SME Times News Bureau | 16 Sep, 2020
India should look at outward investments in agriculture and rare earth
elements to meet domestic demand as well as specific interventions for
encouraging innovation-led manufacturing, revisiting regulations to reduce
import dependence in certain sectors, states a study by Export Import Bank of
India (Exim Bank).
According to the study, the recent performance of the manufacturing sector in
India is indicative of an underlying inertia, with the share of manufacturing
in India's gross value added declining to 15.1 per cent in 2019-20, as compared
to 18.4 per cent in 2010-11, despite growing consumption demand in the country.
This weakness in the domestic manufacturing sector has translated into greater
dependence on imports to meet the growing domestic demand over the years, said
Exim Bank.
According to Exim Bank study, in sectors like agriculture and rare earth
elements, there is a greater need for strategies that enable collaborative
arrangements and encourage outward investments into partner countries for
meeting domestic requirements.
Securing rare earth elements is important for India to enter high-tech
manufacturing.
In the case of technology-intensive sectors the strategies are focused on
creating domestic capacities for reducing import dependence.
The study titled 'Self-Reliant India: Approach and Strategic Sectors to Focus',
identifies select sectors for import substitution and enhancing domestic
production including electronics, defence equipment, machinery, chemicals and
allied sectors, pharmaceuticals, and select agricultural products.
The study has also included sectors such as auto components, and iron and steel
where, though there is overall trade surplus for India, but in some
sub-categories, there is trade deficit, particularly with China
These sectors account for more than $186 billion of imports by India, with a
share of nearly 39 per cent in overall imports and 50 per cent in the non-oil
imports by India.
ASome of the other strategies suggested by the study include: specific interventions
for encouraging innovation-led manufacturing, addressing deficiencies in tax
and duty structures, encouraging joint ventures, revisiting government
regulations and programmes, among others.