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Agricultural exports-imports

GS Paper 3

Syllabus: Indian economy, agriculture and related issues

 

Source: IE

 Context: Both agricultural exports from and imports into India have scaled new highs in the fiscal year that ended March 31, 2023.

 

Provisional data of Department of Commerce on agri imports-exports:

  • Agricultural trade surplus (Exports – Imports): It has marginally dipped from $17.82 billion to $17.46 billion.
    • The surplus narrows further if one adds the import of fertilizers, which have risen from $14.17 billion in 2021-22 to $17.21 billion in 2022-23.

 

The drivers – global prices:

  • The UN FAO’s Food Price Index (FPI) – a weighted average of world prices of a basket of food commodities over a base period value (2014-16 = 100) – remains high since 2020-21.
  • It made India’s agri-commodities more globally price competitive.

 

Major export-import contributors:

 

 

Export profile:

  • Basmati exports are mainly to the Persian Gulf countries, while non-basmati shipments are more diversified, spreading across –
    • Asia (Bangladesh, China, Sri Lanka, Malaysia, Vietnam, UAE and Iraq) and
    • Africa (from Senegal, Ivory Coast and Benin to Somalia and Madagascar).
    • It’s non-basmati that has made India the biggest rice exporter, ahead of Thailand.
  • In sugar exports, the country has emerged as the world’s No. 2 exporter after Brazil.
    • Indian mills have built markets for both raw sugar (among refineries in Bangladesh, Indonesia, Malaysia, Saudi Arabia and Iraq) and
    • Regular plantation whites (in African countries, Afghanistan, Sri Lanka and China).
  • Spices exports have stagnated since 2020-21.
  • The exports of raw cotton, guar-gum (a thickening agent used in extraction of shale oil and gas) and oil meals, have declined.

 

Imports profile:

  • Imports meet roughly 60% of India’s vegetable oil requirements, 10% of pulses.
  • Imports of spices, cashew and cotton – commodities where India has traditionally been a net exporter – have shown a rising trend.

 

Concerns:

  • Unfavourable regulatory regime:
    • Cultivation of GM Bt cotton and high global prices had enabled India to become the world’s top producer (ahead of China) and No. 2 exporter (after the US) of natural fibre.
    • But, as the government is not permitting new gene technologies, the country has turned from a net exporter to an importer of cotton.
  • Domestic crop shortages: Specially in cotton, soyabean, guar-gum and oil meal.
  • Spice imports going up are a reflection of reduced price competitiveness (vis-à-vis Vietnam in pepper and Guatemala in pepper).
  • Export curbs: The government banned wheat exports, broken rice exports and slapped a 20% duty on all non-parboiled non-basmati shipments.

 

Government steps to promote agricultural exports:

  • Agriculture Export Policy (2018): It aims to harness export potential of Indian agriculture to make India a global power in agriculture and raise farmers’ income.
  • ‘District as Export Hub’ Initiative of the Department of Commerce would be utilised to achieve the objectives of Agriculture Export Policy.
  • Transport and Marketing Assistance for Specified Agriculture Products – a Central Sector Scheme to mitigate the freight disadvantage for the export of agriculture products.
  • Trade Infrastructure for Export Scheme (TIES)
  • Market Access Initiatives (MAI) Scheme
  • The Export Promotion Schemes of APEDA

 

Risks ahead:

  • International prices: The latest FPI reading showing declining trends.
  • Domestic food inflation, more curbs on exports and a further liberalisation of imports if the ensuing southwest monsoon season delivers subnormal rainfall.
Related news: Revision in India’s Import-Export tally

Source: TH 

Context: India’s overall export-import figures (merchandise) for last year have been scaled down by around $3 billion dollars each.

Earlier dataRevised dataRevision is dominated by
Exports Expected to have grown 6% in 2022-23 to hit $447.46 billion$444.4 billion, reflecting a 5.3% rise from 2021-22Petroleum exports and imports after the Russia-Ukraine conflict
Imports$714.24 billion$711.85 billion, indicating a growth of 16.1%
Trade deficitExpected to rise 40%Has risen 40.8% to $267.45 bn

Concerns: Trade deficit raises uncertainty on the outlook for India’s current account deficit and thereby rupee.

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Importance of Agri exports