Global Value Chains and the Missing Links

Saon Ray is Senior Fellow at the Indian Council for Research on International Economic Relations (ICRIER), New Delhi, India. An economist specializing in industry and international trade issues, her areas of interest include global value chains, technological upgrading of Indian industries, free trade agreements, and trade creation effects. She has published widely on these issues in books and journal articles. Her recent book is Impact of American Investment in India: A Socioeconomic Assessment (2014). Smita Miglani is Research Associate at the Indian Council for Research on International Economic Relations, New Delhi, India. She has an MPhil in Economics from Jawaharlal Nehru University, New Delhi and her areas of research interest include international trade and investment, WTO (GATS) and energy economics. Her work has been published in various reports, working papers, books and journals. Her research has contributed to India’s negotiating strategies in signing bilateral trade and investment agreements and other policy reform issues at the domestic level.

‘Effective participation in the Global Value Chains is indeed one of the most missing elements of India’s international trade. We started at independence as an inward-looking country with emphasis on 'import substitution' as the primary goal conserving foreign exchange to import the only the most essential goods. This licence permit raj of management had reached its limits and we ended up promoting inefficiencies, poor quality and high costs through this protectionism. We moved to the next phase in 1991 effectively opening up trade with 'export promotion' replacing our earlier policy of 'import substitution'. But so far as being part of an international chain of value addition, thus, importing raw materials or intermediate goods and re-exporting them after processing is concerned, we have miles to go. Schemes such as SEZs, EOUs, EPCG, Advance Authorisation schemes are steps in this direction. However, we have not become a major player in the Global Value Chains. The reasons for this situation are much more than mere EXIM policies or Customs procedures. The entire range of issues which the participating organisations have to deal with including infrastructure, finance, time taken to clear the goods, transport them to the factories and to re-export them need to be looked at. This book precisely and wonderfully does that. It is absolutely opportune that such a study is made at this time in the country. In addition to identifying the problems in general, it is important to study specific industries and their problems and issues if the studies have to be meaningful and this is the second biggest contribution of the book. I am confident that the book will be extremely useful for policymakers, practitioners, researchers and trade alike and it will encourage others to conduct more studies covering a larger number of industries.’P. V. Subba Rao, IRS (C&CE), Joint Secretary (COFEPOSA), Department of Revenue, Ministry of Finance, Government of India‘This book is an empirically rich analysis of the reasons for India's poor integration in global value chains (GVCs). The book also looks at what can be done to increase India's benefits from participation and upgrading in GVCs. Its analysis and conclusions should be of interest to both researchers and policymakers.’Dev Nathan, Visiting Professor, Institute for Human Development, New Delhi; Coordinator, GPN Studies, New Delhi; and Visiting Research Fellow, Center on Globalization, Governance and Competitiveness, Duke University, USA.

• List of Figures List of Tables Acknowledgements List of Abbreviations Part I: Concepts and Framework 1. Introduction Part II: Evidence of India’s Integration 2. Why is GVC Engagement Limited for Some Countries? 3. Conceptual Framework for the Book 4. Evidence of India’s Integration into GVCs 5. Integration of Developing Countries in GVCs and the Case of India: Survey Findings Part III: Integration across Sectors 6. Integration in the Automobile Value Chain: The Case of India 7. India in the Chemical GVCs 8. Integration in the Petrochemicals Sector in India 9. Integration in the Pharmaceutical Value Chain: The Case of Formulations in India 10. Integration in the Semiconductor Microchip Node in India 11. Integration in the Garments Value Chain: The Case of India 12. Integration in the Specialty Chemicals Value Chain: The Case of India Part IV: Conclusion and Policy Implications 13. Sectors that Hold Promise 14. Conclusion Index