India’s agricultural output, spanning across food grains, horticulture and livestock, has risen steadily over the past decade, but a surge in domestic food consumption has not only kept exports of these products subdued, but also caused a big jump in imports, according to official data.
The primary driver of the imports are edible oils, but inward shipments of pulses remained high too, even though in a more erratic manner (see chart).
India’s trade surplus in “agriculture and allied products” has been tapering in recent years – in FY24, the surplus was just $15.4 billion, as against $27.2 billion in FY14.
Earnings from export of farm items were only marginally higher at $48.2 billion in FY24 compared to $43 billion in FY14. On an inflation-adjusted basis, this is barely any growth.
On the contrary, imports more than doubled from $16 billion in FY14 to to $33 billion in FY24.
The items whose exports were still growing at healthy rate were rice, marine products and spices, whereas frequent policy interventions in trade constricted the growth of rice exports.
While white rice exports are now banned and there is a 20% export on parboiled variety, exports of basmati rice were restricted by a minimum export price until recently.
Simultaneously, edible oil imports had been boosted with reduced import tariffs since late 2022 (last week, these tariffs were raised, to slightly twist the terms of trade in favour of farmers.
Experts attribute the reduced trade surplus to a “consumer bias” in trade policies. “Immediately after prime minister Narendra Modi formed the government in 2014, there were back-to-back droughts in 2014-15 and 2015-16. So, imports had to increase to keep food prices under control. But later on, in 2022-23 and 2023-24, when global prices were high and rising, the government put export controls on wheat, rice, sugar, and even onions,” Ashok Gulati, agricultural economist and former chairman Commission for Agricultural Costs and Prices, said.
Gulati said this and the lower import duties on edible oils and pulses that prevailed for long “clearly shows consumer bias in agri-food policies, including imports-exports of agriculture produce”.
While exports of farm items contracted 8.2% on-year in FY24, imports shrank 7.6%. However, in FY23 and FY22, while exports had risen by 5.6% and 20% respectively, imports grew at 10% and 50%.
On the other hand, import bill of edible oil more than doubled from $7 billion to $15 billion between FY14 and FY24 and that of pulses rose from $2 billion to $3.8 billion. For exports, shipment or rise grew from $7.8 billion tonnes in FY14 to $10.4 billion in FY24, that of marine products rose from $5.1 billion to $7.4 billion during the same period.
Binod Anand, member of the Minimum Support Price Committee set up by the agriculture ministry, said the the government’s thrust is to ensure “higher participation of farmers” in agri-exports value chains through creation of specialised cooperatives would help boost exports. “The government has set up National Cooperative Exports which works at umbrella organisation for exports by the cooperative sector,” he said.
From: financialexpress
Financial News
