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Why Indian Agriculture May Need A New Export-Import Policy

India’s agricultural sector is a cornerstone of its economy, contributing significantly to GDP and employment. For UPSC aspirants aiming to understand the complexities of India’s trade dynamics, a nuanced comprehension of agricultural exports and imports is essential. In this article, we delve into recent trends, drivers, and policy implications of India’s agricultural trade, providing valuable insights for aspirants preparing for the Civil Services Examination.

India witnessed a notable decline of 8.2% in agricultural exports during the fiscal year ending March 31, 2024. This decline, attributed to various factors including shipment curbs and global market dynamics, resulted in a total export value of $48.82 billion. To contextualize this, it’s essential to examine the trajectory of India’s agricultural trade over the years.

The journey of India’s agricultural exports showcases both highs and lows. Under the Narendra Modi government, there was a noticeable decline in exports from $43.25 billion in 2013-14 to $35.60 billion in 2019-20. This decline coincided with an increase in imports, reflecting global market shifts and price fluctuations.

A closer look at the data reveals that the decline in exports was led primarily by certain commodities, notably sugar and non-basmati rice. For instance, sugar exports plummeted to $2.82 billion in 2023-24, a stark contrast to previous fiscal years. Similarly, restrictions on non-basmati rice exports impacted overall trade, reflecting concerns over domestic availability and inflation.

Commodity2021-22 (in $ million)2022-23 (in $ million)2023-24 (in $ million)
Marine Products7772.368077.987372.00
Basmati Rice3537.494787.655843.30
Non-basmati Rice6133.636356.714573.40
Buffalo Meat3303.783193.693743.26
Fruits & Vegetables1692.481791.052037.56
Oil meals1031.941601.721714.02
Processed F&V1190.591417.591624.62
Raw Cotton2816.24781.431116.52
Castor Oil1175.501265.641071.55
Other cereals1087.391194.07517.79

*Note: *Includes all other items.

The policy landscape surrounding agricultural trade is complex and often reflects a delicate balancing act between various stakeholders. For instance, export bans or restrictions, though aimed at curbing inflation and ensuring domestic supply, can have adverse effects on producers. Similarly, import policies, such as tariff adjustments, impact domestic production patterns and farmer livelihoods.

Commodity2021-22 (in $ million)2022-23 (in $ million)2023-24 (in $ million)
Vegetable Oils18991.6220837.7014871.66
Fresh Fruits2460.332483.952734.97
Raw Cotton559.551438.69598.64
Natural Rubber1032.71937.60739.18

*Note: *Includes all other items.

As India navigates the complexities of agricultural trade, policymakers face the challenge of formulating a balanced and sustainable approach. For UPSC aspirants, understanding these dynamics is crucial, as questions related to trade policies often feature prominently in the examination.

  • India’s agricultural exports declined by 8.2% in FY 2023-24, reaching $48.82 billion.
  • Export bans on commodities like sugar and non-basmati rice were significant drivers of the decline.
  • Basmati rice and spices witnessed growth in exports, while other items like buffalo meat and raw cotton saw moderate growth.
  • Imports of edible oils decreased, but pulses imports surged to their highest levels.
  • Policy stability and predictability are essential for the agricultural sector’s growth and sustainability.
  • Balancing the interests of producers and consumers is crucial in formulating export-import policies.

Q1: What were the major drivers of the decline in India’s agricultural exports in FY 2023-24?

  • A1: Export bans on sugar and non-basmati rice, coupled with global market dynamics, contributed to the decline.

Q2: Which commodities witnessed growth in exports during the same period?

  • A2: Basmati rice and spices recorded growth, indicating resilience in certain segments of India’s agricultural trade.

Q3: How do import policies impact India’s agricultural sector?

  • A3: Import policies, such as tariff adjustments, influence domestic production patterns and farmer livelihoods, necessitating a balanced approach by policymakers.

Q4: Why is policy stability crucial for the agricultural sector?

  • A4: Policy stability ensures certainty for producers and traders, facilitating long-term planning and investment in the agricultural value chain.

May 2024