|1.||Import substitution has varied both by sector and by period. During 1953-54 to 1960-61, only six of fourteen sectors enjoyed positive import substitution (both direct and total): coal and coke (sector 3), engineering (sector 7), cement (sector 9), food (sector 11), cotton and other textiles (sector 12), and jute textiles (sector 13). The number increases to eight and eleven during the periods 1953-1954 to 1964- 1965 and 1960-1961 to 1964-1965, respectively. This clearly indicates an increasing tendency over time in the economy toward import substitution.|
|2.||The structural component of import substitution (u01 in the case of total substitution and ū01 in the case of direct substitution) has also varied from sector to sector and from period to period. During the first period, 1953-1954 to 1960-1961, u01 and ū01 both exceeded unity in the case of only five sectors: coal and coke (sector 3), nonferrous metals (sector 6), engineering (sector 7), glass, wood, and nonmetallic products (sector 10), and leather, rubber, and products (sector 14). Only these five sectors, therefore, have gained from a favorable technological effect on import substitution, leather, rubber, and products (sector 14) being ranked first. But during the period 1960-1961 to 1964-1965, u01 and ū01 exceeded unity in the case of twelve sectors, and thus almost all the sectors attained a favorable technological effect on import substitution (direct and total), cotton and other textiles (sector 12) being ranked first.|
|3.||Indirect import substitution for most of the sectors has been either nil or insignificant, as can be seen from Table 15.3. Nonferrous metals (sector 6) deserves special attention. Interestingly, and to an appreciable extent, it has displayed significant positive indirect substitution, although its direct and total substitution have both been negative.|
First, in this chapter import substitution is estimated only at the relative level. Absolute import substitution is not estimated.
Second, imports are taken as perfect substitutes for domestic goods. This is quite consistent with the characteristics of the Indian economy, where all types of imports have domestic substitutes. However, the case of imperfect substitutes may be examined along the lines developed here.
Third, competitive imports and domestic outputs are lumped together without distinction, in final demand and intermediate demand, and hence in the input-output balance equations. Intermediate transactions may be decomposed into (1) intermediate transactions of domestic outputs and (2) intermediate transactions of imports, and two separate interindustry transactions matrices may be built, one relating to the interindustry domestic transactions and the other to the interindustry import transactions. Import substitution may then be examined in terms of the "pure" domestic technology matrix (which is formed from the interindustry domestic transaction matrix). We have not experimented with this approach because such a matrix is not available over time for India.