GTRI calls for deeper participation of Indian firms in GVCs

26 Sep '23

2 min read

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India's limited participation in global value chains is a barrier to its export potential despite substantial manufacturing capabilities across relevant product categories, the Global Trade Research Initiative has said.
Steps like streamlining port and customs operations and setting up of a national trade network will add $1.2 trillion to foreign trade by 2030.

India's limited participation in global value chains (GVCs) is a barrier to its export potential despite the country’s substantial manufacturing capabilities across various GVC-relevant product categories, the Global Trade Research Initiative (GTRI) said in a recent report.

"India's weak GVC integration can be attributed to poor trade infrastructure, causing delays at ports and customs, which are detrimental to the timely flow of goods in these intricate value chains," according to GTRI co-founder Ajay Srivastava.

Steps like streamlining port and customs operations and setting up of a national trade network will help Indian firms integrate with GVCs and add $1.2 trillion to the country's foreign trade by 2030, the report said.

The integration of Indian firms in the GVCs is needed as about seven-tenths of global trade operates within these chains, covering a wide range of products, including apparel, a news agency reported citing the document.

Countries like Malaysia, South Korea, Japan, Thailand and China have excelled in GVCs due to investments in quality trade infrastructure.

The GTRI report has recommended six action points for the government to help boost the participation of domestic firms in GVCs.

The suggestions include automating port and customs procedures, and implementation of green channel clearances for 99 per cent of shipments; analysing the top 10,000 exporters responsible for 85 per cent of India's exports; matching global best practices for ship turnaround times, reducing queues, speeding up transactions, and optimising infrastructure use; and enhance communication between traders and shipping companies, port operators, and container freight stations.

The report asked for creation of an online platform for all export-import compliance processes.

"National Trade Network (NTN) would enable exporters to submit all required information and documents in one place, eliminating the need to interact separately with customs, DGFT (directorate general of foreign trade), shipping companies, ports, and banks," Srivastava said.

The other steps include focus on high-value segments of GVCs, product conceptualisation, design, prototype development, and after-sales services.

Countries like the US, Germany, Japan, Taiwan, and South Korea excel in R&D expertise at the high end, while China specialises in final assembly at the lower end.

The report recommended inviting top global firms to become anchor manufacturers in priority sectors.

ALCHEMPro News Desk (DS)

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