Amid rising imports, Centre mulls boosting production of specific items

Amid a sustained rise in inbound shipments, officials from the commerce department on Tuesday met industry representatives over ways to boost domestic production of specific items, beginning with consumer products. This, in turn, could give a fillip to exports, people aware of the matter said.

Officials refused to call this an import-substitution strategy, saying there is no attempt to stop inbound shipments. This is a strategy to enhance domestic production instead, they added. The department of commerce has identified 102 priority items that are imported in sizable quantities or saw a sharp rise in inbound shipments in recent times.

These 102 items include electrical equipment, metals, chemicals, petroleum products, precious and semi-precious stones, lithium ion batteries, plastics and textiles. They comprised 58.67 per cent of the overall inbound shipments during April-August of 2021-22.

“There was a meeting on how to boost domestic production, in view of the Atma Nirbhar Bharat programme, and thereby boost exports.

There has been a certain surge in import (of these 102 items), which could be due to some global supply chain disruption, procedural bottlenecks or challenges in regulatory mechanisms in India. The attempt shouldn’t be viewed as import substitution,” a senior government official told Business Standard.

The strategy would start with strengthening domestic capacities in consumer goods segments that comprised nine per cent of the 102 priority items imported during April-August 2021. “We won’t touch raw materials right now or stop importing such items,” the official said.

Government officials also told industry representatives that exports and domestic production are inter-linked. And, as such, there will be focus on increasing production of consumer goods such as electronics products.

The meeting, chaired by additional commerce secretary Rachna Shah, was attended by representatives of all export promotion councils.

India imported goods worth $611.93 billion in 2021-22, up 54 per cent year-on-year. According to the department of commerce, of the 102 items, raw materials had a share of 41 per cent. Moreover, intermediate goods comprised 33 per cent and capital goods 17 per cent during April-August of FY22.  

Ajai Sahai, director-general (D-G) and chief executive officer (CEO), Federation of Indian Export Organisations (FIEO), said many of these goods are important from an export perspective.

“Electrical, electronics, machinery and automobile products account for over one third of our imports. Fortunately, these are covered under the production-linked incentive (PLI) scheme to augment domestic production both for the indigenous market and exports. We should also explore plug-and-play facilities for our small and medium enterprises so that they can also be engaged in this exercise,” Sahai said.