India's Agricultural Exports

Table of contents

Despite ranking as the world’s eighth-largest agricultural exporter in 2023, India’s Agricultural Exports declined from $51.12 billion in FY23 to $48.77 billion in FY24 due to restrictions on rice and wheat exports for domestic food security.

India’s Agricultural Exports: Current Scenario

Current Development: India’s agricultural exports for FY24 stood at $48.77 billion, reflecting a decline from $51.12 billion in FY23, yet maintaining its position as the 8^th largest agricultural exporter globally.
India’s Agricultural Export: Comprises 2.5% of the global agricultural trade, ranking 8^th worldwide as of 2023.
Leading Export Destinations: USA, Saudi Arabia, Iran, Nepal, Bangladesh, and emerging markets in Latin America, Africa, and Scandinavian countries.
Prominent Export Categories: Cereals, fruits & vegetables, processed food, animal products, floriculture, organic products, along with marine products, meat, and rice, which together account for approximately 52% of total agri exports.
Focus of Agri Export Policy: To achieve $100 billion in agricultural exports over the next decade.

Source: IBEF

Significance of Agricultural Exports

Doubling Farmers’ Income: Agricultural exports boost export earnings and market access, contributing significantly to the goal of doubling farmers’ income.
Employment Generation: Agri exports have the potential to create 7-10 million jobs in agriculture, agri-based industries, and food processing (HLEG estimate).
Foreign Exchange & Current Account Deficit: Exporting high-value products like marine goods, dairy, meat, and spices helps earn foreign exchange and reduce the current account deficit.
National Imperative: Achieving $100 billion in agricultural exports is crucial for enhancing India’s global market position and strengthening the agricultural sector.

Challenges Faced by Indian Agricultural Exports

Poor Agricultural Productivity: Small land holdings and low mechanisation hinder economies of scale. This reduces productivity and the efficient use of high-yielding varieties (HYVs), impacting overall agricultural performance.
Mismatch with Production: Despite India being the world’s largest producer of several commodities like rice, pulses, and spices, agricultural exports remain limited. In FY 2022-23, agricultural exports accounted for just 11.8% of the total agricultural production, indicating underutilisation.
Lagging Export Competitiveness: India struggles to fully capitalise on high-value commodities such as horticultural products and animal-based goods due to challenges like inconsistent quality, high logistics costs, inadequate export promotion, and stringent global standards.
Low Share of Processed Products: The share of processed agricultural exports in India remains relatively low, constituting ~17% of total agricultural exports. This is significantly lower compared to leading economies such as the United States (~25%) and China (~50%)
Inconsistent Government Policies: Frequent changes in trade and agricultural policies, such as export restrictions, price controls, and MSP issues, lead to uncertainty, discouraging long-term investments and affecting export reliability.
Other Challenges: Global economic volatility, outdated land reforms, lack of modern marketing systems, limited access to credit and insurance, and customs bottlenecks continue to limit export growth.

Key Government Initiatives to Boost Agri-Exports

Digital Platforms for Agri-Exports: Platforms like Safe Food Export Traceability Portal and Farmer Connect Portal promote transparency and ease in agri-export processes.
Agriculture Export Promotion Plan (AEPP): APEDA’s scheme focuses on enhancing the export potential of agricultural products.
Marine Export Promotion by MPEDA: Targets boosting India’s seafood exports through specialized programs and incentives.
Export Clusters & ODOP: Promotes regional specialties like mangoes from Lucknow and oranges from Nagpur for global export.
National Programme for Organic Production (NPOP): Certifies organic farming to encourage organic exports.
Agri Udaan Programme: Supports agri-tech startups through mentoring to scale innovative agricultural solutions.
Market Access Initiative (MAI): Assists in expanding the export reach of Indian agricultural products to new global markets.
Merchandise Exports from India Scheme (MEIS): Offers export incentives for agricultural products to boost international trade.
International Negotiations: India actively participates in WTO negotiations to secure favorable terms for agri-exports.

Agriculture Export Policy 2018

To provide an impetus to agricultural exports, the Government of India has come out with the Agriculture Export Policy, 2018. The policy bridges the gap between the Ministry of Commerce and Industry and the Ministry of Agriculture.
The policy is aimed at doubling India’s share in world agri exports by integrating with global value chains and boosting high value and value added agricultural exports.
It suggests developing product-specific clusters in the country with the involvement of Farm Producer Organizations (FPOs). The policy also aims at addressing the obstacles faced by Farmer Producer Orgnanisations through an organisation like the Small Farmers Agribusiness Consortium (SFAC).
To address shifting export destinations and diversified agricultural export baskets, India is set to review its six-year-old Agri Export Policy.

Key Objectives of the New Policy

Enhancing Competitiveness: Align Indian products with global standards and increase the focus on value-added and processed food exports.
Targeting Emerging Markets: Strengthen trade ties with new destinations in Latin America, South America, and Scandinavia.
Infrastructure Development: Improve export logistics and facilities to support farmers and traders.
Promoting Organic and High-Potential Commodities: Tap into the rising demand for organic and processed foods, along with crops like millets, onions, and potatoes.

Way Forward to Boost India’s Agricultural Exports

Consistent Export Policies: Avoid abrupt export restrictions (E.g., rice, and wheat bans) to ensure stable markets and long-term competitiveness.
Infrastructure Investment: Expand irrigation (only 4-5% under drip irrigation) and mechanisation to boost productivity and reduce wastage.
Farmer Welfare: Implement uniform taxation on agricultural inputs and improve procurement policies to ensure better prices for farmers.
Sustainable Practices: Promote exports of climate-resilient crops (E.g., millet, organic foods) to align with global sustainability trends.
Support for Landlocked States: Focus on promoting exports from landlocked states like Uttar Pradesh, Madhya Pradesh, Rajasthan, and Chhattisgarh to harness their untapped agricultural potential.
Millet Promotion: Capitalise on the growing global demand for millets, especially as India celebrates 2023 as the International Year of Millets, to boost exports of this nutritious and climate-resilient crop.
Balancing Domestic Needs: Ensure that export policies are designed in a way that protects domestic food security and stabilises local markets while promoting international trade.
Enhancing Competitiveness: Invest in research, resource-efficient farming, and reduce subsidies that distort market dynamics.
Strategic Market Access: Use market intelligence to focus on high-value exports (E.g., shrimp, basmati rice) and promote international certification.
Reassess Government Role: Revise export duties/policies that hinder farmers’ access to global markets.
Leveraging Global Trends: Capitalise on rising global demand for organic and health-focused agricultural products post-COVID.

From being “National with a begging bowl” to emerging as the “Food Basket of the World,” India has transformed its agricultural landscape through strategic reforms and global integration. To sustain this growth, a farmer-centric, sustainable export policy must be prioritized to ensure long-term prosperity for both farmers and the nation.

Reference: Indian Express | Livemint

PMF IAS Pathfinder for Mains – Question 24

Q. Discuss the role of agricultural exports in India’s economic growth. What are the key challenges and opportunities for enhancing India’s agricultural export potential? Suggest measures to strengthen agricultural export policies. (250 Words) (15 Marks)

Approach

Introduction: In the introduction, briefly define agricultural exports and give data on agricultural exports.
Body: Discuss the challenges in enhancing agricultural exports and opportunities for agricultural exports.
Conclusion: Write a way forward & conclude by highlighting the need for a holistic approach.