India Business & Trade - Nov 2022

Indian tea has developed a distinctive identity for itself in global markets. It is the world’s largest consumer and second-largest producer of tea, and prides itself in some of the world’s most popular single-origin tea varieties like Darjeeling, Assam, Nilgiris and Sikkim. Over time, Indian tea exports have dropped due to increased competition from other sources, especially Sri Lanka and Kenya. This year, however, we have seen clear indications of trade diversion in India’s favour.

The monthly trend indicates steady growth in tea exports from US$ 49.73 million in May to US$ 82.78 million in August 2022 (Department of Commerce). According to an analysis by Tea Board for the months of January to July 2022, tea exports stood at US$ 411.56 million in value terms (growth of 28.53% YoY) and 116.36 million kg (growth of 13% YoY) in quantity terms.

Orthodox teas accounted for 50% of exports by quantity and CTC teas garnered a share of 43%. Clearly, orthodox teas have gained significantly this year so far, growing by 23.2% YoY during this period in dollar terms, while CTC teas witnessed a decline by 11.4%.

This is directly being linked to the economic crisis in Sri Lanka, which is recognized as its worst in 70 years. The crisis has caused a severe shortage of essential items like food, medicines, cooking gas and fuel. The government announced a debt default in April, as the country faces multiple challenges. Farmers are facing severe shortages of chemical fertilisers and pesticides, fuel and spare parts for agricultural machinery, coupled with unbearably high prices of agricultural inputs. This is worsened by growing indebtedness and high interest rates on loans.

Sri Lanka is the leader in orthodox teas, accounting for over 50% of global trade. But due to the crisis, tea production in Sri Lanka has witnessed a sharp fall of around 19% YoY (ICRA), which could mean 60 million kg of lower production for the year. To give a context, that is over half of India’s orthodox tea production of 113.1 million kg in 2021!

Market mapping of Indian and Sri Lankan tea exports shows that the former’s top markets in 2021 include Iran, Russian Federation, US, UAE, Germany and the UK. On the other hand, Sri Lanka’s top markets include Iraq, Turkey, Russian Federation, UAE, Iran and China. When you compare their respective top 10 markets, we find four markets where India and Sri Lanka seem to compete directly –Iran, Russian Federation, UAE and Iraq.

Actual YoY growth of India’s tea exports for April-August 2022-23 shows relatively insignificant gains in value for Russia and Iraq, while Iran has actually shown a decline by 20%. UAE seems to be the only standout performer, where India’s tea exports have grown by 185% YoY. This is also possibly because UAE is a major re-exporting hub, particularly to Iran and CIS region. Among other top markets of Sri Lanka, we see India’s tea exports growing significantly in two other markets – Saudi Arabia (US$ 7.6 million, 115.3%) and China (US$ 5.51 million, 33.73%). These markets can be analysed further for growth prospects in Indian tea exports.

Indian enterprise. Global synergies

4 | Issue 2 NOV 2022

EDITORIAL

CONTENT & RESEARCH

Talotma Lal, Guneet Kaur, Himanshu Raj, Manish

DESIGN

SR. ART DIRECTOR Prakash Shetty DESIGNER Ajay Kumar

India Business & Trade is a monthly magazine published by Trade Promotion Council of India, 9, Scindia House, Connaught Circus, New Delhi- 110001, India and printed at M R printers, A-29/1, Naraina Phase 1, New Delhi - 110028

Material in this publication may not be reproduced in any form without the written permission of TPCI. Editorial/external opinions expressed in this magazine are not necessarily those of TPCI, and TPCI does not take responsibility for the advertising content, content obtained from third parties and views expressed by any independent author/contributor.

VIRAT BAHRI

Editor, India Business & Trade

TPCI CHAIRMAN Prashant Garg ADDITIONAL DIRECTOR GENERAL Vijay K Gauba DEPUTY DIRECTOR GENERAL Sandip Das

TRADE ACCELERATING CONTENTS

TABLE OF

14 GREEN TECH

Sustainability will curb pollution & aid companies in making profits.

TPCI NEWS BUZZ

4 Trade and business news updates from across the world.

QUICK INSIGHTS

8 Challenging the Almighty Dollar! The dollar’s safe haven status makes it the favourite in forex markets.

9 Will OTTs eclipse cinema culture? OTTs or cinemas - the audience will decide the winner of this tug of war.

10 Astro speak: Time for a digital fix? With rising online consultations, online astrology seems set for a boom.

11 Decoding India’s R&D landscape R&D is going to be the driving force for India in the coming years.

CATR DATA POINTS

12 India’s growing ceramic footprint This edition of IBT Data Point analyzes the current size, growth and potential for India’s ceramic exports in the world’s leading markets.

22

PERSPECTIVES

14 Electronics industry: Going green A ‘green’ electronics industry is a win-win solution as it will curb environmental pollution & aid companies in making profits.

16 DESH Act: Easing operation between SEZs & DTAs The draft DESH Scheme is a well thought out legislation.

18 Increasing India’s exports through integration in GVCs This article analyses India’s current integration into global value chains, the critical road blocks and strategies to be adopted.

DESH BILL

A much-needed policy on non-fiscal incentives.

20 India should explore Mode 3 in healthcare IIM-B’s Dr Rupa Chanda explores India’s prospects as a healthcare hub.

22 DESH: The key to boost exports The DESH Bill is the right step in terms of designing a policy on nonfiscal incentives.

COVER STORY

24 ACCELERATING TRADE 4.0 Disruptive technologies are bringing a paradigm transformation to industrial and trade competitiveness. 31 If we ignore digital advancement, digital obsolescence will hit us India’s pace of digitization is impressive but ensuring benefits to the industry will take a lot of effort. 32 Digitization can help India become a major F&B exporter Digitization can help boost Indian F&B industry’s export prospects. 33 Digitization can bring logistics’ share of India’s GDP to single digits R S Subramanian, SVP South Asia, DHL Express shares his perspective on logistics and digitization.

COUNTRY PROFILE

34 Panama A gateway to Latin America Strategically situated, Panama is a major re-export zone.

CHOPPER VIEW

35 DESH could be a great enabler The DESH Scheme focuses on maximizing efficiencies and competitiveness.

MARKET ENTRY STRATEGIES

DIPLOMATIC DISCOURSE

PRODUCT INNOVATION

ACTIVITIES

PRODUCT PROFILE

International News Buzz

Australia’s trade surplus dips in August

The Australian Bureau of Statistics (ABS) reported that Australia's trade balance decreased from a record high of AUD 17.67 billion in July to AUD 8.73 billion (US$ 5.87 billion) in August. This was lower than expectations of AUD 10.1 billion.

A 10% drop in exports from July led to an unexpected decline in trade balance. The largest contributor to the loss was a decrease in the exports of coal, metals, and minerals.

The significant fall in Australia's trade balance is mainly linked to China’s economic situation as it is one of the major trading partners of Australia. In the face of ongoing COVID-19 lockdowns in its most important economic hubs, China is battling declining economic growth. For example, a lockdown in its commodities hub, Yiwu, impacted

metal and oil trade in August.

At the same time, as a result of Australia removing all COVID curbs earlier this year and the ensuing rise in debits from overseas travelling, imports also increased by 5% from July 2022.

Australia's economy grew slightly less than expected in Q2, 2022. Analysts believe that if the current situation lasts in China, it could worsen economic conditions for Australia, given that the former is a leading commodities market.

Global clean energy employment grows

According to the first World Energy Employment Report by the International Energy Agency (IEA), hiring in clean energy has boosted employment in the energy sector globally above pre-pandemic levels, despite the oil and gas industry still struggling to recover from significant layoffs

during the early stages of the COVID-19 pandemic.

Clean energy offers the greatest potential for job growth and has surpassed the 50% threshold for its share in total energy employment. Following Russia's invasion of Ukraine and the ongoing energy crisis, countries are trying to "accelerate expansion of domestic clean energy businesses," according to IEA Executive Director, Fatih Birol.

IEA estimates that around1.3 million new energy jobs have been added between 2019 and 2021 in clean energy sector. The sector employed more than 65 million people in 2019, roughly 2% of the entire global work

force. It might increase by 6% in 2022, driven by the quest for decarbonization and net-zero targets across the globe.

Significant new manufacturing facilities, particularly in solar and electric car technologies, have been operational since 2019, which is fostering expansion in the clean energy workforce.

According to the survey, more than half of all energy industry jobs are located in the Asia-Pacific region. Countries in this region have become manufacturing hubs for renewable energy, particularly for solar technologies, EVs and batteries.

However, the study notes that several risks could derail the momentum, including current labour shortages and increased worker turnover of oil companies.

Europe to spiral into recession

S&P Global’s final composite Purchasing Managers’ Index (PMI), an indicator of economic health, dropped to an 18-month low of 48.9 in August from July’s 49.9, indicating that Europe is entering recession much earlier than expected. The services sector in European economies like Germany, France and Spain has seen contraction recently, as domestic demand came under pressure from high inflation.

In August, overall business activity in Britain contracted for the first time since February 2021. However, the Italian services industry has returned

to modest growth.

Peter Schaffrik of the Royal Bank of Canada said “The PMI surveys signal that the euro area is entering recession earlier than we previously thought, led by its largest economy, Germany, and we now see the euro area ‘enjoying’ a longer, three quarter recession”.

Another survey by Reuters showed that the prospect of recession has struck investor morale in the European Union, as it plunged in September to its lowest since May 2020.

The region also faces the possibility of raising interest rates in the near future aggressively.

NUMBER GAME

IN QUOTES

Dip in median age of Canadians

Due to the open immigration policy of the Trudeau administration, Canada's population grew younger for the first time since 1971. According to Statistics Canada, the country's national statistics agency, the median age of Canadians in 2022 dipped slightly to 41, its first decrease in more than five decades.

The median age increased steadily from 26.2 in 1971 to 41.1 in 2021. In the second quarter of 2022, Canada's population increased

by 0.7% to 38.9 million people, recording the fastest quarterly growth rate since 1957.

Prime Minister Justin Trudeau’s administration has set a goal of welcoming over 1.3 million new permanent citizens over the next three years.

According to statistics, international migration accounted for a gain of nearly 270,000 people, or 95% of the quarterly growth, also the highest since 1971.

The growth in employment in Canada has mostly been attributed to immigration, which has also been one of the key economic drivers in the country. The government is likely to begin targeting immigrants in specific occupations to ensure better matching with industries facing intense labour shortages.

6.6 million EVs sold globally in 2021, followed by 2 million in Q1 2022 (up 75% YoY)*

Elon Musk CEO, Tesla Motors

"I think it's (Twitter ) an asset that has sort of languished for a long time but has incredible potential."

News buzz

National

Durga puja: 'Intangible Cultural Heritage'

Kolkata's famous annual festival, Durga Puja, has been added to the Representative List of the Intangible Cultural Heritage of Humanity by UNESCO's Intergovernmental Committee for the Safeguarding of Intangible Cultural Heritage.

UNESCO defines intangible cultural heritage as "historic, modern, and living at the same time", "inclusive", "representative", and "community-based".

Understanding the intangible cultural history of various groups facilitates intercultural discussion and fosters respect for other people's ways of life, which is "essential in conserving cultural variety in the face of expanding globalisation."

Durga Puja is observed in September or October every year. It is especially notable in Kolkata, West Bengal, but is also observed throughout India and among the Bengali diaspora.

A dynamic environment for

collaborative artists and designers, Durga Puja is regarded as the best example of public performance of religion and art. The celebration is distinguished by expansive installations and pavilions in populated places, as well as by customary Bengali drumming and

goddess adoration.

Other Indian festivals and spiritual experiences in the list are Yoga, Vedic Chanting, Buddhist Chanting in Ladakh, Chau Dance, Ramlila, Navroz and Kumbh Mela. Croatia, France, Peru and Japan also have several ICH tags.

India defends its ban on rice & wheat exports

In response to criticism from a number of nations, including the US, the EU, Geneva, and Senegal, India has defended its decision to limit the exports of wheat and rice at a WTO meeting.

India halted the exports of wheat

in order to increase domestic availability, claiming that concerns about domestic food security, were only “temporary.”

To increase the domestic supply of these food products in light of a decline in the paddy planting area during the current kharif season, it also barred exports of broken rice and placed a 20% export levy on all nonbasmati rice, with the exception of parboiled rice, in May.

India stated that the restrictions

on exports of broken rice, which is used in chicken feed, came as a result of an increase in exports of the grain, which has put pressure on the domestic market.

WTO regulations limit farm/food subsidies in developing countries to no more than 10% of the value of a commodity’s production. The official noted, “India has also clarified that the measures are temporary in nature and under continual review.”

The US, Australia, Canada, Brazil, New Zealand, Paraguay, Thailand, Australia, Uruguay, and Japan have requested consultations with India regarding the use of the peace clause in order to protect its food programmes from action resulting from trade disputes at the meeting.

Festive sales accelerate

Festive season sales have experienced a surge in number of orders placed on e-commerce platforms, which increased by 28% YoY. More than 7 million ordered items were processed within the first two days of festive season sales for 2022.

According to Unicommerce, the personal care segment is the fastest growing segment with over 70% year-on-year(YoY) order volume growth, while the electronics segment experienced 48% YoY growth (excluding mobile phones),

driven by audio products and smart wearables. The clothing and fashion industry showed maximum order volume this year.

The company recorded more than 32% YoY increase in festive order volumes for Tier 3 cities and over 20% increase in Tier II volumes, according to data from top e-commerce companies like Amazon & Flipkart.

Startup India gets `73.8 bn

The Central government announced Funds of Funds for Startups (FFS), launched under the Startup India initiative in 2016 by Prime Minister Narendra Modi has committed `7,385 crore to 88 Alternative Investment Funds (AIFs), as of September 24, 2022.

