According to the Ministry of Commerce, India’s exports declined by about 16.7 (sixteen point seven) % in October compared with the year earlier.
Challenges Related to Indian Export Growth:
- Rising Protectionism and Deglobalisation: Countries around the globe are moving towards protectionist trade policies due to disrupted global political order (Russia-Ukraine War) and weaponization of supply chain, that is in way shrinking India’s export capacities.
- Lack of Basic Infrastructure: India’s manufacturing sector lacks sufficient manufacturing hubs, internet facilities and transportation are costly when compared to developed nations which is a huge deterrence to Industries.
- Uninterrupted power supply is another challenge.
- Lack of Innovation Due to Low Spending on R&D: Currently, India spends about 0.7% of GDP on research and development. This prevents the manufacturing sector from evolving, innovating and growing.
- Specialisation versus Diversification: Indian exports are characterised by high diversification combined with low specialisation, implying that India’s exports are spread thin over many products and partners.
- Joint Development Programmes: India can explore joint development programmes with other countries in sectors like space, semiconductor, solar energy to improve India’s medium-term growth prospects.
- Dedicated Export Corridors: The economic policy should also strive to promote export dynamism and product specialisation alongside product diversification through Dedicated Export Corridors to offer the best services.
- Promoting Acquisitions Abroad: Indian entrepreneurs can be incentivised to sign joint venture undertakings abroad for building up an export potential for their products.
- Frontlining MSME Sector: Ministry of Micro, Small and Medium Enterprises (MSMEs) account for 29% of GDP and 40% of international trade, making them key players in achieving ambitious export targets.
- It is important for India to link Special Economic Zones with the MSME sector and incentivize small businesses.
- Filling Up Infrastructural Gaps: A robust infrastructure network – warehouses, ports, testing labs, certification centres, etc. will help Indian exporters compete in the global market.
- It also needs to adopt modern trade practices that can be implemented through the digitisation of export processes. This will save both time and cost.