 "A farmer sprays pesticides at a mustard field, in Kamrup district of Assam, Thursday, Nov. 30, 2023. (PTI Photo)")
India's agri export basket is dependent on just five commodities including rice and sugar and this makes the sector vulnerable to fluctuations in global prices and demand, a report by economic think tank GTRI said on Monday.
The Global Trade Research Initiative (GTRI) said these five products -- basmati rice, non-basmati rice, sugar, spices, and oil meals -- account for 51.5 per cent of India's total agriculture exports.
Furthermore, India grapples with various domestic challenges including infrastructural deficits, quality control issues, and non-tariff barriers, all of which impede the growth and competitiveness of its agricultural sector, it said.
"This makes them (agri exports) vulnerable to fluctuations in global prices and demand," it said, adding these commodities also face frequent export bans in India.
At present export of non-basmati rice is currently banned from India and India is also fighting at the WTO (World Trade Organisation) to protect subsidies to rice and wheat under a public stock holding programme.
Besides, certain WTO member countries have taken India to disputes on sugar for providing subsidies to farmers. "All this makes India's top exports vulnerable and uncertain," it added.
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To deal with the issue, the think tank has suggested the government to focus on areas like modern infrastructure for the sector.
The report said China with higher rice productivity does not encourage export of rice as every kg of rice products can consume up to 80 litres of water.
It also said that in 2023, India's agricultural trade landscape presents a challenging scenario.
With agriculture exports and imports projected to reach USD 43.3 billion and USD 33 billion, respectively, the sector is experiencing a significant downturn compared to the previous year, it added.
"Exports will decline by 7.2 per cent and imports by 10.1 per cent in 2023 over 2022. India's agriculture exports will be 10.1 per cent of India's merchandise exports.
"This decline is exacerbated by the concentration of exports in a few products like rice and sugar, making the market susceptible to global price fluctuations and policy constraints, such as export bans and WTO disputes," it added.
However, it said that India is learning from global developments and implementing innovative initiatives like farm-to-fork and traceability systems across various agricultural products to enhance quality, safety, and market accessibility.
"Indian agriculture faces significant challenges, including a heavy reliance on rice and sugar, which makes it vulnerable to global market fluctuations and domestic policy changes and unorganised sector activity," GTRI Co-Founder Ajay Srivastava said.
He suggested a rethink on the sector, as export earnings do not justify input or environmental costs in most cases.
The sector is hindered by inadequate cold chain infrastructure and inefficient logistics, leading to spoilage and export competitiveness issues, Srivastava said, adding quality and traceability inconsistencies, along with high non-tariff barriers in international markets, further impede export potential.
"At the policy level, India's large public stockholding for food security is a contentious issue at the WTO, with ongoing negotiations adding to the uncertainty.
"These challenges, compounded by global agricultural trends and the dominance of a few large firms in the international grain trade, highlight the need for strategic improvements in infrastructure, quality control, and policy adaptation to enhance India's agricultural sector's global competitiveness," the report said.
The three primary categories for exports are - basic agriculture products, processed agriculture products, and other products.
According to the GTRI's forecast, basic agriculture products will see a decrease in export value from USD 24.8 billion in 2022 to USD 22.3 billion in 2023, marking a 10 per cent decline. This category constituted a significant 51.5 per cent share of India's total agricultural exports.
Processed agricultural product exports may dip from USD 16.3 billion last year to USD 15.7 billion in 2023. The sector accounts for 36.3 per cent of the total exports.
It added that other product categories can register a dip of 5.6 per cent to USD 5.3 billion in 2023 from USD 5.6 billion in 2022. It accounts for 12.2 per cent of total exports.
Non-basmati rice exports have dipped by 12.2 per cent to USD 5.51 billion so far this year (2023). However, basmati rice exports rose by 17.7 per cent to USD 5.3 billion this calendar year.
Sugar exports dipped by 32.4 per cent to about USD 4 billion so far this calendar year. Spices and oil meal exports have increased by 8.5 per cent and 48.6 per cent to USD 3.72 billion and USD 1.,83 billion during the period under consideration.
The other agri products which India exports include coffee, castor oil, fresh fruits, tobacco, processed fruits and juices, groundnut, fresh vegetables, herbal goods, meat, silk, wool and cotton, dairy, and live animals.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
