India to Increase its Share in the Global Value Chain
On March 23, serious efforts are being made to increase India's share in the global value chain (GVC). Currently, India's share in the global value chain is only 3.3%. By increasing manufacturing, India can boost its share in the GVC. A higher share in the GVC will enhance India's dominance on the global stage.
Manufacturing will increase, and new jobs will be created. To increase its participation in the value chain, the NITI Aayog has recommended that the government primarily focus on the electronics, chemicals, and automotive sectors. India has been consistently performing well in these three sectors, and thus there is significant potential to become a key player in these sectors within the GVC.
In addition to these three sectors, NITI Aayog has advised focusing on 10 other sectors to enhance manufacturing and become a significant player in the GVC. These sectors include security and drones, textiles, solar PV, capital goods, steel, food processing, leather and footwear, pharmaceuticals, telecom equipment, and aircraft manufacturing. Currently, manufacturing accounts for 17% of India’s GDP.
The global supply chain is primarily dominated by countries like China, the US, Japan, Germany, and South Korea.
According to NITI Aayog's report, chemicals and automotive both contribute 7% each to India’s GDP, but India’s share in global automotive exports is only 3%. To increase this share, the commission has recommended manufacturing components like engines, engine components, drive transmission, steering components, cooling systems, suspension, braking systems, and chassis. These items have limited manufacturing currently.
Target to Reach $500 Billion Electronics Market
In FY 2023-24, India exported auto components worth $7.7 billion. India primarily exports auto components to the US, Turkey, Germany, Mexico, and Brazil.
In the chemicals sector, India manufactures over 80,000 products and also provides various raw materials to the industrial sector. More than 2 million people are employed in the chemicals sector, and its expansion will also promote job creation.
To increase its share in the GVC, India aims to grow its electronics sector to a $500 billion market by 2030. This will include exports worth $200-225 billion. Achieving this target is expected to generate 5.5 to 6 million new jobs.
Out of the $500 billion market, $350 billion will be in finished products, while $150 billion will come from electronics components. Following NITI Aayog’s recommendations, the government is focusing on providing policy support, research, and development across all 13 sectors. Additionally, hackathons are being organized regularly to develop new products in sectors like electronics, drones, and defense.