Apex exporters body Federation of Indian Export Organisations (FIEO) in its latest report has said that India's labour-intensive export sectors such as apparels, marine products, plastics, and gems and jewellery are showing a ‘troubling pattern’ as the country is experiencing a decline in global market share across these segments during the last five years. It also said that a note of caution is warranted regarding a distinct spike in export growth of roughly $40 billion as this particular surge is likely attributed to a rerouting of crude oil trade routes via India to Europe. It said this phenomenon may not be sustainable in the coming years.
FIEO has stated that the most ‘pressing concern’ regarding the negative export growth is the ‘poor’ performance of labour-intensive sectors. In a country like India, these sectors hold immense significance not only for their job creation potential but also for their substantial contribution to net high-value addition. Addressing this challenge requires a proactive approach that delves into the underlying factors contributing to the loss of market share. 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.
Elaborating on the importance of promoting traditional sectors, it said that the exports of mobile phones, which amounts to $10 billion, has a net value addition of about $1-2 billion. On the other hand, $10 billion worth of exports of traditional sectors would have a net value addition of over $9 billion. In woven garments, despite a global trade growth rate of about 2 per cent, India's export growth has consistently been below 1 per cent for years, while Bangladesh and Vietnam growing at 6 per cent and 4 per cent, respectively, impacting India's share.
