India’s State-wise Merchandise Export Performance in FY 2023-24

We discuss the shifts in merchandise exports of India’s states in FY 2023-24, linked to their core export items and global trade dynamics.

India’s merchandise export landscape has seen notable shifts in FY 2023-24, with Gujarat and Maharashtra maintaining their top positions, albeit with declining contributions, while Tamil Nadu and Andhra Pradesh have gained ground. These shifts highlight the evolving economic profiles and export strategies of Indian states.

Also Read: India’s Trade Performance in FY 2023-24 and Strategy to Explore New Export Markets

Source: NIRYAT, Ministry of Commerce, GOI

Source: NIRYAT, Ministry of Commerce, GOI

Key aspects of India’s state-wise trade performance in FY24

Gujarat and Maharashtra: Dominance with decline

Gujarat, holding a substantial 30.7 percent of India’s US$437 billion merchandise exports in FY24, experienced a dip from its 32.7 percent share in FY 2022-23. Despite this decline, Gujarat’s share grew significantly from 20.7 percent in FY 2020-21. The state’s exports are primarily driven by petroleum products, precious metals, and gems, sectors heavily influenced by global market volatility.

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Maharashtra, with a 15.4 percent share in FY24, saw its third consecutive year of decline from 16.2 percent in FY23, 17.4 percent in FY22, and 20 percent in FY21. The state’s major exports include engineering goods, and pharmaceuticals, sectors that face intense global competition and regulatory challenges.

Tamil Nadu: A rising export powerhouse

Tamil Nadu (TN) stands out among the top exporters, being the only state to consistently grow its share over the last three years. From 8.4 percent in FY22 to 9.1 percent in FY23, and nearly 10 percent in FY24, TN’s export growth is attributed to its diversified export basket and a significant surge in smartphone exports. In FY24, TN’s electronics exports rose by 77 percent year-on-year to US$9.6 billion, reflecting the state’s robust manufacturing capabilities and strategic investment in technology sectors.

Other emerging states

Haryana, Telangana, and Odisha also showcased positive export growth in FY24, despite subdued global trade conditions. These states have leveraged their regional strengths and tailored policies to enhance their export profiles.

Product-wise export analysis

• Gujarat: Dominated by petroleum products and precious metals, which are susceptible to global market fluctuations.
• Maharashtra: Major exports include engineering goods and pharmaceuticals, sectors that require consistent innovation and compliance with international standards.
• Tamil Nadu: A diverse export portfolio including electronics, textiles, leather and non-leather goods, and automotive products. This diversification helps mitigate risks associated with global economic shocks.

Source: NIRYAT, Ministry of Commerce, GOI

Services exports contribution

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While merchandise exports faced challenges in the past fiscal, India’s overall trade remained stable—totaling US$776 billion in FY24—due to the robust performance of services exports, which reached US$341.1 billion, up from US$325.3 billion in FY23.

Karnataka, TN, and Telangana are leading states in services exports, driven by IT/ITES and business services offered by global capability centers.

Advisory for foreign investors seeking to set up export-oriented production sites in India

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India’s diverse and rapidly growing market presents a multitude of opportunities for businesses looking to establish manufacturing operations. However, navigating the complexities of setting up a business in India requires strategic planning and understanding of the local landscape.

1. Market research and feasibility study

• Understand market demand: Conduct thorough market research to understand consumer behavior, demand patterns, and competition in your industry.
• Feasibility analysis: Evaluate the feasibility of your business model in the Indian context, considering factors like market size, growth potential, and regulatory environment.

2. Regulatory compliance

• Legal structure: Decide on the appropriate legal structure for your business, such as a private limited company, public limited company, partnership, or LLP.
• Permits and licenses: Identify and obtain necessary permits and licenses required to operate in India. This may vary by industry and state.
• Foreign direct investment (FDI) policies: Understand FDI regulations specific to your sector and ensure compliance with the Department for Promotion of Industry and Internal Trade (DPIIT) guidelines.

3. Location strategy

• State selection: Choose a state that aligns with your business needs. Consider factors like infrastructure, talent availability, state-specific incentives, and proximity to suppliers and customers.
• Special Economic Zones (SEZs) and industrial parks: Explore opportunities in SEZs and industrial parks that offer tax benefits, world-class infrastructure, and ease of doing business.

4. Taxation and incentives

• Tax structure: Familiarize yourself with India’s tax structure, including Goods and Services Tax (GST), corporate tax, and other applicable taxes.
• Incentives and subsidies: Leverage state and central government incentives and subsidies available for specific industries and regions.

5. Human resource management

• Talent acquisition: Develop a strategy for recruiting skilled labor, considering local talent pools and educational institutions.
• Labor laws: Comply with Indian labor laws and regulations, including wage standards, working conditions, and employee benefits.

6. Infrastructure and supply chain

• Logistics: Ensure robust logistics and supply chain management, considering transportation, warehousing, and distribution networks.
• Technology and innovation: Invest in technology and innovation to improve operational efficiency and competitiveness.

7. Cultural adaptation and corporate social responsibility (CSR)

• Cultural sensitivity: Understand and respect Indian cultural nuances and business etiquette to build strong relationships with local stakeholders.
• CSR initiatives: Engage in CSR activities to contribute to the community and enhance your company’s reputation.

8. Finance and funding

• Capital requirements: Assess your capital requirements and explore funding options, including venture capital, private equity, and loans from financial institutions.
• Financial management: Implement robust financial management practices to ensure sustainability and profitability.

9. Partnerships and joint ventures

• Local partnerships: Consider forming partnerships or joint ventures with local companies to leverage their market knowledge and networks.
• Strategic alliances: Explore strategic alliances with other businesses to enhance your market presence and capabilities.

10. Government liaison and support

• Engage with authorities: Maintain regular communication with government authorities and industry associations to stay informed about policy changes and opportunities.

Conclusion

India’s state-wise merchandise export performance highlights the dynamic nature of global trade and the critical role of strategic planning and investment. By emphasizing diversification, innovation, and regional strengths, states are enhancing their export profiles and contributing significantly to the national GDP.

Foreign investors aiming to benefit from India’s export promotion strategy should engage in meticulous planning and strategic execution. Conducting thorough market research, ensuring regulatory compliance, and leveraging local partnerships are essential steps for successfully establishing and expanding operations in this vibrant market.

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