It can create cause & effect on rupee, reminds Assocham.
New Delhi: It’s not just crude but sharp rise in non-oil imports are also contributing to trade imbalance, Assocham said on Sunday.
“It is not only crude oil which is exerting pressure on India’s import bill and consequently on the current account deficit and the rupee, but a host of other non-oil items like coal, electronics, chemicals and leather and leather products, fruits and vegetables are witnessing rising imports and becoming a drag on the country’s overall balance of trade situation,” Assocham said.
“While there is no alternative to crude oil and gold imports, domestic supply constraints have led to an increase in imports by well over the double digit in as many as 22 (other than crude and gold) out of 30 top import items,” the industry chamber noted.
“It is given that crude oil and gold and to an extent essential chemicals, and select electronic items do not have any domestic alternative and therefore, their imports are unavoidable. But close to 60 per cent rise in imports of fruits and vegetables from $98.67 million in July 2017 to $157.47 million in July, 2018 can surely be reduced, if not eliminated by improving domestic productivity and quality,” said Assocham.
It said that same is true about coal, coke and briquettes which have witnessed a runaway upward movement in imports for the month under review, from $1.54 billion to $2.05 billion.
“Likewise, imports of leather and leather products saw a rise of over 22 per cent from $79.66 million to $97.54 million, while electrical and non-electrical machinery witnessed a 30.59 per jump in imports from $2.4 billion to $3.15 billion,” said Assocham.
“Surely, a well co-ordinated effort is needed, which can reduce India’s import bill, while continuous measures are required to ramp up exports. Removing domestic supply constraints should not be construed as import substitution in the traditional sense of the word. These imports can create both cause and effect on the sliding rupee,” it added.