The Narendra Modi government in the last few years has cemented its intentions of making India a manufacturing hub for the world with the Make in India campaign. However, global demand for goods is cooling amid a slowdown thereby putting the manufacturing sector under pressure and as a result, India’s exports might take a hit.
The Centre may need to tweak its policies in the upcoming Budget to address these concerns as it stands to take a toll on India’s export revenue and hamper economic growth.
Analysts have suggested that the manufacturing sector is likely to be impacted by the lower external demand amid the global slowdown. The downtrend in the global economy can be attributed to multiple headwinds including geopolitical tensions and rising commodity prices due to elevated inflation. Global trade lost momentum in the first six months of 2022 owing to these factors.
The Modi-led government has been aiming to make India a global manufacturing hotspot, however, low external demand may turn out to be a stumbling block.
The export-intensive sectors of India, including gems & jewelry, ceramic & glassware, leather & leather products, drugs & pharmaceuticals, engineering & electrical goods, and textiles & garments, are likely to be hit majorly amid a global slowdown in world trade.
Sectors like textiles and garments, gems & jewelry, and leather products are highly labor-intensive as well. Hence, a slowdown in these sectors will have implications for the overall employment scenario in the economy as well, suggested the report.
Stakeholders from these export-intensive industries have been making some demands ahead of the budget. The Council for Leather Exports (CLE) demanded the reinstatement of basic customs duty exemption on the wet blue crust and finished leather to boost the shipments.
It also suggested reinstating and maintaining a 40 percent export duty on rawhide and wet blue, besides permitting exports of crust leather of all types without any export duty.
In addition, the commerce ministry has also sought a cut in the import duty on gold in the upcoming budget. The decision comes with a view to push exports and manufacturing of gems and jewelry sector.