Export Preparedness Index: Niti Aayog- UPSC Current Affairs

Why in the News?

Recently, the NITI Aayog released the Second Edition of Export Preparedness Index (EPI) 2021.

Probable Question

The recent surge in exports can be attributed to the success of the ‘Make in India’ initiative. Analyze.         

Key Points

About Export Preparedness Index 2021

• Top Performing Coastal States:
  • Gujarat
  • Maharashtra
  • Karnataka
  • Tamil Nadu

Image Source: Export Preparedness Index (EPI)2021

• In the category of ‘Landlocked States’, Haryana was the best-performing state.
•  Among ‘Himalayan States’ and ‘Union Territories’, Uttarakhand and Delhi are the top-performing states respectively.

Image Source: Export Preparedness Index (EPI) 2021

• Parameters Involved:
  • Four Pillars:
    • 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 which include:
    • 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.
• Goals: 
  • To instill competition among all Indian states (‘Coastal’, ‘Landlocked’, ‘Himalayan’, and ‘UTs/City-States’).
  • To bring about favorable 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. 
• Major Challenges to India’s export promotion:
  • Intra- and inter-regional differences in export infrastructure; 
  • Weak trade support and growth orientation across states; 
  • Lack of R&D infrastructure to promote complex and unique exports.
• Recovering from COVID-19 Pandemic:
  • After the Covid-19 pandemic, the Indian economic recovery is still far from achieved though signs have been positive.
    • For Example, India’s merchandise exports in April-February 2021-22 were $374.81 billion as against $256.55 billion during the year-ago period, registering a growth of 46.09%.
• Exports have been contributing roughly 20% on average to the GDP of India for the past decade making it an inalienable component of India’s economic growth story.

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Suggestions to Boost Exports

• It becomes important to invest in export infrastructure which will reduce the cost, in turn, boost Export performance.
• To achieve stability and growth in exports, it is important to diversify the export basket.
• Strengthening industry-academia linkages and creating state-level engagements for economic diplomacy can go a long way in boosting the performance of the exports sector.
• ‘Make in India’ initiative should be utilized to its full potential with the private sector.

Significance

• The report is a comprehensive analysis of India’s export achievements. 
• The index can be used by States and Union Territories (UTs) to benchmark their performance against their peers.
• It will help to analyze potential challenges to develop better policy mechanisms to foster export-led growth at the subnational level.
• It promotes competitive federalism and a fair contest among States/UTs.

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