Import related inventory management in Indian economy

Abstract The importance of inventory management for improving overall performance and foreign exchange savings at sectoral as well as economy levels have been widely emphasised. The paper examines the impact of optimal use of imported inventories for public enterprises, public limited companies and private limited companies on optimisation of value added in multiple-objective dynamic input-output framework for 1986–87 and 1990–91 for the Indian economy. Empirical results for 1990–91 reveal not only the trade-off between optimal value added and imported inventories of the above-mentioned concerns, but also unidirectional movement of optimal value and some of the imported inventories with the extent of the diversification of the economy. Given the concern for ‘high cost of imported inputs’, the main conclusion of the study is that the management of the import-related inventories is a basic ingredient for the success of the ongoing structural reforms for the globalisation of the economy.