Agriculture Export Policy: Ramlal from Sikar district in Rajasthan depended completely on agriculture to earn his daily livelihood. He owned 100 acres of land and his entire family was involved in farming. With a large farmland, Ramlal once felt that he was not utilizing his agricultural land fully, and he should increase the production of crops in his farmland to make the maximum out of his ancestral property.
Gradually, as the farming produce increased and so did his income, he decided to enter into the agri-export business. When he discussed this plan to start an agricultural export business, his entire family liked this idea and decided to work together on this plan. Today, Ramlal’s income has more than tripled, his son is settled in a city where he is involved in an agri-export business, while Ramlal’s daughter is preparing for competitive exams in Kota.
The Agri-export business has completely changed Ramlal’s and his family’s financial situation. At one point, when the farmer was unable to fulfill the basic necessities of his family members and afford higher studies for his daughter, today he is living a happy life. Ramlal’s journey from a farmer to a successful businessman was supported to a great extent by government schemes aimed at boosting agricultural exports from India. There are so many farmers like Ramlal, especially in agrarian states for whom the export business has changed their lives drastically, for a good reason.
India is one of the world’s largest agricultural product exporters. The country’s agriculture sector mainly exports agri & allied products, marine products, plantation, and textile & allied products. Rice is the largest exported agricultural product from India and contributed to over 19% of the total agriculture exports in 2021-22. Sugar, spices, and buffalo meat were among the largest exported products. As of 2022–2023, the USA, China, Bangladesh, UAE, Vietnam, Saudi Arabia, Indonesia, and Malaysia were the top importers of Indian agricultural goods.
Agriculture Export Policy India:
Agriculture export policy, also known as an Agri export policy, is a set of government regulations, measures, and incentives framed to govern and promote the export of agricultural products from India.
India is one of the world’s leading producers of cereals, milk, sugar, fruits and vegetables, spices, eggs, and seafood products. In India, agriculture is a source of livelihood for almost 50% of the population. Thus, Agro-processing and agricultural exports are key areas and India’s role in global export of agricultural products is steadily increasing.
India’s export basket is a diversified mix led by rice, marine products, and meat which together constitute ~52% of its total agri exports. Agriculture export, if properly supported by infrastructure, institutional backup, packaging, and freight transport backed by market access will be in a position to transform the agricultural economy in India.
From low farm productivity to poor infrastructure to global price volatility to market access, there are a plethora of challenges faced by the agricultural sector in India. Prime Minister Narendra Modi’s vision to double farmers’ income by 2022 would require a series of interventions to improve production and productivity, and better price realisation for farm produce. The need to have a dedicated agricultural export policy was felt long back in India.
Objectives Of India’s Agriculture Export Policy:
- To boost agricultural exports with a stable trade policy regime.
- To diversify export baskets, and destinations and boost high-value and value-added agricultural exports including a focus on perishables.
- To boost novel, indigenous, organic, ethnic, traditional, and non-traditional Agri products exports.
- To provide an institutional mechanism for pursuing market access, overcoming barriers, and dealing with sanitary and phytosanitary issues.
- To double India’s share in world Agri exports
- Enable farmers to benefit from export opportunities in the global market.
Elements of the Agriculture Export Policy Framework:
The policy recommendations are organized in two broad categories: Strategic and Operational.
| Elements of the Agriculture Export Policy Framework: | |
| Strategic | Operational |
| Policy Measures | Focus on Clusters |
| Infrastructure and Logistics Support | Promoting Value added exports |
| Holistic Approach to boost exports | Marketing and promotion of “Brand India” Attract private investments into production and processing |
| Greater involvement of State Governments in Agri Exports | Establishment of Strong Quality Regimen Research & Development |
| Miscellaneous | |
Policy Measures:
Negotiations with public and private stakeholders across the agricultural value chain are required to boost agricultural exports. In view of the domestic price and production volatility of certain agricultural commodities, there has been a tendency to utilize trade policy as an instrument to achieve short-term goals of controlling inflation.
Such circumstantial measures are mostly product and sector-specific, for example, the ad-hoc ban or imposition of Minimum Export Price (MEP) for onion and non-Basmati rice exports. This disturbs export supply chains and impacts India’s image as a trusted supplier affecting price realization for Indian produce.
