Context:
Recently, data from the Department of Commerce revealed that India’s agricultural exports decreased by 8.2% in 2023-24, mainly due to government restrictions on various commodities. At the same time, agricultural imports fell by 7.9% due to lower edible oil prices. These trends highlight the necessity for a balanced agriculture export-import policy to stabilize the agricultural sector, ensuring both domestic availability and market growth.
Relevance:
GS III: Agriculture
Dimensions of the Article:
- Current State of Indian Agricultural Exports and Imports
- Key Factors Influencing India’s Agricultural Exports and Imports
- Agricultural Export Policy
Current State of Indian Agricultural Exports and Imports
Agricultural Exports:
- Decline in Exports: India’s agricultural exports fell by 8.2% in the fiscal year 2023-24, totaling USD 48.82 billion, down from USD 53.15 billion in 2022-23.
- Sugar Exports: Banned from October 2023, reducing exports to USD 2.82 billion from USD 5.77 billion the previous year.
- Rice Exports: Ban on all white non-basmati rice exports from July 2023 due to domestic availability and food inflation concerns. Only parboiled grain shipments are allowed with a 20% duty, leading to a decline in non-basmati exports from USD 6.36 billion to USD 4.57 billion.
- Wheat Exports: Stopped in May 2022, falling to USD 56.74 million in 2023-24 from USD 2.12 billion in 2021-22.
- Onion Exports: Ban lifted in May 2024, with a floor price of USD 550 per tonne and a 40% duty. Exports fell to 17.08 lakh tonnes (USD 467.83 million) from 25.25 lakh tonnes (USD 561.38 million).
- Growth in Other Commodities: Basmati rice exports reached USD 5.84 billion. Spices exports crossed the USD 4 billion mark. Marine products, castor oil, and other cereals (mainly maize) also saw growth.
Agricultural Imports:
- Decline in Imports: India’s agricultural imports dropped by 7.9% in 2023-24, due to global market conditions and domestic demand.
- Edible Oils: Major factor in the decline. Imports of vegetable fats were USD 20 billion in 2022-23, influenced by the Russia-Ukraine war. In 2023-24, the FAO vegetable oil sub-index eased to 123.4 points, reducing the import bill below USD 15 billion.
- Pulses: Imports nearly doubled to USD 3.75 billion, the highest since 2015-16 and 2016-17 levels, showing continued dependence on foreign sources to meet domestic demand.
Analysis:
- Export Restrictions: Measures like bans on sugar and rice exports were taken to ensure domestic availability and control food inflation, but they significantly impacted overall export figures.
- Import Dependence: The reliance on imports for essential commodities like edible oils and pulses indicates a need to boost domestic production to reduce vulnerability to global market fluctuations.
- Policy Implications: Effective management of trade policies, enhancing domestic production capabilities, and strategic export-import regulations are crucial to balancing domestic needs and international trade dynamics
Key Factors Influencing India’s Agricultural Exports and Imports:
Export Restrictions:
- Government-imposed curbs on rice, wheat, sugar, and onion exports due to concerns over domestic availability and food inflation.
- These restrictions significantly declined the exports of these commodities.
Global Price Movements:
- The UN FAO food price index (base: 2014-16=100) tracks global agri-commodity prices.
- FAO food price index dropped from an average of 119.1 points in 2013-14 to 96.5 points between 2013-14 and 2019-20, reflecting a global price crash.
- Post-COVID-19 and the Russia-Ukraine war, the index soared to 140.8 points in 2022-23.
- In 2023-24, the average FAO index eased to 121.6 points, leading to a decline in India’s edible oil import bill.
Government Policies:
- Low or zero import duties on pulses and edible oils contradict the goal of boosting domestic production.
- This policy favors imports over domestic cultivation, potentially discouraging crop diversification and undermining long-term agricultural development.
Agricultural Export Policy:
About:
- An agricultural export policy comprises government rules, actions, and encouragements aimed at regulating and boosting agricultural goods exports.
- The policy includes export subsidies, tariff reductions, quality standards, market access agreements, financial incentives, and trade promotion initiatives.
India’s Agriculture Export Policy, 2018:
- Implemented to leverage India’s agricultural export potential, establish India as a leading force in global agriculture, and increase farmers’ incomes.
- Objective: Doubling agricultural exports from USD 30+ billion to over USD 60 billion by 2022.
- Focus on promoting ethnic, organic, traditional, and non-traditional agri-products exports.
- Establish a monitoring framework for implementation.
Elements:
- Strategic: Policy measures, infrastructure, logistics, and supporting a holistic approach to boost exports with greater state government involvement.
- Operational: Focus on clusters, promoting value-added exports, marketing and promoting “Brand India,” attracting private investments, and establishing a strong quality regime and research & development.
Challenges to the Agri-Export Policy:
- Frequent changes in export policies disrupt market stability and long-term trade relationships.
- Reduced import duties on pulses and low tariffs on edible oils aim to ensure consumer affordability but conflict with promoting domestic crop diversification.
- Populist measures during election seasons undermine fiscal discipline and agricultural sector financial health.
- Insufficient investment in agricultural R&D, currently around 0.5% of agricultural GDP, needs to be increased for substantial growth.
- Ensuring consistent quality and compliance with international sanitary and phytosanitary standards is challenging due to pests and diseases.
- Competition in pricing and quality and exchange rate fluctuations influence the competitiveness of Indian agricultural exports.
-Source: Indian Express
