INDIA’S AGRICULTURAL EXPORTS DECLINE
- November 7, 2023
- Posted by: OptimizeIAS Team
- Category: DPN Topics
INDIA’S AGRICULTURAL EXPORTS DECLINE
Section: External sector
Impact of Global Prices:
- Farm exports decreased by 11.6% in April-September 2023.
- Farm trade surplus declined marginally from $7.4 billion to $7.2 billion in 2023.
Impact of Export Curbs:
- Government restrictions, like bans and duties, contributed to falling farm exports.
- Wheat, rice, and sugar faced bans or restrictions leading to plummeting exports.
Concerns for Farmers:
- Declining international prices impacted cost competitiveness and increased vulnerability to imports.
- Cotton and edible oils, especially soyabean, faced significant challenges due to global price fluctuations.
Effect on India’s Agricultural Trade:
- India’s farm exports hit an all-time high in 2021-22 and 2022-23 but declined in 2023-24.
- The country’s agricultural trade is closely correlated with global prices, which have recently decreased.
Policy Measures and Impact:
- Government restrictions on exports were introduced to manage domestic availability and inflation concerns.
- Focus on controlling food inflation influenced the government’s stance on import and export regulations.
- Farmers faced a double whammy as global price fluctuations affected their export competitiveness and increased their vulnerability to imports.
- Import duties on essential commodities like edible oils and pulses continued, further impacting the farming community.
- Farmer Connect Portal: APEDA established a Farmer Connect Portal on its website for fostering interaction between Farmer Producer Organisations (FPOs) and Farmer Producer Companies (FPCs) with exporters.
- Establishment: The Agricultural and Processed Food Products Export Development Authority (APEDA) was founded under the Agricultural and Processed Food Products Export Development Authority Act 1985.
- Mandate: It facilitates the export of agricultural and processed food products from India, operating under the Ministry of Commerce and Industries.
- Scheduled Products: APEDA is responsible for the export promotion and development of various scheduled products, including fruits, vegetables, meat, poultry, dairy, confectionery, and more.
- Chairman: Appointed by the Central Government.
- Director: Appointed by APEDA.
- Secretary: Appointed by the Central Government.
- Other Officers and Staff: Appointed by the Authority.
About Farmer Producer Organisation (FPO):
- An FPO is a registered entity comprising a group of farm producers, where the producers are shareholders.
- It engages in various business activities related to agricultural produce, aiming to benefit the member producers.
Trade Infrastructure for Export Scheme (TIES):
- Objective: TIES aims to develop and upgrade export-related infrastructure and provide assistance for setting up and upgrading infrastructure projects with an export link.
- Focus Areas: The scheme emphasizes addressing the issues related to the export value chain, including the creation of quality infrastructure, capacity building, and modernization of infrastructure.
- Implementation: TIES is implemented by the Directorate General of Foreign Trade (DGFT) under the Ministry of Commerce and Industry.
Market Access Initiatives (MAI) Scheme:
- Objective: MAI Scheme is designed to assist exporters and export organizations in accessing and expanding their markets.
- Focus Areas: It primarily focuses on market studies, market entry expenses, and other export promotion activities to facilitate market access for Indian products.
- Implementation: The scheme is implemented by the Department of Commerce, Government of India, to promote India’s exports.
Export Promotion Schemes of APEDA:
- Objective: APEDA’s export promotion schemes aim to promote and develop export-oriented activities for various agricultural and processed food products from India.
- Incentives: These schemes provide incentives, subsidies, and assistance for various activities related to the export of scheduled products, such as fruits, vegetables, meat, poultry, dairy, and more.
- Implementation: The export promotion schemes of APEDA are administered by the Agricultural and Processed Food Products Export Development Authority (APEDA) under the Ministry of Commerce and Industries.
