issues in Indian agriculture

1. CURRENT ISSUES IN INDIAN AGRICULTURE
By Anvi Agarwal

2. INTRODUCTION
• Agriculture trade, often referred to as agri-trade is a cornerstone of
the global economy. During 2019-20, the value of India's agri-exports
of principal agri commodities group was Rs. 2,52,297 crore which
was 1.2% of Gross Domestic Product (GDP) at current prices. Despite
covid-19 pandemic, there has been 22.8% growth in agri exports at
Rs. 3, 09,939 crore with a share of 1.6% to GDP during 2020-21
• India’s 10-15% of the foreign trade is related with agriculture
products

5. WHY IMPORT ?
• To Meet the Shortage of Essential Consumer Goods :– Indian economy can meet
the shortage of essential consumer goods like foodgrains, edible oils, sugar etc.
through imports. For example, in 1994 due to less production of sugarcane in the
country, there was shortage of sugar. To meet this shortage of sugar, it was
imported in huge quantity from foreign countries.
• To meet the Need of Capital Goods :– India needs many capital goods like
machinery, equipments etc., for its industrial development. Out of these some
capital goods can not be produced at all in India. In this way, the need of capital
goods like machinery can be met through imports.
• To obtain Important Inputs/ shortage :– For industrial and agricultural
development of India, many important inputs like petrol, chemical fertilizers,
minerals etc. are needed. These cannot be produced in sufficient quantity in the
country. Thus, their shortage can be met through imports.
• To improve quality of domestic goods: with increased competition from foreign
goods market domestic sellers will improve their quality and variety of goods .

8. WHY EXPORT ?
• Export of Surplus Production :– In India the production of some products like tea,
jute etc. is more than its domestic needs. The advantageous and large scale
production of these products is possible due to the exports of these to the
foreign countries.
• To obtain Foreign Exchange :– India requires foreign exchange for its imports. This
foreign exchange can be obtained by exporting its products.
• Improved relations – International trade between nations also leads to a greater
scope of communication between the two nations. It enables the exchange of
knowledge and ideas as well.
• Increase in national income: Scale of production increases with the increased
foreign demand so GNP also increases proportionally
• Agricultural development : With increased export there is formulation of surplus
for farmers can be used for further advancements and capital formation

11. BARRIERS TO EXPORT
• Tariffs and Non-Tariff Barriers
Indian agricultural exports face high tariffs and non-tariff barriers in many
countries, making it difficult for Indian farmers to compete in the global market. For
example, the European Union imposes a high tariff on Indian basmati rice, which
has resulted in a decline in exports to the EU. Non-tariff barriers such as sanitary
and phytosanitary regulations, technical standards, and labeling requirements also
pose challenges for Indian exporters.
• Lack of Infrastructure and Logistics
India's inadequate infrastructure and logistics systems also hinder agricultural
exports. Poor road and rail networks, inadequate storage facilities, and inefficient
supply chain management result in high transportation costs and product losses.
These challenges make it difficult for Indian farmers to compete with other
countries that have better infrastructure and logistics systems.

12. • Quality and Safety Concerns
Indian agricultural exports have faced quality and safety concerns in some
markets. For example, Indian shrimp exports to the US were banned in
2017 due to concerns about antibiotic residue. Similarly, Indian grapes
have faced restrictions in the EU due to concerns about pesticide residues.
These concerns have resulted in a loss of market access for Indian farmers
and exporters.
• Foreign Market Instabilility
Many war kind situation also effects the export of a country during Russia-
Ukraine war india exporter of mineral fluids to Ukraine which was
sanctioned after war affecting the country’s source of revenue

