In recent years, the global trade landscape has witnessed a significant transformation, with India emerging as a crucial player on this stage

According to a report from the National Stock Exchange of India, released on December 26, a notable increase in India’s contribution to global trade has been highlightedThe figures are striking: India’s share in global merchandise exports has seen a steady rise from a mere 0.9% in 2005 to an impressive 1.8% in 2023. The service sector showcases an even more remarkable leap, growing from 2% to 4.3% in the same time frameThis overall increase positions India’s total export share from 1.2% in 2005 to 2.4% in 2023, sealing its indelible mark in the global trade narrative.

The success story of India’s remarkable trade ascent can be attributed to multiple factors that have synergistically propelled its progressOne significant contributor has been the robust bilateral trade agreements that have acted as gateways to broader markets

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Through partnerships with various nations and regions, India has successfully maneuvered its goods and services into numerous international marketsThis has not only reduced trade costs but also dismantled several trade barriers, providing Indian enterprises with a solid foundation and pivotal momentum for their international expansion.

Additionally, the diversification of export composition is fundamental to India's firm establishment in global tradeRather than relying on a single product or market, India has been proactive in expanding its range of goods and services for exportFrom traditional agricultural products and textiles to emerging high-tech innovations and services, India has carved out a niche in various global marketsThis diversified structure allows for flexible adjustments in response to global economic fluctuations, significantly diminishing dependency on any single market, thus ensuring a relative stability in export growth.

Moreover, improvements in logistics infrastructure play a crucial role in this upward trajectory

Over recent years, the Indian government has made substantial investments in modernizing transportation networks, port facilities, and logistics parks, vastly enhancing the efficiency and capability of goods transportationAn efficient logistics system reduces both transportation time and costs, boosting competitiveness for Indian products in the global arena, enabling faster and more cost-effective delivery to international customers.

Policies such as “Make in India” and the Production-Linked Incentive (PLI) scheme have provided a further impetus to export growthThe “Make in India” initiative aims to position the country as a global manufacturing hub, attracting significant domestic and foreign investment, thus accelerating manufacturing growth and enhancing the production capacity and technological standards of Indian industries

The PLI scheme, on the other hand, incentivizes companies with financial subsidies and tax benefits to boost research and development investment and technological advancements, further enhancing the quality and competitiveness of Indian products in the international marketplace, thereby significantly driving export increases.

Of particular note within the export sectors is the outstanding performance in services, with India shining brightly on the global trade platformServices account for a striking 43.8% of India's total exports, a figure that stands out prominently among major global economies, where the average rests at just 24.7%. This distinctive advantage highlights India's formidable capabilities and comparative edge in sectors such as IT, finance, and consulting services

The country’s IT industry boasts exceptional software development capabilities, efficient outsourcing services, and a rich talent poolInnovations in finance have drawn a host of international clients, while consulting services offer high-quality solutions to global businesses, showcasing India’s prowess in these vital sectors.

Reflecting on the last two decades, India's export growth can be categorized into two starkly different phasesDuring the first two decades of liberalization (FY 1994 to FY 2004), the compound annual growth rate for exports was at a commendable 11.1%, indicating a positive trendThis figure surged to 17.3% during the period from FY 2004 to FY 2014, marking a golden era of rapid export growthHowever, the last decade (FY 2014 to FY 2024) has seen a notable deceleration in export growth, with the CAGR dropping to 3.3%. This slowdown can be attributed to several global challenges: subdued global demand, sluggish economic growth in various nations, rising trade protectionism, and numerous trade frictions that have posed substantial hurdles for Indian exports

The unexpected impact of the COVID-19 pandemic and ongoing geopolitical tensions have further complicated the global trade landscapeDespite these challenges, India’s service exports continued to thrive, maintaining a robust CAGR of 8.4%, indeed adding a touch of brightness to the Indian export narrative.

The report astutely notes that India has established relatively strong international competitiveness in key sectors such as agriculture, textiles, chemicals, and pharmaceuticalsThe country’s vast agricultural resources and traditional production techniques grant its farm products a competitive edge regarding price and quality on global marketsThe enduring history and craftsmanship of the textile industry further lend prestige to its products abroad, while the chemical sector continues to achieve breakthroughs in technological innovation and production scale

Additionally, the pharmaceutical industry has cemented a significant share in the global healthcare market, owing to its robust research and development capabilities alongside an advantage in generic medicine productionHowever, when it comes to high-value sectors such as machinery, transport equipment, and electronics, there remains a noticeable gap relative to global leaders, indicating an area where India can invest further for growthThis reflects the untapped potential within these high-value sectors, pointing to avenues for expansive development in the future.

From a global perspective, the recent years have seen substantial adjustments in the global trade dynamicsChina's share in global merchandise exports has markedly risen, bolstered by its unrivaled manufacturing strength and continuously improving product quality