India’s merchandised export should reach a level of $160 billion by 2007-08 and $200 billion by 2008-09. The foreign trade policy reinforces the twin objectives of achieving both higher growth as well as employment generation. It focuses on development of exports, earning more and more foreign exchange, along with employment generation.

India’s merchandise exports have consistently grown at a fast pace of more than 20% since 2002-03 and India’s share in world exports has increased from 0.7% in 2001 to 1% in 2005. This was because of the export growth which was higher than the world average during the past few years and is also a result of the sustained and continuous efforts taken in the past which created a favourable environment both at home and internationally.

Exports of the principal commodities have registered a growth of over 20% in dollar terms during 2006-07 over the previous year which indicates the heavy diversification of export goods away from the traditional exports.

During 2006-07, the export share of the top five commodities, i.e., engineering goods, petroleum products, chemicals and related products, textiles and gems & jewellery was 74.5% while twelve other commodities of exports only have a share of 25.5% in India’s total exports.

The region-wise break-up of exports depicts a continuous rise in India’s export share to Asia and Asean countries. This is in accordance with the newly found enthusiasm for the Look East Policy.

The textile sector is the second largest employment provider, next only to agriculture, for the Indian workforce. The labour intensive textile sector, however, has not been able to leverage the benefits of globalisation, whether in terms of export growth or employment, to a significant extent.

Although the rupee appreciation vis-à-vis the US dollar has affected overall exports, textile exports in particular have borne the brunt of the strengthening rupee to a significant extent. This has eroded the competitiveness of textile exports and their profit margin. This will affect employment generation adversely, particularly in the textile sector.

There is a need to revamp the approach to exports, since there is a limit to how far the Reserve Bank of India can intervene in the currency market to prevent the rupee from appreciating vis-à-vis the US dollar. Nevertheless, we can adjust to the new situation. An all out effort should be directed towards adopting new strategies for exports.

Small and medium enterprises (SMEs), which constitute a majority of exporters from India, may be used as an effective tool for employment generation and for enhancement of exports.

Mr. Rakesh Joshi

Joshi Enterprise

Manager, Joshi Enterprise
Dispur, India

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