Introduction:
India’s agricultural and processed food exports have exhibited robust growth, surpassing 13% in the fiscal year 2022-23.
Body:
The Need for Agri-Exports:
- Economic Impact: Agricultural exports have significantly contributed to India’s total exports, reaching USD 53 billion in FY 2022-2023, signifying substantial economic influence.
- Global Market Share: Despite recent growth, India’s global share in agricultural exports was only 2.2% in 2016, highlighting the potential for further expansion and market penetration.
- Food Security: A strategic export policy can generate revenue to enhance food security and boost farmer incomes, supporting nearly 18% of the global population with limited resources.
- Controlling Food Inflation: Agricultural exports can stabilize domestic prices, benefiting both consumers and producers, especially during years of abundant harvests.
- Employment Generation: With agriculture engaging 45% of India’s workforce, promoting exports can create jobs, particularly in rural areas linked to farming.
- Balance of Payments (BOP): Agricultural exports significantly contribute to India’s foreign exchange reserves, aiding in balancing the trade deficit and maintaining currency stability.
- Crop Diversity: India’s potential for exporting rice, wheat, spices, and horticultural products emphasizes the need for a structured export policy.
- Trade Relationships: Agricultural exports play a pivotal role in fostering trade relationships, evident in the rising exports to countries like the United States, Saudi Arabia, and the United Arab Emirates.
Major Challenges:
- Restrictive Export Policy: Policies favoring domestic consumers over farmers, such as the USD 1,200 MEP for basmati rice, contribute to export limitations.
- Subsidy Centric Schemes: Populist measures like subsidies, loan waivers, and free power for farmers during elections strain fiscal discipline and impact the agricultural sector’s financial health.
- Inadequate R&D Investment: India’s meager 0.5% investment in agricultural R&D hampers significant growth, necessitating increased investment for becoming an agricultural production and export powerhouse.
- Quality and Standards: Maintaining consistent quality and meeting international standards pose challenges, with compliance issues and pest-related hurdles affecting adherence to SPS measures.
- Infrastructure: Inadequate storage, transportation, and processing infrastructure cause post-harvest losses, reducing the competitiveness of Indian agricultural exports.
- Competitiveness: Global competition requires India’s competitiveness in pricing and quality, with exchange rate fluctuations impacting the competitive edge of agricultural exports.
- Environmental and Sustainability Concerns: Balancing increased agricultural exports with environmental sustainability is challenging due to potential long-term consequences of over-exploitation.
Steps for Improvement:
- Agriculture Export Policy 2018: With a vision to make India a global power in agriculture, utilize suitable policy instruments to harness the export potential of Indian agriculture and raise farmers’ incomes.
- Investment in R&D: Allocate a minimum of 1.5% of the agricultural GDP for R&D, emphasizing the commitment to enhancing agricultural productivity and sustainability.
- Infrastructure Development: Invest $10 billion over five years to modernize storage, transportation, and processing, reducing post-harvest losses and logistics costs to enhance competitiveness.
- Quality Assurance and Compliance: Implement a $500 million program for international standards, targeting a 20% increase in global competitiveness within three years.
- Market Diversification: Allocate $50 million annually for diversification, aiming for a 15% increase in export destinations within two years to reduce dependency on specific markets.
- Skill Development and Capacity Building: Invest $2 billion over a decade in training 500,000 farmers annually, aiming for a 30% increase in export-quality crops.
- Promotion of Agro-Processing Industries: Provide $1.5 billion to support agro-processing industries, aiming for a 20% increase in value addition.
- Government Policies and Incentives: Allocate $3 billion for policy implementation, incentivizing sustainable agriculture, and provide $1 billion annually to support eco-friendly practices.
- E-Commerce and Digital Platforms: Invest $300 million in e-commerce and digital platforms to connect 2 million farmers directly with buyers, aiming for a 25% increase in transparency.
- Climate-Resilient Agriculture: Allocate $1.2 billion for climate-resilient practices to mitigate climate change impact for long-term sustainability.
Conclusion:
By investing in modern infrastructure, adopting sustainable agricultural practices, engaging in effective trade diplomacy, and promoting value addition through agro-processing, India can not only overcome existing hurdles but also elevate the competitiveness and sustainability of its agricultural export sector. In doing so, India can secure a more prominent and resilient position in the global agricultural trade landscape.
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