According to a recent report from the World Bank (WB), India’s share in global trade has not kept pace with its rapidly growing economy. As a result, Vietnam and Bangladesh have overtaken India as low-cost manufacturing and export hubs.

Despite India’s impressive economic growth, the report reveals a decline in the proportion of trade in goods and services relative to its gross domestic product (GDP) over the past decade. Specifically, the report states, “India’s share in global exports of apparel, leather, textiles, and footwear (ALTF) initially grew from 0.9 percent in 2002 to a peak of 4.5 percent in 2013, but it subsequently declined to 3.5 percent in 2022.” In contrast, Bangladesh has captured 5.1 percent, while Vietnam has reached 5.9 percent of global ALTF exports in 2022.

The report also points out that, as China reduces its involvement in low-skill manufacturing due to rising wages, India has a unique opportunity to capitalize on this shift. Currently, countries like Bangladesh and Vietnam, along with advanced economies such as Germany and the Netherlands, are benefiting most from China’s diminishing market share. Notably, Bangladesh was the top beneficiary of China’s loss in global exports from low-skill sectors between 2015 and 2022, followed by Vietnam and Poland.

To help India remain competitive, the World Bank recommends reducing trade costs, lowering trade barriers, and enhancing trade integration. “This is an area where India could focus on…This is a call to action,” said Nora Dihel, a senior economist at the World Bank, in remarks to journalists in New Delhi.

Prime Minister Narendra Modi aims to establish India as a manufacturing hub as businesses diversify their supply chains away from China. His government has invested billions of dollars in subsidies to attract investment in key industries, such as electronics and chip-making, as reported by Bloomberg.

The World Bank projects continued rapid growth for the Indian economy, forecasting a rate of 7 percent for the current fiscal year ending in March 2025, following a growth rate of over 8 percent in the previous year. Additionally, the lender anticipates India’s growth to average 6.7 percent for the fiscal years 2025-26 and 2026-27.