New Delhi: The government has identified energy, fertilisers, electronics and semiconductors, critical minerals, pharmaceuticals, medical devices and other strategic manufacturing sectors as priorities for strengthening and diversifying India’s supply chains, commerce and industry minister Piyush Goyal informed Lok Sabha.

In fertilisers, nearly 73% of India’s total requirement was met through domestic production in 2025 and the government is pursuing long-term arrangements for key raw materials while diversifying supply sources to ensure reliable availability to farmers.

Also read: Coal India weighs acquiring Wealth Minerals unit with Chile lithium assets

Noting that critical minerals such as lithium, cobalt, nickel, graphite, rare-earth elements and copper have been identified as essential for clean-energy technologies, electric vehicles, electronics, semiconductors and advanced manufacturing, Goyal also said that critical minerals are being prioritised in trade and investment engagements, including free trade agreement negotiations.

Trade deficit

The increase in the merchandise trade deficit largely reflects higher imports of essential and productive goods required for economic growth, industrialisation and export competitiveness, rather than any structural weakness in India's external sector, the government told Parliament.

“While a higher merchandise trade deficit can increase import payments and exert pressures on the current account and the exchange rate, its impact needs to be viewed in the context of India’s overall external-sector strength,” the commerce and industry ministry said, adding that

India’s external sector continues to remain resilient and macroeconomic stability remains well supported.

A significant share of India’s imports comprises crude oil, electronic goods, machinery and capital goods, gold and precious stones, fertilisers and other intermediate inputs, which are essential for meeting domestic consumption requirements, ensuring energy security, supporting manufacturing, infrastructure

development and industrial expansion.

The government, it said, has adopted a comprehensive strategy aimed at achieving the twin objectives of reducing critical import dependence through domestic capacity creation while simultaneously promoting exports through improved competitiveness, market access and deeper integration with global value chains.

China imports

Certain imports from China, including critical minerals and other industrial inputs, are essential for India’s clean-energy, electric vehicle, electronics and semiconductor sectors responding to a question on concerns over the impact of low-cost Chinese goods on domestic manufacturers, the ministry said.

India imports lithium, cobalt, nickel, graphite and rare earth elements that are essential inputs for clean-energy technologies, electric vehicles, electronics and semiconductors.

Also read: Pentagon to invest $400 million in Australian rare earth mine scandium

It also said imports of intermediate goods, capital equipment and advanced technologies support domestic production and deeper integration with global value chains, particularly in strategic sectors including energy, pharmaceuticals, fertilisers, electronics.

On unfair import practices concerns, the ministry said the Central Board of Indirect Taxes and Customs monitors cases involving under-invoicing, mis-declaration of goods and country of origin, as well as attempts to route Chinese goods through third countries to circumvent duties and trade-policy measures.

US trade

Negotiations are ongoing between India and the US for a trade pact. The two announced on February 7, 2026 that they have reached a framework for an Interim Agreement regarding reciprocal and mutually beneficial trade.

Tobacco exports

Over the last ten years, the exports of tobacco and tobacco products have increased to 368.85 million kg valued at Rs 17,192.04 crore ($1.9 billion), from 240.93 million kg valued at Rs 6,450.66 crore ($ 958.68 million) registering an increase of about 53.1% in quantity and about 166.51% in value terms.