

Broadly referring to the input materials required in the construction of civil and private infrastructure projects, the import of project goods may act as a barometer for the pace of infrastructure creation, both public and private, in the country. 

India is a net importer of such goods and, historically, has had a higher inflow during periods of growing infrastructure activities. 

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A look at India’s imports in the current financial year leading up to December shows that project goods category has been hit especially hard with a fall of more than 24%. This may lead to a systemic lag in the beginning or completion of infrastructure projects for a protracted period to come, which becomes significant at a time when the government is keen to push through with the smart cities project.

For January too, project goods went down by more than 20%.

This will also invariably impact the gamut of domestic industrial output. Although the latest figures suggest the index of industrial production (IIP) grew by 2.9% in January, the cumulative figures for the financial year are much lower as compared to the previous year. While in the April-Jan period of 2015-16, the IIP grew by 2%, the corresponding figures for the previous year suggested a growth of 5.3%.

On the other hand, the export of project goods also went down by more than 41% in the April-December period.