Agriculture Export Policy of India: Objectives and Challenges

Did you know India, a global leader in agricultural production, accounts for just 2.4% of the world's agricultural exports? On the surface, it may seem like the sheer size of India's population leaves little surplus for exports, but there's more to it.

India's agriculture export policy faces several challenges that go beyond domestic demand, ranging from trade policies to global competition. This blog will walk you through the key trends, challenges, and actionable strategies to help you understand India's agricultural trade and make the most of emerging opportunities.

India's Agricultural Export Performance: Key Trends and Data

India's agricultural trade has seen significant ups and downs in recent years. While the Agriculture Export Policy (AEP) 2018 aimed to achieve $60 billion in agricultural exports by 2022, the target remains unmet. In 2023-24, exports dropped to $48.8 billion from $53.2 billion in the previous fiscal year, marking an 8% decline. These figures highlight the pressing need to tackle the factors affecting the country's agricultural exports.

Declining Commodities

Some of the most notable declines were seen in key export commodities:

• Sugar: A ban on exports in October 2023 cut sugar export revenue to $2.82 billion in 2023-24, down from $5.77 billion in 2022-23.
• Non-Basmati Rice: In July 2023, concerns over domestic food inflation led to restrictions on white non-basmati rice exports. Only parboiled rice shipments are currently allowed and are subject to a 20% duty.
• Wheat: Export bans since May 2022 have nearly eliminated wheat exports, which dropped to $56.74 million in 2023-24 from $2.12 billion in 2021-22.
• Onions: Although the government lifted an export ban in May 2024, a minimum price and 40% duty have restricted onion exports to just 17.08 lakh tonnes (lt) in 2023-24, compared to 25.25 lt in 2022-23.

Commodities Showing Growth

While certain staples struggled, other commodities performed well:

• Basmati Rice: Achieved $5.84 billion in exports due to steady demand from premium markets in Europe and the Middle East.
• Spices: Surpassed $4 billion for the first time, underscoring India's reputation as a leading global supplier of spices.
• Marine Products: Consistently contributed to export revenue, supported by demand from North America and East Asia.
• Castor Oil and Maize: Added diversification to the export basket with consistent growth.

Agricultural Imports

India's agricultural imports also declined by 7.9% in 2023-24, reflecting shifts in global prices and domestic demand. Key trends include:

• Edible Oils: Falling global prices significantly reduced India's edible oil import bill.
• Pulses: Pulse imports surged due to strong domestic demand and a lack of self-sufficiency.

Global Positioning

India remains the ninth-largest agricultural exporter globally, but its 2.4% share suggests significant untapped potential. Addressing challenges like policy inconsistencies and limited diversification is essential to strengthening its global position.

Also Read: List Of Profitable & Best Products To Export From India

Understanding India's Agriculture Export Policy (AEP) 2018

India's Agriculture Export Policy (AEP), launched in December 2018, had a clear vision: to boost agricultural exports, increase farmer incomes, and position India as a prominent player in the global agricultural market. The policy addressed systemic challenges while unlocking the country's full export potential.

Key Objectives of the AEP

1. Doubling Agricultural Exports: The policy targeted increasing agricultural exports to $60 billion.
2. Promoting Value-Added Products: Emphasis was placed on exporting high-value, processed, and branded goods to increase profitability.
3. Better Farmer Realization: The policy sought to improve farmers' income by connecting them to global value chains and minimizing losses across the value chain.
4. Diversification of Export Basket: A focus on ethnic, organic, and non-traditional products was introduced to reduce reliance on staples like rice and sugar.
5. State-Level Involvement: Greater collaboration between the central and state governments was envisioned to promote region-specific exports.

Framework of the AEP

The AEP's framework is divided into two main components:

1. Strategic Recommendations:
   
   • Establishing a stable trade policy to reduce the unpredictability of export bans or restrictions.
   • Improving infrastructure and logistics, including cold storage and transportation, to minimize post-harvest losses.
   • Adopting a holistic approach by aligning agricultural policies with export promotion strategies.
   • Enhancing state-level participation through action plans, monitoring committees, and regional initiatives.

2. Operational Recommendations:
   
   • Developing agricultural export clusters to simplify production and improve efficiency.
   • Branding India's agricultural exports, such as creating a premium image for basmati rice and Indian spices.
   • Promoting value-added exports by encouraging food processing and product differentiation.
   • Attracting private investments in agricultural production and processing.
   • Strengthening quality compliance through adherence to international standards and certifications.
   • Increasing investment in research and development to improve yields, reduce costs, and meet global demand.

While India's agricultural export potential is significant, several challenges continue to hinder progress. Let's explore the major challenges impacting India's agricultural exports in detail.

