What caused Indian engineering exports to figuratively implode?
As per the National Economic Survey 2021, India’s GDP is estimated to have contracted by a devastating 7.7% in the financial year 2020-2021. India’s exports are facing the question of survival like never before. India lags far behind Bangladesh (and many other comparatively smaller nations, despite having the capacity to supersede the competition). Myriads of factors pertain to this decline of the exports. For the sake of brevity and clarity, we shall mention a few of them:
Bangladesh exports posted a compounded annual growth rate of an impressive 8.6% over 2011-2019 versus that of India’s pitiful export growth of 0.9%. To better understand the power of exports in the economic growth of a country, consider ‘A’ and ‘B’ as two countries where ‘A’ is exporting its product(s) to ‘B’. Now, suppose the per unit price is ₹5. In sale of a single product of its kind, ‘A’ will have a gain of ₹5 plus the competitive advantage in respect to ‘B’ (the monetary competitive advantage stands at nearly the same amount as the product’s selling price, i.e., ₹5). That means, to export a product worth ₹5 may yield the benefit of ₹10 (and other benefits too) for the exporting country and same or more loss to the importing nation. The outperformance in the exports, as per the Economic Survey 2021, is because Bangladesh “exports those commodities in which it has a competitive advantage”. Bangladesh holds the third position out of the 46 Countries in United Nations List of Least Developed Countries (UNLDC). To make it simpler, Bangladesh is classified as a BPL state (Below Poverty Line) by UN. This LDC list is same as the Indian classification of its citizens into APL & BPL Categories. Thus, directly deducing from the above record, India has the upper hand in its status in the United Nations Conference for Trade and Development. This has been mentioned for the sake of better understanding the LDC List issued by the UN; there is no intention of making the great and proud people of Bangladesh feel or to be made felt inferior.
Here I shift my focus towards one of the major contributors in the Indian economy. If proper work would have been executed at the grassroots level, it would have yielded better results in economic development of the nation. According to The Brand Equity Foundation of India, engineering goods contribute 25% of India’s total exports in goods and is its largest foreign exchange earner. The engineering sector has a 30% weight in India’s Index of Industrial Production. In FY19, India’s engineering export stood at US$ 81.02 billion and for FY20, it stood at US$ 75.97 billion. Statistically, the downfall is visible. As per EEPC (Engineering Export Promotion Council) of India, the engineering exports from India witnessed year on year drop in most of India’s major markets in Europe, – in December 2020 figures, be it Germany (minus 20.08 percent), Belgium (minus 19.71 percent), UK (a whopping 35.56 percent setback) and France (minus 16.60 percent). The current state of India’s export affairs is miserable to say the least.
Engineers plan, design and shape the environment we all live in. Transport networks, roads, bridges, energy supplies, airways, AI, etc, are engineered systems that have made our lives easy. Infrastructure is also a product of a nation’s engineering sector. Apart from this, engineering has had a much wider and more lasting impact in helping fuel economic growth. Science and engineering have always played a pivotal role in any nation’s economic development. A study was commissioned by the Royal Academy of Engineering with the aim to determine if there is any measurable link between present engineering faculty and development of the (respective) nation. The research was launched in 2017 at a conference conducted by the Centre for Economics and Business Research. The research assessed 99 countries in order to measure the relative strength of each one’s engineering sector. By combining factors such as the number of engineering businesses, the quality of existing infrastructure, investments and exports of engineering (or engineered) goods and services, as well as research quality and so on, they determined an Index called the Engineering Index for each country. Using a ranking method based upon the performance of each nation against their (above mentioned) standards, Sweden came out on top, followed closely by Denmark and the Netherlands. India appears at 46th position on the Engineering Index, lagging far behind relatively smaller countries in terms of size and resources, e.g., Vietnam appears on the 38th rank on the same Engineering index. The aim of the study was to demonstrate the vital role that engineers play in our society at large and the research also demonstrates the link between the engineering capability and economic development in countries across the world. The commissioned research project was a success as it proved that there is a direct correlation in between engineering faculty and the progress of a country.
There are 195 countries in the world and only India produces 25% of World’s engineers. As per the US-based National Science Foundation’s ‘Science and Engineering Indicators 2018 report’, India is world’s no.1 country in producing Engineering and Science graduates. Yet, look where we as a nation stand in comparison to nations who should not have left us behind. India is, veritably, crushed in competition against such nations, who on paper, hold nothing on us. The Annual Employability Survey 2019 reported by Aspiring Minds reveals that 80% of Indian engineers are not fit for any job in the knowledge economy (you read that right). The survey further stressed on the lack of industry exposure amongst students. “Students are trapped in a college bubble. They have little to no industry exposure. Only 47% of students attend industry talks. Sixty percent of faculty do not discuss how engineering concepts apply to the industry,” the Aspiring Minds report rues. Despite this India’s low spending on R&D is one of the pitfalls that plague science, engineering and innovation in India. The US, followed by China, stands at the top of the list of nations that spend the most on their R&D sector. Though human resource in general and young people in particular play a vital role in any country’s economy, India in spite of being a young nation and no.1 nation in terms of producing engineers is failing to live up to her own expectations, let alone that of the world. Most of the Indian academicians and business experts boast and brag of India being a young nation but when the time comes to tap, harness, shape, channelise and invest in the same youth, their house of cards comes falling down. Perhaps my conclusion is gloomy, but how we wish we could apologise for the reality that we live in!
The writer has an MBA in Marketing and HR. [email protected]