Revving Exports to U.S. Keeps India in Race to Be Next China
Sub-continent’s largest economy growing at world’s quickest pace
India, believed by many to have the potential to become the next China, is finally making headway in the exports market as it broke into the top 5 suppliers of Christmas decorative items and t-shirts to the U.S.
Seaborne shipments of festival goods and accessories to America touched $20 million last month, almost triple the value from the year-ago period, according to U.S. customs data. In the process, India gained a clear lead over the Philippines, as buyers diversify supply sources in the face of rising labour costs and disruptions from China’s strict COVID-zero policy.
The trend isn’t limited to Christmas goods. Exporters in Asia’s third-largest economy (after China and Japan) have been witnessing a significant increase in orders from both the US and Europe, with the shift mostly seen in low-cost, labor-intensive sectors such as apparel, handicrafts and non-electronic consumer goods. While diversification of supply chains began with the US-China trade war in 2018, India hadn’t seen any meaningful gains back then as countries such as Vietnam cornered the bulk of orders that were moving away from Beijing.
The pandemic, which saw China adopt strict lockdowns, is helping change that. India’s goods exports, which touched $420 billion in the fiscal year ended March, have already reached close to half that level in the five months beginning April. While that’s hardly worthy of comparison to China’s annual $3.36 trillion of exports, analysts view it as a good starting point for the sub-continent’s largest economy, which is currently growing at the world’s quickest pace.
“Taiwan, the EU, the US, Japan — all are willing to give India a second look,” said Alex Capri, a research fellow at Hinrich Foundation, set up by US entrepreneur Merle Hinrich to promote sustainable global trade.
Indian government data showed Christmas decoration exports in the year ended March increased more than 54% from fiscal year 2020 levels, while handicraft exports witnessed a jump of around 32% during the same period.
China’s continued decoupling from the global economy along with post-pandemic recovery presenting an opportunity for India to accelerate its investment in longer-term competitiveness and prioritize ‘winnable’ sectors, Siddharth Jain, a partner in the operations and performance practice at Kearney, said. By 2030, India is projected to have the world’s most abundant labor force, and could contribute over $500 billion annually to the global economy, according to a report by Kearney and the World Economic Forum.
Source: BNN Bloomberg
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