India must close export gap to match manufacturing might, says ISID Chief Nagesh Kumar
KR SRIVATS | January 21, 2025 | New Delhi
Need to unlock opportunities through China+1 strategy, says RBI MPC Member
India must step up its game in manufacturing exports, where it ranks tenth globally—far behind its standing as the world’s fifth-largest manufacturing nation, Nagesh Kumar, Director & Chief Executive, Institute for Studies in Industrial Development, (ISID) has said.
“We are the fifth-largest economy in terms of GDP and third-largest in PPP terms. Our rank in manufacturing aligns with this at fifth place. Yet, as a manufacturing exporter, we rank only tenth. This gap needs urgent attention,” Kumar said at an Exim Bank event in New Delhi.
Kumar, recently appointed by the Central government as an external member of the RBI’s Monetary Policy Committee, emphasised that India has yet to fully harness its manufacturing export potential to drive growth and create jobs, despite its exports ideally deserving a global rank of fifth or sixth.
Grab China-plus-one deal
“The challenge has grown tougher, as world trade, which expanded at 16 per cent annually between 2003 and 2009, has slowed significantly post the global financial crisis. This year, the projected growth is just 3.6 per cent,” Kumar noted.
Despite these hurdles, Kumar pointed out opportunities for India amidst global shifts. “The world is pushing back against China’s dominance and multinationals are reconsidering overdependence on single-country supply chains. India must seize this China-plus-one moment to boost its global trade footprint,” he said.
Kumar cited garments as an area where India has an untapped potential, with its share in global exports at just 3.5 per cent compared to China’s 36 per cent. “Given our rich legacy, there’s scope to capitalise on countries diversifying away from China and expand our share,” he added.
He also urged to focus on food processing and agricultural exports, highlighting India’s recent success in transitioning from a net importer to an exporter in sectors like leather goods and toys. “Even in a sluggish global trade environment, fully exploiting the China-plus-one strategy can help India make a significant mark,” Kumar said.
By addressing these challenges and opportunities, India could align its export strength with its manufacturing capabilities, Kumar noted.
Speaking at the same event, Anantha Nageswaran, Chief Economic Advisor to Finance Ministry, said that India is on course to achieve annual exports (both manufacturing and services) of $1 trillion in the coming days. He, however, clarified later that this milestone will not be achieved this fiscal.
Nageswaran also underscored the need for land reforms, noting that regulations need a revamp as the current system has made life very difficult for land acquisition by entrepreneurs and made things difficult for manufacturing.