<\/p>\n
News<\/span><\/b>: Recently, the <\/span>Russia-Ukraine clash<\/span><\/b> and the <\/span>resultant sanctions<\/span><\/b> have pushed India to face a strong headwind to growth and Indian exports. This is due to surge in energy costs, elevated geopolitical uncertainty. <\/span><\/p>\n However, the clash has come up with a number of opportunities which require deep analysis.<\/span>\u00a0<\/span><\/p>\n India gets an opportunity to fill the <\/span>shortage of commodities<\/span><\/b> in the <\/span>global market<\/span><\/b>. Russia and Ukraine together account for 30% of <\/span>global wheat exports<\/span><\/b>. At present, they are unable to export.\u00a0<\/span>\u00a0<\/span><\/p>\n However, India is a <\/span>wheat surplus <\/span><\/b>country. The <\/span>Food Corporation of India (FCI)<\/span><\/b> possesses good buffer stock. Therefore, India can export wheat to meet global demand.<\/span>\u00a0<\/span><\/p>\n There are limited prospects for sustained wheat exports for India. India has an available <\/span>surplus <\/span><\/b>of around<\/span> 25 million tons<\/span><\/b>. It was accumulated over five years. This is not a big number. Russia and Ukraine annually export nearly 60 million tons of wheat.<\/span>\u00a0<\/span><\/p>\n In addition, exporting all the surplus stock would push up domestic wheat prices. Further, it would lead to tariff hikes on future exports like in <\/span>case of palm oil in Indonesia<\/span><\/b>.\u00a0<\/span>\u00a0<\/span><\/p>\n In agricultural trade, India has the <\/span>dubious distinction<\/span><\/b> of being an unreliable trading partner.\u00a0 India is the<\/span> second-largest producer <\/span><\/b>of wheat in the world. But has only 1% share of global wheat exports.\u00a0<\/span>\u00a0<\/span><\/p>\n Indian\u2019s wheat export is not <\/span>globally competitive<\/span><\/b>. The\u202fgovernment\u2019s <\/span>Minimum Support Price (MSP)<\/span><\/b> and Procurement regime <\/span><\/b>makes its less competitive. The MSP often rises every year. It normally exceeds global prices. Thus, exports would be difficult.<\/span>\u00a0<\/span><\/p>\n India\u2019s lack of export <\/span>competitiveness<\/span><\/b> can be seen from the consideration of the <\/span>export parity price (EPP)<\/span><\/b>. The cost of getting the produce from the farm or factory to the border or the port is high in India. It is due to high <\/span>domestic logistics costs <\/span><\/b>(like <\/span>road transport costs)<\/span><\/b>. India\u2019s domestic logistic cost is over 13% of GDP as compared to the global best practice of 8%. In addition, India\u2019s ports are inefficient.\u00a0<\/span>\u00a0<\/span><\/p>\n The<\/span> FCI<\/span><\/b> cannot sell procured grain for com<\/span>mercial gains <\/span><\/b>as a result of<\/span> India\u2019s commitments<\/span><\/b> under <\/span>WTO<\/span><\/b>. It would be difficult to bring in intermediary.<\/span>\u00a0<\/span><\/p>\n India had adopted a <\/span>\u201cheterodox\u201d approach<\/span><\/b> for opening up trade. It aims to open on the export side while being restrictive on the import side. This creates political difficulties in trading relations.<\/span>\u00a0<\/span><\/p>\n India\u2019s<\/span> non-price attributes<\/span><\/b> like food safety, quality, and variety of wheat consist of a lot of issues. It restricts the <\/span>sustainability of Indian exports<\/span><\/b>. The food safety and quality of wheat are highly preferred in the global market.\u00a0<\/span>\u00a0<\/span><\/p>\n As per recent study, India has the highest number of<\/span> consignment rejections <\/span><\/b>in both European and US markets in comparison to other developing countries.\u00a0<\/span>\u00a0<\/span><\/p>\n The crisis can be an opportunity for India to fix the fundamentals, like its <\/span>\u201ctime to trade<\/span><\/b>\u201d, \u201c<\/span>costs to trade<\/span><\/b>\u201d among others<\/span>\u00a0<\/span><\/p>\n A long-term <\/span>sustained export strategy<\/span><\/b> is needed. The strategy must incorporate the changing nature of global trade.\u00a0<\/span>\u00a0<\/span><\/p>\n There is a need to deliver on <\/span>quality<\/span><\/b> or <\/span>honouring commitments<\/span><\/b>. India can expand trade through new products, varieties and new trade agreements.<\/span>\u00a0<\/span><\/p>\n Source<\/span><\/b>: The post is based on an article \u201cDon\u2019t rush into export \u2018opportunity\u2019 presented by Russia-Ukraine conflict\u201d published in the Indian Express on 21<\/span>st<\/span> April 2022.<\/span>\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":" News: Recently, the Russia-Ukraine clash and the resultant sanctions have pushed India to face a strong headwind to growth and Indian exports. This is due to surge in energy costs, elevated geopolitical uncertainty. However, the clash has come up with a number of opportunities which require deep analysis.\u00a0 What are the opportunities?\u00a0 India gets an… Continue reading Don\u2019t rush into export \u2018opportunity\u2019 presented by Russia-Ukraine conflict\u00a0<\/span><\/a><\/p>\n","protected":false},"author":10328,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[216,10500],"class_list":["post-180541","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-3","tag-indian-express","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704739385},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/180541","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10328"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=180541"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/180541\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=180541"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=180541"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=180541"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}What are the opportunities?<\/span><\/b>\u00a0<\/span><\/h5>\n
What are the issues with India\u2019s rush to \u201cencash the opportunity\u201d for agricultural exports?<\/span><\/b>\u00a0<\/span><\/h5>\n
Ways Forward<\/span><\/b>\u00a0<\/span><\/h5>\n