Gujarat, Tamil Nadu, Karnataka, Uttar Pradesh, Maharashtra, Rajasthan, Haryana, Punjab and Delhi are nine leading Indian states in the textile and apparel industry. Though some of these have overall good infrastructure, policies and eco-system in export, there is enough scope of improvement at various levels. And it was highlighted in two recent official reports – first-ever Export Preparedness Index (EPI) 2020 by the National Institution for Transforming India (NITI) Aayog and State Business Reform Action Plan 2020 (State BRAP) by the Ministry of Commerce.
One should not forget that in export, one has to compete with overseas competitors that are far ahead in many aspects, be it productivity, less overall costing, favourable policies of their own countries, special status or benefits by countries where they are exporting, etc. Keeping all this in mind, exporters often insist on providing level playing field, and states have the most important role to play here.
NITI Aayog’s EPI examined the export eco-system of Indian states; it studied export preparedness and competitiveness at the sub-national level. Existing policy measure (20 per cent), business eco-system (40 per cent), export infrastructure (20 per cent) and export performance (20 per cent) of the state are some key parameters for measuring export preparedness. Under these categories, there are around 50 standard parameters that were taken into consideration.
Overall ranking by the NITI Aayog (only prominent textile and garment manufacturing states mentioned) –
| Rank | State | Export Preparedness (in percentage) |
| 1 | Gujarat | 75.19 |
| 2 | Maharashtra | 75.14 |
| 3 | Tamil Nadu | 64.93 |
| 4 | Rajasthan | 62.59 |
| 7 | Haryana | 56.03 |
| 9 | Karnataka | 55.17 |
| 11 | Uttar Pradesh | 53.67 |
| 15 | Delhi | 45.80 |
| 18 | Punjab | 39.63 |
It is also pertinent to mention here that around 70 per cent of India’s overall export has been dominated by five states – Maharashtra, Gujarat, Karnataka, Tamil Nadu and Telangana. So, there are enough opportunities for other states, as they are missing currently.
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No doubt, the one-size-fits-all policy will not work for all states. Though Haryana and Karnataka do need to improve, it is like an eye-opener for Delhi and Punjab to improve their export performance. All these states are 20 points down, or even more, as compared to Gujarat and Maharashtra. Out of the total export of Delhi, more than 6 per cent belongs to garment and textile products. Regarding export eco-system pillar, Karnataka, Uttar Pradesh and Delhi’s performances are very poor. Same is with Rajasthan and Tamil Nadu!
Major areas for improvement
The lack of access to financial facilities is one of the major challenges. This is particularly because most states don’t have any form of loan facilities to be provided to the exporters. Delhi provides high credit of around 5.31 per cent, in comparison to the country average of 0.6 per cent. Having a strong focus on textile and apparel export, states like Maharashtra, Gujarat and Tamil Nadu lag in this particular parameter.
Innovation plays a key role in boosting the overall export growth. Maharashtra and Tamil Nadu have managed to score high in India Innovation Index with a dedicated emphasis on crucial factors such as business eco-system, investment on R&D, etc. All other states need to work in this regard, as the apparel sector requires a lot of R&D and innovation. Some states have performed very well, but there are many areas where leading states do need to improve a lot. For example, Gujarat is on the number one slot, but its ratio of research institutes stands at 0.04 per cent, while that of a state such as Rajasthan stands almost close to 1.49 per cent. It shows that there is a huge scope for Gujarat to boost its R&D infrastructure, which could complement and sustain the high business growth in the state.
Similarly, there is a disparity in terms of availability of NABL accredited research labs across states. While Maharashtra has 895 accredited labs, Uttar Pradesh has only 83 labs at an internationally acceptable level of competence.
Isn’t it surprising that the report reads Delhi is an anomaly because it does not provide enough trade-related support, such as a trade guide or an online portal for easy accessibility of information? However, the report also says that Delhi has been able to attract businesses and investments, thereby creating an enabling business infrastructure. The state has tremendous potential to translate this into an ideal export eco-system, once it has the prerequisite basic infrastructure in place.
Collective efforts at all fronts need to be taken immediately, as looking at the official figures, Rajasthan’s average export growth (overall, not just textile and apparel) over 3 years stands at a meagre 5 per cent.
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Maharashtra’s is as low as 0.12 per cent. The larger states must take initiatives to expand their export growth. Because they already have the prerequisite infrastructure in place, their volume of exports should not be restricted to lower valuations.
No doubt that most states are mainly identifying their thrust areas or sectors for exports. This is not enough. Export promotion policy needs to focus on incentives like providing market support, financial and non-financial incentives to MSMEs, and an increased emphasis on product and process standards and quality certifications.
Huge scope for UT as textile is their main product
Amongst the Union Territories (UT), Andaman and Nicobar Islands have registered the best performance. This is primarily because of its significantly high export growth of over 280 per cent over the last 3 years. Andaman specialises in exports related to textiles, as 15 per cent of its export is of cotton tees, though the value is only US $ 0.60 million. The textile industry is one of the biggest export industries in the country, and hence, the Islands benefit from it. If they can boost their infrastructure, it would further help them to expand their exports.
Irrespective of value, it is pertinent to keep in mind that in the total export of Jammu & Kashmir, two textile products (woollen shawls and carpets) have 26 per cent share. So, both UTs should focus more on export, especially that of textile products.
States top in export preparedness, down in State Business Reform Action Plan 2020
On the other hand, in the State Business Reform Action Plan 2020 (State BRAP) by the Ministry of Commerce, the same states mentioned above have a totally different picture, as many states lag behind in this tally, especially Gujarat, Maharashtra and Tamil Nadu – these remain at the top in export preparedness, but go down in State BRAP. This action plan includes 180 reform points covering 12 business regulatory areas such as Access to Information, Single Window System, Labour, Environment, etc. It will help attract investments, foster healthy competition and increase ease of doing business in each state. The ranking this time gives full weightage to the feedback from over 30,000 respondents at the ground level, who gave their opinion about the effectiveness of the reforms.
State BRAP (only prominent textile and garment manufacturing states mentioned) –
| Rank | State |
| 2 | Uttar Pradesh |
| 8 | Rajasthan |
| 10 | Gujarat |
| 12 | Delhi |
| 13 | Maharashtra |
| 14 | Tamil Nadu |
| 16 | Haryana |
| 17 | Karnataka |
| 19 | Punjab |
No doubt, various policies by State and Union Governments are to the benefit of exporters compared to the companies focusing on the domestic market. But now as there is a very thin line between companies purely into export and those purely focusing on domestic markets, especially in the textile and apparel industry, state and industry have to think and execute policies in a way that they should have a proper eco-system.
Export-led growth strategy is the need of the hour. The export-led growth trajectory would also fuel domestic consumption, in turn encouraging even domestic manufacturers to become more competitive. The new world order is one in which production systems are more consolidated, and supply chains are significantly reduced in size to increase efficiency. Given this new paradigm of global production, India will face intense competition in exports from other regions that compete on cost advantages. So, the question remains – will all states now improve wherever they need to? They must!
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