India’s Exports: From Meluha to Now

India’s Exports: From Meluha to Now

Time to chart a new course

: Dr Rajiv Pathni

Meluḫa is the Sumerian name of their prominent trading partner during the Middle Bronze Age (around 2600 BC).  Most scholars associate it with the Indus Valley Civilization. Their major exports were commodities like spices, textile, timber, gems, grain, copper, etc.

It appears that several millennia later the focus of India’s exports remains on goods trade. This is despite the decreasing margins, increasing competition from other countries, lower labour cost arbitrage, and a host of other issues. The WTO guidelines restricting incentives for exporters would further make it even more difficult for them to continue profitably after 2020.

The Government is ably leading the charge with a slew of measures to improve the ease of doing business (we moved to World Bank rank 77 from 142 in 2014), bringing in more transparency, promoting digital transactions, etc. However, some lament that we do not speak from a position of power. And that may well be true.

However, in exports we may be missing the woods for the trees.

Need a Change of Focus

We have a continuing trade deficit in foreign trade, the only silver lining being the services sector where we have a trade surplus. India’s  services sector accounts for 55.2% of gross value added.  But this sector has been merely a blip on the radar of the authorities till now. Earlier this year the government changed course.

Recognizing the potential of the services sector, the government has approved an action plan for 12 ‘champion’ services sectors for realising their potential through establishment of a Rs 5,000 crore dedicated fund. These include IT & ITeS, Tourism and Hospitality, Medical Value Travel, Transport and Logistics, Accounting and Finance, Audio Visual, Legal, Communication, Construction and Related Engineering, Environmental, Financial and Education sectors. The commerce ministry is working with different ministries to formulate separate plans with a view to boost growth in these segments.

This is in addition to some other measures which have already been taken by the government last year :

  • India is working towards trade facilitation agreement (TFA) for services, which will help in the smooth movement of professionals.
  • Incentives provided under SEIS have been increased last year
  • The Government is working to remove many trade barriers to services in the WTO.

All developed economies have a significant focus on the services sector.  India has the  required HR capital and knowledge base for exporting services. We have already excelled in IT and ITeS sector.  With the right kind of stimulus, the other sectors will also flourish.

However, the services sector requires synergy across multiple domains. For instance, Medical Value Travel (a.k.a. Medical Tourism) needs not only world class hospitals but also visa support, affordable quality accommodation, language support, etc  The hospitals themselves need internationally recognized accreditation and networking with insurance providers and TPAs to ensure seamless and trouble-free treatment.

If we want to be counted amongst developed nations, we must go beyond legacy systems of goods trade. The government is willing and providing support.

Do we have it in us to go beyond the Meluhan trade?  Can we realize our true potential  in services sector in the near future?




     Dr Rajiv Pathni, an IAF Veteran, is pursuing studies in International Business Management at IIFT
     He is an accomplished Physician, an alumnus of AFMC and AIIMS and recipient of the prestigious
     WHO Fellowship at Liverpool School of Tropical Medicine, UK.