Agriculture Export Policy, Import Policy in India

Introduction to agriculture export policy and import policy in India: Agriculture plays very important role in the Indian economy. Indian Agricultural export and import policy have undergone a foremost change in this modern era.  With large and diverse agriculture, India is among the world’s leading producers of cereals, milk, sugar, fruits, and all vegetables, spices, eggs and seafood products. Indian agriculture system continues to be the backbone of our society and it provides livelihood to nearly 50 percent of our population. India is supporting 17.84 percent of the world’s population, about 15% of the livestock population with merely 2.4 percent of the world’s land and 4 percent water resources. Then, continuous innovation and efforts towards productivity, pre, and post-harvest management, value-addition, use of technology and infrastructure creation is imperative for Indian agriculture.

A guide to agriculture export policy and import policy in India

A stable agricultural import and export policy in India has been a long-standing demand. India’s agrarian culture and varied regional climate have contributed to the global food basket. The agricultural import and export policy would help the government in achieving the target of doubling farmer’s income. The vision of agriculture export policy is to harness the export potential of Indian agriculture, through appropriate policy instruments, to make India global power in agriculture and raise farmer’s income. As export and import of agricultural products depend on many factors such as international and domestic demand and supply situation, international & domestic prices, quality concerns and food security concerns no targets for exports or imports are fixed.

Today, India ranks second worldwide in Agri farm output. Indian agricultural product has occupied a unique place in the world agriculture product. India is the world’s largest producer of different ranges of commodities due to its favorable agro-climatic conditions and rich natural resource base. In India, the contribution of agricultural export and economic growth has a forward and backward relationship. India, the central place of exporting agricultural commodities such as Basmati Rice, Non-Basmati Rice, Cereal Preparations, Fresh Onions, Pulses, Maize, and Other Fresh Fruits.

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Guide to Agriculture Export Policy.
Guide to Agriculture Export Policy.

The agriculture policy seeks to diversify exports by-products and destination and will focus on high value-added farm produce and perishables. At present, rice, wheat, and marine products account for about 52% of the total agriculture farm exports. Dedicated clusters can be set up for mangoes, pomegranate, bananas, grapes, tea, coffee, turmeric, and marine products, among others.

Agriculture trade policy

Exports – Presently exports of principal agricultural products containing rice, wheat, sugar, cotton, fruits, and vegetables are “free” without any quantitative restrictions. And export of pulses excluding Kabuli channa and edible vegetable oil in bulk excluding coconut oil and rice bran oil is ‘restricted’ to meet the domestic demand.

Imports – Imports of agriculture products are “free” without any quantitative restrictions.

Objective and vision of agriculture export policy

A dynamic nation of 1.3 billion consumers with rising discretionary incomes, changing food patterns, diverse agriculture and a large population dependent on agriculture has propelled India to the world’s center stage as a big consumer market. It has been suggested that an essential element of “Make in India” has to be “Bake in India”, that is a renewed focus on value addition and processed agricultural products. The rapidly growing population and shrinking farmlands, coupled with changing socio-economic, agro-climatic and dietary patterns, have challenged scientists to reconsider how we grow and feed 7.5 billion global citizens. India’s quest, then, is to grow sustainably, trade abundantly and progress harmoniously.

Challenges are aplenty; from low farm productivity to poor infrastructure to global price volatility to market access. The vision of Prime Minister Shri Narendra Modi to double farmer’s income by 2022 would need a series of interventions to improve production and productivity, better price realization for farm produce, along with economizing the cost of production. There has been a long-felt want for a dedicated agricultural export policy in India.

The agriculture export policy in India is framed with a focus on agriculture export production, better farmer realization, and synchronization within policies of the government. It is necessary to have a “Farmers’ Centric Approach” for improved income through value addition at the source itself which will help to minimize losses across the value chain. India needs to have a farmer oriented strategy to attain the twin objective of food security and a prominent agriculture exporter of the world.

The main objectives of the policy can be given below;

  • To double agricultural exports from the present value.
  • To diversify the export basket and boost high value and value-added agricultural exports including a focus on perishables.
  • To promote novel, indigenous, organic, ethnic, traditional and also non-traditional Agri products exports.
  • To provide an institutional mechanism for pursuing market, tackling barriers and deal with sanitary and phytosanitary issues.
  • Enable farmers to obtain the benefit of export opportunities in the overseas market.

Information about India’s farm exports

The information about India’s farm exports is given below;

India’s share in global farm or food exports and imports is around 2.07% and 1.24% respectively. Thus, India is a net exporter of agricultural farm products. And in terms of global agricultural and food exports, India’s rank is 10. The largest export product in the farm sector in India is Basmati Rice; as the largest import product includes edible oils. Place of marine products comes after Basmati rice in India’s farm exports. India is one of the leading exporters of some farm products that are tea, sugar, oilseeds, tobacco, spices, and products with agricultural content (jute, cloth and sugar products). In recent times, Buffalo meat and Guar gum exports have seen important volume growth in exports of India. Further, the share of processed food such as mango pulp, dried & preserved vegetables, and meat and poultry items has also increased.

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Agri-exports

India’s agri-exports can be divided into three main categories, i.e. export of

  • Raw products,
  • Semi raw products
  • Processed and ready-to-eat products.

