Ajit Ranade: India must diversify its export of manufactured goods

Copyright © HT Digital Streams Limit all rights reserved. Opinion Ajit Ranade 4 min Read 21 Apr 2025, 12:30 hours IST Geopolitics Drastically changes the world’s trading patterns. (Getty Images via AFP) Summary of India’s trade export, which remained flat in 2024-25, needs a start. The developing geopolitical situation has opened opportunities for us to increase consignments. Even China says it wants to import more from India. Indian data on the export of goods is reported faster than of services. This is because customs statement and port formalities capture the data in real time and a digital format that is ready to use. GST data payments on exports are also useful for triangulating and reporting quickly. In comparison, service exports must reconcile reconciliation from the banking system and the Reserve Bank of India (RBI) before the final numbers can be confirmed. In addition, the provision of services takes place over a longer time, as contract periods can take years. The export of merchandise is clocked at the moment that goods leave the shore. There may be intricacies such as pending receivable payments or the return of rejected items due to quality issues. The Holy Grail is to get goods and services trading data and suit the data reported by the importation of countries. Also read: India’s export of seafood is trapped on a series of uncertainty released by India’s execution data for 2024-25 for 2024-25. Our total $ 437 billion export revenue is the same as last year; That is, there was no growth. This stagnation is surprising because the impact of US President Donald Trump’s rates will only arrive later. In the calendar year 2024, the total world trade grew by 3.7%. The export of Southeast Asia grew by 5.8% and from China by 5.4%. Thus, India’s zero growth calls for introspection. This flat rash was at the top of a 3% drop in 2023-24. Thus, it formed two years of sluggish achievements, although two years ago, in 2022-23, India clocked its highest export value of $ 450 billion. Why did that momentum relax? Export forms an important driver of domestic growth and employment. This is especially important at a time when private investment is not picking up and limiting growth in public capital expenditure. A geopolitical upheaval and a reformed trade relations can work for India’s benefit. Some diversification and re -alignment of export priorities can be very profitable for India. The zero export growth of the last financial year conceals a diverse achievement that includes great positive and negative. The most spectacular performance was from the electronic sector, of which exports grew by 33%; Exports of smartphones grew by 54%. Apple’s iPhone export alone was $ 17 billion in 2024-25, and India emerged as a top iPhone manufacturing center. Engineering goods, which include machinery, have also risen in double digits, as does the export of auto components and pharmaceutical products. So what does the total zero growth explain? One of the most important sectors that had a sharp decline was gemstones and jewelry, a traditionally strong sector for the country. Their exports fell by 17% to a low of two decades, attributed to the poor demand of the major luxury markets of the US and China. But it could also be due to the competition of newer players in Southeast Asia. There was a time when nine out of the 10 uncut diamonds polished in the world went through India, but no longer. The other big reason may be that artificially produced machining and other jewelery is now of equal quality and is a sharp discount on traditional, which polishes, which was the country’s strength. Also read: Mint Primer: Can Indian diamond export sparkle again? Another big factor is oil. Refined products such as gasoline and diesel still form almost a fourth of India’s dollars exports. In 2024-25, export income fell by 24%due to a drop in oil prices of about 8%, although volumes increased. There was also the volatility of oil price. This is a vulnerability of too much dependence on oil exports for dollar earnings, as oil prices can be quite volatile and the amount of demand is inelastic. Both the diamond polish and oil refinement sectors have low value addition and high import component. The last two years of sluggish export performance can also be adversely affected by a rupee tightened by RBI. For a long period, he chose to defend a stronger exchange rate by selling space and forward dollars. Since India is a net importer of dollars, the optimal value of the rupee-dollar rate is a matter of intense debate. The great success, of course, was the export of service, which grew 12% over the past financial year. Over the previous four years, the export rate of this sector was 23.5%, 27.8%, 4.9%and 12.4%respectively. Given their relative strength, services may soon catch up with our manufacturing exports. The sub -component for the strongest services was software and outsourcing of the business process (BPO), which grew strongly. Global ability centers and outsourcing process (KPO) have also clocked impressive growth, as well as two other sub -sectors, consultation and financial services. It is noteworthy that our two largest earners are software services and overpayments. Also read: Ajit Ranade: India needs to formulate a strategy to increase agricultural exports in general, and the exports of India, including services, have grown about 4% to $ 821 billion last year. India can certainly double the export of agriculture and benefit from the US tariff differences in favor of India to perform more ready -made garments, textiles and shoes. In the same breath, why not increase the supply of soybean, cotton, sugar, buffalo and rice to China because it threatens to cut off US imports? India’s trade with both the US and China has risen well. But we barely scratched the potential to tap the Chinese consumer market of about $ 6 trillion. The Chinese seem to be willing to import more from India. Geopolitics drastically changes the world’s trading patterns. It is for us to have the opportunity to open and make aggressive in the west and east of India. The author is a senior fellow at Pune International Center. Catch all the business news, market news, news reports and latest news updates on Live Mint. Download the Mint News app to get daily market updates. More Topics #india China #Exports #Tariff Hike Mint Special