- Objective: The Merchandise Exports from India Scheme (MEIS) is a part of the Foreign Trade Policy (FTP) of India 2015-20. It aims to offset infrastructural inefficiencies and associated costs involved in the export of goods/products manufactured in India, particularly those with high export intensity and employment potential, thereby enhancing India’s export competitiveness.
- Implementation: The scheme is notified by the Directorate General of Foreign Trade (DGFT) and implemented by the Ministry of Commerce and Industry.
- Incentives: MEIS provides rewards in the form of duty credit scrips to exporters, allowing them to import inputs or goods without paying duty. These scrips can be used to pay various duties, including the basic customs duty.
- Replaced Schemes: MEIS replaced several other incentive schemes from the previous Foreign Trade Policy 2009-14, including the Focus Product Scheme (FPS), Focus Market Scheme (FMS), Market Linked Focus Product Scheme (MLFPS), Infrastructure Incentive Scheme, and Vishesh Krishi Gramin Upaj Yojana (VKGUY).
Foreign Trade Policy (FTP):
The Ministry of Commerce and Industry launched the Foreign Trade Policy 2023, which will come into effect from April 1, 2023.
The Foreign Trade Policy (FTP) 2023 is a comprehensive framework aimed at facilitating exports and trade, fostering partnerships with exporters, and streamlining processes for businesses.
It is built on the principles of trust and partnership, promoting a responsive and agile environment for trade. Some key details of the FTP 2023 include:
- Process Re-Engineering and Automation:
- Shift from an incentive-based regime to a facilitating regime, emphasizing technology interface and collaboration.
- Reduction in fee structures and IT-based schemes for enhanced accessibility to export benefits, particularly for MSMEs.
- Implementation of duty exemption schemes for export production through Regional Offices in a rule-based IT system environment, reducing manual intervention.
- Towns of Export Excellence (TEE):
- Addition of four new towns, namely Faridabad, Mirzapur, Moradabad, and Varanasi, as TEEs, in addition to the existing 39 towns.
- Priority access to export promotion funds under the MAI scheme and Common Service Provider (CSP) benefits under the EPCG Scheme for TEEs.
- Recognition of Exporters:
- Exporter firms recognized with ‘status’ based on export performance will participate in capacity-building initiatives.
- Encouragement for 2-star and above status holders to provide trade-related training based on a model curriculum.
- Promoting Export from the Districts:
- Establishment of partnerships with State governments and the Districts as Export Hubs (DEH) initiative to boost exports at the grassroots level.
- Introduction of State Export Promotion Committee and District Export Promotion Committee for addressing concerns at the district level.
- Streamlining SCOMET Policy:
- Strengthening the “export control” regime with enhanced outreach and understanding of SCOMET among stakeholders.
- Implementation of a robust export control system in India to facilitate controlled items/technologies under SCOMET.
- Facilitating E-Commerce Exports:
- Development of e-commerce hubs and related elements such as payment reconciliation, book-keeping, and returns policy.
- Increase in the consignment-wise cap on E-Commerce exports through courier from ₹5 Lakh to ₹10 Lakh in the FTP 2023.
- Facilitation under EPCG and Advance Authorization Scheme:
- Rationalization of the EPCG Scheme with the addition of schemes like PM MITRA and exemptions for the dairy sector.
- Inclusion of various green technology products under the reduced Export Obligation requirement under the EPCG Scheme.
- Extension of the Special Advance Authorization Scheme to the apparel and clothing sector for prompt execution of export orders.
- Amnesty Scheme:
- Launch of an online portal and a six-month window for exporters to avail the scheme.
- Coverage of all pending cases of default in export obligation of authorizations, regularized on the payment of all customs duties exempted proportionally to unfulfilled export obligations.
The previous foreign trade policy for 2015-2020 had targeted exports of USD 900 billion by 2020, which was extended till March 2023. However, it is expected that India will end 2022-23 with total exports of USD 760-770 billion, showing improvement from USD 676 billion in 2021-22.