Impact of Import Intensity on Exports, Output and Employment during Post- Liberalisation Period

Abstract

The paper examines the trends and patterns of import intensity in the Indian economy and manufacturing sector during 1990s and beyond. It reviews past studies on import intensity based on different data bases and alternative methodologies. Import intensity of India's exports increased steadily from 10.54 per cent in 1993-1994 to 15.9 per cent a decade later in 2003-2004. In 2006-2007, import intensity of exports rose sharply to 28.4 per cent before dropping off to 18.72 per cent in 2007-2008. The steep rise in import intensity between 2003-2004 and 2006-2007 mirrored an 89 per cent jump in import intensity of manufacturing exports which fell to 29.63 per cent in 2007-2008. Fall in industrial production led to decline in the demand for intermediate inputs. This reduced the import intensity effectively. Changing levels of import intensity have implications for the growth of output, employment and exports. Therefore, import liberalization measures need to be implemented and sequenced with caution to get the desired result.