[Answered] With more policy support, exports can help the Indian economy reach the $5-trillion target sooner than expected. Suggest steps required to improve exports from India.

India’s exports surpassed the pre-pandemic level of $331 billion in FY 2018-19 and reached $418 billion in FY 2021-22. The proactive policy schemes by the government such as merchandise exports scheme, duty exemption scheme, export promotion capital goods, transport and marketing assistance scheme have helped the export sector.

Steps required for improving exports:

• Address sector-specific and market-specific problems: There is a huge difference in India’s exports potential and actual exports in many sectors, especially pharmaceuticals, gems and jewellery and chemicals. E.g., India’s potential in diamond and jewellery exports is close to $58 billion but actual exports are at $30 billion.
• Increase participation in global value chains (GVCS): India has significant amount of working-age population and strength in labour-intensive manufacturing. As the Economic Survey (2019-20) suggests, “assemble in India”, particularly in network products, will increase India’s share in world exports to 6 per cent and create 80 million jobs.
• Improve trade facilitation: India also needs to work on institutions facilitating trade, processes for exports and imports and logistics because these factors not only reduce trade and transaction costs but also ensure reliability and timely delivery.
• Free trade agreements: One way to reduce the complexities of trade and business is by signing free trade agreements. These not only reduce tariffs and give market access but bring down non-tariff barriers such as administrative fees, labelling requirements, anti-dumping duties and countervailing measures.
• Focus on services exports: India has done well in IT and IES exports and it can accelerate services exports in other categories including travel and tourism and business, commercial and financial services. However, the services sector needs government support.

Way forward:

• The acceleration of merchandise and services exports could potentially make the Indian economy a $5-trillion economy sooner provided we are proactive in policies to capitalize on our exports potential, explore new markets and curb protectionism.
• If India sustains the momentum and capitalizes on exports’ potential, and meets the targets of $1 trillion in services exports by 2030, the $-5 trillion economy goal can be achieved sooner.