Also Read: Meaning and Objectives of EXIM Policy in Export Trade

Challenges Impacting India's Agricultural Exports

India's agricultural export sector faces obstacles that hinder its global growth. Addressing these challenges is essential for the country to fully realize its export potential.

1. Policy Instability: Frequent changes in export policies, such as sudden bans on sugar, rice, and wheat, create uncertainty. This unpredictability weakens India's position as a reliable supplier and disrupts trade relationships.
2. Limited Product Diversification: The export basket relies heavily on a few staples, such as rice and sugar, which makes it vulnerable to price fluctuations and domestic supply issues. 
3. Infrastructure and Logistics Gaps: Inadequate cold storage, poor transportation networks, and high post-harvest losses increase costs and reduce competitiveness. 
4. Compliance with Global Standards: Indian agricultural exports often face challenges meeting international quality and sanitary standards. Issues like pests in shipments and non-compliance with safety regulations hinder market access.
5. Global Competition: Countries like Brazil (sugar), Vietnam (rice), and Thailand (processed foods) have better infrastructure and competitive pricing, posing a significant challenge to Indian exports.

Despite these challenges, India's agricultural sector has untapped potential that can be unlocked with strategic interventions.

Also Read: Understanding the Meaning and Impact of Logistical Issues

Opportunities and Strategies for Exporters in 2025 and Beyond

Despite the challenges, India's agricultural sector offers significant opportunities for growth. With strategic adjustments, exporters can tap into emerging markets, improve efficiencies, and build a competitive edge in global trade.

1. Expanding Export Basket

Focusing on high-value and niche products can diversify India's exports and reduce reliance on staples:

• Organic Products: Increasing global demand for chemical-free foods offers opportunities to establish organic clusters.
• Processed Foods: Value-added goods like ready-to-eat meals, packaged spices, and fruit concentrates can enhance revenue.
• Pulses and Oilseeds: These less water-intensive crops align with sustainability goals and have growing international demand.

2. Targeting Emerging Markets

Identifying high-growth markets can help exporters expand their footprint:

• Middle East and Africa: Growing populations and demand for Indian staples like rice and wheat.
• European Union: A lucrative market for organic and specialty products.
• East Asia: High demand for spices, marine products, and processed foods.

3. Taking Government Support

Exporters can benefit from various government schemes aimed at promoting agricultural exports:

• Trade Infrastructure for Export Scheme (TIES): Improves logistics and cold storage facilities.
• Market Access Initiatives (MAI): Provides financial support for exporters to explore new markets.
• APEDA Initiatives: Focuses on creating Farmer Connect Portals and promoting millets.

4. Adopting Technology

Advanced technologies can enhance productivity and compliance:

• Blockchain: Ensures traceability and quality assurance in supply chains.
• Precision Farming: Increases yields and reduces resource usage through data-driven practices.
• Digital Platforms: Tools like Pazago simplifies trade processes, from procurement to fulfilment, offering real-time tracking and document management.

5. Building Sustainability

Prioritizing sustainable practices will improve marketability:

• Shift toward crops that require less water, like oilseeds and pulses.
• Promote environmentally friendly farming techniques to align with global sustainability trends.

6. Strengthening Branding and Quality

Creating a premium image for Indian agricultural products can open doors to new markets:

• Positioning Indian spices, basmati rice, and organic goods as premium offerings.
• Investing in quality certifications and compliance with international standards to build trust with buyers.

To ensure your strategies succeed, integrating smart tools like Pazago will help simplify operations and enhance your competitiveness in global markets.

Also Read: Import and Export Trade: Understanding Its Impact and Strategies In India

How Pazago Can Simplify Agricultural Exports

As India looks to boost its agricultural exports, using technology can provide exporters with the tools to simplify their processes and enhance efficiency. Pazago is one such platform designed to optimize the entire export-import cycle, offering valuable features to exporters.

• Documentation: Simplifies the documentation process, ensuring accuracy and saving time.
• Real-Time Tracking: Track shipments live through multiple global logistics partners.
• Enhanced Communication: Facilitates seamless coordination between traders, suppliers, and logistics providers.
• Quality Inspections: Conduct pre-shipment quality checks to meet global standards.
• Integrated Finance and Insurance: Manage payments and insurance for international transactions easily.

By utilizing Pazago, Indian agricultural exporters can enhance their operational efficiency and improve the overall quality and reliability of their exports, helping them meet global demand more effectively.

Conclusion

India's agricultural exports hold untapped potential, but challenges such as agriculture export policy instability, infrastructure gaps, and global competition must be addressed to realize this. With the right strategies, including policy reform, export diversification, technological adoption, and market expansion, India can increase its share in the global agricultural trade and unlock new opportunities for growth.

Unlock the full potential of your agricultural exports. Book a demo now and explore how Pazago can simplify your operations.