In 720 startups, these AIFs have contributed `11,206 crore since FFS, which had a corpus of `10,000 crore, was announced. The Department for Promotion of Industry and

Internal Trade (DPIIT), Ministry of Commerce & Industry, will provide budgetary assistance for the corpus' development for the course of the 14th and 15th Finance Commission cycles (that is, FY 2016-2020 and FY 2021-2025).

FFS has not only provided funding for businesses at early-stage, seed-stage, and growth-stages, but it has also acted as a catalyst for domestic capital raising, reduced reliance on foreign money, and the establishment of new venture capital funds. FFS-supported successful firms are demonstrating valuation increases by more than ten times, with some of them even attaining unicorn status (valuation of over US$1 billion).

IN QUOTES

` 10.7 tn UPI transactions recorded in August, 2022 a 9.1% rise since April 2022.^

Bob Sternfels Chief Executive Officer McKinsey & Co. India will be the world's future talent factory as it will have 20% of globe's working population by 2047.

Challenging the Almighty Dollar!

In the absence of a clear contender, the dollar’s safe haven status continues to make it the overwhelming favourite in forex markets; particularly in volatile phases like the present one.

The US dollar rose to power as the global reserve currency by replacing the British Pound, following the World War. This is when many countries turned to the US for loans to curb their financial crunch, hence paving the way for the country’s currency to claim a dominant position. Since then, the US dollar has been dominating global currency markets as the predominant reserve currency and as a medium of common exchange between countries.

CHALLENGING THE HEGEMONY

The dominance of US dollar is difficult to overcome because of its large circulation. Many countries prefer the US$ as the reserve exchange, due to its deep regulatory framework and transparent transactions in the financial market, as well as for being the bearer of the most clear corporate governance frameworks. This implies that bringing an alternative of this exchange currency to the global forum shall also require a cordial settlement with the US.

This, however, brings to light the sanctions by Russia and China to start chipping away at the US currency’s dominance. Things may be falling into place for the Chinese Yuan, as can be seen through its increasing use in bilateral trade.

According to Richard Turrin, author of “Cashless: China’s Digital Currency Revolution”, many allied countries of China and Russia have reportedly agreed to carry out their trade in Yuan.

The attractive factor here for other developing economies, specifically Asian countries, is that if they intend to run large trade deficits currently, it may compel them to either increase their

exports or increase their reserves.

If Yuan is made the global trade currency, the Chinese intend to simplify trade agreements to curtail such issues of global trade with its allied countries. This shall easily win the confidence of its supporting countries and assert its good status, thereby shifting the balance vis-à-vis the US.

TAKING DOWN THE US DOLLAR

There are certain implications to be considered when it comes to abandoning the US dollar as a reserve currency:

1. Diverting global savings may lead to a collapse in exports, a dry spell in manufacturing and surge in unemployment.

2. Taking off the US as the runner

CHINESE CHECKERS?

Many countries have now been trying to prune their holdings of US dollars, firstly due to the recession and the Chinese ‘Yuan intervention’ creating bilateral trade agreements with its allied countries.

of current account and trade deficit will lead to a massive deficit, forcing world to reduce its collective trade.

3. Fall in world savings shall lead to income redistribution in many countries and political turmoil.

4. A majority of countries are strangled by large US dollar reserves. This can’t be turned away so easily.

5. Fiscal deficit may intensify if net foreign capital isn’t balanced by an extensive domestic investment, creating a huge disparity in household debt. Factually, an increase in bilateral trade agreements may appear to be taking a toll on the US dollar as the reserve currency, but replacing it shall take many years. In the meantime, the US shall not sit back and let its holding drop beyond a point. It will endeavour to maintain its dominance either unilaterally or by forming alliances collectively. But, it will not take an easy fall. In the midst of this, it will be an interesting scenario to see the extent to which competitors like China and Russia can succeed.

NO CAKEWALK, THIS!

It needs to be noted that the dip in dollar reserves, as an IMF working paper states, has not led to an increase in reserves of other traditional currencies. A quarter of the shift has been towards non-traditional currencies. So, a real strong basket of contenders doesn’t seem to be emerging at the moment. Especially in volatile market situations, the dollar’s safe haven status continues to make it the overwhelming favourite.

Will OTTs eclipse cinema culture?

OTT platforms have severely dented the revenue models of multiplex theatres. How will the latter bounce back?

COVID-19 changed multiple facets of human life, and watching movies is one of them. During this period, when there were restrictions on movement, online platforms, or OTTs, emerged as a great source of entertainment. At the same time, viewers got accustomed to the many advantages of OTTs – low cost with multiple payment plans, the convenience of watching content at your own pace, the fine variation of content & movies being streamed on OTTs soon after their release.

Now, that the pandemic is under control and people are returning to the ‘old normal’, several commercial successes such as Jug Jug Jeeyo, Everything Everywhere All at Once & Top Gun: Maverick have released on the big screen. Yet, few movies are still being made exclusively for OTT platforms such as Cuttputtli, Samaritan, The Tomorrow War, Qala and Chor Nikal Ke Bhaaga Hence, a question arising from this scenario is, who will in the long run continue to hold the keys to the hearts of Indian audience - cinema halls or OTT platforms?

• India’s OTT market is in its 2nd growth phase with revenues of US$ 3 bn in 2022.

• It is expected to touch the US$ 7 bn mark by 2027.

Source: Media Partners Asia

ENTERTAINMENT 4.0

India has around 50-55 OTT platforms offering various content in multiple languages. Few operate free, while the rest work on subscription plans. According to a CII-BCG report, India had around 70-80 million paid subscribers by the end of 2021, compared to 14 million in 2018 and just 0.5 million in 201415. The market is led by DisneyHotstar, followed by MX Player and Zee5 and is expected to reach US$ 13-15 billion over the present decade. Interestingly, the pioneer Netflix does not count among the top 10 in India!

There is no denying the fact that OTT platforms have dented the earnings of theatres and will continue to do so. Indeed, there are few movies of the league of Avatar and Jurassic Park, which merit the experience of the big screen and surround sound. But for other genres, the differentiation fades.

We moved from an era of single screen theatres to multiplexes, which presented content across genres. With OTTs covering all those genres and more, with content from across the globe, users do not necessarily need to splurge an average of Rs 2-3,000 for every family outing, when they can do with a subscription that costs much less and lasts a month!

With bundled OTT options being offered by the likes of Airtel Xstream, Tata Play Binge and OTTPlay, the game is only getting bigger over time. Theatres have to slash ticket prices sharply to bring back more audiences to theatres. In order to sustain, they can explore price differentiation strategies (like increase the premier options) and open up other revenue streams.

INDIAN OTT LANDSCAPE

The ‘catch’ in our stars

As COVID-19 pandemic rattled every aspect of human life, online astrology came to the rescue for many. With rising online consultations, this market seems set for a boom.

The astrology market is estimated to be in the US$ 40-billion plus range, according to an analysis by Expert Market Research. These numbers indicate that the religious and spiritual market is booming. Within this market, the share of the Indian horoscopes market is US$ 10 billion alone. The number of practising astrologers is around 2 million.

Adding to that, this industry has seen a lot of new players. Take Astrotalk, for example. Its founder, Puneet Gupta, revealed that his company served 20+ million customers in the past 4 years. These numbers are simply astounding. The company does a business of around `41 lakh every day & has grown by 20% every month.

AstroYogi, a Gurugram-based astrology startup, has been looking to expand in the US, Canada, Africa, and other Spanish-speaking countries. In the past three years, the company registered a growth of about 300% YoY, which is helping it venture into new markets and acquisitions. The company recruited around 15,000 astrologers in FY

THE ‘STAR’ STRUCK MARKET!

• Life-changing conditions of the COVID-19 pandemic resulted in a feeling of insecurity in people. As a result, they started connecting with astrologers through consultation sessions at variable rates.

• Many production houses, Bollywood celebrities and directors bore the brunt of financial losses. So, they resorted to astrology and allied spiritual sciences.

• During their educational years as well as at various stages of their career, people are keen to know about their future prospects.

• Prospective brides and grooms are inquisitive about questions like when they will get hitched, how their partners will turn out and whether or not their marriage will work.

2020. Their customer base crossed 7 million on the cloud calling platform Talk to Astrologers & it is now earning estimated revenues of around ` 4-8 crore every year.

GROWTH PROSPECTS

According to the latest report by IMARC Group, with the advent of AI, astrology will become one of the fastest growing markets, with an expected CAGR of 10.2% by 2027. Educated professionals with a passion for astrology are also taking it up professionally and contributing to widen the circle by guiding people through quality consultations.

Interestingly, this is not restricted to India. Around 30% of people from the US believe in astrology in some form or another. This can be verified by the fact that more and more people are thronging to popular astrologers in spiritual destinations like Mathura, Rishikesh, Haridwar, Allahabad, Varanasi and Vrindavan. With the increase in Vedic Astro apps, these numbers are expected to increase further and contribute to market growth in the coming years.

Decoding India’s R&D landscape

From finding cures for diseases to unearthing solutions for a zero carbon economy, R&D is going to be the driving force for India in the coming years.

Big spending on R&D was earlier predominant in developed nations only.

Over the years, R&D centres are becoming global and expanding to developed countries like India & China. According to the United Nations Conference on Trade and Development, India’s R&D services exports grew the fastest globally (2022).

Explaining this trend, especially in the post-pandemic scenario, Pareekh Jain, Founder, Pareekh Consulting, stated, “As things normalize across the world with regard to the COVID-19 pandemic, many MNCs are making public announcements of expanding their R&D centres in India or setting up new units. Notably, Indian R&D centres of global firms are doing high-end technology innovation work for global centres.”

Some of the factors driving Indian R&D landscape are:

• Good educational institutes & skilled workforce

• Groundbreaking R&D output coming from India

• Huge domestic market

• Policy support

• Rise in global capacity centres

• The startup ecosystem

India presents numerous R&D opportunities across sectors:

Automotive

Currently, most innovation is being done in EVs, where a lot of technology is being tested to maximize power efficiently.

IT/ITeS

India has become a global force to be reckoned with in the IT/ITeS sector, with the likes of Infosys, Wipro and TCS.

Fintech

Giants like Paytm, BharatPe and Google Pay are doing considerable innovation in this sector.

Pharmaceuticals

India is one of the global pharmaceutical giants and lags only behind the US in terms of production and market size.

Retail

Thanks to R&D and business process optimisation, companies

like Big Basket and Blinkit have disrupted the landscape

India has been spearheading the development of tech solutions like mobility and telecommunications, AI and cloud, power green tech and health tech. The country is taking many measures to emerge as a global leader in R&D and this future is closer than one can imagine. All it needs is steady growth and ecosystem development to emerge as an innovation powerhouse.

India’s growing ceramic footprint

India is the 5th largest exporter of ceramic products, and its exports have grown at a CAGR of 16% over the past five years. This edition of IBT Data Point analyzes the current growth trends and potential for India’s ceramic exports in the world’s leading

BY HIMANSHU RAJ

1.

India exported ceramics products worth US$ 2.31 billion in 2021. Exports have grown at a CAGR of 16% between 2017 and 2021. The top export markets for ceramics are the US (8.1% share); Saudi Arabia (7.6% share) & the UAE (5.6% share). Markets witnessing strongest CAGR during 2017-21 are Libya (141%); Indonesia (88%); Russia (67%), Jordan (52%) & Thailand (48%). Notably, India has witnessed a positive CAGR across its top 25 export markets of ceramics products between 2017 and 2021. It also has a positive trade balance with all its top 25 export markets, except for Germany.

Market-wise, the share of India’s ceramics exports is quite diversified, with the top 10 importing countries accounting for only 13% of its exports. Saudi Arabia, UAE, Iraq and Nepal account for positions 2-5 among India’s top exporting markets, but are nowhere among the global top 10 importers. Only two of the top 10 markets globally - US & UKfigure in India’s top 10 export markets.

The leading markets where India has

been unable to mark a significant presence are: Germany, France, Viet Nam, China, Republic of Korea, Netherlands, Japan and lastly Canada.

Vietnam is the fastest growing import market for ceramics among the top 10 between 2017-21, and it has been growing at a CAGR of 113.2%.

4.

2000 1800 1600 1400 1200 1000 800 600 400 200 0

1758

Unglazed ceramic flags and paving...

Ceramic sinks, washbasins, washbasin...

Refractory bricks, blocks, tiles...

Retorts, crucibles, mufers...

Tableware, kitchenware, other...

India's top 5 ceramic export markets

HS code Product label Exports Imports

'6907

Vietnam’s top imports & exports for ceramics

Unglazed ceramic flags… 13.828 633.579 '6903 Retorts, crucibles, mufflers… 3.641 45.651

'6902 Refractory bricks, blocks… 0.535 108.234 '6910 Ceramic sinks, washbasins… 0.137 697.427 '6911 Tableware, kitchenware… 0.052 340.117 '6914 Ceramic articles, n.e.s. … 0.014 79.081 '6912 Tableware, kitchenware… 0.001 21.96 '6909 Ceramic wares for laboratory,… 0.001 78.83 '6901 Bricks, blocks, tiles… 0 1.127 '6904 Ceramic building bricks… 0 27.714

India's top five ceramic product exports 188.0 United States of America 175.3 Saudi Arabia 130.7 United Arab Emirates 90.7 Iraq 88.4 Nepal

'6905 Roofing tiles, chimney pots… 0 0.996 '6906 Ceramic pipes, conduits… 0 1.11 '6913 Statuettes and other… 0 72.429

Source: Trade Map; data at HS- 4 digit level in US$ million

FOCUS MARKET: VIETNAM

Source: Trade Map; Figures in US$ million; data at HS 4-digit level has a great opportunity to export to Vietnam as it’s the third largest exporter following China and Japan. While Vietnam’s imports from the world have grown by 113.2% over 2017-21, India’s growth in exports during the period is just 9.96%.

