For years, the story of India’s trade gap has had a familiar villain: crude oil. But now, another problem has begun showing up—India’s non-petroleum trade deficit has crossed that of petroleum products. Since 2022-23, non-petroleum trade deficit has been 1.4-1.8 times that of petroleum products, with a sizeable chunk sitting with arguably the biggest success of the Make in India initiative: the electronics segment.
The recent West Asia war has underlined how high import dependence could translate into larger economic vulnerability. However, even in non-disruptive times, import dependence has been one of the key issues for India, more so in the non-petroleum sector. In 2025-26, India recorded $334 billion trade deficit. Of this, $120 billion came from petroleum products and $214 billion, nearly double, from non-petroleum products. Electronics trade deficit stood at nearly $69 billion, making up 20% of total trade deficit and 32% of the non-petroleum trade deficit.
Import-heavy
Sector-wise, mining and are the two most import-dependent sectors, a Crisil report released last week said. Mining is the most vulnerable sector, with its imports at 35.4% of the total supply. A large part of this import vulnerability comes from crude oil dependence. India meets 85-90% of its domestic oil and petroleum demand through imports. Copper ore and natural gas also add to this segment. In manufacturing, import dependence is particularly high for industrial input, Crisil noted.
The good news is that in the manufacturing segment, dependence on finished goods is low, which means India is importing to manufacture more, rather than to consume more. However, import dependence of this kind can also leave India vulnerable. For example: China’s squeeze of and fertilizers last year had left India in a vulnerable position.
“India’s imports have risen steadily for nearly three decades, reflecting persistent gaps in domestic capacity across energy, electronics, machinery, critical minerals, chemicals and industrial components,” Ajay Srivastava of Global Trade Research Initiative (GTRI) said. The continuing reliance on foreign technology, components and raw materials shows that domestic manufacturing has not expanded or deepened fast enough to meet demand, he added.
Standing in the assembly line
Within the manufacturing segment, electronics aren’t the largest import-dependent sector, but a sizeable one. Gems and jewellery is, and has been, the biggest group with imports at 56.5% of the total supply, Crisil’s analysis of statistics ministry’s supply use tables showed. Electronic products rank second, with imports making up 29.8% of total supply.
The government’s production-linked incentive (PLI) scheme for the electronics segment did help build domestic capabilities and reduce import dependence of finished products like mobile phones, Crisil said. “However, according to a 2025 Crisil study, domestic value addition has risen only to around 20%, indicating that the industry remains heavily reliant on imported components and largely focused on assembly,” it added.
Within the electronics segment, import dependence is particularly concentrated in key components: electronic integrated circuits alone recorded $30 billion in net imports in 2023-24, while and electric accumulators each stood at $4.9 billion.
“India has built large-scale assembly capacity and emerged as a major exporter, but domestic value addition remains modest because many high-value components—such as semiconductors, displays, camera modules and memory—are still imported,” GTRI’s Srivastava said.