Govt plans to double farm exports by ’22 to gain trade lead over ChinaUpdated: Jun 27, 2020, 00:00 IST
New Delhi: In line with the “Atmanirbhar Bharat”, or self-reliant India, stance spelt out by Prime Minister Narendra Modi in recent weeks, India aims to double farm exports from US$ 30 billion now to US$ 60 billion by 2022, scout new markets hit by Covid-19, and put China at a disadvantage in bilateral farm trade, according to details of consultations to “recalibrate” the country’s agriculture trade policy set in 2018.
An interministerial assessment last week showed there’s room to export more to the US, Canada, Chile, Ecuador, South Korea, Malaysia, Iran, and to China and its rival Taiwan, an official familiar with the developments said
“Having invoked three Ordinances this month to liberalise the farm sector, it’s time to scout for new markets and boost exports. India is an agricultural powerhouse. Good export can help achieve doubling of farm incomes, a target set by the PM,” the official said.
New export hubs for horticultural produce – fresh fruits and vegetables – will be opened in smaller cities as part of the strategy to provide direct global access to local farmers, according to the plan being discussed, he added.
The country has got market access for 35 agricultural products with eight countries this month. It will send out a few more over the course of the next few months, according to the plan.
India has a trade surplus with China when it comes to farm produce; in other words, the country sells more commodities, in value terms, to China than it buys from the neighbour. “The aims is to widen this gap to India’s advantage,” the official said.
To be sure, as a rule, as economies become developed, they sell more and more high-value manufactured items rather than farm-based products.
In 2018-19, India’s total agri-based exports to China, from raw cotton to shrimps, stood at US$ 1.9bn, a rise of 117% over the previous year. In the same year, India’s total agricultural imports from the neighbour was $282 million.
India framed a national agriculture trade policy for the first time in 2018. Officials said this policy needs to be retuned because of the global impacts of the coronavirus pandemic.
According to changes being proposed, while India aims to export more farm produce to China, it will cut down on some.
Officials have identified 11 farm-based items which China imports from other trading partners, which India also has the potential to export.
These items will be put in so-called “potential exports to China” category, including maize, tobacco, tamarind, broken rice, coffee, cashew and pre-cooked meals. Bihar is one of the largest producers of maize.
On other hand, Indian imports from China included commodities in which India is self-sufficient, such as bamboo, wheat gluten and apple juice concentrate. “A centrally sponsored scheme is currently on to promote bamboo products because of large plantations in the Northeast. We will now promote exports of bamboo products, rather than importing them,” the official said. Marine products will receive special policy attention, the official added.
The country has concluded discussions on phytosanitary certifications for Indian mangoes with Iran.Phytosanitary certification is a formal declaration by an exporting country guaranteeing that shipments are free of pests and plant diseases, and meet the requirement of the importing country.
Taiwan will allow exports of Indian lily bulbs. Canada has cleared Indian mangoes, grapes, pomegranate, banana, litchi, papaya, custard apple and okra for export. Chile has approved coconut fibre and walnut. South Korea and Malaysia, too, have agreed to buy Indian mangoes. Equador is the latest country to clear Indian rice.
To give local farmers access to exports, India conducted trial international shipments of farm produce directly from Varanasi and Guwahati before Covid-19 struck. The Agricultural and Processed Food Products Export Development Authority, in association with the farm ministry, identified 70 districts as potential export hubs.
Shipments to Dubai from Varanasi contained chilli from Uttar Pradesh. Pineapples were sent from Guwahati and oranges from Meghalaya and Arunachal Pradesh. Smaller cities, like Varanasi and Guwahati, will now have complete infrastructure for exports, including phytosanitary certification.
In a boost for mango exports, the US has agreed to shift pre-shipment inspection tasks to Indian plant quarantine authorities. The US has also agreed to bear the cost of these outbound inspections, which will bring down the cost of exports, a second official said.
India is one the world’s largest growers of cereals, vegetables, fruits and the second largest grower of sugarcane. It is also the largest producer of milk.
The government liberalised the farm economy through three ordinances announced on June 2. These aim to cut the government’s powers in deciding how much produce traders can store by amending the Essential Commodities Act, boost contract farming and remove rules requiring farmers to only sell their crops to licenced middlemen in state-notified markets.
India’s agricultural exports grew five times from about $8.7 billion in 2004-05 to $42.6 billion during 2013-14. This fell to $33 billion in 2016-17. The country’s net exports (i.e. exports minus imports or the agricultural trade surplus) fell to $7.8 billion in 2016-17, falling a further 15 and 22 percentage points in 2017-18 and 2018-19.
“Ramping up exports will call for a whole lot of infrastructure and relook of tariffs too. Also, our non-farm imports tariffs are around ASEAN levels, between 18-20%, but agricultural tariffs are still very high,” said Uma Kapila, an economist with the Academic Foundation.