Final answer:
India's export potential is influenced by its economic policies and historical trade patterns, with large economies often having lower trade ratios relative to GDP. As a developing country with growing industrial sectors, India has the potential to increase its exports over time.
Step-by-step explanation:
The claim that India's export potential is only about 4.0% of its total production and very low compared to other countries can be misleading. It's important to understand that different countries have varying levels of trade due to several factors including the size of their economies, the historical patterns of trade, and geographical location relative to trading partners. For instance, large economies like the United States and Japan, despite being global leaders, have a relatively low ratio of exports to GDP compared to the world average because they can support more of their own division of labor internally.
On the other hand, smaller economies with greater need to trade, like Belgium and Korea, show higher trade levels. India, classified as a low-income economy by the World Bank, is a large but developing economy that has often chosen to restrict trade, resulting in lower levels of trade. However, with its rapidly expanding economy and burgeoning sectors such as vehicle and high-tech industries, India is positioned to increase its export potential considerably.