It’s taken all of 15 years for India to increase its share in world trade from 0.5% to 1.5%. So, when economic soothsayers, notably CK Prahalad, portray a near seven-fold jump in market share in the next 15 years—in a market where the battle is between nations, a market that has grown at an average of 13% over the last five years—as being within the realm of possibility, the first reaction might be to say: "people, do the math!’

Prahalad believes it’s possible as India would have achieved the necessary "economic strength, technological vitality and moral leadership" in the global scheme of things. India has a lot going for it. For one, there’s the GDP growth story, which is unleashing capabilities in virtually every sector, serving as a natural launch pad for Indian trade.

In select sectors, India has established a firm foothold in the world market. The $40 billion IT industry, which accounted for about 25% of India’s exports in 2007-08, is on course to hit $60 billion by 2010. And S Ramadorai, CEO and MD, TCS, says, "we haven’t even scratched the surface". India is gaining ground as a production base. Low-cost is an obvious trump card, good examples being (besides software) gems and jewellery, pharmaceuticals, textiles and auto ancillaries.

Still, India needs a lot more if it is to get to 10%. It’s a big number—10%—and an illustrious grouping. Today, only one country, the US, has managed to breach the mark—in 2007; China, which has drilled into place a win-at-all-costs export strategy over the past decade, is expected to get there next year (in 2007, it was 8%). Then, it’s Germany, Japan and the UK. Leapfrogging them won’t be easy because of both external threats and internal shortcomings. How it manages them in the coming years will determine whether the share of Indian trade breaches the double-digit mark in the next two decades.

First, the external threats. At a time when economies are stuttering, and the talk is of a return to the high inflation, high interest rate regime of the late 1970s, 28% per annum growth in trade, which is what India has managed in the past five years, will be difficult to emulate. However, this is more of a passing hurdle, a sign of the times, and it’s something India can control only so much.What can have a more enduring impact—in a negative sense—and what India can control is the business and trade ecosystem in the country, which has many cracks and not the ideal facilitator of such tall ambition. Like the rare success in Indian sport, success in trade is in spite of the system, not because of it.

It starts with the vision. Says Amir Ullah Khan, Director, India Development Foundation, a Gurgaon-based research organisation, who thinks the 10% target is too ambitious: "To be a global trade player, you must be willing to open up to the world and be one with it. That mindset is missing in India. Moreover, its propensity to ban exports and imports at the first possible hint of danger makes it a highly unreliable trading partner."

A case in point, says Khan, is agriculture, which accounted for about 11% of India’s trade in 2007-08. India’s agricultural trade could be significantly higher—some say, a multiple of current levels—but for India’s reluctance to reduce high tariffs in agriculture and embrace agricultural trade. Even if the government conceded some ground on tariffs, there are other barriers that will prevent a manifold increase in agricultural exports.

Agriculture remains shackled by age-old laws (some land revenue laws date back to the time of Emperor Akbar), orders that have outlived their utility (like the Fruits and Vegetables Order, and Milk Order, which restricts the movement of milk products), and restrictions on movement of foodgrains within India and outside India. Freeing contract farming from its legal bindings, allowing bulk marketing of products, doing away with old land laws and facilitating the development of a retail value chain (all the way from farm to fork) can help India set standards in quality and price, and drive overseas demand for Indian farm products, especially fruits and vegetables.

Instead, the Indian agricultural trade story makes news for railing against stringent sanitary and phytosanitary conditions (SPS) imposed on all its food products imported by Western nations. Says Shubhashis Gangopadhyay, Adviser to Finance Minister P Chidambaram: "While we can protest, there is little we can do about their (of US and EU) sovereign right to set standards. If we want to become global leaders, we should be able to set the benchmarks for quality and safety standards in the world."

Indeed, the refrain of most authorities on the subject of trade is: for the big leap, India needs to take it to the next level, be it in manufacturing or services, branding or infrastructure, governance or policies. Says Jim Champy, Chairman of Consulting, Perot Systems: "Indian companies must now focus on the value they deliver to customers as an additional means of competing. When you can no longer compete only on the basis of low cost, it’s the value you deliver that will provide your competitive distinctiveness."

Ramadorai echoes a similar sentiment: "It’s innovation and the ability to innovate in a collaborative environment that will drive the industry." India can take a leadership position in several high-technology areas, with an upcoming one being nuclear energy. Says Rajiv Kumar, Chief Executive Officer, ICRIER: "The Indo-US civilian nuclear deal gives India a chance to patent a thorium-based nuclear plant; given the abundance of thorium in the country, it could export such plants."

Another critical facet of trade is branding. Like credit ratings, the image of the country can supersede that of a company. For example, ‘Made in Japan’ has come to symbolise quality, while ‘Made in China’ low price, but not quality. It’s in this context that Paul Heath, President, O&M Asia Pacific, makes a pitch for revamping Brand India’s image to that of an economic powerhouse. The biggest challenge, he says, is that of "mindsets".

Any country’s ability to trade depends a lot on its ability to compete on quality and

A nation hoping to shape global trade should push for a multilateral trading system, which is most beneficial for developing nations

cost. That means creating a more favourable climate for doing business in India: world-class infrastructure, skilled human resources, a good tax system (including a single tax rate for goods and services), no restrictions on capital inflows and technology transfers. Says Gangopadhyay: "The country will also need to provide finance for start-ups—people with ideas, but no credit history. These entrepreneurs will lead the trade revolution in the coming years."

For a nation hoping to shape global trade, it is imperative to push for the success of a multilateral trading system. Not just because it is the most equitable system of trade, but also because it provides the maximum benefits for the developing world.

Greater tact and self-interest are also advocated in trade negotiations. Says Khan: "For India to reap the benefits, it needs to stop positioning itself as a ‘leader’ of third-world countries, put national interests up front and provide credible counter-offers rather than just refusing all proposals."

Even on bilateralism, India needs to change its focus from third-world countries and enter into trade pacts with the more prosperous nations of the European Union and Japan, which are not only strong in manufacturing, but also home to large markets. Targeting the emerging economies of Brazil and Argentina would also help. Says Gangopadhyay: "In order to make bilateralism a success, the country should be willing to sacrifice a few inefficient gains for much larger gains to the economy."

For the big leap in volumes, value and market share, the focus has to be on enabling larger gains—policies that open up big new markets, products that offer radically new value propositions, services that create a new competitive edge, brands that stick in customer minds and are associated with India, processes and infrastructure that make doing trade a breeze. It’s not all there. Much of it is a work-in-progress. And the direction and pace of that progress will write the report card of Indian trade in 2022.