India, Sept. 20 -- India has been living with chronic trade deficits for nearly half a century. The last time the country recorded an overall annual trade surplus was in 1976-77-only the second time in its history, the first being in 1972-73. Since then, the red ink has flowed year after year. India has consistently imported far more than it has exported, with China leading the pack of deficit partners, followed by Russia, Saudi Arabia, the UAE, and Indonesia. The inability to build an export-oriented manufacturing base while allowing low-tech imports to flood the market has locked India into a cycle of rising deficits and shrinking competitiveness.

For decades, successive governments have offered the same explanation: petroleum imports....