NEW DELHI: The push for diversification of India’s exports to other countries is not just a short-term phenomenon but a larger policy shift for the medium- to long term as government realises the risk of putting all eggs in one basket.“In the past we have faced challenges in imports due to over reliance on some markets and now we are facing some challenges on exports. We are living in times when supply chains are being weaponised. It is a good wake up call for industry to diversify the export basket,” a government official said.The statement may be a signal to how government sought to step up efforts to reduce dependence on China after Covid and Galwan. Although the share of imports from China have increased in the last five years, the composition has changed a little, with inputs now having a bigger share (see graphic).Officials also acknowledge that these switches are not easy and certainly not possible overnight.

/

Experts said it is critical to have a diversified export and import basket in terms of products and destination or sources. “For a large country like India it is never good to focus on one country, especially since in Trump’s first term itself it became clear that US policy in general will be more volatile,” said Biswajit Dhar, a former professor at JNU. He said that over the last decade, China has reduced its share of US markets from around 21% to 12%, while for India, it’s been the other way round. He suggested to focus on Africa and CIS countries, especially with improvements in purchasing power.Sachin Chaturvedi, who heads think tank RIS, said diversification of the export basket is the only option before India and requires careful analysis and detailed monitoring of the supply chain and sources. “Over the last seven years, India’s exports have become more dependent on imports and its share in the global value chain has increased from 38% to 44%. We need a proper strategy for import diversification and export markets will find their way. We need to strengthen our ties with Africa and Latin America.”For govt, the immediate focus is Europe, with FTAs signed with the UK and the EFTA bloc and one with EU in the pipeline. Besides, the commerce department is working out a strategy to focus on 50 countries.In the past too, govts have sought diversification through schemes, such as Focus Africa and Focus LAC (Latin American Countries), only to abandon them for easier options like a thrust towards the US or other market.