India's export growth will come from states that are truly prepared

Gujarat, Maharashtra, and Tamil Nadu together account for roughly 56% of India's exports, with Gujarat alone contributing close to 30%

The NITI Aayog’s recently released “export preparedness index” (EPI), 2024, is an attempt to measure how ready India’s states are in participating in global trade. The index benchmarks preparedness across four pillars — business ecosystem, export infrastructure, policy and governance, and export performance — using a wide set of indicators ranging from the depth and logistics efficiency of micro, small, and medium enterprises (MSMEs) to regulatory capacity and diversification. The exercise is meant to shift attention from the headline export numbers to the underlying conditions that enable firms to compete internationally.

 

It rightly highlights India’s uneven export performance. A handful of states dominate trade flows. The numbers are striking. Gujarat, Maharashtra, and Tamil Nadu together account for roughly 56 per cent of India’s exports, with Gujarat alone contributing close to 30 per cent, led by petrochemicals and gems and jewellery. Their success clearly rests on long-term investment in ports, industrial corridors, and special economic zones, combined with policy stability and administrative capacity. Beyond this, the report points to encouraging signs of diversification. Haryana’s exports, driven by automobiles and auto components, have been relatively insulated from swings in commodity prices. Telangana has built momentum in high-value sectors such as pharmaceuticals and aerospace. Odisha, long seen primarily as a mineral exporter, has begun to strengthen its position through industrial expansion. Himachal Pradesh recorded an export growth rate of about 9 per cent in 2023-24, largely on the back of pharmaceuticals, which now account for nearly 70 per cent of the state’s exports. These examples suggest that export capability can broaden when infrastructure, policy focus, and firm-level capacity align.

 

The other side of the picture is also equally clear. States such as Bihar, Jharkhand, and Chhattisgarh, along with several Northeastern states, remain in the lower tiers of export preparedness. Weak logistics, limited industrial depth, thin MSME ecosystems, and regulatory bottlenecks continue to hold them back. At the level of districts, concentration is even more pronounced. The top 100 districts account for nearly 88 per cent of India’s exports, and around 70 of these are clustered in just eight states. Large swathes of the hinterland remain disconnected from global markets, despite having latent advantages in agriculture, textiles, labour-intensive manufacturing, or niche products.

 

Although overall export competitiveness is shaped by macroeconomic and geopolitical forces, which lie well beyond the reach of state governments, it is local conditions that determine who is able to export when opportunities arise. Firms experience competitiveness through the reliability of power supply, the quality of roads to the nearest port, the speed of regulatory clearances, access to testing and certification facilities, and the availability of credit and skilled labour. These are precisely the areas where state- and district-level policies matter. Studies like these can help identify gaps and enable states to take advantage of export opportunities. Although the external environment has been clouded by the unfair tariff imposition by the United States, India is working on trade agreements with several other trading partners, including the European Union. Trade agreements will help only if India is prepared to tap emerging opportunities. States have a big role in this regard.