A blueprint for boosting exports

Nine suggestions to revitalise trade and spur economic growth

- AJAY SRIVASTAVA

India's foreign trade, valued at $1.63 trillion in financial year 2023-24, constituted 41 per cent of its gross domestic product (GDP), underscoring its vital role in the nation's economy and job creation. The sector faces significant internal and external challenges. Here are nine suggestions for the new government to boost trade and economic growth.

Revive labour-intensive exports: Exports in most labour-intensive sectors were lower in 2023 compared to 2015. Key product categories include garments, textiles, fabric, yarn, fibre, carpets, leather products, footwear, diamonds, and gold jewellery. These sectors generate more jobs per unit of investment compared to others.

Bangladesh and Vietnam, relying on imported fabric to make garments, have outpaced India through focused measures over the last two decades. The production-linked incentive (PLI) scheme for textiles is a non-starter and might be better scrapped. Technology is not the issue. An honest appraisal of the sector, rather than consultant reports promising distant rosy futures, is needed. If the export slide does not stop, we will see imports in these sectors rise.

Diversify service exports: Three-fourths of India's service export earnings come from software & IT and business services. In these two sectors, India has a high 9.0 per cent global share. This category accounts for 36 per cent of global services exports. Services other than these two represent a large 64 per cent of world services exports, where our share is a low 1.9 per cent.

A few such services, along with India's global share in the category, are transport and travel (2.4 per cent), maintenance and repair (0.24 per cent), insurance and pension services (1.38 per cent), financial services (1.30 per cent), and charges for the use of intellectual property (0.23 per cent). India needs to work to enhance its share in these sectors to achieve a stable service export performance.