India’s Agri Exports vulnerable to fluctuations in global prices

India’s agricultural exports are highly vulnerable to fluctuations in global prices and demand  since the country is dependent on five commodities including rice and sugar according to the findings of a think tank

The Global Trade Research Initiative (GTRI) said these five products — basmati rice, non-basmati rice, sugar, spices, and oil meals — account for 51.5 per cent of India’s total agriculture exports

India also grapples with various domestic challenges including infrastructural deficits, quality control issues, and non-tariff barriers, all of which impede the growth and competitiveness of its agricultural sector, it said.

This makes agri exports vulnerable to fluctuations in global prices and demand,” it said, adding these commodities also face frequent export bans in India. At present export of non-basmati rice is currently banned from India and India is also fighting at the WTO (World Trade Organisation) to protect subsidies to rice and wheat under a public stock holding program. Besides, certain WTO member countries have taken India to disputes on sugar for providing subsidies to farmers. “All this makes India’s top exports vulnerable and uncertain,” it added.

To deal with the issue, the think tank has suggested the government to focus on areas like modern infrastructure for the sector. The report said China with higher rice productivity does not encourage export of rice as every kg of rice products can consume up to 80 litres of water.

India’s agricultural trade landscape presents a challenging scenario during the current financial year.With agriculture exports and imports projected to reach 43.3 billion US dollars and 33 billion US dollars, respectively, the sector is experiencing a significant downturn compared to the previous year, it added.

Exports will decline by 7.2 per cent and imports by 10.1 per cent in 2023 over 2022. India’s agriculture exports will be 10.1 per cent of India’s merchandise exports.”This decline is exacerbated by the concentration of exports in a few products like rice and sugar, making the market susceptible to global price fluctuations and policy constraints, such as export bans and WTO disputes