Invest in infra, skills for success of 'Make in India': Crisil

Government needs to invest in infrastructure and skill development to boost exports and make its flagship 'Make in India' programme successful, ratings agency Crisil said today.
"Not doing so (investing in infrastructure and skill development) could upend the government's flagship 'Make in India' programme, which aims to generate large-scale manufacturing employment," Crisil's Chief Economist Dharmakirti Joshi said.
The agency's research wing came out with a note spelling out the headwinds which make the government's target to double exports to USD 900 billion by 2020 from the present USD 470 billion an ambitious one.
Among the domestic factors, it identified declining competitiveness, infrastructural bottlenecks and labour market rigidity as the key issues which hurt exports.

"Apart from investing massively in vocational ecosystems that generate a large number of skilled workers, India also needs to quickly develop its infrastructure if it has to attract foreign investment and become a world-class exporting hub," the note said.
India's exports remained in the negative territory for the 11th month in a row by registering a dip of 17.53 per cent in October to USD 21.35 billion.

Exports contracted due to steep decline in shipments of petroleum products (57 per cent), iron ore (85.5 per cent), engineering (11.65 per cent) and gems and jewellery (12.84 per cent) amid a global demand slump.

The cumulative exports during April-October this fiscal came down by 17.62 per cent to USD 154.29 billion as against USD 187.2 billion in the same period last year.
Crisil said that even as the exports are declining, the trade deficit has come down to 1.4 per cent in 2015 from 6.5 per cent two years ago, largely due to a correction in oil prices.
However, Joshi warned that this can be a "transient" factor, saying that while global sluggishness will keep exports subdued, a pickup in commodity prices can "bloat India's trade and current account deficit again".
The agency also dismissed some notions which are attributed for the dip in exports, like export destinations not doing well, prices of products declining and an appreciation of the rupee.

"The decline in exports is more than that warranted by these factors...The decline isn't merely cyclical, there are structural elements at play as well. If the structural factors are not addressed, it will continue to act as a drag on India's export performance," it added.