The Indian government is in the final stages of setting up a new high-level body to cut regulatory hurdles and red tape, according to news reports. The structure, operating under the National Manufacturing Mission, is meant to slash bureaucratic delays and help triple merchandise exports by 2035. Tripling exports over nine years implies a compound annual growth rate (CAGR) of around 13%. Is this credible?
In theory, nothing is impossible. China has shown that truly exceptional outcomes can be achieved under exceptional circumstances. In practice, however, sustaining export growth of this magnitude would require no lost years, a buoyant global trading system rather than the emerging ‘trade fortresses’ triggered by Donald Trump’s tariffs, no global downturns, no prolonged policy slippage, and manufacturing exports growing faster than gross domestic product (GDP) year after year for a decade.
India would need not merely a good run but something close to the near-peak performance once achieved by the Asian tigers in their best years. Even then, those great historic performances occurred when China was a minnow rather than the dominant force looming over global manufacturing and trade as it is today. If this is genuinely India’s ambition, history offers some instructive benchmarks.
Consider first, South Korea, perhaps the only country to have lifted itself from poverty to first-world status within a single generation. Its best sustained export boom was a CAGR of around 18% between 1965 and 1985. Manufacturing expanded rapidly, moving up in the value-added chain from textiles to steel, automobiles and electronics. The State played a central role: the currency was undervalued, credit was directed, export targets were imposed and firms were punished for missing them. South Korea was poor, wages were low and global trade was expanding rapidly. Korea also benefited from unusually close trade and geopolitical ties with the US.
Taiwan followed a similar trajectory. During 1965–1980, its exports grew at roughly 16% per year. The formula was dense clusters of small and medium-sized enterprises, deep supplier networks, aggressive technology absorption and strong access to the American market. Taiwan managed double-digit export growth for around 15 years, again from a very low base and with low wages.
More relevant for India are Thailand and Malaysia, both middle-income and democratic—or semi-democratic—countries operating under constraints closer to India’s own. Thailand’s true export boom ran roughly from 1986 to 1996, before the Asian financial crisis, when merchandise exports increased at a CAGR of about 14%. This was powered by a sharp devaluation of the baht in 1984, a surge of Japanese foreign direct investment, integration into regional production networks, labour-intensive manufacturing and electronics assembly, a predictable trade regime and a global trade boom. Thailand became a classic late-comer export platform.
Between 1987 and 2000, Malaysia’s merchandise exports grew by almost 14% a year. The strategy was aggressive export-promotion industrialisation through foreign investment in free-trade zones, mainly from Japan but also from Taiwan and South Korea, which were by then seeking lower-wage locations. By 1996, manufactured goods—especially electrical machinery and electronics—accounted for over 80% of total exports. A stable currency, export-friendly policies, fast ports and customs clearance, a skilled semi-technical workforce and specialisation in electronics turned Malaysia into a key node in the global electronics supply chain.
As Thailand and Malaysia ran into limits in more recent years, due to messy politics and a lack of policy breakthroughs, a new Asian tiger emerged. Vietnam’s exports grew at around 14% a year from 2005 to 2024, as Vietnam transformed itself from a minor regional exporter into a global manufacturing hub. It is the only large economy today sustaining tiger-like export growth. As labour costs rose in China and geopolitical tensions intensified, Vietnam became the preferred destination for multinational companies such as Samsung, Apple’s contract manufacturers and Intel.
Vietnam is also a ‘super-joiner’ of trade agreements, winning preferential or duty-free access to many of the world’s largest markets. In a striking case of corporate-led growth, Samsung alone accounts for nearly 13.4% of Vietnam’s total exports, with the country serving as the company’s global smartphone production hub. Vietnam combines this with a young, literate and disciplined workforce at costs significantly below those of China, and even Thailand or Malaysia.
Despite global headwinds and tougher American trade policies, including a brief episode of ‘reciprocal tariffs’ in early 2025, Vietnam recorded a US$20bn (billion) trade surplus in 2025 and achieved GDP growth of 8%.
A charitable view is that we have made a start to emulate the Asian Tigers, four decades later. After all, India has become a big base for Apple’s smartphone exports. Apple’s share would be 5% of India’s exports this year and rising, but then India’s exports to GDP ratio is itself very low at about 21% whereas that of Vietnam is 86%. It will take a lot for export growth led by large companies to reach a meaningful share.
Beyond anecdotal evidence, history suggests that sustaining export growth of around 13% for a decade requires these conditions: cheap currency, strong central coordination and disciplined policy execution, a large surplus of labour at low wages, assured access to large and open markets, and a willingness to tolerate overcapacity and frequent failures. India currently possesses none of these in sufficient measure. Instead, India is facing headwinds from rising protectionism, aggressive dumping by China and reforms that are often procedural rather than outcome-oriented.
What India does have in abundance, instead, is red tape such as licences, circulars, registrations, permissions, returns, displays, registers, challans, renewals and notices, all of which lead to corruption.
According to a 2024 white paper by TeamLease RegTech, Indian businesses are subject to 1,536 Acts, translating into 69,233 compliances and 6,618 annual filings. Of these, 26,134 compliances prescribe imprisonment as a penalty for violations. Labour regulation alone accounts for 463 Acts (30.1%), 32,542 compliances (47%) and 3,048 filings (46%).
India’s weak manufacturing base, modest export performance and dense regulatory thicket are not new problems. Successive governments have tried to address them through incremental tinkering. The National Manufacturing Mission is one more. It was announced a year ago but has still not got going in any practical sense. Such efforts have been and will amount to too little, too late.
(This article first appeared in Business Standard newspaper)
When you write * India currently possesses none of these in sufficient measure*, you miss out on a vital missing link; that of traditionally minuscule R&D investment in manufacturing in India. It will be interesting to get an idea of R&D investment by the countries used in your insightful article.
Thailand, Malaysia are not equal to some of our States. Yet, they surpassed our export. Hopefully, the new pacts will remove the red tape and ease exports.
For a country facing multiple headwinds, India looks oddly relaxed. The stock market still hovers near record highs. Shopping malls are busy. Interest rates are stable. Car and bike sales are rising. High-end property sales are...
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