NITI Aayog Report: Tamil Nadu Takes the Top Spot in Export Preparedness Index 2022

The NITI Aayog’s 3rd edition of the Export Preparedness Index for States/UTs of India in the year 2022 highlights the significance of unlocking regional competitiveness and utilizing India’s inherent diversity to boost its export potential.During the post-pandemic era, Indian exports have demonstrated their resilience by effectively navigating supply-chain challenges and geopolitical factors. To sustain this progress, India is committed to emerging as a prominent global export player by fostering states and districts as export hubs.

 In the EPI 2022 rankings, Tamil Nadu secured the top position, followed by Maharashtra and Karnataka. Gujarat, which held the leading spot in the EPI 2021 (released in 2022), has now been relegated to the fourth position. Tamil Nadu’s top ranking in the EPI is attributed to its excellent performance in various export indicators, such as the value of exports, export concentration, and global market footprint. The state has consistently led in sectors like automotive, leather, textiles, and electronic goods. In the rankings for hilly/Himalayan states, Uttarakhand claimed the first position, with Himachal Pradesh, Manipur, Tripura, Sikkim, Nagaland, Meghalaya, Arunachal Pradesh, and Mizoram following in that order. Haryana emerged as the top performer among the landlocked regions, signifying its readiness for exports. Following closely were Telangana, Uttar Pradesh, Punjab, Madhya Pradesh, and Rajasthan. In the rankings for union territories and small states, Goa secured the top position. Jammu and Kashmir, Delhi, Andaman and Nicobar Islands, and Ladakh followed, securing the second, third, fourth, and fifth positions, respectively.

Important factors of EPI, the role of EPI in the global political economy and the key takeaways from the reports are being discussed here. The report analyzes India’s export performance within the existing global trade landscape, followed by an examination of the country’s sector-specific export achievements in FY22.

The Export Preparedness Index (EPI) is a comprehensive tool designed to assess the export readiness of India’s States and Union Territories (UTs). Exporting plays a crucial role in stimulating economic growth and development within a country, emphasizing the importance of comprehending the factors that impact export performance. The index conducts a thorough analysis of States and UTs based on export-related parameters to identify their strengths and weaknesses. Some basic pillars and its sub pillars help epi to run a smooth assessment in the economy. First one is a policy which is a comprehensive trade method that offers a strategic direction for both exports and imports. Next one is a well-functioning business ecosystem that aids states in attracting investments and establishing enabling infrastructure for individuals to initiate start-ups. There should be proper assessment of the business environment, that is specific to exports. Finally the  Export Performance , which is the only output-based parameter and evaluates the reach of export steps of States and UTs.

The index also considered 10 sub-pillars, which are: Export Promotion Policy; Institutional Framework; Business Environment; Infrastructure; Transport Connectivity; Export Infrastructure; Trade Support; R&D Infrastructure; Export Diversification; and Growth Orientation.

 In 2021, global trade exhibited signs of recovery from the Covid-19 pandemic. Various factors, including heightened demand for goods, fiscal policies, vaccine distribution, and the easing of restrictions, led to a 27% surge in merchandise trade and a 16% increase in services trade compared to the previous year. However, the recovery faced a setback in February 2022 due to the Russo-Ukrainian war, particularly affecting sectors such as grain, oil, and natural gas. Despite this, trade in goods experienced substantial growth, and services trade rebounded to pre-pandemic levels by Q4 2021. In 2021-22, despite the global economic slowdown, India’s exports reached an unprecedented milestone of USD 675 billion, with trade in goods accounting for USD 420 billion. The value of merchandise exports surpassed the ambitious government target of USD 400 billion, reaching USD 422 billion by March 2022. This remarkable performance can be attributed to various factors. Globally, the surge in commodity prices and increased demand from developed countries played a significant role in boosting India’s merchandise exports.

 Coastal states have demonstrated the strongest performance across all indicators, with six out of the top states in the index hailing from the coastal region of the country. Notably, states like Tamil Nadu, Maharashtra, Karnataka, and Gujarat have excelled, each performing exceptionally well in at least one pillar. Regarding strengths, the policy ecosystem presents a positive outlook, as numerous states have embraced essential policy measures to promote exports within their respective regions. At the district level, a significant achievement is observed, with 73% of districts in the country having an export action plan, and an impressive coverage of over 99% of districts under the ‘One District One Product’ scheme. States have faced challenges in terms of transport connectivity, particularly the lack of air connectivity, which hinders the seamless movement of goods between regions, particularly in landlocked or geographically disadvantaged states.

Moreover, the lower performance in Research and Development (R&D) highlights the insufficient emphasis on innovation’s role in driving exports. The state government must maintain and expand its support to the struggling industries. A total of 26 states in the country have witnessed a decline in the gross value addition of their manufacturing sector, while 10 states have experienced a decrease in the inflow of Foreign Direct Investment (FDI). The limited availability of capacity-building workshops for exporters hinders their potential to access global markets, as 25 out of 36 states have conducted fewer than 10 workshops annually.For the government schemes designed to assist states to be effective, timely approval of projects is essential.

States should be motivated to embrace beneficial practices from their counterparts if they align with their requirements. By learning from successful states, lagging states can enhance their export performance. States ought to allocate resources for Research and Development (R&D) to stimulate product innovation, create market-specific products, enhance product quality, reduce costs, and improve efficiency. Establishing dedicated research institutes with consistent funding can significantly contribute to states’ efforts in enhancing their export capabilities. States should leverage their distinctive Geographical Indication (GI) products to establish a strong global presence. By promoting and enhancing the manufacturing and quality of GI products, states can significantly enhance their export potential. A case in point is Kancheepuram Silk products, which can only be exported by Tamil Nadu and face no competition from other regions in the country. Recognizing and fostering high-growth sectors, including information technology, pharmaceuticals, automotive, textiles, and renewable energy, can effectively boost India’s export capabilities.

sayanthana K
sayanthana K
English journalism student from IIMC Dhenkanal ( Indian institute of mass communication