Explained: This article explains the political background, key decisions, and possible outcomes related to Explained : India’s trade strategy to achieve US$ 2 trillion exports by 2030 Part – II and Its Impact and why it matters right now.
- Export-Import Bank of India (EXIM Bank) and Small Industries Development Bank of India (SIDBI)
EXIM Bank provides lines of credit to overseas buyers to purchase goods and services from India in turn facilitating larger transactions and entry into new markets by providing financial support to buyers and exporters.
SIDBI helps in the promotion of exports by offering various schemes to the MSMEs to access international markets.
- Infrastructure development
For boosting exports from India, Infrastructure development is quite crucial as it:
- Reduces logistical costs;
- Enhances supply chains, and;
- Ensures timely delivery of goods.
Infrastructure development includes improved transportation networks such as highways, railways, and ports which aid in the smooth and fast movement of products to the international markets. To reduce costs and improve efficiency, India is focussing on enhancing and modernising its logistics network.
Modernisation of major ports such as the Jawaharlal Nehru Port Trust (JNPT), Mumbai Port Trust (MPT) and the Chennai Port are part of the expansion activities that have been conducted.
Initiatives such as the Sagarmala Programme has been set up with an aim:
- To modernise the ports,
- Promote development, and enhance connectivity, with an investment of US$ 123 billion thereby aiding exports from the country.
Tremendous efforts have also been made in the development of:
- Inland Waterways;
- Logistics parks, and;
- Warehousing facilities.
With significant investments in National Waterway -1(NW–1) (Ganga River), National Waterway-2 (NW-2) (Brahmaputra River) and National Waterway-3 (NW-3) (West Coastal Canal), 111 National Waterways have been developed.
With a view to reduce logistics costs and shipment times, 35 Multi-Modal Logistics Parks have been established with an estimated investment of approximately US$ 2 billion.
US$ 1 billion has been invested to develop the cold chain network, specifically for perishable goods.
- Development of Special Economic Zones (SEZs)
SEZs have been playing a critical role in the enhancement and boosting of exports. The main purposes of the SEZs include:
- Enhancing the economic activity;
- Promoting exports of goods and services from the country;
- Increasing the foreign and domestic investment;
- Creating more employment opportunities, and;
- Developing infrastructure facilities.
Some incentives provided for this include:
- Tax incentives;
- Infrastructural support, and;
- Ease of doing business. In addition;
- 100% income tax exemptions on export income for SEZ units have been provided for:
- The first five years;
- 50% in the next five years, and;
- 50% for another five years of the ploughed-back export profit.
Development of infrastructure includes providing:
- Reliable power supply;
- Water;
- Transportation facilities, besides;
- Implementation of single-window clearances for various regulatory approvals aiding businesses in smooth functioning.
Exports from SEZs which stood at US$ 90.2 billion in 2017-18 grew to US$ 163.7 billion in 2023-24 amounting to 81.49 % increase.
The share of SEZs in the overall exports from India has grown from 30% in 2017-18 to 38% in 2023-24.
Sectoral strategies
To achieve the goal of US$ 2 trillion exports by 2030 government has focussed on certain sectors that possess significant export potential including:
Pharmaceuticals & Healthcare
The Government has allotted Rs. 1000 crore (US$ 119.72 million) for the promotion of Bulk Drug Parks by 2025 to reduce import dependence & boost exports & is focussing on the development of Pharmaceutical Clusters equipped with world-class Testing facilities, Research Centres and Quality Certification to ensure Global Level of Quality for the products manufactured & exported from India.
Textiles
The Government has announced sites for setting up of seven PM Mega Integrated Textile Regions & Apparel Parks (PM MITRA) for the Textile industry, these coming up in Tamil Nadu, Telangana, Gujarat, Karnataka, Madhya Pradesh, Uttar Pradesh & Maharashtra.
Inspired by the 5F vision of the PM (i.e. Farm to Fibre to Factory to Fashion to Foreign), these constitute a major step forward in realising the government’s vision of making India a global hub for Textile manufacturing & exports. These parks are expected to enhance competitiveness of the textiles industry by helping it achieve economies of scale.
Electronics & IT & services
The Government has been attracting investments to set up semiconductor fabrication units by offering incentives worth US$ 10 billion which is expected to make India a major hub for semiconductor manufacturing & exporting to other nations. For this, Software Technology Parks (STPs) have been set up to provide state-of-the-art infrastructure and tax incentives to the various IT firms helping in the overall production & exports from the sector. Reportedly, the sector will be targeting US$ 350 billion in IT services exports by 2025 with the help of innovation, skill development & global market expansion.
Renewable energy
Renewable energy has been one of key sectors that has experienced growth over the past few years. The Government is promoting the manufacture of solar photovoltaic (PV) modules by investing more than US$ 5 billion. Efforts are also being made for the development & export of wind turbines & components from the country.
Investment in digital infrastructure
Through enhanced digital infrastructure exporters experience better connectivity and communication aiding them to access global markets more seamlessly.
The key components enhancing digital infrastructure include:
- The introduction of E-governance platforms;
- Trade portals, and;
- Implementation of blockchain technology.
E-governance platforms such as the Indian Customs Electronic Gateway provide e-filing services to trade and cargo carriers offering 24×7 access to customs services.
The introduction of trade portals such as the Directorate General of Foreign Trade (DGFT) offer a one-stop destination for:
- All trade-related information;
- Access to market data, and;
- Important Export-Import documentation.
The blockchain technology enables real-time tracking of goods improving the transparency and accuracy of information between the exporters and importers.
The Blockchain’s immutable ledger can provide verifiable proof of origin, proving beneficial for sectors such as agriculture and pharmaceuticals where the authenticity of the products is critical.
Epilogue
With these wide-ranging policy reforms coupled with a slew of incentives offered to the sectors possessing significant export potential, the government expects to achieve the target US$ 2 trillion worth of exports.
Disclaimer
Views expressed above are the author’s own.
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