Export Preparedness Index (EPI) – UPSC Notes

The aim of Export Preparedness Index is to identify challenges and opportunities, enhance the effectiveness of government policies and encourage a facilitative regulatory framework for export. It has four pillars, eleven sub pillars and sixty indicators and covers across all the states and union territories. On this basis, the Indian states have been divided into four parts – Coastal, Landlocked, Himalayan, and UTs/ City-States.

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NITI Aayog, in collaboration with the Institute of Competitiveness released the second edition of the Export Preparedness Index (EPI) in 2021. It is a comprehensive analysis of India’s export achievements. The first Index was launched in August 2020.

Framework of Export Preparedness Index

The four pillars of Export Preparedness Index are:

1. Policy: A comprehensive trade policy providing a strategic direction for exports and imports.
2. Business Ecosystem: An efficient business ecosystem helping states attract investments and create an enabling infrastructure for individuals to initiate start-ups.
3. Export Ecosystem: Assess the business environment, which is specific to exports.
4. Export Performance: This is the only output-based parameter and examines the reach of export footprints of States and Union Territories.

The eleven sub pillars of Export Preparedness Index are:

1. Export promotion policy
2. Institutional framework
3. Business environment
4. Infrastructure
5. Transport connectivity
6. Access to finance
7. Export infrastructure
8. Trade support
9. R&D infrastructure
10. Export diversification
11. Growth orientation

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Significance of Export Preparedness Index 

• The EPI serves as a guide for the state governments to benchmark regional performance with respect to export promotion and thus deliver key policy insights on how to improve and enhance the exports.
• The index helps policymakers and exporters to identify the drivers and obstacles, and examine them to strategize a viable export map for the state.
• It aims to examine the export performance and the export readiness of the states and union territories.
• The index helps to instill a sense of competition among the states and union territories to bring about favorable export – promotion policies, to create and promote necessary infrastructure for exports etc.

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Highlights of Export Preparedness Index (EPI) 2021

• Gujarat has been named India’s top State in terms of export preparedness for the second consecutive year as per the Export Preparedness Index (EPI) 2021 released by the NITI Aayog while Maharashtra, Karnataka, Tamil Nadu were ranked second, third and fourth in the index. These are coastal States which account for a majority of India’s exports because of higher industrial activity and access to sea ports.
• Uttarakhand, Himachal Pradesh, Tripura, Sikkim and Manipur were at the top five paces among Himalayan states.
• Among the union territories, Delhi has topped the index.
• Lakshadweep, Arunachal Pradesh, Mizoram, Ladakh, and Meghalaya were ranked as the worst performers.
• As per the 2021 Index, the three major challenges to India’s export promotion 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.

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Facts About India’s Exports

• India’s total export registered a growth of 37% in the financial year 2022. The export value was $400 billion compared to $292 billion in the previous year.
• Engineering products were the highest contributors increasing by 50%.
• The export of petroleum products increased by 147.6% due to the continuous increase in crude oil prices.
• The top five export destinations for India are UAE, US, China, Bangladesh and Netherlands.

If utilized properly, Export Preparedness Index will serve as a valuable tool for the government and policymakers to promote healthy competition among states and UTs, hence enhancing India’s standing in the global export market. It will also help the states and Union territories to plan and execute sound export-oriented policies for ensuring a conducive export ecosystem, to make maximum utilization of their export potential.

UPSC Based Questions

The SEZ Act, 2005 which came into effect in February 2006 has certain objectives. In this context, consider the following: (2010)

1. Development of infrastructure facilities.
2. Promotion of investment from foreign sources.
3. Promotion of exports of services only.

Which of the above are the objectives of this Act?

(a) 1 and 2 only
(b) 3 only
(c) 2 and 3 only
(d) 1, 2 and 3

Ans: (a)

Who releases the Export Preparedness Index (EPI)?

Describe the performance of various states under various categories.

How are the states ranked?

Discuss the significance of the Export Preparedness Index (EPI) 2020.

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