View: India needs $1 trillion exports to become a $5 trillion economy
High export growth rate is crucial for India’s goal of becoming a $5 trillion economy by 2025. To achieve this objective, the economy will have to grow at an average rate of 8% during the next four years. India’s exports will have to grow at an even higher rate.
The current slowdown has made the objective more challenging, with India’s exports having shrunk 6.57% in September. Moreover, GoI has to take a call on whether to join the Regional Comprehensive Economic Partnership (RCEP), the free trade grouping of 10 Asean members and their six allies. The group continues to pressure India on finalising the deal by November 4, even though several industry and trade organisations have increased the pitch of their opposition to the agreement.
Free Up Trade Agreements
In view of the stakes involved, the report of the high-level advisory group (HLAG) set up by the ministry of commerce could not have come at a more opportune time. The report presents a roadmap to double India’s exports to $1 trillion by 2025 from about $500 billion at present. To achieve this, it suggests a slew of measures, some of which have been much talked about in the past. These include reducing the cost of capital by further lowering repo rates.
However, the main focus is on raising competitiveness of Indian exports. Moreover, it makes bold recommendations on several issues traditionally considered to be risky economically and sensitive politically, such as free trade deals.
In principle, by promoting exports, free trade agreements (FTAs) can help the country move up the value chain. That, in turn, can provide India an edge vis-à-vis non-member countries. However, the fact remains that we have not gained from existing FTAs. The main culprits are the non-tariff barriers and administrative hurdles faced by Indian exporters such as difficulty in quality and specification certificates, and time-consuming custom clearances, just to name a couple. They have prevented Indian exporters from exploiting markets of trading partners. Unsurprisingly, the partner countries have gained more.
Moreover, due to co ption and lax quality control, several cheap but poor quality goods, especially from China, have flooded the market. These are bad for India’s health, environment and balance of trade.
The FTAs, in themselves, do not address these problems. For Indian exports, the logistical bottlenecks are other stumbling blocks. The turnaround time at the best of Indian ports like Kochi is two-three time longer than for Chinese ports. We come a cropper even compared to our Asian competitors like Vietnam and Bangladesh. Shipping of garments from point of origin to the nearest port can take as much as seven times longer in India than in Bangladesh, and as much as 20 times than in Vietnam.
Unsurprisingly, India falls well below its potential in attracting foreign direct investment (FDI), crucial for raising exports. To a large extent, China’s spectacular performance on the export front is on account of FDI, whose share is estimated to be over 50% in China’s manufactured exports.
自由贸易协定本身并没有解决这些问题。对于印度出口来说，物流瓶颈是另一个障碍。印度最好的港口，比如高池港的周转时间是中国港口的2 - 3倍。即使与我们的亚洲竞争对手，如越南和孟加拉国相比，我们的表现也很糟糕。在印度，从服装产地到最近港口的运输时间是孟加拉国的7倍，是越南的20倍。
Export Hard, Bargain Harder
Reportedly, many companies are considering moving out of China, since the start of the US-China trade war. However, not many are keen to relocate to India. To overcome this hurdle, the HLAG report proposes a centralised authority for issuing licences, and to empower it to grant incentives for companies meeting pre-defined criteria.
While the Insolvency and Bankruptcy Code (IBC) has helped fix part of the mess from the past, contract enforcement in India still leaves much to be desired. Judicial delays, coupled with the lack of appreciation of the economic consequences of delayed decisions, call for a clear and consistent legal and regulatory framework to guide judicial decision-making. Moreover, GoI would need to negotiate hard on non-tariff barriers that restrict Indian companies from accessing markets of trading partners, such as the requirement of local experience by China.
Addressing these issues, and having a staggered timeline, can reduce the risks of entering into an FTA. The proposal to fund infrastructure using long-term bond market, though spot on, will work only if the regulatory framework for grading of projects is in place beforehand. Several other measures will help.
Consider the issue of land. GoI owns large tracts of unused land. The ministries of railways and defence have upward of 43,000 and 33,000 hectares of idle land respectively. The case is similar for major airports, power plants and other public sector utilities (PSUs), a large part of which is in prime areas or near cities, such as the 31,886 hectares of idle land owned by special economic zones (SEZs). This land should be utilised for omnipresent infrastructural demands, investment projects and multi-model logistics hubs.
Creation of big data-driven prediction systems for Indian exports will help in identifying priority areas. In fact, big data and artificial intelligence (AI) also have the potential to serve as a source of new exports to the developed world. Councils along the lines of goods and services tax (GST) councils may be a good idea for developing logistical hubs and value added exports of agricultural products.
The pathway to $1trillion exports is bumpy. But the recommendations, backed by the above policy actions, will go a long way in promoting exports and increasing share of manufacturing in the GDP and total employment.
译文来源：三泰虎 http://www.santaihu.com/48709.html 译者：Joyceliu
Dr SK MUKHERJEE
Mr Modi has announced to arrange Rs 8100 lakh crore investment in 5 years to achieve USD 5 trillion economy and for that we may need Rs 20 lakh crore yearly for capital expenditure. Last year Rs 9.2 lakh crore allocated for capital expenditure was cut down to Rs 8.5 lakh crore in FY 19. Even if capital expenditure is allocated in the budget around Rs 15-16 lakh crore we may require Rs 28 lakh crore to top up in average in the 5th year. But now Rs 32 lakh crore we may require at the end to make it a Rs 100 crore capital expenditure due to the condition we are in. As per RBI report the capacity utilization in our industries is less than 75℅, resulting in fall in production. The manufacturing sector is worst affected. There is a steep fall in production which leads to fall in growth. I, and presume so you all, wish to view Indian economy, wherein go nment should encourage investment so that there is growth in production, exports and employment; the economy should encourage savings so that there should be growth in both – demand and expenditure. The growth in demand will generate growth in production, export and employment to complete the cycle.
