NEW DELHI: Employment generation in export-related activities is shrinking in India as it misses out to countries like Vietnam, Bangladesh and even Germany in taking advantage of China’s declining share of low-skilled manufacturing exports, the World Bank has said in its latest India Development report.
According to the World Bank, direct employment related to exports has fallen from a peak of 9.5% of total domestic employment in 2012 to 6.5% in 2020. There was a similar trend in indirect employment, which peaked at 9.6% in 2006 and then fell to 6.4% by 2020. The global agency argues that this has happened because the share of low-skilled manufacturing exports has fallen from over 50% in 2012 to around 35% in 2022.
“Because these (exports) sectors are highly capital-intensive, they are ill-suited to employ large shares of the Indian workforce,” the World Bank says in its report titled India’s Trade Opportunities in a Changing Global Context.
The report while raising India’s FY25 GDP forecast from 6.6% to 7% noted that to reach its $1 trillion export target by 2030, India needs to diversify its exports and increase its participation in Global Value Chains (GVCs). “Over the past decades, despite rapid overall economic growth, India’s trade in goods and services has decreased as a percentage of GDP and India’s participation in GVCs has fallen,” says the World Bank.
India’s share in global exports of labour-intensive manufactured goods like apparel, leather, textiles, and footwear (ALTF) initially grew from 0.9% in 2002 to a peak of 4.5% in 2013, but it subsequently declined to 3.5% in 2022. In contrast, Bangladesh and Vietnam have achieved strong growth, with Bangladesh reaching 5.1% and Vietnam 5.9% of global ALTF exports in 2022.
According to the WB report, capital-intensive sectors in 2020 accounted for 70% of manufacturing GVA and 50% of formal manufacturing job in India. In contrast, labor-intensive sectors, such as apparel and textiles, which account for less than 20% of formal manufacturing GVA, were responsible for over 40% of formal manufacturing jobs.
The report also highlighted India’s limited participation in Global value chains.
‘Low-skilled mfg exports fell to 35% in 2022’
As per the World Bank, direct employment related to exports has fallen from a peak of 9.5% of total domestic employment in 2012 to 6.5% in 2020. There was a similar trend in indirect jobs, which peaked at 9.6% in 2006 and then fell to 6.4% by 2020. The global agency argues that this has happened because the share of low-skilled manufacturing exports has fallen from over 50% in 2012 to around 35% in 2022