As global value chains are re-connecting once again and GDP growth rates of India’s major export destinations are projected high in 2021 as compared with last pandemic year of 2020, at this juncture, India holds a great opportunity to enhance the export growth trajectory to the next level and to achieve US $ 400 billion merchandise export target set by the Government.
India's export growth trajectory has increased from USD 17.9 billion in 1991-92 to USD 291.2 billion in 2020-21. However, India achieved a remarkable growth of USD 330.1 billion in 2018-19 and USD 313.4 billion in 2019-20 but owing to pandemic, export growth decelerated a little in 2020-21. Recently, Government of India has set a target of USD 400 billion of merchandise exports for 2021-22 to take advantage of opportunities created in the post-Covid scenario, explore new destinations and expand the export basket. The government has suggested 4 ways to be focused significantly to make India a global champion: 1) increase in manufacturing which is Qualititavely Competitive 2)Minimize the Logistics Cost 3) Work in collaboration 4) Identifying international market for Indian products.
Source: PHD research bureau, compiled from ministry of commerce.
At present, exports account for 20 per cent of India's GDP and about 60 per cent of India's exports are related to engineering, gems and jewellery, petroleum and chemical products and pharmaceuticals. The average GDP growth rate for India’s top 10 export destinations is projected to stand at 3.9 percent in 2021 as compared with the negative growth rate of (-) 2.5 percent in 2020. India's exports increased about 90 percent (average) during the period of April to July 2021 compared to the previous year, which brings India closer to its export target of USD 400 Billion.
To achieve this target, the factors to be focused upon includes removal of problems of transport, logistics, manufacturing, walking shoulder to shoulder with exporters, and expanding Indian product basket for the international market. The draft National Logistic Policy, boost for project exports and enhancing export insurance cover offer significant encouragement in taking exports to new peaks and meet the current requirements to facilitate market scenario. In achieving Atmanirbhar Bharat Mission simplification of export procedures, increased competitiveness among Indian exporters and capacity building programs for potential Indian exporters are actively being the driving force.
Developing a Foreign Trade Policy which is in line with the larger Industrial Policy will help the industries to compete and perform well at larger scale. Promoting Brand India would help establish India as a global manufacturing hub and improving the policies of Special Economic Zones would aid in achieving the target. Identifying high end imported products through technological advancements as prospective for manufacturing in house can also be implemented for selective products. Newer international schemes and policies will make the Indian manufacturers ready to compete at global level more easily and achieve better results.
Fixing an achievable export target is a first step towards the identification of potential market and region selection for business purposes. Various market expansion activities such as handling of routine trade and investment enquiries, providing information on economic and business climate, and identifying new business opportunities by undertaking promotional activities such as market surveys, seminars, workshops and outreach activities will pave the way for an efficient trading process.
|S.no.||HS-Code||Commodity||2020-2021 (USD Million)||Top 5 Destinations|
|1||27||Mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes.||26,881.28||Singapore, UAE, Netherlands, Nepal, Malaysia|
|2||71||Natural or cultured pearls, precious or semiprecious stones,pre.metals,clad with pre.metal and artcls thereof ;imit.jewlry;coin.||26,160.76||USA, Hong-Kong, UAE, Belgium, Israel|
|3||30||Pharmaceutical products||19,383.87||USA, South Africa, UK, Nigeria, Russia|
|4||84||Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof.||18,947.56||USA, Germany, Thailand, China, UK|
|5||29||organic chemicals||17,950.46||China, USA, Germany, Brazil, Japan|
|6||85||Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts.||14,211.96||USA, UAE, Germany, China, UK|
|7||87||Vehicles other than railway or tramway rolling stock, and parts and accessories thereof.||13,637.18||USA, Mexico, Bangladesh, South Africa, Nepal|
|8||72||iron and steel||12,124.33||China, Vietnam, Italy, Nepal, UAE|
|9||10||Cereals.||10,064.03||Southy Arab, Bangladesh, Iraq, Nepal, Iran|
|10||39||Plastic and articles thereof.||6,870.86||China, USA, UAE, Nepal, Bangladesh|
|Total of Top ten Commodities||166,232.29|
|Rest of World||124,931.25|
|Source: PHD research bureau, PHDCCI, compiled from ministry of commerce.|
Top exported products in the year 2020-21 are mineral fuels, mineral oils and products of their distillation, natural or cultured pearls, pharmaceutical products, Nuclear reactors, boilers, machinery and mechanical appliances, organic chemicals etc. The top 10 commodities accounts for almost 57% of total Exports with value worth USD 124,931 million. The destination of top 10 commodities are directed towards countries like USA, UAE, China, Germany, UK, South Africa, Hong-Kong, Nepal, Bangladesh etc.
|S. No||Countries||Exported value in 2020 (USD Billion)||%Share||GDP growth rate 2020||Projected GDP growth rate 2021 by IMF|
|Total of Top ten Countries||146.97||50.47%||Avg (-) 2.5 %||Avg 3.9 %|
|Rest of World||144.23||49.20%|
|Source: PHD research bureau, PHDCCI, compiled from ministry of commerce, IMF.|
The top 10 export destination of India are USA, China, UAE, Hong-Kong, Bangladesh, Singapore, UK, Germany, Nepal and Netherlands. With USD 146.97 billion of exports (50 percent of total exports) are directed towards these top 10 exporting destination of India.
Going ahead, the export Target of USD 400 billion is achievable as the top exporting partners of India are the leading economies with significant GDP growth rates and are projected to grow at higher rates by IMF in the year 2021, therefore India has the potential to gain from the growth of these economies by meeting their import demand with its enhanced volume of exports to such destinations.
(Dr. S.P. Sharma is Chief Economist & Director of Research • PHDCCI (PHD Chamber of Commerce and industry, India)
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