THE ECONOMIC WEEKLY SPECIAL NUMBER JULY 1961

Export Strategy for the Next Decade

Surendra J Patel

What are the main elements on which an adequate policy for export expansion in the next decade
can be based ?

It would require more than reckless audacity to suggest any easy answers. And, yet, the main ele-
ments on which such a policy can be based are not so difficult to discern.
They are a combination of a radical shift in both the direction and composition of exports, the for-
mer constituting the m a i n basis of expansion in the early years of the Third Plan and the latter for a
longer-term solution.
The main, lines of the export strategy should consist of the following steps ;
1 Maximum effort in the dynamic directions mainly based on traditional items in the early phase
and extending to new items as the trade flows increase,
2 Serious drive for increasing exports of the " new" products to the pre-industrial countries.
The degree of success will depend on the unorthodox methods pursued and the vigour of their
execution,
[The author is indebted to research workers at the Indian Statistical Institute, New Delhi, for the
basic statistical work and extended discussions on the substance of the main arguments in this study.
The views expressed are those of the author and hare nothing to do with the position he holds in the
E C E of the United Nations.]

THE m a i n trends in exports f r o m Rs 600 crores — higher d u r i n g the of supply in their expanding
India are fairly well-known. Korean boom, lower in the period imports.
However, they may be briefly sum- of adjustment and somewhat i i ) The value of e x p o r t s to
marized so as to provide a proper higher, but fluctuating in the last the pre-industrial countries fell by
background for the line of t h i n k i n g few years. A three-year m o v i n g Its 60 crores or about 30 per cent.
suggested in these notes. ( F o r a average indicates no marked trend. This suggests that the small foot-
more detailed discussion, see the. Near-stagnation against a d o u b l i n g holds India had established in the
a u t h o r s " E x p o r t Prospects and Eco- of w o r l d trade — this is the setting carry postwar years: were reduced
nomic G r o w t h : I n d i a " in the Eco- against w h i c h the export prospects as the industrial countries regained
nomic Journal, September 1959.) for India must be outlined. these markets.
As a rough and ready calcula- ( b ) An analysis of the changes i i i ) India's trade relations
tion., India's share in w o r l d exports in the direction of exports (nee w i t h the traditional partners — the
has fallen f r o m over 10 per cent to Table. 1) d u r i n g the decade sug- private enterprise i n d u s t r i a l coun-
approximately 7-8 per cent f r o m gests pointers w h i c h have great re- tries - have thus acted as a dou-
the beginning to the end of the levance in developing a policy for ble-edged sword. Exports to them
nineteenth century. The decline has expansion. d i d not share in their e x p a n d i n g
continued throughout the twentieth imports and their exports cut i n t o
century — from 4 per cent in the i) The current value of ex-
ports to private enterprise indus- ours in t h i r d markets. Net result :
twenties to 3 per cent in the thir- w o r l d trade doubled, I n d i a n exports
ties, 2 per cent in the early fifties t r i a l countries (excluding Japan)
increased by 15 per cent, while stagnated.
and to only about 1 per cent in
recent years. S i m i l a r l y there was a their imports from the rest of the i v ) In the midst of this over-
f a l l in exports as a p r o p o r t i o n of w o r l d more than doubled. India all stagnation there was a begin-
n a t i o n a l income : f r o m about 16 was m a i n l y by-passed as a source ning of an i m p o r t a n t shift in
per cent to 10 per cent between the
end of the last century to the early
thirties of t h i s ; from 6-7 per oent
in the early postwar years to under
5 p e r cent by the end of the Second
Five Year Plan.
Performance of the Last Decade
(a) These trends have continued
in the past decade of p l a n n i n g in
India. T h i s decade witnessed per-
haps the most r a p i d expansion in
w o r l d trade ( a n n u a l average rate
of about 7 per c e n t ) . B u t the value
of I n d i a ' s exports averaged a r o u n d
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SPECIAL NUMBER JULY 1961
direction — more trade w i t h Japan 1
and the centrally planned econo-
mies. D u r i n g this decade exports
to these two areas increased f r o m
Rs 12.15 to Rs 95 crores. W i t h o u t
this redirection, the current value
of exports at the end of the Second
P l a n in fact would have been
slightly lower than at the beginning
of the First, Now these " d y n a m i c
directions" account for 15 per cent
of our exports as against less than
3 per cent in 1949-1950.
