NITI Aayog releases Export Preparedness Index 2020; Gujarat tops the chart

NITI Aayog

Earlier today, NITI Aayog released its report on Export Preparedness Index 2020 that was streamed live.

Gujarat has topped the NITI Aayog’s Export Preparedness Index 2020 followed by Maharashtra and Tamil Nadu in the second and third place respectively, according to the report.

Speaking at the launch of the report, Niti Aayog Vice Chairman Rajiv Kumar said exports are an integral part of Aatmanirbhar Bharat and the country will have to keep striving to increase the share of exports in GDP and world trade.

He also urged states toset up dedicated export departments and re-look at the composition of exports with focus on labour intensive sectors.

The framework of the EPI

The extensive framework dwelled on ranking the states and Union Territories based on their index score, while examining export performance and preparedness of the states.

Six of the eight coastal states feature in the top ten rankings, indicating the presence of strong enabling and facilitating factors to promote exports.

Among the landlocked states, Rajasthan has performed the best, followed by Telangana and Haryana while among the Himalayan states, Uttarakhand topped the chart, followed by Tripura and Himachal Pradesh, the report said adding that across Union Territories, Delhi has performed the best, followed by Goa and Chandigarh.

“The rapid growth of exports is a crucial component for long term economic growth. A favourable ecosystem enables a country to contribute significantly to global value chains & reap the benefits of integrated production networks, globally.”

~ Amitabh Kant, CEO, NITI Aayog

The index was also hoped to create necessary infrastructure for exports and to aid in identifying strategic recommendations for improving export competitiveness.

Finalising the framework process was an extensive process that was carried over for the past 12-15 months, as was shared in the conference, involving quality stakeholder interactions, preliminary index collections etc. Policy, Business Ecosystem, Export Ecosystem and Export Performance formed the four key pillars of the Framework, together with its sub-pillars.

The NITI AAYOG (National Institution for Transforming India) functions as a “Think Tank” for the Indian Government.

Latest Figures

In June 2020, India’s exports followed their June 2019 numbers by 12%. In July 2020, the gap to July 2019 was 10%.

For a segment that shrank by 60% in April, these figures do look optimistic.

However, it may be mentioned that India’s exports have had a difficult time in recent years. In 2019-20, the year against which its current performance is being evaluated, India’s exports fell 5%, as per data from India’s central bank.

In addition to that, the pandemic has exposed the country to extremes in the past few months.

According to the Data from the Organisation for Economic Co-operation and Development (OECD) which evaluates 25 countries on recent monthly exports numbers , it has come to the fore that India suffered the second-largest monthly drop in April, which was also the worst month of the pandemic.

Subsequently, it was ranked third in monthly increase in May and seventh in June. In other words, India’s exports are recovering, but they are doing so on a low base, and fundamental issues on how to become more competitive globally remain.

Short and long term objectives

In the near term, it is likely that the objective would be to at least go back to the old normal, and the recent trade figures do suggests reasons for hope. After the sharp plunge in April, recovery in exports has been stronger than in imports.

The exports recovery in May, June, and July does seem to be broad based, as per data from the Ministry of Commerce.

Pharmaceuticals ($1.6 billion in July), iron and steel ($1.3 billion), cereals ($813 million), and aluminium ($445 million) comprises of some of the 14 categories where exports have increased for three successive months.

In comparison, the rebound in imports seems not only relatively muted, but also less broad based.

However, deceleration in goods imports at a time when exports are rising faster suggests that domestic demand in the country is recovering more slowly when compared to other countries.

In July, there’s been positive growth in exports to north-east Asia (including China and South Korea) and Asean countries (including Malaysia, Singapore and Vietnam). By comparison, exports to North America, European Union and West Asia have tumbled.

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