$1 trillion goods export target can be achieved before time, annual exports needs to grow 18% annually, says PwC India

India could achieve the target of $ 1 trillion in merchandise exports a year in advance than it intends to, according to a PwC India report. Notably, the government has set an ambitious target of achieving $ 1 trillion in merchandise exports by 2029-30.

"...ironing out of geopolitical conflicts and India taking actions along a strategic pathway, this (export) target could perhaps be achieved one year in advance," the multinational professional services company said in a report.

Explaining how India could achieve that target, the PwC report said it considered an annual export growth rate of 18%.

"The other two scenarios, business as usual and conservative, consider an annual export growth rate of 14.5% and 10% respectively, to achieve the $ 1 trillion exports mark by 2030-31 and 2032-33 respectively."

Today, Union Minister Piyush Goyal has unveiled PwC India's report, "VIKSIT: An Approach for India to Achieve $1 trillion exports, which outlines a strategic framework to elevate India's export capabilities and drive sustainable growth.

India has powered through to emerge as the fifth-largest economy in the world. International trade has played a key role in fuelling India's economic growth - the share of merchandise and services trade in India's GDP increased from 15% in 1980 to 46% in 2023. The growing emphasis on export-led growth is reflected in the improved share of India's exports in global trade - from 0.4% in 1980 to 1.85% to 2023.

A key factor for unlocking growth in India's journey towards $1 trillion in exports rests with dormant micro, small and medium enterprises (MSME) exports, the report suggested.

At present, only 1.36% of India's MSMEs are exporting, highlighting the disconnection between India's export growth and MSME's propensity to internationalize.

Challenges along four key areas, namely business environment, export procedures, access to finance, and access to markets and information impact MSMEs' ability to export, it said.

Sanjeev Krishan, Chairperson, PwC in India, commented, "India's rise to becoming the fifth largest global economy is mirrored by its increasing share in global trade, driven by a focus on export-led growth. We're excited to introduce the VIKSIT framework, a strategic initiative designed by PwC to leverage the nation's strengths and address key infrastructural and technological impediments to boost the country's export potential. The framework can be leveraged over the coming years to enable a continuous dialogue on enabling competitiveness across the government and the private sector."

As per the report, there are five considerations that need to be weighed in while charting India's export growth journey. While adding scale, India's manufacturing sector also needs to improve its value-addition ratio to prevent commoditisation of the export basket and ensure that exports move towards high value-adding and emerging segments, it suggested.

In addition to product diversification, the report emphasises the criticality of expanding India's geographic market access to mitigate market concentration. In the recently concluded financial year 2023-24, India registered record exports at $778 billion. In 2022-23, the country exported goods and services combined at $776.3 billion. In break up, services exports rose from $325.3 billion to $341.1 billion in 2023-24. Merchandise exports though, marginally declined from $ 451.1 billion to $437.1 billion.