Almost six years ago, on May 12, 2020, India launched the Atmanirbhar Bharat Abhiyan (Self-Reliant India Campaign), for which the finance minister had announced a Rs 20 lakh crore economic package – roughly 10% of India’s GDP – to aid economic recovery from the disruption caused by the COVID-19 pandemic. The ideas behind the campaign included promoting domestic production and boosting India’s Micro, Small and Medium Enterprises (MSME). The overarching goal was to reduce import dependency in five tranches, covering MSMEs, agriculture, and structural reforms.However, a look at the import and export trends of the past six budgets shows that India still grapples with three major issues – strategic inconsistency, structural reliance on merchandise imports and misaligned policy tools. Yearly tweaking through budgetary mechanisms have not addressed any of these issues head-on.As a result, six years on, Atmanirbhar Bharat has not reduced structural import dependence; instead, fiscal adjustments have coexisted with deepening integration into global supply chains. For instance, India’s foreign trade data shows a persistent deficit in goods trade, even as services exports remain strong.In FY25, merchandise imports stood at about USD 720 billion versus exports of USD 437 billion. This added up to a goods trade deficit of nearly USD 283 billion. Total imports (goods plus services) were USD 915 billion, while total exports were USD 821 billion.In FY24, imports were high again, approximately USD 678 billion, while exports were pegged at USD 437 billion. Again, a deficit of USD 241 billion.As against this situation, the budgetary measures, including the customs duty choices of the Union government, showed mixed policy signals on addressing India’s import dependency. For example:Budget 2025-26 focused on rationalising customs duty rates, removing several tariff slabs and aiming to simplify the structure for industry and trade. It proposed the removal of seven customs tariff rates for industrial goods, reducing complexity but without a protective bias towards core intermediate inputs that are domestically manufactured.Simultaneously, duties were cut, or exemptions were provided on many input materials, such as critical minerals for manufacturing raw materials meant for EV batteries and other electronics. But such reductions also facilitate more imports of inputs instead of strictly substituting them.A macro view of the past six budgets would therefore reveal that, contrary to its Atmanirbhar goals, India still sources a large share of its imports from China, especially electronics, machinery parts and intermediate inputs. China alone accounted for around 16% of India’s total imports in 2020, growing significantly faster than any other trade partner.This contradicts the policy of building domestic capabilities because many imported components and inputs are essential for manufacturing in sectors where India aims to scale up independent capability. This includes items in the electronics and electrical machinery sectors. Dependence on China for such inputs implies that India’s productive base remains integrated into the supply chains controlled elsewhere rather than being wholly internal.Slogans like “Vocal for Local” have missed their intent in consecutive Union budgets, which have indirectly favoured traders who import low-value goods from China that flood Indian markets. A deeper question is thus raised, and the uncomfortable answer to it is that India’s growth model has structural constraints, and its export-import policies are strategically misaligned.After the reforms in 1991, India’s export destinations diversified. The United Kingdom, Japan, Hong Kong and Germany were the major export destinations till 2000, which later shifted towards China, the United Arab Emirates (UAE), Singapore and Hong Kong. The United States of America (US) has been a consistent export destination for Indian goods since those reforms.India’s import destination also diversified, away from the industrialised European economies such as Switzerland, Germany, the United Kingdom, Belgium and Japan towards Asian economies including China, the UAE and Saudi Arabia. Again, the US remained a consistent source of imports since the 1991 reforms, though its share stagnated between 5 and 7% since 2000.Also read: Indian Efforts to Cut Chinese Imports Falter as China Becomes Top Trade PartnerChina has been a major import destination for India since 2010. India’s import basket in 2021 included intermediate goods (35.43%), raw materials (31.23%), capital goods (21.25%), fuel (29.87%) and machinery and electricals (18.36%). This composition changed in 2023 to raw material (33.60%), fuel (32.82%), intermediate goods (30.72%), capital goods (23.63%) and machinery and electrical goods (19.72%). In other words, between 2021 and 2023, the composition has not changed much. There are small shifts, but the overall structure remains the same.Further, when the top five source countries for India’s imports are considered, then it turns out that there has been very little geographical diversification The table below shows how India’s imports in 2023-24 were heavily concentrated among a few countries, led by China (15%), followed by Russia, the UAE, the US and Saudi Arabia.Today, as the global economy experiences turmoil – the US’s tariff-led war, the Russia-Ukraine war, conflicts in the Middle East and elusive peace efforts – India cannot remain aloof, at least not economically. Visit any market or shopping complex and it is easy to see how aesthetically designed low-cost Chinese goods from LED bulbs and electronic toys to idols, toothbrushes, even bathroom fittings, have flooded the Indian market, as local sellers gain excessive markups.Also read: What Would Boycotting Chinese Goods Mean for India?Second, India’s energy reliance and trade deficits with countries like Russia and the UAE and Saudi Arabia are a great constraint, drawing the ire of the US, which has imposed prohibitive tariffs. The reliance on discounted Russian oil shows how short-term cost incentives can outweigh long-term strategic concerns about supply chains and geopolitical alignments.Third, although efforts like the Production Linked Incentive (PLI) schemes aim to boost domestic manufacturing, the distribution of imported value suggests that India’s import geography has not shifted dramatically. The continuing domination of Eastern and Middle Eastern partners indicates trade linkages based on price competitiveness and existing supply chains.What India now needs is to realign its policies to reflect its economic pragmatism. For starters, India cannot but remain integrated into global value chains, especially for electronics and intermediate goods. Second, Indian producers will continue to face competition from imports and newer technological applications, which complicates import substitution strategies.Third, trade diversification efforts like free trade agreements with the EU or wider global partners may help, but structural capabilities must be built domestically to realise their full potential.Policy implicationsGeoeconomic reality shows that Atmanirbhar Bharat often coexists with economic pragmatism. No doubt India has emerged as the fastest growing economy, but it is with increasing inequality, as also with one of the largest consumer markets, which has propelled the domestic economy while attracting economic blocks like the EU.India has been trying hard to diversify its exports and imports beyond China and the dominance of a few partners. However, the continued large share of imported manufactured intermediates and consumer goods reveals a contradiction between trade realities and the aspirational goals of Atmanirbhar Bharat.Over the past decade, budgets have become the major tools for tweaking policy changes through fiscal policies and even beyond. But to move closer to self-reliance, India may need policies that not only incentivise domestic manufacturing but also reduce dependency on a handful of source countries for key inputs. Moving forward, India’s industrial and trade policies need to be more coherently aligned.Dr Achintan Bhattacharya is a former professor at Lal Bahadur Shastri Institute of Management Delhi and Dr Kunwar Milind Singh is Associate Professor at the institute. The views expressed are personal.