Context: With global supply chains being disrupted because of the COVID-19 crisis, the Indian government has given a clarion call for “Aatma Nirbhar Bharat”. India has been the net exporter of agricultural commodities since 1991, however, there is scope for increasing its net export. This article suggests the strategy to achieve this.
Background

• Indian PM has given the clarion call for ANB in the backdrop of COVID-19 (which has disrupted the global supply chains) and border standoff with China.
• Protectionism: The government has banned 59 Chinese apps, has stepped up effort to check imports and investments from China and asked Indians to “be vocal for local”.

“Aatma nirbharta” in the agriculture sector

• Presumption: A large country like India should produce most of its food at home.
• Increase in foreign exchange reserves: The “aatma nirbharta” in food is because of reforms in correction of the exchange rate which is coupled with the gradual integration of India with the world economy.
• This has helped India increase its foreign exchange reserves from $1.1 billion in June end, 1991 to more than $500 billion today.
• India as Net exporter of agri-produce: The graph presents exports and imports of agricultural commodities over the last 10 years (2010-11 to 2019-20).
• It clearly shows that India has been a net exporter of agri-produce ever since the economic reforms began in 1991.
• Golden time of agri-trade: It was 2013-14 when agri-exports peaked at $43.6 billion while imports were $18.9 billion, giving a net trade surplus of $24.7 billion.
• Sluggish agri-exports: Since 2014, agri-exports have been sluggish and sliding and in 2019-20, agri-exports were just $36 billion and the net agri-trade surplus at $11.2 billion.

How to chalk out a strategy for increasing agriculture exports?

• Comparative advantage: India needs to export more where we have a competitive edge and importing where we lack competitiveness.

Current agri-export basket of 2019-20

• It gives a sense of “revealed comparative advantage”. Marine products with $6.7 billion exports top the list, followed by rice at $6.4 billion (basmati at $4.6 billion and common rice at $2.0 billion), spices at $3.6 billion, buffalo meat at $3.2 billion, sugar at $2.0 billion, tea and coffee at $1.5 billion, fresh fruits and vegetables at $1.4 billion, and cotton at $1 billion.

High subsidy effects

• Rice and sugar cultivation are quite subsidised through free power and highly subsidised fertilisers which accounts for about 10-15% of the value of rice and sugar produced on a per hectare basis.
• Faster depletion of groundwater: It is leading to the virtual export of water as one kg of rice requires 3,500-5,000 litres of water for irrigation and one kg of sugar consumes about 2,000 litres of water.

Incentives for exports of high-value agri-produce like fruits and vegetables, spices

• On the agri-imports front, the biggest item is edible oils which values about $10 billion (more than 15 mt).
• Atma Nirbharta: India needs to create a competitive advantage through augmenting productivity and increasing the recovery ratio of oil from oilseeds and in case of palm oil, from fresh fruit bunches.
• Potential: The maximum lies in oil palm apart from the mustard, sunflower, groundnuts and cottonseed. This is the only plant that can give about four tonnes of oil on a per hectare basis.
• India has about 2 million hectares that are suitable for oil palm cultivation — this can yield 8 mt of palm oil.

Road Ahead

• The government must focus on augmenting export and decrease import dependence in agricultural products which will further its goal of aatmanirbharta and doubling the farmers’ income.