 "Agriculture leads net foreign exchange earnings")
It is generally believed that services is driving India’s exports and also net foreign exchange earnings. While data related to exports of services is easily available from government agencies and industry bodies, information about imports is missing. However, when one runs through the data of import & exports from multiple organisations such as UNCTAD, WTO, IMF, etc, the findings are surprising. It is agriculture that wins the battle hands down (refer Table 1).
As per the data, India’s services sector is highly import-intensive (since all the softwares used in any digital equipment have to be licenced from abroad). In fact, some experts feel that software products imports are now growing faster than exports of these services. In 2014, India, at 21st position globally, ranked much lower than even smaller countries such as Croatia, Cuba, Israel, etc in the net income from services trade. India in 2014 earned net $ 8 billion from $ 304 billion trade in commercial services.
On the other hand, agricultural trade of $ 56 billion fetched as much as $ 18 billion in trade surplus. This is because while in services trade imports account for a lion’s share, in agriculture imports component is negligible since basic resources such as sunlight, land, water, labour, etc are all available in the country. Till 2000, agriculture catered to the needs of local population (driven by food security philosophy), however, focus shifted to exports in the later years. This resulted in increasing the exports from $ 6 billion in 2000 to $ 47 billion in 2013. Thus, agriculture is important not just for feeding local population, but also for fetching much higher net foreign exchange (better than services sector).
Table 1: India’s international trade in services and agriculture