Context:
Recently, NITI Aayog has released the 3rd edition of Export Preparedness Index (EPI) for States/UTs of India for the year 2022.
Relevance:
GS III: Indian Economy
Dimensions of the Article:
- Export Preparedness Index (EPI)
- Key Highlights of EPI 2022
- Key Learnings of the Exports Preparedness Index (EPI)
- Recommendations of the EPI
Export Preparedness Index (EPI)
- EPI is a comprehensive tool that measures the export preparedness of the States and Union Territories (UTs) in India.
- It aims to understand the factors influencing export performance and identify strengths and weaknesses.
Features:
- Data-driven approach to identify core areas crucial for export promotion at the sub-national level.
- Highlights India’s export potential by examining contributions from each state and union territory.
Pillars:
- Policy: Evaluates the effectiveness of trade policies in providing strategic direction for exports and imports.
- Business Ecosystem: Assesses the efficiency of the business ecosystem in attracting investments and creating enabling infrastructure for startups.
- Export Ecosystem: Examines the business environment specific to exports.
- Export Performance: Measures the reach of export footprints of States and UTs.
Sub-Pillars:
Considers 10 sub-pillars that contribute to export promotion:
- Export Promotion Policy
- Institutional Framework
- Business Environment
- Infrastructure
- Transport Connectivity
- Export Infrastructure
- Trade Support
- R&D Infrastructure
- Export Diversification
- Growth Orientation
Key Highlights of EPI 2022:
Top Performing States:
- Tamil Nadu secured the top position in EPI 2022.
- Maharashtra and Karnataka followed in the second and third positions, respectively.
- Gujarat, the previous year’s top performer, dropped to the fourth position.
Tamil Nadu’s Performance:
- Tamil Nadu’s strong performance in export indicators, such as export value, concentration, and global market footprint, contributed to its top ranking.
- The state has shown consistent leadership in sectors like automotive, leather, textiles, and electronic goods.
Hilly/Himalayan States:
- Uttarakhand ranked first among the hilly/Himalayan states in EPI 2022.
- Himachal Pradesh, Manipur, Tripura, Sikkim, Nagaland, Meghalaya, Arunachal Pradesh, and Mizoram followed in the rankings.
Landlocked Regions:
- Haryana emerged as the top performer among landlocked regions, indicating its preparedness for exports.
- Telangana, Uttar Pradesh, Punjab, Madhya Pradesh, and Rajasthan also performed well in this category.
Union Territories and Small States:
- Goa secured the first position among union territories and small states in EPI 2022.
- Jammu and Kashmir, Delhi, Andaman and Nicobar Islands, and Ladakh followed in the rankings.
Global Trade Recovery and Impact of Russo-Ukrainian War:
- Global trade in 2021 showed signs of recovery from the Covid-19 pandemic.
- Increased demand for goods, fiscal policies, vaccine distribution, and easing of restrictions contributed to a 27% increase in merchandise trade and a 16% increase in services trade compared to the previous year.
- However, the Russo-Ukrainian war in February 2022 slowed down the recovery and had an impact on sectors such as grain, oil, and natural gas.
India’s Export Performance in 2021-22:
- Despite the global slowdown, India’s exports in 2021-22 exceeded USD 675 billion.
- Trade in goods accounted for USD 420 billion, while trade in services also showed a recovery to pre-pandemic levels by Q4 2021.
- The value of merchandise exports crossed USD 400 billion in FY2022, reaching up to USD 422 billion by March 2022.
- Several factors contributed to this performance, including the increase in commodity prices and rising demand from developed countries.
Key Learnings of the Exports Preparedness Index (EPI):
- Coastal states have performed well in the index, with Tamil Nadu, Maharashtra, Karnataka, and Gujarat showing strong performance.
- The policy ecosystem in many states is favorable for driving exports, with the adoption of necessary measures.
- Transport connectivity remains a challenge, particularly in landlocked or geographically disadvantaged states.
- Research and Development (R&D) in exports need more attention, indicating a lack of focus on innovation.
- Support to struggling industries is crucial, as many states have seen a decrease in the gross value addition of their manufacturing sector and inflow of Foreign Direct Investment (FDI).
- Capacity-building workshops for exporters should be increased to enhance their global market penetration.
- Timely project approvals are essential for the effectiveness of government schemes supporting states.
Recommendations of the EPI:
- States should learn from successful peers and adopt good practices to improve their export performance.
- Investing in R&D can drive product innovation, improve product quality, reduce costs, and enhance efficiency.
- Establishing dedicated research institutes with regular funding can support states in improving their exports.
- Capitalizing on unique Geographical Indication (GI) products can help states establish a presence in the global market.
- Identifying and promoting high-growth sectors like information technology, pharmaceuticals, automotive, textiles, and renewable energy can boost India’s export potential.
-Source: Indian Express, PIB
