VIKSIT

An approach to achieve USD 1 trillion merchandise exports from India by 2030

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The VIKSIT framework for exports lays down an approach for enabling a sharper focus on exports and identifying critical success factors for enabling accelerated growth.

We have applied the framework to three select sectors - auto, electronics and food processing - and the same can be applied for other industrial sectors.

India has set an ambitious target of USD 1 trillion in merchandise exports by FY30. We evaluated three scenarios. Considering an optimistic perspective towards global political and economic stability and India taking actions along a strategic pathway, this target can be achieved one year in advance, i.e. FY29. This scenario considers an annual export growth rate of 18%, benchmarked against export performance from 1986–1995 and India’s average export growth rate in the COVID-19 period.
Key considerations to India’s export growth potential
- Commoditisation - merchandise exports remain dominated by traditional commodity baskets with lower value addition
- Concentration - limited market access for merchandise exports
- Disconnection - large number of MSME units struggle to become a part of the export growth journey
- Fossilisation - technology fails to make an impact on export efficiency, product quality and unit productivity
- Carbonisation - recent climate change and mitigation measures are impacting international trade

Sanjeev Krishan, Chairperson, PwC in India, introduces the VIKSIT framework

VIKSIT framework - an approach to enable India to achieve its USD 1 trillion in merchandise exports ambition by addressing current challenges and key considerations

V - stands for Value addition and volume-led growth

I - for Infrastructure investments

K - for Knowledge and capacity building

S - for Sustainable supply chains

I - for Inclusive industrial development

T - for Technology enablement

India is projected to reach USD 1 trillion in merchandise exports by FY29 in the optimistic scenario of our report.

India surpassed USD 451 billion worth of merchandise exports last year.

India’s exports grew 8.6x time from 2003 to 2023.

India’s contribution to global trade grew by 2x from 0.5% in 1990 to 1.85% in 2023.

India’s export basket has diversified with a revealed comparative advantage in over 1,400 commodities.

In 1990s, trade made up 15% of India’s GDP (at current prices in INR crore), it is 46% in 2023.

The rising contribution of trade to India’s growth has been facilitated by the reduction in the global weighted average Most Favoured Nation (MFN) rates from 21.7% in 1990 to 6.6% in 2021.

The VIKSIT framework has been applied to three select sectors: auto, electronics and food processing.

EVs, EV battery and SDV enabling technology are the three focus areas identified in the report for driving exports growth (V). Mobilising investments into building scale and R&D infrastructure for these segments will be critical (I). The role of OEMs will be defining as these players will have to ensure high component carryovers during design, undertake knowledge transfer and maintain relevance of Tier-2 and Tier-3 manufacturers (K). ESG performance across the value chain will be a competitive differentiator for manufacturers (S). While overall exports growth shall improve the financial metrics of the MSMEs, the sector growth may also present differentiated avenues for growth (I), e.g. developing recycling capacity, developing Tier-1 suppliers for EV-specific requirements such as aluminium battery casings. Lastly, we envisage OEMs to be the source of the technology push (T) required for emerging segments such as developing full-stack proprietary platforms and establishing commercially viable local value addition as profit pools are expected to shift.

The report suggests that the next phase of electronics exports from India will be driven by (i) consumer electronics and IT hardware, (ii) auto-electronics and (iii) electronic components and PCB assemblies. While current capabilities largely rest with design and assembly, India may lay focus on incremental localisation (V). Make versus buy analysis shall be undertaken to strategically select on potential localisation nodes. The scale expansion envisaged may require set-up of sector-focused infrastructure – development of specialised storage options, air connectivity to Tier-2 and Tier-3 cities with EMCs, provision of infrastructure as a service at EMCs, etc. (I). Considering the knowledge-driven nature of electronics, joint ventures with global partners may be critical to build manufacturing capabilities and workforce skills for localising products with a high bill of materials (BoM) contribution and import dependency (K). While India develops electronics capabilities, it will be critical to focus on supplier diversification and sustainable sourcing (S). Adequate supply and size of credit to MSMEs shall be necessary to ensure engagement in new-age production processes to ensure alignment (I). Creation of innovation garages to drive collaboration with startups to bridge the innovation capability gaps may be envisaged (T).

