India's Exports Remains Buoyant Despite Competition From Chinese Goods, Slowing World Economy.

India's exports have remained buoyant in the face of competition from Chinese goods and a slowing world economy, thanks to exporters differentiating products and moving into goods higher up the value chain.

India's share in merchandise world trade rose from 0.7% in 2000 to 1.4% in 2010, making it the 20th largest exporter in the world, according to the WTO's 'World Trade Report 2011'. Amongst other things, the rising share in world trade can be attributed to a shift towards better quality and high-value products - a strategy that has helped it grow alongside China in the array of products the emerging powers sell to the richer nations.

"China is the market leader in low-cost products. So, instead of competing there, we improve the quality of our exports and move up the value chain to offer a different basket of goods, (albeit) at a higher price," Engineering Export Promotion Council chairman Aman Chadha said.

India's exports of engineering goods in 2010-11 accounted for 38% of its total exports that year while textiles made up 14%.

On the other hand, China - the largest exporter of manufactured goods in the world with a 10.4% share of global trade in 2010 - has seen its trade surplus reduce to zero in 2010 and 2011.

Therefore, rather than competing with China, which has technology and skilled labour to produce goods at lesser cost, Indian exporters are trying to diversify their product range.

Cotton Textiles Export Promotion Council's executive director Sidhartha Rajgopal seconds the view.

"We do not compete with China, rather we complement each other. We focus on different product lines. India does well in the medium and upper end of the market, while china does well in the lower end, where they charge low prices," Rajgopal said.

Asia's third-largest economy also enjoys an advantage over China in terms of services related to these manufactured goods, which helps in differentiating products.

"China follows the assembly line production approach, i.e. on mass scale. India has small batch process, so it has the advantage of using services in manufacturing. For instance, design in ready-made garments allows strategic diversification of goods," said Nisha Taneja , professor at ICRIER , a think tank.

In fact, even China is increasingly becoming an important export destination for Indian goods. In 2010-11, China was the largest importer of Indian engineering goods at $5631.66 million (April-Jan).

Indian manufacturers are also importing cheap components from China. For instance, flanges, which are used for connecting pipes and industrial valves, are imported from China and used in the manufacture of bigger pipes that are later exported.

Source : economictimes.indiatimes.com