$900-billion exports target is achievable but this can happen only when there is a boom in manufacturing
The Government is reportedly contemplating an ambitious export target of $900 billion for the current fiscal, which will be almost 17 per cent more than exports of $770 billion in 2022-23. Optimism in official circles is occasioned by various factors, one of which is the World Trade Organisation’s (WTO’s) upwardly revised forecast for trade growth. It estimates that global merchandise trade volume growth will be 1.7 per cent of world GDP in the calendar year 2023; in October 2022, its estimate was 1 per cent. Second, the $94-billion increase in exports in 2022-23 despite huge problems has made the officials upbeat. Third, they are confident that the Make in India, Make for World programme and the Rs-2 lakh crore production linked incentive (PLI) schemes to incentivise exports are doing well, especially in electronic exports. Electronics figured in the top 10 items of merchandise exports; it was 5.7 per cent in its share in 2022-23 at $25.39 billion, up from 3.71 per cent in 2021-22. US technology giant Apple has augmented its iPhone production in India substantially; it rose from 1 per cent of global production to 7 per cent in two years. Apple partners like Foxconn Technology Group and Pegatron Corp are assembling their products in India. Chinese smartphone maker Vivo will also invest Rs 1,100 crore in a new 169-acre manufacturing facility in Greater Noida. The Government believes that the $900-billion exports target is not unrealistic but it will fix the target after wide consultations with all stakeholders.
Policy and decision makers, however, would do well to focus more on merchandise exports. In the last fiscal, these were $447.46 billion, up from $422 billion in 2021-22; this was a rise of merely 6 per cent. Services exports, on the other hand, grew from $254.53 billion in 2021-22 to $322.72 billion in 2022-23, registering a rise of 26.8 per cent. In other words, most of the rise in exports is because of the excellent performance of services. This is a familiar story, a story that underlines the Indian economy’s Achilles’ heel—manufacturing. National Manufacturing Policy, which was announced in 2011, aimed to increase the share of manufacturing in GDP to 25 per cent by 2025. In 2021, it was 14 per cent, down from 15 per cent in 2015. In fact, since 1960 this share never touched even the 20 per cent mark. If the Government really wants to increase merchandise exports, it has to ensure buoyancy in manufacturing. It is doing a lot directly and indirectly to boost factory output. At the Central level, there are not many procedural rigours, but the same cannot be said about the State level; it is here that industrialists, especially from micro, small and medium enterprises or MSMEs, face problems. The Centre must coax, nudge or goad States to become more sensitive to the concerns of MSMEs—and not just in hi-tech sectors like electronics. There cannot be a boom in merchandise exports without a boom in manufacturing.