Export Preparedness Index 2021: NITI Aayog

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    In News

    • Recently, the second edition of Export Preparedness Index 2021 was released by NITI Aayog.

    Export Preparedness Index 2021

    • About:
      • It was released by NITI Aayog, in partnership with the Institute of Competitiveness, released the Export Preparedness Index (EPI) 2021.
      • The report is a comprehensive analysis of India’s export achievements. 
    • Goal:
      • To instil competition among all Indian states (‘Coastal’, ‘Landlocked’, ‘Himalayan’, and ‘UTs/City-States’) 
      • To bring about favourable export-promotion policies, 
      • Ease the regulatory framework to prompt subnational export promotion, 
      • Create the necessary infrastructure for exports, and 
      • Assist in identifying strategic recommendations for improving export competitiveness. 
    • Ranking:
      • State: 
        • Gujarat ranked No. 1 for the second time in a row.
        • Followed by Maharashtra, Karnataka, Tamil Nadu, Haryana, Uttar Pradesh, Madhya Pradesh, Punjab, Andhra Pradesh and Telangana as the top 10 performers.
        • This edition has shown that most of the ‘Coastal States’ are the best performers, with Gujarat as the top-performer.
        • In the category of ‘Landlocked States’, Haryana was the best-performing state. 
        • Among ‘Himalayan States’, Uttarakhand topped.
      • UT:
        • Among union territories, Delhi has topped the index. 
        • Followed by Goa, Jammu and Kashmir, Chandigarh and Puducheery while Uttarakhand, Himachal Pradesh, Tripura, Sikkim and Manipur were at the top five paces among Himalayan states.
    • Growth:
      • Growth of India’s exports is 36 per cent.
      • While the world trade growth is 30 percent.
    • Merchandise: 
      • India’s share in world merchandise trade increased from 1.6 to 1.7 per cent.
      • Sectors which contributed to the growth include vehicles, electrical machinery, iron and steel.
    • Value of global trade:
      • The value of global trade is USD 24 trillion, of which India’s export is worth USD 400 billion, so there is “massive” potential.
    • Recovery from COVID 19:
      • Global: 
        • The COVID-19 pandemic upended the existing economic structures and exposed the fragility of global trade and economy.
        • After two years of the COVID-19 pandemic, the recovery from adverse effects on economies is still far from achieved. 
        • One of the most vital components of an economy is the export of goods and services which was gravely affected worldwide due to the consistent imposition of lockdowns and shutdown of major economies.
        • Furthermore, events such as the Suez Canal Blockage impugned global trade recovery.
      • India: 
        • Despite these challenges, India has shown great resilience in exports and achieved a record high growth. 
        • India has been showing positive statistics in exports since the beginning of FY 2021-22 and in December 2021 India achieved the highest ever export of, 37 billion USD, a 37 per cent jump over December 2020.
    • Framework:
      • The 4 pillars and the rationale behind their selection is given below:
        • Policy: 
          • A comprehensive trade policy provides a strategic direction for exports and imports.
        • Business Ecosystem: 
          • An efficient business ecosystem can help attract investments and create an enabling infrastructure for businesses to grow.
        • 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.
      • 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.

    Significance 

    • The index can be used by states and union territories (UTs):
      • To benchmark their performance against their peers and 
      • Analyse potential challenges to develop better policy mechanisms to foster export-led growth at the subnational level.
    • Highlight: 
      • The Export Preparedness Index is a data-driven endeavour to identify the fundamental areas critical for subnational export promotion.
    • Federalism:
      • It promotes competitive federalism and a fair contest among States/UTs.

    Challenges to Indian Exports

    • EPI 2021 brings out three major challenges to India’s export promotion. 
      • Intra- and inter-regional differences in export infrastructure; 
      • Weak trade support and growth orientation across states; and 
      • Lack of R&D infrastructure to promote complex and unique exports.
    • Work on: 
      • There is also a need to work continuously on strengthening our manufacturing and infrastructure ecosystems at the state/UT levels to ensure robust growth of exports in the future.
    • Better Connectivity:
      • Currently a lot of export is credited to Kandla or Nhava Sheva or Kakinada, but those goods may be originating elsewhere which increases the cost of product due to storage and transport.

    Way Ahead

    • If utilised properly, the index can be a valuable tool for the government and policymakers in encouraging healthy competition among states and UTs, hence enhancing India’s standing in the global export market.
    • EPI 2021 will help the states and UTs in a long way to plan and execute sound export-oriented policies for ensuring a conducive export ecosystem, to make maximum utilisation of their export potential.
    • All the states should have district export plans and promotion committees for a target to quadruple India’s share in the global trade in the next ten years.

    India’s historic achievement of crossing $400 bn export targets

    • Asserting that the demand for Indian products is increasing all over the world and therefore, the supply chain of India is getting stronger by the day.

    Image Courtesy: News on Air 

    Image Courtesy: News on Air 

    Indian Exports

    • Total exports registered a growth of 37% in FY22
      • Topping out at $400 billion, exports registered a growth of 37%  as compared to $292 billion in the previous fiscal and 21%  over the previous record high of USD 330 billion in FY19, before the pandemic.
    • Engineering goods export grew by 50% in FY22
      • Engineering goods were the biggest contributor to the growth in exports, growing at around 50% and expected to reach USD 110 billion by the end of FY22. 
    • Petroleum products export increased by 147.6% in FY22
      • The export of petroleum products increased by 147.6% due to the continuous increase in crude oil prices. 
      • Other products registering strong growth in exports include organic and inorganic chemicals, readymade garments, meat and dairy products as well as marine products.
    • India had significantly increased exports to major trading partners with outbound shipments to the UAE growing by 65% during the financial year and exports to the US increased by 46%.
      • It is worth noting that the top five export destinations are:
        • UAE
        • US
        • China
        • Bangladesh
        • Netherlands 

    Source: PIB