‘Export or perish’ was the clarion call given by Jawaharlal Nehru. Now, with a staggering import bill of $491.9 billion, India needs to stop imports of cheap goods and encourage buying indigenous equipment, even if it costs 15% to 20% higher than overseas

In a written reply to the Lok Sabha, Anand Sharma, minister for commerce and industry, has confirmed India's exports at $300.3 billion as against a staggering import bill of $491.9 billion during the year 2012-13. 

He has further stated that 10 countries, which account for this trade deficit of $191.6 billion, are China, Switzerland, Saudi Arabia, Kuwait, Iraq, Qatar, Venezuela, Nigeria, Australia and Indonesia. These account for as much as 76.5% of our deficit. There are 70 more countries that have a favourable balance of trade against India!

The reasons are not far to seek.  Saudi Arabia, Iraq, Kuwait, Qatar, Venezuela and Nigeria are our principal suppliers of oil and gas, which we produce indigenously but in insufficient quantity and thus have to import for catering our growing needs. Australia and Indonesia supply coal, again an essential energy base. India has the resources in substantial quantity but is unable to excavate and distribute in an efficient manner, due to bureaucratic bungling in environmental clearances and logistical issues.

China is well entrenched in India in supplying cheap electronic goods, thereby killing the domestic industry and, of course supplying various power generating equipments, which have been found to be of inferior quality and workmanship. However, this factor is conveniently overlooked due to cheaper Yuan credit that China can give.

It took months of protests and appeals before the government imposed an increased tariff on these electrical equipments that were actually hurting the indigenous industry.

Now, the Heavy Industry Minister Praful Patel is seeking to have the import duty cut to 14% from the revised rate of 21% imposed a few months earlier. We do not know what has caused him to make this suggestion.

On these issues, we appear to brazenly overlook the fact that we need to seriously improve our own production capacity of all electrical power generating equipments, which we import from China, the main supplier, and others.

Secondly, apart from maintaining the current tariff, the government must consider giving a preferential treatment in obtaining indigenous equipment, even if these are 15% to 20% higher than the imported counterparts. Treating such supplies as "deemed export" is one thing, but giving this sort of direct price advantage is a key element to facilitate growth.  Besides, a whole lot of foreign exchange can be saved in this manner. Employment opportunities will increase as will consumption and growth of essential raw materials, like steel, that are indigenously made.

The Government must have a think tank to work on these lines of import substitution more seriously than what it being done so far.

(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)