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India’s export share globally has remained at sub-2 percent for more than a decade now and has refused to budge. As of 2023, it stood at 1.8 percent. Today, India ranks 17th in the list of the top global exporters and is behind developing countries like Mexico, which is ranked 9th besides China whose presence as a developing country often gets argued upon.
While India has set a target of US$1 trillion in merchandise exports by 2030, given the current circumstances, this remains largely impossible. However, even considering doubling India’s goods exports from the current US$437 billion in FY 2024 to around US$874 billion by FY 2030 would require a greater participation of many other districts in the country.
Incidentally, 39 percent of India’s exports come from just 10 districts in the country as of FY 2024, which is a serious anomaly. These are largely in Jamnagar, Surat, Kachchh, Ahmedabad, Bharuch (all from Gujarat), Mumbai, Pune (Maharashtra), Kanchipuram (Tamil Nadu), and Gautam Buddha Nagar (Uttar Pradesh).
The Government of India could also identify select districts from India’s central and eastern regions whose export share could be doubled by 2030 through a focused approach.
It is extremely imperative to shift the focus from these select cities to other districts so that this huge disparity is repaired, and the concentration is diminished. Hopefully, the ensuing Budget will consider this. The Districts as Exports Hubs was launched with a similar mindset, but it is more important to experience traction when new districts compete with the top 10 export districts. The Government of India could also identify select districts from India’s central and eastern regions whose export share could be doubled by 2030 through a focused approach.
India does have a well-designed structure at the district level for promoting industries, but much remains to be done. The District Industries Centre (DIC) programme was launched in 1978 to build the potential of these districts. Today, it needs a renewed focus as India wants to increase its exports. Firstly, the government should look at utilising the DIC to promote exports through greater oversight. Secondly, the DIC needs adequate and qualified manpower who are equipped to drive its purpose. Thirdly, the DIC should also be compulsorily tasked to utilise funds available at their disposal to promote entrepreneurship. Fourthly, it has also been observed that many entrepreneurs and business owners are unaware of the various schemes available from the centre and the state, which could otherwise be of help to enhance their businesses. Fifthly, the DIC should work in collaboration with block development officers, local industry associations, and the chambers of commerce to help their districts play a more active role in exports.
Women entrepreneurs are increasingly playing a greater role. The Udyam portal highlights some significant data regarding the involvement of women in the workforce.
Today, women entrepreneurs are increasingly playing a greater role. The Udyam portal highlights some significant data regarding the involvement of women in the workforce. 20.5 percent of the total number of MSMEs (Micro, Small and Medium Enterprises) registered on the Udyam portal are women-owned, besides the fact that women-owned MSMEs contribute to 11.15 percent of the total investment. However, what would be interesting to observe is that rural areas have a slightly higher share of women-owned enterprises at 22.24 percent when compared to urban areas (18.42 percent). While there have been efforts taken in this regard, it is important to ensure that there is no dummy participation of women to gain the benefits therein. Towards this end, there needs to be a direct engagement of the DIC with women entrepreneurs.
Districts in landlocked states are at times deprived of export opportunities given their location. The centre should assist such districts to get more investment, thereby helping them to capitalise upon their latent export potential. The Trade Infrastructure for Exports Scheme currently provides grants to select institutions or firms, but only to the extent of 50 percent of the total equity contributed by the entity to the project. It is suggested that for landlocked states like Madhya Pradesh and Chhattisgarh, which have a negligible share in India’s exports, the amount should be increased to at least 70 percent. For the Northeast States and the Himalayan region, it should be increased to 80 percent.
Local chambers along with federations must take up the onus to reduce this through continued interventions, allowing for better utilisation of such FTAs.
In the last few years, India has signed multiple free trade agreements (FTA) to allow greater Indian exports, but it has been observed that there is a lot of ignorance about such developments amongst exporters in the districts, especially in Tier 2 and Tier 3 cities. Local chambers along with federations must take up the onus to reduce this through continued interventions, allowing for better utilisation of such FTAs.
Another very important need for district-level exports is to ensure that products remain acceptable. For example, almost 18 percent of India’s exports go to the European Union (EU). Therefore, exporters must be aware of the evolving stringent rules like deforestation regulation, general data protection, and carbon-based adjustment mechanisms that have been brought in by the EU, which could impact India’s exports.
India has a lot of potential to increase its exports through Geographical Indications (GIs), benefiting local communities and preserving heritage. As of October 2024, India has 643 registered GIs. Many of these are produced at the grassroots level without being aware of their latent potential to market products abroad. The Government of India may consider setting up stalls for GI items at airports, while also training them towards improving their quality and packaging.
For a Viksit Bharat, districts need to become more Viksit and play a more homogeneous role in export growth. This will not only help India increase its share in global exports but will also cause a multiplier effect, helping in the overall development of more districts.
Rahul Mazumdar is an economist with the Export-Import Bank of India.
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