Enhancing India's Agricultural Exports

Enhancing India's Agricultural Exports

For Prelims: Food Inflation, Pulses, Sanitary and Phytosanitary (SPS), Technical Barriers to Trade (TBT), MSP, WTO, Development Box, FTAs, Agricultural Export Policy (AEP), 2018.
For Mains: Trends in India's agricultural exports, associated challenges, and the way forward.

Why is it in the news?
India's agricultural exports grew by 6.5%, reaching USD 37.5 billion from April to December 2024. However, imports rose by 18.7% to USD 29.3 billion, reducing the agricultural trade surplus.

Trends in India’s Agricultural Exports

• Shift in Cotton Trade: India, once the world’s second-largest exporter of cotton, is now a net importer. Cotton exports fell from USD 4.3 billion in 2011-12 to USD 1.1 billion in 2023-24.
• Shrinking Agricultural Trade Surplus: India’s agricultural trade surplus peaked at USD 27.7 billion in 2013-14 but dropped to USD 16 billion in 2023-24.
• Impact of Global Commodity Prices: Falling global food prices between 2013-14 and 2019-20 eroded India’s export competitiveness. However, post-COVID-19 and the Russia-Ukraine war, prices surged, boosting exports to USD 53.2 billion in 2022-23.

Major Export Commodities:

• Marine Products: As India’s top agricultural export, marine product exports saw a decline in 2023-24, with the downward trend continuing into 2024-25.
• Sugar & Wheat: Exports fell due to government restrictions aimed at controlling domestic food inflation.
• Rice: Non-basmati rice exports remained strong despite restrictions on white rice and export duties on parboiled rice.
• Cash Crops: Exports of coffee and tobacco surged due to adverse weather in key producing countries like Brazil, Vietnam, and Zimbabwe.
• Other Exports: India is the leading global exporter of chillies, mint products, cumin, turmeric, coriander, fennel, etc.

Major Import Commodities:

• Edible Oil: Imports are projected to be the highest in 2024-25, primarily due to price hikes triggered by the Russia-Ukraine war.
• Pulses: Imports averaged USD 1.7 billion from 2018-2023, but are expected to exceed USD 5 billion in 2024-25 due to low domestic production in 2023-24.

Key Export Destinations:

• Asia: In 2023, India exported USD 48 billion worth of agricultural products, with the Global South (75%) and Asia (58%) being key markets.
• China & UAE: Both imported USD 3 billion each of Indian agricultural products, while Vietnam imported USD 2.6 billion.
• Africa & US: Africa accounted for 15% of India’s agricultural exports, while the US accounted for 13.4%, primarily consisting of rice, sesame seeds, and fresh fruits.
• Europe: Europe made up 12.6%, with major exports including tobacco, fresh fruits, and ornamental plants.

Key Import Sources:

• Global South: Brazil, China, Mexico, Argentina, and Indonesia are major suppliers, contributing 48% of India’s agricultural imports.
• Developed Economies: The US, Netherlands, and Germany are key suppliers.

Challenges in India’s Agricultural Exports

• Non-Tariff Barriers (NTBs): Developed countries impose stringent Sanitary and Phytosanitary (SPS) and Technical Barriers to Trade (TBT), creating hurdles for Indian agricultural exports. For example, bans on basmati rice and tea exports to the EU due to pesticide contamination and Japan’s restrictions on cut flower imports due to pest concerns.
• Unfair Level Playing Field: Developed nations provide heavy farm subsidies to their farmers, creating a disadvantage for Indian farmers. The US provides USD 61,286 per farmer annually, while India allocates only USD 282.
• Challenges to MSP Policy: Developed countries like the US, Canada, and Australia challenge India’s Minimum Support Price (MSP) at the WTO, arguing it exceeds the 10% limit under the Agreement on Agriculture (AoA).
• FTAs and Competition: Free Trade Agreements (FTAs) with countries like Singapore, ASEAN, and Japan lower tariffs on imported agricultural products, impacting Indian farmers by limiting the adoption of new technologies and infrastructure investment.
• Frequent Export Restrictions: Export bans, such as those on onions, disrupt supply chains, erode India’s reliability as a trading partner, and discourage foreign investment in post-harvest management and food processing.

Government Initiatives to Boost Agricultural Exports

• Agricultural Export Policy (AEP), 2018
• APEDA (Agricultural and Processed Food Products Export Development Authority)
• PM Formalisation of Micro Food Processing Enterprises (PM-FME) Scheme
• Krishi Udan Yojana 2.0
• National Programme for Organic Production (NPOP)

Way Forward

• Market Intelligence Units: Establish external units to provide real-time data on global export demand, helping farmers and exporters meet market needs.
• Support Agri-Tech Startups: India’s agricultural sector provides opportunities for startups to innovate and scale, maximizing trade potential.
• Diversify Export Markets: Explore new products and markets, focusing on dairy, poultry, vegetables, and fruits in Africa, Southeast Asia, and the Middle East.
• Promote Superfoods and Herbal Products: India should boost the cultivation and processing of millets and other trending superfoods.
• SPS Compliance: Educate farmers and agribusinesses on SPS measures and invest in processing infrastructure to improve product quality and global competitiveness.
• Agro-Climatic Clusters: Identify optimal zones for export-oriented crops to enhance productivity and quality.
• Trade Policy Streamlining: India needs to establish a consistent trade policy to minimize frequent export restrictions.

Drishti Mains Question:
What steps should India take to increase its share in global agricultural trade?

UPSC Civil Services Examination, Previous Year Question (PYQ)
Prelims
Q. With reference to Indian agriculture, the concept of “Conservation Agriculture” assumes significance. Which of the following fall under Conservation Agriculture?

• (a) Avoiding monoculture practices
• (b) Adopting minimum tillage
• (c) Avoiding the cultivation of plantation crops
• (d) Using crop residues to cover soil surface
• (e) Adopting spatial and temporal crop sequencing/crop rotations
  Select the correct answer using the code given below:
• (a) 1, 3 and 4
• (b) 2, 3, 4 and 5
• (c) 2, 4 and 5
• (d) 1, 2, 3 and 5
  Answer: (c)

Mains
Q. What are the current challenges to crop diversification in India? How do emerging technologies provide opportunities for crop diversification? (2021)
Q. What are the main constraints in the transport and marketing of agricultural produce in India? (2020)

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