Composition of India's imports

Topic: India's International Trade and Tourism · NCERT: Class 12, Ch 8 "International Trade"

Meaning

The composition of India's imports is the list of goods India buys from other countries, and the share of the total import bill that each one takes. In 2021-22, fuel (coal and POL, or petroleum, oil and lubricants) was the largest group at 31.6%. The largest single items after petroleum were non-ferrous metals, chemicals, pearls and precious stones, edible oils and fertilisers. India stopped importing foodgrain after the Green Revolution.

This list shows what India's economy is short of: energy, metals and edible oil. It also explains why India buys more goods than it sells, which is called a trade deficit.

Explanation

How the import basket changed over time

• 1950s–60s: food and machines
• Food production was low after Partition, so India imported foodgrain.

• New industries under the Five-Year Plans needed capital goods (machines used to make other goods) and machinery.

• 1970s: foodgrain imports stopped

• The Green Revolution (high-yielding seeds, irrigation and fertiliser in Punjab, Haryana and western Uttar Pradesh) raised wheat and rice output.

• India no longer needed to buy grain from abroad.

• After the 1973 oil shock: fuel and fertiliser took the lead

• The oil-exporting countries (OPEC) cut supply, and world crude prices rose about four times.

• India's oil bill shot up. Petroleum and fertilisers replaced food as the main imports.

• 2021-22 (NCERT Table 8.4): fuel leads, and machinery's share has fallen. The cause is growing use of energy by industry, transport and households.

The parts of the import basket (2021-22)

Commodity group	Share of total imports
Fuel (coal + POL)	31.6% (the largest)
Capital goods	10.1% (a falling share)
Food and allied products	4.4%
Fertilisers	2.3%

Largest single items (NCERT Table 8.5)	Value, 2021-22
Petroleum, crude and products (POL)	₹12.08 lakh crore
Non-ferrous metals (copper, aluminium and similar)	₹5 lakh crore
Chemicals	₹3.09 lakh crore
Pearls and precious stones	₹2.31 lakh crore
Edible oils	₹1.42 lakh crore
Fertilisers	₹1.06 lakh crore

• Gold and silver and electronic goods are other large items.
• Pearls and precious stones are partly "earn-back" imports. India imports rough diamonds, cuts and polishes them, and re-exports them as gems and jewellery. So part of this bill returns as export money.

Why India needs each big import

• Petroleum: the bill keeps rising
• Industrialisation: factories, power plants and freight transport use more fuel.
• Higher living standards: people own more vehicles, fly more and use more LPG.

• World price swings: India buys most of its crude oil abroad. Every rise in world prices pushes up the import bill directly.

• Edible oil: a farming gap

• Most oilseeds, such as groundnut, rapeseed-mustard, soybean and sesame, grow on rainfed drylands. These fields have no assured irrigation.
• Their yields are therefore low, and they change from year to year with the monsoon.
• A larger and richer population eats more oil, so demand grows faster than home output.

• In 2023-24, India produced 12.18 million tonnes of edible oil and imported 15.66 million tonnes [3].

• Fertiliser raw materials: missing minerals

• Potash: India has almost no deposits it can mine, so nearly all of it is imported.

• Phosphate: India has some rock phosphate, but not enough. Much phosphate and phosphoric acid is imported.

• Coking coal: a quality gap. Steel plants need low-ash coal to make coke, which is the fuel used in blast furnaces. Indian coal contains a lot of ash, so coking coal has to be imported.

• LNG (liquefied natural gas): natural gas is cooled into a liquid so that ships can carry it. India imports it for power, fertiliser plants and city gas.

Where it occurs

• Palm oil: comes from Indonesia and Malaysia, in South-East Asia near the equator. The climate there is hot and wet all year, which suits oil palm.
• Soybean oil: comes from Argentina and Brazil, in South America.
• Sunflower oil: comes from Russia and Ukraine, in the Black Sea region.
• Coking coal: comes mainly from Australia.
• LNG: comes mainly from Qatar in the Persian Gulf, and from other suppliers.
• Rough diamonds: they are cut and polished mainly in Surat (Gujarat) and Mumbai, then re-exported.
• Rock phosphate in India: Rajasthan (around Udaipur) and Madhya Pradesh. Output is not enough for the country's needs.
• Rainfed oilseed belts: Rajasthan, Gujarat, Madhya Pradesh and the Deccan.
• National Mission on Edible Oils (NMEO), Government of India:
• NMEO–Oil Palm (2021): spreads oil palm farming. The North-East and the Andaman and Nicobar Islands are focus areas.
• NMEO–Oilseeds (2024): runs from 2024-25 to 2030-31 with an outlay of ₹10,103 crore [2].

