India’s Export Growth Conceals a Widening Regional Divide

Export Strength and the Illusion of Uniform Progress

Despite a weakening rupee that places India among Asia’s poorer-performing currencies, national export figures remain resilient. However, a closer examination of the RBI Handbook of Statistics on Indian States 2024–25 reveals a structurally uneven reality. India’s export growth is becoming increasingly concentrated, challenging the long-held belief that exports automatically drive broad-based development.

A Top-Heavy Export Geography

Five States — Maharashtra, Gujarat, Tamil Nadu, Karnataka and Uttar Pradesh — now contribute nearly 70% of India’s exports , up from about 65% five years ago. This growing concentration, captured by a rising Herfindahl–Hirschman Index (HHI) , signals a hardening core–periphery pattern . Coastal and near-coastal regions are embedding themselves deeper into global value chains, while much of northern and eastern India is gradually decoupling from export-led growth.

Changing Global Trade Dynamics

Global conditions amplify this divergence. Merchandise trade growth has slowed structurally to 0.5–3% , and the top ten exporters control about 55% of global trade . In such an environment, capital seeks economic complexity rather than low-cost labour. Regions with dense supplier networks, skilled labour and strong institutions attract investment, leaving labour-abundant hinterland States behind.

Export Growth Without Employment Gains

The employment link has weakened sharply. The Annual Survey of Industries 2022–23 shows fixed capital rising faster than jobs, with capital per worker touching ₹23.6 lakh . Manufacturing is becoming more capital-intensive. Correspondingly, the Periodic Labour Force Survey shows manufacturing employment stagnating at around 12% , even as exports hit record highs.

Rethinking Exports as a Development Tool

Exports in India increasingly reflect pre-existing structural capacity rather than driving convergence. Treating export growth as a proxy for inclusive prosperity risks confusing outcomes with instruments, underscoring the need for new metrics of economic progress.

Important Facts for Exams

• Five states account for ~70% of India’s exports

• Rising HHI indicates export concentration

• Manufacturing employment remains near 12%

• Capital intensity in industry is increasing