Import Export Management Chapter 3

EXPORT – THRUST PRODUCTS &
MARKETS
• Learning objectives:
• This chapter intends to guide you to move into
this highly lucrative business
Chapter 3 - Import Export Management

MARKETS
• Indian exports have grown at a robust annual
average rate of 21.3% in the last decade
between 2003 and 2013; the average value of
exports rising from USD 52.7 billion in 2003 to
300.2 billion in 2013.
• Exports have come to be regarded as an
engine of economic growth in the wake of
liberalization and structural reforms in the
economy.

MARKETS
• 1.1 EXPORTS FROM INDIA
• Over the six and half decades since independence, the
country has brought about a landmark agricultural
revolution that has transformed the nation from chronic
dependence on grain imports into a global agricultural
powerhouse that is now a net exporter of food.
• India exports several agricultural products such as Basmati
rice, wheat, cereals, spices, fresh fruits, dry fruits, buffalo
meat, cotton, tea, coffee and other cash crops particularly
to the Middle East, Southeast and East Asian countries. It
earns about 10 percent of its exports earnings from this
trade.

MARKETS
• The state of Gujarat has become a hub for the manufacture
and export of pharmaceuticals and APIs. The industry is
expected to double from its 2012 levels to US$55 billion by
2020, according to a McKinsey report.
• Engineering industry in India is the largest sub-sector of its
industry GDP and is one of three largest foreign exchange
earning sectors for the country. It includes transport
equipment, machine tools, capital goods, transformers,
switchgears, furnaces, cast and forged simple to precision
parts for turbines, automobiles and railways.
• India’s engineering industry sector exported $67 billion
worth of engineering goods in 2013-14 fiscal year, as well as
served part of the domestic demand for engineering goods.

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• The engineering industry of India includes its
growing car, motor cycle and scooters industry, as
well as productivity machinery such as tractors.
• India is the world’s largest producer of and the
largest market for tractors accounting for 29% of
worlds tractor production in 2013.
• India is the 12th largest producer and 7th largest
consumer of machine tools in the world.

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• Ludhiana produces 90% of woolens in India and is
known as Manchester of India.
• Tirupur has gained universal recognition as the
leading source of hosiery, knitted garments,
casual wear and sports wear.
• Expanding textile centers such as Ichalkarangi
enjoy one of the highest per capita incomes in
the country.
• India’s cotton farms, fiber and textile industry
provides employment to million people in India.
MARKETS
• India’s services sector has the largest share in
GDP, accounting for 57% in 2012, up from 15%
in 1950. It is the 12th largest in the world by
nominal GDP and fourth largest when
purchasing power is taken into account.
• The services sector provides employment to
27% of the work force.

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• Since 2000,Indian companies have expanded
overseas, investing FDI and creating jobs
outside India,
• Since liberalization, the value of India’s
international trade has increased sharply with
the contribution of total trade in goods and
services to the GDP rising from 16% in 1990-
91 to 47% in 2008-10.

MARKETS
• India accounts for 1.44% of exports and 2.12% of
imports for merchandise trade and 3.34% of
export and 3.31% of imports for commercial
services trade worldwide.
• India’s major trading partners are the European
Union, China, USA & UAE.
• In 2006-07, major export commodities included
engineering goods, petroleum products,
chemicals and pharmaceuticals, gems and
jewellery, textiles and garments, agricultural
products, iron ore and other minerals.

MARKETS
• Indian trade has undergone massive
restructuring following the 1991 liberalization
policies. Ever since, India’s exports have
experienced a growth rate of 18.11%.
• Indian exports fell from $200.9 billion in 2008
to $165 billion in 2009. India ranked 22nd in
terms of export volume.

MARKETS
• Being a country with a huge workforce, India has seen
its trade boosted by the production of precious stones
and metals.
• The various other export commodities that India
exports are:
• Petroleum products
• Machinery
• Iron and steel
• Chemicals
• Vehicles
• Apparel

MARKETS
• India’s main export partners are:
• UAE
• US
• China
• Singapore

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• 1.2 EXPORTS-ENGINE OF ECONOMIC GROWTH:
• Exports have come to be regarded as an engine of
economic growth in the wake of liberalization and
structural reforms in the economy.
• The global economic scenario continues to be
bleak with India witnessing slowdown in exports
with our traditional partners.
• Under the circumstances, we need to set in
motion strategies and policy measures which
analyse growth of exports in several different
sectors as well as in newer markets.
MARKETS
• In view of our remarkable achievements in foreign
trade during 2004-09, the Foreign Trade Policy 2009-14
has envisaged two milestones.
• First, to double India’s export of Goods and Services by
2014 by achieving an annual export growth of 15%
with an annual export target of US$200 billion by
March 2011 and achieving the high export growth path
of around 25% per annum in the remaining three years
i.e. upto 2014 and
• Secondly to double India’s share in global trade by
2020.

