Headed skywards: You could say that for India's exports

It started almost as an accident. When the Indian government laid down the foreign exchange neutrality norms-exports would have to match the value of imports over a five-year period-for foreign automobile majors, little did it realise that it was spawning a revolution of sorts that would, within a decade, find mention in the World Human Development Report of 2005. The beginning of the auto ancillary export revolution can be traced back to March 1997, when Ford India set up Visteon Automotive Systems India to supply components to Ford India in line with its international practice. That turned out to be a masterstroke-not only because Visteon has emerged as a key components supplier to other major automakers like Maruti Udyog and Toyota Kirloskar, but also because it started exporting a large portion of its output to meet the foreign exchange neutrality guidelines. This strategy has been successfully replicated by almost every other foreign auto major. Says Suhas Kadlaskar, Director (Finance), DaimlerChrysler India: "We expect our components exports to touch euro 100 million (Rs 540 crore) by the end of 2006. This year (2005), our export projection is euro 85 million (Rs 459 crore)."

The entry of multinationals in the auto and auto components space has forced Indian companies to benchmark their quality against international standards. The fact that several of these MNCs outsourced some of their requirements to domestic companies helped. Result: major Indian players such as Bharat Forge, Brakes India and Sundram Fasteners have emerged as reliable global suppliers to Toyota, Honda, Suzuki, General Motors and others. Consequently, export earnings from this sector have more than quadrupled from $2.4 billion in 1994-95 (Rs 7,555.2 crore at the then exchange rate) to $9.7 billion (Rs 42,680 crore) in 2004-05. Says Surinder Kapur, Chairman & MD, Sona Koyo Steering: "Original equipment manufacturers and Tier-I suppliers to global auto majors now consider us reliable partners."

The automobile sector, too, is eyeing foreign markets. Passenger car and SUV exports have zoomed at a CAGR of 57.40 per cent over the last three years-from 27,112 vehicles in 2000-01 to 166,413 vehicles in 2004-05; commercial vehicle and two-wheeler exports have also cantered along, at 21.44 per cent and 34.78 per cent, respectively, during this period. The main markets: Sri Lanka, Bangladesh, Nepal, Egypt, the Netherlands, South Africa and West Asia. And leading the surge are Hyundai, Tata Motors, Maruti and Bajaj Auto. Says Dilip Chenoy, Director General, Society of Indian Automobile Manufacturers: "India can become the global small car hub."

But autos and auto ancillaries are not the only new sectors making waves on the export front. The latest trade data shows that petroleum product exports have jumped from $3.57 billion (Rs 16,065 crore then) in 2003-04 to $6.79 billion (Rs 29,876 crore) in 2004-05, a 90.4 per cent increase-the highest jump recorded by any commodity. It's an irony; even as the country groans under the burden of rising crude prices, and the consequent rise in the oil import bill, oil majors such as Reliance Industries, Indian Oil Corporation, and Oil and Natural Gas Corporation are putting India on the world's petroleum export map.

The wheel turns: Oil is exported now!

If India's export story is ever made into a Bollywood movie (unlikely), it would have to be a multi-starrer. Another heavyweight in the cast would be the pharma sector. Players such as Ranbaxy, Dr Reddy's, Matrix, Cipla and others have established significant footprints on the global stage. But this could be only the tip of the iceberg. About $40-billion (Rs 1,76,000-crore) worth of drugs are going off patent this year and another $70 billion (Rs 3,08,000 crore) will do so in 2006. This could just provide Indian generic drug manufacturers with a window to grab a huge chunk of this pie, says a recent Assocham report. "Pharmaceutical exports may touch Rs 30,000 crore in 2007-08 from Rs 15,500 crore in 2003-04," the report adds.

Traditional export items like textiles, too, are perking up. The post-quota regime offers Indian textile exporters an opportunity to become preferred suppliers to international chains like Wal-Mart, Marks & Spencer, Saks Fifth Avenue and Hennes & Mauritz. No wonder, companies as diverse as the Rs 47-crore India Card Clothing to the Rs 73,184-crore Reliance Industries are ramping up their operations to cash in on this flood. Says S.P. Oswal, Chairman, Vardhaman Mills: "Exports are booming; 70 per cent of our yarn production is going to garment makers focussed on exports."

Similarly, the gems and jewellery sector, which is targeting exports of $20 billion (Rs 88,000 crore) in 2006-07, compared to $15.68 billion (Rs 68,992 crore) in 2004-05, is also moving up the value chain. Says Sanjay Kothari, Convenor, Gems & Jewellery Export Council: "Big exporters are embracing innovative ideas and hiring Italian designers to compete in the global market."

But the sectors that have really given Indian exports a profile it didn't have before are IT, ITEs and services. In 2004-05, the IT industry clocked exports of $17.2 billion (Rs 75,680 crore), up from $5.3 billion (Rs 24,910 crore then) in 2000-01. ITEs-BPO services added another $5 billion (Rs 22,000 crore). Little wonder that India now exports more invisibles than merchandise. The inflection point was reached in the first quarter of 2004-05. The RBI Bulletin dated September 2004 announced that during that quarter, exports of invisibles touched $17.7 billion (Rs 77,880 crore) compared to merchandise exports of $16.8 billion (Rs 73,920 crore).

With both traditional and modern sectors booming in the export markets, it's just a matter of time before the lumbering elephant catches up with the Asian Tigers and, hopefully, the rampaging dragon, too.