High VAS can shape India’s growth: IMF
The Dollar Business Bureau
India has seen a tremendous expansion in the exports of services between 1990 and 2013. This is nothing short of spectacular as it placed India on the world’s high-income economies map.
It is a known fact that trade leads to structural transformation and a diversification in the economies, the types of goods traded and the trading partners leave an impact.
By laying importance on exporting high-value services that India has an advantage in, it could capitalize on the same by increasing the quality, sophistication and diversification in manufacturing. This could lead to expansion in total exports, improving the quality of products, focusing on sophistication and expanding into higher value added services, that could serve generating better employment opportunities for Indians.
A new paper by IMF titled ‘Make in India: Which Exports Can Drive the Next Wave of Growth, analyses, the complexities of India’s export basket.
It claimed that India can shape the curves of economic growth with the support of cultural inventions and new technology.
However, the paper claimed that manufactured goods were a major setback for India when compared to the market peers. Both, the quality and the quantity in the export basket was low.
Growth of service exports in India is deeply indebted to the arrival of modern services, which means the products can be stored and sold in a digitized manner.
While trade is the pillar for transformation of economies, the types of products traded and the trading partners are the base. IMF, while stressing that trade partners leave a huge impact on the economic curves, it stated that India should explore new markets, mainly the South-Asian zone.
The expansion of trade, better quality and rise in quantity of manufactured goods will not only mint money, but also generate employment opportunities for Indians.
The working paper recommended that enhanced policies for exports, reduction of trade costs, liberal FDI laws, promoting entrepreneurship, encouraging innovations, advancing infrastructure will help to reach high productivity.