“The US is making a very conscious effort to bypass China and if any country can chip in for China, it is India. We have the wherewithal, the capability and the resources but it is a million dollar question whether we will occupy that space or not,” he said while speaking at the ET MSME Awards in the capital on December 8.
Sahai stated this in the context of India’s high-tech exports, where the exports is just 7% and the total exports is to the tune of around $30 billion. “Look at countries like Singapore, they are exporting high-tech goods to the tune of $175 billion, in South Korea it is $250 billion and China $170 billion. This is a segment where we have to move in,” he said.
Talking about how exports can play a key role in India’s transition from developing country to a developed economy, Sahai said that we are now aiming big. “We have already clocked $450 billion in merchandise exports and $329 billion in services exports in the last fiscal. We want to take both goods and services exports to $1 trillion by 2030. I think we will reach that figure much before,” he said.
Delving into some of the structural issues being seen in exports, Sahai spoke of how the manufacturing sector has not been seeing consistent growth. “If you see the GDP number, it is 13.2% in manufacturing growth, but there will be occasional dips also. If we want to sustain exports, we have to bring manufacturing on track and all issues relating to non-competitive manufacturing need to be addressed,” he stated.
Quoting from the BCG report, Sahai added that while India is the second most competitive country when it comes to manufacturing as far as cost within the factory is concerned, we are outpriced in costs outside the factory. “We are aware of the cost disability factor of the economy and that is why the government has rolled out Production Linked Incentives in 15 critical sectors. Initially, it was only confined to the high technology sector. But over time we have extended it to some of the labour-intensive sectors also such as food processing and technical textiles because we want to move ahead in those sectors as well,” he said. Sahai added that the main problem in exports is what they call an issue of the “70s to 30s as opposed to the 30s to the 70s”. “70% of my exports are targeted to a segment that just contributes to 30% of global imports, whereas 30% of my exports is to a segment which contributes to 70% of global imports. Today, global imports are dominated by technology. Sectors such as machinery, electronics, automobile and auto components together contribute to roughly 35% of the global imports to the size of around $7 trillion. In this segment, India’s share is 0.8%. In goods and services, the overall share is 2.5%,” he stated.
On the bright side, he added, India is addressing such segments through the PLI scheme, which will not only create a manufacturing base but also support exports and stem imports. “We may be importing around $100 billion of these goods into the country right now,” he said.
He also stated that even though we are not an export-centric economy, exports can play a transformational role for India in the times ahead. “Both in 2022-23 and 2021-22, exports contributed to 50% of the overall incremental GDP growth,” he stated.
The way exports can lead to prosperity can be seen evidently in the economic growth of the Southeast Asian countries. “Bangladesh is a recent example where they have uplifted millions of people out of the poverty line due to sheer exports only,” he added.
