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Indian Economy

Agriculture Export Policy, 2018

  • 17 Dec 2018
  • 6 min read

Why in News?

  • The Union Cabinet recently approved the agriculture export policy.
  • The Cabinet also approved the proposal for establishment of Monitoring Framework to oversee the implementation of Agriculture Export Policy.
  • India’s agricultural export is a paltry 15% of its total produce; which stands 25 % for US and 49 % for China.

Agriculture Export Policy

  • Policy looks to provide impetus to agricultural exports, it is aimed at doubling the agricultural exports and integrating Indian farmers and agricultural products with the global value chains
  • It envisions making India global power in agriculture and raising farmers’ income through various policy instruments.

Objective

  • To double agricultural exports from 30 billion dollars to 60 Billion by 2022.
  • To diversify export basket, destinations and boost high value and value added agricultural exports including focus on perishables.
  • It looks to promote novel, indigenous, organic, ethnic, traditional and non-traditional Agri products exports.
  • To provide an institutional mechanism for pursuing market access, tackling barriers and deal with sanitary and phytosanitary issues.

Sanitary and Phytosanitary Measures

  • With the establishment of the World Trade Organization on 1 January 1995, an agreement on the Application of Sanitary and Phytosanitary Measures (the "SPS Agreement") entered into force.
  • It concerns the application of food safety and animal and plant health regulations.
  • Countries can set their own standards but they should be based on science and should be safe for the consumers.
  • To strive to double India’s share in world agri-exports by integrating with global value chain at the earliest.

Elements of the Policy

Agriculture Export Policy has been organised in two categories – Strategic and Operational

  • Strategic: It Includes,
    • Policy measures
    • Infrastructure and logistics support
    • Holistic approach to boost exports
    • Greater involvement of State Governments in agri exports
  • Operational: It includes,
    • Focus on Clusters
    • Promoting value added exports
    • Marketing and promotion of “Brand India”
    • Attract private investments into production and processing
    • Establishment of strong quality regimen
    • Research & Development
    • Miscellaneous

India and WTO

  • All the measures proposed in the Agriculture Export Policy are compatible with World Trade Organisation norms.
  • With India moving out of the income bracket of per capital gross national income of less than $1000, it is not allowed by the WTO to give any financial assistance or export SOPs.
  • Therefore measures such as marketing and promotion and infrastructure building such as development of clusters are only considered in the policy.

Benefits of Export Policy

  • India’s agricultural trade policies are inconsistent with respect to guaranteed availability of produce for exports which makes India an unreliable trading partner; the policy would help India become a reliable partner.
  • It will help India in turning the unfavorable balance of payment as it will become an important source of foreign exchange.
  • It will act as a catalyst for crop diversification which helps in averting crop failure, better price realization etc.
  • It will also result in social upliftment by increasing farm income.

Challenges

  • Prices in international market for food grain, sugar, cooking oil as well as dairy and meat products are very low leaving Indian products at disadvantage from their global peer.
  • Current minimum support price (MSP) of wheat and rice make India’s food grain quite dear in the domestic market.
  • Indian government is always "pro-consumer", backing cheap imports to keep inflation in food prices low, hurting local producer.
  • Farmers are not aware of the external factors like global price, quality standard etc which makes them a poor choice as reliable suppliers.
  • India’s farm produce suffers from poor customs and port infrastructure, and high logistics cost that cut into the exporters’ margins.

Way Forward

  • Effective cold chains can increase the exports of processed agricultural products, but government needs to put in money to push infrastructure.
  • Limited state interference, reform of the Agricultural Produce Market Committee (APMC) Act, liberalization of land leasing norms etc is required to make India a reliable supplier with continued stability.
  • Government should ensure easy credit flow to the export sector, especially small exporters to ensure adequate availability of funds to them.
  • Trade promotion organizations can be setup at strategic overseas location which can boost India’s paltry export to those nations.
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