EXPORT PREPAREDNESS INDEX FOR 2021

NITI Aayog Releases Second Edition of EPI 2021

     NITI Aayog, in partnership with the Institute of Competitiveness, released the second edition of the Export Preparedness Index (EPI) 2021. EPI 2021 entails 4 pillars, 11 sub-pillars and 60 indicators and covers across 28 states and 8 UTs. As per the index, Gujarat emerged as the top-performing state in the 'Coastal States' category, followed by Maharashtra and Karnataka. 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.

       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 and analyse potential challenges to develop better policy mechanisms to foster export-led growth at the subnational level.

       The EPI prepared by Niti Aayog in partnership with the Institute of Competitiveness (IFC) ranked 36 states, city-states and union territories on the basis on policy (export promotion and institutional framework), business ecosystem (business environment, infrastructure, transport connectivity and access to finance), export ecosystem (export infrastructure, trade support and R&D infrastructure), and export performance (growth and orientation and export diversification). The index – a benchmark of the performance of states and UTs against their peers, is used to assess potential challenges as well as promote favourable environment for exports.

          EPI 2021 brings out three major challenges to India’s export promotion. These are 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. The EPI’s primary goal is 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. It promotes competitive federalism and a fair contest among States/UTs. 

          The existence of a favourable trade policy in a region forms the basis for the strategic advantage to the stakeholders and provide a vision of the state government. The pillar covers the paramount trade policies vital for the expansion of export business. It evaluates whether the particular policy has been implemented in the state or not. A conducive eco-system with regulatory ease and a facilitative environment spurs business activity. This pillar tries to capture the performance of the states on similar grounds. The existence of efficient business ecosystem strengthens the backward and forward linkages of the exporting industry, thereby enhancing their output and growth. It covers a wide range of areas like Ease of Doing Business, Innovative Capacity, Cluster strength, Financial Ability, Logistics and more. In addition to the comprehensive enabling environment in the state, special attention must be given to the export business ecosystem, which drives competition and growth in the export-specific sector. The pillar covers indicators like area under Export Promotion Industrial Parks, Export Promotion Zones, Existence of Trade Guide, Number of Inspection agencies - NABCB certification and others, which are essential to attract new investors and increase the productivity of the existing ones. Measuring export performance is necessary to assess actual results. This particular pillar, unlike others, is an output-based dimension. It helps to examine how much the states have achieved and improved in the export sector. Growth and diversification of exports constitute the export performance of the states.

          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.