Domestic value added content of India's exports: Estimates for 112 sectors, 1999-2000 to 2012-13

Using Input-Output (IO) analysis, this study provides the time series estimates of domestic value added (DVA) content of India's merchandise and services exports for the period 1999-2000 to 2012-13 and for 112 sectors. The study makes use of the official input-output tables (IOTs) for the benchmark years 1998-99, 2003-04, 2007-08 as well as the recently published Supply Use Tables (SUTs) for the years 2011-12 and 2012-13. The IOTs and SUTs, compiled by the CSO, do not distinguish imported inputs from domestic inputs. Using a proportionality assumption we separate domestic and imported inputs. Further, for the intervening years (i.e., the years for which IOTs and SUTs are not available), we construct the domestic use tables by making use of detailed production and trade data from various official sources. This enables us to make use of year-specific domestic use tables in our estimation. The estimates show that the DVA content of India's exports increased from US$46 billion in 1999-00 to US$ 295 billion in 2012-13, with a growth rate of 17.7 per annum. The ratio of DVA to gross exports steadily declined from 0.86 in 1999-00 to 0.65 in 2012-13. The decline in the ratio of DVA to gross exports has been particularly sharp for manufacturing sectors, suggesting that Indian industries have become more integrated with the global production networks (GPNs) and value chains, especially since the second half of the 2000s. Backward linkages, particularly from manufacturing to agriculture and services, have become an important source of export related DVA in the country. An implication is that the industries which are less export oriented are not necessarily protected from negative external shocks. Finally, using an econometric analysis, we show that greater participation in GPNs, as captured by the share of DVA in gross exports of a sector, leads to higher absolute values of gross exports and DVA.