India’s manufacturing export projections for 2015

India, so far has shied away from large scale manufacturing exports. However, as per McKinsey Report, ‘Made in India’ brand will be the next big thing in the upcoming years. With developed nations trying to manufacture and source products from low cost countries (LCCs), it is predicted that in the coming years, India is likely to gain significantly from this evolving global trend. The biggest USP that will help India leap-frog is its educated cheap work-force.

According to the report, India’s manufacturing exports was US$40 billion in 2002 which will increase approximately to US$300 billion by 2015, which roughly translates into 3.5 per cent in world manufacturing trade.

Moreover, the increase in manufacturing exports will create 25-30 million new jobs in the manufacturing domain and add 1 percent to India’s annual GDP growth rate. However, to go full-throttle in manufacturing exports the Indian manufacturers will need to assume a global outlook, marketing flair, cost-efficiency, and prudently select the product segments, where they can gain the maximum vantage point. Improvement in taxation, infrastructure, SEZs, and skill enhancement should also be focused upon to help India climb up the export ladder.

SKILL-INTENSIVE INDUSTRIES IN FOCUS FOR MANUFACTURING EXPORTS

It is reported in 2002, US imported good worth US$1,300-US$1,400 from LCCs. Labour-intensive industries like toys, apparel and footwear and skill-intensive industries like computer hardware and consumer electronics formed a huge part of US imports.

The Low Cost Countries which actively exported their products to US included, China, Taiwan, Malaysia, India, South Africa, Turkey, Brazil, Indonesia, Thailand, Poland, Russia, Mexico and the Philippines.

From now onwards, the offshoring will include skill-intensive industries such as auto components, industrial electronics and specialty chemicals. This will result in increased exports of goods from LCC, from the current US$1,300-US$1,400 billion to US$4,000-US$4,500 billion by 2015.

The factors that will aid this growth rate are: growing strong supplier base in LCCs, margin pressure in players in home markets and the unshackling of regulatory barriers enforced by World Trade Centre.

INDIA HAS THE CAPACITY TO CAPTURE ABOUT US$300 BILLION IN MANUFACTURING EXPORTS BY 2015

India’s manufacturing exports in 2002 was US$40 billion, way below China’s manufacturing exports US$ 300 billion, Taiwan’s US$ 145 billion, MexicoUS$ 140 billion, Malaysia’s US$78 billion and Thailand’s US$55 billion. Notwithstanding its restrained start, India still can make it to the top three in terms of exports, by 2015. In 2002, India’s export’s was just 0.2 percent of the total world exports. Now, the economy aspires to achieve 3.5 percent by 2015.

Powered by skill intensive industries like auto components and pharmaceuticals, cheaper wage rates, good engineering skills, well set-up raw material bases, a growing suppliers list and evolving domestic demand will help India script a new chapter in manufacturing exports.

In-depth study, demonstrates that of the approximately US$300 billion targeted of manufacturing exports, US$70-US$90 billion could be easily gained through just four segments –apparel, specialty chemicals, auto components and electrical and electronic products.

India total exports in these four sectors in 2002 were just US$ 10 billion. In apparel alone, global trade could raise from US$200 billion in 2002 to over US$300 billion by 2015. Of this, India can grow from US$6 billion in 2002 to US$25-US$30billion by 2015, i.e., thereby can earn the reputation of being the second-largest LCC exporter with 8-10 percent of global trade. China has currently captured 20 percent of the world trade and in the future may capture 40-50 percent of the world trade.

When it comes to auto components, LCC offshoring is poised to reach US$375 billion by 2015. India should attempt to capture US$20-US$25 billion of this by 2015. India’s exports in 2003 touched US$1 billion, which means the growth rate required is almost 30 percent a year.

Competing LCCs, for instance, Thailand and China have been trying to achieve phenomenal growth rate over the last three years in this sector, so we don’t see any reason why India should stay behind.

In electrical and electronic products, India should bid to capture US$15-US$18 billion, in comparison to exports of US$1.2 billion in 2002.

Quite a few Indian companies are already made headway in areas such as pharmaceutical intermediates and India is leading LCC exporters in segments like dyes and intermediates, Active Pharmaceutical Ingredients (APIs) and agrochemicals for crop protection.

India can definitely achieve the aforesaid goals if Indian companies, the central and state governments and MNCs go hammer and tongs to achieve this goal.