What are we good at, better at, best at ? Will the experts please identify them. Pound them real hard and chase the rainbow to get the pot of gold ! Forget Modi and the politicians.
this goverment always set target but any of the goal have they acheived till today?only making sensation is a character of bjp.so take it easy.
The no 1 thing as indians we need is honesty. This is missing at every level. Our pm ,our ministers our administration our judiciary our stock markets are all blatant examples as to how we get away by speaking half baked truths and even worse complete lies. It''s sad to note there is no accountability at any level.till this is not sorted out there is no point shouting from the top of our voices india is only going downhill and worse is in store.
The author of the article is absolutely correct India needs $ one trillion or more in exports if it wants to become a $ 5 trillion economy. Vietnam, Thailand, Malaysia, Indonesia are exporting more on a capita basis than India. The domestic market can support up to a certain level local production after which it becomes saturated. The excess has to be exported. Modi go nment and the Congress before have failed to grasp the fundamentals. Unless exports increase fast and cover imports India is in for a free fall no matter what ever one says.
people are talking about fake agenda set by BJP govt. even they know that 5 T is easy task but making big. but all indians knows that event india will not reach 4T under current incompetent PM/FM and BJP govt
A FAIRYTALE OF THE WORLD TRAVELING THE PM.......HE WANTS EVERYTHING OTHER WORLD COUNTRIES ECONOMIES ARE CAPABLE.....NEVER EVER UNDERSTANDING INDIAN MENTALITY OF THE WAYS OF WORKING.......
And a best team of financial professionals and Finance Ministers.
With India losing the WTO case, it will have to remove export subsidy so exports will go down drastically. There is now no way to reach the target.
until we get one best successful leader our country dream remains as a dream
Govt should put more energy in such issues than internal politics.
With only political motives, self branding and policies for only election winning, it is a distant dream.
Mr NarendrajiMy one request to u, don’t go for RCEP
No one recognizes that Indian economy is no competitive. India is unable to sign any Free trade agreement because due to its high cost of products it will be overrun by imports and lead to closure. The go nment''s attitude to foreign companies is to be suspicious. India and North Korea are the only countries with no Apple stores. India has burdensome requirement for investors huge tariffs to prevent exports to India, but India wants access to every country. Indian labor is lazy, the babus still run a license raj. India is the last place to invest. Better to invest in Vietnam or Indonesia for manufacturing before India.
It’s a joke. In Indian cities cars travel at max speed of 30 KMPH, that too if lucky. Kolkata amongst them is even pathetic. We r still in British era built city and roads
Amazing proof of intellect level in India. Neither the author of the article nor the wise guys leaving comments are aware of the fact that India''s current exports are 300 billion and not 500 billion. The classic case of cut-paste.
FALTHU BAKWAS. BETTER USE OUR RESOURCES TO GROW MIGHTILY. AS FOR MONETARY POLICY, DO LIKE USA, EU AND CHINA. CHEERS
To reach 5 trillion, we have to cross so many social barriers, then law and order, discipline, work culture,traditional methods,mentality, total reform of bureaucracy, dynasty and list goes on.....
British wrote contract law for indians and our esteemed greedy lethargic judges lawyers babus made a mess of that.Indian courts are not known all over world for their honesty.I don''t think we have any courageous person to get rid of these worthless parasites from india.
Indian or foreign corporations treat people like cattle.German companies working in india like audi-mercedes don''t even give weekly off to employees and make people work 12 hrs everyday,throughout year.Unless,people are treated better,why would anyone work in factory jobs?Europeans and americans preach a lot about work life balance and their own citizens never work more than required.These same companies adopt slavemaster attitude in india.
Good article but misses one very important point-Export of what? Low cost goods require huge capacities and very low cost of labor-land-electricity-taxes.Engineering goods need technology and talented manpower.Indian engineering colleges like IIT-NIT-govt colleges-university departments produce graduates whose main aim is to settle in USA.Why are we running these institutions?No engineer wants to work in factory due to stringent work conditions.Who will train indian workers?These are most untrainable people on earth.
This is so true. While politicians have destroyed India, the mindset of Indian common public as well as the general societal outlook itself is not conducive for competitive global success. We are at our best when preaching about rights but next to zero when performing duties and fulfilling professional commitments. I don''t see much improvement even in the future, we will remain an also-ran country, nothing more, nothing less.
Sensible non partisan write up. It would be better if concrete corrective measures had been suggested,like starting a network of Cargo airports,needful rupee depreciation, boosting domestic consumption demand and savings etc.
excellent article. hope the govt listens.
If dreams can fly we should be soaring. But alas we are only good at talking. And for some even able to fool people around. First get your economy out of the morass, then you have the right to talk about 5 trillion economy.
Lol. Without Land, Labour, banking reforms it should not even be dreamed of. And any political parties in India is not interested in reforms as they can easily win elections just on religion and caste politics.