Q) Despite being the second largest agricultural producer in the world, India’s share of exports of agricultural goods in the global market remains consistently below the mark. Discuss.
Why this question:
Important part of GS paper-III.
Key demand of the question:
Give an account of why India has not been able to perform in the area of agricultural exports and measures to improve it.
Discuss- back up the answer by carefully selected evidence to make a case for and against an argument, or point out the advantages and disadvantages of the given context and finally arrive at a conclusion.
Give an introduction of the current state of agricultural exports in India.
In the first part, highlight the reasons for poor performance in the area of agricultural exports.
In the next part, highlight the measures to improve the situation.
Conclude with the significance of enhancing agricultural exports and the larger impact that it will have.
India is the second largest agricultural producer in the world and has the largest Arable land of 156 million hectares. In 2019, India exported 38.7 billion US dollars of agricultural goods, which is only 7% of Indian agricultural production. Globally India ranks 13th in agriculture exports despite being the leading producer of milk, bananas, mangoes, etc.
Causes of low agriculture export in India
- Low productivity- Indian farms are smaller that are one to two hectors on average and this makes it hard to achieve economies of scale.
- Low mechanization- the level of mechanisation in Indian farms is relatively low and the farmers do not utilise many high yield input varieties used in other Agri producing countries
- High logistics costs- India’s cost of logistics is currently around 14% of the GDP which is higher than the developed country exporters like the US where it is 9.5%.
- Limited value addition- India is a more prolific exporter of primary commodities than of value added agricultural products. The country ranks tent globally in processed meat, 18th in export of processed fruits and 35th in dairy. reasons for this include low relative lack of private sector investment and adequate incentives.
- Decreasing incentives to Agri exports- while India has invested heavily in a broad range of export promotion schemes such as agriculture export zones, India’s export incentives have declined over time.
- Non tariff barriers - Indian agricultural exports also face non tariff barriers, stringent sanitary and phytosanitary standards (SPS), residue limits for various pesticides, antibiotics, etc. in attractive markets such as Europe.
Measures to enhance agricultural exports
- Focus on the 22 crop value chains with a demand driven approach that has the potential of taking Indian exports from 40 billion US dollars to 70 billion US dollars in a few years.
- Identify markets with high export potential for competitive value chains & beneficial bilateral or multilateral agreements with them, raising sanitary and phytosanitary production levels to meet their quality standards and negotiating to remove non tariff barriers.
- Develop value chain clusters with a focus on value addition. This would also serve to converge the government's expenditures on schemes, as well as seek the additional funding required for building any necessary infrastructure.
- Creating state led export plans that will layout the opportunity, initiatives on investment required to meet the desired value chain export aspiration.
- Centre should play an active role in enabling the players involved in agriculture exports and encourage them for more production.
- Both the central and the state governments will need to incentivise private investors as well as provide viability gap funding wherever necessary.
- Funding through convergence of existing schemes, finance Commission allocation and private sector investment should be promoted.
- Entering into long term contracts with exporters that can assure supply during crisis two large food importers.
Promotion of agricultural exports has a variety of benefits. it has the potential to create an estimated 7 to 10 million jobs. Moreover it will help India earn foreign exchange. A growth in agri exports will help India in achieving its goal of doubling the farmers income by 2022 and also help in the expansion of diversified markets for Indian agricultural commodities.