The Prospects in the D r a f t Outline
T h e D r a f t Outline of the T h i r d
Plan estimated total exports to rise
f r o m approximately Rs 640 crores
in 1960-1961 to Rs 740 crores
(derived by straight-line projec-
tion) by the end of the Plan, or by
16 per cent. A more recent paper,
hased on the studies of six commo-
dities ( i r o n ore. jute manufactures
tea, edible vegetable oils, sugar and
engineering and other products)
suggests the basis for revising the
estimate of the D r a f t Outline up-
w a r d by some 3-4 per cent. Exports
w i l l still continue to be a f a l l i n g
p r o p o r t i o n of national output.
Some observations may be made
regarding the suggested outlook for
tea and edible oils two of the
commodity groups studied in detail
by the W o r k i n g C r o u p ,
Tea : The W o r k i n g G r o u p has
suggested an export target of 610
m i l l i o n lbs by 1965-1966 against an
annual average of 478 m i l l i o n lbs
for 1958-1959. or an increase of
over 130 m i l l i o n lbs. An adequate
evaluation of the prospects of at-
t a i n i n g this target w o u l d require
detailed analysis of the m a i n direc-
tions to w h i c h these additional ex-
ports are estimated to go and the
extent of possible competition.
Since 1934-1938, w o r l d exports
of tea have increased by only one-
quarter, or about 1 per cent per
year — that is, less than the g r o w t h
of w o r l d p o p u l a t i o n and much
less than that of per capita i n -
comes. The w o r l d trade in tea may
be assumed f o r the next five years
to expand by 2 per cent per year
(a rather optimistic and not a con-
servative assumption) ; even then
this would lead to a me of no
more than 120 m i l l i o n lbs. But
the target of additional exports set
f o r , I n d i a alone seems to be higher
1 An expansion of exports at least
In the twenties and the thirties,
nearly one-tenth of Indian (as con-
stituted then) exports went to Japan
(see Table 1),
than the probable rise in w o r l d ex-
ports. Surely it is not expected that
our competitors, who account for
over 60 per cent of worId exports,
w o u l d be considerate enough to
take a holiday and let the next five
years be exclusively the I n d i a n Tea
Q u i n q u e n n i u m . If they do not ob-
lige us and we succeed in m a k i n g
the additional quantities available
for export, the consequent price
fall ( w h i c h cannot be simply as-
sumed away) w o u l d seriously de-
press the level of export proceeds.
The h i g h l y doubtful gains in the
volume of exports w i l l then per-
haps be more than offset by a fall
in the unit value. The recent ex-
perience of the producers of the
sister-beverage (coffee) illustrates
this point.
Edible Oils : The export target
suggested by the W o r k i n g Group
in about 250,000 tons of o i l per
year. India accounted f o r roughly
one-third of about 1 m i l l i o n tons
(converted to o i l equivalent) of
groundnut o i l exports in pre-war
years. In post-war years, world ex-
ports of groundnut o i l and products
have not risen above the level of
the thirties and the share of I n d i a
has fluctuated around one-tenth of
the total — much below this level
d u r i n g the last five years. Despite
the fact that exports from I n d i a
have, v i r t u a l l y ceased since 1956,
the w o r l d market j u i c e for ground-
tints has not only not shown any
increase hut has in fact receded
somewhat.
The target for o i l exports of
250,000 tons in 1965-1966 implies
that I n d i a would make a b i d to re-
verse the decline in the share in
w o r l d markets and almost recapture
in a matter of five years our pre-
war share. The target of additional
supplies from India w o u l d require
that our competitors, as in the case
of tea, would have to be content
w i t h stagnation, or even a possible,
decline in their exports, although
they have now a price advantage.
Can one reasonably assume such
co-operation on their part? Fur-
thermore, as in tea, any success we
m i g h t have in raising the volume of
exports w o u l d tend to n u l l i f y to a
considerable extent the expected
rise in export proceeds through a
fall in u n i t prices.
in line w i t h projected income
g r o w t h is an -essential element f o r
assuring that the expected income
1180
THE ECONOMIC WEEKLY
rise w i l l in fact materialize. Such
a g r o w t h of exports requires a
complete reversal of the stagnation
w h i c h has become so f i r m l y and
deeply entrenched over so long a
p e r i o d of time. It should be obvi-
ous that a reversal of this nature
can hardly be brought about
by a merely statistical "operation
optimism".
