Exports from key labour-intensive sectors decline 12% compared to pre-pandemic levels
- May 5, 2024
- Posted by: OptimizeIAS Team
- Category: DPN Topics
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Exports from key labour-intensive sectors decline 12% compared to pre-pandemic levels
Subject: Economy
Sec: external Sector
Context: During the last financial year, when overall goods exports shrank 3 per cent, the outbound shipments of textiles, leather, gems and jewellery and marine products saw a much steeper 9 per cent decline to $78 billion against $86.32 billion in FY23.
Details:
- While India’s exports have been largely flat, the country’s exports from labour intensive sectors such as textiles, leather, gems and jewellery and marine products are seeing a sharp dip. India’s shipments from these four high jobs generating sectors have declined nearly 12 per cent compared to the pre-pandemic levels five years ago (FY18) amid an overall weakness in demand from developed nations and stiff competition from Vietnam and Bangladesh.
- During the last financial year, when overall goods exports shrank 3 per cent, the outbound shipments of textiles, leather, gems and jewellery and marine products saw a much steeper 9 per cent decline to $78 billion against $86.32 billion in FY23. The comparable number in FY18 and FY19 stood at $90 billion and $88.14 billion respectively, as per commerce and industry ministry data.
- During the last seven years, India’s textile and garments exports have remained flat at around $35 billion, while Vietnam and Bangladesh have gained market share on the back of free trade agreements (FTAs) and Least developed countries (LDC) status that amount to 10-15 per cent concession on duty.
- As per Global Trade and Research Initiative (GTRI) report in 2023, China exported $114 billion worth of garments, followed by the European Union (EU) with $94.4 billion, Vietnam with $81.6 billion, Bangladesh with $43.8 billion, and India with just $14.5 billion.
- India significantly trails behind China and the EU and is also falling behind smaller countries like Bangladesh and Vietnam.
- From 2013 to 2023, Bangladesh’s garment exports grew by 69.6 per cent, Vietnam’s by 81.6 per cent, but India’s grew by only 4.6 per cent. As a result, India’s global market share in garment trade has declined from 2015 to 2022. The share of knitted apparel dropped from 3.85 per cent to 3.10 per cent, and the share of non-knitted apparel decreased from 4.6 per cent to 3.7 per cent
- Another sector witnessing considerable stress is the gems and jewellery sector that employs nearly 50 lakh people according to the union government’s estimates. The exports from the gems and jewellery sector declined over 20 per cent to $32.7 billion compared to $41.54 billion in FY18.
What reforms government has brought?
- To make the industry more globally competitive, however, the Union government had launched Mega Investment Textiles Parks (MITRA) programme in 2021 to increase investment and acquire a competitive edge over global competitors.
- The commerce and industry ministry, in its reply to a query, said that remission of duties and taxes under Remission of Duties and Taxes on Exported Products (RoDTEP) scheme were extended to 18 items to support the textiles sector.
Positive developments
- Rerouting of petroleum products and the PLI-led push for electronic manufacturing has shown increased value addition, but job creation particularly in the tech-intensive phone manufacturing sector has remained lower than government’s projected employment generation estimates from the PLI scheme.
- While exports of electronic goods jumped 288 per cent between FY18 and FY24, imports during the same period jumped 61 per cent, official data showed. In the case of petroleum products, the exports between FY18 and FY24 jumped 127 per cent but imports during the same period surged 65 per cent.
Decline exports of labour intensive sector: