About The Export Preparedness Index (EPI) 2022

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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:

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.

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.

Considers 10 sub-pillars that contribute to export promotion:

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 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.

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.

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.

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