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The country is viewed as a source of high-quality agricultural products and modifications in export regime due to changes in domestic price, and religious and cultural beliefs can have long-term consequences. It is important to design a stable and predictable policy with restricted State interference to send a positive signal to the global market. Refraining from making a distinction between the products meant for export and those for domestic consumption is required.
Agricultural Export Policy Objectives:
- Providing a guarantee that the processed agricultural products and all types of organic products will not be brought under the cover of any kind of export restriction (viz. Minimum Export Price, Export bans, Export duty, Export capping, Export permit, Export quota, etc.) even though the primary agricultural product or non-organic agricultural product is brought under some kind of export restrictions.
- Identifying commodities that are essential for food security in consultation with the relevant stakeholders and Ministries. Any export restriction on such identified commodities under extreme price situations will be based on the decision of a high-level committee.
- Liberalised import of agricultural items for value addition and re-export.
Reforms in APMC Act and streamlining of mandi fee:
The market fee, arthiya commission, and other charges that are outside the ambit of Goods and Services Tax (GST) remain under the purview of the state (and local bodies). Different States levy different fees on mandi procurement.
Infrastructure and Logistics:
The presence of robust infrastructure is a critical component of a strong agricultural value chain. This involves pre-harvest and post-harvest handling facilities, storage & distribution, processing facilities, roads, and world-class exit point infrastructure at ports facilitating swift trade. Large Food Parks, state-of-the-art testing laboratories, and Integrated Cold Chains are the fundamentals on which India can increase its agricultural exports. Given the perishable nature and strict import standards for most of the food products, efficient and time-sensitive handling is very vital to agricultural commodities.
Thus, identifying strategically significant clusters and building interior transportation networks in addition to specialized agricultural infrastructure at ports that offer round-the-clock customs clearance for perishables will significantly increase commerce.
A comprehensive approach to promote exports:
Agricultural exports are determined by certain factors such as food security, supply-side factors, processing facilities, infrastructure blockages, and existing regulations. Agricultural export policy will involve established institutions concerning agricultural production to make dedicated efforts towards the promotion of export. Krishi Vigyan Kendras will be involved in transferring export-oriented technology to farmers and spreading awareness among farmers about export prospects.
Global trade opportunities play a significant role in the cropping and farming decisions of Indian farmers. Pesticide and chemical residues are the main cause of concern for Indian agricultural exports. Indian food exports sometimes face rejection due to residues found that are higher than the Maximum Residue Limit (MRL) of importing countries. From Basmati to grapes to peanuts – the list is long. The lack of awareness among Indian farmers regarding the judicious and timely use of chemicals has been a major barrier.
Quality control can best happen at the farm level. Nonetheless, strategic and operational synergy across ministries will play an important role in boosting productivity and quality. The renewed government approach will address issues of; R&D for improved varieties, value addition and packaging, creation of a good standards regimen, and Technical Barriers to Trade (TBT) faced by Indian products.
Agricultural Export Compliance:
Operational recommendations:
The export of horticultural products requires considerable volumes of high-quality produce of the same variety with standard parameters matching import demands. Small landholding patterns and lack of awareness among farmers in India have often meant limited volumes of different types of crops with little or zero standardisation. Export-oriented cluster development across States will be key to ensuring surplus produce with standard physical and quality parameters that meet export demands.
The success of such a scheme will ride on the agriculture infrastructure available in different states. It is therefore critical that the Indian government encourages the State Governments by strengthening State infrastructure to:
- Identify suitable production clusters;
- Conduct farmer registrations;
- Digitization of land records; and
- Promote Farmer Producer Organizations (FPO).
Promoting value-added products:
Stakeholders have suggested a financial package for development and research on value-added products. E.g. cashews require a boost to be exported in a value-added form such as cashew apple jams and pastes, flavoured cashews, etc. Currently, less than 4% of cashew exports are in value-added form (CNSL, Roasted/salted nuts). Industry estimates suggest a significant quantity of exports is sold to countries that conduct limited value addition and re-export it.