Export Strategy for the Next Decade
Before coming to a discussion of
the main lines of export strategy
for the next decade, it may be help-
f u l to point to the experience of
some other countries w h i c h in their
past history faced and successfully
overcame similar difficulties. The
examples that readily come to m i n d
are these :
(a) Private enterprise economies:
Japan, w h i c h displayed an energe-
tic export drive in the interwar
period and d u r i n g the fifties (based
on a major shift of direction of ex-
ports in the earlier period and in
the commodity structure in the
later o n e ) ; also I t a l y in the fifties.
( b ) Centrally planned economies :
China in the fifties, showing a
fundamental shift in the direction
but only a minor shift in the com-
modity structure of exports; most
of the Eastern European countries
which combined decisive changes
both in the direction and composi-
tion of exports. Another successful
example, and perhaps much more
relevant to I n d i a n conditions, is
provided by the Yugoslav export
drive in the fifties where b o t h the
direction and commodity structure
of exports underwent a pronounced
change. A close analysis of the
major factors responsible f o r the
success of the export drives in these
countries may p r o v i d e clues w h i c h
can he helpful in f o r m u l a t i n g an
adequate export strategy for I n d i a .
W h a t are the m a i n elements on
which an adequate policy for ex-
port expansion in the next decade
can be based? It w o u l d require
more than reckless audacity to
suggest any easy answers. Innocent
statistical exercises, which are
based on an analysis of export and
output experience of a few commo-
dities over the last few years only
and often overlooking the long-
term overall w o r l d e x p o r t setting,
could be easily misleading. A n d
yet, the m a i n elements on w h i c h
such a policy can be based are not
so complicated to discern.
 THE ECONOMIC WEEKLY
T h e y are a combination of a
radical shift i n both the d i r e c t i o n
and composition of exports, the
f o r m e r constituting the m a i n basis
o f expansion i n the e a r l y years o f
the T h i r d Plan and the latter for a
longer-term solution of the export
impasse. The manner in which
these two threads w o u l d be inter-
woven i n actual i m p l e m e n t a t i o n
can o n l y be indicated after a de-
tailed analysis of the degree of
d y n a m i s m existing in each major
commodity and market."
T h i s d y n a m i s m may lie r o u g h l y
characterized by the rate of g r o w t h
of exports : ( a ) stagnant or f a l l i n g ,
( b ) expanding by about 5 per cent
per year, and ( c ) r i s i n g very ra-
pidly. In the absence of such a
study, a tentative b e g i n n i n g may be
made by suggesting the possible
lines a l o n g w h i c h answers may be
f o u n d . A n analysis o f the m a i n
directions of I n d i a ' s exports {see
Table 1) seems to p r o v i d e the
most f r u i t f u l point of departure.
In recent years over 90 per cent
of India's exports were directed
to p r i v a t e enterprise economies :
two-thirds to industrial economies:
and one-fourth to pre-industrial
countries. A little under one-tenth
went to the c e n t r a l l y planned eco-
nomies. The possible trend in
India's exports for these m a j o r
markets are discussed below,
( a ) Private Enterprise Industrial
Countries (Excluding Japan)
Over the last few decades the
essence of I n d i a ' s export experience
in this area has been a v i r t u a l
stagnation. It is not because these
markets were stagnant. Since the
late twenties the current value of
imports i n t o these countries has
more than t r e b l e d ; but their i m -
ports f r o m I n d i a valued even at
current prices have remained al-
most unchanged. Efforts to promote
exports can no doubt be increased.
M o r e trade missions can be sent
and e x h i b i t i o n s and fairs be h e l d .
