 "Prof Rakesh Mohan Joshi")
India’s dynamic and futuristic trade strategy has facilitated establishing an eco-system for consistently unprecedented growth in the country's exports despite worldwide headwinds. India’s world market share in exports is poised to exhibit spectacular growth and is likely to rise to 4.5 per cent by 2031 from 1.8 per cent in 2022, according to the estimates of the recent report, ‘How India has transformed in less than a decade’ published by the US-based financial investment company, Morgan Stanley.
An integrated and dynamic approach to exports in view of the contemporary realities of fast changing international trade environment has created a robust eco-system for exports that not only contributes to the country's exports growth but also its diversification in terms of product composition and markets leading to its sustainability.
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Despite strong headwinds worldwide, India’s total exports, merchandise exports and services combined, grew at 13.8 per cent to achieve a new record of $770 billion in 2022-23 surpassing not only its own record performance of $676 billion last year, but also India’s own target of $750 billion.
Services exports recorded an impressive rate of 26.8 per cent to touch a record high of $323 billion in 2022-23 from $254.5 billion in the previous year whereas India’s merchandise exports increased at 6.03 per cent to $447 billion during the current financial year from $422 billion in the previous year whereas imports grew to $714 billion from $613 billion during the same period. India’s impressive growth in merchandise exports during the last fiscal is extremely commendable in view of its unprecedented record growth of 45 per cent to reach an all-time high export of $422 billion in the preceding fiscal 2021-22. India’s merchandise exports growth rate of 6 per cent in the last fiscal has been in tandem with world’s leading manufacturing hub: Vietnam, Hong Kong (SAR, China) and South Korea. India’s achievements in exports are highly commendable in view of recent WTO estimates, published in April 23, indicating a slowdown of global trade volume growth to 1.7 per cent in 2023, accompanied by real GDP growth rate of 2.4 per cent at market exchange rates.
Unprecedented diversification of exports basket
An unprecedented transformation in its export promotion strategy has led to remarkable diversification in addition to sustainable growth in India’s exports. The country has also rapidly emerged as an exports hub for several new sectors such as information technology, electronics and telecommunication, defence production wherein it was largely dependent on imports.
India exported over $11 billion in 2023 from virtually non-existence smartphone exports in 2014. The country has fast emerged as a global hub for defence production. India has come a long way from being world’s largest importer of defence equipment to a prominent exporter. India’s defence exports reached a record high from merely Rs 1,521 crore in 2016-17 to Rs 15,920 crore in 2022-23, an increase of more than 10 times in six years.
India’s toy industry that was largely dependent on imports, only a few years ago, has made a significant mark on the global stage in a short span of time, a success story no one had imagined. In a span of three years, India’s toy exports exhibited an impressive growth of 60 per cent whereas its imports declined by 70 per cent. Interestingly, there has been a growing craze for Indian music and culture worldwide which has helped India expand in the international market for non-traditional products with exports of Indian musical instruments rising by 3.5 per cent in the last 8 years. The exports of electrical musical instruments have gone up by 60 times.
Rapidly created eco-system for exports
The spectacular rise in India’s exports performance and its optimistic estimates are not accidental, but a culmination of a host of holistic strategic policy interventions and their efficacious implementation to create an eco-system at an unprecedented pace to facilitate trade and investments. India’s focused exports promotion strategy and targeted Product Linked Incentive (PLI) scheme have transformed India’s exports basket from traditional commodities such as textiles and gems and jewellery to high value-added products such as electronic goods, organic and non-organic chemicals, and engineering goods.
Export facilitation ensured effective conceptualisation and implementation of a bundle of export promotion schemes such as Market Access Initiative (MAI), Remission of Duties and Tax on Exported Products (RoDTEP), Trade Infrastructure for Exports Scheme (TIES) and Interest Equalisation Schemes (IES) on pre- and post-shipment rupee export credit among others.
Logistics, a critical stumbling block in India’s exports competitiveness, has been proactively addressed, which would go a long way to make the entire exports logistics proficient and remarkably integrate Indian production systems with global value chains (GVC), thereby boosting exports. In recent years, the Ministry of Commerce is actively engaging with state governments, that too, at a district level for speedy and effective implementation of policy measures to promote exports.
Extraordinary measures taken by the Modi government in the last few years to promote states’ participation in exports promotion, that had hitherto indifferent to exports, not only at the state level but even encourage at the district level by One-District-One-Product scheme (ODOP) and promotion of districts exports hubs.
Most Free Trade Agreements (FTAs), signed by India previously, hardly served India’s trade interests and became rather counterproductive. Centre re-examined all the FTAs signed previously and is in the process of engaging in newer ones to benefit India. Recently, India speedily negotiated new FTAs meticulously and acumen-ship with UAE, Mauritius and Australia and it is in advanced stage of negotiations with the UK. India is also actively exploring new trade agreements with the EU and Canada.
Prof. Rakesh Mohan Joshi, Director, IIPM, Bengaluru and Professor, Indian Institute of Foreign Trade, New Delhi. Views are personal.
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www-business-standard-com-nalsar.knimbus.com or the Business Standard newspaper
