MSMEs could increase exports in the long term with government push: State Bank of India
May 7, 2020
The government must push micro, small, and medium enterprises to increase consumer goods exports to take advantage of post-pandemic trade, according to the State Bank of India.
MSMEs in India have the potential to benefit from the post-pandemic global trade paradigm, the SBI said in its ‘Ecowrap’ report on Thursday, accessed by the Press Trust of India. The greatest number of consumer goods MSMEs in India are in the textiles and clothing sector at 17.3% of total MSMEs, according to the report, which said that India has a “comparative advantage” in trade in this sector.
“Although, the revealed comparative advantage [RCA] for India is lower than China as far as capital goods exports are concerned, India can still capitalise on this opportunity to push its capital goods exports,” read the report. “However, the bigger opportunity right now is in the consumer goods sector, in which India has an RCA greater than China.”
Calling 2020 a lost year, the SBI report suggested that India should think long term and build up relations that would allow it to take over trade opportunities it believes will be vacated by China.
“How India manoeuvres the geopolitical space will clearly determine how successful it is in becoming an export behemoth,” read the report. “With just 1.7% in [the] world's merchandise exports, India has a long road ahead to catch up with China.”
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