India’s share in global trade has not kept up with its fast-growing economy, as Vietnam and Bangladesh have surpassed the country as low-cost manufacturing and export hubs, according to a recent report of World Bank (WB). Despite India’s rapid economic growth, the proportion of trade in goods and services as a percentage of its gross domestic product (GDP) declined over the past decade, said the multilateral lender in the report.
“India’s share in global exports of apparel, leather, textiles, and footwear (ALTF) initially grew from 0.9 percent in 2002 to a peak of 4.5 percent in 2013, but it subsequently declined to 3.5 percent in 2022,” said the report.
In contrast, Bangladesh and Vietnam have achieved strong growth, with Bangladesh reaching 5.1 percent and Vietnam 5.9 percent of global ALTF exports in 2022, added the report released. It also said as China’s participation in low-skill manufacturing decreases due to rising wages, India can do more to capitalise on this opportunity. Currently, countries such as Bangladesh and Vietnam, and even advanced economies such as Germany and the Netherlands, have become the primary beneficiaries of China’s shrinking market share.
Among the top five beneficiaries of China’s loss in the share of global exports from low skill sectors between 2015 and 2022, Bangladesh was in top position followed by Vietnam and Poland, said the report. The WB recommended that India reduce trade costs, lower trade barriers, and deepen trade integration to remain competitive.
“This is an area where India could focus on…This is a call to action,” Nora Dihel, a Senior Economist at the World Bank, was quoted.
Prime Minister Narendra Modi’s ambition is to make India a manufacturing hub as businesses diversify their supply chains from China. Modi’s Government has spent billions of dollars in subsidies to attract investment in industries such as electronics and chip-making, added the Bloomberg report.
The WB expects the Indian economy to continue its rapid growth at a rate of 7 percent in the current fiscal year, ending in March 2025, following a growth rate of over 8 percent in the previous year. The multilateral lender also forecasts India’s growth to average at 6.7 percent for fiscal years 2025-26 and 2026-27.
India’s share in global trade has not kept up with its fast-growing economy, as Vietnam and Bangladesh have surpassed the country as low-cost manufacturing and export hubs, according to a recent report of World Bank (WB). Despite India’s rapid economic growth, the proportion of trade in goods and services as a percentage of its gross domestic product (GDP) declined over the past decade, said the multilateral lender in the report.
