30/09/2016
Exports growth: Efforts not enough without direction
The continuous decline in Indian exports has finally been arrested. Exports will rise now, but the growth will likely be slow and steady, and not fast as global demand is yet to pick up.These views came last week from our trade minister. She added that the Centre was looking into more diversification -- both in terms of markets and products -- and signing of FTAs with more countries These measures sound good, but I think the Centre must first work on a clear road-map for growth of the sector so that such efforts can be given a focused direction.
Over the last few years, India has signed FTAs with a number of countries, but by now it has become evident that some of them are not boding well for us while some others are reportedly harming our domestic industry. For example, our FTA with the ASEAN -- which was signed in 2010 -- has hardly benefited us, with imports rising by over 33 percent to $ 40 billion, but exports remaining stagnant at $ 25 billion for the period between 2010-11 and 2015-16. So, just more FTAs will not help our exports. Before entering into any such new pacts, we must ensure that they do not result in efficiency loss.
Now and then, our policymakers blame low global demand for our exports decline. This argument, not an iota of doubt, holds water, but the question is: have we done enough to fight back? A recent media report shows that India's exports declined 17 percent in 2015 over 2014 while Vietnam's exports grew by 24 percent during the period. This extent of Vietnam's export success -- even during the gloomy days of global demand slowdown -- has become possible largely due to the country's success in negotiating effective FTAs, improving ease of doing business and attracting export oriented FDI. We are still lagging in these areas.
Diversification is pretty critical if we have to grow our exports. While a recent report says that concentration of our top ten export products reduced to 58 percent in 2015 from 60 percent in 2010, there is little doubt that our export basket is still dominated by resource-based products. When it comes to manufacturing exports, the share of medium and high-tech products is very low. Over the years, our market diversification has also improved, but again we are still over-dependent on a few traditional markets, such as the US and EU. Here again, the Centre must act if it wants to give exports a real push.
From CEO TradeIndia 06.09.2016
