Importance of agri exports — and what Govt can do to boost India’s farm trade surplus

Source: The post is based on an article “Importance of agri exports — and what Govt can do to boost India’s farm trade surplus” published in The Indian Express on 14th November 2022.

Syllabus: GS 3- Agriculture

Relevance: concerns associated with increase in imports of agri-products.

News: The article discusses position of India in importing agri-products and measures to improve it.

What is the position of India in agri-exports?

India’s agriculture exports have grown 16.5% in the period of April-September and are expected to grow further.

This growth has come at a time when the government has brought measures to ban the export of wheat, broken rice and sugar.

However, despite the ban all three have shown a rise in exports from the last year. For example, sugar exports grew 45.5% in April-September this year compared to last year.

However, imports have increased more than exports.

What is the position of India in import?

The first six months of the current fiscal (2022-23) have seen a narrow trade surplus because imports grew at a faster rate (27.7%) than exports (16.5%).

India’s trade deficit in overall merchandise trade account has widened from $76.25 billion in April-September 2021 to $146.55 billion in April-September 2022.

Even with a wide trade deficit, India’s surplus in agriculture trade reduced only from $7.86 billion to $7.46 billion.

Therefore, surplus in agricultural trade matters because this is one sector, apart from software services, where India has some comparative advantage.

Which agri-products have seen increase in import?

Exports of all agri-products have been good except cotton, spices, cashew and vegetable oils.

Exports of cotton have declined and its import has increased due to the lower domestic production which has turned India a net cotton importer.

In spices, India has become an importer of pepper and cardamom. Vietnam, Sri Lanka, Indonesia, and Brazil have out-priced India in pepper, while India has lost market share to Guatemala in cardamom.

India has also increased its import of cashew compared to its export.

Further, India is a major importer of vegetable oils. Imports have increased by more than 25% in the first half of this fiscal year. Vegetable oils are the country’s fifth biggest import item after petroleum, electronics, gold, and coal.

That is why the government has come up with important decisions to reduce its import of vegetable oil.

What are the decisions taken by the government?
  1. a) government has raised the MSP of mustard from Rs 5,050 to Rs 5,450 per quintal for the 2022-23 crop season, b) government has granted clearance for commercial cultivation of genetically modified (GM) hybrid mustard.

The yield from GM hybrid mustard is claimed to be 25-30% more than from currently-grown popular varieties and it would be also useful in developing new mustard hybrids giving higher yields.

What is the way forward?

A similar kind of approach is needed to boost high yields of cotton production.

GM Bt technology has helped in the increase in the cotton production but a new approach is required as production has started to fall down touching a 12-year low in 2021-22.

Therefore, India should focus on domestic production and productivity by leveraging technologies.

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