Manufacturing sector must become more competitive for export growth: Ansari

Terming the fall in India's export growth as "disturbing", Vice President Hamid Ansari on Thursday said the domestic manufacturing sector needs to become more competitive to take the country back on a higher export growth trajectory.

"Five years ago India's export story looked strong and convincing. Merchandise exports grew at a healthy annual average growth rate of 22 percent in the five years preceding the crisis.

"After a small blip in 2010, exports smartly recovered and grew at 30 percent in the next two years post the crisis. However, since 2013, India's export growth has stalled," Ansari said addressing the 194th annual general meeting of the Calcutta Chamber of Commerce.

He noted export growth rate fell to about 1.2 percent in 2013 and 2014, and this trend has continued in 2015 with exports growing at an average rate of 2.2 percent year to date.

"This fall in exports growth is disturbing," he said.

"To get back on a higher export growth trajectory, we in India would need to improve manufacturing competitiveness."

He said India now exports fewer price-sensitive items such as textiles, leather, etc. and more income-sensitive items such as chemicals, engineering goods and petroleum products, making its export basket more income-elastic.

Refering to UNIDO's CIP (Competitiveness of Industrial Production) that measures the ability of countries to produce and export manufactured goods competitively, Ansari said while India's CIP score has improved from 0.04 in 2000 to 0.07 in 2010, China's rating has jumped from 0.16 in 2000 to 0.33 in 2010.

"Similarly, while India has managed to increase its share in world manufacturing value added from 1.1 percent in 2000 to 2.0 percent in 2010, China more than doubled its share from 6.7 percent to 15.0 percent over the same period."

He said the Make in India campaign launched by the central government has the vision and the faith in India's ability to achieve the goal of becoming a manufacturing export hub.

"However, this is just the beginning and more concrete steps need to be taken to achieve the desired objective. Emphasis on the manufacturing sector, especially small and medium enterprises (SMEs) will be critical to India's export growth.

"SMEs account for 40 percent of India's manufacturing exports and 45 percent of manufacturing output, but lack of access to credit, poor technology and difficulties in hiring skilled labour are thwarting their growth," he added.