India Inc's Import Dependence Remains Stable
India Inc's import dependence has remained broadly stable despite concerns over global supply disruptions, according to a report by Bank of Baroda. The report examined the import-to-net sales ratio of a sample of 1,372 companies, excluding banks and financial companies, across various sectors to assess their vulnerability to rising input costs amid the recent West Asia crisis.
Import Intensity Concentrated in Few Sectors
The report stated, "India Inc's import to net sales ratio has broadly remained flat." It noted that rising prices of oil and metals have emerged as a key concern for industries relying heavily on imported inputs. However, the analysis showed that the import-to-net sales ratio has broadly remained flat over the years.
The report highlighted that several sectors have reduced their dependence on imports over time, providing relief amid the current global environment. The import-to-net sales ratio has declined in sectors such as chemicals, consumer durables, electricals, and capital goods, indicating lower import intensity compared with previous years.
Sectors with Elevated Import Dependence
Despite the overall stability, certain sectors continue to have elevated import dependence due to the nature of their business and input-output dynamics. According to the report, sectors such as industrial gases and fuels, non-ferrous metals, and crude oil continue to report higher import-to-net sales ratios because of their operational requirements.
The report emphasized that import intensity in India Inc is concentrated in a limited number of sectors and companies rather than being broad-based across the corporate sector. As a result, any disruption arising from global supply shocks is unlikely to have a widespread impact on India Inc.
Policy Implications and Sector-Specific Measures
The report added that the impact of such disruptions can be managed through sector-specific policy measures, given that the vulnerability is confined to a few industries instead of affecting the broader economy. Bank of Baroda said the analysis was undertaken against the backdrop of concerns surrounding the West Asia crisis, where rising oil and metal prices have renewed worries over input costs for import-intensive industries.
Based on its assessment, the report concluded that while some sectors remain exposed to higher import costs, India's corporate sector as a whole has maintained a stable import dependence, reducing the likelihood of broad-based disruptions from global supply shocks.
