India Could Achieve $1 Tn Merchandise Exports Goal By FY29: PwC India

Driven by the growing emphasis on export-led growth resulting in an improved share of the country’s exports in global trade from 0.4 per cent in 1980 to 1.85 per cent in 2023, India could achieve the target of USD one trillion merchandise exports by financial year 2029. A report by PwC India has laid out the framework to achieve such a goal by stating that the country needs to iron out geopolitical conflicts and take action along a strategic pathway.

The PwC India report, however, states that such a target can only be met with an annual export growth rate of 18 per cent till FY29. The report, titled “Viksit: An approach for India to achieve USD 1 trillion exports”, cites three scenarios under which this ambitious target can be achieved.

The first is the 18 per cent annual export growth rate journey, benchmarked against the export performance from 1986 to 1995 and the country’s average export growth rate in the Covid-19 period. The second approach has been termed as ‘Business as usual’ wherein a 14.5 per cent annual export rate is expected to meet the target by FY31. The third approach, Conservative, seeks to achieve a ten per cent growth rate to achieve the USD 1 trillion exports mark by FY33.

Sanjeev Krishan, Chairperson, PwC India said, “It is possible to reach USD one trillion mark by FY29 as the seeds have already been sown. Energy, Semiconductors, electric vehicles, battery storage…all structures are in place. We need to take micro-image building to the macro-level.”

The report highlights five areas which need attention while marching ahead on this path. The country’s manufacturing sector needs to work on its value-addition ratio to prevent the commoditisation of the export baskets while adding scale. It needs to ensure that the exports shift towards high value-adding and emerging segments.

Not only does the country need to diversify its products, but it also has to work towards expanding the market access to mitigate market concentration, as per the report. India currently has 20 active trade agreements with several markets. It is now time to move ahead with a more revamped trade agreement strategy which positions Indian products competitively and reduces the burden of compliance with non-tariff barriers (NTBs), the report suggests.

The micro, small and medium enterprises (MSMEs) will have to play an important role in realising India’s goal. “At present, only around 1.36 per cent of the country’s MSMEs are exporting, which shows a disconnect between export growth and MSME’s propensity to internationalise,” the report states. The MSMEs face four challenges which impact their ability to export. These are business environment, export procedures, access to finance and access to markets and information, as per the report.

Going ahead, it will be crucial to expand and enhance the role of technology. The report mentions, “Technology fossilisation has impacted export efficiency, product quality and unit production. Advanced technology adoption in India’s manufacturing and export sector has been slow, impacting the ability to cater to international market trends and demand.”

Even though the efficiency of Indian ports has improved in recent years, there is still a lot of work that needs to be done. In 2023, the average turnaround time of containerised cargo from arrival to vessel sail out was about 156 hours, of which customs processes took about 19 hours, the report brings the issue to the fore.