India’s agricultural exports declined 8.2% in the fiscal year ending March 31, 2024, due to various restrictions on shipments of grains, sugar and onions. India needs to reform its agricultural policy to suit the global agricultural market while balancing imports and exports.
Current status of import and export
- According to Commerce Department data, the total agricultural export value in 2023-24 stood at $48.82 billion, lower than the record $53.15 billion in 2022-23 and $50.24 billion in 2021-22.
- There was a decline in exports between 2013-14 and 2019-20 while imports increased during this period.
Due to decline in exports
- Global imbalance: Low international prices have reduced the country’s export cost competitiveness. Also, making it more sensitive to imports.
- However, following the COVID-19 pandemic and the Russia-Ukraine conflict, India’s agricultural exports as well as imports reached an all-time high in 2022-23 but declined in fiscal 2023-24.
Domestic availability and food inflation
- Overall non-Basmati exports declined due to supply restrictions due to domestic availability and food inflation. Additionally, wheat and onion have also suffered the brunt of export restrictions.
- Wheat exports were completely stopped in May 2022, after which its value fell to $56.74 million in 2023-24 after reaching an all-time high of $2.12 billion in 2021-22.
Impact of current policy
- Higher import duty can boost domestic production of pulses and oilseeds, reduce dependence on imports and provide support to farmers.
- India is the largest exporter of rice in the world. Most of the non-Basmati rice goes to many African countries. India’s announcement of ban on export of non-Basmati white rice has not presented a good image of India to African countries.
Need for new agricultural policy
- To increase income: To increase the income of farmers, their produce has to be combined with uninterrupted access to the best markets. This requires a dynamic policy rather than a restrictive export policy.
- For food security: India supports 17.84% of the world’s population but has limited resources.
- For this, by implementing a well-planned export policy, additional revenue can be generated which can be reinvested in increasing food security and increasing the income of farmers.
- For employment generation: According to the NSSO Periodic Labor Force Survey for the year 2021-22, the agriculture sector is the largest employer in India, with about 45% of the workforce engaged in agriculture.
- Promoting agricultural exports can help create more employment opportunities, especially in rural areas, where livelihoods are closely linked to agricultural activities.
- For Research and Development: India’s total investment in agricultural research and development, including both the Center and the states, is only about 0.5% of the agricultural GDP. If India has to become a powerhouse of agricultural production as well as agri-exports, it needs to be doubled immediately.
- Regarding carbon sinks: Support policies need to be redesigned taking into account environmental consequences. Carbon credits can be given to encourage cultivation of millets, pulses, oilseeds and most horticulture crops.
- Positive message: Agricultural exports also show how competitive Indian agriculture is compared to the rest of the world and how much surplus it can generate.
- Competitiveness primarily arises from increasing productivity and obtaining maximum profits from minimum inputs. For this, changes in policies are necessary from time to time.
- There is a need to reform the restrictive exports for farmers as export markets are premium markets and need to be developed and maintained over the years.