Annual Plans 5.29. Imports in 1966-67 aggregated to Rs. 2078 crores *1 as compared to Rs. 2218 crores (in post devaluation rupees) in 1965-66, showing a reduction of 6.3 per cent. In 1967-68 and 1968-69, imports declined further to Rs. 2008' and Rs. 1862*1 crores respectively. The trends in imports of principal commodities during the years 1966-67 to 1968-69 are shown in table 2.
5.30. The decline in total imports by Rs. 140 crores in 1966-67 is mainly attributable to the substantial reductions under iron and steel and non-ferrous metals, machinery and transport equipment, mineral fuels, lubricants and related materials and raw cotton. On the other hand, cereal imports increased by as much as Rs. 144 crores to Rs. 651 crores. A major factor responsible for the decline was the higher rupee cost of imports following devaluation. The restrictive import policy pursued in the latter half of 1965-66 also contributed to the decline in imports.
5.31. The further reduction of Rs. 71 crores in total imports in 1967-68 was mainly the outcome of a reduction in cereal imports which was rendered possible by a substantial increase in domestic production of foodgrains. Non-cereal imports, on the other hand, recorded an increase of only Rs. 62 crores in 1967-68. There was a continued decline in imports of machinery in that year while those of transport equipment recorded a moderate increase. The small increase in non- cereal imports, particularly in industrial raw materials and machi- nery, is attributable to the slackness in investment and industrial activity and the substitution of a variety of machinery and other import commodities by domestic production. The conditions of 1967-68 continued in 1968-69 when the reduction in total imports was mainly a result of the decline in cereal imports which fell by as much as Rs. 182 crores. Non-cereal imports did not show any significant change.
5.32. While total imports underwent a significant contraction between 1966-67 and 1968-69, there were no marked changes in the shares of the different regions in India's imports. Imports from East Europe and Africa recorded an absolute increase during the three-year period. The share of East Europe in India's imports rose from 11.1 to 16.2 per cent and that of Africa from 4 to 8 per cent.
Import Requirements 5.33. The total import requirements of the economy during the Fourth Plan period are estimated at Rs. 9730 crores. These are made up of Rs. 590 crores of food imports (including those under PL 480 arrangements); Rs. 7840 crores of maintenance imports or imports of raw materials. components and spares needed for sustaining and accelerating the growth of industrial and agricultural production; and about Rs. 1300 crores of project imports.
5.34. The maintenance import requirements totalling Rs. 7840 crores include major items such as fertilisers and fertiliser materials, POL, chemicals, non-ferrous metals, special varieties of steel, components and spare parts of machinery. In making estimates of maintenance imports, various assumptions have been made. It has been assumed that all possible steps will be taken to ensure that the targets of production in the agricultural, mineral and industrial fields are achieved according to schedule. The second assumption is that the present restrictions on imports of consumer goods will continue. Thirdly, it is postulated that raw material requirements of consumer goods industries will continue to be severely restricted unless these are specifically required for export production. Fourthly, strict economy will be exercised in the use of certain commodities like kerosene, newsprint and paper where demand may con- tinue to exceed supplies. Fifthly, as regards nonferrous metals for which the country has either limited or no natural resources, it is assumed that all possible efforts will be made to economise their use through the adoption of processes and technologies which require smaller quantities of these Metals per unit of production and through substitution by domestically produced metals, as zinc and copper by aluminium.
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5.35. So far as the production of capital goods is concerned, the assumption is that in line with the present import policy, the entire demand of these industries for imported ray materials, components and spares will be met. At the same time, it is assumed that effective policy measures would be taken to ensure the maximum use of indigenously produced machinery, specially in view of the wide and diversified engineering capacity already built up in the country. The present import policy in regard to components and spares would be of help in increasing the supply of complete plant and machinery from indigenous production.
5.36. More than half of the requirements of maintenance imports during the Fourth Plan period will be on account of iron and steel, non-ferrous metals. POL (crude ad refined). fertilisers (including fertiliser materials) and components and spares for machinery and transport equipment. With the increase in industrial production and overall growth in the economy, requirements of such materials, intermediate products and components would increase significantly from year to year. Imports of chemicals, drugs and dyes and newsprint, paper board and pulp are expected to show only a nominal increase. Imports of agricultural raw materials are likely to show a generally declining trend.
5.37. Project imports have been estimated on the assumption that the requirements of complete machinery, plant and equipment would be met largely from domestic production and that only plants and machinery of the more complex and sophisticated kinds which are yet to be produced within the country will be imported. The major part of project imports is accounted for by the three sectors of industry and minerals, transport and communications and irrigation and power.
5.38. An important assumption underlying the import estimates is that the basic ingredients of the import policy evolved in the years since devaluation would be continued, so that linberal import facilities for the priority industries, export industries and units and the small-scale sector would be provided. With the expansion of production in the different sectors and the efforts to be made to promote exports, the requirements of essential imports of raw materials, components and spares will grow. it would, therefore, be necessary, to keep the total import bill within the limits determined by the likely availability of foreign exchange resources. A deter mined and sustained' drive will have to be undertaken towards import substitution and rationalisation. It would be appropriate to give special attention to bulk areas like POL, metals, fertiliser and machinery and equipment of all kinds, since progress in import substitution in these areas would result in sizeable savings of foreign exchange. It will be desirable to review periodically the efforts made in the field of import substitution, to keep a watch on progress achieved, to provide guidelines and to identify new areas where import substitution is feasible.
5.39. In line with the Government's recently announced policy to canalise progressively imports of industrial raw materials through state trading agencies, it would be necessary to undertake studies of the various categories of industrial raw materials which are now being imported and to devise an appropriate time-schedule for the progressive canalisation of their imports.