The reports suggest three key product segments that may drive growth of exports from the food processing sector, viz. bread and bakery products, protein concentrates, and cane or beet sugar (V). Developing clusters in proximity to ports with supporting infrastructure such as testing and quality assurance labs will be required for accelerating exports (I). The sector attracts one of the most stringent NTBs owing to food safety related aspects. Hence, one of the top priorities will be to advance both processing and production to ensure regulatory alignment with target markets (K). Further, addressing the NTB requirement of markets and consumer sensitivity towards the environment will also require exporters to take into account the hidden water and carbon footprint of their products (S). Considering the stringent NTB requirements and evolving nature of demand, it will be crucial to create awareness and support MSME R&D for development of suitable products (I). Technology can play a key role in streamlining sector operations, e.g. blockchain for addressing traceability and IoT for smart warehousing and cold chain management. (T).

Value addition and volume-led growth
- Undertake initiatives for improving value addition for key sectors such as furniture, electrical equipment, fabricated metal products, machinery and equipment, rubber and plastic, and automobiles.
Infrastructure investments
- Formulate a new SEZ policy and attract anchor investors, especially from hi-tech sectors to replicate the success of current SEZs.
- Develop partner government authorities (PGAs) infrastructure near key manufacturing hubs and ICDs.
- Deploy non-intrusive inspection systems at seaports, CFSs and ICDs for exports to reduce cargo release time of export containers.
Knowledge and capacity building
- Develop a centralised platform for business intelligence and market insights into priority products.
Sustainable supply chains
- Conclude FTAs with major global importing countries where India currently doesn’t have any active trade agreements (e.g. the US, the EU, the UK, GCC, African Free Trade Area, etc.).
- Encourage and incentivise private sector initiatives which enable net-zero/decarbonisation transition.
- Promote usage of sustainable aviation fuel via issuing green credits to MNCs using green flights for business.
Inclusive industrial development
- Set up an apex body for export promotion in India.
- Establish SEPCs in all Indian states where they do not exist.
- Make all the existing SEPCs fully functional (currently only some of the SEPCs are functional).
- Evaluate export-linked incentives (ELIs) for merchant exporters.
Technology enablement
- Develop a single integrated portal for providing end-to-end approvals required for conducting exports (state and Central government approvals) to improve ease of exporting.
- Integrate NLP-Marine with PGAs, the Indian Railways and other organisations which are not part of it.

Value addition and volume-led growth
- Airport operators can undertake annual time study initiatives to keep a check on the performance and efficiency of cargo terminal operators to minimise delays and congestion at airports.
Infrastructure investments
- Private developers can evaluate developing economic zones, industrial townships, and common facilities such as testing and certification labs near major ports of India based either on PPP or private sector development models.
- Invest in port terminal equipment to increase cargo handling productivity and facilitate the development of rail siding within terminals to cater to future cargo growth.
- Invest in major airports such as Delhi, Bengaluru and Mumbai to enhance the capacity of air cargo terminals.
Knowledge and capacity building
- Establish SME internationalisation centres in key export clusters for providing end-to-end support to organisations intending to conduct exports. Support services may include logistics, trade compliance, order and lead management, finance and insurance.
Sustainable supply chains
- Invest in electrification of port and airport handling equipment and renewable sources of power for electrifying the port and airports.
- Set goals to use rail and coastal shipping for export and cargo movement to reduce carbon emissions.
- Invest in technologies and startups working on engines based on sustainable aviation fuels.
Inclusive industrial development
- MSME players in India may evaluate forming private sector led export consortiums to aggregate their supply which could enable enhanced negotiation terms.
Technology enablement
- Implementation of globally accepted best practices in terms of advanced technology used for critical and high dwell time processes like cargo weighment and screening at ports and airports to reduce overall process dwell time.
- Integration of the airport systems with the IT systems across the export supply chain, including systems of major freight forwarders, government agencies such as customs, PGAs and DGFT.

Hear from our leaders

Vivek Prasad talks about how our export strategy must be inclusive and infrastructure-led with a focus on sustainable development, skilling and value addition.

Manpreet Singh Ahuja talks about how the VIKSIT framework offers a strategic roadmap to further elevate the electronics industry.

Arnab Basu outlines the top three key industries that are pivotal to making the USD 1 trillion merchandise exports a reality.

Mohammad Athar sheds light on the VIKSIT framework, a strategic approach to drive our export growth.

Ranen Banerjee emphasises how PwC India’s VIKSIT framework is crafted to empower all critical stakeholders in this ambitious endeavour.

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Manpreet Singh Ahuja

Chief Digital Officer and TMT sector Leader, PwC India

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VIKSIT

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Hear from our leaders

vivek viksit

Manpreet Singh Ahuja talks about how the VIKSIT framework

Arnab Basu outlines the top three key industries that are pi

Mohammad Athar sheds light on the VIKSIT framework, a strat

Viksit Ranen

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