Telangana becoming exports powerhouse
The State can tap more opportunities by strengthening its infrastructure for testing, production and logistics, says Exim Bank MD
Hyderabad: Telangana is strengthening its efforts to increase its exports across categories. Merchandise exports from the State in 2019-20 were valued at $7.4 billion, growing at an annual average growth rate (AAGR) of 8.1 per cent between 2015-16 and 2019-20 period, significantly higher than the national AAGR of 4.7 per cent.
The key destinations for the merchandise exports from Telangana are the US (28 per cent), China (six per cent), Russia (four per cent), the UAE (four per cent) and Bangladesh (four per cent).
Highlighting that the growth pattern continues, David Rasquinha, MD, India Exim Bank told Telangana Today, “During 2020-21, up to September 2020, Telangana’s exports were valued at $4.1 billion, registering a year-on-year increase of 14 per cent over the same period in 2019-20.”
Telangana currently has 34 operational SEZs and as of 2020, the State has the third highest number of SEZs, next just to Tamil Nadu and Maharashtra, which have 46 and 37 operational SEZs, respectively. Out of the 34 SEZs operating in Telangana, 24 belong to the IT/ITeS sector. The State can focus on diversifying the SEZs and build sector-specific clusters to create more avenues for economic growth, he noted.
Electronics landscape
Telangana accounts for six per cent of the electronics production in India and has significant headroom for growth. While the State has been pro-active in enacting its own policy to boost the growth of the sector, it could benefit from the Centre’s Production Linked Incentive Scheme and Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors.
He said, “Focus should be laid on developing sub-segments that entail relatively higher value addition, like design and manufacturing, instead of assembling. Apart from increasing the State’s export revenue, the electronics manufacturing sector can play an important role of integrating the State into the Global Value Chains (GVCs) of downstream industries such as mobile phones, semiconductors and consumer electronics.”
“Further, given the large presence of specialised sub-segments such as medical, electronics device, fabless chip design, and emerging industries such as electric vehicle and power electronics, Telangana is uniquely positioned to leverage the export potential across the niche areas,” he added.
Food processing
Telangana accounts for substantial agricultural produce ranging from rice, maize, lemon, grapes, mango and soybean. In particular, the State accounted for the highest production of turmeric and sweet orange, third highest production of tea and coffee, and the fourth highest production of marine fish.
“The State could significantly boost its exports from the agro and food processing sectors by focusing on the development of infrastructure and setting up of agro-processing clusters and food parks, food testing & quality control labs and creating an efficient supply chain,” he recommended.
Further, there is a huge potential to promote inland fisheries, organised meat processing, greenhouse and exotic vegetable cultivation in the State.
Renewable energy
Telangana is one of the fastest growing States in India in terms of installation of solar power and ranks second in terms of solar power generation, after Karnataka. In order to cater to the growing energy demand and to facilitate faster uptake of renewable energy, Telangana could further expand its network of solar power plants and attract investments for setting up manufacturing of photovoltaic cells, which are mostly imported from China.
Life sciences
Telangana accounts for about 30 per cent of India’s pharmaceutical production, 40 per cent of total bulk drugs production and 50 per cent of the bulk drug exports from India in 2019-20. Over the last four years, Telangana has attracted over Rs 10,000 crore investments.
Rasquinha added, “The State can focus on integrating its ecosystem into the global value chain by building capacities to export critical inputs for further processing.”
Infra for exports
Apart from making the State’s exports more competitive in the international markets, development of export-enabling infrastructure can play a crucial role in re-routing the foreign trade flows of neighbouring States via Telangana. The State could develop Inland Container Depots through which hinterland customers can receive port services more conveniently, closer to their premises.
Exim Bank chief further noted, “Telangana has performed almost at par with the coastal States such as Tamil Nadu and Maharashtra in terms of its logistics infrastructure. This reflects the State’s efforts to reduce congestion and delays of exports through various transport modes via a system that allows global traders to submit clearance forms at a single window and complete all the formalities at the same location. This has also eased the process of customs clearance.”
GI tagging
The State government could further capitalise on its Geographical Indication (GI) tags in the international markets. The State could consider adopting a two-pronged approach – first, identifying new products from different categories which can be conferred the GI status and second, branding the existing GI products to leverage the region-specific specialties (such as Pochampalli Ikat, Cheriyal Paintings, Hyderabadi Haleem and Gadwal Sarees).
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