Indians love electronics a lot

July 6, 2018 Hot from the Oven Valli Sarvani No comments

Indians have a love of gold, which is widely known. However, this attraction to gold seems to be dropping to second place, while a love for electronic devices is on the rise.

The increase in Indians’ purchasing of televisions, smartphones, computers, and other electronics have resulted in electronic devices becoming India’s second-biggest import item.

India’s main import item continues to be oil, but electronics have surprisingly overtaken gold as India’s second-largest deficit. This is not good news for the Indian economy, since this significantly raises the trade deficit of the country.

It also does not bode well for the Indian rupee. The rupee is already facing worsening conditions from the rise in the price of imported oil.

Economists have forecast the current account deficit to widen by 2.3% of gross domestic product in the fiscal year ending in March 2019. Currently, the current account deficit is 1.9% of gross domestic product.

The chief economist at Axis Bank Ltd., Saugata Bhattacharya, says that the increase in India’s imports of electronic devices are already impacting the nation’s current account deficit.

However, Bhattacharya does see a way to solve this issue. He says that the problem could be solved if India integrates more into the global supply chain within the coming years.

Prime Minister Narendra Modi’s “Make in India” program is focused on manufacturing items locally and cutting down India’s reliance in imported items.

However, global companies have not yet bought into Modi’s plan. In the financial year that ended in March 2018, China was, by far, the biggest source of mobile phones, personal computers, and other consumer electronics.

They accounted for almost 60% of the total. Government data for the 13 months up to May show the total value of India’s electronics imports. They were valued at $57.8 billion, which far exceeded the country’s gold purchases. Gold purchases were valued at $35.8 billion.

India now faces a new challenge to its current account deficit, so the country must work to make Modi’s “Make in India” program a reality.

Image credit: Photo by Marvin Meyer on Unsplash (Free for commercial use)