We have selected Vietnam for a deeper analysis into product groups. Import CAGR (2017-2021) of Vietnam has increased recently to 113.2%. Vietnam’s imports of ceramic products mainly originate from China.

India’s exports account for very little share in Vietnam’s market. It

Vietnam’s top imported products globally are from HS Codes ‘6910, ‘6907 and ‘6911. India’s exports to

Source: Trade Map; Figures in US$ million

Vietnam in these categories are very low at US$ 0.14 million, US$13.83 million and US$ 0.05 million. Out of these, HS Codes 6910 and 6907 have been strong for India, as they account for its top 2 global ceramics exports at the 4-digit level. So, these two product segments can be further explored for expansion by India in exports to Vietnam.

Tackling the scourge of e-waste

A ‘green’ electronics industry is a win-win solution as it will curb environmental pollution while helping companies to attract more buyers and boost their profits.

BY NIKHAAR GOGNA

Electronics have become ubiquitous to life these days.

The National Family Health Survey 5 (2019-21) states that 68% households in the country own a TV, while there are 18% households with a washing machine, 38% with refrigerators and 24% with ACs.

While it is impressive to see the growing consumption of consumer electronics in the country, another storm is silently brewing, which merits our attention. This is the menace of electronic waste or e-waste, i.e., an electric device that is discarded, becomes obsolete, or breaks down. According to the Central Pollution Control Board, e-waste in the country rose 31% from 7.71 lakh tonnes in 2018-19

to 10.14 lakh tonnes in 2019-20. Further, the Global E-waste Monitor 2020 found that in 2019, India (3.2 mt) was the third largest contributor to global e-waste, after China (10.1 mt) & the USA (6.9 mt).

TIME TO REBOOT

It is widely recognized that e-waste is not only a major environmental pollutant, raising concerns about air, water and soil contamination but it is also a major reason for health hazards. Substances such as mercury and lead damage the human brain and/or coordination system. To make things worse, much of today’s electronics contain data storage, which could be accessed after the item has been discarded and exploited by nefarious

parties. Given the global clamour about climate change & concerns around human health, it is high time for the electronics industry to rethink its ways of operation & incorporate sustainability into its business model. Some approaches that can be applied are as follows:

Ensuring endurance

Manufacturers need to stay away from the practice of planned obsolescence & ensure greater shelf life for the product. Not only will this approach help the brand build loyalty among customers, but brands can also generate higher revenues by offering resale and repair, despite fewer sales.

Circular supply chain

E-waste has several precious, critical, and other non-critical metals (estimated value at approximately US$ 57 billion) that can be used as secondary materials after recycling. Using recycled metals is profitable for companies too. According to Toxics Link, 5 tonnes of e-waste from 83 computers would give profit worth of ` 1,78,308 through recycling.

Changing customer perception

Companies need to educate customers that products from reused substances are not inferior. They can use promotional strategies such as heavy discounts on exchange of old gadgets or selling refurbished devices at competitive prices. Governments can also disincentivise customers from buying first hand products with policies like “pay as you throw” (consumers pay a fee based on the amount of waste they present for collection).

Carbon trading Last, but not the least, companies

also have the option of buying certificates that someone else is reducing emissions on their behalf. While this will still keep a tab on carbon emissions, this is similar to the concept of greenwashing, as buyers will source voluntary carbon credits against the total emission done by them instead of actually taking steps to cut down carbon emission in the value chain. Another issue pointed out by Shailendra Singh Rao, founder of Creduce, with this strategy is, “Carbon credit has no fixed pricing mechanism and has no fixed process by which pricing can be done in the international market. Carbon credits, moreover, are the subject matter of bilateral trading”.

THE BALANCING ACT

The government aspires to transform India into a US$ 300 billion electronics manufacturing powerhouse from the current US$ 75 billion by 2026. This vision for the Indian electronics industry is in line with its Aatma Nirbhar Bharat initiative. It is taking measures such as enacting US$ 10 billion PLI Scheme for the semiconductor and display ecosystem to ensure that the country is a part of the global electronics value chain.

At the same time, a sustainable business model is the need of the hour amidst soaring temperatures & pollution. The global green technology and sustainability market was estimated at US$ 11.49 billion in 2021. It is expected to grow from US$ 13.76 billion in 2022 to $51.09 billion by 2029, at a CAGR of 20.6% according to Fortune Business Insights. Innovators from across the world are expected to bring in new innovations, backed by zealous VCs, to ensure catalytic growth in this market. Total investments in green technologies reached US$ 755 billion in 2021, growing by 25% YoY, according to BloombergNEF. Explaining the importance of circularity, Tim Cook, CEO of Apple said, “Every company should be a part of the fight against climate change”. Given that around two-

thirds of consumers across six international markets believe they have a responsibility to purchase products that are good for the environment and society according to the Harvard Business Review, sustainability is a win-win solution. This is attributed to the fact that it will not only curb environmental pollution & check global warming, it will also help companies attract more buyers, save costs & gain a positive brand recognition.

To illustrate this point, according to Daily Mail, Apple has saved over US$ 6 billion by not providing chargers in iPhone boxes. Not only did it save money by not producing chargers, it also saved money in packaging & shipping smaller boxes. Similarly, Intel achieved a 90% non-hazardous waste recycle

rate by 2020 & recorded cumulative energy savings of 4 billion kWh from 2012 to 2020. HP has also adopted sustainable measures such as recycled plastic, third party certified recycled corrugated for packaging & reducing the amount of materials in the PC by weight. The brand has reported US$ 3.5 billion in sales associated with sustainability in the last three years.

To sum up, a green electronics industry is the way forward. Business & Sustainable Development Commission also emphasizes on this point. It predicts that sustainable business models related to the SDGs could open economic opportunities worth up to US$ 12 trillion and increase employment by up to 380 million jobs by 2030.

DESH Act: Easing operation between SEZs & DTAs

The draft DESH Scheme is a well thought out legislation to replace the SEZ act as India must move towards a genuine single window clearance mechanism.

BY ALEX PAUL MENON

While understanding the outcomes of the SEZ Act and the need for the current DESH Scheme, it is pertinent to examine one particular data point. On one end, the industry is asking for land and built up area, and on the other hand, swathes of developed & partially developed land areas are lying idle.

For example, in MEPZ, spanning across Tamil Nadu, Pondicherry and Andaman & Nicobar Islands, there is an area of over 2,000 hectares of land. However, only 50% of the land is utilized. Similarly, out of 23.6 crore sq ft of built up area in the services sector, around 7.6 crore sq ft is vacant. Nationally, around 20,000 hectares of land and around 10 crore square feet of built-up space is lying vacant.

NEED TO REPLACE SEZ ACT

This indicates that the capex and infrastructure to create world class products has not been efficiently optimized. If you look at it, when we conceived SEZs, we did not even have services in its scope in 2005. But the growth of the services sector has been humungous. And the legislation neither meets domestic nor WTO needs. In fact, the criteria called Net Foreign Exchange Earnings is detrimental to India’s domestic needs. If the industry becomes exclusively export oriented, the product becomes very expensive the moment you sell to the DTA.

Optimization requires that every penny spent within this country in creating infrastructure, transport and logistics facilities will have to

be thoroughly utilized. For that, a very flexible approach is needed and larger scales and better products need to be thought of to be integrated with the global value chain. The existing Act had to be modified in a big way, by relooking at the current highly centralized structure and involving more state governments in decision making.

For example, if it’s possible to run the unit for 24 hours and current export orders mandate you to run for just eight hours, you put machinery for waste for the next 16 hours. That is not acceptable – you should still be able to utilize it 24/7, cater to the DTA or any other area. And when a unit requires any kind of subsidy or incentive for exports, they should reach us and freely operate, just by paying taxes.

That should be the approach, rather than putting a filter at the valve and saying that everybody will go through the valve. Only those who seek incentives come through the valve, get a little scanning done and then move out, and the rest of them do business as usual.

As the Baba Kalyani committee report rightly pointed out, we need to create the triple Es or the Employment and Economic Enclaves, where we have infrastructure in place. Everybody can plug in and cater to all markets around. There are three key impediments to focus on – net foreign exchange, free movement to and from DTA and contiguity clauses. The moment you tackle these three, every zone becomes an absolutely free zone.

This way, we are looking at an influx of existing units coming and asking for SEZ status and not the other way around. In the light of all this, it was extremely important to create a new bill with a new thought, where there is no NFE criteria and where to and fro movement between the DTA and the SEZ units happens seamlessly. This is what we are looking at in the new DESH Act.

MAXIMISING EASE OF BUSINESS

If we look at just the labour sector, there are around 45 state and central acts in all. Just for complaints in this area, companies have to maintain 94 registers. So, a labour inspector can actually walk into any industry, catch hold of the entrepreneur and say, “You have not maintained your register number 92!” Since we have multiple laws and each of them has its own rules, one has to maintain a certain set of information in a certain format, and either file them or keep them as a register with relevant information.

Apart from labour, there at least 30 plus more acts under which you need to maintain information – whether pertaining to central government, state government or authorities like pollution control. The only way that an industry can thrive or survive in such a scenario

is with a decentralized accountability structure and single window system for all approvals and compliances.

Even today, there are multiple single windows inside every single window. Whereas a real single window can actually function in a manner that does not hamper the existing authority.

Collection of information should instead happen in two forms –one for approvals and one for compliances. Each information should get divided and sent through an Application Programming Interface (API) to the concerned department for approvals. And there should be a system of deemed approvals within a timeline. The new proposed Act is actually going to have this provisional agreement.

If somebody applies, and it’s not happening within 90 days, it will be considered a deemed approval.

We also introduced a concept called partnering government agency. It may be a state government authority, a public sector authority considered under certain laws as independent, central agencies or so on and so forth. Anybody who’s involved in

the management of the industry, will have to become a partner government agency. And whoever volunteers to be part of the SEZ will be subjected to provisional approval over a time span of 90 days. They will still have another 90- or 180-day window to contest the provisional approval, and pull back approvals. If they don’t do so, it becomes deemed approval.

This kind of single-window system should be able to automatically check whether the industry is compliant to all rules and regulations or not. For example, if there is a particular labor law, say, Payment of Bonus Act, the system will automatically detect anomalies. Life becomes simple, and industry also stays vigilant.

There is one school of thought that the development commissioner of the SEZ should have all the powers of labour, industry, environment, etc and be the adjudicator on every law applicable on it. It is humanly impossible to vest that kind of responsibility with one single authority. Rather than depend upon people, we should be dependent upon a single-window computerized ecosystem with a provisional and a deemed approval scenario, which takes care of all our approvals as well as compliances. That will reduce the load from the central government to the state government or regional authority, as conceived in the new Act.

We have also proposed a state authority that will have a larger role on approvals, with a key role being played by the development commissioner’s office. In this kind of single window system, everybody is connected digitally and there is a faceless, paperless approval compliance monitoring system where we rely more on the business intelligence tools, and not on human intervention. This is the future we should envision for the industry.

The author is Joint Development Commissioner, MEPZ Special Economic Zone. Views expressed are personal.

AS THE BABA KALYANI COMMITTEE REPORT RIGHTLY POINTED OUT, WE NEED TO CREATE THE TRIPLE ES OR THE EMPLOYMENT AND ECONOMIC ENCLAVES, WHERE WE HAVE INFRASTRUCTURE.

Increasing India’s exports through integration in global value chains

To integrate into global value chains and promote employment in the country, a two- pronged strategy is required for India based on its competitive advantages.

BY DR. SAON RAY

The disruption of supply chains following the COVID-19 pandemic illustrated the complex nature of world trade and interlinkages between countries. The phenomenon of production using global value chains (GVCs) underlines the above interlinkages. GVCs are “cross border networks that bring a product or service from conception to market.”

The emergence of GVCs has coincided with international trade being dominated by trade in intermediate goods and services owing to the fragmentation of production since the mid-1990s.

Intermediate inputs account for as much as two-thirds of international trade and more and more imported parts and components are embodied in exports. According to Mitra et al. (2020), global export of goods and

services increased from US$ 7.4 trillion in 2000 to US$ 21.7 trillion in 2017. GVC exports grew from US$ 5.2 trillion to US$ 15.7 trillion over the same period (accounting for nearly 70% of global exports).

Rapid expansion in GVCs led to an increase in participation rates globally. Trade-based rates rose from 35.2% to 46.1% from 1995 to 2008. Similarly, production-based rates rose from 9.6% to 14.2%, with some slowdown after the global financial crisis.

Data from OECD, WTO and World Bank shows that between 1995 and 2009, income from GVCrelated trade increased six-fold for China and five-fold for India.

PARTICIPATION IN GVCS

Participation of a country in GVCs is defined by its engagement with a particular part of the production

process. Countries are integrated into these GVCs through backward or forward integration. GVC participation is defined as the sum of the share of foreign value added in gross exports (backward linkages) and the share of domestic value added in exports of intermediate goods (forward linkages). These linkages give a measure or ‘participation index’ of a country’s engagement in GVCs. The domestic value-added embodied in foreign final demand was 20% for India in 2011, while the foreign value-added in domestic final demand was about 25% in the same year.

India’s participation index stands at around 40%, which is obtained by combining the two measures from the buyer’s and seller’s perspective. Its backward and forward participation has been low at 22% and 19% respectively

in 2009. India, however, has remained a fringe player, with only US$ 241 billion or 1.5% of global GVC exports in 2017. The share of foreign value-added embedded in the production of exports of India is low, even compared with the 20% average observed in developing and emerging market economies.

INDIA’S EXPORTS

India’s export position was 27th in the world (accounting for 0.96% of total world gross exports) in 2007, while in 2017 it improved to 20th (accounting for 1.66% of total world gross exports). The country exported products worth US$ 475 billion in 2020, out of which merchandise exports constituted about US$ 276.3 billion, resulting in a share of 1.57% and a rank of 21 in terms of global merchandise exports. Exports of commercial services amounted to US$ 202.6 billion in 2020, with a share of 4.12% and rank of 7 in terms of the total world exports of commercial services.

