Following the doubling of India’s share in the global exports of agricultural produce from one per cent to 2.2 per cent in 2016, the ministry of commerce and industry has recently issued a draft agriculture export policy, whose objective is to increase the agri export from the country, as stated by Suresh Prabhu, minister of commerce and industry, Government of India. The ministry, which aims at a long-term, stable export policy, has stipulated that stakeholders submit their comments on the draft by April 5, 2018.

The aims of India’s agri export policy are to become one of the top ten exporters of agricultural produce and to strive to double India’s share in the global exports of agri produce and increase the share of agricultural exports from the present figure (over $30 billion) to over $60 billion by 2022. Focusing on organic and processed foods, the policy aimed at reforming the agricultural produce market committees (APMCs) and the creation of an agri start-up fund.

The effort of the agri export policy would be to analyse top agricultural commodities and products on the bases of current global and Indian trade. Each commodity would be studied in detail based on five key criteria, namely global trade, five-year impact potential, India’s current competitiveness, scope for value addition and future market potential. The effort would be to shortlist about ten commodities as focus commodities for specific farm, infrastructure and market intervention.

According to the draft, the preliminary analysis shows very high potential for shrimps, meat, basmati rice, bananas, pomegranate, vegetables (including potatoes), cashew, plant parts/medicinal herbs in value-added forms [including herbal medicines, nutraceuticals, aromatics and spices (cumin, turmeric and pepper)] and ethnic and organic food.

The reason, stated the draft, was that world agricultural trade had been relatively stagnant in the last five years (i e between 2013 and 2017). The sharp drop in oil prices was a major contributor to the softening of global agricultural commodity prices.

In a similar vein, India’s agricultural trade dropped by a compound annual growth rate of -5 per cent from $36 billion in fiscal year (FY) 2013 to $31 billion in FY 2017. However, a comparative analysis of India’s ten-year agri exports reveals an encouraging picture.

Indian agricultural exports grew at a whopping nine per cent compared to China (eight per cent), Brazil (5.4 per cent) and the United States (5.1 per cent) between 2007 and 2016. During this period, the exports of coffee, cereals, horticultural produce doubled, while the exports of meat, fish, processed products grew between three and five times.

G Chandrashekhar, economic advisor, IMC Chamber of Commerce and Industry, said, “The new draft export policy issued by the ministry is an ambitious one, but it will be a daunting challenge to implement.”

“To start with, we should ask ourselves, in how many commodities and crops we have a genuine export surplus. Basmati rice and cotton are two good examples of crops in which the country has a genuine export surplus,” he added.

“Otherwise, given the rising incomes and expanding population, India may not be left with a genuine surplus export in many crops and commodities,” Chandrashekhar said, adding that inter-ministerial consultations were critical to ascertain ways to generate export surplus and for a steady long-term export policy.

Besides, changes in the export policy because of temporary domestic shortages and high prices may prove counter-productive.

Another important aspect is value addition. India is known to export more of raw materials than value-added or finished products. Many crops and commodities, such as fruits and vegetables, castor oil and so on, lend themselves to value addition, but this is not captured in India itself.

“The policy should attempt to encourage export of value-added products. We can generate employment and earn more foreign exchange through domestic processing and value addition. So, in addition to fruits, why not work toward export of fruit juices, jams and jellies, which will increase employment opportunities and attract more foreign investment,” Chandrashekhar said.

“Outdated concepts like minimum export price and minimum import price must be done away with. These restrictions distort the market and lend themselves to invoice manipulation by unscrupulous traders. Imposing and changing the rate of customs duty is the best way to regulate foreign trade,” he added.

Meanwhile, the draft stated that challenges were aplenty. They included low farm productivity, poor infrastructure, global price volatility and market access.

“The vision of prime minister Narendra Modi to double farmers’ incomes by 2022 would require a series of interventions to improve production and productivity, along with economising the cost of production,” it added.

“This would also require India to augment its exports to the global market to ensure that farmers get a remunerative price and a marketing channel for their production,” the draft said.

“There has been a long-felt need for a dedicated agricultural export policy in India. With World Trade Organization (WTO) negotiations in full swing and globalisation of value chains, India has played an integral role in world agricultural trade in the past one decade,” it added.

And, therefore, the policy recommendations in the draft were proposed to be organised in two broad categories – strategic and operational.

The recommendations in this category included policy measures, infrastructure and logistics, approach to boost exports and greater involvement of state governments in agri exports.

The focus of this category would be on clusters, promoting value-added exports, marketing and promotion of produce of India, infrastructure and logistics to support agricultural exports, the establishment of a strong quality regime, self-sufficiency and export-centric production, research and development (R&D).