Maharashtra leads NITI Aayog's export preparedness index

The NITI Aayog's Export Preparedness Index (EPI) 2024, which placed Maharashtra at the forefront, followed by Tamil Nadu and Gujarat, serves as a crucial barometer for India's trade ambitions and the performance of its states in fostering an export-friendly ecosystem. This index is not merely a ranking exercise; it's a comprehensive diagnostic tool designed to assess and improve the export readiness of Indian states and Union Territories, thereby contributing significantly to India's aspiration of becoming a global trade powerhouse.

**Background Context:**

India's journey towards economic liberalization began in earnest in 1991, shifting from an inward-looking, import-substitution strategy to one that embraced global trade. The establishment of NITI Aayog in 2015, replacing the erstwhile Planning Commission, marked a strategic shift towards a 'think tank' approach, emphasizing cooperative and competitive federalism. Recognizing the pivotal role of states in national economic growth, NITI Aayog launched the first Export Preparedness Index in 2020. The EPI was conceived to identify challenges and opportunities, enhance states' export competitiveness, and encourage a healthy spirit of competition among them to improve their export performance. This aligns with national initiatives like 'Make in India' and 'Atmanirbhar Bharat', which aim to boost domestic manufacturing and integrate India into global supply chains.

**What Happened:**

The EPI 2024 evaluated states across four key pillars: Policy, Business Ecosystem, Export Ecosystem, and Export Performance. Each pillar comprises several sub-pillars and indicators, providing a granular assessment. Maharashtra's top ranking underscores its robust export policies, a conducive business environment, well-developed export infrastructure, and strong export outcomes. The state's diverse industrial base, including manufacturing, engineering goods, chemicals, and agricultural products, coupled with its significant port infrastructure (like Mumbai and JNPT), contributes to its export prowess. Tamil Nadu and Gujarat, consistently strong performers, also demonstrate well-rounded export ecosystems. Uttarakhand's leading position among smaller states highlights the potential for focused policy interventions and infrastructure development even in states with limited resources, showcasing that size is not the sole determinant of export success.

**Key Stakeholders Involved:**

Several stakeholders play crucial roles in India's export landscape. **NITI Aayog** is the architect of the EPI, providing a framework for assessment and policy recommendations. The **Ministry of Commerce and Industry**, Government of India, formulates the overarching Foreign Trade Policy (FTP) and implements various export promotion schemes. **State Governments** are critical implementers, responsible for creating state-specific export policies, developing infrastructure (ports, logistics, SEZs), and fostering a business-friendly environment. **Exporters and businesses**, from large corporations to MSMEs, are the actual drivers of exports, responding to market demands and leveraging government support. Financial institutions like the **Reserve Bank of India (RBI)** and various banks facilitate trade finance, while **Export Promotion Councils (EPCs)** and industry associations advocate for exporters and provide market intelligence.

**Why This Matters for India:**

Exports are a vital engine for economic growth, employment generation, and foreign exchange earnings. A robust export sector improves India's Balance of Payments, strengthens the rupee, and enhances the country's global economic standing. The EPI's findings are crucial for evidence-based policymaking, allowing both central and state governments to identify areas requiring intervention. By fostering competitive federalism, the index encourages states to learn from best practices and proactively address their bottlenecks. For a developing economy like India, increasing its share in global trade is essential for achieving its vision of becoming a developed nation by 2047.

**Historical Context:**

Historically, India's trade policy underwent significant transformations. Post-independence, the focus was on import substitution to protect nascent domestic industries. This approach, while fostering self-reliance, limited India's integration into global trade. The economic reforms of 1991 marked a paradigm shift, opening up the economy, reducing tariffs, and promoting exports. Subsequent Foreign Trade Policies (FTPs) have consistently aimed at simplifying procedures, reducing transaction costs, and providing incentives for exporters. The establishment of Special Economic Zones (SEZs) and Export Processing Zones (EPZs) further underscored the commitment to creating dedicated export hubs.

**Future Implications:**

The EPI 2024 results will likely spur greater focus on state-level export strategies. States will be incentivized to improve their policy frameworks, invest in critical infrastructure (including logistics and digital trade platforms), enhance ease of doing business, and diversify their export baskets and markets. This healthy competition can lead to a more balanced regional development of export capabilities, moving beyond traditional export hubs. Furthermore, the insights from the EPI can inform India's approach to negotiating Free Trade Agreements (FTAs) and participating in global value chains, ensuring that state-level strengths are leveraged effectively. The continued monitoring and evaluation through indices like EPI will be crucial for India to achieve its ambitious merchandise export targets, which are projected to reach trillions of dollars in the coming years.

**Related Constitutional Articles, Acts, and Policies:**

India's export framework is governed by a mix of constitutional provisions and specific legislation. The **Seventh Schedule of the Constitution** places 'Trade and Commerce with foreign countries' (Entry 41) and 'Inter-State Trade and Commerce' (Entry 42) primarily under the **Union List (List I)**, granting the Central Government the primary authority to legislate on these matters. However, the implementation and creation of a conducive environment fall significantly within the purview of state governments, demonstrating cooperative federalism. **Article 301** guarantees freedom of trade, commerce, and intercourse throughout the territory of India, which, while primarily domestic, underpins the seamless movement of goods essential for exports. The primary legislative framework is the **Foreign Trade (Development and Regulation) Act, 1992**, which empowers the Central Government to make provisions for the development and regulation of foreign trade. The **Foreign Trade Policy (FTP)**, updated periodically (e.g., FTP 2023), outlines the specific strategies, incentives, and procedures for exports and imports. Other relevant policies include the **Make in India initiative**, **Atmanirbhar Bharat Abhiyan**, and various **Production Linked Incentive (PLI) Schemes**, all aimed at boosting domestic manufacturing and making Indian products globally competitive.