New Delhi: India’s share in global exports in labour-intensive sectors such as apparels, marine products, plastics, and gems and jewellery has been declining during the last five years, India’s top exporters body has said.
The most “pressing concern” regarding the negative export growth is the “poor” performance of labour-intensive sectors, Business Standard reported, citing a report by the Federation of Indian Export Organisations (FIEO).
This phenomenon may not be sustainable in the coming years, it said.
It noted these sectors are immensely significant because of their job creation potential and their substantial contribution to net high-value addition.
However, these sectors have seen a modest growth rate from 1% to 2% only.
While the global trade in knitted garments expanded by 6%, India’s growth remained at a mere 2%.
“It calls for a comprehensive analysis of the dynamics at play, ranging from maintaining the competitive advantage, reducing the production costs and increasing efficiency to quality and innovation,” the report said.
The FIEO report noted that the spike in export growth of roughly $40 billion was due to a rerouting of crude oil trade routes via India to Europe.
In woven garments, India’s export growth has consistently been below 1% for years, as compared to a global trade growth rate of about 2%. Bangladesh and Vietnam are growing at 6% and 4%, respectively, the report added.
“In the footwear sector, the global trade expanded by 5%, but India’s exports have contracted. Bangladesh’s brilliant growth from $1 billion to $1.7 billion over three years is in contrast with India’s meagre growth from about $2.8 billion to $3 billion,” it said.
In India’s pharmacy sector as well, the sector’s growth has not matched demand, lagging at 9% while the global market grew by 12% in the past four years.
“Concerns arose due to criticism linked to cough syrup, underlining the need for an efficient trace and tracking system for quality assurance,” it said.
While the technology-driven sector has seen a surge in the global demand for machinery, auto components, electrical and electronics goods, India’s current market share in these sectors stands at a mere 1%.
Such a decline in the labour-intensive sectors raises concerns about India’s competitiveness and sustained participation in these traditional jobs creating crucial segments, it said.
India’s goods exports contracted for the seventh straight month in August though the extent of decline narrowed to 6.86% from double-digit contractions in recent months, to hit a three-month high of $34.5 billion.
Earlier, FIEO president A. Sakthivel had told The Hindu that easy and cheaper credit should be provided to small enterprises. They also need marketing support such as promoting Indian products as well as exempting GST levies on freight for exports.