Export Preparedness Index (EPI) 2020
#GS3 #Economy #Exports
NITI Aayog in partnership with the Institute of Competitiveness released the Export Preparedness Index (EPI) 2020 today.
- 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; and encourage a facilitative regulatory framework.
The structure of the EPI
- It 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.
The 4 pillars and the rationale behind selection of each of them are given below:
- Policy: A comprehensive trade policy provides a strategic direction for exports and imports.
- Business Ecosystem: An efficient business ecosystem can help states attract investments and create an enabling infrastructure for individuals to initiate start-ups.
- Export Ecosystem: This pillar aims to assess the business environment, which is specific to exports.
- Export Performance: This is the only output-based pillar and examines the reach of export footprints of States and Union Territories.
Observations in the report
- What this edition of the EPI has shown is that most Indian states performed well on average across the sub-pillars of Exports Diversification, Transport Connectivity, and Infrastructure. The average score of Indian states in these three sub-pillars was above 50%. However, Indian states should also focus on other key components in order to improve export competitiveness.
- Overall, most of the Coastal States are the best performers. Gujarat, Maharashtra and Tamil Nadu occupy the top three ranks, respectively. Six of eight coastal states feature in the top ten rankings, indicating the presence of strong enabling and facilitating factors to promote exports. In the landlocked states, Rajasthan has performed the best, followed by Telangana and Haryana. Among the Himalayan states, Uttarakhand is the highest, followed by Tripura and Himachal Pradesh. Across the Union Territories, Delhi has performed the best, followed by Goa and Chandigarh.
- The report also highlights that 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 synchronise with national logistical plans to grow their exports. Chhattisgarh and Jharkhand are two landlocked states that had initiated several measures to promote 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.
Challenges to export promotion in India
- Based on the findings of the report, export promotion in India faces three fundamental challenges: intra-and inter-regional disparities in export infrastructure; poor trade support and growth orientation among states; and poor R&D infrastructure to promote complex and unique exports.
- There is a need to emphasise on key strategies to address these challenges: a joint development of export infrastructure; strengthening industry-academia linkages; and 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.
- To achieve the target of making India a developed economy by focusing on ‘Atmanirbhar Bharat’, there is a need to increase exports from all the states and union territories. The EPI provides invaluable insights on how states can attain this goal.