Context: India has shown remarkable resistance to the obstacles created by the pandemic in global trade and India has achieved new heights in terms of export in the financial year 2021-22. 

• In light of this, the Second Edition of Export Preparedness Index 2021 offers a comprehensive analysis of India’s export milieu with new indicators that have been added that provide a robust picture to this edition. 
• The report is also an attempt to capture the effects of the COVID-19 pandemic and recovery from it in terms of exports.

What is the Export Preparedness Index (EPI) 2021?

• Released by: NITI Aayog in partnership with the Institute of Competitiveness
• Aim: To examine export readiness and export performance of the Indian States and Union Territories.

Objective: To instil competition among all Indian states to bring about 

• a) favourable export-promotion policies, 
• b) ease the regulatory framework to prompt subnational export promotion, 
• c) create the necessary infrastructure for exports and 
• d) assist in identifying strategic recommendations for improving export competitiveness. 

Parameters: The index ranks states and UTs on 4 main pillars and 11 sub-pillars.The four pillars include-

• Policy: A comprehensive trade policy provides a strategic direction for exports and imports.
• Business Ecosystem: It examines the business ecosystem, as an efficient business ecosystem can help attract investments and create an enabling infrastructure for businesses to grow.
• Export Ecosystem: It aims to assess the business environment, specific to exports.
• Export Performance: It examines the reach of export footprints of states and union territories.

Significance of the index: The index can be used by states and union territories (UTs) to benchmark their performance against their peers and analyze potential challenges to develop better policy mechanisms to foster export-led growth at the subnational level
Key Rankings of the index

• States: Gujarat has retained the top position in the index, followed by Maharashtra and Karnataka.
• Union Territories: Delhi has topped the index, followed by Goa.
• The index has found that most of the ‘Coastal States’ are the best performers. 
• The top-six states in India —Maharashtra, Gujarat, Karnataka, Tamil Nadu and Telangana —contribute 75% of India’s overall exports.

What are the challenges in export promotion?

The index brings out three major challenges to India’s export promotion. These are:

1. Intra- and inter-regional differences in export infrastructure,
2. Weak trade support and growth orientation across states and
3. Lack of R&D infrastructure to promote complex and unique exports.

Key Significance
Examines the Export Performance of States and UTs: It aims to examine the export performance and the export readiness of the states and union territories.

• The idea behind the index is to create a benchmark to rank these states and UTs to help them individually promote a conducive export environment in the region.

Helps in Identifying Obstacles to Export: The index is an essential tool for policymakers and exporters to identify the drivers and obstacles, and examine the same to strategize a viable export map for the state.

• A guide to State Government: The Index would be a helpful 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.
• Instil Competition Among States: Its primary goal is to instil competition among all Indian states (‘Coastal’, ‘Landlocked’, ‘Himalayan’, and ‘UTs/City-States’) to bring about favourable export-promotion policies, ease the regulatory framework to prompt subnational export promotion, create the necessary infrastructure for exports, and assist in identifying strategic recommendations for improving export competitiveness.

Suggestion to Increase Export

• Export Infrastructure and Market Concentration: For better export performance, it is necessary to invest in developing reliable and efficient export infrastructure, which will help in cost reduction and improve efficiency in the supply of exports
• Need for export diversification: It plays an important role in achieving stability and growth in the export sector.
• Emphasis on key strategies like a development of export infrastructure, strengthening industry-academia linkages and creating state-level engagements for economic diplomacy to address the challenges in exports.
• The private sector can also play an important role in export promotion.