India’s Diversification of Export Markets Increases
India’s diversification of export markets has been increased as concentration of exports towards the top 10 export destinations declined from 56% in FY2004 to 53% in FY2009 and to 49% in FY2014 said, Shri Sharad Jaipuria, President, PHD Chamber.
India’s exports are no more majorly dependent on its traditional export destinations as volumes of exports towards African & Asian markets are increasing. [cryout-pullquote align=”left|center|right” textalign=”left|center|right” width=”63%”]
Region-wise % share in India’s exports
|2||Southern African Customs Union (SACU)||0.9||1.7|
|5||West Asia- GCC||11.1||15.3|
Source: PHD Research Bureau, Compiled from Ministry of Commerce and Industry
[/cryout-pullquote]India’s export performance has exhibited remarkable performance during the last decade. At the time of commencement of reforms India’s exports were only of around US$20billion which increased to US$45 billion in 2001-02 and to US$312.6 billion in 2013-14. Thus, during the early phase of reforms it took as many as 10 years (FY1992- FY2002), to double the exports, however, within next 12 years (FY2003-FY2014) the exports increased nearly by six times, said Shri Jaipuria
India‘s integration with the world economy, reflected by the trade openness indicator (merchandise trade to GDP) is also enhanced from 14.3 % of GDP in 1991-92, to 28.2% in 2004-05 and further to 41.8 % of GDP in 2013-14. And, the share of India‘s merchandise exports in the world exports has been increased from 0.5% in 1991 to 0.8% in 2004 and to 1.7% in 2013, he said
However, despite of exhibiting encouraging exports growth, India’s exports performance at the international stage is still not that much significant and suggests lot of scope to excel further with increased share in world exports, said Shri Jaipuria
This is apparent in the recent World Trade Report, 2014 of WTO wherein, India with total exports of around US$313bn and 1.7% share in world exports is ranked at the 19th position amongst the World’s top 20 leading exporters. While, China with total exports of US$2209bn & 11.7% is the leading merchandise exporter followed by US (8.4%), Germany (7.7%), Japan (3.8%), and Netherlands (3.6%).
To become internationally competitive, Shri Jaipuria suggests commodity composition of the country to be focused for diversification with the inclusion of more and more commodities in export baskets. Contrary to increasing market diversification of India’s exports, product diversification of India’s exports has reported a fall from 57% in FY2004 to around 64% in FY2014.
For this, the country needs to provide facilitation to exporters to diversify the composition of export basket with enhanced knowledge of foreign markets regarding demand for goods across borders.
More and more information about the world demand dynamics would help exporters to enhance their export baskets and manufacturers to enhance their production possibility frontiers, said Shri Jaipuria.
Further, India needs to enhance its productivity in the manufacturing sector with a major focus on research and development and new product innovations.
He suggested that manufacturing processes in the country should be facilitated with the simplification of procedures and ease of doing business. Industrial infrastructure especially, the export infrastructure needs to be enhanced in terms of capacity expansion of ports, state of the art facilities in the railways and improved quality of roads.
The improvement in industrial infrastructure will not only improve the manufacturing competitiveness in India but also enhance its export competitiveness in the international markets, said Shri Jaipuria