The urgent need for expanding
trade can be more eloquently ex-
pressed. Better studies of these
markets can be undertaken. New
2
Such a study of the last ten years'
experience would indeed he a (treat
help. In this as well as in other
sectors of the economy, all sorts of
calculations are being set, while the
live operational experience of this
economy over the last decade of
economic planning is still patiently
waiting to yield a rich harvest to a
devoted investigator.
staff, well-versed in marketing
techniques and efficient w i t h ready
smiles, can be h i r e d . The capa-
ciousness of variations in demand
and u n i t prices may be more pre-
cisely interpreted by d e r i v i n g some
correlations. I n t r i g u i n g suggestions
on v a r i a b l e exchange rates can be
explored. The scale of sales, ex-
cise and export taxes and the so-
called "restrictive" export practices
can be revised. W i t h a l l this done
and perhaps more, how w i l l our
t r a d i t i o n a l exports fare? The ans-
wer, p l a i n l y seated, w o u l d appear
to be : more or less as they d i d
over the past l o u r decades. A exports has cut sharply into the
little rise, often offset by a little
f a l l , and if we are more fortunate
s t u m b l i n g to a level some 10-20
per cent higher by the end of this
decade. A n y suggestion of a diffe-
rent, that is a more cheerful, order
of expansion w o u l d have to be
much more documented to be
credible.
Selling to Wrong Places
India's export experience in this
area may be s i m p l y s u m m a r i z e d :
we have been selling w r o n g things
to the w r o n g places. Offering more
of the same things to the same mar-
kets w h i c h no longer want more of
them can h a r d l y raise our export
proceeds. F o r m a t i o n of the Com-
mon M a r k e t and other trading
blocks w i l l o n l y make the task more
complicated. I f w i t h eager enthu-
siasm we were to push in this b l i n d
alley by m a k i n g available a larger
q u a n t i t y of most of the t r a d i t i o n a l
e x p o r t products, there w o u l d o n l y
be a rebound — t h r o u g h sharply
reduced prices — to snipe us in the
back. W i t h all the w o r l d experience
before us, we cannot then reason-
a b l y put up a face of the innocently
injured.
T h i s unwelcome reality is often
recognized in words ( " a l l this is
k n o w n " ) , but finds only a feeble
expression i n policy f o r m u l a t i o n . I t
w o u l d indeed be i l l u m i n a t i n g to
determine the total effort (measured
in terms of money, staff e m p l o y e d
a n d the amount of general intellec-
t u a l attention devoted) put into
trade expansion in each of the three
major regions shown in Table 1
One need not be surprised at all is
an inverse correlation is f o u n d to
exist between the i n p u t of efforts
and increments in exports in these
areas. T h i s w o u l d suggest that
there is a significant gap between
acceptance of certain ideas vn p r i n
1181
SPECIAL NUMBER JULY 1961
ciple and their reflection in chan
nels of p o l i c y implementation.
On the basis of the consideration
suggested above and despite efforts a
present envisaged to promote export;
to the private enterprise i n d u s t r i a l
countries ( e x c l u d i n g J a p a n ) , it doe
not seem l i k e l y that they would ris
f r o m Rs 380 crores in 1959-1960
to more than Rs 420-440 crores in
1965-1966 and Rs 4 6 0 4 8 0 crores in
1970-1971.
(b) Pre-Industrial Countries
In these markets, the recovery of
the i n d u s t r i a l countries and of their
little beach-heads we had gained in
the early postwar years. This decline
in the absolute value, and even
more in the relative share, of India's
exports took place in the early
fifties. In these years the w o r l d ex-
port markets were still dominated
by scarcities of supplies and export
competition was much less intense
than at present.
Like I n d i a , most of these coun-
tries are exporters of p r i m a r y pro-
ducts. They have s i m i l a r l y been
facing difficulties in raising their
e x p o r t proceeds. These are deve-
l o p i n g countries and as their p o l i -
cies of raising investment take
clearer shape and attain firmer exe-
cution, they w i l l increasingly face
c r i t i c a l shortages of foreign ex-
change. Their i m p o r t structure
w i l l also show a marked change in
favour of capital goods. The i m -
port? of t r a d i t i o n a l or simpler forms.
of manufactured consumer goods
such as textiles etc. w o u l d have to
be restricted and many of them
domestically produced.
