Assemble in India for world can raise export market by 6 per cent by 2030: Economic Survey

India must focus on a group of industries, referred to as “network products”, where production processes are globally fragmented and controlled by leading multi-national enterprises (MNEs) within their “producer driven” global production networks.

The Economic Survey 2019-20, presented at the Parliament on Friday, advised that by integrating “Assemble in India for the world” into Make in India, the country can raise its export market share to about 3.5 per cent by 2025 and 6 per cent by 2030, which is highly feasible.

“In the process, India would create about four-crore well-paid jobs by 2025 and about eight-crore by 2030,” the Survey said.

The Pre-Budget Survey also said that the incremental value added in the economy from the target level of exports of network products, which is expected to equal $248 billion in 2025, would make up about one-quarter of the increase required for making India a $5 trillion economy by 2025.

The Survey noted that China’s remarkable export performance vis-a-vis India is driven primarily by deliberate specialisation at large scale in labour–intensive activities, especially “network product” where production occurs across Global Value Chains (GVCs) operated by MNCs.

India is clearly catching up with China

The Survey mentioned that the India-China gap in the world market share is almost fully driven by the effect of specialisation. On the other hand, the Survey said, India is clearly catching up with China in terms of diversification across products and markets.

Overall, high diversification combined with low specialization implies that India is spreading its exports thinly over many products and partners, leading to its lacklustre performance compared to China.

According to the Survey, the specialisation effect can change over the years, due to changes in the quantity and/or the prices of exported commodities.

Therefore, “If India wants to become a major exporter, it should specialise more in the areas of its comparative advantage and achieve significant quantity expansion,” the Survey suggested.

The Survey noted that the overall impact on India’s exports to the partners, with which the agreements have been signed, is 13.4 per cent for manufactured products and 10.9 per cent for total merchandise.

“The overall impact on imports is found to be lower at 12.7 per cent for manufactured products and 8.6 per cent for total merchandise. Therefore, the Survey says, from the perspective of trade balance, India has clearly “gained” in terms of 0.7 per cent increase in trade surplus per year for manufactured products and of 2.3 per cent increase in trade surplus per year for total merchandise,” it added.