India has said it wants to see its global exports double by 2025 as it seeks to step in and supply nations affected by the current, prolonged trade wars.
At a stakeholders' meeting to discuss a trade strategy, commerce minister Suresh Prabhu said setting this goal was necessary due to challenges including uncertainty of global trade, lack of credit availability, productivity standards and the high cost of logistics.
Plans for more exports
Minister of state for commerce and industry C R Chaudhary has been tasked with drawing up a solid plan for boosting exports to this level and is now set to review export promotion councils as part of his role.
It is hoped that the services sector can step in to meet this lofty ambition, rather than the IT sector that currently dominates.
In 2017-18, merchandise exports grew $303 billion (ten per cent), while services accounted for a growth of $195 billion (18.8 per cent).
Mr Prabhu said India must look at boosting trade with smaller countries, as well as participating in agreements with Nafta, Europe, North East Asia, ASEAN, South Asia, Latin America, Africa, Australia and New Zealand.
However, it also hopes that a large proportion of its future trade could come from China's consumer market, as the country continues to do economic battle with the US Trump administration.
Indeed, India has already drawn up a list of goods that it could export to China to replace those that would otherwise have come from America, but that have become costlier in recent months as a result of tit-for-tat tariffs.
Some 40 products including fresh grapes and cotton linters are on the list, with the potential for 80 more items to join them, according to an unnamed source speaking to Bloomberg. As such, the government is looking to increase production in these sectors in order to take advantage of the situation and potentially reduce the $63 billion trade deficit with China.
Senior research fellow at the National University of Singapore Amitendu Palit told the news provider that this could work: "One of the major impacts of the trade war would be that there will be a lot of re-organisation and reconfiguration of supply chains. There is a possibility that India may become part of some production chains."
Advice against emulating US
However, specialist in policy research Ritesh Singh said in an article for the Economic Times of India that it would be unwise to take this push for economic growth too far and be tempted to check imports and implement protectionist measures like those being demonstrated by US president Donald Trump.
He warned that, far from pushing indigenous manufacturing and creating jobs for its own workforce, this could "create an inefficient industrial structure that will backfire on India".
"It will raise the cost for downstream industries, penalise exports, limit consumers' choices and, worse, it may trigger retaliation from trade partners who expect to lose from tariff hikes. There is no denying that an increase in import duties may provide some temporary respite, but, in the end, it will do more harm than good," Mr Singh added.
India has already been raising import duties on items such as steel, car parts and toys, but an increase in duties and minimum import prices resulted in a surge in domestic steel prices last year.
It is feared that any retaliatory trade action resulting from further protectionist measures may reduce the size of overseas markets, thereby damaging India's goals for trade expansion.
India has been recording sustained trade deficits since 1980, with a trade gap of $18.02 billion recorded in July 2018 as imports jumped.
Foreign trade currently accounts for around 48 per cent of India's GDP and it exports to around 190 countries while importing from 140 nations.
Its major exports include engineering goods, refined petroleum, gems and textiles.
