According to the BoB report, despite the global supply chain crisis, the import dependence of Indian companies is stable. This is limited to only a few specific sectors, due to which there is less possibility of a large-scale impact on the economy.
New Delhi [भारत]July 6 (ANI): India Inc’s import dependence remains largely stable despite concerns over global supply disruptions, with import intensity concentrated only in a few sectors and not across the corporate sector, according to a Bank of Baroda report.
The report analyzes the import-to-net sales ratio of a sample of 1,372 companies (except banks and financial companies) across sectors to assess their sensitivity to rising input costs amid the recent Middle East crisis. “India Inc’s import-to-net sales ratio has remained broadly flat,” it said.
Stability in import-sales ratio
According to the report, rising prices of oil and metals are a major concern for industries that are heavily dependent on imported inputs. However, the analysis showed that India Inc’s imports-to-net sales ratio has remained broadly stable over the years.
The report also said that many sectors have reduced their dependence on imports over time, which has provided relief in the current global environment. According to the report, the import-to-net sales ratio of sectors such as chemicals, consumer durables, electricals and capital goods declined, indicating lower import intensity compared to previous years.
Still more dependence in some sectors
However, the report noted that some sectors remain more dependent on imports due to the nature of their businesses and input-output dynamics. According to the report, the import-to-net sales ratio remains high in sectors such as industrial gases and fuels, non-ferrous metals and crude oil due to their operational requirements.
Less possibility of widespread impact
The report highlights that import intensity in India Inc is concentrated in a limited number of sectors and companies rather than being widespread across the entire corporate sector. As a result, it said any disruptions arising from global supply shocks are unlikely to have a material impact on India Inc.
The report further said that the impact of such disruptions can be managed through sector-specific policy measures, as the weakness is limited to certain industries rather than affecting the broader economy.
Bank of Baroda said the analysis was done against the backdrop of concerns over the Middle East crisis, where rising oil and metal prices have again raised concerns over input costs for import-intensive industries. Based on its assessment, the report concluded that even though some sectors remain vulnerable to higher import costs, India’s corporate sector has overall maintained a stable import dependence, reducing the likelihood of widespread disruptions from global supply shocks. (ANI)
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