IMPORT SUBSTITUTION AND EXPORT

PROMOTION AS DEVELOPMENT STRATEGIES

Facilitator: Presented By:

Prof. Samanta PGP GROUP 4
 EXPORT PROMOTION
The following export product group represents the highest dollar value
in Indian global shipment during 2017.

 1.Gems, precious metals: US$42.6 billion (14.4% of total exports)

 2.Mineral fuels including oil: $35.9 billion (12.1%)
 3.Machinery including computers: $16.7 billion (5.6%)
 4.Vehicles: $16.2 billion (5.5%)
 5.Organic chemicals: $13.6 billion (4.6%)
 6.Pharmaceuticals: $12.9 billion (4.4%)
 7.Iron, steel: $11.7 billion (4%)
 8.Clothing, accessories (not knit or crochet): $9 billion (3%)
 9.Electrical machinery, equipment: $8.8 billion (3%)
 10.Knit or crochet clothing, accessories: $8.3 billion (2.8%)
 MAJOR INDIAN EXPORT COMPANIES

India placed 54 corporations on the Forbes Global 2000

rankings.
 Reliance Industries (oil, gas) Tata Motors (cars, trucks) Indian
Oil (oil, gas) Coal India (diversified metals, mining) ITC
(tobacco) Bharat Heavy Electricals (electrical equipment)
Hindalco Industries (aluminum) Tata Steel (iron, steel) Bharat
Petroleum (oil, gas) Hindustan Petroleum (oil, gas)
 TDP linkages in the Import-substituting industry
Import substitution
Industry
Poor
Management Consumers benefit
Removal of from increased
Lack of Inefficiency domestic tariff availability of
Technological and quota imported goods at
upgradation restriction on lower price
imports

Increased
Fall in domestic competition from
Rise in imports
Production imported goods

Closure of Negative
Significant loss in implications for
domestic
employment Poverty
Factories
Examples:
1. Textile Sector in Tanzania
• Supported by World Bank and the International
Monetary Fund (IMF)
• Measure to liberalise trade:
o Withdrawing the role of the Government in the
production and commercial activities in favour of
the private sector
o Rationalising import tariffs
o Dismantling import restrictions
o Introducing a foreign exchange market
o Improving incentives for export performance
• Currently, trade liberalisation in shaped by regional
trade agreements associated with the bodies such as
the WTO, the SADC, the EAC.
2. Oil sector in India
• Major initiatives taken by GOI:
o Bilateral relationship between India and Norway
o India and Vietnam have stepped up cooperation in
the energy sector as ONGC Videsh and Petro
Vietnam Exploration Production Corporation has
signed an agreement
o To set up Petroleum, Chemicals and Petrochemicals
Investment Region (PCPIR) near Bina, M.P with an
investment worth around Rs. 1 trillion
o Approval to sign a MoU between India and U.S for
cooperation in gas hydrates for a period of 5 years.
• The National Gas Hydrate Program (NGHP)
Expedition-02 and 03 are advanced stage of
planning and are due in the period 2014-2017.
Under the program the Govt. plans to core 20 sand
prone sites and drill 40 wells.
TDP linkages in the Export-oriented Industry
Domestic Trade Growth in Favourable external
Policy measure ,i.e. Exports environment , i.e, the
several export quota facilities under
promotion measures the ATC

Expansion of Expansion of
Expansion of
Exports forward linkage
backward linkage
industries industries

Increase in demand Direct

for unskilled employment
labour effect
Indirect
employment and
Rise in relative wage Indirect employment
poverty effects
rate of unskilled and poverty effects
labour
Increased female Direct
employment in Rise in income of the poorer poverty
some sectors such households as unskilled effect
as apparels, carpet labour is the major source of
and footwear their income
 Examples:-
1. Ready Made Garment Industry from
Bangladesh
• Duty free market access to around 52
countries
• Reduced tariff facilities
• Trade deals – SAARC Preferential Trading
Arrangement , Asia-Pacific Trade
Agreement, Bay of Bengal Initiative for
Multi-Sectoral Technical and Economic
C0-operation, South Asian Free Trade Area,
Trade Preferential System among the OIC
member states.
2. Carpet Industry from India
• Carpet Export Promotion Council (CEPC)
– to promote and develop exports of
handmade carpets, Rugs and other flooring
coverings.
• Helps in R&D, quality assurance, timely
delivery of the products
• Government considering more concessions
to exporters
• Government doubles import duty to
promote ‘Make in India’
• Government is also planning to give
incentives to textile sector to boost
domestic manufacturing
 Comparison between IS and EP
strategies for Development
Import substitution
Export promotion

• Outward looking. • Inward looking.

• Promotion of infant export activities.
• Forces domestic entrepreneurs to make their
products technologically advanced and speed up
the learning process.
• The EP strategy naturally enables an economy to
take full advantage of scale economies.
• It is more capable of generating sustained high
economic growth in long run.
• More focus on intermediate or industrial goods
than IS regime.
• Developing infant industries for substitution of
manufactured imports.
• Lack of experience under protective wall of
tariffs.
• The developing countries do not have the
advantages of scale economies due to limited
domestic market.
• More focus on consumer goods.
Conclusion
• The diagnostic trade integration studies (DTIS) shows that the two
strategies are interlinked. Countries develop their productive capacity
and food security behind tariff walls as their competitiveness increases
and they meet their objectives of food security they begin to liberalise
their economies.
• Conclusion the overall lessons from country experiences would
suggest that whether astrology can bring desired results when pursued
in isolation. Therefore, a mix of these two Strategies is better for any
developing country for sustainable economic development.
References:
https://retail.economictimes.indiatimes.com/news/apparel-fashion/apparel/government-may-give-incentives-to-
textile-sector-to-boost-domestic-manufacturing/65285881

https://economictimes.indiatimes.com/topic/Carpet-Export-Promotion-Council

https://www.iaspoint.com/general-studies/is-make-in-india-an-import-substitution-strategy/

https://www.researchgate.net/publication/242557863_Trade_Development_and_Poverty_Linkage_A_Case_Stud
y_of_Cellular_Phone_in_Bangladesh/download
THANK YOU