Low Labour productivity and gaps in high-tech infrastructure holding back India's export potential: Report

New Delhi [India], April 28 (ANI): Despite becoming the world's fifth-largest economy, India is yet to tap into its full export potential, according to a report by Ionic Wealth by Angel One.
The report highlighted that low labour productivity and gaps in high-tech infrastructure are key challenges holding back India's global trade performance.
It stated, "Persistent bottlenecks -- including low labour productivity and gaps in high-tech infrastructure -- continue to hold back its full potential, highlighting significant untapped export opportunities."
India's economic rise has been significant, with the country's share in global GDP increasing from 1.6 per cent in 2000 to 3.5 per cent in 2023. Over this period, the economy has expanded nearly four times, while real per capita GDP has tripled.
However, in merchandise exports, India ranks only 8th globally, despite the rupee's weakening -- a factor that usually supports export growth. This pointed to persistent bottlenecks in the system, which, if addressed, could unlock significant untapped opportunities.
The report also highlights positive developments that support India's trade outlook amid global uncertainties. Investments in emerging sectors like electric vehicles (EVs), electronics, semiconductors, and green energy are expected to grow 6.8 times between FY25 and FY30 compared to FY21-25.
This growth is much faster than the broader capital expenditure growth trend of 1.6 times, signalling a major shift in India's manufacturing landscape.
Furthermore, the increasing flow of foreign direct investment (FDI) and the growing presence of multinational companies indicate a shift from merely promoting 'Make in India' to actually 'Making in India.' This shift is boosting India's manufacturing and export capabilities.
The report also said "India is diversifying its exports, recording strong growth in electronics, pharmaceuticals, automotive, and food processing, backed by Free Trade Agreements (FTAs) and ongoing bilateral trade negotiations".
In addition, India enjoys tariff advantages over competitors like China and Vietnam in key sectors, enhancing its cost competitiveness during the ongoing global tariff wars.
On the manufacturing front, India's Purchasing Managers' Index (PMI) continues to lead among key Asian economies, reflecting resilience and strong momentum.
A recent survey by the Reserve Bank of India (RBI) also indicates positive sentiment across manufacturing parameters such as production, orders, capacity utilisation, exports, and profitability.
Overall, while India faces challenges in labour productivity and infrastructure, strong investment trends, policy support, and positive business sentiment are laying the foundation for stronger export growth in the years ahead. (ANI)