Keeping a clear focus on low-skilled, labour-intensive manufacturing, India needs to step up and quickly seize the global export space currently being vacated by China, former chief economic advisor Arvind Subramanian has said. At a time when all countries are scrambling to corner that open market, India needs to act quickly, he said.

Pointing to China's share of global exports consistently reducing over the past few years as the country's economic engine stabilises after two decades of unprecedented growth, Subramanian said China's global current account surplus has also inched downwards. This follows the general idea that economies slowly move on from labour-intensive manufacturing to high-value technological exports as they climb the development ladder. This is further fuelled by wages rising over time which render economies cheaper to do business in as uncompetitive.

Embracing protectionism

Subramanian also indicated his lack of support for the current government's overall trade policy. "China is vacating export space and India is trying to fill that space through a kind of very unusual, in fact odd combination of industrial policy, protectionism and non-engagement in the most dynamic part of the world," he said.

He added that since 2014, India has reversed the 30-year old consensus on slowly opening up the economy in favour of embracing protectionism, as a result of which tariffs have risen from an average of 13 percent to 18 percent in the last budget.

But despite the changes in global trade patterns, Subramanian added that India and China continue to remain polar opposites. "India's share of low-skilled global manufacturing exports also remain far smaller than India's share of the global labour force. China is exactly the opposite," he said.

Earlier, as part of the Modi government, Subramanian had repeatedly pushed for rapidly expanding government investment in labour-intensive manufacturing to simultaneously boost productivity, job creation and export.