ICT accounts for 33.88% of the total US$ 475 billion exports in that year. The share of pharmaceuticals is high, and this is followed by agricultural products and petroleum oils, refined among exports of goods.

The share of manufactures in merchandise exports was the highest (70.8%) followed by fuels and mining products (17.3%) and agricultural products (11.5%), the largest exported goods being in moderate and low complexity products, chemicals and agriculture respectively. India’s largest trading partners in 2020 were the US (17.9%) followed by the European Union (14%) and China (6.9%). For exports in commercial services, exports of OCS (other commercial services and goods-related services) constituted 83.1% of the total exports, followed by transport services (10.3%) and travel (6.4%).

For many goods, India’s share in world trade from 1994 to 2020 is declining, while the share of services is increasing. However, services trade was very badly affected by the

pandemic and only recently has it picked up. Recent data shows that exports of certain items (mostly raw materials) have been affected & this could be due to global disruptions.

On the other hand, trade deficit has been a concern for a long time in India. It is on account of merchandise trade and not services. In 2020-21, the country posted a current account surplus after 17 years. To understand the components of trade deficit, we must analyse what we are importing and exporting. India’s backward integration is higher, which means that our GVC integration is through imports (that could be used for exports or domestic consumption). It is important to understand that imports of certain goods are critical – especially if they are imports

multimodal transport have been proposed in the next three years.

Budget 2022-23 has underscored the importance of GVCs and the necessity of linking with value chains to promote exports. It has rationalized the customs duty on items of chemicals, electronics, and gems and jewellery to give a fillip to domestic manufacturing. To promote the manufacturing of capital goods, exemptions are being introduced on inputs, like specialised castings, ball screws and linear motion guide. Tariff of 7.5% on capital goods and project imports has been proposed. The exemptions for advanced machineries that are not manufactured within the country shall continue.

The budget also recognized the importance of barriers in improving our export competitiveness and has addressed these barriers e.g. logistics, SEZ etc. The recent proposal on the rebranding of the SEZ Act through Development of Enterprise and Service Hubs (DESH) is another example. The new criteria suggested for SEZ units are growth, which could include investment and employment rather than net foreign exchange earnings.

CONCLUSION

of intermediate goods and not produced in the country.

In our book Global Value Chains and the Missing Links, we have highlighted some of the important barriers preventing India from integrating in GVCs. These include logistics, timeliness, infrastructure as well as sector-specific problems. It is heartening to note that some of the barriers have been removed in the budget this year and the issues addressed effectively.

For example, the issues of timeliness and turnaround at ports have been addressed through the GATI Shakti. The PM Gatishkati National Master Plan will lead to development of Multimodal Logistics Parks at four locations. Cargo terminals under the PM Gatishkati plan by the Railways for

To integrate into global value chains and promote employment in the country, a two- pronged strategy is required. In sectors, where there is comparative advantage, the promotion of exports is needed. Identification of such sectors with export potential will be important in this context.

For sectors, where there is no comparative advantage, but which could potentially generate jobs, investment is needed and more units need to be set up. The production linked incentive (PLI) scheme is such a scheme, which has been introduced for several sectors. Recognition of the linkage between services and goods exports is also important.

Dr. Saon Ray is Visiting Professor at ICRIER. Views expressed are personal.

FROM THE POINT OF VIEW OF GVCS, EXPORTS OF HIGHER VALUEADDED PRODUCTS (PROCESSED GOODS) ARE BETTER THAN EXPORTS OF RAW MATERIALS.

Alternative therapies hold promise for Indian healthcare exports

Dr Rupa Chanda, Professor, Indian Institute of Management, Bangalore, talks about the prospects of India as a healthcare hub post-COVID, and which modes will be most promising.

Rupa Chanda: There are many changes, but I think the fundamental shift would be in the comfort level in terms of using digital health. This is one area where I potentially see a big change, both in terms of behavioural change on the demand side, and change in management of the healthcare system via the use of digitalization.

The second, of course, is that people have understood the multisectorality of health with many other verticals, ministries or other stakeholders. For example, look at how the pandemic threw up the importance of supply chains in healthcare, like production of pharmaceutical products, or even simple things like PPE kits.

The third change, I would say, is manpower. While we faced bottlenecks in terms of supply of diagnostics, equipment and vaccines, the importance of adequate and well-trained manpower was realized as well.

It also got us thinking more about the capacity of our own health workforce. We’ve always been aware of it; always known that quality is an issue and it’s very non-uniform across the country. But how do we scale up with quality?

The pandemic really made us look at the entire health sector, in a very holistic way. It’s been a rude awakening call in many senses.

IBT: How do you juxtapose this contrast where on one end, we have such deficiencies in manpower, supplies, etc., and yet India is also a leading exporter of medical services?

Rupa Chanda: This has always been a conflict. We talk about exporting manpower and yet, if you look at the WHO’s numbers, India is actually classified as a critical shortage country. So, is the Philippines, which is a big exporter of health manpower.

It’s ironic, of course. India has argued that the way such studies do their threshold calculations for shortage is not correct. If you bring in ASHA workers, the figure is much more in synch with demand.

But clearly, we don’t have to look at the two as ‘one at the expense of the other’. If you want to be an exporter in future, you have to invest in the domestic health workforce, both in scale and quality. I think it is also important to see how you look at many more classes of healthcare workers, and this is also highlighted by the pandemic.

IBT: Please elaborate on the point of more classes of healthcare workers. Also, there

is a concern that a lot of workers who travel via Mode 4 tend to settle there.

Rupa Chanda: You don’t have to just talk about traditional exports of nurses and doctors. There are many other categories of healthcare workers, where there are huge opportunities. Many of the allied health professionals or less qualified categories of health workers can explore such opportunities, because of the demographics in other countries. In that case, it will be a win-win in both senses.

Alongside that, what is important is - why are people leaving today? We need to look at that issue. It is not just the usual economic forces. A large part of it is also poor management of health systems, lack of career advancement and opportunities, exposure, training and so on.

And once people go, even if they just go temporarily, they don’t come back and find those opportunities. The skills they’ve acquired are not given value so that they may be absorbed back into the system. So, there are larger things that we have to look into in terms of human resource management

IBT: What changes do you see in the healthcare ecosystem, pre and post-pandemic?

practices and the development of our workforce.

IBT: India is often seen as the final frontier for medical tourism. Is India looking at a huge opportunity in this arena and what should it be doing to achieve it?

Rupa Chanda: There is an opportunity, but when you ask big hospitals and so on, do they really gear up for medical tourism? They have dedicated super wards for foreign patients. But because the domestic market is so large, affluence levels are rising, and insurance coverage is also gradually picking up, more people can afford this kind of super specialty care.

Actually, their focus is not on the foreign patient. India is not the go-to-place necessarily, for medical tourism from across the world. It is there for South Asia, but even there, we have competition.

India used to be an attractive option for the Middle East, but the latter itself is becoming a medical tourism hub. And since they have affluence, they can afford treatment in other countries.

And the differential in terms of fees is not going to make such a huge difference, unless there are large numbers. So, it’s an opportunity but it will never be the big thing for India’s medical exports. Mode 4 is bigger but not in the traditional sense. Most people go and settle there, so it’s not Mode 4 ultimately.

In fact, Mode 2 is a bigger opportunity, but it has not grown to the extent people think. Mode 2 comes with its own complications too. This is because most of it will be out-of-pocket paying patients, but if you really want to scale this up and get the big ticket, then it’s the insurance part that you have to get. So there’ll be issues of crossborder liability and recognition. Unless you have mutual recognition and insurance providers recognise treatments, they will not be covered.

Then there are issues in

many countries like flying time restrictions. So, if you want to tap a particular market, you will not be able to do so, until you can get into G2G arrangements, and accredit certain institutions, where people come for various procedures.

IBT: How can we make India a more attractive medical tourism destination?

Rupa Chanda: Medical tourism goes a lot with perception. Firstly, I think the perception of India as a safe, clean, tourist-friendly place has to be there. When I did my surveys, I found that this general perception is missing. The cost difference is large, but still, sometimes people choose not to come here, just because it’s not seen as an easy country to come and do your treatment compared to many others. A lot of related facilities such as tourist visas for visitors, etc, have to be improved. Thus, we need to be more strategic in terms of target markets and look at particular barriers affecting the flow of patients from these countries. Maybe we can have some sort of referral arrangements – private establishments are already doing so. Some incentives or benefits are required from the government’s side to give this more of a push.

IBT: Can Digital India initiatives ramp up capabilities or overcome the barriers of infrastructure?

Rupa Chanda: Digital health exports is always a possibility, but again, the first and foremost pre-requisite is infrastructure. I

always believe that unless you do the domestic capacity building, there is no basis for you to be doing exports. It will happen only in an adhoc way. So, yes, if we put more focus, especially after COVID, on the entire tele-health mission nationally and leverage some of the infrastructure created in recent years, I think it is a possibility.

With cross-border tele-health, again you have regulatory issues, because unless you have mutual recognition, a doctor’s diagnosis from here will not be validated there. So, basically the person will be given a ghost diagnosis and over there, someone else will have to read the document and sign off on it. So, you need another certification. Thus, it comes back to recognition of qualifications.

This basically means that if you want to export more health, you have to have complementary issues addressed on the legal, insurance and logistics side. It comes back to creating that ecosystem overall.

IBT: Among the modes, which one is the most promising for India, at present?

Rupa Chanda: After COVID-19, if alternatives really were to pick up in a big way, people have become much more aware of wellness and alternative therapies. If India could really put a big push on it, and this is not an area that gets covered normally anyway, by insurance, it’s a certain class of patients. This is an opportunity, I think, where we have a niche. However, medical tourism after COVID-19 is also a challenge, because of the way travel restrictions come into play. But alternatives is a niche within the medical field.

India has an opportunity to address many of the challenges in Modes 1, 2 & 4, if it could do more of Mode 3 exports. Once you set up establishments, maybe partly locally employed, you create hubs in other places, which you then use. Of course, it’s not your direct Mode 2 export, but it actually can have a lot of spinoffs in terms of bringing patients from there.

DESH: The key to boost exports

While the DESH Bill is the right step in terms of designing a policy on non-fiscal incentives, there is need for more clarity on the fiscal incentives for making it attractive to units.

BY DR ARPITA MUKHERJEE, SUNIL RALLAN & NIDA RAHMAN

India has set an ambitious target of US$ 1 trillion exports each of goods and services by 2030, aiming to position itself among the top 5 exporting countries in the world. Several initiatives and schemes have been launched to meet this target and among them, the Development of Enterprise and Service Hubs (DESH) Bill, 2022, is expected to give exports a boost.

This Bill aims to revisit the Special Economic Zone (SEZ) Policy, which has now come under the scanner of the World Trade Organization (WTO) Agreement on Subsidies and Countervailing Measures (ASCM) for providing export-linked prohibited subsidies.

ASCM tends to focus on fiscal incentives for manufacturing, treating them as actionable or

prohibited subsidies based on certain conditions. DESH Bill has been initiated to make industry clusters/SEZs WTO compliant.

WHY ARE SEZS IMPORTANT?

Globally, SEZs have been set up by countries to promote exports and attract investment by providing firms located inside the zones with certain financial and non-financial incentives, which are not available and/or different from those given to firms in the domestic tariff area (DTA). In India, too, the SEZ Act 2005 set out to achieve five objectives:

(a) Generation of additional economic activity;

(b) Promotion of exports of goods and services;

(c) Promotion of investment from domestic and foreign sources; (d) Creation of employment opportunities and (e) Development of infrastructure facilities.

To meet these objectives, certain fiscal and non-fiscal incentives were given to the developers and units in the zones vis-à-vis the DTA. The income tax benefits were conditional upon the units being net foreign exchange earners in five years, which is an export-linked prohibited subsidy under the ASCM.

India is among the pioneer countries in Asia to set up an SEZ as early as 1965 in Kandla (Gujarat). As of June 30, 2022, India had 425 formally approved SEZs, out of which 268 SEZs were operational.

JOURNEY OF DESH BILL (2022)

In March 2018, the US challenged a number of export-linked incentives given under India’s Foreign Trade Policy and the SEZ as prohibited subsidies in the WTO. India lost the case against the USA in October 2019, requiring the country to withdraw its export-linked subsidies. This has prompted India to design incentives for industry clusters that are aligned with the WTO ASCM. While designing such incentives, it is also important to look at:

(a) Incentives given by competing countries and

(b) How incentives can help to increase global competitiveness of our firms and help them integrate into the global value chains.

To come up with a robust policy, the Government constituted a committee under the Chairmanship of Baba Kalyani, Chairman M/s. Bharat Forge, to study the SEZ policy of India in 2018. This Committee made several recommendations on how to change the SEZ policy.

During her Union Budget 2022-23 speech, the Finance Minister, Honourable (Smt) Nirmala Sitharaman, announced the revamp of the present SEZ legislation with a new legislation allowing states to become partners in the DESH. Subsequently, the DESH Bill (2022) was introduced, which will be tabled at the winter session of Parliament in 2022.

The Bill proposes to create two kinds of development hubs –enterprise hub and services hub. The core objective of the Bill is to provide “for the establishment, development and management of Development Hubs, including Special Economic Zones, as enclaves for the purposes of the promotion of economic activity, employment generation, integration with global supply and value chains and maintenance of manufacturing and export competitiveness, development of infrastructure facilities, promotion of investments,

and investment in research and development and for matters connected therewith or incidental thereto”.

The Bill removed the NFE criteria, which was making incentives given to SEZ prohibited under the ASCM. While the SEZ policy allowed workers from the DTA to do job work for units in SEZ, there is no clarity on reverse job work or on allowing the units in SEZs to undertake job work for the DTA; including after sales services and point-of-sale services. The DESH Bill has the provision of reverse job work, allowing units in SEZs to cater to the domestic tariff area. It also seems to have more clarity on entry and exit of investors.

