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Planning, Poverty and Political Economy of Reforms: A Tribute to Suresh D. Tendulkar Read chapter Read first chapter

2017 | OriginalPaper | Chapter

9. Determinants of Import Intensity of India’s Manufactured Exports Under the New Policy Regime

Author : Bishwanath Goldar

Published in: Perspectives on Economic Development and Policy in India

Publisher: Springer Singapore

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Abstract

This paper attempts to understand the factors behind the significant increase in import intensity of India’s manufactured exports that has taken place in the post-reform period. The industry-level analysis indicates that the increase in import intensity of manufactured exports is attributable partly to changes in product composition of exports and partly to growing export orientation of Indian manufacturing industries. A major contributing factor appears to be the liberalization of import policy in India. Firm-level econometric analysis reveals that exporting firms are more import intensive than non-exporting firms. A significant positive impact of export intensity on import intensity of firms is clearly indicated. The econometric results also show that firms’ decisions to import and export are interdependent. Both decisions may be rooted in firm heterogeneity.

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previous chapter Capital Flows and Exchange Rates: The Indian Experience
Footnotes
1
Ratio of direct and indirect requirements of imports divided by the value of exports.
 
2
E.g., Goldar and Kato (2009), Ranjan and Raychaudhuri (2011), Haidar (2012).
 
3
Exports of tea, coffee, processed fruits, and sugar and molasses have been included as a part of manufactured exports. Thus, the coverage of ‘manufactured exports’ adopted here is wider than that in the RBI Handbook of Statistics.
 
4
The trend growth rate goes up to 24% per annum if petroleum products (which have high import intensity) are included in this category of industrial products.
 
5
The import intensity estimates for individual industries for 1998–99 have been taken from Bhat et al. (2007). Similar estimate for 2003–04 and 2006–07 have been made in this study using input-output tables and import flow matrices for these two years and applying the same methodology as in Bhat et al. (2007) and Bhat and Paul (2009). The sectoral classification in the input-output tables for 2003–04 and 2006–07 are slightly different from those in the input-output tables for 1993–94 and 1998–98. Therefore, in certain cases, sectors have been merged to obtain comparable sectors. This has reduced the number of sectors constituting manufacturing to 65.
 
6
At the time of writing this paper, the input-output table for 2007–08 had become available. However, the import flow matrix was not available. Therefore, data for this year have not been included in the analysis.
 
7
This inference is drawn by comparing export intensity levels of zero and one. Alternatively, one may contrast a typical exporting firm (exporting about 23% of its sales) and a typical non-exporting firm. The difference in import intensity between these two firms, after controlling for other variables, is expected to be in the range of 2.3–4.1% points.
 
Literature
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Metadata
Title
Determinants of Import Intensity of India’s Manufactured Exports Under the New Policy Regime
Author
Bishwanath Goldar
Copyright Year
2017
Publisher
Springer Singapore
Book
Perspectives on Economic Development and Policy in India

Print ISBN: 978-981-10-3149-6

Electronic ISBN: 978-981-10-3150-2

Copyright Year: 2017

DOI
https://doi.org/10.1007/978-981-10-3150-2_9

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