In Indian economy, the contribution of trade to GDP has been showing declining trend. Discuss the remedial measures that Government of India should take to reverse the trend. (200 Words)
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IAS Parliament 5 years
KEY POINTS
· The Indian economy had a better-than-average export performance in 2018-19.
· But the contribution of trade to GDP has also reduced with every passing year.
· This is the ill for the economy and may seriously slow down our growth, unless robust remedial steps are taken.
Remedial measures
· Diversify into high-technology products, while enhancing the competitiveness of our existing export basket.
· Moving into high-technology and high value-added items would require the acquisition of such technology.
· The short-term solution to this is to identify a few champion sectors and provide attractive incentives to transnational corporations, which own advanced technologies, to set up their manufacturing bases in India.
· The long-term plan should be to invest significantly in research and development so that we could, eventually, be the owners of cutting-edge technology and one of the global industry leaders.
· Bbecause of the resource constraint in providing incentives, we will have to select only those sectors that are going to occupy a significant chunk of global trade over the next few decades.
· Electronics, including medical instrumentation, is one such sector. New technology storage batteries and renewable energy, and pharma and biosimilars could be the other two.
· Our clothing sector suffers from a lack of scale. While export-oriented factories in China, Vietnam and Bangladesh employ more than 5,000 people under one roof, our largest factory barely reaches 5,000 workers.
· Fragmentation and technological unawareness of the sector, which is a major supply side constraint.
· With growing wages, China is relocating many garment factories involving low investments and technology to Vietnam and Cambodia (and to some extent Bangladesh).
· However, for the time being it is retaining its more capital-intensive textile mills, which yield higher value addition, to supply fabrics to these countries.
· This shift poses an opportunity for India to overcome its deficiencies. We need to undertake land and labour reforms in close collaboration with the states so that we can attain global standards of scale.
· We need to enhance worker productivity by undertaking more training programmes.
· Providing a larger ceiling to banks (especially public sector banks) for financing exports and providing appropriate instruments to reduce the risks are needed to present Indian exporters with a level playing field.
· More infrastructure such as roads, railways and ports can reduce transaction costs.
K. V. A 5 years
Pls review
IAS Parliament 5 years
Good answer. Try to include about few points on youth's skill up gradation. Keep Writing.
Ruthesh kumar 5 years
kindly review it
IAS Parliament 5 years
Try to include schemes which boosts India's exports. Keep Writing.
Anisha Sahu 5 years
Kindly Review it.
IAS Parliament 5 years
Try to include schemes that increases exports, land reforms, reforms made to ease the business etc. Keep Writing.
V Ajisha 5 years
Kindly review. Thanks!
IAS Parliament 5 years
Try to include schemes like TREADS, SFURTI, labour law frame work etc. Keep Writing.