CONCERNS & WAY FORWARD

While the DESH Bill proposes many non-fiscal incentives like allowing reverse job work for units in the SEZs, it lacks clarity on the actual fiscal incentives that will be provided to the SEZs units. Further, given that various fiscal incentives are available such as Remission of Duties and Taxes on Export Products (RoDTEP) and those under the Production Linked Incentives (PLI) Scheme, units may like to have clarity on what kind of fiscal incentives can be availed under the DESH Bill.

At the same time any incentive given to any unit in an industry cluster needs to be carefully designed in order to be WTO ASCM compliant. A region-specific subsidy can be actionable under the ASCM.

With increasing servicification of manufacturing, subsidies can also be given to the services used in manufacturing and since there is no discipline on subsidies in services, these can be WTO complaint.

The more important issue is the criteria or performance indicator for giving the subsidy. The DESH Bill (2022) mentions a number of performance indicators that can be considered. Criterion such as generation of additional economic activity and integration with global supply and value chains & promotion of innovation are difficult to measure.

Whenever a subsidy is provided, a budget is allocated for the same and to justify the budgetary allocation, three things need to be considered:

(i) The measurable performance indicator against which the subsidy will be pegged.

(ii) An estimate of the amount of subsidy to be provided in the next 1-5 years, based on the measurable performance criteria and (iii) An estimate of the projected gains to the country on giving the subsidy.

Without clarity on these major points, it is difficult for the Ministry of Finance to have an estimate of the subsidy and also the justification for the same.

To summarise, while DESH Bill is certainly a step in the right direction in terms of designing a policy on non-fiscal incentives, there is need for more clarity on the fiscal incentives and performance indicators against which these are granted for making it attractive to units as countries like the US will watch how these incentives are rolled out.

Authored by Dr Arpita Mukherjee, Professor, ICRIER; Sunil Rallan, Chairman and Managing Director, J Matadee Free Trade Zone Pvt Ltd; and Nida Rahman, Consultant, ICRIER. Views expressed are personal.

TRADE 4.0 ACCELERATING

Disruptive technologies are bringing a paradigm transformation to industrial and trade competitiveness. To ensure more equitable trade recovery post-pandemic, it is vital to build global consensus on digital trade frameworks and address growing protectionism.

BY DR BADRI NARAYAN GOPALAKRISHNAN & VIRAT BAHRI

Digitisation and lower human intervention are regarded as key foundations to drive trade growth. The pandemic period was accompanied by an immensely volatile international trade environment. Lockdowns, rising cases and demand fluctuations upended the entire ecosystem of trade, be it rising freight costs, low container availability, shipping capacity, and even essential staff functions.

While the situation was changing every day, the paper-based system of trading woefully exposed how underprepared we were for this scenario. CEOs responded swiftly to manage the situation, but 75% of them admitted to be using digital for the first time, according to a McKinsey Global Survey of Executives. They had clearly woken up to the fact, however, that this would be the new normal even post the pandemic.

Disruptive technologies, which are essentially the results of path-breaking innovations, are posing a formidable challenge to established industries and promising unprecedented transformation in global trade. Several such technologies have been developed in the past few years. The impact of these innovations is often compared to the ‘next Industrial Revolution’ or ‘next Internet’, etc. While their utilisation was increasing steadily, the pandemic has led to a rapid acceleration in their adoption. This article discusses the potential impact of these technologies on the global economy and trade ecosystem, and how governments & businesses need to approach them.

CASE OF THE MISSING CONTAINERS!

With the advent of robotics, AI, blockchain, 3D printing, etc, the processes of production and consumption are changing significantly. This is a very substantial deviation from the way we have been doing things over the past few decades. It can change cost of production and efficiencies in a big way, which are more mechanical changes. But

on the other hand, they can also change the way we are doing things significantly.

Global Value Chains will be structurally affected by these technologies in many different ways. Economic policies have also begun responding to these technologies. Some technologies like blockchain, IoT and cloud may provide a strong positive impetus to trade by means of increased transparency and trade

facilitation. But some others like AI, automation, robotics and 3D printing may erode trade due to elimination of comparative advantage.

As a result, policy makers will be required to make adjustments for employment & skill development. Trade agreements will have to bring in clauses for new tech. There is also a risk of greater protectionism by nations targeting hi-tech products for instance, which may be harmful for trade growth.

The theory of comparative advantage broadly explains global trade as being a result of countries focusing on activities that they can carry out more inexpensively and efficiently, due to the abundant factors available with them. Due to this reason, poorer countries with excess labour that’s cheap have traditionally focused on producing and exporting labour-intensive goods and services.

However, this situation is rapidly

ARTIFICIAL INTELLIGENCE & MACHINE LEARNING (AI/ML):

BLOCKCHAIN

• Wiki: “A blockchain is a growing list of records, called blocks, which are linked using cryptography. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data.”

• Blockchain is a process of recording transactions through a digital ledger. These transactions are public and verified by multiple computers to ensure ledger accuracy.

DISRUPTIVE TECHNOLOGIES

The term “artificial intelligence” dates back to 1956 and belongs to a Stanford researcher John McCarthy, who coined the term and defined the key mission of AI as a sub-field of computer science.

Artificial intelligence (AI) is the ability of a machine or a computer program to think and learn. The concept of AI is based on the idea of building machines capable of thinking, acting, and learning like humans.

ML comprises algorithms that parse data, learn from that data, and then apply what they’ve learned to make informed decisions.

AI and robotics may lead to

• Acceleration and precision of decisionmaking.

• Improved processes at lower cost and higher efficiencies, without reliance on cheap labour.

Impact on economic policies:

• Safety, Fairness, Accountability, Transparency and Ethics.

• Global leadership in AI and implications for education programs.

• Future of jobs and skill development Data science also has similar advantages like AI (and a lot of overlap).

Impact on economic policies

• WTO discussions (ongoing) about tariffs on cross-border data flows.

• Proposed as a source of additional tariff revenue and negotiation point for some developing countries.

• May have negative effects on them due to the large presence of such cross-border flows.

• May also harm other developed countries for the same reason, if reciprocated.

• Solves the puzzle of the combination of Distributability and Encryption.

• No central authority needed for “trust”.

• Cryptocurrency was its first but not last application.

3D PRINTING

• Now, screws can be 3D printed in large scale, but in future even cars may be 3D printed.

• This means greater trade in raw materials and elimination of cheap labour as a comparative advantage – anyone can manufacture anything if raw materials are available!

• Broadly, it may reduce trade (by 40% according to ING, 2017) – but raw material exporters may gain!

CRYPTOCURRENCY

• Dominance of global currencies for trade may fade, with the rise of cryptocurrencies

• This may change the way trade evolves, avoiding many losses that may happen due to fiat currency fluctuations (e.g. losses faced by exporters to UK upon BREXIT due to GBP’s rapid depreciation), but cryptocurrencies are not necessarily stable either (e.g. Bitcoin).

• Stable coins and asset-backed cryptos are future prospects.

changing with the emergence of new technologies. Technological capital, abilities and skills are much more important now than traditional factor endowments. An example of this is 3D printing technology. This is a relatively new manufacturing technology, which enables us to literally ‘print’ a commodity whose design is available in soft copy

either locally or via the web. In the nineties, an early lab-only version of this technology was called ‘Rapid Prototyping’ technology. Over time, this has expanded to commercial use for many products, including face masks in the recent past that came to light during the first wave of the COVID-19 pandemic.

Such a technology may

potentially help a company in the UK export a novel design file to the US, wherein its customer can purchase it online and print the desired commodity behind that design at their 3D printer at home. But when we compare this with the traditional setting, several questions arise:

• What happens to the factory in

• Blockchain is not strictly a new technology but a novel business application of existing advanced technologies in cryptography, internet and the cloud.

• Blockchain in conjunction with other new technologies can change the landscape in business. For instance, in future, you will be able to see a container in real time.

DRONES

• Applications: Unmanned inspections in several industries like mining and energy, monitoring of environment and yields in agriculture, tourism, entertainment, etc.

• They can cut costs (even upto 90% labour reduction in some tasks –McKinsey, 2018).

• The effects on trade may be similar to those of automation, in terms of reduced costs and increased efficiencies.

• Countries that adopt drones and related technologies for production may gain comparative advantage.

INDUSTRY 4.0

OTHER IT INNOVATIONS

• Sharing economy (e.g. Uber model for labour contracts, etc) can cut costs to the extent of substituting outsourcing (coupled with the ongoing trade wars)

• Internet of Things (IoTs) often interact with other technologies explained above – can substantially cut costs, increase efficiencies and improve transparency!

• Cloud services can reduce data handling and sharing costs substantially (upto 50% according to our analysis with AWS data). This can add to the competitiveness.

• Combination of all the new technologies in the shopfloor

• Predictive maintenance

• Digital engineering

• Again, reduced failures, increased efficiencies, reduced costs ->ideal combination for greater export performance!

• However, initial costs may not be trivial –capital costs to be borne by whom?

• Skill availability and displaced unskilled labour need policymakers’ attention as well.

Mexico that was manufacturing this commodity before?

• What happens to the transportation infrastructure that dealt with its export from Mexico to USA, and even before, the export of samples and designs from the UK to Mexico?

• What happens to the US-based import houses that were in-charge

of branding and selling these commodities?

• Finally, what happens to the warehouse and retailer in the US that sold this commodity before?

A simple answer might be that they are all going to be gone. We have already seen some signs as to how this may happen in the future.

While it seems unimaginable for us now with all the pent-up demand and supply chain disruptions with the lack of containers, the shipping container industry was in the middle of an interesting phase of some soul searching not so long ago. Container demand was witnessing a decline due to realignment of global supply chains, trade/tariff tensions,

deglobalization, near-shoring, reshoring, friend-shoring, etc.

If such a reduction in transportation growth can happen even with these quick and even transitory policy changes, such a deep long-lasting technological change can only have more profound impact. An alarming study by ING estimates that global trade is likely to shrink by one-fourth by 2060 if 3D printing expands as much as expected in the future.

One may ask, justifiably, as to what would the remaining 75% of the trade comprise? Well, we still need the ‘printer ink’, viz, raw materials like plastics, wood, metals, minerals etc. In this scenario, all raw material producers may end up becoming exporters, while others may be importers.

SEAMLESS, PAPERLESS, FACELESS

Disruptive technologies are also influencing the manner in which digital trade itself is being conducted. Cross border e-commerce, defined as the selling of goods from a website of a national store in one country to another party in a foreign country, is rapidly picking up as a catalytic force in global trade. According to

Zion Market Research, global crossborder B2C e-commerce market revenue was estimated at US$ 562.1 billion in 2018 and is predicted to reach US$ 4,195 billion by 2027, growing at a CAGR of nearly 28.4% between 2020-27.

Cross border e-commerce provides companies with a vital route to expand internationally, and OEMs can bypass long channels to reach customers directly. Amazon India has projected US$ 20 billion in exports from India by 2025, which is twice the target it set earlier. But SMEs, which are expected to be the major beneficiaries of this trade, have strong inhibitions and distrust with digital transactions (particularly with returns in cross border e-commerce being a

major challenge), so a strong outreach becomes necessary with appropriate capacity building initiatives. Moreover, a lot of players may feel constrained due to lack of resources for brand promotion. Support measures by policy makers, industry bodies, etc will be crucial in helping these companies benefit.

Blockchain is expected to be a key facilitator in lowering entry barriers for trade, as well as reducing trade costs for players. It is essentially a distributed ledger technology that enables connected computers to reach an agreement over shared data. This greatly enables trust and ensures seamless traceability, and is a potential boon for developing countries in particular. Building an ecosystem of mutually recognized trustworthy digital identities at a global level could be a significant catalyst to facilitate trade through more agile supply chains and help build resilience to future crises – which would ultimately benefit small and medium-sized enterprises (SMEs) significantly, as argued in a paper by Hanna C. Norberg, TradeEconomista; Emmanuelle Ganne, World Trade Organization; Nadia Hewett, World Economic Forum. They feel that this issue

GLOBAL CROSSBORDER B2C E-COMMERCE MARKET REVENUE WAS ESTIMATED AT US$ 562.1 BILLION IN 2018 AND IS PREDICTED TO REACH US$ 4,195 BILLION BY 2027.

should be on high priority in RTAs and other trade agreements before various siloed approaches make a globally trusted digital identity system difficult to realize.

After India’s ratification of the Trade Facilitation Agreement of the WTO in April 2016, the country has introduced reforms focused on infrastructural upgradation, digitisation and automation. These include Direct Port Entry and Direct Port Delivery, Radio Frequency Identification system and Single Window Interface for Facilitating Trade, the Port Community System to seamlessly integrating all maritime trade-related stakeholders on a single platform and e-SANCHIT to cut down on human intervention.

DGFT provides online services of issuing Certificate of Origin and banks provide E-Bank realization certificate, based on realization of payment against exports. In 2014, RBI launched an online system named Export Data Processing

& Monitoring for monitoring all export activities in India through the generation of shipping bills.

The UN Global Report on Trade Facilitation 2021 concludes that reducing trade costs is essential for enabling economies to effectively participate in regional and global value chains, and for them to continue using trade as an important engine of growth and sustainable development. But according to the ESCAP-World Bank Trade Cost Database, trade costs remain high in many regions of the world.

Implementation still varies greatly, with developed economies achieving the highest level at 81.8%, while the Pacific Islands have the lowest rate (40.1%). Implementation in Sub-Saharan Africa is 9.1%, second to the Pacific Islands. South Asia recorded the most progress, with more than 10 percentage point increase since 2019. India has taken the lead, with ambitious reforms over this period and a trade

facilitation implementation rate of 90.3%. The economy scores well on all parameters except for cross border paperless trade, which refers to international trade taking place on the basis of electronic data and documents. According to ESCAP, implementation of paperless trade measures is expected to reduce international trade costs in the AsiaPacific region by 25%, saving the economies US$ 600 billion annually.

