'India's diversification of export markets increasing'

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SME Times News Bureau | 02 Nov, 2014
Country's diversification of export markets has been increased as concentration of exports towards the top 10 export destinations declined from 56 percent in FY2004 to 53 percent in FY2009 and to 49 percent in FY2014 said, 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."

Export performance has exhibited remarkable performance during the last decade. At the time of commencement of reforms India’s exports were only of around USD 20billion which increased to USD 45 billion in 2001-02 and to USD 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 Jaipuria.

India's integration with the world economy, reflected by the trade openness indicator (merchandise trade to GDP) is also enhanced from 14.3 percent of GDP in 1991-92, to 28.2 percent in 2004-05 and further to 41.8 percent of GDP in 2013-14. And, the share of India‘s merchandise exports in the world exports has been increased from 0.5 percent in 1991 to 0.8 percent in 2004 and to 1.7 percent 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 Jaipuria.

This is apparent in the recent World Trade Report, 2014 of WTO wherein, India with total exports of around USD 313 bn and 1.7 percent share in world exports is ranked at the 19th position amongst the World's top 20 leading exporters. While, China with total exports of USD 2209 bn & 11.7 percent is the leading merchandise exporter followed by US (8.4 percent), Germany (7.7 percent), Japan (3.8 percent), and Netherlands (3.6 percent).

To become internationally competitive, 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 percent in FY2004 to around 64 percent 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 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 Jaipuria.