Districts As Export Hubs: Can Lower-Ranked States Take On Gujarat, Maha, Tamil Nadu?

In a written reply to the Rajya Sabha last year, Commerce Minister Piyush Goyal had said that the objective of the government’s “Districts as Export Hubs” initiative was “to mobilise each district of the country to achieve its potential as an export hub”. Furthermore, in what may be seen as proof of the government’s intent to push for a balanced pan-India growth in the exports sector, it is likely to allocate Rs 2,500 crore for the scheme in the upcoming budget, as reported by Livemint.  

However, ambitious that it is, the initiative seems to be grappling with challenges of its own, as can be inferred from the data compiled by the ministry for the period of April–September 2021–22. As per the data, Gujarat, Maharashtra and Tamil Nadu have emerged as the top three major exporters, accounting for seven of top 10 districts in the list.  

Currently, these three states together account for more than 55 per cent of the country’s merchandise exports. In the last financial year, when India’s exports touched an all-time high of $422 billion, Gujarat accounted for about 30 per cent of the total exports at $127 billion, followed by Maharashtra and Tamil Nadu at $73 billion and $35 billion, respectively.  

Interestingly, these three states lead in the production of the goods which are among the most-exported products of the country and account for 81 per cent of the country’s exports. 

For example, Gujarat and Maharashtra are the top-notch centres for segments like petroleum products, engineering goods, gems and jewellery, drugs and pharmaceuticals. The fact that these were port states has given them historical advantage in terms of developing infrastructure for promoting overseas trade. So, can the DEH initiative help states other than the Big Three emerge as winners? 

Product Diversification As A Viable Option

In September last year, Dubai got to taste apricots from Ladakh, known for their distinctive taste, for the first time. Farmers of Chandauli district of UP are growing black rice to export to markets like Australia and New Zealand.  

Apricots and black rice may not be among the top five export items of states leading in the sector, but they, like many other items, hold the potential to generate revenue for their home states. 

Ajai Sahai, director-general and CEO of the Federation of Indian Export Organizations (FIEO), says, “With this scheme, the right message has been sent to the states. Now, the government wants to increase our exports substantially and that requires identifying new products and bringing new exporters in the field at the cutting-edge level in the state.” Along with diversifying markets, diversifying products could yield rich dividends, he suggests.  

Pointing to the peculiar problems associated with different states, he adds, “Each state, and the districts within it, may have different problems. For example, some may not have technical testing labs, while some may lack last-mile connectivity. Such gaps need to be plugged.”

He is of the firm opinion that the more granular we are in our approach, the better placed we would be to address the challenges faced by the export sector in different states and address the existing infrastructural gap. 

Integration Is The Key Word  

Rajeev Kher, former commerce secretary to the Union government during 2014–15, underpins the need for cost-effectiveness and asserts that this scheme will work only if the government puts in place the right kind of integrated ecosystem that will help states realise their potential.  

He says, “The concept of ‘one district one product’ is a development planning concept, but same or similar products cannot be restricted to one district alone. Contiguous or proximate districts which produce same or similar products will require regional integration to bring in cost effectiveness in areas of technology, skills, logistics, infrastructure, trade promotion, etc. Therefore, the success of the programme will entirely depend on how these requirements are planned and funded to achieve this integration.”

Looking Beyond Exports  

Sahai is hopeful that the scheme, apart from generating jobs, can address the problem of distress migration. It should be noted that Gujarat and Maharashtra are among the states considered to be the magnets for internal migrants. In terms of Gross State Domestic Product (GSDP) as well, these states are among the top. While Maharashtra is the largest state economy, accounting for 14 per cent of country’s GDP, Tamil Nadu comes at the second position with 9.6 per cent share and Gujarat at the third with 9.2% share in the national GDP for 2020-21.

If implemented in the right way, the scheme holds the promise of addressing the regional disparity between the states which the successive governments find difficult to solve, an opinion seconded by Kher.

Sustained Push Necessary

In his Independence Day speech in 2019, Prime Minister Narendra Modi expressed his vision to convert each district of the country into an export hub and enable MSMEs, farmers and small industries to explore overseas markets for their unique products. The “Districts as Export Hubs” initiative could prove to be a game changer for hitherto untapped regions which were nowhere on India’s exporting map, or the districts which could not fully exploit their potential due to infrastructural gaps.  

A total of 50 districts are likely to be selected in the pilot phase for developing export competitiveness. The scheme is also likely to attract more funds in the coming years—there were reports that the commerce ministry had asked for Rs 6,000 crore for it in the budget allocation.  

District Export Promotion Committees, headed by the district magistrate (DM) have been set up in all districts. Products/services with export potential have been identified in all 733 districts across the country. It now remains to be seen if and how lower ranked states can use the policy support to optimally harness their export potential.