Concentrated of India's Exports in Few States

91% in 10 States: The Stark Reality of India's Export Geography

India’s export geography is becoming alarmingly narrow. The latest RBI Handbook of Statistics on Indian States 2024–25 reveals that the top 10 States now account for 91 percent of India’s exports in FY25. This is a striking increase from 84 percent in FY22 and underscores a deeper narrative of economic divergence. What is perhaps more telling is the combined share of Gujarat, Maharashtra, Tamil Nadu, Karnataka, and Uttar Pradesh, which alone contribute nearly 70 percent of national exports. The rest of India languishes in comparison—a troubling scenario for the goal of balanced regional development.

The irony lies in the government's lofty rhetoric around decentralised trade policies like One District One Product. Despite such initiatives, much of northern and eastern India seems to be receding further from the country’s export engine. Why does this matter? Because export concentration doesn’t just skew economic outcomes—it also erodes the developmental dividends trade is supposed to deliver in jobs, infrastructure, and inclusive growth.

The Anatomy of Export Concentration

The structural advantages of the top-exporting States are hard to match. Gujarat’s industrial corridors and port networks, Maharashtra’s financial capital status, and Tamil Nadu’s deep supply-chain integrations present infrastructural setups that inland and landlocked States simply cannot replicate. Consider this: Credit–Deposit ratios in high-export States like Tamil Nadu and Andhra Pradesh exceed 90 percent, effectively keeping savings within regional economies to fund industries and services. Compare this with Jharkhand or Bihar, where this ratio is abysmally lower—indicative of weak financial ecosystems.

Further, global trade trends exacerbate the divide. UNCTAD estimates suggest that the top 10 exporters contribute 55 percent of global merchandise trade, making competition fiercer and favouring already-integrated regions. India’s coastal economies are better equipped to handle this shift, especially as global capital favours economic complexity over traditional low-cost factors. High-tech manufacturing hubs in Karnataka, for instance, command higher export value than labour-intensive clusters elsewhere.

Uneven Outcomes and Their Implications

One fallout of this concentration is regional inequality, as coastal and industrial states integrate deeper into global trade while hinterland regions decouple entirely. The numbers tell a worrying story: export growth no longer guarantees mass employment. Sectors like IT services and pharmaceuticals, though lucrative, are not labour-intensive. This decoupling of export growth and job creation limits trade’s ability to act as a developmental lever—particularly for the millions still dependent on agriculture and low-skill sectors.

Fiscal pressures are another hidden cost. States with sluggish industrial growth—Jharkhand, Chhattisgarh, Odisha—are often forced into fiscal stress, unable to generate enough revenue to reinvest in production capacity or infrastructure. The divergence is more than economic; it risks becoming political. Frustrations in northern and eastern India could strain cooperative federalism as exporting states draw disproportionate benefits.

The Gap Between Policy Intent and Execution

The government has introduced numerous initiatives to democratise export participation. The Districts as Export Hubs (DEH) scheme seeks to robustly integrate regional producers into trade value chains. The complementary Agriculture Export Policy targets rural and inland markets for processed food and agricultural exports, while the PM Gati Shakti Master Plan promises better multimodal logistics connecting manufacturing centres to ports. The schemes are ambitious on paper. But are they closing the gap?

The evidence is weak. For example, APEDA Financial Assistance hasn’t meaningfully lifted export competitiveness in landlocked States. Similarly, the DEH framework struggles with uneven implementation due to limited local capacity and institutional inertia. Coastal States continue to dominate because they already have mature ecosystems—state-of-the-art dry ports, skilled labour pools, and proximity to large international buyers. Programs like Towns of Export Excellence (TEE), aimed at boosting niche products (handicrafts, leather), remain grossly underfunded.

A Comparative Lens: Lessons from Vietnam

India might look to Vietnam for inspiration. Vietnam’s regional industrial clusters, spread across coastal and inland provinces alike, demonstrate a deliberate attempt to decentralise export-driven growth. The government invests heavily in inland logistics and provides tax incentives to attract foreign direct investment (FDI) into landlocked regions. In 2022, Vietnam’s inland provinces like Bac Ninh contributed nearly 45 percent of industrial exports—a stark contrast to India’s coastal dependence. Infrastructure spending, focused on connectivity, stood at 5.8 percent of GDP in Vietnam compared to India’s lagging 3 percent.

What Does Success Look Like?

Metrics should extend beyond export growth to include employment generation, regional dispersion, and value-chain integration. Success would mean hinterland States producing high-value exports—not just raw or intermediate goods tied to agro-processing. It also necessitates reducing India’s logistics costs, currently hovering at 13–14 percent of GDP compared to Vietnam’s 9 percent and China’s 7 percent.

At the institutional level, strengthening district-level bodies under DEH and EPM is imperative. Currently, too much depends on central ministries, while state and district-level execution remains erratic. Moreover, outcomes must be monitored beyond generic targets. Export decentralisation cannot succeed without addressing underlying gaps in skill ecosystems, access to finance, and infrastructure equity.

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