India needs to take a leaf out of China’s trade playbook and intensively specialise, produce and ship out a select category of ‘network products’ (NPs) such as computers, electronic and electrical equipment, and telecommunications goods, to boost the currently beleaguered export sector, the Economic Survey
Delhi would also need to integrate the aim of ‘Assembling in India for the world’ with the government’s flagship ‘Make in India’ policy, it said. By focus on NPs, the country can raise its export market share to about 3.5 per cent of the global average by 2025 and 6 per cent by 2030. In the process, creating millions of jobs, the Survey says.
Exporters lauded the suggestions. '”As the global market becomes more and more competitive, we completely agree with the assessment of the Economic Survey
that India needs to focus on core competencies and value additions even as we are doing some catch up with China,” said Engineering Exports Promotion Council India Chairman Ravi Sehgal.
There has been success in cutting import of consumer electronic items from China, it adds, via incentives to domestic manufacturing and imposing of tariffs on finished goods. However, the government might need to pick up the pace in approaching infotech majors like Apple and Samsung — the Survey suggests production processes for most NPs are globally fragmented and controlled by leading multinational enterprises, within own production networks.
Chief Economic Advisor Krishnamurthy Subramanian
has borrowed from predecessor Arvind Subramanian’s idea of pushing labour-intensive manufacturing investment, to simultaneously boost productivity, job creation and export. The latest prescription of pushing NPs will result in $248 billion of incremental value addition in the economy by 2025, the Survey suggested.
Even more attractive for policymakers could be its proposition that NPs might create about 40 million well-paid jobs by 2025, rising to 80 mn by 2030. “To revive exports, the Centre needs to focus on multiple areas. It requires a policy space that typically requires a mix of tariff protection, facilitating development finance for enterprises to maximise employment, and investments in infrastructure. For the medium term, there’s a need for innovation policy,” said senior trade policy expert and professor at Jawaharlal Nehru University, Biswajit Dhar. In other labour-intensive sectors, such as textiles and leather, there is an indication of more structural reform. The Survey calls for drastically raising India’s share in global export through a targeted plan of pushing up market share in major markets. And, to immediately improve the country’s participation in the global value chains of various products.
The Survey is also in favour of India signing bilateral trade deals. It stressed that contrary to the popular opinion among businesses that India has been harmed in the free trade agreements (FTAs) it signed, manufacturing export has benefited as a result of 8 of 14 existing FTAs. However, it concedes, this did little to raise total export — several prime foreign exchange earning commodities were restricted by other nations in most deal, it said. It says merchandise shows a 2.3 per cent increase in trade surplus every year.
Indian business is in a contentious dispute on whether the government should enter into bilateral deals with America and the European Union, and by extension open larger chunks of its market to foreign competition. Delhi has also been extended an invitation to join talks on the proposed Regional Comprehensive Economic Partnership deal that begin on February 3 but is still on the fence, say sources.