Gujarat tops again in export preparedness
- Gujarat has been named India’s top State in terms of export preparedness for the second year in a row as per an index released by the NITI Aayog.
- Maharashtra, Karnataka, Tamil Nadu were ranked second, third and fourth in the index, as coastal States with higher industrial activity and access to sea ports account for a majority of India’s exports.
About the Index
- The index was prepared by the NITI Aayog in partnership with the Institute of Competitiveness
- Aim: To identify challenges and opportunities, enhance the effectiveness of government policies and encourage a facilitative regulatory framework for export.
- Ranking Parameter: The index ranked states on four key pillars:
- Policy: A comprehensive trade policy providing a strategic direction for exports and imports.
- Business Ecosystem: An efficient business ecosystem helping states attract investments and create an enabling infrastructure for individuals to initiate start-ups.
- Export Ecosystem: Assess the business environment, which is specific to exports.
- Export Performance: This is the only output-based parameter and examines the reach of export footprints of States and Union Territories.
- Sub-pillars: The index also took into consideration 11 sub-pillars - export promotion policy; institutional framework; business environment; infrastructure; transport connectivity; access to finance; export infrastructure; trade support; R&D infrastructure; export diversification; and growth orientation.
- Features: The EPI is a data-driven effort to identify the core areas crucial for export promotion at the sub-national level (states and union territories).
- Benefit: The Index would be a helpful guide for the state governments to benchmark regional performance with respect to export promotion and thus deliver key policy insights on how to improve and enhance the exports.
Findings of the report
- Most of the ‘Coastal States’ are the best performers, with Gujarat as the top-performer.
- Land-locked States: Haryana, Uttar Pradesh and Madhya Pradesh have been ranked fifth, sixth and seventh in the overall index, but are the top three performers in export preparedness.
- Himalayan States: Uttarakhand, Himachal Pradesh and Tripura have been ranked as the top three.
- Union Territories and City States: Delhi, Goa and Jammu & Kashmir have been rated the best performers in descending order.
- India’s share in world merchandise trade is increasing from 1.6% to 1.7%.
- Sectors which contributed to the growth include vehicles, electrical machinery, iron and steel.
- Value of global trade is $24 trillion, of which India’s exports are worth $400 billion, so there is a “massive” potential to grow further.
- The quarterly data of merchandise exports indicates that India has crossed the pre-pandemic value in the first quarter of 2021.
- Merchandise exports for the period April-December 2021 was USD 301.38 Billion as against USD 201.38 Billion during the period April-December 2020, registering a positive growth of 49.66 per cent
- This consistent positive growth has been a result of key measures adopted by the government post-2016 for the promotion of merchandise exports.
- A mid-term review of the Foreign Trade Policy 2015-20 was conducted in 2017 to assess the policy interventions required to boost the export levels.
- A new Logistics Division was established in the Department of Commerce to organize the integrated development of the logistics sector.
- Trade Infrastructure for Export Scheme (TIES) was launched in 2017 to address the existing export infrastructure gaps.
- Agriculture Export Policy was rolled out to target export contribution at a micro-level.
- Transport and Marketing Assistance (TMA) scheme was also introduced for the export of specified agriculture products to mitigate the disadvantage of the higher cost of transportation.
- The index identifies three major challenges to India’s export promotion efforts.
- Intra- and inter-regional differences in export infrastructure
- Weak trade support and growth orientation across States; and
- Lack of R&D infrastructure to promote complex and unique exports.
- The Indian economy has a huge potential to become a strong exporter on the world stage.
- This can be achieved by making India’s states and union territories active participants in the country's export efforts.
- Currently, 70% of India’s export has been dominated by five states- Maharashtra, Gujarat, Karnataka, Tamil Nadu and Telangana.
- Emphasis on key strategies like a development of export infrastructure, strengthening industry-academia linkages and creating state-level engagements for economic diplomacy to address the challenges in exports.
- The private sector can also play an important role in export promotion.
- Increase in exports can help India to achieve the target of making India a developed economy by focusing on ‘Atma Nirbhar Bharat’. The exports can also help generate employment in India.