The commerce minister’s celebration of yet another free trade agreement hides a deeper worry. Yes, India’s exports look strong on paper. Yes, the country seems more plugged into global trade. But the gains are coming froma narrow strip of the map. A handful of states now drive almost all exports. Maharashtra, Gujarat, Tamil Nadu, Karnataka and Uttar Pradesh together control nearly 70 per cent of India’s export basket. This level of concentration is not healthy. It tells us growth is clustering fast and leaving most of the country behind.
The RBI’s latest state-level data makes this imbalance hard to ignore. Over 90 per cent of exports now come from just ten states. Twenty others are left fighting over scraps. Even within the top group, power is shifting. Gujarat’s share has jumped sharply, while others have slowed. This is not accidental. These states sit on ports, corridors, refineries and supplier networks built over decades. They attract PLI money and foreign capital with ease. Firms go where everything already exists. The result is that national export numbers look good, but the regional picture is quietly breaking apart.
This divide deepens when we look at finance. Export states recycle their own savings into the local industry. Their credit deposit ratios are high. In the hinterland, savings flow out. Money deposited in Bihar or eastern Uttar Pradesh is lent to factories on the coast. Labour migrates. Capital migrates. Goods flow back in. This is not integration. It is dependence. The interior is locked into low-value output while the peninsula moves up the ladder into electronics and complex manufacturing.
Free trade agreements will not fix this on their own. More exports from the same few states will only harden the divide. If India wants sustained growth and real jobs, export capacity must spread inland. That needs patient public investment, deeper state capacity, and financial systems that fund local industry, not drain it. Otherwise, India risks becoming two economies in one country. A coastal exporter and a stranded hinterland. No amount of headline trade numbers can hide that for long.
