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Context: NITI Aayog, the policy think tank of the Government of India, released the third edition of its report on the ‘Export Preparedness Index (EPI) 2022’ for States/UTs of India. 

Details

• Exports are vital for stimulating economic growth and development in a country, which necessitates understanding the factors which influence export performance. India has a huge potential to increase its share in the global trade market, which currently stands at around 2%. However, several challenges and bottlenecks hinder India’s export competitiveness and diversification.
• NITI Aayog has been undertaking various initiatives to foster export-led growth in India. One such initiative is the Export Preparedness Index (EPI), which was first launched in 2019 as a tool to measure and benchmark the export preparedness of the States and UTs in India. The index undertakes a comprehensive analysis of States and UTs across export-related parameters to identify their strengths and weaknesses.
  • The index seeks to encourage peer learning among the States and UTs to uphold the spirit of competitive federalism. By improving collaboration among states, and between states and Union, India can aspire to achieve sustained economic growth and leverage its heterogeneity to foster development at national and sub-national levels.

Export Preparedness Index 2022

About

• Indian exports have shown remarkable resilience in the post-pandemic era, overcoming the challenges posed by the post-pandemic supply-chain disruptions and geopolitical factors. To sustain this momentum, India aims to become a global export player by fostering States and further districts as export hubs.
  • The Export Preparedness Index 2022 acknowledges that by unlocking regional competitiveness and harnessing our innate diversity, India can boost its export potential.
• The report presents a comprehensive analysis of India’s export performance in FY22, along with its sector-specific and district-level merchandise export trends.
• The Report evaluates the performance of the states across four pillars – Policy, Business Ecosystem, Export Ecosystem, and Export Performance. The index uses 56 indicators that capture the export preparedness of States and UTs in terms of exports at both the state and district level.

Objectives

• To provide State governments with specific insights based on their regions to help them make informed decisions, leverage their strengths, overcome their challenges, and promote inclusive growth across States and UTs of India.
• To introduce a framework that encourages competitiveness within the country by comparing the export preparedness of States and UTs.
• To help stakeholders to identify and improve the factors that affects their state's exports, and thus enhance their export competitiveness.
• To offer a comprehensive analysis for policy reforms and the development of a conducive export ecosystem using its data-driven approach.

4 Pillars are

• Policy Pillar: This pillar looks at how well states and UTs have adopted policies that support exports at the state and district levels, and how effective their institutional frameworks are for implementing those policies.
• Business Ecosystem: This pillar evaluates the quality of the business environment in states and UTs, including the availability of business-supportive infrastructure and the connectivity of transport networks.
• Export Ecosystem: This pillar examines the state of export-related infrastructure in states and UTs, as well as the trade support services they provide to exporters, and the level of research and innovation activities that foster export competitiveness.
• Export Performance: This pillar is an outcome-based indicator that assesses the growth of exports from states and UTs over the previous year, and their degree of export diversification and global presence.

Highlights of the Report

• The EPI 2022 Report analysed the export readiness of different states in India and found that the coastal states, such as Tamil Nadu, Maharashtra, Karnataka and Gujarat, were the best performers in all categories.
  • These states have taken proactive steps to create export-friendly policies and plans at the state and district levels. However, the report also pointed out that many states still need to improve their business and export environment to boost their export potential.
• The report suggested that state governments should design solutions that suit their specific challenges and opportunities in the export sector. They should also leverage their unique products and promote them in the global market.
• States should invest in research and development to foster innovation and enhance their export efficiency and diversification. By identifying new markets and products based on their competitive advantage, they can increase their share in global trade.

Performance of State/UTs

• The EPI 2022 report has ranked Tamil Nadu as the top performer among all States/UTs with a score of 80.89 out of 100. Tamil Nadu has scored high on all four pillars of the index, especially on policy and business ecosystem.
  • Tamil Nadu is followed by Maharashtra, Karnataka and Gujarat as the top four performers in the index.
• Among UTs, Delhi has emerged as the top performer followed by Chandigarh and Puducherry (55.64).
• Among landlocked states, Rajasthan has topped the index followed by Telangana and Haryana.
• Among Himalayan states, Uttarakhand has ranked first followed by Himachal Pradesh and Jammu & Kashmir.
• Among northeastern states, Assam has secured the top position followed by Tripura and Manipur.

Significances of the Report

• It provides a comprehensive assessment of the export preparedness of the States/UTs in India across various dimensions and indicators.
• It helps identify the strengths and weaknesses of each State/UT in terms of their export potential and performance.
• It facilitates benchmarking and comparison among States/UTs on various aspects of export preparedness.
• It encourages peer learning and best practices sharing among States/UTs to improve their export competitiveness and diversification.
• It provides policy recommendations and suggestions for improving export preparedness at both national and sub-national levels.
• It highlights the role of districts as export hubs in the country and provides a district-level analysis of merchandise exports.
• It contributes to achieving India’s vision of becoming a $5 trillion economy by 2024-25.

Challenges and Way Forward

• Improve coordination and convergence among various stakeholders involved in export promotion and facilitation at both national and sub-national levels.
• Strengthen the institutional framework and capacity building for export promotion and facilitation at both national and sub-national levels.
• Improve the quality and availability of data on exports at both national and sub-national levels.
• Bridge the infrastructural gaps and bottlenecks that affect the export competitiveness and efficiency of the States/UTs.
• Enhance the trade facilitation and ease of doing business for exporters in the States/UTs.
• Foster innovation and R&D in the States/UTs to create new products and markets for exports.
• Improve the quality standards and compliance of the export products in the States/UTs.

Conclusion

• The EPI 2022 report is a valuable tool for measuring and improving India’s export preparedness at both national and sub-national levels. It provides a comprehensive picture of the current state of affairs as well as a roadmap for future action. By implementing the recommendations and suggestions given by the report, India can achieve its vision of becoming a global leader in exports and a $5 trillion economy by 2024-25.

 Must-Read Articles:

INDIAN EXPORTS AND IMPORTS: https://www.iasgyan.in/daily-current-affairs/indian-exports-and-imports

Export Preparedness Index (EPI): https://www.iasgyan.in/daily-current-affairs/export-preparedness-index-epi-report-2022

PRACTICE QUESTION Q. Which of the following has released the “Export Preparedness Index (EPI)”? A. Union Finance Minister B. Ministry of Commerce and Industry C. World Bank D. NITI Aayog Answer: D

https://pib.gov.in/PressReleasePage.aspx?PRID=1940295