Don't confuse with

• Composition of exports: this is what India sells abroad, not what it buys. Pearls and precious stones appear in both lists, because India imports rough stones and exports finished gems and jewellery.
• Largest import group vs largest single item: the largest group is fuel (coal + POL) at 31.6% of imports (Table 8.4). The largest single item is POL at ₹12.08 lakh crore (Table 8.5). The second-largest item is non-ferrous metals, not capital goods.
• Merchandise trade deficit vs services trade: India imports more goods than it exports, which is a deficit. It sells far more services, such as software and IT-enabled services, than it buys, which is a surplus. The services surplus was US$ 213.89 billion in 2025-26 [5].
• Balance of trade vs Balance of Payments (BoP): the balance of trade covers only exports minus imports. The BoP records all money flows between India and the rest of the world, including services and remittances (money Indians abroad send home).

Prelims Hooks

• Largest import group (NCERT Table 8.4, 2021-22): fuel (coal + POL) at 31.6%, then capital goods at 10.1%, food and allied products at 4.4%, and fertilisers at 2.3%.
• Largest single items, in order (Table 8.5, 2021-22): POL (₹12.08 lakh crore) → non-ferrous metals (₹5 lakh crore) → chemicals (₹3.09 lakh crore) → pearls and precious stones (₹2.31 lakh crore).
• Order of events: foodgrain imports in the 1950s–60s → the Green Revolution ends them in the 1970s → after the 1973 oil shock, petroleum and fertiliser become the main imports.
• Edible oil suppliers: palm oil – Indonesia and Malaysia; soybean oil – Argentina and Brazil; sunflower oil – Russia and Ukraine. Trap: palm oil does not come mainly from Brazil or Russia.
• India is the world's largest importer of edible oil. Imports met about 56% of home demand in 2023-24, down from 63.2% in 2015-16 [3]. NMEO–Oilseeds aims for 69.7 million tonnes of oilseeds by 2030-31 [2].
• Supplier pairs: coking coal – Australia; LNG – Qatar. Potash is almost fully imported. The merchandise trade deficit was US$ 333.19 billion in 2025-26 [5].

Mains Points

• Energy is the root of the import bill (GS-III)
• Fuel is about a third of all imports (31.6% in 2021-22). So world oil prices drive the trade deficit, the value of the rupee and inflation.
• The goods deficit grew from US$ 241.14 billion (2023-24) [4] to US$ 333.19 billion (2025-26) [5].

• Ways to reduce it include more oil and gas exploration at home, ethanol blending, renewable energy, electric mobility and strategic petroleum reserves.

• Edible oil imports show a geography problem (GS-I/III)

• Oilseeds grow on rainfed, low-yield drylands in Rajasthan, Gujarat, Madhya Pradesh and the Deccan, so India still imports about 56% of its edible oil (2023-24) [3].
• NMEO–Oil Palm (2021) brings oil palm to the North-East. Oil palm gives far more oil per hectare than annual oilseed crops.

• NMEO–Oilseeds (2024) aims to raise oilseed output from 39 million tonnes (2022-23) to 69.7 million tonnes by 2030-31 [2].

• The changing import basket shows how India developed

• India once imported food (1950s–60s). Today it imports energy, metals and electronics, which shows it became self-sufficient in food after the Green Revolution and grew as an industrial and consumer economy.
• The large electronics bill is the reason for schemes that support manufacturing inside India.
• The services surplus (US$ 188.84 billion in 2024-25) [5] and remittances cover much of the goods deficit. This shows India's comparative advantage (what it produces most efficiently compared with others) lies in skilled services rather than raw materials.

Related concepts

• Edible oil imports
• India's trade deficit

Read more

• Composition of imports and the trade deficit