Chennai: India can achieve an incremental gain of around $100-150 billion over the next decade if the government focuses on accelerated export growth in sectors such as chemicals, footwear, furniture, and textiles, finds a study.
India would do well if it improves on the issues related to sector-specific tax issues, infrastructure and trade relationships to gain dominance on these sectors for the long term.
“We estimate India’s exports in chemicals, footwear, furniture and textiles to increase to $200-300 billion over the next 10 years. India could potentially gain around $100-150 billion over the next decade through these sectors if the focus is shifted towards accelerated exports growth,” said a study by Kotak Economic Research.
In the global chemical trade of $2.3 trillion, India has a share of $50 billion. According to Kotak, India’s export opportunities in chemicals can be around $110 billion if market share increases by 1.5 times and market grows at 4 per cent CAGR over the next 10 years and $180 billion if market share increases by 2.5 times. The growth of the Indian chemical industry will be driven by private capital and entrepreneurship. The chemical industry derives its advantage from use of technology, IP and a skilled workforce. India has significantly lower wages.
India’s market share in global footwear exports of $149 billion has been stagnant over the past 10 years. Despite being the second biggest producer of footwear globally, 90 per cent of production is utilised domestically. India has the second lowest average wages among major footwear exporters. There is an opportunity to reach $8 billion exports over the next 10 years if market share grows to 3 per cent from 1.9 per cent.
Furniture contributes 0.5 per cent of Indian exports, despite growing at 11 per cent CAGR over FY2010-19. Kotak envisages that the opening of Ikea in India will help further growth competency in furniture manufacturing. Furniture exports can reach $4 billion if market share grows to 1.2 per cent from 0.8 per cent and $8 billion if the share touches 2.4 per cent.
The textile sector accounts for 12 per cent of exports. While exports have grown steadily over the past ten years, Asian countries like Bangladesh, China and Vietnam saw sharp growth. India has to correct the inverted duty structure in import of synthetic goods, make products competitive and sign FTAs with key buyers.