India experienced a massive export surge between January and October 2021, which demonstrated its inherent strengths in manufacturing, entrepreneurial dynamism, and the ability to meet global demand in a short period of time. India’s present level of exports can be boosted further to US$ 1 trillion by 2029-30, at a CAGR of 14%.
The Confederation of Indian Industry (CII) in the paper “Achieving USD 1 Trillion Merchandise Exports by 2030: A Roadmap” elaborates a holistic export strategy that can help India achieve the target based on wide stakeholder consultations. The approach comprises of five key elements as follows:
Identification of Countries and Products
Countries are identified based on a combination of filters including their population, GDP size and exports. While factors such as population and GDP indicate the market size to be addressed, exports of a country show its presence in global value chains. India’s chances of exporting to the country become higher, with higher levels of integration.
The methodology specifically targets countries whose population, GDP and exports exceeds 30 million, US$ 300 billion and US$100 billion respectively.
The report identifies a total of 41 countries based on 2 out of these 3 criteria being met. Countries identified include China, USA, Bangladesh, France, UK, South Korea, Japan, among others. Several of the countries identified also had very low presence in India’s export profile including Indonesia, Russia, Philippines, Argentina, Ukraine, Poland and several European countries. These countries therefore must be emphasized and require targeted export promotion.
CII has developed a unique methodology with the help of a statistical tool that enables mapping top products with highest export potential at the 6-digit HS code level with countries. Products with high export potential are determined using the Export Specialization (ES) Index, that can be exchanged between two specific countries based on their respective strengths.
The ES Index, which is a slightly modified version of the more conventionally used Revealed Comparative Advantage (RCA) index has been employed in the study to identify products for specific markets and partners. The ES index looks at specific market characteristics of the partner country rather than world export shares as used by the RCA, which is extremely useful in identifying products relevant to specific markets. The index throws light on the relevance of a particular commodity in a specific market, which is an important criterion for understanding potential exports to specific markets.
As per World Banks’ World Integrated Trade Solution (WITS), the ES index is computed as the ratio of the share of a product in a country’s total exports to the share of this product in imports to specific markets or partners.
A comprehensive exercise has been carried out by CII where products have been identified for India’s eight partner countries including France, Germany, US, UK, Japan, UAE and South Korea. The report uses exports and related data from International Trade Center (ITC) at the HS6-digit level. Expanding production of the identified products are likely to further enhance India’s exports to the partner countries.
The top products identified for the countries belong to the broad 2-digit level categories of mineral oils and products (HS 27); pharmaceutical products (HS 30); machinery and mechanical appliances (HS 84); vehicles other than railway or tramway (HS 87) and gems and jewellery (HS 71). among others.
The report also provides recommendations and specific actions to be undertaken sector-wise. Several agricultural and manufacturing segments are taken up to suggest measures to expand exports.
With aggressive promotion across these different segments and effective Government-Industry collaboration, the export endeavour can be strengthened to make India a global manufacturing powerhouse.
Read the CII report on ‘Achieving USD 1 Trillion Merchandise Exports by 2030: A Roadmap’ – https://bit.ly/34W1TJ3