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About The Export Preparedness Index (EPI) 2022

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:

  1. Export Preparedness Index (EPI)
  2. Key Highlights of EPI 2022
  3. Key Learnings of the Exports Preparedness Index (EPI)
  4. 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


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