Global value chains (GVCs) have significantly changed international trade by allowing production to be broken up and spread across different countries. GVCs have led to higher productivity, more employment opportunities, and structural transformations in economies. Government of India policies aim to broaden India's participation in GVCs through various initiatives like the Production Linked Incentive scheme, Atmanirbhar Bharat, Make in India, and improving trade infrastructure and the business climate. These policies focus on enhancing skills, attracting investment, facilitating exports, and supporting sectors like electronics and pharmaceuticals to integrate into global supply chains.

1. GVCs
……………thatchangedinternationaltrade
&
GovernmentofIndiapoliciessupporttobroadenparticipation
By:
DR. ASHIS KUMAR DASH
Submitted to World Bank Group (OLC)

2. Global Value Chains (GVCs): Introduction
Global value chains (GVCs) is international production sharing, a
phenomenon where production is broken into activities and tasks
carried out in different countries. Increased possibilities of
offshoring or relocating production activities around the globe, in
the face of declining communication and transport costs, have
allowed slicing up the production of a single commodity to be
spread across the most economically viable countries. GVCs are
highly efficient, specialised, and interconnected.

3. Standard Value Chain
Stages
of
Value
Addition
Upstream stages
(Sourcing of primary products)
Manufacturing and assembly of the product
Downstream stages of production
(transporting it, branding and marketing,
distribution and post-sale services )

4. GVC Participation
GVC Participation
Forward GVC
Participation
Backward
GVC Participation

5. How GVCs have changed/changing the international trade
Expansion of Global Value Chain (GVCs) over last three decades have had
remarkable effect in terms of increase in productivity, employment generation,
increasing standards of living ,reduction of poverty etc .In the field of international
trade the following changes are more visible owing to greater participation in
GVCs….

6. Higher Productivity
Employment generation
Structural transformation in terms of boosting exports,
Job shifting from less productive activities to push into more productive manufacturing
Availability of diverse employment opportunity
Rise in the demand for labour because of input–output linkages
Compositional shifts in the structure of the economy

7. More participation of women in business activities
Improvement in wage
Minimizing the costs of production or maximizing the profits
Support long-term firm-to-firm relationships
Importance on Product standard and technical standard
Strong enforcement of Intellectual Property Rights
Visibility of quality trade infrastructure :Custom, logistic network, Road, Port

8. Predominance of Digitalisation
Continuous flow of goods and Service
Hyper specialization in specific tasks
Automation of manufacturing
Focus on economy of scale
Large scale capital-intensive manufacturing with precision

9. Adoption of cutting edge technologies: ICT, AI, Robotics
Know-how transfer from global lead firm to small suppliers
Innovation
Huge investment in labour force, education, management and access to capital .
Capacity building, skill development, particularly in management and
engineering services help firms to grow and increase productivity
Import of higher-quality or less costly intermediate inputs

10. Better Trade infrastructure
More Connectivity
Visibility of scale Effect, composition effect and technique effect
Technological changes
Low tax and reduction in tariff barrier
Predominance of efficiency seeking
Attractive Business climate: single window facility
Good investment agency
More Trade Agreements
Establishment of more Special Economic Zone
Trade facilitation measures

11. Steps towards elimination of trade distorting measures by countries
Optimal utilisation of comparative advantage of a country in specific sector and in different
stages of production within sectors
Greater institutional quality: Strong enforcement agency: Strong legal, accounting,
computer system, design, employment agency, credit reporting, advertising, commercial
agent, photography, equipment rental etc.
Governments are focusing on investment in international trade infrastructure comprising
greater and better connectivity from high-way to i-way, improvement in business climate
and reduction in trade barriers helps in growth, productivity and generating effective
employment opportunities

12. Policies Government of India supports to broaden
participation in GVCs
India as a participant in world trade is not insulated from the trend of
facilitating greater participation in GVCs. To broaden participation
in GVCs the attempts made by Government of India can be focused
as follows

13. Production linked Incentive (PLI) scheme for 13 targeted sectors large-scale manufacturing like the electronics,
pharmaceutical etc.
Atmanirbhar Bharat Initiative for capacity building
Focus Market and Focus Product Initiative for diversification
Redesigning macroeconomic policies
Make In India Initiative
Skill India Initiative for upskilling
Zero Defect Zero Effect Initiative
Multilateral and Regional Trade Agreements

14. Policies to facilitate the ease of doing business
Trade infrastructure building
Digitalisation in every line departments to facilitate Export: Port, Custom,
Commerce, Banking, Insurance etc.
Enabling regulatory environment,
Welcoming Policies to attract Foreign direct investment (FDI)
Focus on human capital development: Skill India Initiative and Fit India Initiative

15. Facilitate linkages between multinational corporations and suppliers
Targeted investment promotion
Foreign Trade Policy to augment export competitiveness and to boost export Provide multiple schemes
Dedicated world class infrastructure for import and export in Special Economic Zones
Incentives for Export: Export Product Capital Good EPGG, Advance Authorisation Scheme, Duty Free Import
Authorisation Scheme to promote Export
Incentive for Innovation
Special attempts to infuse MSME in GVCs
Encouragement for infusion of cutting age technology like AI, Robotics, 3D Printing etc.
Facilitation to attract global firms.

16. Target specific global lead firms in a select GVC and use promotion
efforts to attract them to the country.
Partnering with foreign firms to help expand and upgrade an
existing, viable industry.
Steps to expand and upgrade an existing, viable industry into a
higher-value GVC segment.
Digitalisation: New pathways for export diversification
Focus on backward GVC linkages in sectors which are not
competitive

17. THANK YOU