Gujarat, Maharashtra, and Tamil Nadu, among the top 10 states in terms of exports, lead India’s international trade, contributing over 85% of the nation’s total exports. A closer look at the geographic distribution of exports reveals that India’s states are highly unequal in terms of industrial development, regulatory complexities, infrastructural connectivity, availability of skilled manpower, etc. To bring more balanced contribution in exports, India needs to focus on each state’s uniqueness and then make appropriate strategies.
Image credit: Shutterstock
India’s exports in 2022-23 crossed an unprecedented US$ 770 billion, with trade in goods accounting for US$ 447 billion and in services accounting for US$ 323 billion, despite global slowdown. This growth has been driven by a number of factors, including a strong domestic economy, rising demand for Indian goods and services in global markets, and government policies that have made it easier for businesses to export.
Source: Ministry of Commerce and Industry
India’s growth in exports is being supported by increased efforts from states to raise production of existing products, boost investments and identify newer products to export. Over the year 2021-22, states like Odisha, Gujarat and Karnataka have emerged as the top states in terms of growth when compared to the pre-pandemic year of 2019-20.
Gujarat, Maharashtra, Tamil Nadu, Karnataka, Uttar Pradesh, Andhra Pradesh, Odisha, Haryana, West Bengal, and Telangana were India’s top ten exporting states in absolute terms in 2021–22, accounting for more than 85% of the country’s total exports.
Gujarat led in terms of export share, accounting for over 30% of all goods exported from India and worth US$ 127 billion. A majority of Gujarat’s exports are petroleum-based, with gasoline ranking as the top product, followed by precious metals, gems, and stones.
This was followed by Maharashtra and Tamil Nadu, with respective shares of US$ 73 and US$ 35 billion. The primary exports of Maharashtra are drugs and formulations, gems and precious metals, and iron and steel, whereas Tamil Nadu exports Textiles and Garments, Leather Goods, Automobiles and Components, among other things.
On the other hand, seven Indian states performed better than the average growth rate: Gujarat, Karnataka, Odisha, Telangana, West Bengal, Rajasthan, and Madhya Pradesh. Among them, Odisha increased its exports by 156% over 2019-20, valued at US$ 17 billion. Its primary exports included iron, steel, aluminum, and iron ore in 2021-22.
Similar to this, Karnataka saw a 56% increase in exports, despite continuing to export petroleum products, RMG cotton, iron and steel, electronic instruments, and electronic components. On the other hand, exports from Kerala and Delhi fell by 56% and 20%, respectively. It is notable that other than Haryana and Uttar Pradesh, all states among the top ten had a coastline. Certainly, a state’s capacity to export benefits from improved port accessibility.
Some states where production and supply lines were harmed by COVID-19 still felt the effects of the restrictions that were subsequently imposed. In some states, exports experienced a decline in value and growth rate due to problems with transportation, investment, and labour shortages, among other things.
The exponential growth of India’s exports, owes much to FDI inflows in top performing states. States like Gujarat, Maharashtra, and Tamil Nadu, attracting Foreign Direct Investment (FDI), have significantly contributed to this surge, capitalizing on infrastructure enhancements, ease of doing business measures and advanced technologies boosting export competitiveness, according to NITI Aayog ‘s Export Preparedness Index 2022.
Source: Dpiit.gov
Maharashtra state ranked 1 in FDI receipts at US$ 14,806 million, followed by Karnataka (US$ 10,429 million), Gujarat (US$ 4,714 million), Delhi (US$ 7,534 million), Tamil Nadu (US$ 2,169 million), Haryana (US$ 2,600 million), Telangana (US$ 1,303 million), Jharkhand (US$ 6 million), Rajasthan (US$ 910 million), and West Bengal (US$ 394 million).
Sectors Attracting Highest FDI Equity Inflow
Source: Dpiit.gov (values in US$ million)
One of the biggest challenges to India’s exports is the fact that they are currently too concentrated in a few states. Only 10 states account for 85% of India’s total exports. This means that a slowdown in one of these states can have a significant impact on India’s overall export performance.
According to Mr. Sanjay Mangla, Associate Professor at Symbiosis International University, “India’s states are highly unequal in terms of industrial development, regulatory complexities, states highway connectivity to national highway connectivity, political stability, skilled manpower, state government trade policies and port connectivity. Most exports performing states are coastal states thus have good port connectivity. If India can address these challenges, then more states of India can come forward and become exports hub of India. By focusing on each state uniqueness and then making strategies, attracting more FDI, India can boost its export competitiveness and reach its full export potential.”
He further added that in order to promote India’s export growth and bridge disparities among its states, a well-coordinated approach is imperative. State-level utilization of government schemes for creating export promotion zones, transport facilities, and research hubs will empowers weaker states to increase their export share.
States lagging in export performance should receive support to develop the necessary export framework as per their unique challenges. Encouraging the adoption of successful practices from peer states like Himachal Pradesh and Uttarakhand will serve as models for their counterparts, amplifies growth prospects.
Leveraging India’s treasure trove of Geographical Indication (GI) products unlocks unique export potential. Exclusive to individual states, such products can spearhead their global market presence. For instance, Tamil Nadu’s Kancheepuram Silk remains unrivaled across India, propelling manufacturing, quality, and market identification. States should explore new markets for existing products to unveil fresh opportunities for exporters.
One District One Product (ODOP) and Districts as Export Hubs Initiative (DEH) have merged. The ODOP-DEH Initiative emphasises the necessity of harnessing each district’s potential and unique identity to transform them into export hubs. ODOP- Districts as Export Hubs initiative has identified a total of 1102 products from 761 districts across the country. This initiative has the potential to bring more states into India’s export economy by providing a platform for more states to access export markets.
The government’s District As Export Hub initiative aims to make it possible for MSMEs, farmers, and small businesses to take advantage of export opportunities and shift the emphasis to District-led Export Growth for self-sufficiency and self-reliance. This would increase investment in the District, increase manufacturing and exports, and create a district-level ecosystem for innovation and technology use, which would increase the competitiveness of the exporters.
Identifying and promoting high-growth sectors – IT, pharmaceuticals, automotive, textiles, and renewable energy – forms a strategic thrust for export enhancement. Stressing value-added and technology-intensive products captures a larger global share. Strengthening manufacturing through initiatives like “Make in India” bolsters competitiveness by optimizing infrastructure, reducing logistics costs, streamlining regulations, and fueling innovation.
Capitalizing on Free Trade Agreements (FTAs) opens avenues for India’s exporters. Agreements with multiple countries like UAE, ASEAN, Australia, and others stimulate economic growth, market access, and fair competition. States can tailor products to meet partner countries’ needs, while facilitating market knowledge transfer aids exporters’ penetration. Investment inflow from partner countries further enhances productivity and growth.
Additionally, the government can simplify the export process by reducing the number of documents required and streamlining the approval process, more export training can be provided to businesses, helping them to understand the export market and develop export strategies. Promotion of India’s exports through trade fairs, exhibitions, and marketing campaigns. By taking these steps, the government can help to boost India’s exports and create jobs in the country.
Happy to read that Maharashtra is doing great in Exports.
You must be logged in to post a comment.
Stay ahead in the dynamic world of trade and commerce with India Business & Trade's weekly newsletter.