NDO - On September 3, the World Bank (WB) assessed that India's share of global trade has not kept pace with its rapid economic growth, lagging behind countries like Vietnam and Bangladesh as a low-cost manufacturing and export hub.
In its report, the multilateral lending institution noted that India's trade in goods and services has declined as a percentage of its GDP over the past decade, despite its economic strength.
The WB highlighted that India's global export share in apparel, leather, textiles, and footwear rose from 0.9% in 2002 to a peak of 4.5% in 2013, but has since dropped to 3.5% in 2022.
In contrast, Bangladesh's global export share in these sectors reached 5.1%, while Vietnam's share stood at 5.9% in 2022.
The WB suggested that to boost exports and capitalize on China’s shift away from labor-intensive manufacturing, India needs to lower trade costs, reduce tariff and non-tariff barriers, and amend its trade agreements.
Prime Minister Narendra Modi has set ambitious goals to position India as a manufacturing hub as businesses seek to diversify supply chains away from China.
The Indian government has poured billions of dollars into subsidies to attract investment in industries like electronics and chip manufacturing. However, India’s export sectors are becoming increasingly capital-intensive and are not absorbing the millions of unemployed in the country.
The WB estimated that direct employment related to exports has declined from a peak of 9.5% of the total domestic workforce in 2012 to 6.5% in 2020.
The WB expects India’s economy to continue proliferating, forecasting a 7% expansion in the current fiscal year (ending March 2025) after growing by over 8% in the previous fiscal year. The WB projects India's economic growth to average 6.7% for fiscal years 2025-2026 and 2026-2027.