MARKETS
• Strategy for Doubling Exports:
• Global economic outlook is a major determinant of export
performance of any country.
• Export growth cannot, therefore, be viewed in isolation
from economic outlook in the world economy.
• Keeping in view the urgency of managing the growing trade
deficit and uncertain global economic scenario, department
of Commerce in May 2011 finalized a strategy paper for
doubling merchandise exports in three years from US$246
billion in 2010-11 to US$500 billion in 2013-14.
• Exports were envisaged to increase at compounded
average growth of 26.7% per annum.

MARKETS
• Exports by Principal Commodities:
• Exports of the top five commodities during
the period 2011-12(April-October) registered
a share of 53.1 percent mainly due to
significant contribution in the exports of
Petroleum(crude and products), Gems and
Jewellery, Transport Equipments, Machinery,
Machinery and Instruments, Drugs,
Pharmaceuticals & Fine Chemicals.

MARKETS
• 1.3 EXPORTS GROWTH
• Exports during February 2013 were valued at
US$26259.42 million during February,2012.
• Cumulative value of exports for the period
April-February 2012 was US$265946.37
million as against US$277124.56 million
registering a negative growth of 4.03 percent
in dollar terms over the same period last year.

MARKETS
• Country wise pattern of exports in Q1 of 2012-
13 shows that the USA became the biggest
destination for India’s exports with a share of
14.4 percent, replacing UAE (13.4 percent)
followed by China (5.1 percent), Singapore(4.5
percent) and Hong Kong ( 4.2 percent).
• These five countries together accounted for
around 41.6 percent of India’s total exports
during Q1 of 2012-13.

MARKETS
• Indian exports have grown at a robust annual
average rate of 21.3% (CAGR) between FY03 and
FY13, the value of exports rising from USD 52.7
billion in FY03 to 300.20 billion in FY13.
• The export value of FY13, comes marginally lower
than the peak of USD 305.70 billion recorded in
FY2012, consequent on global demand drying up
to certain extent in the face of economic
uncertainty and moderation in global growth.

MARKETS
• Major manufactured goods exported by India
include engineering goods, chemicals and
related products, textiles and ready-made
garments.
• Manufactured goods account for major share
of exports (61.2 % as of FY 13) followed by
petroleum and crude products (20.1% in FY13)
and agri-products (13.5% I FY13)

MARKETS
• The export of ores and minerals has grown by
12.1%(CAGR, FY03-FY13) to touch USD 5.6 billion
in FY13, while export of petroleum and crude
products has registered exponential growth of
41.9% (CAGR, FY03-FY13) to stand at USD 60.2
billion in FY13.
• Contribution of petroleum and crude products in
India’s export basket has risen over the years,
while that of manufactured goods has declined.
Other commodity groups have registered range-
bound charges in share.

MARKETS
• In terms of share in overall exports, the share
of agri and allied products, ores and minerals
and other commodities have moved in a
range-bound fashion. However there has been
some perceptible shift from the manufactured
goods to the petroleum and crude products
segment between FY03 and FY13.

MARKETS
• Asia has always dominated as India’s exports
partner over the years; followed by Europe,
America and Africa.
• However, exports to America and Africa have
declined from FY03 to FY13 and increased
with Asia instead.

MARKETS
• 1.4 DIRECTION OF EXPORT:
• When comparing the direction of exports in FY03 with that
in FY13, one can notice the shift towards trade within the
Asian zone rising.
• Although, nominally speaking, trade with Europe and
America has risen over the 10 year period under
consideration, their share in overall exports has declined.
• Coupled with increased trade integration with Asia, this
shift of export direction away from America and Europe
may be attributed to the modernization in economic
activity in these countries, which has caused import
demand from these countries to contract.

