What question did this study set out to answer?

This research aims to evaluate how domestic manufacturing and import substitution strategies impact trade deficits in India's key sectors from 2015 to 2025.

June 15, 2026Open Access

Analyzing Sectorial Trade Dynamics in India : The Role of Domestic Manufacturing and Import Substitution in Reducing Trade Deficits (2015–2025)

Key Points

This research aims to evaluate how domestic manufacturing and import substitution strategies impact trade deficits in India's key sectors from 2015 to 2025.
Utilized secondary time-series data from multiple sources including the Ministry of Commerce and Industry and the World Bank.
Analyzed sector-specific dynamics in electronics, pharmaceuticals, and renewable energy.
Assessed the effectiveness of policies like Make in India and Atmanirbhar Bharat.
Electronics sector averaged a trade deficit of -$3,191.05 million with 74.84% import dependency.
Renewable energy sector showed a trade deficit of -$373.29 million with 89.33% import dependency.
Pharmaceuticals sector generated an average surplus of +$1,294.62 million with just 11.6% import dependency.

Abstract

This paper examines sector-specific trade dynamics in India from 2015 to 2025, focusing on electronics, pharmaceuticals, and renewable energy. Using secondary time-series data from the Ministry of Commerce and Industry, Reserve Bank of India, World Bank, and Directorate General of Foreign Trade, the study assesses the role of domestic manufacturing and import substitution strategies in addressing trade deficits. The analysis reveals persistent deficits in electronics (average -3, 191. 05 million) and renewable energy (average -373. 29 million), accompanied by high import dependency (74. 84% and 89. 33%, respectively). In contrast, the pharmaceuticals sector consistently generated surpluses (average +1, 294. 62 million) with low import dependency (11. 6%). The findings highlight the differential effectiveness of policies such as Make in India, Atmanirbhar Bharat, and the Production-Linked Incentive (PLI) scheme. Strengthening domestic production capabilities and strategic global value chain integration is critical for reducing trade deficits and enhancing export competitiveness.

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