Only 5 states account for 70% of exports, Economic Survey shows

Severe disparity among states in terms of exports, the growth of the logistics sector and the continuing expansion of services trade despite rising protectionism by importing nations are among the issues marked by the Economic Survey 2017-18 regarding India's foreign trade.

Tabled by Finance Minister Arun Jaitley on Monday, the Survey has for the first time included data on the international exports of states. Such data indicates a strong correlation between export performance and states‘ standard of living, it says. States that export internationally and trade with other states have been found to be richer.

Handful of states account for majority of India's exports

Dwelling on the subject of International Trade, Inter-State Trade and Economic Prosperity, the Survey points out for the first time in India‘s history that five States Maharashtra, Gujarat, Karnataka, Tamil Nadu and Telangana account for a whopping 70 % of India‘s exports.

Heterogenous nature of exporters

India‘s exports are unusual in that the largest firms account for a much smaller share of exports than in other comparable countries. Top one percent of Indian firms account only for 38 per cent of exports unlike in other countries where they account for substantially greater share – (72 %, 68 %, 67 % and 55 % respectively in Brazil, Germany, Mexico and USA respectively). Such tendencies were also found to be true for the top 5-10 % of the Indian firms.

Rationalization of various export promotion instruments

The Survey pointed out that the Rebate of State Levies (ROSL), provided to exporters has increased exports of readymade garments (man-made fibers) by about 16 per cent. However, it hasn't helped others.

Focus on Inter-State trade

Last year the Survey had estimated that India‘s Inter-State trade in goods was between 30 and 50 percent of GDP. But the GST data suggests that India‘s internal trade in goods and services (excludes non-GST goods and services) is actually even higher and is about 60 % of GDP.

More growth being paved by logistics sector 

According to the Survey, the logistics industry is worth more than $160 billion and has grown at a compound annual growth rate (CAGR) of 7.8 % during the last five years. The sector provides employment to more than 22 million people. The Global Ranking of the World Bank‘s 2016 Logistics Performance Index shows that India jumped to 35th rank in 2016 from 54th rank in 2014 in terms of overall logistics performance. 

Services trade remain strong

The Survey has also pointed out that India has remained the eighth largest exporter in commercial services in the world in 2016 with share of 3.4 per cent. This is double the share of India‘s merchandise exports in the world at 1.7 %.

India‘s services sector registered an export growth of 5.7 % in 2016-17. During the period April-September 2017-18, growth in services exports was robust at 16.2 % but imports also rose by 17.4 %. Net services receipts rose by 14.6 % during this period.