An updated overview of India’s export market

Context:

• The Government of India is soon to announce the foreign trade policy review.
• A shift in India’s manufacturing and export strategy has been signalled.

What are the new strategies for India’s manufacture and export market?

• Commerce and Industry Minister Suresh Prabhu has signaled a shift in India’s manufacturing and export strategy with a focus on new emerging sectors such as genomics.
• The minister gives a thrust to export of goods that are not currently among the top ten items shipped out of the country.
• The Union Minister is banking on India’s political relationships with countries such as Cuba and many in Africa to push exports to new markets.
• The government will shortly announce the midterm review of the foreign trade policy to enhance the country’s export.

 What should India concentrate for a successful “Make in India 2.0”?

• If the manufacturing in India needs to continue then there is a need to give a thrust to the exports.
• Increasing the price of crude could reduce our competitiveness sizably and affect the export of the country.
• The appreciation in the rupee takes its hit straight away on the exports while increasing the imports and widening the current account deficit.
• Even though India has done well in Ease of Doing Business, but its cross border trade quantity is very low.
• India should make a stronger bond with China for it is the chief supporter of free trade.
• The Centre should also back labour-intensive sectors and it should be of low technology and low cost.
• The real reforms for should be made in the district and state level that has to drive employment.
• There should be a global brand for exports.
• The government should also keep a strict check on price rise.

What are the other sectors has been proposed for Indian export business?

• At present India is exporting:
• Engineering goods,
• Capital good and
• Gems and jewellery
• But now, there is a need to focus on the sub-sectors of the present export sectors:
• Automobiles and automobile components under engineering goods.
• Labour intensive sectors in manufacturing and also in exports.
• Textile sector has a lot of potential.

What are the major drawbacks in India’s trade market?

• Even though India has done well in Ease of Doing Business, but its cross border trade quantity is very low.

• Indian has signed quite a lot of FTA’s but without studying its Impact.
• Due to foreign competition and unrestricted imports the upcoming industries in the country may collapse.
• The underdeveloped countries have to depend upon the developed ones for their economic development which leads to economic exploitation.
• Excessive exports may exhaust the natural resources of a country in a shorter span of time than it would have been otherwise.

Way ahead:

• The government needs to put in money to push infrastructure if exports have to be increased.
• Improvement in warehousing infrastructure would also counter inflation concerns due to seasonal factors such as poor monsoon rains.
• India needs to adopt an open, stable and reliable export policy.
• Abrupt export bans, high minimum export prices to restrict exports, or other quantitative restrictions on pulses, edible oils even on vegetables and cereals at times must give way to a policy not contradicting exports.
• Liberalization of factor markets, especially land-lease markets, would also help in building more efficient and reliable export value-chains.
• Long land-lease arrangements can facilitate private investments in building export-oriented global value-chains, generating rural non-farm employment and enhancing farmers’ incomes.