Global Value Chain  (GVC) refers to international production sharing, which is the process of breaking down production into activities and tasks that are completed in different countries.

Benefits of GVC

• Helps in building domestic companies that can compete globally
• Higher foreign exchange earnings.
• Leads to faster growth, import of skills and technology, and boost employment.

Reasons behind India’s weak GVC integration

• India has not been part of significant trade blocs for e.g.- SAARC is inactive and India has withdrawn from RCEP.
• Historical inward looking industrial policies for e.g.- license Raj, import substitution.
• The pace of re-skilling and up-skilling of the workforce is slow.
• Lack of integration with lead  firms for e.g.- Bangladesh outperforms India in the garment industry due to its alignment with GVC lead firms.

Way Forward

• Streamline ports and customs operations and improve turnaround time.
• Accelerate free trade agreements with key partners.
• Ensure International Quality Standards by ensuring  adherence to global standards and certification systems.
• Target High-Value specific segments such as defense, electronics, etc.
• Accelerated adoption of e-governance and e-compliance in trade.