According to provisional data released by the Department of Commerce, agricultural exports from and imports into India have reached new heights in the fiscal year that ended March 31, 2023. Total farm exports stood at USD 53.15 billion while imports were at USD 35.69 billion during 2022-23, breaking previous year’s records. Despite this upward trend, the agricultural trade surplus has slightly dipped from USD17.82 billion to USD 17.46 billion.
Driving Forces Behind Increased Agricultural Exports
Between 2013-14 and 2015-16, India’s agricultural exports faced a significant drop from USD 43.25 billion to USD 32.81 billion. This decrease was mainly due to lower global prices, as signaled by the UN Food and Agriculture Organization’s Food Price Index (FFPI). With continued imports, the farm trade surplus also decreased. However, recent recovery in FFPI boosted the competitiveness of India’s agricultural products in global markets, leading to an increase in exports from 2020-2023.
The FFPI is a monthly indicator of international price changes in a selection of food commodities. It evaluates variations for a batch of cereals, oilseeds, dairy products, meat, and sugar. When international food prices rise, the FFPI increases.
Major Contributors to Exports
Marine products, rice, and sugar have been key contributors to India’s agricultural exports recently. Marine product exports expanded steadily from USD5.02 billion in 2013-14 to USD8.08 billion in 2022-23. Rice exports, driven by non-basmati rice, increased from USD7.79 billion to USD11.14 billion in the same period. The increment in sugar exports was substantial, growing from USD 810.90 million in 2017-18 to USD 5.77 billion in 2022-23, making India the world’s No. 2 sugar exporter after Brazil.
Declining Trends in Agricultural Exports
Spices exports remained stagnant after a surge between 2013-2021. Buffalo meat exports have not regained their peak level of USD 4.78 billion achieved in 2014-15. The situation is more severe for raw cotton, guar-gum, and oil meals as their exports in 2022-23 were considerably lower than their highs of 2011-12. Regulatory restrictions and lack of new gene technologies resulted in India turning from a net exporter to an importer of cotton. Due to domestic crop shortages, especially in cotton and soybean, guar-gum and oil meals exports did not enjoy the same post-Covid boom.
Significant Contributors to Agricultural Imports
Vegetable oils are the most notable among India’s imported farm products, with their import value more than doubling between 2019-20 and 2022-23. About 60% of India’s vegetable oil needs are met through imports. The value of pulses imports has dropped from USD4.2 billion in 2016-17 to USD1.9 in 2022-23. Imports of spices, cashew, and cotton – commodities where India has traditionally been a net exporter – have shown a rising trend due to decreased price competitiveness and stagnant or falling domestic production.
Potential Risks for Future Trade
The FFPI reading for April 2023 indicates a decrease from the 2022-23 average, which could lead to reduced export earnings, especially for products that are more price sensitive. Fears of food inflation ahead of the 2024 national elections could also negatively affect the trade. Government measures to control domestic inflation, like the ban on wheat and broken rice exports and a 20% duty on non-parboiled non-basmati shipments, could further impact agricultural trade.
Government Initiatives to Enhance Agricultural Exports
The government has introduced several measures to support agricultural export, including the Agriculture Export Policy (2018), which aims to make India a global power in agriculture and raise farmers’ income, and the ‘District as Export Hub’ Initiative to promote export products and services across all districts. Other initiatives include the Transport and Marketing Assistance for Specified Agriculture Products, Trade Infrastructure for Export Scheme (TIES), Market Access Initiatives (MAI) Scheme, and the Export Promotion Schemes of APEDA. These schemes provide financial assistance and logistical support to promote the export of agricultural products.