Trends, Determinants And Economic Impact Of Imports In India: An Empirical Study

Abstract

This empirical study investigates the structural trends, macroeconomic determinants, and growth impacts of 
merchandise imports in India over a twenty-five-year post-liberalization horizon spanning FY 2000–01 to FY 
2024–25. Drawing upon secondary time-series datasets compiled from the Reserve Bank of India (RBI), the 
Directorate General of Commercial Intelligence and Statistics (DGCI&S), and the World Bank, the paper employs 
quinquennial regime decomposition, log-linear Ordinary Least Squares (OLS), and Autoregressive Distributed 
Lag (ARDL) models alongside disaggregated macroeconomic impact regressions. Empirical trend analysis 
reveals that India's merchandise imports expanded fourteen-fold from USD 50.54 billion in FY 2000–01 to a peak 
of USD 720.24 billion in FY 2024–25, registering a compound annual growth rate (CAGR) of 11.71% and 
widening the merchandise trade deficit to USD 282.82 billion. Econometric estimates of the aggregate import 
demand function demonstrate that real GDP is the primary structural determinant with a long-run income 
elasticity of 1.426 (p < 0.001), followed by international Brent crude oil prices with an elasticity of 0.645 (p < 
0.001), whereas nominal exchange rate depreciation exerts a modest restraining effect (-0.708, p = 0.067), 
confirming the price-inelastic nature of essential imports. Crucially, disaggregated impact regressions establish 
a dualistic macroeconomic relationship: productive imports comprising capital machinery, electronics, 
semiconductors, and chemical intermediates, constituting 52.3% of total imports in FY 2024–25 significantly 
accelerate Gross Fixed Capital Formation (beta = 0.418, p < 0.001) and real GDP growth (beta = 0.312, p = 
0.002), whereas energy and bullion imports exacerbate external deficits, necessitating targeted tariff calibration 
and domestic value-chain integration.