Capacity Building as the New Engine of Growth for Indian Exporters

Internationalization amongst Indian companies has always been a macroeconomic issue reflecting size and quantum of growth rather than quality and firm level competencies. This has eventually led to a history of thirty years of growth in international trade without maturity in the process of internationalization. Internationally, however, the degree and maturity of internationalization has always been a progressive topic of research impacting national and firm level policy making. This became the focal point of this study. A large part of this blame was shared by policy-makers as lack of planned capacity building. Hence it becomes imperative to derive a set of business variables related to capacity building which can foresee and impact the process of internationalization. A detailed study of sectors of export prominence in India like – drugs & pharmaceuticals, apparel, information technology, metals & metallurgy revealed the lowest degree of internationalization and unplanned capacity building prominent within the apparel sector. The dismantling of the MFA and implementation of ATC under WTO since 1995, should have witnessed capacity building of highest order in this sector to face the world markets post 2005. The severe lack of firm level competencies in the textile and clothing sector has led to loss in cost effectiveness and negligent presence in overseas markets. These and other factors determined the primary research issue as exploring the path to a mature international presence against a backdrop of planned capacity building. The research methodology consisted of an exploratory research design with use of statistical techniques like Factor Analysis to help in identification of factors which can directly impact effective capacity building. This business model would later be tested on an apparel exporting company for its efficacy as a case study in the sequel to this paper.