New Delhi, Mar 5 (KNN) Santosh Kumar Sarangi, Director-General of Foreign Trade has called for a comprehensive review of the country’s trade and industrial policies, highlighting significant challenges that threaten the nation’s export ambitions.
He emphasised the urgent need for strategic recalibration in light of increasingly competitive global markets.
The export landscape is rapidly changing, with advanced economies implementing aggressive industrial policies.
The United States has introduced the Inflation Reduction Act and CHIPS Act, while the United Kingdom has developed an Advanced Manufacturing Plan, and the European Union has launched its green deal. These developments create a more complex environment for Indian exporters.
The challenges are multifaceted. More than 40 per cent of India’s exports are directed to the United States, European Union, and United Kingdom, markets where domestic manufacturers are becoming increasingly competitive.
Additionally, Indian exports are likely to face growing non-tariff barriers, including the Carbon Border Adjustment Mechanism.
Manufacturing remains a critical concern. India’s manufacturing sector has stagnated at 13-14 per cent of gross domestic product over the past five years, significantly lagging behind regional competitors.
In comparison, China’s manufacturing contributes 26 per cent to its GDP, while Thailand stands at 25 per cent, South Korea at 24 per cent, and Vietnam at 23 per cent.
Structural impediments compound these challenges. The country struggles with insufficient global value chain integration, lack of scale, technological disadvantages, and high import tariffs.
Logistics inefficiency further undermines competitiveness, with India’s logistics costs reaching 8-9 per cent of GDP, compared to 5-6 per cent in advanced economies.
Exporters face additional hurdles, including low credit coverage, high interest rates, insufficient branding, and limited market outreach. Export credit currently covers only 28.5 per cent of total merchandise exports, amounting to USD 124.7 billion, while the estimated requirement is USD 284 billion for projected exports of USD 437 billion.
The government is responding with targeted interventions. Schemes are being developed to support micro, small, and medium enterprise exporters, including easier credit terms and alternative financing instruments.
The upcoming budget introduces BharatTradeNet, a unified platform for trade documentation and financing solutions.
The Export Credit Guarantee Corporation of India currently provides insurance cover for only USD 44.9 billion of the total export credit, prompting calls to reconsider its monopolistic structure.
As India aims to achieve its ambitious USD 2 trillion export target, a holistic and strategic approach will be crucial in navigating the complex global trade landscape.
(KNN Bureau)
