India creates an import surge in textile, gems and jewellery: GTRI analysis

In the midst of inflation, geopolitical tensions and volatile market, a recent analytical report by Ajay Srivastava, founder of the Global Trade Research Initiative (GTRI), highlights a rising demand among the country. The report indicates a notable uptick in demand for luxury and investment goods at the higher end, leading to shifts in the dynamics and figures of key sectors within the nation. Sectors such as gemstones, jewellery, textiles, and clothing, known for their substantial employment generation potential, have garnered significant attention as a result.

According to reports spanning fiscal years 2019 to 2024, there’s been a notable decline of 7.10% in textile and clothing exports, totaling $34.84 billion. Conversely, imports have surged by 20.33%, reaching $8.90 billion. This scenario complicates matters in global market competition and poses challenges for sustaining steady growth in the local market, particularly for imported goods.

Also the recent updates regarding the exports and imports of gems, jewellery, diamonds, and gold products reveal a significant 18.78% decrease in exports, amounting to $32.85 billion. In contrast, imports have surged by 21.25% to $78.47 billion. This shift in dynamics shows changes within the luxury and investment goods market. The GTRI report notes that a substantial portion of gold and diamond products in the Indian market is consumed domestically, with only 35% or less being processed for export as jewellery.

During the review period, certain sectors stood out for their performance:

•  Electronics and telecom products witnessed an impressive surge of 170.32% in exports, reaching $34.41 billion, while imports grew by 52.37% to $79.31 billion.
•  The export of agriculture products, meat, and processed food products experienced a robust growth of 32% to $48.30 billion in FY 2024, while imports in this sector rose by 63.93% to $31.97 billion.
• Metals, ores, minerals, and petroleum saw an 80% increase in exports, totalling $94.04 billion, while imports rose by 31.55% to $230.18 billion, indicative of strong domestic demand for these resources.
• Chemicals and pharmaceuticals exports grew by 32% to $60.94 billion, while imports rose by 26.2% to $62.89 billion, highlighting a steady growth in both domestic production and consumption.
• Exports of machinery surged by 43.37% to $30.06 billion, while imports rose by 30.97% to $57.42 billion, indicating heightened investments in manufacturing capabilities.
• In the auto sector, exports experienced a moderate up-tick of 15.47% to $20.90 billion, while imports grew by 23.56% to $7.61 billion, signalling growth in both production and market expansion. Impressively, the auto sector stands out as the only major sector exporting significantly more than it imports.

As per the analysis by GTRI, these sectors serving as inputs for manufacturing performed strongly in both export and import domains.

India’s total imports of goods from countries with which it has free trade agreements, including the UAE, South Korea, and Australia, experienced a significant surge of approximately 38% during the fiscal years 2019-24, reaching $187.92 billion, according to GTRI’s findings. Amid India’s overall notable increase in trading activity, it’s essential to highlight that, aside from China and the US, other prominent trading partners within the top five include the UAE, Russia, and Saudi Arabia also.