MARKETS
• INDIAN ELECTRONICS HARDWARE EXPORTS: We
are making India to emerge as the electronics and
IT hardware outsourcing hub in the world.
• The global electronic industry today is one of the
fastest growth areas in international trade.
• Indian electronics hardware industry is still in the
development phase, and India has so far been
able to capture a minuscule share of the global
electronics hardware as compared to her
neighboring Asian countries.
MARKETS
• Overview of Global Market in Electronics
Hardware:
• Rapid innovation and speed to market
• Short Product Life Cycle
• Highly automated manufacturing to give
consistent quality at low cost
• High volume production
• Continuous improvement in capabilities for
reducing costs
• Profit accrual through volumes

MARKETS
• Government of India and the Indian Electronic Hardware
manufacturers have taken some proactive initiatives as follows:
• Identification of a vision and strategic growth plan
• Reducing operational costs of manufacturing and improving
business attractiveness
• Promoting single manufacturing clusters
• Promoting R&D activities and human resource development
• Promoting India as an ideal destination for Electronics Hardware
manufacturing
• Relaxation of Labour laws
• Identification of thrust areas and development of incubators
• Skill development
• Pro-active policies for development of entrepreneurship in
hardware sector like software

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• The industry level initiatives taken include:
• Developing mass production capacities
• Global Partnerships for rapid technology acquisitions
• Strategic exploitation of niche markets
• Made in India product branding and new products
• Initiation of a Marketing Campaign through
participation in International Fairs, India Contact
Programmes, Release of print ads in International
publications etc
• Initiative to build the image of India as a manufacturing
hub to be the way of doing the manufacturing business

MARKETS
• Major obstacles and suggestions for growth in
FDI flow in Electronics Hardware sector
• Lack of awareness of investment opportunities
in India
• Wrong perception about setting up of
operatives in India
• Poor Infrastructure facility
• Lack of Publicity of India Advantage
MARKETS
• Suggestions :
• FDI flow necessitates a Pro business and pro-growth
congenial enabling policy regime, projection and
publicity of image of India emerging as the logistically
and economically viable manufacturing hub for supply
to SAARC, Central Asian markets.
• India is to be promoted as an emerging potential
market with low barriers and it is hassle free to operate
and foreign investors are welcome in any Special
Economic Zones which are nothing but deemed foreign
enclaves.

MARKETS
• 1.5 EXPORT STRATEGY FOR INDIAN TRADE
• The long-term vision is to make India a major player in the world trade by
2020 and assume a role of leadership in the international trade
organizations commensurate with India’s growing importance.
• Our goal in the medium term is to double India’s exports of goods and
services by 2014 with a long term objective of doubling India’s share in
gold trade by the end of 2020.
• The realization of the aspirations of the exports growing at the targeted
rate would depend to a great extent on the early recovery of the world
economy and its sustained high growth thereafter.
• At present export of taxes to other countries is sought to be eliminated
through the mechanism of duty drawback on the basis of estimated
incidence of embedded taxes. This system is not geared to fully
compensate the exporters. The system of Goods and Service Tax
(GST)proposed to be introduced may provide the solution. GST is also
expected to help growth in India’s international trade.

MARKETS
• The dependence on ‘low value addition’
export items like petroleum products and
gems and jewellery may not be sustainable in
the medium to long term.
• Therefore diversification into non-traditional
areas like engineering, chemicals,
petrochemicals, plastics etc and to services
sectors is essential.

MARKETS
• STRENGTHS:
• Availability of most natural resources and long
coastline
• Diversified Industrial base Skilled manpower
including entrepreneurial ability
• WEAKNESS :
• Major infrastructural deficit in terms of power,
ports, roads and railways
• Lack of state of art technology in many
manufacturing

MARKETS
• OPPORTUNITIES:
• Good combination of skilled manpower and technology
• THREATS:
• Higher labour productivity, world class infrastructure base
of China could make it difficult for India to gain a larger
share of global exports. India’s bilateral trade with China is
also currently running an annual trade deficit of $17 billion.
• Lower cost competitors like Bangladesh ( in textiles and
clothing) and Vietnam(for textiles, clothing, tea, coffee and
some spices) could erode India’s share in global trade.

MARKETS
• ABILITY :
• English language skills
• Growing middle class and disposable incomes
represent a robustly growing domestic market
• Low wages compared to all developed and
emerging developing countries like China and
Brazil
• Younger population as compared to all
developed countries and China
MARKETS
• 1.7 EXPORT OF CONSULTANCY SERVICES:
• The current size of consulting industry in India is
about Rs.10000 crores including exports and is
expected to grow at an approximation of 25% in
the next few years.
• Indian consulting organisations are growing with
great pace to compete with international
organizations.
• In the recent period, the trade policy in India
reflects the strategic importance of India’s
comparative advantage of trade in services.
MARKETS
• The services sector ahs been identified as a thrust sector
for trade policy.
• The Foreign Trade Policy had set up Services Export
Promotion Council to map opportunities for key services in
import markets and to develop strategic market access
programme.
• Some of the other key initiatives of the government in
promoting exports of consultancy services are through
Market Development Assistance (MDA), Market Access
Initiative(MAI) scheme, proactive EXIM Policy and EXIM
Bank Schemes. Government also provides exemption on
service tax for export of consultancy services. Income Tax
exemption under section 80 ‘O’ need to be reinstated to
enhance consultancy export.
MARKETS
• The major strengths of Indian consulting
organizations include professional competence,
low cost structure, diverse capabilities, high
adaptability and quick learning capability of
Indian consultants.
• On the other hand there are major weaknesses of
Indian consulting organizations, which has
hindered the export growth of consulting sector
in the country, are low quality assurance, low
local presence overseas, low equity base, lack of
market intelligence, low level of R&D.

