Finance Commission’s report on agricultural exports

Context: Recently, the High Level Group (HLEG) on Agricultural Exports set up by the Fifteenth Finance Commission has submitted its report to the Commission.

• The HLEG was set up to recommend measurable performance incentives for states to encourage agricultural exports and to promote crops to enable high import substitution.

Key Points
Purpose to Constitute HLEG

• To assess export & import substitution opportunities for Indian agricultural products (commodities, semi-processed, and processed) in the changing international trade scenario and suggest ways to step up exports sustainably and reduce import dependence.
• To recommend strategies and measures to increase farm productivity, enable higher value addition, ensure waste reduction, strengthen logistics infrastructure etc. related to Indian agriculture, to improve the sector's global competitiveness.
• To identify the impediments for private sector investments along the agricultural value chain and suggest policy measures and reforms that would help attract the required investments.
• To suggest appropriate performance-based incentives to the state governments for the period 2021-22 to 2025-26, to accelerate reforms in the agriculture sector as well as implement other policy measures in this regard.

The major recommendations of the HLG are:

• Focus on 22 crop value chains – demand-driven approach
• Solve Value Chain Clusters (VCC) holistically with a focus on value addition
• Create State led export plan with participation from stakeholders
• The private sector should play an anchor role
• Centre should be an enabler
• A robust institutional mechanism to fund and support the implementation

State-led Export Plan

• This would be a business plan for a crop value chain cluster, that will lay out the opportunity, initiatives and investment required to meet the desired value chain export aspiration.
• These plans will be action-oriented, time-bound and outcome-focused.
• The Group recommended that for the success of these plans, they should be prepared by collaboration with private players and commodity boards. The Centre should play the role of an enabler.

India’s Estimated Agricultural Export Potential

• India’s agricultural export has the potential to grow from USD 40 billion to USD 70 billion in a few years.
• The estimated investment in agricultural export could be to the tune of USD 8-10 billion across inputs, infrastructure, processing and demand enablers.
• Additional exports are likely to create an estimated 7-10 million jobs.
• It will also lead to higher farm productivity and farmer income.