On India’s Agricultural Export Sector – Export potential

Source: This post on India’s Agricultural Exports has been created based on the article “Export potential” published in “Business Standard” on 11^th January 2024.

UPSC Syllabus Topic: GS Paper 3 Agriculture – Marketing of agricultural produce.

News: The article discusses the status of India’s Agricultural Export Sector. It also highlights the challenges faced by the sector and suggests steps that need to be undertaken to overcome these challenges.

What is the current status of India’s Agricultural Export Sector?

In 2022-23, the value of India’s agricultural exports was $52.50 billion, while in 2021-22 it was $50.21 billion.

India’s export basket includes:

1. Basmati rice, non-basmati rice, sugar, spices, and oil meals (around 51.5% of India’s agricultural exports).
2. Other agri products include coffee, tea, tobacco, fresh and processed fruit and juices, groundnuts, fresh vegetables, dairy products, and live animals.
3. India is also a large exporter of buffalo meat and marine products.

The Union government expects agricultural exports to almost double to around $100 billion by 2030.

What are the challenges faced by India’s Agricultural Export Sector?

1. Low on the Agri-export Value Chain: Majority of India’s exports are low-value and semi-processed.
2. Inadequate Infrastructure: This includes lack of cold chain infrastructure and inefficient logistics. This leads to spoilage and decreases the export competitiveness of Indian products (due to quality issues and higher costs).
3. Structural Issues: Issues such as the small size of landholdings and a lack of access to credit leads to farmers not transitioning to commercial production.
4. Arbitrary Export Curbs: India has recently banned exports various agricultural products (such as rice). This harms India’s credibility as a reliable source of food exports.
5. Lack of Diversification in Export Products: According to a report, India’s agri-export basket is concentrated (a few products accounting for a large share of exports).
6. Recent Logistical Challenges: This includes high freight rates and container shortages due to the Red Sea crisis.

What are the government initiatives undertaken to boost agriculture exports?

1. Agri-Export Policy: It calls for overhauling infrastructure and logistics, a greater involvement of state governments, and developing export-centric clusters as well as ensuring surplus quality produce.
2. Agri-Cells in Indian embassies across 13 countries have also been set up.

What should be done?

1. Regarding Export Curbs: Instead of opting for a protectionist trade policy, the government should make smart changes in the trade policy to control food inflation.
2. Regarding Lack of Diversification: India should aim to increase diversification in its food export basket to contain the risk to overall exports declining due to a decline in the production of one item or the other.
   For instance, India hopes to give a boost to exports of value-added millet products.
3. Moving Up the Value Chain: Attracting private investment in processing and related activities will help boost exports over time.

This will help push agricultural growth in the country as well as raise farmers’ incomes.

Question for practice:

What are the challenges faced by India’s Agricultural Export Sector? Suggest steps that should be undertaken to overcome these challenges.