Raw products exported are low-value high volume nature. And semi-processed products are of intermediate value and limited volume and processed ready-to-eat products are of high value but low volume nature. The agriculture exports of India are cereals that are mostly rice – Basmati and non-Basmati, spices, cashew, oilcake or meals, tobacco, tea, coffee, and marine products. And the value of agri-exports to total exports of the country has been ranging between 15 to 20 percent. Whereas marine products export has exhibited some uptrend, this benefit was more than offset by a sharp decline in export prices of soya meal which of late has been a major export item.

India’s agriculture exports face certain constraints that arise from conflicting domestic policies relating to production, distribution, food security, and pricing concerns, etc. Unwillingness to decide on basic minimum quantities for export creates Indian supply sources unreliable. Higher domestic prices in comparison to international prices of products of bulk exports such as sugar, wheat, and rice, etc. make our exports commercially less competitive. Market intelligence and creating awareness in the international market about the quality of products want to be strengthened to boost agricultural exports.

Agri-imports

Agri-imports constitute a small proportion of the country’s total imports. During the period 1996-97 to 1999-2000, agri-imports have been in the range of 4 – 7 percent of the total imports of the country. In recent years, edible oil has the single largest Agri import accounting for more than 50 percent of the value of total agri-imports. In 1999 -2000, it accounted for as high as 70 percent of total agri-imports. Another item, this has been accounting for around 10 percent of total imports, is the raw cashew nut. Each of the other agricultural and allied products imported into the country – cereals, pulses, spices, sugar, milk and milk products, and chicken meat, etc.

It is commonly the policy that import duties should low for those sensitive essential products where there is a large domestic shortfall in production. And pulses are a typical example, where there is zero import duty. High tariff walls were raised this year for agricultural and allied products, such as rice, wheat, millets, sugar, milk powder, apple, chicken, and edible oils, etc. to ally the fears of large scale dumping of such products in the Indian market given liberalization of import policy in respect of many products.

Recent upward trends in farm exports

Agriculture export policy in India have shown an upward trend and this is expected to sustain due to many reasons such as reduced transaction costs, time, increased demand overseas and increased importance to the food processing industry, etc.

India’s agricultural import in India is a net agricultural exporter; yet a huge burden on India’s import bill is due to agricultural imports. The largest agricultural exports of India are Edible oil; wood products and also pulses. India keeps importing Sugar, onion, etc now and then. Edible oil is India’s largest import farm commodity mostly because of its higher consumption and lower production.  Oilseeds and edible oils are essential commodities.

Need for export policy in India

The export policy in India can address challenges to exporting agricultural products such as low farm productivity and global price volatility to market access. India’s share in global exports of agriculture products was only 2.2 % in 2016.

India has remained at the lower end of the global agriculture export chain given that the majority of its exports are low value and marketed in bulk. The share of India’s high value and value-added agriculture produce in its agri-export basket is less than about 15% compared to 25% in the US and 49% in China.

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India is unable to export its vast horticultural make due to lack of uniformity in quality, standardization and its inability to curtail losses across the value chain. Given the globalization of value chains, the country must create concerted efforts to boost exports of high margin, value-added and branded processed products. The vision of doubling farmer’s income by 2022 will want a series of interventions to improve production and productivity along with economizing the cost of production. This would require India to augment its exports to the global market. Therefore, it is necessary to have an agriculture export policy in place.

Agricultural export and import policy recommendations

The policy recommendations in this report are organized into two broad categories. They are strategic and operational.

Strategic

  1. Policy measures – Discussions with public and private stakeholders across the agricultural value chain highlighted certain structural changes that were necessary to boost agricultural exports. These comprise of both general and commodity-specific measures that can be urgently taken and at little to no financial cost.
  2. Infrastructure and logistics – The presence of robust infrastructure is an important component of a strong agricultural value chain. This involves pre-harvest and post-harvest handling facilities, storage and distribution, processing facilities. Mega Food Parks, state-of-the-art testing laboratories and Integrated Cold Chains are the fundamentals on which India could increase its agricultural exports. Given the perishable nature and stringent import standards for most of the food products, efficient and time-sensitive handling is extremely essential to agricultural commodities
  3. A holistic approach to boost exports – Agricultural exports are determined by supply-side factors, food security, processing facilities, infrastructure bottlenecks, and some regulations. This mainly involves multiple ministries and state departments. Strategic and also operational synergy across ministries will be key to boosting productivity and quality.
  4. Greater involvement of state governments in agriculture exports products

Operational Recommendations

  • Focus on Clusters – There is a need to evolve and put in place institutional mechanisms for the effective involvement of small and medium farmers for the entire value chain as group enterprise within the cluster of villages at the block level for select produce. This will help to realize the actual benefit of the farming community to double their income through the entire value chain.
  • Promoting value-added exports
    1. Product development for indigenous commodities and value addition
    2. Promote value-added organic exports
    3. Promotion of R&D activities for new product growth for the upcoming markets
    4. Skill development
  • Marketing and promotion of “Brand India”
  • Attract private investments in export-oriented activities.
  • Establishment of Strong Quality Regimen
  • Research and Development – Agricultural research and development (R&D) led by private industry along with higher infrastructure spending by the government will be the main key to boosting agricultural exports.
  • Miscellaneous – Creation of Agri-start-up fund – Entrepreneurs are to be supported to start a new venture in agriculture export products during the initial period of establishment.

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1 COMMENT

  1. It is an informative article on export and import of agricultural produce/comodities from India. Can you provide me some information on export of celery from India?
    B. S. Thind

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