Hemant Soren is now India’s tallest tribal leader

Soren’s leadership led the JMM to a...

BJP appoints central observers for Maharashtra legislature party

New Delhi: The Bharatiya Janata Party has...

Top 10 states drive 85 per cent of India’s exports: NITI Aayog report

BusinessTop 10 states drive 85 per cent of India’s exports: NITI Aayog report

Gujarat, UP, AP, TN among top 10 states with 85 % share in India’s total exports in FY’22.

Call it an outcome of the spirit of competitive federalism or a spillover of regional pride and ambition, the India growth story in exports is being scripted by India’s top 10 states in India in absolute export numbers – Gujarat, Maharashtra, Tamil Nadu, Karnataka, Uttar Pradesh, Andhra Pradesh, Odisha, Haryana, West Bengal, and Telangana which accounted for 85 per cent of India’s total exports in 2021-22. This share is an increase from the previous two years where it was 79 per cent and 77 per cent, respectively, as per the third edition of NITI Aayog’s report, ‘Export Preparedness Index (EPI) 2022’ for States/UTs prepared in association with the Institute for Competitiveness. Interestingly, as per the EPI 2022 Report, most ‘coastal states’ have performed well, with Tamil Nadu, Maharashtra, Karnataka and Gujarat being the top-performers in the EPI across the country, in all categories of states.

This performance is important in the context of the evaluation of states across four pillars – policy, business ecosystem, export ecosystem, and export performance. The index uses 56 indicators which holistically capture the export preparedness of States and UTs in terms of exports at both the state and district-level. These top performing states indicate increased attempts by the Central and federal governments as well as greater success in boosting production of goods with diversified profiles, stimulating investment in industries and discovering additional exportable products all contributed to India’s export growth. The efforts of state governments in improving the policy ecosystem have led many states to create export promotion policies and district-level export action plans.
Coastal states have fared the best across all indicators with six out of the top states in the index coming from the coastal region of the country. States like Tamil Nadu, Maharashtra, Karnataka, and Gujarat have shown exceptional performance across pillars with all of them performing the best in at least one pillar. Furthermore, the higher average of coastal states represents their better preparedness and higher contribution to the national exports. Landlocked states have had a satisfactory performance in the index with Uttar Pradesh and Haryana being the positive outliers. States like Punjab and Telangana have performed adequately, however their regional advantages are left untapped resulting in their average performance. Himalayan and UT/Small states, with the exception of Uttarakhand, Himachal Pradesh, Goa, and Delhi, have registered an unsatisfactory performance across the index indicating the need for urgent reforms by their state governments.

The release of the EPI 2022 comes at a crucial juncture for the country in terms of its strong global positioning driven by robust exports throughout the post-pandemic period and India’s struggle to maintain the show amidst intensifying geopolitical headwinds and economic slowdown. Demonstrating resilience in successfully navigating the storm of post pandemic supply-chain issues and conflicts, India’s merchandise trade for April-March 2021-22 grew to USD 422,004 million, up by 44.62 per cent 2020-21 and service exports climbed by 23.42 per cent y-o-y to USD 254,347 million in 2021-22. In 2022, exports of goods and services accounted for nearly 22.74 per cent of India’s GDP, a nearly threefold increase from their 7.05 per cent share in 1990, a reflection of persistent efforts by states and UTs.

Going ahead, as Vice Chairman, NITI Aayog, Suman Bery puts it, “As we look towards 2047 and becoming the third largest economy, we need to focus on fostering competitiveness in service and agriculture exports along with manufacturing. To achieve it, comparative advantages of states should be leveraged.”

Chief Executive Officer, NITI Aayog BVR Subrahmanyam agrees that competitive federalism has the potential to drive the country’s development by
leveraging the inherent diversity of our states for growth. While India has striven to establish itself as a prominent player in global trade by signing free trade agreements with nations worldwide, many states have made significant progress in creating export-oriented policies and strengthening their export ecosystem to fully tap these new markets, thus contributing to India’s overall export performance, points out Subrahmanyam.

A key challenge here, according to Subramanyam, is that even though exports are the driving engines of economic growth, many states do not realise its importance. The third edition of the EPI is a timely platform to correct the picture of untapped potential and compare the states’ export strengths and weaknesses, urging them to foster a competitive spirit and learn from each other’s achievements to tailor policies to harness their export potential based on their unique characteristics.

Improving the overall business ecosystem is vital for Indian industries to compete globally. Asked if the report reflects the progress in the ease of doing business (EDB) in the larger context of facilitating exports, Sanjeet Singh, Senior Advisor, NITI Aayog told the Sunday Guardian that the report is a great compendium for states to look into and evaluate their approach towards creation of a favourable export ecosystem using its data-driven approach. “The focus of the report actually has been how states have picked up learnings, picked up on initiatives. In the past three editions we have cross learnings. Across the states, most of them are already going to put positive policy structures in place to drive exports. However, the extent to which they are going to be used is what is reflected in the final results. So while EDB has been accepted across states as a powerful tool for growing exports.
Commenting further on the query, Beri pointed out to Sunday Guardian about states now having investor summits. “That is an example of competitive federalism. So the incentive for following an EDB agenda arises out of that, towards not just exports but also FDI. Cooperative federalism is reflected in the states’ learnings from each other. Does Niti Aayog help in that, it is a yes and do we need to do more, it is yes to that and that’s what we are trying to gear up ourself for,” Beri said.
The EPI 2022 report this time also emphasises the need to promote districts as a driver of export hubs and focuses on understanding export concentration at the district level and the top exporting districts in the top 5 exporting states. This approach reveals that out of the 680 districts which engage in exports, the top 100 districts contribute around 87 per cent of the total exports from India. Among these hundred districts, the concentration of exporting hubs lies within the top performing states, 66 of the 100 districts are present in 7 states, which are coincidentally the top performing states, in terms of exports in the country.

Expressing concern over the high concentration of exports, the EPI report suggests it is detrimental for the country in the long run as it percolates the cash flow from exports to few regions in a country, leading to regional disparity in terms of development. Regions with high trade attract higher investment in terms of both capital and human capital, which has a chain-effect on the region’s industrial development. Thus despite India’s decent performance across the input pillars, the last output based pillar of export performance paints a picture of untapped potential. Although many states have fared well in the country with eight states exporting over USD 15 billion worth of merchandise, there remain 15 states with exports less than USD 1 billion. Eleven of these states are yet to cross the USD 100 million mark.

The report admits that for a comprehensive evaluation of the export preparedness of states, important indicators such as source of origin of export data, and service exports need to be assessed as they are currently not being captured at the sub-national level. Using this index, states can improve on their weak areas and positively impact their export performance. For the exporters in the state to compete in the global markets, proper channels of knowledge dissemination need to exist. Lack of capacity building workshops for exporters hampers their ability to penetrate the global markets as 25 of 36 states have organized less than 10 workshops across a year.

An analysis conducted by PHD Chamber of Commerce and Industry which pegs India’s exports at USD 1000 billion by 2024-2025, sees tremendous potential in the Foreign Trade Policy 2023 to push wider engagement with states and districts to take advantage of the global tailwinds and empower each state to integrate with the global trade. The FTP 2023 entails making states and districts as partners by decentralizing export promotion, thereby, bringing greater level of awareness and commitment at the district level. It involves preparation of District Export Action Plans (DEAPs) that outlines the action plan to promote identified products and services which shall make states and districts a meaningful stakeholder and active participants in making India an export hub, suggests the PHD report.

- Advertisement -

Check out our other content

Check out other tags:

Most Popular Articles