While the initiatives by India are laudable, experts feel several gaps need to be bridged, especially vis-àvis standardisation and coordination of processes across ports and awareness and acceptability of new initiatives among the users.

THE EQUITABILITY PARADOX

From the policy perspective, the digitisation of trade raises some more interesting questions. If we are not going to produce or transport much on a massive scale, how do we ensure that the economy runs and jobs grow? This may require policymakers to adjust labour supply with a long-term vision. Secondly, if cross border trade declines in this manner, where do we get our customs revenue?

Source: Mckinsey & Co.

The answer to the first challenge is pragmatic development of industrial and skill development plans and policies. As for the second question, there has been a proposal from developing countries to allow them to tax cross-border data transmissions, for which the WTO MC12 has concluded to continue the 24-year old moratorium that prohibits such duties.

Since 2010, e-commerce and digital trade provisions are increasingly being integrated into digital trade agreements, according to a report by WTO and World Economic Forum. For instance, the United States-Mexico-Canada Agreement (USMCA) covers a chapter on e-commerce and digital trade. Digital-only trade agreements, such as the Singapore–Australia Digital Economy Agreement (SADEA) and the Digital Economy Partnership Agreement (DEPA) between Chile, New Zealand

and Singapore, are focused specifically on a gamut of digital trade issues. India and UAE also added a Digital Trade chapter in their trade agreement concluded earlier this year, covering areas like paperless trading, domestic electronic transactions frameworks, authentication, online consumer protection, unsolicited commercial electronic messages, personal data protection, cross-border flow of information, etc.

The WTO-WEF report further adds that 5 Gs will play a critical role in wide-scale adoption of trade tech:

• Global data transmission and liability frameworks

• Global legal recognition of electronic transactions and documents

• Global digital identity of persons and objects

• Global interoperability of data models for trade documents and platforms

• Global trade rules access and computational law

Areas which are virtually missing from trade agreements at present include connectivity, data sharing and e-signatures. Electronic transferable records, automated contracts, digital tokens, interoperability of data models, and

DIGITAL POLICY ALERT ACTIVITY

TRACKER LISTS 3,736 MEASURES ACROSS G20, EU MEMBER NATIONS AND SWITZERLAND BETWEEN JAN 2020 & SEP 2022.

digital identity of legal and physical persons and of physical and digital goods are getting covered in few of the recent trade agreements. However, the world is witnessing a steady rise in digital protectionism. The Digital Policy Alert Activity Tracker lists 3,736 measures across G20, EU member nations and Switzerland between January 2020 and September 2022. Maximum measures are in data governance, followed by content moderation, competition, registration & licensing and taxation. Similarly, the OECD Digital Services Trade Restrictiveness Index 2019 shows increased tightening of the regulatory environment for trade in digitally enabled services. The share of restrictive and liberalizing measures between 2014 and 2018 was in the ratio of 80:20! This

level of protectionism among the world’s leading economies shows that governments are increasingly concerned about the impact of digital trade on their economies.

According to an estimate (Wilson Centre report), a 10% increase in ‘bilateral digital connectivity’ raises goods trade by nearly 2% and trade in services by over 3%. Digitalisation is key to bringing about a more holistic recovery in trade post-COVID 19. Lack of global consensus and increasing protectionism on the other hand, threatens to restrict the benefits of digitization to a few, and widen the digital divide further. This must be avoided at all costs.

Dr

Badri Narayan Gopalakrishnan, Lead Adviser & Head, Trade & Commerce, NITI Aayog and Member, Committee for Advanced Trade Research, TPCI

Mr. Virat Bahri, Deputy Director, TPCI and Editor, India Business & Trade

If we ignore digital advancement, digital obsolescence will hit us hard

India’s overall pace of digitization is impressive, but ensuring holistic benefits to the industry will take a lot of effort and inculcation of a digital mindset.

Digitization is the buzzword everywhere today with the advent of Industry 4.0. Asia Pacific happens to be one of the key regions driving digitization in trade post-pandemic. A study estimates that the contribution of digitization to incremental trade volume is more than 50% from Asia Pacific compared to single digits from some of the developed regions.

Within Asia Pacific, the contribution of countries like China, India, etc has increased. The impact of digitisation on trade has gone up. In our region, the multiplier effect is expected to be very high at around 5-6 times by 2030-35. A few basic pertinent questions are – “Are we prepared? Is the current ecosystem ready to undertake a quantum jump?” Statistics reveal that silobased operations are still causing delays at ports, certifications, documentation clearances, etc.

There still seems to be lot of room for improvement. When you consider digital impact on trade, there are e-commerce transactions on one hand, where platform dependency is high. On the other hand, there are non-e-commerce transactions (like bulk exports), where more digitally literate human resources are involved.

There are three areas where I propose improvements in particular. Firstly there have been significant initiatives like Sagarmala, Digital India and the recently launched National Logistics Policy. But the major problem is the involvement of numerous ministries and departments. For example, when the DGFT, Customs and port authorities are involved, how are these being linked, so that all of them speak the same digital language?

The solution is ensuring that all of them come on the same kind of a platform. For example, an exporter

Dr K. Rangarajan

Professor & Head Centre for MSME Studies & Head Kolkata Campus, IIFT & Member, Commitee for Advanced Trade Research, TPCI

has to reproduce a shipping bill at each of the touch points, though sometimes digitally. Can't we have a single digital format to be used by port authorities, DGFT, customs and finance officials? If a shipping bill is already there in the customs database, can't it be used by other authorities when required, so that duplication doesn't happen? This will also reduce the transaction time for documentation clearances.

Secondly, almost all stakeholders, be it banks, logistics providers or e-commerce platforms – are concentrating on MSMEs, because they account for a much higher share of transactions. But MSMEs are a low involvement user segment, i.e. they don't look into the technicalities of digitisation like a larger firm; instead they work on trust. Hence, interested stakeholders should concentrate on building such trust rather than simply propagating the onset of digitalisation. I think industry bodies and trade promotion organisations should also take suitable initiatives in such a

direction, as the government can't do much about it.

Most clusters are not located in the highly digitally connected areas. A unit holder from Ichalkaranji or an artisan from Sankrail don't know what will happen to their transactions in the e-commerce mode due to their low awareness and minimal exposure. Hence, trust has to be built if the MSMEs should benefit from the digitalization.

Overall, the approach to digitization or mindset of digitization will be very important. Almost all of us agree that e-invoicing has become mandatory since the introduction of GST. But even in large organisations, we find that people raise e-invoices, and yet take a printout to put it in a file. The crux is that I have digitised, but at the same time, the benefit of digitization is not there. There is a fear of nonavailability or non-acceptability of such digital documents. Electronic archiving and the data retention aspects of digitization and its acceptance should be addressed.

The third aspect is about the larger firms who achieve higher degree of digitization. But they need to understand that a lot of smaller players are also working with them. Are they compatible with such technologies? Without ensuring compatibility with the ecosystem, there is no point.

Speed is of the essence. Technology is improving rapidly and new versions are coming. If we don't adapt fast, obsolescence will also hit us even faster. There is no question that digitization will have a major impact on trade. The choice is yours - whether to accept that impact and positively contribute to it or be impacted negatively. This current phase of transformation certainly calls for serious introspection by all the stakeholders.

Digitisation can help India become a major F&B exporter

Digitization can be leveraged to boost export prospects for the Indian F&B industry, with the rise of e-commerce, promising B2B platforms and enhanced ease of business.

Digitalization in India is becoming more effective economically with a lot of cheaper and efficient solutions that will help propel India to the forefront of the global supply chain. With great farsightedness, the government has been working on ensuring transparency through digitalization. The entire GST system now works digitally and affords more control to the government on the economical front.

On the industrial front, a lot of payment systems have now become digitalized, like SWIFT, Fedwire and TTs, thus allowing international banking transactions to happen with a lot more ease. Payment acceptance is now happening in multiple currencies where earlier, it was more or less dependent entirely on the US dollar.

This has helped de-risk businesses a lot from the fluctuation of foreign currencies, thus allowing a far more stable business. On the logistics front, implementation of RFID with containers, which has ensured complete end-to-end traceability across the globe has been another important step.

Modes of outreach to clients and customers are also becoming increasingly digitalized. Virtual exhibitions, like what TPCI does, have allowed Indian companies to reach out to a lot more overseas audiences and vice versa, helping ensure seamless exports during the pandemic. This has now become a new normal. Communication and integration of services being offered to importers are better; and hence trade is becoming better.

Coming to the F&B sector in particular, India’s massive biodiversity enhances the potential for unique value added exports like saffron and many GI-tagged products. This also means

minimal competition from a global perspective. Numerous specialized bodies created by the government, like Spices Board, Cashew Board, Coir Board, Coffee Board, have made a lot of their processes digitalized. But since India is greatly diversified geographically and product-wise too, the different Boards have different requirements. This must be addressed.

Ease of business can be greatly increased through a system, where data filing & submission is done at one source and passed on to Banks, Customs Department & others in a single take, instead of individually. This will help startups and the younger business community, which is where innovations are happening right now.

Creation of a B2B platform, which rates or gives categories to the companies and exporters will make the sector more organized and ensure that greater quality products are being sent into the export market. It will also help global buyers to assess Indian suppliers in the correct manner.

A single window approach where all queries of manufacturers are answered clearly is the need of the hour. Using chat bots to solve basic questions for startups will help provide clarity at single window level. The earlier physical application submission is now no longer required. Few states have implemented this successfully, thus helping companies to register quickly and easily, & start business domestically or internationally.

At the domestic business level also, especially on issues related to compliance and fulfilment of labour laws or FSSAI license, going digital is highly required and recommended. Domestic digitization can enhance export business by bringing in greater traceability of raw materials. If a system is built to guarantee traceability right from the farm to the customers, a lot of issues that occurred in the past can be avoided.

India can prove to be a much stronger global food supplier. Live dashboards to track payments, factory status, sales status etc. need to be adopted. Not only from the perspective of an organized branded export house, but also from the perspective of a bulk wholesale supplier, aggressive implementation of digitalization will play a vital role.

Some non-changeable aspects in the Indian agro ecosystem like diversified agro climatic zones and vast biodiversity are strengths to be played up. Startup India has put forth many novel and creative businesses, thus enhancing India’s potential to be a strongly export oriented economy. E-commerce and great B2B platforms will allow businesses to bridge gaps and trade to grow at large. In the next 5-10 years, a very aggressive growth on the export front for Indian manufacturing is a given.

Anand Rajkumar Chordia Director (Technology and Innovation), Pravin Masalewale (Suhana), and Founder, The Eco Factory Foundation

Digitization can bring logistics share of India’s GDP to single digits

R S Subramanian, SVP South Asia, DHL Express shares his perspective on logistics and digitization in the current context, and how it can potentially transform India’s trade ecosystem.

The Indian logistics market is large and lucrative, having a worth of approximately US$ 160 billion. According to a McKinsey study, the Indian technology and services market is expected to reach about US$ 350 billion by 2025.

The market is very complex and has evolved over 75 years. Some numbers tell us about the complexity and indicate how we can streamline and digitalize the logistics space.

There are numerous Ministries in the Centre and State, which have their Regulatory agencies apart from Trade promoting agencies. The ecosystem covers vast regions of the country including various logistics options via seaports, airports, inland container depots, road and railway networks, inland waterways, etc. Hence, the existence of these complexities opens possibilities for eliminating waste and creating efficiencies in productivity and cost.

An NCAER study says that logistics as a percentage of gross value added can contribute anywhere between 15-22% depending on the commodity. This shows the scope of economic value that can be created from simplification, elimination of waste, automation, and the need for digitalization. Logistics is the flow of goods in one direction, which almost always leads to the flow of money in the opposite direction and data flowing in all directions. An often quoted number of logistics costs is pegged at 13-14% of GDP. In developed economies, it can be as low as 5-6%. The NPL endeavours to bring down the cost of logistics to a single digit, which can happen through digitization.

Over the last 5-6 years, DHL has had its share of challenges in onboarding customers onto the basics of digitalization, of which

50-60% are MSMEs. The pandemic accelerated the shift to digital, and today the airway bill, which is the most basic information or data contract between enterprises and customers, is 100% digital. We do about a million shipments a month typically, with 3-4 copies of the airway bill for use. So about 5 million A4 size papers have been eliminated since we embraced digitalization. All bills that DHL now gives out to its customers are digital. Collection is over 99% digital. Sound digital processes across the regulatory environment can bring more efficiency and sustainability. Going paperless and digital in a smart way is the right option for India, which aspires to be among the largest economies in the world.

India is moving towards becoming a US$ 5 trillion economy soon and has a 2047 vision as well. Trade infrastructure is essential to make this vision a reality. But almost every major project has the risk of delays. Digitalization and data interchange can result in simplification of regulations and improvement in automation of processes. This is necessary so that more can be done with existing

infrastructure while allowing entities more time to create infrastructural capacities that the economy needs.

The recently launched National Logistics Policy addresses many concerns. It talks about a few elements that rely on digitalization - the Integrated Digital System (IDS), the Unified Logistics Interface Platform (ULIP), and the Ease of logistics, or E-log system. However, basics of data compliance and data cleanliness from the grassroots level have to be adhered to for clean digital adoption rates.

The ambition of NLP is the interoperability of multimodal logistics with the standardization of ideas. Twenty years back, when I went to Germany, it was fascinating to see that you can check in your luggage at the train station, get a boarding pass, walk into the airport, and get on a flight. You can be rest assured that the luggage will be checked in, as the train, road, and air networks for goods and passengers were fully interconnected. That kind of interoperability will come if there is standardization, and IDS and ULIP are promising to deliver that.

