India loses global market share in 61 export items

Source : Economic Times 30 May 2017

NEW DELHI: Readymade garments, gems and jewellery, and agricultural products, which have traditionally represented India’s exporting prowess, all lost market share in the past five years.

Cars, diamonds, maize, trousers, make-up and skincare items, handbag and cotton sweaters figure in the list of 61 products where India lost market share between 2011 and 2016.

Although India failed to cater to increasing demand for high-end cars and handbags, it lost market share in gold and silver jewellery due to the rise of competitors such as China, and Cambodia and Bangladesh in readymade garments.

India’s market share in the medium-end car segment fell from 8.84% in 2011 to 5.77% in 2016 and for high-end cars, it fell from 1.77% to 1.57%. This considerable loss in share is attributed to South Korea and Japan, the leaders in manufacturing passenger vehicles.
Lack of skilling of artisans in the gems and jewellery sector has cost India heavily, especially in diamonds, in which the country’s share declined from 31.36% in 2011 to 30.79% in 2016. India ceded much of the market to China and Vietnam, which emerged as the key competitors. Exporters have raised the red flag on 61 such products and asked the commerce ministry to revisit its strategy to promote their exports.

“We have asked export promotion councils and the department of commerce to revisit the strategy for export of these items,” said Ajay Sahai, director general of the Federation of Indian Export Organisations.

In case of agricultural items such as maize and oil cakes, currency fluctuations played a big role in India losing market share. As the Brazilian real weakened, India lost its competitiveness in oilcakes to the South American country.

“We need to build domestic capability or give them a greater impetus to increase their share,” Sahai said.

he government, on its part, could give higher support to these products in the Merchandise Exports from India Scheme (MEIS). The MEIS was introduced in the Foreign Trade Policy 2015-20 with product and market focused incentives, under which rewards are payable by way of the MEIS duty credit scrip, which can be transferred or used for payment of a number of duties including the basic customs duty.

The government later announced higher support to several products such as industrial machinery, machine tools, bicycle parts and hand tools used in agriculture that are manufactured by small and medium enterprises.

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