Import intensity of India’s manufactured exports: an industry level analysis

Abstract

India opened up her domestic market to global competition in early 1990s, however, it was in the early 2000s that the trade dynamics gained momentum with India actively entering into free-trade agreements, both regionally and bilaterally. The period between 2000–2001 and 2017–2018 witnessed a surge in imports from $50 billion to $384 billion, respectively. One of the fallouts of import liberalisation policy was internationalization of the production process. Import intensity of exports based on input–output tables for various years till 2013–2014 reveals that rise in imported inputs in the export sector did not have a positive impact on exports. Second, the impact of these imported inputs led to a rise in the demand for skilled labour than the abundant less skilled labour that India possesses. In future trade negotiations, the heterogeneity of Indian industry should be an important consideration while negotiating trade deals to enable greater imports of intermediate inputs necessary to boost the productivity of exporting firms.