Context: India’s agricultural trade surplus has reduced from $10.6 billion in April-December 2023-24 to $8.2 billion for the corresponding nine months of the current fiscal year 2024-25.
Relevance of the Topic: Prelims: Agriculture exports- trends.
Agriculture Trade: Trends
- Agriculture Exports:
- India's agricultural exports increased by 6.5%, rising from $35.2 billion (April-December 2023) to $37.5 billion (April-December 2024).
- This growth surpassed the 1.9% increase in total merchandise exports.
- Agriculture Imports:
- Grew at a higher rate of 18.7%, rising from $24.6 billion (April-December 2023) to $29.3 billion (April-December 2024).
- Narrowing Agricultural Trade Surplus:
- The surplus fell from $10.6 billion (April-December 2023-24) to $8.2 billion (April-December 2024-25).
- Historically, India's agricultural trade surplus peaked at $27.7 billion in 2013-14 but declined to $8.1 billion by 2016-17.
- It increased again to $20.2 billion in 2020-21, but has since been declining.
Impact of Global Commodity Prices on Indian Exports
- The FAO food price index fell between 2013-14 (119.1) and 2019-20 (96.4), reducing India's agricultural export competitiveness.
- Post-COVID-19 and the Russia-Ukraine war, global food prices surged, leading to higher Indian exports.
- The index peaked at 140.6 in 2022-23, boosting exports to $53.2 billion, but has since fallen, affecting exports.
Key Agricultural Export Commodities
- Marine products:
- No. 1 export commodity in India’s agri-exports.
- Exports fell from $8.1 billion (2022-23) to $7.4 billion (2023-24).
- Sugar: Dropped from $5.8 billion (2022-23) to $2.8 billion (2023-24) due to government restrictions.
- Wheat: Exports reduced significantly due to domestic supply concerns.
- Rice: Despite export restrictions, non-basmati rice exports remain high, while basmati rice exports are expected to reach record levels.
- Spices, Coffee, and Tobacco: Crop failures in other countries (Brazil, Vietnam, Zimbabwe) have boosted India’s exports.
Key Agricultural Import Commodities
India’s agricultural imports are dominated by two commodities: Edible oils and pulses.
- Edible oils: Imports surged due to high global prices post-Ukraine war.
- Pulses: Poor domestic production led to an increase in imports, expected to cross $5 billion for the first time.
- Spices: India has become a net importer of pepper and cardamom, despite leading in other spices.
- Cotton: Once a major exporter, India is now a net importer, with imports increasing by 84.2% in 2024.
While India remains a strong player in agricultural exports, increasing imports and global market uncertainties pose challenges. A balanced trade policy, along with investments in domestic agricultural productivity, will be crucial in maintaining a healthy agricultural trade surplus.