In these markets, the broad ex-
p o r t strategy w i l l have to be: at
least to h o l d ( a n d if possible ex-
pand) the present level of our t r a d i -
t i o n a l exports and to pursue aggres-
sive e x p o r t policies in the " n e w "
(engineering i n general and c a p i t a l
goods in p a r t i c u l a r ) goods. Judged
by the canons of liberal trade p o l i -
cies. I n d i a has been a great sinner
on the i m p o r t side, but very v i r t u -
ous on the export side. It can h a r d l y
be i m a g i n e d that in an intensely
competitive field the appeal of our
independent foreign policy would
be an adequate offset against a l l the
advantages enjoyed by the establish-
ed. N o r should it be expected that
the odds faced by the "newcomer"
w o u l d be overcome if the e x p o r t
d r i v e was to be carried out by
SPECIAL NUMBER JULY 1961 THE ECONOMIC WEEKLY
THE ECONOMIC WEEKLY
hundreds of small traders, whose
valuation of f o r e i g n exchange is
guided solely by its equivalence in
domestic currency and whose ener-
gies are activated proportionately to
possibilities o f profit. I n view o f
the usual abundance of hopes and
indifferent performance in the past,
it seems essential that the export
trade in the new commodities be
handled by a centralized State
T r a d i n g C o r p o r a t i o n w h i c h can
make not o n l y agreements but many
other arrangements whereby the ex-
ports of these new items is made
competitive.
The Dynamic Commodities
The new or the " d y n a m i c " com-
modities now account for Only 1-2
per cent of India's exports, or about
Rs 10 crores. An energetic export
drive, conducted by a neutralized
agency, and c o m b i n i n g various ele-
ments of export subsidization ( Y u -
goslav experience in this field has
a lot to o f f e r ) , m i g h t lead to an
expansion of these exports from
about Rs 10 crores to Rs 50 crores
by 1965-1966 and to Rs 100-200
crores by 1970-1971. The export
drive w i l l have obviously to be co-
ordinated w i t h the possibilities of
m a k i n g these goods available for
export. If these orders of magni-
tude are attained I n d i a w o u l d have
made a significant change in the
c o m m o d i t y composition of exports
the dynamic commodities would
then account for 15-25 per cent of
total exports towards the end of the
decade. We can then expect to
benefit increasingly from the m a i n
lines of expansion in internalional
trade f r o m the seventies.
Summarizing the indications
shown above, the trade potential
may be estimated as Rs 190-210
crores by 1965-1966 and Rs 250-350
crores by 1970-1971 against Rs 150
crores in 1959-1960. It need not be
emphasized that these potential
gains can only be reached if India's
export d r i v e is made more vigorous
and is organized more efficiently
along unconventional lines.
( c ) The Dynamic Directions
Japan and the Centrally Planned
Economies
As shown in T a b l e 1, these direc-
tions alone have been responsible
f o r more than the entire amount of
expansion in I n d i a ' s total export
earnings d u r i n g the last decade.
Exports in all other places have in
fact f a l l e n . W i t h o u t a detailed
study of the i n d i v i d u a l commodities
that are exported to the dynamic
directions, it is indeed difficult to
indicate the potential expansion of
exports to these destinations. In a
r o u g h and ready way — but only
that and no more — a broad order
of magnitudes may be suggested so
that it can be judged whether a de-
tailed study m i g h t be considered
worth undertaking.
Japan: Over the last decade
India's exports to Japan have risen
f r o m Rs 7-8 crores to about Rs 35
crores, or a p p r o x i m a t e l y five-fold.
F a i r l y clear ideas are now available
about the potential expansion of
steel o u t p u t in Japan d u r i n g the
next ten years. I n d i a can easily be-
come the major supplier of Japan's
expanding iron ore imports. Some
estimates can also be made for ex-
ports of short-staple raw cotton.
Moreover, the Japanese economy is
expected to keep on g r o w i n g at 8-9
per cent per year for the next ten
years. In such a r a p i d l y expanding
market it should be possible for
I n d i a to raise the exports of many
other commodities w h i c h at present
p l a y o n l y an insignificant r o l e . On
the basis of these considerations the
exports to Japan can be raised to
about Rs 60-75 crores by the end
of the T h i r d Flan and to about Rs
90-110 crores by the end of the
F o u r t h . The rate of expansion in
the latter period w o u l d be lower
than in the former, but not very
different f r o m the estimated expan-
sion of i n d u s t r i a l output and pre-
sumably total i m p o r t s in Japan.
