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.