Electronic Export Boost – India Seatrade News

Tamil Nadu is experiencing a dream run in export. The state’s merchandise exports were $40.7 billion in FY23, up 15.6% year-on-year.

“This is significantly higher than the 6.9% growth rate recorded by India’s goods exports over the same period, demonstrating Tamil Nadu’s remarkable resilience to global shocks over the year,” said David Sinate, chief general manager of India Exim Bank.

Tamil Nadu is now the third largest exporter and accounts for 9% of Indian goods exports. The big winner is electronics, which have now trumped automobiles.

“In 2022-23, Tamil Nadu became the leader in electronics exports for the first time, beating Uttar Pradesh. TN’s balance sheet increased from $1.66 billion in 2020–21 to $5.37 billion in 2022–23 (see table). This is a big change as there are more investments coming in the future,” says Vishnu Venugopalan, MD and CEO of Guidance Tamil Nadu. In his opinion, this strong increase was due to the large contributions from Pegatron, Foxconn and Tata Electronics. New players like Cisco, which just announced investments in manufacturing in Tamil Nadu, “will help the state move up the value chain and the investments expected in the future will support this trend,” he adds.

Telecommunications instruments saw the highest year-on-year growth of 391.6% in FY23, driven by mobile phone exports from Tamil Nadu. The share of telecommunications equipment in Tamil Nadu’s total merchandise exports rose from just 2.2% in FY22 to 9.2% in FY23, making it the second largest exported product of the state.

In addition, export momentum did not slow down in FY24. According to data from India Exim Bank, Tamil Nadu’s merchandise exports reached US$6.9 billion in April-May of fiscal 24, up 1.6% year-on-year. This is much higher than the year-on-year decline in Indian goods export growth of -5.48% over the same period, Sinate adds.

This despite the weakening in Europe. “Five of the state’s top ten export destinations are European countries, which together accounted for almost 18.9% of the state’s total goods exports in FY23,” says Sinate. The decline in shipments of ready-made cotton and non-cotton apparel, cotton fabrics and ready-made garments was more than offset by the telecom and electronics boom.

According to data from India Exim Bank, Tamil Nadu’s exports in April-May FY24 were also fueled by telecom tools. Mobile phone exports to the US, Czech Republic, Italy, UK and Netherlands quadrupled. Also, the exports of medical devices and electronic instruments in fiscal year 2024 from April to May recorded year-on-year growth rates of 88.3% and 36.8%, respectively.

The icing on the cake? Auto components also posted a modest growth rate of 2.7% over the period. With EVs now on the rise to enter foreign markets, this trend should continue. “We aim to be an international mobility company and will consider exporting sooner rather than later,” says Ankush Aggarwal, Ola’s Chief Business Officer.

Industry experts say TN’s traditional manufacturing strengths, including a broader industrial footprint, also bring export advantages. “The industrial clusters are not limited to a specific region, but are spread across the entire state, enabling local production and the bundling of exports,” says Ankush Aggarwal. “Good road connections, the presence of three major ports and a major airport, and a robust corporate culture have helped both investors and exporters,” he adds.

But beyond those basics, the state should focus on expanding exports by diversifying into higher value-added segments, Sinate says. Given that TN has a dedicated program to extend benefits and subsidies to man-made fiber (MMF) yarns, MMF made from recycled materials, and technical textile manufacturing facilities, this focus is already in the works. According to data from India Exim Bank, exports of 13 of the top 15 products recorded positive year-on-year growth in FY23. These include motor vehicles/cars, car components, electric machines, industrial dairy machines, leather shoes, electronic instruments and petroleum products. Clearly, the boom in Tamil Nadu’s electronics and telecommunications sectors has not come at the expense of its traditional export products.

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