By Subrata Majumder
Amid concern over Trump’s high tariff, a new ray of hope beckons for a new face of India’s export basket, which will yield higher value addition and manufacturing excellence. Hitherto, traditional industries were dominant in the export basket, prioritizing labour intensive industries and agricultural products, but with lower value addition. Exports of textiles, garments, leather, diamonds, agricultural products like spices, cashew are the cases in point.
Incidentally, new industries like electronics and drugs and pharmaceuticals are exempted from Trump’s high tariff woes. This unleashes a bonanza for India, in addition to lower reciprocal tariff (18 percent), against competitive Asian countries like China (35 percent) , Bangladesh (20 percent), Vietnam (20percent), Thailand (19 percent), Malaysia (19 percent), Philippine (19 percent).
Given the new template for export basket and exemption of electronics and drugs and pharmaceutical from high tariffs, relaxation in import tariff in India for non-cereal agricultural products and wines in return, is not a bad deal. It will lend a conciliatory support to pacify Trump’s ire and meet his MAGA dream
With new policy initiatives to boost manufacturing of new industries, such as PLI scheme, opening more scope for foreign investment, enhancement of infrastructure facilities, strong digital transformation and booming start-up, they played pivotal role in export basket.
Eventually, new industries are poised for outpacing traditional industries in India’s export basket. In 2024-25, exports of new industries like electronics, engineering and drugs and pharmaceuticals outsmarted exports of traditional industries like textiles, garments, agricultural products and cut and polished diamonds.
While, excluding petroleum refinery products, exports of new industries, such as electronics, engineering and drugs and pharmaceuticals, accounted for 41.3 percent share in total exports in 2024-25, against 29.7 percent in 2014-15, export of traditional industries like agriculture and allied products, textiles, garments and cut and polished diamonds together accounted for 24.9 percent share in total exports in 2024-25 against 31.7 percent in 2014-15. These show a drastic fall of traditional industries in export basket over a period of decade and surge in new industries, signifying tech oriented and more value addition.
As USA has been the biggest destination for India’s exports, it played pivotal role in recalibrating the structural change in export basket. While export of new industries to USA, viz. electronics, engineering and drugs and pharmaceutical together accounted for 50.2 percent in 2024-25, against 21.9 percent in 2014-15, exports of traditional industries, viz, agriculture and allied products, textiles, garments and cut polished diamond together accounted for 25.1 percent in 2024-25, against 41.9 percent in 2014-15.
The dawn of structural changes in India’s export basket is likely to be fast forwarded by new industries like tech oriented industries and more value addition, palpable for supply chain industries in the global market.
In the deal, India will reduce or eliminates tariff on various American product to India. They are tree nuts (almonds, walnuts, pistachios), soybeen oil (quota based reduced duty access), red sorghum for animal feed, fresh and process fruits (like apples and oranges) and wines/spirits.
In other words, India has been able to protect its sensitive agricultural products , like foodgrain, dairy products, poultry, meat, soy, meat as well as GM products, which are treated environmental safety concern and health hazard in the country.
India pitches sparkling growth in new industries like electronics and automobiles. Electronics production increased six fold in the last 10 years – from US$ 29 billion in 2014-15 to US$ 101 billion in 2923-24. India is the 2nd largest manufacturer of mobile phones in the world. A large inflow of foreign investment (FDI) flagged the robust growth in electronic industry. There was fourfold increase in FDI in electronic sector. FDI in electronic manufacturing increased by 193.7 percent in 2024-25 over 2023-24.
Today, manufacturing of mobile phone in India is not merely an assembly operation, based on screw-driver technology. High end mobile phone, like smart phones and iphone, warrant higher technology. Manufacturing of high end mobile phone involves high tech assembly –cum – manufacturing. They are System-in- Packaging (SIP) or Surface –Mounting -Technology (SMT), where high tech semiconductor devices, displays, camera modules are soldered and assembled into finished products. Foxconn is categorized an high tech manufacturing company of mobile phone.
India has leapfrogged in the growth of automobile manufacturing. It is the 4th largest vehicle manufacturer in the world. It contributed 7.1 percent to the country’s GDP and 49 percent in manufacturing GDP.
USA emerged the biggest destination for exports of new industries of India. It is the top destination for exports of electronics, engineering, auto components and drugs and pharmaceuticals. In other words, nearly more than one-fourth of India’s global exports of new industries depend on USA market. In 2024-25, USA accounted for 37 .4 percent of total exports of electronics, 16.2 percent of total engineering exports , 34.6 percent of total drugs and pharmaceutical exports and 22.5 percent of total exports of auto parts.
Given these structural changes in export basket, where USA played an important role, soft pedalling for imports from USA, even including some sensitive products, is not a bad deal for India. (IPA Service)
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