India's Import from ASEAN

India's Import Policy :
Since independence India has been following a very liberal import policy with a view to achieving the goal of rapid economic development and self reliance in different sectors of the economy. As a result, Indian imports of all items in general and consumer goods in particular increased considerably but the increase created before the country the chronic problem of the paucity of foreign exchange. To overcome this difficult situation, the government adopted a planned restrictive import policy under which restrictions were imposed on the import of almost all the consumer items except food grains. During periods of foreign exchange crisis some restrictions were imposed on the import of capital goods too. However, in case of non-consumer items, it was not a planbet reduction of imports. By and large, under the selective import policy, a distinction was made between core and non core industries. A similar distinction was also made between capital goods and maintains goods. Therefore, in addition to same the scarce foreign exchange, Indian import policy aimed at protecting the domestic industries. Here it is worth noting that India import policy changed from time to time depending upon the domestic production and the availability of foreign exchange. After the Mudaliar Committee (1962) submitted its report, the scope of imports policy was broadened. The Mudaliar Committee which reviewed imports and exports, emphasized that development and maintenance imports were both essential for a growing economy and therefore, urged upon the government to provide facilities for the import of raw material, components, etc., for all existing industries subject to higher priorities to new industries in (i) power and transport which had proved a serious bottlenrcb; (ii) export oriented industries, and (iii) industries producing raw materials and components now imported. Industries depending almost entirely on indigenous raw material could arrange their own foreign exchange for the import of plant and machinery. The import recommendations of the Committee were accepted by the Government.
Since 1975-76, the Government of India has been following a liberalized import policy with the objective of increasing production, especially export production. There has been on increased emphasis on enhancing maintenance imports in order to promote capacity utilization. Since the principal purpose of the import policy was to encourage exports it is characterized as export oriented import policy. While framing the export - import policy (1985), the government was guided by the recommendations of Abid Hussain Committes. Whereas the Committee emphasized the need for striking a balance between export promotion and import substitution, the government in its wave of import liberalisatioin permitted a much greater quantum of imports in the name of export promotion and capital goods imports for technological upgradation. Thus, grave distortions appeared in the process of implementation of the recommendations of the Committees.
The 1985 import policy was broadly welcomed by various chambers of Commerce and Industry, business and industrial houses and leading industrialistis. The policy aimed at restricting unnecessary imports, but permitted imports for encouraging indigenous production and promoting exports. The policy also intended to pursue technological upgradation through imports. The policy was aware of the need to check dumping of goods by multinationals and, therefore; gave support to the indigenous industries by selective restrictions on imports. Another welcome feature of the import policy was the fillip it gave to the small scale and cottage industries as well as to agricultural exports, all this would help to maximize utilization of our manpower and agricultural resources.
The import policy has already passed various phases. In the earlier stage, import substitution mostly covered the domestic production of consumer goods. However, at a later stage the emphasis shifted to capital goods. The next phases pertained to the reduction of dependence on imported know-how by encouraging the use of indigenous technology. Now, the emphasis has shifted to R. and D. of domestic technology. This marks a very important development in import substitution and a move towards industrialization. As a result of the policy of import substitution, many items which were imported earlier, are either not being imported at all or are being imported in very small quantities according to the requirements of the Country. In concrete form a realistic import policy has to embody several measures such as a big enlongement of the number of commodities placed in the list of open general license (OGL), duty free imports on selective basis, introduction of export linked imports whereby input imports would be allowed against exports, liberalisation of the import of high export potentional machinery etc. In a nut shell, the current import policy aims at regulating the domestic supplies of consumer goods and industrial imports besides injecting elements of competitiveness for large industries, with protective cover for the small ones.
It is necessary for India to follow a realistic trade policy and frame her import policy in such a way as may help in gaining self-efficiency in major fields of economy and convert trade deficit into surplus.
Indian import policy may be considered as an extension of the policy of discriminating protection and the import control system. Never the less, India has shown much interest in the ASEAN region and has adopted a liberalized import policy towards them. So much so that several non-traditional items have been included in our imports from these countries on set traditional lines. During the early years of her economic relations with the ASEAN countries, India followed a policy of parter exchange and moulded her import policy accordingly. Later of course she had to switch over to the system of exchange of freely convertible currency. Yet her attitude towards ASEAN countries continues to be very liberal. Despite several efforts, the declining trend continued with so much intensity that individual items of imports from ASEAN region which had been there till the early nineties, disappeared altogether from the list. On the other hand certain new items such as transport equipment and machinery, electronics, steel, power generating equipment, newsprint etc. were included in India" list of import from ASEAN countries. Indian has also been emphasizing the need of further improvement in tele-communication facilities between her and these countries.
In order to establish cordial relations with the ASEAN region the Indian government has granted several concessions and has entered into several trade agreements. There agreements highlight India" been interest in the all round economic development of the ASEAN region. She has established joint ventures in different fields and granted several trade concession. For the expansion and promotion of mutually advantageous trade between India and ASEAN countries governments on both sides agree to exploring new avenues including trade exhibitions, fairs and visits by businessmen and government officials as trade delegation to each others country old colonial relations and the complementarily of native countries in the field of production and trade induced India to import major items from ASEAN countries in preference to other countries of the world.
