India Faces Trade Hurdles Amid Manufacturing Ambitions: World Bank Report

ENA Economy 2024-09-04 14:29:07 New Delhi, Sep 4 (KNN) The World Bank has released a report indicating that India's share in global trade has not kept pace with its rapidly growing economy. The report, published on Tuesday, reveals that India is losing ground to competitors such as Bangladesh and Vietnam in key low-cost manufacturing export sectors. According to the multilateral lender, India's trade in goods and services as a percentage of gross domestic product has been on a downward trend over the past decade, despite the country's significant economic growth. The report specifically notes that India's share in global exports of apparel, leather, textiles, and footwear increased from 0.9 per cent in 2002 to a peak of 4.5 per cent in 2013, but subsequently declined to 3.5 per cent in 2022. In contrast, Bangladesh and Vietnam have seen their shares in these sectors rise to 5.1 per cent and 5.9 per cent respectively in 2022. To address this issue and capitalise on the shift away from China in labour-intensive manufacturing, the World Bank recommends that India take several key steps. These include reducing trade costs, lowering tariff and non-tariff barriers, and revising trade agreements. Nora Dihel, Senior Economist at the World Bank, emphasised the importance of these measures, stating, This is an area where India could focus on. This is a call to action. The report comes at a time when Prime Minister Narendra Modi's government is actively working to establish India as a manufacturing hub, partly in response to businesses diversifying their supply chains away from China. The Indian government has invested billions of dollars in subsidies to attract investment in sectors such as electronics and chip-making. However, the World Bank notes that India's export sectors are becoming increasingly capital-intensive, which may limit their ability to absorb the country's large unemployed population. The report estimates that direct employment related to exports has decreased from 9.5 per cent of total domestic employment in 2012 to 6.5 per cent in 2020. Despite these challenges, the World Bank maintains a positive outlook on India's economic growth. The lender projects that India's economy will continue to grow at a robust rate of 7 per cent in the current fiscal year through March 2025, following an expansion of more than 8 per cent in the previous year. Looking further ahead, the World Bank anticipates average growth rates of 6.7 per cent for the fiscal years 2025-26 and 2026-27. (KNN Bureau) 39158 https://knnindia.co.in/news/newsdetails/economy/india-faces-trade-hurdles-amid-manufacturing-ambitions-world-bank-report 2024-09-04 14:29:07 knnindia.co.in India Faces Trade Hurdles Amid Manufacturing Ambitions: World Bank Report