MARKETS
• 1.8 ENGINEERING DESIGN BACKOFFICE SERVICES:
• Engineering Design Backoffice Services transfer ideas and
designs into functional components that can be
manufactured and marketed in a short time period. The
strength of this industry is its cost effectiveness, large pool
of trained engineers, well established engineering industry,
time zone advantage for real time solutions. Good IT
infrastructure , reputed affordable IT education, English
speaking professionals, Government incentives , influx of
talent from other educational streams.
• The weakness of this industry is low promotion of Indian
capabilities, lack of local presence of Indian engineering
industry, low level of knowledge on international standards
and codes etc
MARKETS
• The opportunity of offshore industry are India’s edge in
outsourcing market with its ability to combine skills
with cost.
• With this trend, Indian engineering design consulting
organizations are increasingly looking to potential
locations like USA, UK and Japan.
• The clients for these services include large
international companies operating in the sectors of
Engineering services, Automobile & manufacturing, IT
and software who directly outsource their design and
development requirements to have competitive
advantage of costs and benefits of different time zones.

MARKETS
• 1.9 EXIM BANK – EXPORT ADVISORY SERVICES:
• The Export Advisory Services Group (EAS) offers a diverse range of
information, advisory and support services, which enable exporters
to evaluate international risks, exploit export opportunities and
improve competitiveness.
• Value added information and support services are provided to
Indian projects exporters on the projects funded by multilateral
agencies.
• The group undertakes customized research on behalf of interested
companies in the areas such as establishing market potential,
defining marketing arrangements and specifying market distribution
channels.
• Developing export market entry plans, facilitating accomplishment
of international quality certification and display of products in trade
fairs and exhibitions are other services provided.

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• EXIM Bank provides a wide range of information,
advisory and support services, which
complement its financing programmes. These
services are provided on a fee basis to Indian
companies and overseas entities.
• The scope of the services includes market-related
information, sector and feasibility studies,
technology supplier identification, partner
search, investment facilitation and development
of joint ventures both in India and abroad.

MARKETS
• 1.10 SUMMARY AND CONCLUSIONS:
• We have not yet used our full potential in pushing Exports to the
required levels as we should. Perhaps we are waiting for more and
more Export incentives and subsidies to treat it as our Milch Cow.
• The landmark agricultural powerhouse has transformed the nation
from chronic dependence on grain imports into a global agricultural
powerhouse that is now a net exporter of food has to be repeated
in other sectors of Export also.
• We need to relook at our Export strategies. Our strength and
weakness have to be rebalanced to support our abilities.
• We must look at the developing countries scenario and become a
leader for Exports to these countries. We have to tap the services
sector also and provide value addition to our exports.

MARKETS
• We have completed
Chapter 3
• Next we move to Chapter4
Merchanting Trade

Import Export Management Chapter 3

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EXPORT – THRUST PRODUCTS &

Chapter 3 - Import Export Management

Chapter 3 - Import Export Management

Chapter 3 - Import Export Management

Chapter 3 - Import Export Management

Chapter 3 - Import Export Management

Chapter 3 - Import Export Management

Chapter 3 - Import Export Management

Chapter 3 - Import Export Management

Chapter 3 - Import Export Management

Chapter 3 - Import Export Management

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Chapter 3 - Import Export Management

Chapter 3 - Import Export Management

Chapter 3 - Import Export Management

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Chapter 3 - Import Export Management

Chapter 3 - Import Export Management

Chapter 3 - Import Export Management

Chapter 3 - Import Export Management

Chapter 3 - Import Export Management

Chapter 3 - Import Export Management

Chapter 3 - Import Export Management

Chapter 3 - Import Export Management

Chapter 3 - Import Export Management

Chapter 3 - Import Export Management

Chapter 3 - Import Export Management

Chapter 3 - Import Export Management

Chapter 3 - Import Export Management

Chapter 3 - Import Export Management

Chapter 3 - Import Export Management

Chapter 3 - Import Export Management

Chapter 3 - Import Export Management

Chapter 3 - Import Export Management

Chapter 3 - Import Export Management

Chapter 3 - Import Export Management

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