INDIA IN THE WAY TO BECOMING EXPORT HUB

India has made progress in several sectors including biodiversity, land neutrality, climate change, waste recycling, and organic farming, said Modi in his Independence Day Speech. After the ‘Make in India‘ initiative by the Modi government, Indian exports have increased manifold. There are numerous export schemes, financial aids, and other benefits provided by the government of India to exporters which have led to this increase in exports.

ROLE OF EXPORTS IN THE INDIAN ECONOMY

Several economists have highlighted that higher exports help nations to grow rapidly in terms of GDP and domestic output. Exports are crucial for a nation’s economic growth as they help in creating domestic jobs, infrastructure, demand, and GDP. It is important for countries to maintain an export-import balance in order to maintain growth momentum. Higher imports and low exports could negatively impact the economy and lead to the devaluation of the currency. Exports offer millions of small business owners and corporate firms access to a wider global market where they can sell their products. China is the world’s leading exporter of goods followed by the US, Germany, and Japan. India too is rising up the ranks as it keeps expanding its global export footprint. At present, India is one of the top agricultural exporters in the world. Experts claim that exports significantly help a country to boost per capita income, which is essential for generating higher domestic income and demand.

STEPS TAKEN BY THE GOVERNMENT

The export-import policy announced by the government every year specifies the details of export assistance and incentives. Export-Import policy or better known as EXIM policy is a set of guidelines and instructions related to the import and export of goods. Facility for Provisional Duty Entitlement Pass Book (DEPB) rates was introduced to encourage diversification and promote the export of new products. DPEB rates rationalize in line with a general reduction in customs duty. Duty-Free Replenishment Certificate (DFRC) scheme extended to deemed export to provide a boost to domestic manufacture. Value addition under the DFRC scheme was reduced from 33% to 25%. It was set up to provide financial assistance for export promotion to recognized organizations from the marketing development fund. There are saved export resource centers- Kandla (Gujarat), Santacruz (Maharashtra), Kochi (Kerala), Chennai (Tamil Nadu), Noida (Uttar Pradesh), Falta (West Bengal), Vishakhapatnam (Andhra Pradesh). Clearances are also available here. One of the latest initiatives from the government is the PLI scheme which attempts to boost domestic manufacturing and improve competitiveness in high-potential sectors. It offers a 4%-6% incremental sales of goods manufactured in India for five years subsequent to the base year (2019-20).

CHALLENGES OF EXPORT IN INDIA

In India, infrastructure deficiencies such as energy shortages, and inadequate and unreliable transport and communication facilities have so far hindered the growth of exports. Power shortages and breakdowns are so common that they often disrupt production schedules, increase costs and badly affect timely shipment. Improving the transportation system, including the expansion and modernization of the port facilities, rationalization of their charges, improving procedural requirements, etc. is absolutely necessary if the country is serious about the development of its export sector. Exporters in land-locked states are hampered by connectivity to gateway ports. It takes 46 hours to move a shipment from a warehouse in Delhi to a port, three times longer than in other countries. Bihar, Jharkhand, Himachal Pradesh, Uttarakhand, Jammu and Kashmir, and the North-Eastern states suffer from poor hinterland countries. The transport of agricultural produce among India’s top exports suffers from poorly built link roads connecting farms with main roads. Among the major problems of Indian exporters, the crucial ones are poor quality image, high costs, unreliability, infrastructure bottlenecks, the inadequacy of trade information system, supply problems, faceless presence, uncertainties, procedural complexities, institutional rigidities, etc.

FUTURE OF EXPORTS IN THE INDIAN ECONOMY

India has the potential to become the world’s fifth largest exporter of goods by 2030 in value terms, says HSBC Trade Forecast. The country has the potential to become an export hub for autos and it is well-placed to further develop its textile industry, an HSBC report said. India has significantly lagged in increasing its manufacturing ability, unlike its prowess in capturing service outsourcing. Manufacturing capability and scale can only be improved if there is considerable ease of doing business in India which would in turn spur confidence and attract foreign and domestic investment to set up and expand businesses in India. Union Minister of Road Transport and Highway and MSME Nitin Gadkari said that the government is working towards making India a global automobile manufacturing hub in the next five years. India needs to increase its rate of employment growth and create 90 million non-farm jobs between 2023 and 2030s for productivity and economic growth according to McKinsey Global Institute. The net employment rate needs to grow by 1.5% per year from 2023 to 2030 to achieve 8-8.5% GDP growth between 2023 and 2030.

CONCLUSION

• Overall, export-led growth has been important for many countries. The challenge is to make ensure that a country is exporting a sufficiently diverse range of products (eg to avoid some of the risks from primary product dependency) and also that the benefits from increased exports and growth are widely dispersed across the population.