INDIA'S EXPORT HOTSPOT – ECONOMY
News: Data
| Jamnagar to Kancheepuram: Mapping India’s export hotspots
What's in the news?
● Jamnagar in Gujarat
is the top exporting district in India. It formed about 24% of India’s exports
in value terms in FY23 (till January).
● Surat
in Gujarat and Mumbai Suburban in Maharashtra feature second and third by a
distance, forming only about 4.5% of the country’s exports in the period.
● The
other districts in the top 10 are Dakshina Kannada (Karnataka), Devbhumi
Dwarka, Bharuch and Kachchh (Gujarat), Mumbai (Maharashtra), Kancheepuram
(Tamil Nadu) and Gautam Buddha Nagar (Uttar Pradesh).
Top Export Sectors:
1. Engineering Goods:
● Registered
a 50% growth in exports at USD 101 billion in FY22.
2. Agriculture Products:
● Exports
were buoyed by the government’s push to meet global demand for food amid the
pandemic.
● India
exports rice worth USD 9.65 billion,
the highest among agricultural commodities.
3. Textile and Apparels:
● Exports
(including handicrafts) stood at USD 44.4 billion in FY22, a 41% increase YoY.
● Government
schemes like Mega Integrated Textile
Region and Apparel (MITRA) Park are giving a strong boost to this sector.
4. Pharmaceuticals and Drugs:
● India
is the third-largest producer of
medicines by volume and the biggest supplier of generic drugs.
● India
supplies over 50% of Africa’s requirement for generics, around 40% of generic
demand in the US, and 25% of all medicine in the UK.
5. Current trends:
● All
pumps, tools, carbides, air compressors, engines, and generators manufacturing
MNC companies in India are trading at all-time highs and shifting more
production units to India.
● Agricultural
exports and textiles are expected to remain strong in the coming years.
● India
is expected to become a major player in the electric vehicle (EV) space and is actively working towards
building capacity in EV batteries and charging infrastructure.
Challenges faced by Indian Exports:
1. Lack of Finance:
● Exporters
require affordable and timely finance to sustain their operations and grow
their businesses.
● However,
many Indian exporters struggle to obtain finance due to high interest rates, collateral requirements, and limited credit
availability, especially for small and medium-sized enterprises (SMEs).
2. Lack of Diversification:
● India’s
export basket is highly concentrated in a few
sectors, such as engineering goods, textiles, and pharmaceuticals.
● This
makes the country vulnerable to fluctuations in global demand and market risks,
as the lack of diversification limits
its resilience to changing trade dynamics.
3. Protectionist Trends:
● With
the disrupted global political order and weaponization of supply chains, many
countries are moving towards protectionist trade policies.
● These
policies are shrinking India’s export capacities and posing a significant
challenge to the country’s export sector.
WAY FORWARD:
1. Improving Infrastructure and Logistics:
● India
needs to invest in transportation networks, ports, customs clearance processes,
and export-oriented infrastructure such
as export promotion zones and specialized manufacturing zones.
● Improved
infrastructure and logistics can reduce transportation costs, improve supply
chain efficiency, and boost export capabilities.
2. Skill Development:
● Skill
development programs should be implemented to enhance the availability of
skilled labour in export-oriented industries.
3. Modernization:
● Incentivizing
and promoting technology adoption,
such as automation, digitization, and Industry 4.0 technologies, can boost
productivity, competitiveness, and innovation in the export sector.
4. Exploring Joint Development Programs:
● India
can explore joint development programs with other countries in sectors like
space, semiconductor, solar energy to improve India’s medium-term growth
prospects.
5. Diversification of Exports:
● To
reduce the vulnerability of India’s export sector to global demand
fluctuations, it is essential to diversify its export basket across different
sectors and countries.
Exports
alone cannot be the sole engine of growth amidst a wave of deglobalization and
slowing growth. In addition exports, India needs to focus on developing other
sectors such as agriculture, services, and manufacturing, to ensure sustainable
economic growth to make stable economy.