Most of the expansion to Japan
is concentrated in two commodities:
i r o n ore and raw cotton. Since the
destination is o n l y one country the
f o r m u l a t i o n and the execution of
the policies needed to attain this
order of magnitude w o u l d be rela-
tively easier to accomplish here
than elsewhere. Even w i t h this ex-
pansion, the share of Japan in
India's total exports by 1970 w o u l d
not be much different f r o m that in
the inter-war period (see Tables 1
and 2 ) .
Centrally Planned Economies:
India's trade w i t h these economies
was almost stagnant throughout the
interwar and the early postwar
periods. But in contrast t o o u r
experience w i t h the other t r a d i t i o n a l
partners ( i n d u s t r i a l countries in the
west), this stagnation cannot be
a t t r i b u t e d to a saturation in demand
for the commodities that I n d i a
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SPECIAL NUMBER JULY 1961
t r a d i t i o n a l l y exports. The reasons
were two-fold. Firstly, the trade
policies in these countries centred
on i m p o r t i n g capital and inter-
mediate goods and restricting very
severely all other forms of i m p o r t s .
Secondly, there was nearly a total
absence of trade and other contacts
between them and I n d i a .
The possibilities of e x p o r t expan-
sion to these markets do not seem
to be restricted, as w i t h our tradi-
tional trade partners, by any lack
of need on their part for the pro-
ducts which I n d i a has been export-
i n g . The g r o w t h of these economies*
over the last few decades has pro-
ceeded at a r a p i d pace without re-
course to products that I n d i a t r a d i -
tionally exports to the w e s t e r coun-
tries. It may w e l l be that these
materials, so far not available or
only inadequately available in their
markets, w o u l d command a marked
cost advantage. 3 The barriers
against enlarged trade are non-
economic in character. W i t h the
steady removal of the two factors
i m p e d i n g the g r o w t h of such trade
(and that is the general t r e n d ) , ex-
ports of the t r a d i t i o n a l commodities
in this direction can be expanded
very r a p i d l y at a rate consider-
ably higher than the average animal
rise in imports (about 10 per cent)
and immediately w i t h o u t w a i t i n g
for a thorough diversification of the
commodity structure of exports
f r o m India.
' Soft ' Goods and ' Hard ' Goods
Moreover, there are some other
factors that, would now favour the
expansion of I n d i a n exports to these
economies. Due to the r a p i d ex-
pansion of the capital goods indus-
tries, these countries are in a posi-
tion to supply I n d i a w i t h her press-
ing requirements of i m p o r t e d ma-
chinery and equipment. In recent
years, more attention has been de-
voted to considerations of cost,
benefits f r o m i n t e r n a t i o n a l speciali-
zation and to increasing r a p i d l y the
supplies of many consumer goods.
As a result. I n d i a can also expect to
increase the exports of m a n y con-
sumer goods for w h i c h there exist
large unsatisfied demands. A pro-
per approach based on long-term
exchanges can relieve these econo-
mies of t h e i r " s o f t " goods. Some
of their "soft" goods ( f o r instance,
3
A detailed and careful study of these
markets would, it seems, provide a
very valuable basis for formulating the
policies for export expansion.
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machine tools of a standard k i n d ,
o i l - d r i l l i n g equipment, crude o i l ,
etc) w o u l d indeed be " h a r d " goods
f o r I n d i a . Thus the trade f l o w s i n
both directions have the basis f o r
e x p a n d i n g r a p i d l y in a complemen-
t a r y manner — that is, the exports
of each financing the i m p o r t s of the
other. Some of the very serious
p a y m e n t difficulties w h i c h I n d i a has
faced in her trade w i t h the m a j o r
traditional partners in the west
w o u l d not arise in increasing trade
flows w i t h the centrally planned
economies.
The experience of the last decade
w o u l d seem to support this line of
reasoning. T h e value of exports in
this direction has gone up f r o m Rs
5 crores in the early fifties to about
Rs 60 crores in recent years — a
twelve-fold increase, w h i c h is nearly
equal to the entire expansion in
India's total exports in this p e r i o d .
The bilateral agreements, recently
concluded, suggest that the exports
in this direction may he doubled
by the m i d d l e of the T h i r d Plan.
