The economic growth of any nation is integral to its overall development, and a significant component of this growth is derived from exports. The success of a country in facilitating a robust export framework is pivotal to its financial advance. In the context of India, the dynamics of exports are intertwined with varied factors such as government policies, resource mobilization, and effective strategies that propel economic growth.
Introduction to Export Preparedness Index
The Export Preparedness Index (EPI), an initiative by NITI Ayog, is designed to assess the readiness of Indian states and union territories (UTs) for export activities. For consecutive years, Gujarat has secured the top position in this index, followed by Maharashtra, Karnataka, and Tamil Nadu. This prominence of coastal states indicates the integral role that geographical logistics and industrial prowess play in export preparedness.
Structure & Significance of EPI
The EPI encompasses four pillars, eleven sub-pillars, and sixty distinct indicators. The pillars include a comprehensive policy, business ecosystem, export ecosystem, and export performance examination. Likewise, the sub-pillars range from export promotion policy and business environment to R&D infrastructure and growth orientation.
The primary purpose of the EPI is not only to gauge the readiness and performance of various states and UTs but also to identify potential challenges and opportunities. It serves as a benchmarking tool helping states to foster an environment conducive to exports.
Identification & Addressal of Export Hurdles
By scrutinizing the different facets of a state’s export capacity, the EPI assists in pinpointing barriers to export activities. Policymakers and exporters can then strategize accordingly to overcome these hurdles and enhance their export map.
Stimulating Healthy Competition
The EPI aims to spark a healthy sense of competition among all Indian states, regardless of their geographical positioning. Sub-national regions are encouraged to formulate favorable export-promotion policies, ease the regulatory framework, develop necessary infrastructure, and identify strategic recommendations for improving export competitiveness.
Predicaments in Export Promotion
Despite the concerted efforts to boost exports, India faces several challenges. The EPI report highlights three major issues: intra and inter-regional differences in export infrastructure; weak trade support and growth orientation across states; and lack of comprehensive R&D infrastructure to promote unique and complex exports.
Role of Exports in Indian Economy
Exports play an integral role in the economic determination of any country. In the equation for Gross Domestic Product (GDP)= Consumption + Investment + Government Expenditure + (Exports – Imports), exports evidently have a significant impact on the GDP values. In the past decade, exports have contributed approximately 20% on average to India’s GDP.
Post-Covid-19 Export Resilience
The Covid-19 pandemic resulted in unprecedented consequences globally. However, India demonstrated remarkable resilience, achieving record-high export growth amidst these challenges. For example, in December 2021, India reached its highest-ever export of 37 billion USD, marking a 37% increase compared to December 2020.
Suggestions for Bolstering Exports
To further enhance export performance, investments in reliable and efficient export infrastructure are crucial. This will lead to cost reduction and improved efficiency in the supply of exports. Moreover, export diversification is essential for stability and growth in this sector. Other significant strategies include strengthening industry-academia linkages, developing state-level engagements for economic diplomacy, and encouraging the private sector’s involvement in export promotion.
The EPI serves as a comprehensive tool enabling the assessment of state-wise export preparedness, instigating competition, facilitating policy formulation, and giving insights into challenges that need to be addressed, thereby playing a key role in shaping the export landscape of India.
