In 2013, India’s exports as a percentage of its GDP was at an all-time high of 25 %. But, what a steep decline has pushed the level to its lowest in 14 years. This development, coupled with steep oil prices has widened the current account deficit. In the months leading up to March 2018, exports worth 303 billion $ were registered, against imports of 460 billion $.
Small exporters across the country are still reeling from the implementation of the Goods and Service Tax. It is also estimated that 1.5 billion $ due to exporters from foreign sales, is being held due to red tape. This means that many small exporters are currently strapped for Working Capital.
The manufacturing sector is held back by complex regulations which means that most of the manufacturing happens in small factories. Unlike factories in other Asian countries, the ones in India do not enjoy the benefits of large-scale production and are not able to compete in Global Markets. Instead of a protectionist approach, the Indian Government needs to go back to the drawing board and come up with reforms to boost exports.
Source: The Economist.
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