The Big Picture – Non-essential imports: How can they be substituted?

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Summary:

  • ‘Make In India’ is now accompanied by plans to cut imports.
  • Some key ministries have been asked by the PM to discourage and cut unessential imports and instead manufacture them within the country.
  • Apart from helping to build a better manufacturing base and creating new employment, this move is also aimed to decrease the trade gap.
  • India has got large untapped potential.
  • A strong bureaucracy is needed for the task of selective targeting.
  • At this point of time our imports are becoming reasonable due to fall in crude oil prices and fertilizers.
  • Three important sectors where the imports need to be cut down are: Coal sector, Electronics and Hardware sector and Military Hardware.
  • Negative Balance of Trade is not always a bad thing. It is because in a developing country like India when there is a deficit, it indicates that we are adding to domestic savings and tapping foreign investments.
  • Unessential imports include Gold and Jewellery imports.
  • Gold Imports have increased because of increase in the investment demands for gold along with normal demand.
  • Prolonged deficits are not good for economy.
  • Competitive advantage in manufacturing sector is often created by the government.
  • There are provisions in WTO which allow for some kind of protection.
  • To make sure that India remains competitive, more wings of the government need to act together.
  • In the last 5 years exports have almost doubled.
  • India is a part of liberal Trading order.