Export Preparedness Index 2020: NITI Aayog

• 27 Aug 2020

Why in News

Recently, the NITI Aayog in partnership with the Institute of Competitiveness released the Export Preparedness Index (EPI) report 2020.

Key Points

• EPI 2020:
  
  • Aim: To identify challenges and opportunities, enhance the effectiveness of government policies and encourage a facilitative regulatory framework for export.
  • Ranking Parameter: The index ranked states on four key pillars:
    
    • Policy: A comprehensive trade policy providing a strategic direction for exports and  imports.
    • Business Ecosystem: An efficient business ecosystem helping states attract investments and create an enabling infrastructure for individuals to initiate start-ups.
    • Export Ecosystem: Assess the business environment, which is specific to exports.
    • Export Performance: This is the only output-based parameter and examines the reach ofexport footprints of States and Union Territories.
  • Sub-pillars: The index also took into consideration 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.
  • Features: The EPI is a data-driven effort to identify the core areas crucial for export promotion at the sub-national level (states and union territories).
  • Benefit: 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 exports.
• Performance:
  
  • Gujarat has topped the overall EPI 2020 followed by Maharashtra and Tamil Nadu.
  • Among the landlocked states, Rajasthan has topped the index, followed by Telangana and Haryana.
  • Among the Himalayan states, Uttarakhand topped the index, followed by Tripura and Himachal Pradesh.
  • Across Union Territories, Delhi has performed the best.

• India’s Exports:
  
  • India’s merchandise exports have witnessed growth from USD 275.9 billion in 2016-17 to USD 331.0 billion in 2019-20.
    
    • However, the Covid-19 crisis gave a major blow to the current fiscal. Consequently, India’s exports shrank by 60% in April 2020.
  • This consistent positive growth has been a result of key measures adopted by the government post-2016 for the promotion of merchandise exports.
    
    • A mid-term review of the Foreign Trade Policy 2015-20 was conducted in 2017 to assess the policy interventions required to boost the export levels.
    • A new Logistics Division was established in the Department of Commerce to organize the integrated development of the logistics sector.
    • Trade Infrastructure for Export Scheme (TIES) was launched in 2017 to address the existing export infrastructure gaps.
    • Agriculture Export Policy was rolled out to target export contribution at a micro-level.
    • Transport and Marketing Assistance (TMA) scheme was also introduced for the export of specified agriculture products to mitigate the disadvantage of the higher cost of transportation.
• Challenges: The export promotion in India faces three fundamental challenges:
  
  • Intra- and inter-regional disparities in export infrastructure.
  • Poor trade support and growth orientation among states.
  • Poor research & development infrastructure to promote complex and unique exports.

Way Forward

• The per capita exports in India stood at about USD 241, as compared to USD 11,900 in South Korea and USD 18,000 in China. Therefore, Indian economy has a huge potential to become a strong exporter on the world stage. This can be achieved by making India’s states and union territories active participants in the country's export efforts.
  
  • Currently, 70% of India’s export has been dominated by five states- Maharashtra, Gujarat, Karnataka, Tamil Nadu and Telangana.
• Emphasis on key strategies like a development of export infrastructure, strengthening industry-academia linkages and creating state-level engagements for economic diplomacy to address the challenges in exports.
• The private sector can also play an important role in export promotion.
• Increase in exports can help India to achieve the target of making India a developed economy by focusing on ‘Atma Nirbhar Bharat’. The exports can also help generate employment in India.

Source: PIB