Govt plans to introduce new agriculture export policy

India ranked the world's eighth-largest agricultural exporter in 2023 despite a decline in exports from $51.12 billion in FY23 to $48.77 billion in FY24.
India ranked the world's eighth-largest agricultural exporter in 2023 despite a decline in exports from $51.12 billion in FY23 to $48.77 billion in FY24.

Summary

  • The review will attempt to enhance the competitiveness of Indian agricultural products, ensure compliance with global standards, and promote value-added products.

India's six-year-old Agricultural Export Policy (AEP) is set for an overhaul as export destinations shift and the country's farm exports basket becomes more diverse, three people directly involved in the process said.

The proposed review will attempt to enhance the competitiveness of Indian agricultural products, ensure compliance with global standards, and promote value-added products. It will also try to find ways to strengthen trade ties with emerging markets while sustaining strong relationships with traditional partners, the people cited above said on the condition of anonymity.

"Our agricultural exports have been witnessing an increasing trend over the last five years. The policy needs to be reviewed to realign our export targets with changing market demands. The review process will begin in consultation with the agriculture ministry, and a timeline will be established," one of the three people cited above said.

India ranked the world's eighth-largest agricultural exporter in 2023 despite a decline in exports from $51.12 billion in FY23 to $48.77 billion in FY24. Over recent years, changing global demand patterns, evolving trade partnerships and advancements in agricultural technology have contributed to a transformation in how and where agricultural products are traded.

"We will assess the performance so far and identify the areas that need to be focused on," the second person said.

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The government introduced a comprehensive AEP in 2018 with the objective of doubling annual agricultural exports to $60 billion by 2022 and reaching $100 billion in subsequent years. However, agricultural exports in FY24 were $48.77 billion, down 8.19% from $53.12 billion in FY23. The decline is largely attributed to export restrictions on rice and wheat introduced to ensure domestic food security and stabilize local prices. Wheat export was banned in May 2022, while the export of non-basmati white rice was prohibited in July 2023.

"The focus will be on processed food to target new market destinations. Organic products are also showing an increase in demand. Our export infrastructure also needs to be augmented to align with export targets," the third person said.

India exports a wide range of agricultural products including rice, wheat, vegetable oils, fresh fruits and vegetables, pulses, spices, cashew nuts, marine products, sugar, coffee, processed fruits and juices, Ayush and herbal products, tea, dairy products, tobacco, poultry products and meat. India's top ten export destinations are the UAE, Singapore, Tanzania, Angola, Ghana, the Netherlands, Congo, Kenya, US and Haiti.

Also read | Budget 2024: Agriculture likely to see major announcements

Experts said the policy should focus on maintaining consistency in existing exports, and protecting farmers' interests.

"The government should remove taxes on raw materials and allow traders to procure at least 50% of the produce, instead of the current 100% procurement requirement by the government," said Vijay Kumar Setia, director of Chaman Lal Setia Exports Ltd and former president of All India Rice Exporters of India. "This will help farmers receive better prices for their produce while ensuring the availability of stock for public consumption. Additionally, the government should implement a uniform tax on imported agricultural goods, rather than levying different percentages based on product quality, as this encourages under-invoicing and anti-competitive practices," Setia said.

Queries emailed to spokespersons of commerce and agriculture ministries remained unanswered.

"The government should prioritize the domestic market and consider the timing of crop arrivals from across the country in its export policy. Farmers grow their crops after facing numerous hardships; so, the policies should not be changed to favour international markets. For crops like onions, current actions are harming both consumers and farmers," said Ramesh Chandra Lahoti, president of the Federation of Karnataka Chambers of Commerce and Industry.

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"In India, every crop is rain-dependent, and mechanisation is still limited. The government is promoting drip irrigation, but its coverage is only around 4-5%, which is insignificant. The policy should focus on the majority of farmers who are entirely dependent on rainfall," Lahoti added.

"The policy must focus on promoting agricultural products from landlocked states such as Uttar Pradesh, Madhya Pradesh, Rajasthan and Chhattisgarh. Commodities with high export potential, like onions and potatoes, should have a consistent export policy," said Satyen Yadav, an agribusiness professional and chairman of India Millet Initiative.

“New markets in Latin America, South America, and Scandinavian countries should be targeted. There should be a clear policy for promoting Indian millets, given their significant export potential," said Yadav.

India is a leading producer of cereals, milk, sugar, fruits, vegetables, spices, eggs, and seafood, serving 17.84% of the world's population with just 2.4% of global land and 4% of water resources. Agriculture remains the backbone of the country, providing livelihoods for nearly 50% of the population.

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