Imports to India in the first half of 2021-2022 have returned to pre-pandemic levels
Trade data for the first six months of 2021-2022 indicates that imports to India have returned to pre-pandemic levels of 2019-20 without any major changes in source countries. Imports increased to reach USD 273.9 billion in the first half of 2021-22, compared to USD 151.94 billion during the same period in 2020-21 and USD 248.08 billion in 2019-20.
The value of India’s imports in 2020-2021 was around $ 394 billion, lower than that of $ 474 billion in 2019-20. The first months of 2020-21 coincided with the initial spread of the COVID-19 pandemic in the country, which resulted in lockdowns and restrictions. These measures affected public traffic and consequently the economic activity of the country. The decline in imports in 2020-21 is in the expected lines due to the impact of COVID-19. In 2020-2021, the export volume also fell to $ 291 billion, from $ 313 billion in 2019-20.
However, an improvement is observed in the first half of 2021-22, compared to the same period in 2020-21. Imports in the first half of the year have grown from $ 151 billion in 2020-2021 to nearly $ 274 billion in the current fiscal year. Likewise, exports increased from USD 125 billion in 2020-2021 to USD 198 billion in the first half of 2021-2022.
In a previous story, we discussed India’s trade trends with China after the COVID-19 pandemic. With the largest number of imports, China is India’s largest import partner. It is also one of the first export destinations for Indian products. In this two-part series, we examine trends in India’s trade with other major trading partners (excluding China) over the past few years and assess the impact of COVID-19. In the first story, we focus on the impact on imports after the COVID-19 pandemic, that is, during 2020-21 as well as the first half of 2021-22.
Significant drop in imports in 2020-21 from Saudi Arabia, Iraq and Nigeria
In the previous story, we pointed out that there was only a marginal change in imports from China, even though overall imports in 2020-21 decreased from the previous year. This decline in overall imports is due to reduced imports to varying degrees from many important trading partners.
Imports from the United States, the second largest source of imports after China, fell 19% in 2020-21. The value of imports from the United States fell to $ 28.9 billion in 2020-2021, from $ 35.8 billion in 2019-20.
However, the major drop in imports in 2020-21 came from Saudi Arabia and Iraq. The total value of imports from Saudi Arabia decreased by almost 40%, from $ 26.8 billion in 2019-20 to $ 16.2 billion in 2020-2021. Imports from another major trading partner, Iraq, also declined by around 40%, from $ 23.7 billion in 2019-2020 to $ 14.1 billion in 2020-2021. The volume of imports from Nigeria is comparatively lower than in these countries. However, it is generally among the top 15 trading partners of India. Imports from Nigeria fell almost 45%, from USD 10.2 billion in 2019-2020 to USD 5.7 billion in 2020-21.
Almost all of India’s top 15 import partners experienced a decline in the value of imports in the 2020-21 pandemic year compared to 2019-20. The only exception is Switzerland, whose imports to India increased in 2020-21. Imports from Iran, Germany and Hong Kong were down in 2019-2020 itself.
The Ministry of Commerce and Commerce recently released the trade information for the month of September 2021. In other words, the complete data for the first half of 2021-2022 is now available.
Imports increased to reach USD 273.9 billion in the first half of 2021-22, compared to USD 151.94 billion during the same period in 2020-21. The previous year, i.e. 2019-2020, the import value was 248.08 billion USD in the first half of the year.
We have already pointed out that imports from China in the first half of the current fiscal year have already exceeded pre-COVID 2019-20 year levels. The same is true for most of India’s major import partners. Iraq and Saudi Arabia, countries whose imports declined significantly in 2020-2021, saw increased imports in the first half of 2021-2022, with numbers reaching 2019-20 levels.
Switzerland, the United Arab Emirates and the United States are among the countries whose imports also increased in the first half of 2021-22 compared to the same period in 2020-21. Switzerland, which reported an increase in imports to India in 2020-21, reported a decrease in imports in the first half of 2020-21. However, imports to India from Switzerland increased again in the first half of 2021-2022 and exceeded 2019-20 levels.
Imports from Switzerland, United Arab Emirates and United States increased significantly in the first half of 2021-22 compared to the same period in 2020-21.
Decrease in imports in 2020-21 mainly due to lower crude oil imports
In 2019-2020, around 20% of the total value of imports to India was crude oil (HS code: 2709). As noted in one of Factly’s previous articles, India imports almost 90% of its crude oil needs. Crude oil worth $ 102 billion was imported in 2019-20, which fell to $ 59.47 billion in 2020-21, a reduction of over 40%. The decline in the value of imports to Saudi Arabia, Iraq and Nigeria, as previously pointed out, can be attributed to lower imports of crude oil.
Crude oil is an important part of the larger product category of “Mineral fuels, mineral oils and products of their distillation, bituminous substances, mineral waxes” (HS Code: 27). There is a 35% drop in the value of imports in this category between 2019-20 and 2020-21. The fall in the value of imports for most of the other major categories of imports has been comparatively nominal.
“Iron and steel”, “Parts of aircraft and spacecraft”, “Nuclear reactors, broilers, etc.” Have also experienced a decline in the value of imports. Most of the decline in imports relates to inputs and raw materials for further processing. The impact of the closure and restrictions on economic activity for much of 2020-21 was visible in the 2020-21 import numbers.
Lower imports from the United States as well as Kuwait and France contributed to the decline in the item “Airspace and spacecraft parts”. In a previous story, we pointed out that âiron and steelâ was one of the declining import categories from China. Lower imports of “Iron & Steel” contributed to lower imports from Germany, Indonesia, Japan and South Korea.
While Switzerland has contributed to an increase in imports in the case of “Animal and vegetable oils and fats”, the increase in imports from Switzerland is also due to an increase in imports of “Fertilizers” as well as articles relating to metals such as nickel, aluminum, zinc, etc.
Even in the case of Switzerland, imports of products such as optical instruments and the like have declined. Among the products that contributed to the increase in imports during the first half of 2021-2022, Crude Oil played a major role. It also means that imports from Saudi Arabia and Iraq returned to 2019-20 levels during the first half of 2021-2022.
“Pearls, stones, natural and cultured metals”, etc. is another important category whose imports increased from 13.08 billion USD to 39.85 billion USD during the first half of 2021-2022. Switzerland, South Africa, the United Arab Emirates and the United States are the countries that have contributed to the increase in imports of this category of products. Imports of this product category from these countries fell in 2020-2021 and returned to 2019-20 levels.
Import trends suggest a return to pre-pandemic levels without major changes
Examination of data for India’s major import partners (excluding China) shows that:
There was a sharp drop in imports in 2020-21, mainly due to a drop in crude oil imports.
The value of imports during the first half of 2021-2022 is at the same level as the value of imports during the same period of the pre-pandemic year of 2019-20.
At the same time, there is no major change in the list of countries that have previously imported large volumes in certain product categories. Most of these countries have regained their position as the leading import partner, without another country replacing them. This is visible in the case of Saudi Arabia and Iraq for crude oil or the United States, United Arab Emirates, Switzerland, etc. for precious metals and stones. In the case of a few countries like Iran, the downward trend in imports to India that started even before 2020-21 continued even into 2021-22.
Overall, imports in the first half of 2021-2022 returned to pre-pandemic 2019-20 levels without major changes in the source of imports. China remains India’s largest import partner even in 2021-2022.
In the following article, we explore India’s export trends for some of the major export partners other than China.