Several months ago we took a closer look at the outlook for Indian trade in manufactured goods and highlighted some of the differences between India and China. Recent forecasts published by the IMF expect Indian trade and economic performance to continue to be strong, although the biggest growth is expected to come from imports and not exports. Between 2022 and 2026 imports are expected to grow by 6% per year and exports 3%. This article looks at how the trading relationships between India and other countries has changed since 2015.
India Trade Today
Mining, energy related and bulk agricultural products such as coal, petroleum products, grains, iron ore and steel, among others account for about 60% of the value of Indian trade. The focus of our analysis is on manufactured goods relevant for container shipping and air cargo. In this segment, two thirds of the value of imports are from Eastern Asia, with China being the largest single source. Europe and the US are also important sources of imports. About half of export value is destined for the US and Europe, and remainder to a broad mix of countries in the Middle East, South Asia, North and Southeast Asia and Africa.
Country Trends from 2015 to 2022
PRC (including Hong Kong), USA, Germany and the UAE today account for about 56% of import and 40% of export value. China alone accounts for 43% of imports (but only a very small percentage of exports). The importance of China as a source of imports has seen a moderate increase since 2015.
The United States is the single most important export partner, accounting for almost a quarter of the value of outbound trade. Imports from the United States account for about 5% of total imports. The share of Indian exports destined for the USA has increase from 19% in 2015 to 24% today.
Germany, the United Kingdom, Italy, France and Netherlands account for 15% of Indian exports and 11% of imports. This has remained relatively unchanged over the last 8 years.
The United Arab Emirates accounted for 11% of total Indian exports in 2016, but this has declined over time to just under 7% in 2022.
Commodity Trends from 2015 to 2022
Industrial equipment ana parts, automotive, mobile phones, apparel and footwear, pharmaceuticals and semiconductors are the most important import and export groups. Over the past eight years the Indian economy has seen a shift in the mix of products traded.
Industrial equipment and parts accounted for 17% of exports and 30% of imports in 2022. While the import share has stayed constant, the share of exports has increased from 14% to 17% between 2015 and 2022.
Automotive exports have stayed constant at around 10% of export value and represent only a small share of imports.
India has evolved from a pure mobile phone importer to both and importer and exporter. The share mobile phones and communications equipment as a percentage of total imports has declined 15% in 2015 to 9% in 2022. Meanwhile the share of mobile phones as a percentage of total export value has increased from less than 1% to 5%.
India has traditionally been a major player in the textile export business. This continues to this day, however, the relative importance of this sector has decreased. In 2015, apparel and footwear accounted for 16.5% of Indian exports. Today the share is only around 11%.
India is viewed as a powerhouse in pharmaceutical production and an important exporter. Around 10% of Indian exports are related to drugs, vaccines and diagnostic equipment. Exports have followed a general upward trend but share of exports has stayed at between 9% and 11%, although the 2020 share was much higher, primarily due to the fact that trade overall was in disarray in that year.
Another segment that has grown in importance is semiconductors and related equipment. In 2022, almost 9% of imports fell into this category, up from under 2% in 2017. During the same period imports of computers increase from 6% of total imports in just under 8%.
Be First to Comment