Oil need not always be the villain. It could be you, as well. Or more precisely, your fixation with filling up your life with technology, right down to that mobile phone you have in your hands right now.
India’s trade deficit climbed to a 6-month high of $32 billion in July, and the way things are unravelling in the Middle East, it could get worse this month.
But oil will not be the only culprit—while non-petroleum imports crossed the value of oil imports a couple of years ago, now the biggest category in it, electronics, by itself, is set to cross oil to become the biggest category draining dear dollars from the nation’s pockets.
Traditionally, every time a missile left the ground for a live target anywhere in the whereabouts of the Persian Gulf, India’s forex pocket got a little light. We saw that again and again, through the two Gulf Wars and earlier this year, when the on-off-and-on-again love-hate between Iran and the US played out like an unending web series rather than the quickie Reels it should have been.
But with electronic components, related parts and even finished electronic exports ballooning in value, India now has a new bittersweet thing to worry about—its growing electronics manufacturing ecosystem, the increasing penchant amongst Indians for technology and devices and the fact that a good chunk of its parts tend to be imported means we now have a worry that cannot just be blamed on geopolitical strife anymore.
In 2026, while India’s electronics manufacturing soared to new heights with $48 billion worth of exports, it also saw imports of $116 billion. A good chunk of it was electronics components and specialised raw materials that had to be imported to be assembled into finished products like the Apple iPhone being manufactured in South India.
The deficit? $68 billion, amounting to one-fifth of India’s $333 billion merchandise deficit.
India’s electronics import of $116 billion is now second only to oil as a category: oil imports last financial year were nearly $135 billion. Of course, the strife that has choked the world’s energy lines this year could well mean electronics may not yet cross oil to become No.1 next year as estimated, but that doesn’t discount the disconcerting long-term picture: forever worried about an oil shock, the new electronics paradigm could just leave the nation’s economy with a new kind of ‘shock’.
The deficiency is acute as a nation which thrived for long on a service economy boom now stops to make sense of how the world changed—electronics parts, semiconductor chips, heavy machinery, rare earths, lithium, these are the ‘new gold’ powering a new age. And is India falling short?
Local capabilities, despite the overused jargon of ‘localisation’, remain sorely short. Some estimates say about 30 per cent of all electronics manufacturing depends on imports (gems and jewellery is the only category with a higher quotient than this, at 56 per cent).
The government’s production-linked incentive schemes (PLI) have helped in raising the localisation percentage, but as the numbers tell us, it’s a long way home. Together with the oil whammy and despite the burgeoning forex reserves, it is a sticky situation the nation’s policy-makers would need to go back to the drawing board for.
