The publication ‘India’s Leading Exporters’ covers major exported product groups that have been selected based upon their achievements, growth trajectory and contribution towards strengthening India’s dominance in the global market, among others. The ten sectors1 featured in this publication together accounted for 94.5% of the total merchandise exports of India in FY07.

Chemicals and pharmaceuticals

This product group — including petroleum products — is the largest among all product groups and has been driving India’s merchandise exports in the last couple of years. Its contribution to total exports has shot up from 19.0% in FY03 to 27.9% in FY07. Within the group, petroleum products constituted the largest share in exports at 52.6%; in fact, petroleum products have been growing faster than chemicals and pharmaceuticals and during FY03-07, they have recorded a CAGR of 63.8%.

China has been playing a significant role in driving exports in this product group, especially exports of organic and inorganic chemicals and plastics and articles thereof; as a result, chemical and pharmaceutical exports to China have increased from around US$ 389.2 million in FY03 to US$ 1,299.26 million in FY07. Additionally, in FY07, the US and Russia emerged as promising destinations for Indian pharmaceutical product exports (under HS Code 30), with a contribution of around 17.3% and 8.8%, respectively.

IT and ITeS-BPO

The Indian IT and ITeS-BPO segment plays an important role in the Indian economy. In FY07, its exports constituted around 38.5% of the total service exports.

The export market is a major segment for the IT and ITeS-BPO segment, as they contributed as much as 65.5% to the total industry revenues in FY07. Out of these exports, IT services had a significant share of 57%, followed by ITeS-BPO at 26.8%. Moreover, during FY03-07 these exports grew at a CAGR of around 33.7%.

The IT services’ robust growth can be largely attributed to custom application development (CAD), which has a 45% share in total IT services exports. During FY03-07, these exports grew at a CAGR of 34.5% at US$ 18 billion. Similarly, the ITeS-BPO segment’s performance could be attributed to the growing BPO verticals such as finance and accounting, customer interaction services and human resource administration. During FY03-07, this segment grew at a CAGR of 35.4%. In FY07, the remaining export segments — engineering services, R&D and software products — also registered a substantial growth at US$4.9 billion, recording a CAGR of 34.4%.

Engineering goods

The engineering goods segment is the second-largest product group in India’s merchandise exports with a contribution of about 14.9%. During FY03-07, this segment grew at a CAGR of 37.1%. In FY07, the sub-segment, machinery and instruments, accounted for a majority share of 34.6% in the total engineering goods exports, followed by transport equipment at 26.1%. The transport equipment segment has been emerging as the fastest-growing segment, as it registered a CAGR of 38.5% during FY03-07.

The US has been a major export market for India’s engineering goods, especially electrical machinery and equipment exports and has a 26% share in these exports.

Minerals and metals

Minerals and metal product exports grew at a CAGR of 32.0% during FY03-07 at US$ 17.3 billion. The sector’s contribution to India’s total exports went up from 10.8% to 13.7% during the same period. In FY07, ores and minerals contributed 40.7% of this product group’s exports, followed by iron and steel at 30.3% and manufacture of metals at 29.1%.

China is the major market for minerals and metals, especially for iron ore as its share in India’s total iron ore exports has gone up from about 73.1% in FY04 to around 85.4% in FY07. This spurt in Chinese demand can be largely attributed to its massive infrastructure development. Likewise, the US has been emerging as a major market for India’s iron and steel exports, and its share in these exports almost doubled from 7.8% in FY03 to 13.6% in FY07.

Gems and jewellery

The gems and jewellery exports remained almost stagnant in FY07 due to sluggish gold demand in international markets and volatility in gold prices in 2006. Its exports grew at a CAGR of 14.6% during FY03-07 at US$ 15.7 billion, as per DGCIS. In FY07, the US accounted for a majority share of 30.3% in the total exports, followed by Hong Kong at 22%. Additionally, the UAE emerged as an important market for Indian gems and jewellery in the last few years and its contribution to export demand shot up from 7.3% in FY03 to 20.4% in FY07.

Food and agro products

Food and agro products, the fifth-largest product group in India’s export basket, contributed 9.9% of the total merchandise exports in FY07 and grossed US$12.5 billion. The segment grew at a CAGR of 16.9% during FY03-07. Among its sub-segments, marine product exports constituted the largest share at around 14% in FY07, followed by rice at 12.4%. Majority of India’s marine products was exported to the US in FY07 and were valued at US$ 285.2 million.

In the case of rice, Saudi Arabia accounted for 27.2% of its exports. In FY07, exports of sugar and sugar confectionery witnessed a triple digit growth at US$ 703.8 million, as these exports to Pakistan and Sri Lanka were worth US$ 356.1 million and US$ 76.2 million, up from around US$ 30.5 million and US$ 23.9 million, respectively, in FY06.The government’s decision to lift the ban on exports to Pakistan actually gave an impetus to exports growth.

Readymade garments

The readymade garment exports grew at a CAGR of 11.2% during FY03-07 and contributed 6.9% to the total merchandise exports in FY07 due to the phase-out of MFA in 2005 and rise in number of textile export oriented units. However, exports in this segment almost stagnated in FY07 due to fall in exports to the US, the UK and the UAE. These three countries together contributed over 49% of the total readymade garment exports in FY07. However, India did witness growth in some emerging markets such as the Netherlands, where exports increased two folds from US$ 158.2 million in FY01 to US$ 343.6 million in FY07. Also, exports to France jumped up from US$ 349.8 million in FY01 to US$ 654.9 million in FY07.

Textiles

Textile exports, excluding readymade garments, contributed around 6.6% to the total merchandise exports of India in FY07 and registered an average growth of 8.9% during FY04-07. The growth in FY07 was a result of rise in spun yarn and cloth production by 10.3% and 8.7%, respectively. Among its subsegments, exports of cotton yarn, fabrics and made ups had a share of 49.7% followed by man made fabrics at 26%. Majority of cotton yarn, fabrics and made ups exports went to the US, who accounted for 20% of exports. Bangladesh accounted for 5.5% of these exports. Similarly, exports of manmade staple fibres grew substantially from US$ 81.8 million in FY06 to US$ 196.5 million in FY07.

Leather products

Leather and leather product exports accounted for 2.3% of India’s total merchandise exports in FY07 at US$ 2.9 billion. They grew at a CAGR of 12.3% during FY03-07. Germany and Italy, which are important markets for India’s leather goods, accounted for almost equal shares of 13.5% in the total leather exports, followed by the UK at 11.9% and the US at 10.3%. Leather footwear and footwear components were the largest exported products among different categories of leather exports, as they constituted over 39% of the total leather exports in FY07.

The footwear segment constituted majority of the global exports, especially casual shoes, ladies shoes, athletic shoes; however, India’s footwear exports were still relatively lower than the global figures in all these segments. Also, the leather products’ export share in India’s total exports fell to 2.3% in FY07 from 3.5% in FY03, which is an indication that in India’s rapid development, a shift from traditional primary products to high-end variants is taking place. However, India still has a long way to go to match its global counterparts in terms of technological capabilities, quality and design.