PM GATI Shakti Master Plan, NLP, and ONDC (Open Network for Digital Commerce) are three major pillars in the making. When they come together, we will see the kind of transformation that UPI has done for payments. A significant amount of trade education is needed to build awareness so that the bottom of the pyramid understands and appreciates the need for compliance. From the regulatory side, compliances have to be made more accessible.

In fact, I am positive about the future. Emerging from this state of flux, I am sure we will be amazed at the progress that India would make in the logistics industry.

R S Subramanian, SVP South Asia, DHL Express

Panama – A little known distribution centre for Latin America

Panama is a major re-export zone and a key logistics hub because of its location, which gives easy access to Latin American and Caribbean markets.

BY SUHAYL ABIDI

Situated in the middle of North and South America, Panama has been one of the fastest growing economies worldwide over the past decade. Its economy is based primarily on a well-developed services sector, accounting for about 80% of GDP – with the Panama Canal as the largest economic contributor. The services sector includes the canal, banking, tourism, logistics, activities in the Colón Free Trade Zone (CFZ), insurance, container ports, and flagship registry. The re-export trade for CFZ is over US$ 30 billion per year.

CFZ is the second largest trade zone in the world, after Hong Kong. Over 3,000 companies have operations in the CFZ. It is frequently visited by Wholesale Clubs of Latin American countries. These are groups of wholesale or retail merchants which make consolidated purchases. So, in the CFZ, an Indian exporter can sell to a merchant duty free, and expect

to see his products distributed and retailed throughout Central America, the Caribbean, and the Andean region of South America. Indian exporters can take advantage of numerous distribution companies in Panama Free Zones. Sectors which can benefit are textiles & garments, pharma & surgical products, food items, handicrafts, building hardware, specialty chemicals, etc.

Panama has rapidly developed private banking and insurance industries, two sectors that value both the confidentiality afforded by the country and its monetary stability, a consequence of its currency peg with the US$ at a 1:1 exchange rate. Benefits you can avail through Panama include:

Reduce Complexity: You sell in dollars to a CFZ merchant. The entry is duty free and you are only selling to one entity. Finally, the CFZ is co-located with some of the world’s largest transshipment ports.

Reduce Financial Risk/Make More Money:

You are selling to established CFZ merchants. They, in turn, make their money by showcasing your products. In addition, you do not have any duties to pay, as they are the responsibility of the final buyer

It is economical for exporters to stock and sell through CFZ companies rather than incurring separate marketing costs in each target country. Exporters can use these facilities to increase their market size, introduce new products and find new customers.

After the success of CFZ, Panama has built 5 Free Trade Zones and exporters can look at the specific advantage they offer.

Suhayl Abidi is Research Advisor, GOG-AMA Centre for International Trade & Consultant, Centre for VUCA Studies, Amity University. Views are personal.

DESH could be a big enabler

BY SASIKUMAR GENDHAM

Salcomp is the market leader in smart phone chargers, & provides power supplies for mobile and other electronic devices. It also produces IoT sensors based on Wirepas Mesh wireless connectivity technology, which enables scalable, reliable, and cost efficient IoT solutions, as well as precision structural parts and modules, 5G RF parts and magnetic materials.

The company has been in India for the last 15 years and operated in an SEZ since the beginning, exporting most of its production. It has produced close to a billion charges in this country over the last 15 years, so it’s a very large-scale operation.

2016 was a major turning point in this journey, when supplying manufacturing chargers from an SEZ to a DTA was taxed at 20%. But there was no tax on supplying from a DTA. So, the same product, which is Made in India, attracts 20% from an SEZ. But when imported, it attracts only 5%. So, there was a big anomaly at that point. This forced the brand to shift from an FTA to a DTA zone. By law, we are forced to have two separate factories with a big fence separating them. Investments have doubled,

though there is no need for that. Capacity utilization is not at its best, and that has a severe impact on competitiveness.

From that point of view, we are extremely glad that the new DESH draft is being thought out, so that we can have a homogeneous scheme. Under this proposed scheme, we can operate for both sets of customers – national & international – and optimize our investments.

Salcomp had just about 3,000 people initially; but today, we almost employ 10,000 people, of whom 90% are women employees. And we also took over the Nokia facility – the whole campus is acquired by Salcomp. Our vision is to go to 25,000 people in the next one year. For a company of our scale, we have to hit the billion-dollar mark and go beyond that.

A lot of support is needed from the government when it comes to seamlessly moving between factories – SEZs to DTAs, of course with all the taxes being calculated and paid as it’s supposed to be. All that we expect is flexibility to be able to compete in the global arena. At present, we are not just competing with China; we are rather competing with Vietnam. When things are moving out of China, they are going

directly to only two countries – India and Vietnam. A lot of electronics manufacturing is coming to India, but we have to get our act right, to be able to capture this opportunity at hand.

The DESH scheme has taken into account most of the problems we have been talking about, like the physical differences between SEZs and DTAs. And the core focus is about improving efficiency, utilizing capacities, and then gaining competitiveness. And then there is the critical question of giving up on net foreign exchange (NFE) criteria.

All we expect is to have seamless transactions between SEZ and DTA, so that we can use the capacities as much as we can. And the second thing is that most SEZs have now been notified as multi-sector. But there is still this ‘50 hectares’ minimum requirement. That has to be out as well, because it’s not serving any interest going forward. And the third point is utilizing common facilities. The electronics industry entails very high investments in testing and approval points. So we need to have one facility that we can use for both SEZs and DTAs and move forward with that.

I would propose that we can have seamless deployment of these resources, whether for SEZ or DTA operations. Fiscal incentives are a separate issue altogether. Ease of doing business is going to be the biggest ask. In that direction, I am positive that the DESH Scheme will be a big enabler.

Gendham is MD, Salcomp Manufacturing India Pvt Ltd. Views expressed

are personal.

Sasikumar

The DESH Scheme, with its core focus on maximizing efficiencies and competitiveness, can be a great facilitator for India to leverage enormous manufacturing opportunities.

Strategies to enter a new market

When entering an international market, it’s more important to be resourceful than to have resources. A company needs to have the right attitude to swim with the sharks.

BY DR. RAJENDRA PRASAD SHARMA

India’s top export markets include the US, the UAE, China, Bangladesh, Singapore, the UK, the Netherlands, and Germany. The choice of these country markets can be attributed to reasons like convenience, similar political ideologies, the presence of Indian diaspora, and geographical proximity. However, more than 80% of the world’s population resides outside India. Further, the market opportunity is not just confined to developed countries; there is a huge market for Indian exporters to sell their products globally.

RIGHT MARKET SELECTION

The critical question is listing the other markets with untapped export potential for India and the market entry strategies to be adopted to penetrate them successfully.

There are more than 200

countries worldwide, and Indian traders have several export opportunities for market selection. For example, Indian exporters can explore the Asia Pacific (APAC) region or the 54 countries in Africa, or the Latin American countries. However, keeping the following criteria in mind would help:

The demand-supply gap

Identifying the demand-supply gap is an essential criterion for selecting a market. For example, if we look at Africa, it has only 11% of the world’s resources while bearing 25% of the world’s disease burden. Indian pharma & healthcare industry, which has expertise in offering quality medicines at competitive prices, can help bridge this demand-supply gap. Thorough research must go into this to identify the markets with the most significant untapped export potential

for the product with platforms like ITC Trade Map.

Leveraging recent FTAs

The government has, of late, been negotiating many Free Trade Agreements (FTAs) with countries such as Australia, UAE, and others. The exporter community should avail the benefits of these FTAs.

Benefit from cultural proximity:

Many Indian IT, telecom & agricultural companies started trading with Latin America during the pandemic. These counties have a culture similar to that of India (even though they are miles apart geographically), and there is also more ease of doing business.

At the same time, brands need to understand the pain points of that market and then adapt the product, because standardization

doesn’t work well in most product categories. For example, Heinz’s, the ketchup brand, did not do well in China because the people there eat soya sauce more. So, it is essential to think globally but act locally.

Risk pays

Indian exporters must also keep in mind that certain countries may not have a shared political vision like a democratic government and have issues like rampant corruption. Still, they may provide the right market for Indian traders. Wherever there are risks, the profit margins are bound to be high.

Regulatory standards

Exporters must ensure that their product meets the importing country’s regulatory requirements. It is tough to do business with developed countries like the US, Canada, New Zealand, and Australia due to the strict regulatory environment, though they are politically stable.

ENTERING A NEW MARKET

The key to making profits, after the right market selection, is identifying the right entry strategies. Before we delve into these strategies, it

is essential to note that one of the most important things is developing the right mindset.

For example, Japan is a small country with limited resources. Yet, they have contributed to many global brands. It is more important to be resourceful than to have resources. For instance, in the realm of air conditioners, they have Hitachi, Panasonic, and Mitsubishi. So, having the right attitude can be a game changer for any firm.

Taking the issue of regulatory compliance, for example, a company should look at the larger picture and think beyond the domestic market. They must meet the international criteria for their product, no matter how long it takes to attain them.

While determining a suitable market entry mode, there are different strategies that a brand can leverage to establish its presence. Exporting is the most basic internationalization strategy for a firm. Direct exporting requires some commitment of time, energy, effort, etc. It is a relatively riskier proposition since the exporter may end up making losses. For example, a firm may be a big name in India but still unknown beyond its shores.

So, it becomes crucial for the company to evaluate its export readiness. Firms must invest in international marketing and branding efforts to create awareness in other countries. The brand and the value proposition communication should complement the host market culture. Instead of direct exports, a company can test the waters by starting with indirect exports through crossborder e-commerce or exporting through a trading house.

Another strategy is entry licensing. For example, the American apparel brand, Arrow, doesn’t manufacture in America and then ship the shirts to India. Arvind Fashions makes shirts for this premium menswear brand in India and Bangladesh. Arrow sells its shirts in India as an American brand without shipping a single shirt from the US to India! Further, brands also need a robust distribution network. A licensing franchising contract can also help a firm cultivate a global audience. For example, the Tata group has acquired Tetley, the second largest tea brand globally. Lastly, brand marketers who understand the tastes and preferences of the consumers can go for a greenfield or a brownfield investment in that market.

Dr RP Sharma is currently a Professor at Indian Institute of Foreign Trade, Delhi & Kolkata and is a Member, Committee for Advanced Trade Research, TPCI. Views expressed are personal.

A

Indian diaspora holds values of family, work & entrepreneurship

Eric Abetz, Patron, IndiaAustralia Strategic Alliance has a freewheeling discussion with India Business & Trade about how the ground was laid for India-Australia FTA, potential areas of collaboration, COVID learnings and pursuing a sustainable energy future.

IBT: How did the thought process evolve in Australia in favour of an FTA with India over the years?

Eric Abetz: Ten years ago, we formed the India-Australia Strategic Alliance. At that time, the general thought process was, “China is the future. Why are you bothering about India?” We had some very practical reasons. The Indian population was on a trajectory to overtake China and we felt that there were a lot of opportunities, which haven’t been fully explored. I thought it wouldn’t be strategically wise to put all our economic eggs in the China basket.

In that regard, I thought India would be a very good country. Whatever our differences might be, India and Australia are democracies that believe in the rule of law. We are in general, freedom loving countries involved in defence and protecting the freedoms and interests of other countries. But we haven’t ever been sort of expansionists. So for me, there was a strong, practical reason to strengthen that relationship.

When we started IndiaAustralia Strategic Alliance, I was in opposition. So when we won in 2013, we were encouraging the government to take the focus a bit more West, rather than directly north to China, and look at India. The then PM Tony Abbott, with whom I was very close, was able to

establish very strong ties with India, and that was a benefit for both countries. Also at that time, we saw a strong growth of young Indians coming to Australia to study.

The two countries have a sense of democracy, rule of law, and cricket as well. Moreover, English, to a large extent, is a common language which allows easier dialogue and understanding. Ten years ago, I was encouraging, different groups to consider Australia for a visit to educate business migrants and investors. A number of them are doing exceptionally well and are well accepted in the community. So it’s been a very good journey for the last ten years. Today, everyone thinks the India-Australia FTA is a great idea, while it was very different 10 years ago.

IBT: How important is the Indian diaspora in the blossoming of

this relationship?

Eric Abetz: The Indian diaspora in Australia is growing rapidly. It has overtaken China and is now the third largest group after Australians and Englanders. Indians hold values which are very close to what I believe in - family, work, reward for effort, entrepreneurship - things which help build family community in the country. A lot of them have started from the bottom, driving taxis or whatever and then study and bring themselves up. The Indian community works exceptionally hard, wants to make a difference and be good citizens, so it’s very good.

IBT: What are the areas where you see bilateral potential post the agreement?

Eric Abetz: In the areas of education and professional services, I think there is there is a very real opportunity for Australia.

India has an opportunity in IT and telecom, where it is quite a leader. And there can be a lot of collaboration in defence production. A businessman I met recently was talking about drone manufacturing, and also protection from drones, for which they are working in partnership with an Australian firm and an Israeli firm. As the doors open, people will think of those opportunities in a lot more ways.

I assume there will be areas that we haven’t even thought of. So for any opportunity that comes along, I would like to be able to assisteducation to farming to defence to IT. Coal production in Australia is important with Navin Jindal focused on Wollongong and the Adani mine in Queensland, getting high energy, low emissions coal to India.

I went to Australian importers in Queensland, and asked, “Why is Indian company so interested in getting coal from Queensland, when there’s a lot more coal closer, like in Indonesia and elsewhere?”

And the answer was the constancy of supply. But more importantly, the quality of coal, which is high energy, low emissions.

IBT: How do you see the role of the sustainability drive in global energy and economic stability?

Eric Abetz: Nobody’s against sustainability. But I think a more considered approach is needed. In Australia, we’re starting to suffer the same sort of energy crisis that Europe is going through. In the 1990s, Australia’s economic fortune was based heavily on low energy cost. Now, we are pursuing solar, wind, etc. and paying some of the highest energy prices in the world.

