India’s export history dates back to the British era, and the nation has always been an essential player in global merchandise exports. With the Ministry of Commerce & Industry of India reporting a remarkable increase in merchandise exports, surpassing the USD 400 billion mark in 2021-2022, we must ask ourselves: Is India on the brink of becoming a global export powerhouse?
To answer this question, let’s dive into the factors propelling Indian exports and the challenges that must be overcome.
Make in India and Atmanirbhar Bharat: Catalysts for Export Growth
The “Make in India” policy and the “Atmanirbhar Bharat” initiative are instrumental in driving India’s export growth. By focusing on local manufacturing and self-reliance, these initiatives are fortifying India’s economy through merchandise exports and setting the stage for a thriving export sector.
The Driving Forces Behind Indian Exports
Diversification: The Key to Expanding Indian Exports
India’s export growth is fueled by a variety of sectors, such as textiles, pharmaceuticals, mobiles, and electronic equipment. This diversification allows the country to tap into numerous markets, thereby expanding its export reach.
Global Manufacturers Finding a New Home in India
As companies move their manufacturing operations out of China, India is emerging as an attractive alternative destination. This shift not only generates employment opportunities but also stimulates economic growth.
For example, the tech giant Apple has been steadily increasing its manufacturing presence in India. The company started manufacturing the iPhone SE and iPhone 6S in India in partnership with Wistron Corporation.
In 2021, Apple began producing the iPhone 12 in India through Foxconn, further expanding its production capabilities in the country. Apple’s shift to India has created thousands of jobs and stimulated growth in the electronics manufacturing sector.
Capitalising on the Demographic Dividend
India’s vast pool of skilled, talented, and employable youth offers a tremendous advantage for industries looking to invest in human resources.
For example, Infosys, a global leader in technology services and consulting, has been capitalising on India’s demographic dividend by employing a large number of Indian professionals.
Infosys has established multiple state-of-the-art training centres and development centres across the country, offering ample opportunities for India’s skilled and talented youth to develop their careers. Through its investments in human resources and infrastructure, Infosys demonstrates how companies can leverage India’s demographic dividend to achieve business growth and success.
The Roadblocks to Global Export Domination
Upholding Quality Standards
India must prioritize product quality by training and monitoring exporters to meet international quality and safety benchmarks. This commitment will result in increased demand from overseas buyers.
Strengthening Infrastructure
Developing robust infrastructure is crucial to support manufacturers investing in sustainable product development and facilitate smooth trade operations.
Riding the Digital Wave
Embracing digital technologies in B2B infrastructure creation and e-commerce is vital for India’s continued export growth.
Statistical Snapshot: India’s Export Landscape
- Let’s look at India’s top 10 trade partners from April to December 2022-23, listed in alphabetical order: Bangladesh, Brazil, China, Indonesia, Netherlands, Saudi Arabia, Singapore, United Arab Emirates, United Kingdom, and United States.
- Did you know, India’s merchandise exports increased by 44.6% and 34.6% over 2020-21 and 2019-20, respectively.
- India’s exports to the U.S. grew by 8.54% during the April-December period in 2022-23, reaching $53.1 billion, isn’t that exciting?
- Exports to the UAE increased by 19.32% during the same period, totaling $20.8 billion.
- India’s overall exports (merchandise and services combined) in April-December 2022 saw a growth of 16.11% compared to the same period last year.
- The country’s overall exports in April-December 2022 were valued at $568.57 billion, while imports stood at $686.70 billion.
Promoting MSMEs for a Strong Export Backbone
Micro, Small, and Medium Enterprises (MSMEs) form the foundation of the Indian economy, contributing significantly to employment generation, industrial production, and exports. By providing financial support, market access, and capacity-building initiatives, the government can empower MSMEs to scale up their operations and compete in global markets.
Furthermore, integrating MSMEs into global value chains will enable them to tap into international networks, access new markets, and enhance their overall competitiveness.
Fostering a Culture of Innovation and R&D
Innovation and research & development (R&D) are critical components for bolstering India’s exports. By fostering a culture of innovation, India can create cutting-edge products and technologies that cater to global demands. The government can facilitate this by incentivizing R&D investments, fostering public-private partnerships, and promoting research collaborations between academic institutions and industries.
By focusing on high-tech and knowledge-intensive sectors, India can attract global attention and establish itself as a leader in innovation, further boosting its export potential.
As India strives to become a USD 5 trillion economy by 2025, exports will play a significant role in realizing this goal. With the resources and potential to emerge as an export hub, it is time for stakeholders to unite and support the ecosystem.
Policymakers must create policies that make India an attractive trade partner for multinational corporations while simultaneously strengthening domestic manufacturers. By overcoming challenges and harnessing the nation’s strengths, India is well on its way to becoming a global export leader.