Export Preparedness Index 2020

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TOPIC: General Studies 3

• Indian Economy – exports

In News: Gujarat has topped the Niti Aayog’s Export Preparedness Index 2020 followed by Maharashtra and Tamil Nadu in the second and third place respectively, according to the government think tank’s report. 

The Report

• Released by: NITI Aayog and the Institute of Competitiveness. 

• It is the first report to examine export preparedness and performance of Indian states. 

• Objective: To identify challenges and opportunities; enhance the effectiveness of government policies; and encourage a facilitative regulatory framework.

The Indian economy holds immense potential to become a strong exporter on the world stage. To realize this potential, it is crucial that India turns to its states and union territories and makes them active participants in the country’s export efforts. In an attempt to realize this vision, the Export Preparedness Index 2020 evaluates states’ potentials and capacities. The detailed insights from this Index will guide all stakeholders towards strengthening the export ecosystem at both the national and sub-national levels.

The Export Preparedness Index is a data-driven effort to identify the core areas crucial for export promotion at the sub-national level. All the states and union territories have been assessed on crucial parameters that are critical for any typical economic unit to achieve sustainable export growth. 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 same.

The first report to examine export preparedness and performance of Indian states, EPI intends to 

• Identify challenges and opportunities; 

• Enhance the effectiveness of government policies

• Encourage a facilitative regulatory framework.

The structure of the EPI includes 4 pillars – Policy; Business Ecosystem; Export Ecosystem; Export Performance – and 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.

Key takeaways 

• Indian states scored average 50% in sub-pillars of Exports Diversification, Transport Connectivity, and Infrastructure. 
• Overall, most of the Coastal States are the best performers, indicating the presence of strong enabling and facilitating factors to promote exports. 
• Export orientation and preparedness are not just restricted to prosperous states. Even emerging states can undertake dynamic export policy measures, have functioning promotional councils, and synchronize with national logistical plans to grow their exports.
• Many northeastern states under the Growth Orientation sub-pillar were able to export more by focusing on their indigenous product baskets. This shows that a focused development of such baskets (like spices) can drive exports on one hand and also improve farmer incomes on the other in these states.

Rankings

• Top Coastal States: Gujarat, Maharashtra and Tamil Nadu 
• Top landlocked states: Rajasthan, Telangana and Haryana.
• Top Himalayan states: Uttarakhand, Tripura and Himachal Pradesh.
• Top Union Territories: Delhi, Goa and Chandigarh.

Export promotion in India faces three fundamental challenges: 

1. Intra- and inter-regional disparities in export infrastructure
2. Poor trade support and growth orientation among states
3. Poor R&D infrastructure to promote complex and unique exports

There is a need to emphasize on key strategies to address these challenges: 

• A joint development of export infrastructure
• Strengthening industry-academia linkages
• Creating state-level engagements for economic diplomacy

These strategies could be supported by revamped designs and standards for local products and by harnessing the innovating tendencies to provide new use cases for such products, with adequate support from the Centre.

Must Read: Issues in export sector during COVID19

Connecting the Dots:

1. What are the two major roadblocks to expansion of global trade today? Discuss.
2. Examine the impediments that have constrained the growth of exports in India. Suggest policy measures to address the same.