Recently, the NITI Aayog in partnership with the Institute of Competitiveness released the Export Preparedness Index (EPI) report for 2020. The aim of the EPI 2020 is to recognize challenges and opportunities, boost the effectiveness of government policies and foster a facilitating regulatory framework for export.
The EPI ranked states based on four main pillars. The first pillar was Policy, which focuses on creating a comprehensive trade policy that can strategically steer exports and imports. The second pillar was Business Ecosystem, an essential component that helps states attract investments and offers a conducive infrastructure for start-ups.
The third pillar, Export Ecosystem, evaluates the business environment with specific regard to exports. The final pillar, Export Performance, is the only output-based parameter that reviews the extent of export footprints of States and Union Territories.
In addition to these key pillars, the index also took into account 11 sub-pillars including export promotion policy, institutional framework, business environment, infrastructure, transport connectivity, access to finances, trade support, R&D infrastructure, export diversification, and growth orientation.
Features and Benefits of EPI
The EPI stands as a data-driven effort to recognize critical areas integral for export promotion at the sub-national level (states and union territories). The Index would serve as a helpful guide for the state governments to benchmark regional performance related to export promotion and thus offer crucial policy insights on how to improve and enhance the exports.
EPI 2020 Performance
According to the latest EPI, Gujarat led overall, followed by Maharashtra and Tamil Nadu. In the category of landlocked states, Rajasthan came first, followed by Telangana and Haryana. Among Himalayan states, Uttarakhand led the index, followed by Tripura and Himachal Pradesh. Among Union Territories, Delhi performed the best.
India’s Exports: Growth, Setbacks, and Measures
India’s merchandise exports have seen growth from USD 275.9 billion in 2016-17 to USD 331.0 billion in 2019-20. However, the Covid-19 crisis negatively impacted the current fiscal year, causing India’s exports to shrink by 60% in April 2020.
The consistent positive growth observed pre-pandemic was due to key measures adopted by the government for promotion of merchandise exports. Key initiatives include a mid-term review of the Foreign Trade Policy 2015-20, the establishment of a new Logistics Division in the Department of Commerce, the launch of the Trade Infrastructure for Export Scheme (TIES) in 2017, and the roll-out of the Agriculture Export Policy.
Challenges faced by Export Promotion in India
India’s export promotion faces three principal challenges. These include variations in export infrastructure within and among regions, poor trade support and growth orientation among states, and a weak research and development infrastructure for promoting complex and unique exports.
The Way Forward for Indian Exports
At present, the per capita exports in India stand at about USD 241, compared to USD 11,900 in South Korea and USD 18,000 in China. Therefore, the Indian economy has significant potential to become a prominent exporter globally. This potential can be harnessed by actively involving India’s states and union territories in the country’s export efforts.
Currently, five states dominate 70% of India’s export—Maharashtra, Gujarat, Karnataka, Tamil Nadu, and Telangana. To address the challenges in exports, emphasis should be placed on key strategies such as developing export infrastructure, strengthening industry-academia linkages, and creating state-level engagements for economic diplomacy. The private sector can also contribute significantly to export promotion. Increasing exports can help India achieve the target of becoming a developed economy, focusing on ‘Atma Nirbhar Bharat’. It can also help generate employment in India.
Last Modified: February 8, 2024