India is looking to achieve USD 2 trillion in exports by 2030 and is embracing trade and strategic alliances to maximize globalization. Despite a slight increase in global merchandise exports, India’s logistics sector is crucial to this transformation…
Japan, South Korea, and China’s economic success proves that trade drives progress. India has traditionally favored protectionism, but it is currently actively pursuing trade and strategic partnerships to maximize globalization. Aiming for USD 2 trillion in exports by 2030 (USD 1 trillion each in merchandise and services, up from USD 450 billion in merchandise and USD 326 billion in services), India is poised for a major shift.
India has seen 4% and 8.6% CAGRs for product and services exports during the past decade. However, product and services exports must maintain CAGRs of 12% and 17% over the next seven years to reach the ambitious USD 2 trillion target, which requires continuous commitment.
India exports 1.8% of global goods, up 0.2% in a decade. China exports 14% of global goods, up 2.8 percentage points. Even smaller economies like Vietnam gained 1.5% share and 0.8 percentage points. India must improve its global competitiveness, and logistics is vital.
India spends 14-18% of GDP on logistics, compared to 8% globally. While the government’s investment in transport infrastructure and logistics strategies is positive, more must be done to close this gap.
India must rise in global value chain, not simply exports. Medium-tech exports rose from 35% (2006-10) to 41% (2018-22), while high-tech exports rose from 15% to 20%. India behind the US, UK, Germany, and Japan. Indian high-tech manufacturing exports are 20%, compared to China’s 38% and Vietnam’s 47%. India needs R&D, innovation, and private sector incentives to boost high-tech manufacturing exports.
Lowering import duties is another key export growth measure. India’s average MFN tariff rate for non-agricultural items is 14.7%, greater than many other economies. Reducing import levies may raise competition for domestic firms, but it will also lower manufacturing costs and boost competitiveness by providing cheaper raw materials.
Scaling output is crucial. India relies significantly on MSMEs for exports. While assisting MSMEs is important, India must also increase production scale to gain economies of scale. The Production Linked Incentive (PLI) scheme and MSME definition amendment are positive moves.
With 4% of global services exports, India has done well. Software services dominate services exports at 45%, contributing to this success. Due to India’s Global Capability Centers, business services exports rose from 20% in FY13 to 25% in FY23. Strategy should include diversifying services exports into tourism and medicine.
The new trade deals India signs will affect its trade-led growth. Comprehensive agreements that cover goods, services, technology transfer, and investment are essential. New environmental and sustainability accords must match with domestic regulations to avoid non-trade barriers.
The global economy wants to connect with India, thus trade and strategic alliances must be prioritized. We must be ready to capitalize on trade as the next growth driver for the Indian economy.
Conclusion
India wants USD 2 trillion in exports by 2030 through trade and strategic alliances. The country’s logistics sector is essential for this development. India exports 1.8% of global goods, compared to China’s 14% and Vietnam’s 1.5%. Both merchandise and services exports must grow 12% and 17% over the next seven years to meet this goal. India’s logistics costs, 14-18% of GDP, above the global average of 8%. India must invest in R&D, innovation, and private sector incentives to boost high-tech manufacturing exports. As India’s average Most Favored Nations (MFN) tariff rate for non-agricultural items is 14.7%, lowering import tariffs is another important approach to boost exports. India’s exports depend on MSMEs, therefore scaling up production is crucial. The Production Linked Incentive (PLI) scheme and MSME definition amendment are positive moves. Comprehensive trade agreements that cover technology transfer and investment will boost India’s trade-led growth. New environmental and sustainability agreements should be handled carefully.
