India's Electronics, Machinery Imports Surge In April-September

India's imports, particularly of electronics and machinery—electrical and non-electrical—witnessed a higher surge in the first six months of FY24 as against the corresponding period in the previous fiscal.

However, the value of crude imports—which accounts for 25% share of the country's total imports—fell to $82.31 billion between April-September 2023 from $106.63 billion during the same period last year, according to Ministry of Commerce data. This accounts for a 22.8% drop on a year-on-year basis.

On a monthly basis, the merchandise trade deficit narrowed to $19.4 billion September this year, as compared with $24.2 billion in August, on the back of a sharp decline in non-oil imports.

Among other items, the value of electronic goods imported—which comes second after crude among imported items—rose to $43.51 billion in the April-September period of 2023, as against $39.79 billion over the same period in 2022.

In terms of the quantum of import surge, India imported $3.73 billion worth of additional electronics goods in 2023. Such goods account for 13% of India's total imports during the April to September period.

Within electronic goods, personal computers such as laptops and palmtops, and digital processing units are India's top imports accounting for a combined value of $7.9 billion in FY23.

To keep a check on import dependence and given security concerns, the government recently announced that it would introduce a import monitoring machism to keep track of the import source of Indian electronic goods such as laptops.

The move has come under much criticism from industry and was also flagged as a concern at the WTO recently. Currently, the People's Republic of China serves as the biggest import source for most of Indian imports of laptops.

For electrical and non-electrical machinery, India's third-biggest import commodity comprising a share of 7.48% of all imports, recorded imports worth $24.47 billion till September as against $21.89 billion in the corresponding period last year.

Other items that observed an annual increase in import value are gold (9.76% YoY increase) and iron and steel (10.25% YoY rise), both of which are among India's top 10 import items.

Oil imports, in particular, jumped to $14 billion in September from $13.2 billion in August, highlighting the diminishing margin of advantage gained from importing Russian oil.

The narrowing benefits from Russian oil imports, according to Amnish Aggarwal, head of research at Prabhudas Lilladher, could be attributed to Russian oil breaching the price cap set by G7 countries.  

"Additionally, the decision by OPEC+ countries to cut oil production reflects the increase in oil imports," Aggarwal said in a research note on Monday.

In terms of country-wise imports, India's dependance on Russia, led by its oil needs, increased to $30.42 billion in April to September this year as against $18.24 billion in the year-ago period.

Crude Price Impact On Exports

Benefiting from the difference in crude prices, India's exports reduced in value to $35.39 billion as against $43.58 billion in the six months till September 2022.

The Ministry of Commerce highlighted that this was a drop led by value decrease and not volume decrease, and attributed the change to a difference in the unit value of crude per tonne.

The unit value of petroleum products per tonne averaged at $1,094 per tonne last year, when oil prices soared against the backdrop of the Russia-Ukraine war. Unit value of petroleum products averaged at $728 per tonne in the first half of FY24, according to government estimates.

"Although petroleum exports have grown in terms of volume, because of the fall in petroleum prices it is reflecting as if there is a fall (in volume). Price effect is dragging down," said Commerce Secretary Sunil Barthwal at a press conference on Oct. 13.