Enhancing India's Agri-Exports | 05 Mar 2025

Source: IE 

Why in News? 

India’s agricultural exports grew by 6.5% to USD 37.5 billion (Apr-Dec 2024), while imports rose by 18.7% to USD 29.3 billion that has reduced the agricultural trade surplus. 

What are the Trends in India’s Agricultural Exports? 

• Shift in Cotton Trade: India is now a net importer of cotton, reversing its earlier status as an exporter. 
  • Once the 2^nd-largest exporter after the US, India’s cotton exports fell from USD 4.3 billion in 2011-12 to USD 1.1 billion in 2023-24. 
• Shrinking Agricultural Trade Surplus: India’s agricultural trade surplus peaked at USD 27.7 billion in 2013-14, fell to USD 16 billion in 2023-24. 
• Impact of Global Commodity Prices: Between 2013-14 and 2019-20, falling global food prices reduced India’s agri-export competitiveness.  
  • Post Covid-19 and the Russia-Ukraine war, prices surged, boosting exports to USD 53.2 billion in 2022-23. 
• Major Export Commodities:  
  • Marine Products: Export of marine products, India's leading agri-export, declined in 2023-24, with the downward trend continuing in 2024-25. 
  • Sugar & Wheat: Sugar and wheat exports fell in 2023-24 due to government restrictions aimed at controlling domestic food inflation. 
  • Rice: Rice exports, especially non-basmati, remained strong despite a ban on white rice and export duty on parboiled rice. 
    • Basmati rice, spices, coffee, and tobacco exports are set to reach record highs in 2024-25. 
  • Cash Crops: Coffee and tobacco exports surged due to adverse weather affecting key producers like Brazil, Vietnam, and Zimbabwe. 
  • Others: India has also consolidated its position as the world’s leading exporter of chilli, mint products, cumin, turmeric, coriander, fennel, etc. 
• Major Import Commodities:  
  • Edible Oil: Edible oil imports in 2024-25 are projected to be the highest mainly due to price hikes caused by the Russia-Ukraine war. 
  •   Pulses imports averaged USD 1.7 billion (2018-23) due to higher domestic pulses production but are expected to surpass USD 5 billion ( 2024-25) due to low production in  2023-24. 
• Key Destinations:  
  • Exports: 
    • Asia: In 2023, India exported USD 48 billion in agri-products, with the Global South (75%) and Asia (58%) as key markets. 
      • China and the UAE each imported USD 3 billion each in Indian agri-products, while Vietnam imported USD 2.6 billion. 
    • Africa: Africa accounted for 15% of India’s total agri exports. 
    • US: US accounts for 13.4% of Indian agri exports primarily consisting of rice (Basmati & Non-Basmati), sesame seeds, and fresh fruits. 
    • Europe: Europe accounts for 12.6% of Indian agri exports primarily consisting of tobacco, fresh fruits and ornamental plants. 
  • Imports:  
    • Global South: The Global South supplies 48% of India’s agri-imports, led by Brazil, China, Mexico, Argentina and Indonesia. 
    • Developed Economies: Top three suppliers are the US, the Netherlands, and Germany. 
• Agricultural Start-ups: 

What are Challenges in India's Agricultural Exports? 

• Non-Tariff Barriers (NTBs): Developed countries impose stringent Sanitary and Phytosanitary (SPS) and Technical Barriers to Trade (TBT) creating trade barriers for Indian agricultural exports. E.g., 
  • India's basmati rice and tea exports have faced European bans over pesticide contamination. 
  • Japan has banned imports of cut flowers from India over zero-tolerance pest rules in floricultural products, although such pests are found in Japan. 
• Unfair Level Playing Field: Developed nations’ heavy farm subsidies to their farmers and high tariffs on Indian agri exports create a disadvantage for Indian farmers.  
  • The US provides USD 61,286 per farmer annually, while India gives only USD 282, lowering global prices and hurting Indian farmers. 
• Challenges to India's MSP Policy: Developed countries like the US, Canada, and Australia challenge India’s MSP at the WTO, claiming it exceeds the 10% limit (Amber box) under the AoA, risking dispute proceedings. 
  • India can provide uncapped input subsidies under the AoA’s ‘Development Box’ for developing nations, but developed countries seek limits that can threaten small farmers' livelihoods. 
• Challenges from FTAs: India's FTAs with countries like Singapore, ASEAN, and Japan lower tariffs on imported agri-products, hinders farmers' adoption of new technologies and investment in infrastructure, reducing global competitiveness. 
• Frequent Export Restrictions: India’s export restrictions to control price shocks deter foreign importers and domestic investment in post-harvest management and food processing. 
  • Frequent onion bans disrupt supply chains and reduce India’s reliability in the global market, prompting import partners to seek alternatives.

Way Forward 

• Establish Market Intelligence Units: The government should set up external market intelligence units to provide real-time data on international export demand, helping farmers and exporters meet global market needs.  
• Support Agri-Tech Startups: India’s vast agriculture sector provides startups opportunities to scale, expand, and innovate to maximize trade potential. 
• Diversify Export Markets: India should explore new products and markets, prioritizing dairy, poultry, vegetables, and fruits in Africa, Southeast Asia, and the Middle East. 
  • With rising post-pandemic demand for superfoods (e.g., millets) and herbal products, India should promote their cultivation and processing. 
• Compliance with SPS Measures: India should educate agri-value chain participants (both upstream and downstream) on SPS compliance and develop processing infrastructure to boost quality and global competitiveness. 
  • Cooperatives and FPOs educate farmers on SPS regulations, food safety, and best practices through workshops on pest control, residue management, and hygiene. 
• Develop Agro-Climatic Clusters: Identifying suitable agro-climatic zones for cultivating export-oriented crops will optimize productivity and quality.  
  • Microsoft’s Project Farm Vibes (PFV) can boost crop yields by 40% while reducing resource consumption. 
• Establish a Credible Trade Policy: India needs to streamline its agricultural trade policy to minimize the frequent imposition of export restrictions.