Why India’s economic growth hinges on coastal export success lifting the heartland too

The trillion-dollar milestone, however, is not an end in itself. It is more notional, meant to signal investment potential and the promise of growth. By their very geography, coastal and inland states will require different strategies for economic expansion. Coastal states, with direct access to ports, are likely to grow faster.

China’s experience illustrates this. Four coastal provinces—Guangdong, Jiangsu, Shandong and Zhejiang—were the first to reach the trillion-dollar mark. Even today, all of China’s trillion-dollar provinces are coastal, though inland provinces are getting close.

This phenomenon, known as the ‘coastal premium,’ underscores how geography and policy intersected to create outsized growth for China. Coastal provinces attracted foreign investment through special economic zones (SEZs) and the export promise of deepwater ports. Meanwhile, China’s inland provinces leveraged rail corridors, riverine links and investment in education and digital infrastructure.

Chongqing, for example, leveraged the Yangtze River and rail corridors to become a logistics hub. Henan and Sichuan drew strength from their vast populations and domestic markets, whereas Anhui and Hunan upgraded their industries through R&D and digital-economy sectors.

This coordinated approach with a single-minded focus on national growth, leveraging each province’s natural strengths, propelled China’s economy. It also holds useful lessons for India.

In 2024 Maharashtra, the country’s largest state economy, was placed at $498 billion, followed by Tamil Nadu ($362 billion), Karnataka ($328 billion) and Gujarat ($327 billion). All four are coastal states. Uttar Pradesh, with its massive population, is at $311 billion. No Indian state is even close to the trillion-dollar benchmark.

If Indian states aspire to join the trillion-dollar club, they must be supported by sound national and state-level strategies that enable rapid and sustained overall economic growth. For India, this means treating coastal and inland states as complementary growth engines.

Instead of individually targeting $1 trillion as the size of their economies, India’s coastal states should cumulatively aim higher.

India aims to raise the share of its coastal cargo volumes to 230 million tonnes by 2030 and the Union cabinet has recently approved a ₹69,725 crore package to strengthen shipbuilding and the maritime ecosystem in the country through a four-pillar strategy that focuses on capacity building, financial support, shipyard development and skill enhancement—to be accompanied by comprehensive policy reforms. These are welcome steps in the direction of our 2030 goal.

For a well-coordinated coastal strategy, however, the following steps would also be needed:

Coastal states like Tamil Nadu and Gujarat that have built a strong export muscle must leverage their strength with immediate state-level interventions like deregulation, land pooling, building by-law reforms and enhanced goods transit facilities around ports.

Policies that enable better mobility, worker housing near factories and stronger social-protection measures should attract migrant workers to these geographies.

Coastal states must also forge deeper links with India’s landlocked states and draw on their domestic markets, labour pool, innovation capacity and natural resources.

As for India’s landlocked states, they have their work cut out as well:

They should strategically select high-value manufacturing industries and focus on their growth. For example, they should adopt efficient single-window clearances, like in Telangana, and set up plug-and-play industrial parks.

It is critical for landlocked states to build robust inter-state networks for logistics. In addition to highways and railways, riverine systems need development. Inland Water Transport (IWT) offers a cost-effective means of transportation. According to a World Bank study, the operating cost per tonne-kilometre is ₹1.20 by IWT, ₹1.40 by railway carriage and ₹2.28 by road haulage.

While adopting the right nationwide policies to spur economic growth is essential, these must be supported by geography-specific initiatives for India to achieve its 2047 goal of a $30 trillion economy. Ports and waterways, logistics corridors, urban clusters and human capital will determine whether states can power the national economy to that size.

For states, this means investing in infrastructure, urbanization, logistics and education, backed by reforms that make them magnets for private capital and global trade.

The authors are, respectively, operating partner, and Uttar Pradesh state lead at the Convergence Foundation.