A resurgent India is slowly, but surely, making its presence felt in global trade. Since 2004, its share in world trade has gone up significantly. According to World Trade Organisation (WTO) statistics, India’s share in total world trade (which includes trade in both merchandise and services sector) has gone up from just over 1 per cent in 2004 to 1.5 per cent in 2006. And it’s estimated that India’s share may well double from its 2004 level to cross 2 per cent by 2009. Much of this impressive performance has been due to robust growth in exports.
In 2004, exports stood at a little over $63 billion. In 2007-08, exports topped $155 billion. India’s total merchandise trade—exports and imports together—will be almost $400 billion this past year, accounting for 1.2 per cent of world trade. If the trade in services is added to this, India’s trade with the world would touch $525 billion.
Enthused by past performance, Commerce Minister Kamal Nath has set a target of 5 per cent share of the world trade by 2020. Says Nath in his foreword to the “Foreign Trade Policy 2008-09”: “Considering that world trade is itself increasing, this would translate into an eight-fold increase in absolute terms. Ambitious the target may be, but achieving it is not impossible”. Given this backdrop, Prahalad’s vision of a 10 per cent share (almost double the government’s projections) of global trade for India by 2022 is ambitious, but possible. Experts feel we can get there but it would require path-breaking initiative by the government.
Says Subir Gokarn, Chief Economist, Standard & Poor’s Asia Pacific: “There would be a rising tide effect. We are one of the fastest growing economies in the world and that is likely to increase our share of the global trade as well. But if we are to touch 10 per cent then we’ll need both policy and administrative reforms.”
Infrastructure and labour reforms top the agenda. “Labour laws are a huge deterrent to investment in largescale operations by entrepreneurs, and that affects our competitiveness compared to countries like China,” says Gokarn. Poor infrastructure blunts the edge as well.
Factories have to grapple with power outages, substandard road networks and congested, primitive ports. Says Ajay Sahai, Director General, Federation of Indian Export Organisations: “Availability of cheap and continuous power is the biggest stumbling block.” The problems are well known. What India needs is imaginative solutions.