When people say to me that it’s not efficient to have coal-fired power stations, I simply ask the question. How is it that we can build a coal-fired power station in a coal mine and virtually shovel it straight in? On the other hand, India, China, South Korea, Japan, will dig up the coal, put it on a train, send it to a port, load it onto a ship, ship it for the country, unload it, put it on a train into a power station.

They are only doing it because they want cheap, reliable energy for their people. And if they can make it work, why shouldn’t we, as Australia doesn’t have these costs.

If I may add, the ‘clean options’, too, have environmental issues, like the toxicity of the solar panels after 10, 15, 20 years. The same is true with big blades from wind turbines that go into massive landfills after 15 years. So, if we would have put a lot of that investment into either nuclear, or reconfiguring our coal fired power stations, that may be a better option. We could have instead retrofitted all Australian coal fired power stations cheaply, got a 30% reduction in emissions and made them more efficient. But instead, we were pursuing clean energy deployments.

The task of those in government and in leadership roles is to try to get that balance. In my own view, nuclear will in fact be the future. It is sustainable with virtually no CO2 emissions or ugly footprints. And in Australia, we hold around 25-30% of the world’s uranium.

IBT: What is your perspective on how the pandemic changed the global economy?

Eric Abetz: The pandemic showed us that in an ideal world, there is a supply chain that lets everything run very smoothly. For example, do you know the base product for the pain killer Panadol comes from India? During the pandemic, we experience some typical situations like some ships are not able to sail or some manufacturers in India are not able to produce (because

workers are sick or not allowed to go to the factory). All of a sudden, there was a shortage of the most basic painkiller in Australia. Similarly, the masks that you have to wear, there’s a little aluminium strip that goes over your nose. Even those strips are not made in Australia!

Good supply chains, uninterrupted, are fantastic and really allow the world economy to hum long, very efficiently. But as soon as they become interrupted or disrupted, what do we do? It’s something every country is now thinking about. For example, in Sydney, most people don’t know that its water and sewage supply was within one week of shutting down. The spare parts needed to keep it going were coming in from China. All of a sudden, they stopped coming. It was very fortunate that people swung into action and we were able to make the parts in Australia.

Some of our towns and cities were wholly reliant on tourists, especially Chinese tourists. Overnight, it was gone. So I think that’s the biggest lesson and there might be a retreat back to the nation state. There’s still room for FTAs, but I think there’ll be greater emphasis on ensuring that we have the capacity to look after ourselves for 1-3 months.

If you run a business of supplying sugar, and if you have to keep a stockpile that big, then each time you sell sugar, the cost to the customer includes keeping the stockpile. If you could rely on the sugar coming in always as needed, you’ll be able to sell your sugar at a lower price, more competitive, more affordable, etc.

So the question is, do you just have that supply chain or do you keep a reserve? If so, how big should that reserve be? The chances are that you shouldn’t keep a reserve of two years, but with one month being better than just continually relying on the daily shipment to provide you with exactly what you need.

Leading the innovation curve

India needs to establish itself globally in healthcare products and create an environment where innovation should be of paramount importance.

DEBARSHI DEY

The healthcare industry, one of India’s largest sectors today, in terms of revenue and employment, is expected to show an unprecedented threefold growth and reach US$ 372 billion by next year compared to US$ 110 billion as of 2016-17.

However, the world’s largest and fastest growing industry that is consuming around 10% of the GDP globally, stands at only 1.3% of GDP in India. This sector has bright growth prospects, opening doors for a risky yet large scale diversification, so as to minimize possible downturns and maximize product and service offerings.

INNOVATIVE PRODUCTS

Mylab Discovery Solutions began with the idea to simplify the complex nature of disease detection. Making it more affordable and bringing cutting edge science and technology to ensure accuracy in detection were the core ideals that inspired the brand. It offers a wide

range of solutions applicable in diverse markets including clinical diagnostics, pharma drug discovery, biomedical research & food safety.

Diversification has been integral to the functioning of the brand. Direct-to-consumer self-testing kits developed by Mylab were a hit during the pandemic. In fact, the company was one of the pioneers in India in manufacturing these kind of RTPCR tests. It also diversified horizontally by allowing customers to get their samples collected at home and sending it to labs for testing.

At the same time, it ensured that these kits were available across India at affordable prices without compromising on their quality. Prevention of the spread of transferrable diseases like respiratory illnesses by means of the self-test kits has been ensured by employing special chemicals to deactivate the virus.

Instrumentation and innovations in designing devices for multiple tests was also being explored.

MyLab is also collaborating with BHU and other research institutes in India to ensure top notch quality of products, which is of utmost importance in the healthcare sector.

GLOBAL FOOTPRINT

Every player in the industry attempts to develop their own fine-tuned stable marketing strategy for local as well as international clients. Counter trading is a cost-effective strategy because of its exemptions from various import quotas. Malaysia has effectively utilized counter trading, bartering palm oil for armaments. Vehicle manufacturers also do the same with the practice of complementary accessories provided with their vehicles.

Other successful marketing techniques include licensing and joint ventures, marketed via multiple country ownerships and franchise outsourcing, with priority given to exports. And, even when we talk about different avenues, there are risks involved. The product’s efficiency determines its export potential, and in turn, offers a better chance of beating the competition.

Other avenues or strategies of entry to the international market include export and export promotion councils of the country. It is helpful to have different bodies that identify manufacturers, budding start-ups, and give them the platform to network.

Lastly, India needs to establish itself globally and create an environment where innovation should be of paramount importance. India is yet to build a reputation in terms of products, but it is definitely on the horizon.

Debarshi Dey is Marketing Director, Mylab Discovery Solutions.Views expressed are personal.

What’s the latest

India-UK BSM on F&B

TPCI organized a 30-exporters B2B delegation of Indian F&B companies to London & Birmingham, United Kingdom between August 30-September 1, 2022. The UK is a lucrative F&B market, with the grocery market valued at £ 214 billion and food & drink services sector at US$ 73 billion ( Statista ).

The BSM brought together some of the leading F&B importers, prominent distributors and iconic modern trade outlets in the UK to explore the most diverse range of new and innovative products

@ TPCI

Oct 2022

offered by Indian players. Sectors featured included grains & cereals, spices & food preparation,

tea & coffee, Indian ethnic sweets & snacks, bakery & confectionery, fresh & frozen food, etc.

F&B business delegation to Bahrain & Saudi Arabia

Dates: Aug 30-Sep 1, 2022

Venue: London & Birmingham, UK

a session led by Mr. Abdulaziz, GM, TUV Austria.

TPCI organised a 20-member food & beverage business delegation to Bahrain and Saudi Arabia from September 1115, 2022. The BSM

started in Bahrain on September 12, 2022 & was inaugurated by HE Mr. Piyush Srivastava, Ambassador of India to Bahrain. The event witnessed

a presence of around 45 leading retailers, importers, distributors and wholesalers of F&B products in Bahrain.

On September 14, the delegation attended

In association with CGI Jeddah, TPCI organized another BSM at Jeddah Chamber of Commerce on September 15. It was inaugurated by Mohd Al Saeed, Secretary General, Jeddah Chamber of Commerce and the keynote address was delivered by Shri Mohd Shahid Alam, Consul General of India to Jeddah. The meet marked a presence of over 50 leading importers from Jeddah.

Date: Sep 11-15, 2022

Venue: Bahrain & Saudi Arabia

India-East Africa BSM on Food & Beverages

Concepts, Top Foods, etc.

Some sectors that the show featured included grains & cereals, spices & food preparations, tea & coffee, Indian ethnic sweets & snacks, bakery & confectionery, canned items, kitchen staples; ready-to-eat; readyto-cook; health food; non-alcoholic beverages; fresh & frozen food products etc.

India, Kenya.

It marked the presence of around 65 leading retailers, importers, distributors and wholesalers of F&B products based in Kenya,

Uganda & Tanzania.

Some of the leading stalwarts present at the event were County Supermarket, Reliance Supermarket, Naivas Supermarket, Jade

TPCI leads delegation to Cersaia Exhibition in Italy

TPCI organized a BSM on F&B at Hilton Hotel, Nairobi, Kenya on 27th Sept, 2022. The BSM was inaugurated by Mr Rohit Vadhvana, Deputy High Commissioner of TPCI led a delegation to Balogna ( Italy ), and participated in Cersaia exhibition during September 26-30, 2022. It also met with the Consul General of India, Milan Ms. T. Ajungla Jamir.

The delegation included players in ceramic tiles and bathroom furnishings. This was one of the first major physical exhibitions in the post-pandemic period.

For ceramic products, the European market accounts for 39.7% of global demand, importing US$ 18.3 billion worth of ceramic products during 2020. It provided a great

platform to foster deeper relationships between Indian exporters of

chemical and ceramic products & European buyers.

The BSM presented a unique opportunity to exchange ideas with stakeholders within the global food community. It was an important inclusive meeting place for the F&B industry.

Date: Sep 27, 2022

Venue: : Hilton Hotel, Nairobi, Kenya

Date: Sep 26-30, 2022

Venue: Balogna (Italy)

WEBINARS

Webinar on market entry strategies for exports

TPCI commenced an International Marketing Series for the benefit of exporters. It intends to address common challenges faced by industry in global expansion & share best practices for building successful global brands.

The first session was held on Market Entry Strategies for Exports, focussing on most suitable approaches for new market selection & penetration. For India to augment its exports, it is critical to diversify its export basket and identify new & lucrative markets. However, it is notable

that nearly 50% of India’s exports are accounted for by just its top 10 export destinations.

The panel for the session consisted of:

• Dr. Rajendra Prasad

Sharma, ProfessorMarketing Area, IIFT, and Member, Committee for Advanced Trade Research, TPCI

• Prof Harsh V. Verma, Faculty of Management

Studies, Delhi University

• Mr. Debarshi Dey, Marketing Director, Mylab Discovery Solutions

• Ms. Priyanka Shah, Co-founder, Expora.

NITI Aayog-TPCI webinar on digitisation & its impact on trade

NITI Aayog and Trade Promotion Council of India organised a webinar on Digitisation and its impact on Trade on September 25. The webinar focused on how digitisation was sweeping the world of trade, and strategies for India to compete from a position of strength in this digital age.

After India’s ratification of the Trade Facilitation Agreement of the WTO in April 2016, the country has introduced a series of reforms focused on infrastructural upgradation, digitisation and automation. But experts feel several gaps need to be bridged, especially vis-à-vis standardisation

and coordination of processes and acceptability of new initiatives. Panelists for the session included

• Dr Badri Narayan Gopalakrishnan, Lead Adviser & Head, Trade & Commerce, NITI Aayog and Member, Committee for Advanced Trade Research, TPCI

• Anand Rajkumar Chordia – Director (Technology & Innovation) Pravin Masalewale (Suhana) & Founder, The Eco Factory Foundation

• R S Subramanian, SVP South Asia, DHL Express.

• Dr K. Rangarajan, Professor & Head, Centre for MSME Studies & Head Kolkata Campus, IIFT and Member, Committee for Advanced Trade Research, TPCI.

• Adil Zaidi, EY India Partner and Economic Development Advisory Leader.

• Nandini Bhattacharyya, Global Trade Products Head, ICICI Bank.

Indian mango set for a major boost?

India is an emerging supplier of mangoes to the world, despite being its largest producer. But with recent developments, it may finally be in a position to raise its share in global trade.

Mango is a widely traded commodity around the world. Total global imports of fresh mangoes, mangosteens, and guavas amounted to 2.1 million tonnes in 2021, registering an increase of 5% from 2020.

The US and the European Union (EU-27) were the two leading importers, with an import share of 26% and 19% respectively. Emerging importers like Saudi Arabia, United Arab Emirates and the Russian Federation are becoming increasingly lucrative markets.

Leading mango exporters include Mexico, Brazil, Peru, Thailand & Philippines, while India and Pakistan are emerging suppliers.

MANGO EXPORTS FROM INDIA

India is home to at least 24 popular mango varieties. The following Geographical Identification ( GI ) certified varieties are exported from India: Khirsapati, Lakkhanbhog, Fazli, Amrapali, Chausa, Langda, Dusshheri, Khirsapati, Lakshmanbhog, Zardalu, Banganapalli, Survarnarekha, Kesar, Alphonso and Totapuri.

Source: First Advance Estimates of Area and Production of Horticulture Crops-2021-22 (production in ‘000 MT)

Top export destinations for mangoes (in 2021-22) for India were the UAE, the UK, Qatar, Oman and Kuwait. The US market has been a rugged terrain for Indian mangoes, with a share of only 0.18% in this market. The major barrier was the former’s fear of pests and bugs, and insistence by their regulatory authorities on ‘elaborate’ UScertified irradiation processes in India.

Europe, too is dominated by the Latin American varieties. The UK and Germany are the two major markets for Indian mangoes in Europe. Alphonso, Kesar, and Banganapalli varieties of Indian mangoes have a huge market in Europe.

TIME TO SPREAD SWEETNESS?

India has exported 27,872.78 MT of fresh mangoes to the world worth US$ 44.05 million during the year 2021-22. Nevertheless, exports from India are still modest.

In January 2022, the Indian government secured the approval of the United States Department of Agriculture (USDA) for export of mangoes to USA. Mango Festivals were organized in Tokyo & Brussels to create awareness and a market for Indian mangoes in Europe.

Similarly, mangoes are being sent to South Korea after a two-year gap due to the Covid-19 pandemic, and Malaysia has assured imports of Alphonso, Kesar and Banganpalli varieties of mango. India is also promoting export of Langda and GI-tagged Zardalu in Bahrain and organic mangoes to Russia this year.

Recently, Maharashtra Agricultural Marketing Board collaborated with the Bhabha Atomic Research Centre to improve the shelf life of mangoes and dispatch them by sea to the US. If India takes this initiative ahead successfully, it will be well-positioned to take the sweetness of its mangoes to hitherto untapped markets of the Western world.