The rapid alignment of Indian exports with world exports in recent years shows that Make in India and Atmanirbhar Bharat are helping India become a key supplier to the world, an article in the Reserve Bank of India’s (RBI) May 2023 bulletin has said.
According to the article — titled `Exploring India’s export potential through the lens of export similarity indices’ — this has happened on the back of India’s increasing specialisation and competitiveness, which has helped it ride the current trend of diversification of supply chains.
India’s changing export structure is visible at the commodity level. The exports of commodities such as engineering goods, chemicals, drugs, pharma, rice, and electronics has increased, while exports of gems and jewellery, and other labour-intensive items such as textiles, leather, and leather products have declined, the article notes.
“This is in line with the shifting pattern in international merchandise trade, characterised by a gradual dip in the share of textiles, clothing, hides and skins over the decades,” the article states.
India on the path to achieve developed country status
The article says that at 0.64, India’s Export Similarity Index (ESI) for merchandise exports is the highest, along with the US, which is India’s top export destination.
The ESI measures the overlap of countries’ export baskets and their export competitiveness.
“Currently, around 60 percent of India’s exports are similar to that of the G7, and there exists further scope for convergence. India’s merchandise export structure is most similar to that of the US (0.64), followed by the UK (0.62),” the article notes.
India has progressed over the years as its index value has improved from 0.50 in 2002 to 0.67 (merchandise) <when>, and from 0.6 in 2005 to 0.65 (services) in 2021, the article says.