Promotion of value-added organic exports:
As of 2017-18, the organic exports from India were in the range of Rs. 3450 crore. It can thus be said that the scope for improving organic exports, particularly, value-added organic from India is very high. Under the aegis of the National Programme on Organic Production (NPOP), new categories of products such as livestock, and aqua-culture having good potential for exports have been included. This is expected to promote value-added organic exports.
Only a limited range of products (mango pulp, puree, soya meal, cakes, by-products of oil crops, and a few ready-to-eat products) and single-processed products like sugar, tea, edible oils, coffee, and essential oils are exported from India. India can look at exports of different categories of value-added fruits and vegetables, IQF Fruits and vegetables, ready-to-eat products, Pickles, Soups, Dairy products, textile products, Processed livestock, Aquaculture products, etc.
Marketing & Promotion Of “Brand India”:
The stakeholders have recommended setting up separate funds dedicated to marketing organic, value-added, ethnic, GI, Region-specific, and branded products. It is also proposed that marketing campaigns be designed for individual fruits/products such as “Wonderful Pom”
and “Bananas of India.” This fund would mainly be utilized for sustained communication campaigns on both digital and traditional media platforms in the key targeted markets. The government should make consistent efforts for GI registration, preservation of the GI tag, and stakeholder negotiation. Marketing the country’s best products as “Make of India”, by stepping up advertising and investing in GI of our unique products would sharply increase our exports. Exporters are to be encouraged to do product registration in target markets.
The Flowchart To Start An Agri-Expo Business In India:
Starting an agriculture export business involves challenges such as navigating trade regulations, understanding global market trends, and managing logistics. Despite these obstacles, the potential benefits of reaching global customers are significant. The prerequisites to start an export business are as follows:
- Organization Establishment
- Bank Account Opening
- Obtaining PAN Obtaining
- IEC Number Obtaining
- RCMC
- Selection of product
- Selection of Markets
- Finding Buyers
- Sampling Pricing/Costing
- Negotiation with buyers
- Covering Risks through ECGC.
Mandatory documents for export/ import of goods from/into India:
- Bill of Lading/ Airway Bill/ Lorry Receipt/ Railway Receipt/Postal Receipt
- Commercial Invoice cum Packing List
- Shipping Bill/Bill of Export/ Postal Bill of Export
- For the export or import of specific goods or categories of goods, that are subject to any restrictions/ policy conditions or require NOC or product-specific compliances under any statute, the concerned authorities may notify extra documents for purposes of export or import.
- In specific cases of export or import, the regulatory authority concerned may electronically or in writing ask for further documents or information, as required to ensure legal compliance.
Government Initiatives To Boost Agricultural Exports:
APEDA
Agriculture and Processed Food Products Export Development Authority (APEDA), a premier body was established in 1986 for the development of the exports of the agriculture industry in India. To boost agricultural exports, the government has undertaken various initiatives through APEDA such as organizing B2B exhibitions in different countries and exploring new potential markets through product-specific and general marketing campaigns. The government has also created a product matrix for 50 agricultural products with high export potential and identified 220 labs to offer services for testing different products to enable exporters across India.
Agriculture Export Policy 2018 (AEP)
The Indian government launched a comprehensive Agriculture Export Policy (AEP) to promote exports of agricultural products. AEP was created with objectives to diversify export baskets and destinations, boost high-value-added agricultural exports, promote indigenous, organic, traditional, and non-traditional Agri products exports, provide an institutional mechanism for pursuing market access, and enable farmers to get the benefit of export opportunities in the global market.
Financial Assistance Scheme (FAS)
FAS is an export promotion scheme by the APEDA. The scheme was launched to assist businesses in export infrastructure development, quality development, and market development. The financial assistance under the scheme ranges from Rs. 5 lakh to Rs. 5 crore.
Ministry of Commerce & Industry scheme
The Department of Commerce under the Ministry of Commerce & Industry has also initiated several schemes to boost exports, including the Trade Infrastructure for Export Scheme (TIES), the Market Access Initiatives (MAI) Scheme, etc. Moreover, support to the exporters of agricultural products is also offered under various schemes including Export Promotion Schemes of APEDA, Tobacco Board, Tea Board, Marine Products Export Development Authority (MPEDA), Coffee Board, Rubber Board, and Spices Board.
