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By Jahanwi Singh | Neha Raman
Greater internationalisation holds a transformative potential for advancing women empowerment. According to a report by the International Monetary Fund (IMF), enterprises engaged in international trade employ more women. According to the report, in developing economies, women constitute 33% of the workforce in exporting firms, compared to just 24% in non-exporting ones. Likewise, female employees account for 33% of total employees in importing firms, as compared to 28% in non-importing companies. Women see similar advantages in businesses that are part of global value chains or have foreign investors, which on average employ 11-12% more women compared to other firms.
According to Exim Bank’s analysis, in India too, several export-intensive sectors have a higher proportion of female employment compared to the all-India level. Such sectors include segments where India’s exports have traditionally been competitive, including apparel, textiles, pharmaceuticals, and leather products. In fact, in textiles and apparel, there is a higher employment intensity for females compared to males — the proportion of females working in these two sectors relative to the total female workforce across all sectors is higher than the proportion of their male counterparts.
There is a need for skilling women and improving their employment in high-value, technology-intensive export sectors such as electronics and machinery as well. According to Exim Bank’s analysis, a higher proportion of female employees in India are engaged in low-technology and resource-intensive sectors that leave them disproportionately exposed to fluctuations in global demand and commodity price shocks. Tailored skill development programmes for the female workforce focused on high-tech industries would be essential to impart resilience to their employment in export-intensive sectors. Further, government support could also be provided through additional payroll incentives by state governments for employing women in technology-intensive export sectors.
A recent IMF analysis also highlights that sectors which employ women more, such as food and beverages, and textiles and apparel typically face higher tariffs on inputs. In India too, goods produced largely by women face, on an average, 6 percentage-points higher tariffs in export markets than those produced largely by men. There is a need for mainstreaming gender considerations in India’s trade agreements. Further, India could seek tariff relaxation in such sectors. Exim Bank’s analysis suggests that a 1% reduction in tariffs faced by India’s exports in sectors that are relatively more important for the female workforce could lead to a 0.36% increase in labour supply in the country and a 0.14% increase in GDP. The overall welfare gains from such a tariff reduction are estimated to be nearly 3.6%. Thus, considering a gendered perspective while negotiating trade agreements would help enhance female workforce participation and welfare gains from trade.
There is also a need to build export capacities of the nearly 1.24 crore women-owned proprietary micro, small, and medium enterprises (MSMEs) in India, accounting for about one-fifth of all MSMEs in the country. While all MSMEs face challenges related to access to finance, technology upgrade, digital transformation, etc., these challenges are more acute for women-led enterprises due to systemic gender inequalities in accessing crucial resources.
A key issue for female entrepreneurs is access to finance. According to estimates by the International Finance Corporation, nearly $1.5 trillion of credit demanded by MSMEs owned by women in emerging markets remain unmet by financial institutions. In India’s case, data from the Global Findex Database suggests that while 77.5% women aged 15 years and above hold bank accounts, only 10.5% have borrowed from formal sources, as compared to 15% men in this age bracket. This is low when compared to several Asian countries such as Singapore, Thailand, Malaysia, China, and Sri Lanka.
Low borrowing rates among Indian women could partly be on account of the limited ability to offer collateral. According to the National Family Health Survey (NFHS) 2019-21, only 31.7% women aged 15-49 years in India own land, either alone or jointly, compared to 42.3% of men in this age group. Home ownership also stood at 42.3% for women, compared to 60.1% for men. This gap in property ownership makes it difficult for women to access formal credit, in turn limiting the growth potential of their businesses. Lack of formalisation of women-owned businesses and weak financials are other key reasons for the low borrowing rates. To address the financing challenges for women-owned businesses, banks and financial institutions are increasingly developing women-centric financing programmes. Many of these initiatives prioritise capacity building for female entrepreneurs to enhance their bankability.
Besides financing gaps, the digital divide between men and women further exacerbates the challenges for female entrepreneurs. According to NFHS data, only 33% women in India use the internet, compared to 51% men. Further, data from the Global Findex Database suggests that only 28% women aged 15 years and above in India made or received digital payments in 2021, which is much lower than men (41.4%). Equitable access to digital tools can significantly enhance e-commerce opportunities for women-owned businesses.
By improving access to finance, enhancing digital literacy, and supporting a shift into tech-intensive sectors, India can unlock the vast export potential of its female entrepreneurs and workforce.
The authors are economists with India Exim Bank.
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