In its Trade and Development Report 2010, Unctad states that India has benefited from the opportunities offered by globalisation, mainly as an exporter of tradable services, while growth in its manufacturing sector has been driven primarily by domestic demand at much lower though creditable rates.
India?s manufacturing industry has grown much more slowly than China?s, and remained significant and relatively stable even after the 1997 Asian crisis. While over the periods of 1980-1989, 1990-1996 and 1997-2003 (post- Asian crisis) India?s manufacturing value added annual rates were 5.6%, 8.7% and 4.7%, whereas that of China grew at 2.1%, 11.8% and 14.1%.
During the 1997-2003 period, in India fewer industries were as export dependent as those in China. India?s exports were all traditional industries such as apparel, leather goods and textiles. Exports accounted for less than one-fifth of production in most manufacturing categories. However, apparent consumption (including imports) for imported luxury goods was significantly higher than domestic production, due to trade liberalisation, a growing middle and upper middle class of consumers, and the inability of Indian producers to meet this demand. Thus doing so India provided a market for a number of manufactured and semi-manufactured imports, and will continue to do so.
Unctad foresees that if this growth in India remains high, or accelerates further, from the structural perspective India may play an equally, if not more, important role as China as a future engine of growth and employment creation in other countries.