Trade, import and exports for MSMEs: Among the most robust
calls to action in making districts as export hubs, were made by Prime Minister
Narendra Modi in his 2019 Independence Day speech. He lauded that each
district’s potential equals that of an entire country, given its diverse
identity and potential for the global market.
Trade, import and exports for MSMEs:
With the intent to fructify an ambitious export target for
FY23, The Directorate General of Foreign Trade (DGFT) has sought Rs 6,000
crores in funding for the ‘Districts as Export Hubs’ initiative. All eyes are
already on India as it ups its ante to produce and export more in the wake of
global supply chain disruption. Moreover, labor shortage, lack of raw
materials, etc. due to covid-19 impact have severely dented China’s potential
to continue its global exports momentum, with many countries opting for the
China +1 strategy being the icing on the cake for India. With all these factors
at play, industry experts view the proposal as a step in the right direction,
and the timing couldn’t have been more appropriate.
In the project’s first phase, work will begin on the 200 out
of the 700-odd districts in India. The aim is to boost production in the
remotest of towns and connect businesses to foreign buyers. This will be a shot
in the arm for India’s medium, small and micro enterprises (MSMEs), who are the
backbone of the country’s economy.
Tapping the Untapped
Potential
Among the most robust calls to action in making districts as
export hubs, were made by Prime Minister Narendra Modi in his 2019 Independence
Day speech. He lauded that each district’s potential equals that of an entire
country, given its diverse identity and potential for the global market.
The top six states in India- Maharashtra, Gujarat,
Karnataka, Tamil Nadu, Telangana, and Harayana contribute 75 per cent of
India’s overall exports. This shows how exports are concentrated in only
certain regions of the nation.
Besides this, perhaps even more focus on promoting
region-specific identified products to reach potential buyers outside India is
an untapped area with incredible growth potential. For instance, consolidating
the exports of gems and jewellery, garments, furniture, toys, and blue pottery
from Jaipur, Rajasthan. And also, doing the same in Palghar (Maharashtra) for
products related to chemicals, pharmaceuticals, engineering, and plastics
related, fisheries, and marine food processing may multiply the exportability
of the whole country instead of focusing exports mainly from large export hubs.
Making Aatmanirbhar Bharat a Reality
If the district export hub scheme gets the Finance
Ministry’s approval, it will form a part of the new Foreign Trade policy,
set to be announced in September.
Self-sufficiency and self-reliance will be the first
by-products of this move. Specific actions to support local exporters and
manufacturers may be a boon in addressing challenges obstructing improved
supply chains, market accessibility, and handholding for increasing exports.
Among the four potential wins or benefits will include:-
- Heavy
investments in the district will boost manufacturing and exports and
provide the ecosystem for innovation and use of technology at the district
level to make exports competitive. - Reduction
of transaction costs for the MSMEs at various stages of the export cycle
and generating employment in the district. - Providing
platforms for the district’s broad and global reach of products and
services through e-commerce and digital marketing.
- Diversification
of exports which is important to improve the stability of export
earnings.
Working towards a Flourishing Rural Economy
The focus on far-fledged areas of the country would fuel
economic activity in the rural hinterland/small towns and prepare businesses
for export, not to mention aid in employment generation at the grass-root
level. Besides supporting MSMEs and local artisans, logistics and agricultural
sectors will also see development, a critical factor that would help India meet
global expectations of delivery and quality. Additionally, Niti Aayog believes
improving the export competitiveness of states could further increase their
wealth and standard of living, which in turn is expected to minimize the
regional disparity across states.
According to Niti Aayog’s Export Preparedness Index 2021
Report, India hasn’t completely leveraged the Lewis curve for low-skill
manufacturing vis-a-vis more skill-intensive exports. Moreover, the report said
India lags in tapping existing market potential compared to Vietnam,
Bangladesh, and China, which continue to lead exports in this category. Since
the nation has a comparative advantage in low-skilled exports, it must boost
its manufacturing capacity to exploit this opportunity further. The focus on
district hubs for export will likely address this gap.
Conclusion
With foreign trade constituting 45 per cent of India’s GDP
and 2021-22 being a bumper year for India’s exports, marking a record-high of
$419 billion, heightened emphasis on economy-building via districts as export
hubs will prove pivotal in organizing the unorganized MSME sector. Moreover,
an Aatmanirbhar Bharat focused on growing all that has been
ignored for decades will set the ball rolling for India to supersede global
peers in exports and have a decades-long impact. Courtesy: www.financialexpress.com