Since the total imports from ASEAN region constitutes only a small fraction of the total imports of India, there is a great scope for ASEAN regions products in India's commodity market and hopefully India's imports from the ASEAN region shall go up in years to come.
An analysis of Indian imports during the period under study reveals that Indian imports from the ASEAN countries have increased substantially especially from Indonesia, Malaysia, Singapore, Thailand and Myanmar whereas imports from the Philippines, Brunei, Cambodia, Laos, Vietnam have remained relatively low. Over the last decade despite year to year fluctuations, an upward trend has been observed in India's imports from ASEAN, which promises further growth of trade relation between them.
ASEAN region countries specialize in supplying different raw products, thanks to their rich national resources and geographical features. Being more industrially advanced than any of these countries, India can absorb their primary export items in larger quantity. This has paned the way for the strengthening of trade relations between India and ASEAN Countries.
Indian imports, traditional and non traditional items both from ASEAN. During the early phase of the study period India's traditional imports from ASEAN region consisted mainly of rubber, spices, rice, palm oil, tin etc. whereas minerals, iron and steel, metal manufactures, chemical and related products oil seeds nuts, oil rigs, non ferrous base metal oil and kernels etc. were among the important items of non-traditional items.
India and ASEAN countries have been interdependent an each other for most of their requirements. Being a developing country, India has been taking been interest in the all round economic development of ASEAN countries. Similarly ASEAN countries have also been following a positive tone fro India and granted several trade concessions for boosting trade with her. India also did not lag behind in granting several conversions through long term and short term trade agreements with some of the countries of ASEAN for promoting imports of several products traditional and non-traditional of national interest and in the interest of promoting economic co-operation with the ASEAN grouping. The following is an illustrative list of principal items which India has been importing from ASEAN countries.
India's Principal import Items from ASEAN Countries
Brunei :
Crude petroleum and manufactured petroleum products, gas natural and Manufactured.
Cambodia:
Rubber, tobacco, fishery products and soybeans.
Indonesia:
Palm oil, crude and processed, coal, petroleum products, chemical, raw cashew, aluminum, urea, plywood, leather and office equipment
Laos :
Wood and wood products, coffee, handicrafts and other.
Malaysia:
Vegetable oils fixed (edible), electronic goods, wood ad wood products, organic chemicals, Machinery & transport equipment non ferrous base metal.
Myanmar :
Pulses and beans wood and wood products.
The Philippines :
Electronic goods, inorganic chemicals, Newsprint, Electrical machinery except electronic, transport equipments, phosphoric acid.
Singapore:
Accessories of computers and computer peripherals, cellular phones, wase & scrap of iron and steel, Photographic chemicals, electrical Machines and apparatus, electrical goods.
Thailand:
Electronic goods, machinery except electronics artificial Resins, Plastic Material etc. Other textile yarn, Fabric made up articles.
Vietnam :
Crude oil, pepper, tea, leather and made-ups, rubber, cinnamon, electronic components and coal.
There have been noticeable changes over the past decade in the pattern of Indo-ASEAN trade, partly in response to the change in India's demand condition and partly in line with thechanges in the structure of ASEAN economics. The inclusion of various traditional and non-traditional items simultaneously has considerably changed the complexion of India's imports pattern from the ASEAN region. During the nineties India's imports from ASEAN countries exceeded her exports to these countries due to India's commodity boom in recent years. This has of course, tended to inflate the relative importance of the exports of primary products of ASEAN countries. Here it is important to note that the overall degree of commodity concentration for the ASEAN countries (except Singapore) still remains high despite significant progress towards diversification. A few primary commodities such as petroleum and natural gas from Brunei : rubber, tobacco, soybeans from Cambodia : palm oil, rubber petroleum from Indonesia : wood and wood products, Coffee from Laos :tin, rubber, palm oil and raw logs from Malaysia : Pulses and beans from Myanmar : copra, sugar and logs from the Philippines : rice, rubber, tungsten dress and concentrates from Thailand : crude oil, tra from Vietnam, still continue to dominate their exports. Singapore, thanks to her lesser degree of dependence on primary commodity exports, has been and continues to be a great success in the exports of finished goods. Since India's total imports from ASEAN countries is significant enough, particular from Indonesia, Malaysia and Singapore, there is an urgent need for the ASEAN region to evolve a comprehensive commodity strategy, including effective measures that can be taken to manage their primary resources more efficiently in view of the rapidly changing environment of India. Truly speaking, India has also agreed to import most of the commodities under open general license system (OGL). However, some licensing procedure are involved in case of certain items in order to protect local industries. Moreover, the Indian Government levies very low tariff of the products of the ASEAN region. The tariff rate generally depend upon the priorities of the government and also upon the fact as to whether the goods are indigenously produced or not. As a matter of fact, It provides better opportunities to ASEAN countries for boosting up their trade. It is evident from these facts that the ASEAN countries by and large have shown a been interest in India's trade to reduce their dependence on Japan and the west through a more self reliant approach.
On the basis of the foregoing analysis it can be safely concluded that there are better anemers and prospects for the ASEAN countries products in India's market. More such possibilities needs be explored and it is likely that in year to come India's imports from ASEAN countries grow considerably.