India is among the top ten exporting countries of
agriculture and food products in the world. The country’s agri-exports grew by a robust 20.4% in
2021-22, to touch a record $50.2 billion. The importance of India in the international agri-market
is continuously increasing and the country has developed export competitiveness
in certain specialised products. There has been a rising demand for Indian
Basmati rice, non-Basmati rice, spices, and sugar as evident by their rising
share of the total agricultural export.
The country needs to significantly enhance agriculture
and food exports, while ensuring that agricultural products are globally competitive.
However, global headwinds due to the Russia-Ukraine conflict, disruption in
global supply chain, unprecedented inflation, and monetary tightening by
central banks of the developed countries, have adversely impacted global trade,
and growth prospects across countries, including India.
Unstable agri-trade regime in India, reflected by
knee-jerk reactions by the government to control prices in the domestic market,
by banning exports of major agri-commodities, viz., rice, wheat, sugar, or
onion, has been a major factor affecting agri-exports. Imposition of Minimum
Export Price (MEP) is another tool often used by the government to tame
inflation. Such moves bring relief to domestic consumers, but create
uncertainty among importing countries, and deprive farmers of higher returns
from their produce, which also discourages them to increase the area under
cultivation of the crop in the subsequent season.
India’s Agriculture Export Policy (AEP), 2018, aims at
promoting a stable trade regime, while setting an export target of $60 billion
by 2022 and $100 billion within a few years, thereafter. Considering the strong
agri-export growth during 2021-22, and the urgency of doubling farmers’ income,
a target of $100 billion agri-exports from India could be set for 2026-27.
However, this would be a daunting task, considering the present global economic
situation.
In order to catch up with Brazil and China in
agri-exports, India needs to bring about comprehensive structural reforms in the
agriculture sector, with a focus on agriculture and food exports. The
prerequisite for achieving the agriculture export target of $100 billion should
be a well-calibrated, comprehensive, strategic, and result-oriented agri-export
policy and action plan, along with overall reforms in the agriculture and
allied sector. Agriculture export reforms, free trade agreements (FTAs)/ comprehensive
economic partnership agreements (CEPAs) with major trading partners,
agriculture marketing reforms, developing efficient agri-value chains, and
building agriculture export infrastructure, are some of the major reform
measures that could be expedited.
Primary products constitute about 75 per cent of APEDA
products exported from India, in terms of value (USD). Therefore, the
agriculture export strategy should prioritise the development of
export-oriented value chains in respect of dairy products, processed marine
products, processed fruits and vegetables, cereal preparations, and organic
food. As India moves towards the exports of
semi-processed, processed, and specialised food products, more value addition
will happen in the country leading to more employment creation and the growth
of the food processing sector.
The agriculture export strategy should include the
integration of value-added agriculture produce with global value chains (GVC),
by adopting the best agricultural practices involving productivity gains and
cost competitiveness, while enhancing farmers’ income. Export-oriented
production through the development of clusters, viz., “One District One Product
(ODOP)”, and dedicated supply chains will help to enhance the global image of
Indian products.
In recent years, several Indian agricultural products
have been facing rejection and export bans in the EU, a key export destination
for India’s agricultural exports, due to sanitary and phytosanitary (SPS) and
technical barriers to trade (TBT) measures. To counter rejection by a partner
country in forums like the WTO’s SPS Committee or TBT Committee, there is a
need for data collection and scientific evidence-based reports. Further, it is
important to build the capacity of our small, marginal, and medium farmers and
processors and educate them about the export market requirements. It is, therefore,
eminently important to sensitise and educate farmer producer organisations
(FPOs) and other stakeholders in the agri-export value chains, on ways to address
SPS/TBT-related issues. If domestic standards are aligned to international
standards, there is less likelihood of product rejections, and it is easier to
earn a premium price for certified products such as organic food products.
A key concern for both India and the UK, with respect
to the agro-foods sector would be the removal of non-tariff barriers (NTBs).
For India, for example, removal of NTBs in the form of less stringent Sanitary
and Phytosanitary Requirements with respect to limits of pesticide residues,
while for the UK, removal of NTBs in the form of easier labelling and
registration procedures, customs requirements, etc., would be beneficial.
Therefore, the India-UK negotiations for CEPA need to take note of this issue.
Growing protectionism across major economies is a
serious threat to raising exports. This would require intense diplomatic
efforts with India’s trading partners to finalise trade deals. Efforts to
upgrade Economic Cooperation and Trade Agreement (ECTA) to CEPA with Australia,
and finalise CEPAs with the UK, the EU, the US and Canada, need to gather
momentum.
The strategy for promotion of agri-exports should
include investments in agri-export zones (AEZs), dairy export zones (DEZ), agro-processing
clusters/zones, marketing infrastructure, cold chains, warehouses, roads,
railways, and logistics along the export-oriented agri-value chains, connecting
to ports and airports through public, private, and Public Private Partnership
(PPP) modes.
Investments in R&D, climate smart agriculture, and
technology in the form of IoT, AI, and blockchain, through a well-defined
start-up ecosystem, supporting pre- and post-harvest activities for
agri-exports, also need focused attention for stimulating agri-exports.
Reducing food loss and waste is a solution to reduce
food and nutrition insecurity and Greenhouse Gas (GHG) emissions, without
impinging on activities related to core economic development. Therefore, GoI should
formulate a comprehensive national policy on ‘Achieving SDG 12.3 Targets by
Minimising Food Loss’, to focus not only on minimising food loss but also on
leveraging the potential to increase agro-based exports, resulting in augmented
farm level income.
It has been observed that there is a strong impact of
export financing on agricultural exports. Availability and affordability of
export credit through lesser-explored mechanisms such as factoring, commodity
exchange-facilitated financing, and value chain financing, would be critical
for the achievement of the ambitious target for agricultural exports.
Concerted and coordinated efforts by GoI, state
governments, APEDA, MPEDA, FIEO, TPCI, NDDB, GCMMF, food and agro-processing
industry, RBI, NABARD, EXIM Bank, banks, agri-tech start-ups, FPOs/FPCs, and
other stakeholders in the agri-export sector, would address a whole range of
issues pertaining to the promotion of agriculture and food exports.
Finally, comprehensive reforms in the agriculture
sector could propel India into the top bracket of agricultural exporters in the
world, while attaining $100 billion in exports of agriculture and food products
by 2026-27.
(The contents of this blog have been drawn from the book India’s Agriculture and Food Exports: Opportunities and Challenges, edited by Debesh Roy & Bijetri Roy and published by Bloomsbury India, 2022)
