Need focus on key exports to boost India's global share, says CII

India needs to speedily boost a variety of exports ranging from women’s apparel, drugs and furniture to cyclic hydrocarbons, at a time when global trade growth continues to shrink, the Confederation of Indian Industry (CII) has said. 

In a research paper, CII has identified 37 crucial items having the high potential to boost outbound trade, given that these have some export competitiveness and figure significantly in the imports of major importing nations such as the United States and China. India’s overall export share in total global imports of $17,958 billion stands at a mere 1.65 per cent.
“A targeted export strategy that identifies and boosts the right products is imperative for achieving double-digit export growth. An export strategy assumes greater significance, given a rapidly changing global trade landscape, shifting of global value chains and new free trade agreements, including mega trade agreements,” Chandrajit Banerjee, director general of CII, said.

The research paper, “Indian Exports: The Next Trajectory – Mapping Products and Destinations”, also suggests a double-pronged approach of expanding domestic production and undertaking targeted promotion in top importing nations to build exports in these items. It maps India’s current export profile for determining its export competitiveness to these top importing nations. While this model has been used by multiple government reports over the past three years, the CII paper considers four key criteria — the total exported value of products, world export shares, India’s rank as a top exporter in the top import items, and the country’s frequency as a top exporter among those top imports.

Consequently, the top-37 products from a range of sectors, including apparel, organic chemicals, machinery and mechanical appliances, pharmaceuticals and others have been identified.

India’s exports fell by 1.7 per cent in the first quarter of 2019-20 to $81 billion due to an uncertain global trade climate. In 2018-19, exports had expanded by 8.8 per cent to cross $330 billion. 

India is facing headwinds from the ongoing global trade conflicts at a time when some other countries are capitalising on changing supply chains and the country must step up its export strategy to compete, the industry body has said.

In June, export growth hit a 41-month low as poor performance plagued all major foreign exchange earners including petroleum oil, gems and jewellery, and engineering goods. 

The government has blamed this on a high-base effect and overwhelming global trading conditions. “While average exports in June have been $22-23 billion since 2015-16, the exports in June 2018, were relatively quite high at $27.7 billion,” the commerce ministry said last week.

The paper has been submitted to the commerce department and officials say it will be discussed during currently undergoing stakeholder consultations on the foreign trade policy (2015-2020), which will end in March, 2020. The new five-year foreign trade policy (2020-25) is expected to be released in September this year.

Trade and investment agreements and an infrastructure for promoting standards and certifications are needed, said CII. Incentives to encourage greater adoption of technology and innovation and boosting high-tech exports are also suggested. 

A key recommendation is the need for developing an export strategy at the state level, based on states’ comparative advantages.

For enhancing the market promotion of the select products, the body has pointed out that non-tariff barriers must be taken up with the respective governments of destination countries. Other suggestions include facilitating effective marketing strategies by setting up centres in top international markets, product promotion and integration of brand building initiatives with India’s commercial missions.

To encourage domestic manufacturing, CII has called for strengthening industrial clusters with related infrastructure and port connectivity. Adopting an integrated value-chain approach for establishing global linkages is another important recommendation which would require interventions such as logistics and infrastructure support and skill development initiatives, among others.

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