The notion that India doesn't need to export is falacious, and based on a 1950s socialistic economic viewpoint foisted by Nehru, and also adopted by NaMo/BJP by default (this is largely based on trade isolationism and import substitution, neither of which worked then or at any time for any country).
India runs a massive trade deficit - we have no choice but to export more to try to balance the trade deficit. Most of the items that dominate the import bill are consumption items or cannot be resold for a profit: Crude oil, Vegetable Oil, Coal, Gold, Arms & Ammunition, Diamonds & Gems. Of these, crude can be refined to higher-value petroleum products which are exported at a profit (Reliance does this), and Diamonds & Gems can be cut, polished and exported. The rest of the stuff cannot be re-exported at a profit, and there's no inexpensive local substitute that can be utilized in place of imports. There's no viable defense industry that can equip the Indian Armed Forces with weapons that actually work effectively - the Ordnance factories cannot even make reliable small arms, which is why the Indian Army prefers its 20-year old imported Bulgarian AK-47s to the local (and unreliable) INSAS rifle, which is now being phased out.
The easiest way to balance trade would have been to promote private-sector production and export of light engineering and electronics, much like all the Asian Tigers did successfully from about 1985 onwards, after the Plaza Accord:
Plaza Accord - Wikipedia, the free encyclopedia
The Plaza Accord failed in its original mission, but the Japanese succeeded in kick-starting large-scale electronics components and sub-assembly manufacturing in Korea, Taiwan, Malaysia, Indonesia, Thailand, Singapore, China and Vietnam, which were then bit-players of little consequence in Electronics, but now dominate world trade in Electronics.
India did not liberalize sufficiently quickly to take advantage of the improved terms of trade due to the Plaza Accord, and missed the electronics export bandwagon. By the time it became necessary to liberalize in 1991, it was too late for India and it had little or no capital or forex to do so anyway. By the time it had sufficient forex (Y2000 and later), electronics had advanced too far for India to effectively enter the area - it had only obsolete plants manufacturing obsolete tail-market components.
When the Nokia plant in Sriperumbudur was established around 2005, it had to bring in an entire modern electronics manufacturing supply-chain infrastructure - and by some miracle, it succeeded! It manufactured about $150B worth of cellphones before it shut down last year. Had a few similar plants and supply-chains been established, the exports from those few plants alone could have balanced the ~$100B/year trade-deficit on their own. However, that's not feasible now, thanks to the UPA II and retrospective taxation, and most of the electronics majors are in exit mode. Without both exports as well as domestic sales, there won't be sufficient economies in scale to be competitive - that's why China promotes both.
It would seem logical that everything should be done to remove friction or impedances to the growth of this high-value sector, but that's not the case. As I cited earlier, there are huge logistics and other issues that would make it imposssible for a small, high-value niche exporter to survive in India. You're not going to find the equivalents of small Chinese export-oriented electronics firms among homegrown firms, leave alone the likes of Sony or Panasonic. Without the exports to balance out the imports, the trade deficit will continue to widen, as it did last month, when overall exports dipped by 14% Year-on-Year.
To summarize, exports are imperative - without exports of value-added manufactured electronics sub-assemblies and finished goods, there's no way to sustain the imports of the raw materials and components. We'll be back to the '60s in no time, with things like NMI (Not Manufactured in India) certificates, Licenses/Permits and so on.