Assuming an annual rise of 10-12
per cent for the r e m a i n i n g period
of the T h i r d Plan, it can he suggest-
ed that the total value may be about
Rs 150-160 crores. After that
p e r i o d , at a rate of g r o w t h of 10
per cent — r o u g h l y the probable
rate of expansion in their overall
imports the w o r k i n g order of ex-
port estimate w o u l d be Rs 210-240
by 1970-1971. A large sum indeed,
but considering the reasoning above,
not p a r t i c u l a r l y an audacious ex-
pectation !
Relative Certainty
A n a d d i t i o n a l advantage o f trade
flow in this direction would be its
relative certainty. Once the agree-
ments have been concluded and the
necessary preparations to supply
the commodities made, one can cal-
culate f a i r l y accurately the export
proceeds that w o u l d be received
d u r i n g the next few years. India's
e x p o r t earnings, l i k e those of the
other p r i m a r y p r o d u c i n g countries,
have fluctuated w i l d l y and e r r a t i c a l l y
over the years — the outlook each
year being just as uncertain as in
crop o u t p u t . I n both the c r u c i a l
sectors of the I n d i a n economy —
agriculture and exports — precise
forecasting and control is very
severely l i m i t e d . The r a p i d expan-
sion o f . exports to the centrally
planned economies w o u l d introduce
a much-needed b u i l t - i n stabilizer i n
t h e e x p o r t trade. I t c o u l d p l a y a
SPECIAL NUMBER JULY 1961
role not altogether d i s s i m i l a r f r o m tions, 4 the measures leading to the
that o f i r r i g a t i o n i n a g r i c u l t u r e , i f necessary reorganization of the ex-
followed w i t h similar vision and p o r t drive, the steps necessary to
vigour. b r i n g about the required rise in
The broad order of expansion output and export availabilities. I n
that may be envisaged for the dyna- the process, some of the flaws i m -
mic directions is shown b e l o w : p l i c i t in the reasoning of this study
may he discovered; but it is also
possible that other more p r o m i s i n g
avenues m a y be opened. T h i s w o u l d
require the realization in policy
that I n d i a is h o l d i n g u n b i l l e d the
dead dream of increasing the t r a d i -
tional exports to the t r a d i t i o n a l
partners.
The increase that can be reason- In brief, it is suggested that the
ably expected by the end of the m a i n line of the export strategy for
T h i r d Plan could amount to Rs the next decade should consist of
115-140 crores. Its importance is these major steps—in order of their
suggested by the fact that even if importance and p r i o r i t y .
the trade in all other destinations 1. M a x i m u m effort in the dyna-
s i m p l y stagnated (as may w e l l be m i c directions, m a i n l y based
the case), this sector alone w o u l d on t r a d i t i o n a l items in the
assure a 3-4 per cent annual rate of early phase and extending to
g r o w t h in total exports or 18-22 new items as the trade flows
per cent by 1965. Hence the i m - increase. Even if everything
perative need to shift the focus of else f a i l e d , success in this
India's export p r o m o t i o n efforts. would assure a rise in total
Summary and Conclusions exports by one-fifth to one-
quarter in the next five years.
The line of reasoning in this study
suggests the f o l l o w i n g orders of 2. Serious drive for increasing
exports of the " n e w " products
magnitude of expansion of exports
to the pre-industrial countries.
in various directions (see Table 2 ) .
The degree o f success w i l l de-
Presented this way. the prospects pend on the unorthodox me-
look t a n t a l i z i n g ! The century and a thods pursued and the vigour
half long f a l l in India's exports as of their execution.
a share of w o r l d exports and of 3. M a i n t a i n i n g , and if possible
India's national output w o u l d be expanding somewhat, the level
reversed. A significant measure of of traditional exports to the
diversification o f direction (and traditional trade partners
necessarily of composition) w i l l he while placing major reliance
attained. ( f o r expanding exports) on
the development of exports of
The outline of the projected pal- " n e w " commodities. Rut not
tern may be dismissed by the scep- p u t t i n g too many resources or
tics as another statistical exercise in hopes in this so that a pro-
" O p e r a t i o n O p t i m i s m " , Before do- bable disappointment does
i n g so, however, it may he w o r t h not lead to too many bitter
while to w o r k out in concrete de- tears,
tails the "logistics" involved 1
estimating the volume of the com- The relevance of the various commo-
dity studies can he meaningfully as-
modities that are likely to he ex- sessed only when broken down by
ported in each of the major direc- major direction.
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