While commerce minister Suresh Prabhu deliberates on how to reduce imports—he heads an inter-ministerial committee on this—he would do well to look at a strategy different from the one followed so far; basically, the strategy has been to hike duties on various imports in order to lower consumption. Apart from the fact that import substitution hasn’t worked as a strategy over several decades, it makes Indian industry uncompetitive.
A more meaningful strategy is one that lowers imports in the long run and, as the same time, makes the country more competitive. Privatising inefficient PSUs and removing the monopoly for them, as it happens, is the only way to lower imports; sadly, prime minister Narendra Modi has steadfastly refused to move on this. Indeed, after promising to open up the coal sector to commercial miners in the private sector, opposition from Coal India’s unions have made him backtrack.
India’s largest imports, as is well-known, are those of crude oil that, at $87 billion in FY18, rose by 24% over the year and comprise around a fifth of the country’s imports. Read More
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