14. INFRASTRUCTURE AND LOGISTICS
• The Indian agricultural sector faces significant challenges in terms of infrastructure and logistics.
Poor road networks, inadequate storage facilities, and inefficient transportation systems have
led to high post-harvest losses and reduced the competitiveness of Indian agricultural products
in global markets. According to the economic survey of 2023, the logistics cost in India is in the
range of 14-18 percent of GDP against the global benchmark of 8 percent.
• Road Networks
• India's road network is one of the largest in the world, but it is also one of the most congested
and poorly maintained. This has resulted in high transportation costs and increased transit times
for agricultural products.
• Storage Facilities
• Inadequate storage facilities have led to high post-harvest losses, particularly for perishable
crops such as fruits and vegetables. This has also contributed to increased food waste and
reduced the availability of high-quality agricultural products in domestic and international
markets.
• Transportation Systems
• Inefficient transportation systems have resulted in high transportation costs and increased
transit times for agricultural products. This has made Indian agricultural products less
competitive in global markets and reduced the profitability of Indian farmers.
• India stands at 52th position in infrastructure and 42th in logistics across the world.

15. FOOD PROCESSING AND VALUE ADDITION
Food processing and value addition refer to the transformation of raw agricultural products into processed food
products that have a higher value and longer shelf life. This process can involve various techniques such as canning,
freezing, drying, and packaging.
• In India, the food processing industry is one of the largest industries, contributing significantly to the country's GDP.
However, the industry's potential has not been fully realized, and there is a need for more investment and innovation
in this sector.
• Current Status
• India's food processing industry is still largely unorganized, with small and medium-sized enterprises dominating the
sector. The industry faces several challenges, such as inadequate infrastructure, lack of skilled labor, and insufficient
access to finance and technology.
• Despite these challenges, the industry has seen significant growth in recent years, with the government launching
several initiatives to promote food processing and value addition. The introduction of the Goods and Services Tax
(GST) has also made it easier for companies to operate in the sector.
• Potential for Growth
• India has a vast potential for growth in the food processing and value addition sector, given its abundant supply of
raw materials and the increasing demand for processed food products both domestically and internationally. The
government has identified this potential and has launched several initiatives such as the Pradhan Mantri Kisan
Sampada Yojana and the Mega Food Parks Scheme to promote investment in the sector.
• India processes only 6-7% of agricultural products whereas developed Europe countries process around 60% of their
produce

16. Instable foreign market
• For India and the region, trade is disrupted in the grains, oilseeds,
fertilizer, and energy sectors. Post sources inform us that some 380,000
MT of sunflower oil shipments destined for India from the Black Sea
region are waylaid at ports from Ukraine. New purchases are being
suspended for the foreseeable future due to the war. India is the largest
market for Ukraine’s sunflower oil, which in 2021 exported $1.9 billion to
India (out of $5.69 billion total). Disruption of sunflower oil
consignments from Ukraine will potentially offer possibilities for
increased U.S.-origin soybean oil shipments to India which will initially
increase the cost of import and good.

17. BARRIERS TO IMPORT
• Tariffs and Non-Tariff Barriers
India imposes high tariffs on many agricultural imports, making it
difficult for foreign producers to compete with domestic suppliers.
Additionally, non-tariff barriers such as import quotas, licensing
requirements, and sanitary and phytosanitary regulations can further
restrict imports.
• Infrastructure and Logistics
Inadequate infrastructure and logistics can also act as a barrier to
agricultural imports. Poor roads, ports, and storage facilities can
increase transportation costs and lead to delays and spoilage of
perishable goods.

18. • Phytosanitary and Other Regulations
India has strict phytosanitary regulations that require imported
agricultural products to meet certain standards for plant health. Other
regulations related to labeling, packaging, and certification can also pose
challenges for foreign producers.
• World market Instability
Many war kind situations or tension between two countries can affect
the world market like Russia Ukraine war India use to import petroleum
from Russia but after war it was hindered and their prices increased in
the world market .

19. IMPACT OF TRADE AGREEMENTS ON
AGRICULTURE
Trade agreements have a significant impact on the agricultural sector
in India. These agreements determine the terms and conditions of
trade, including tariffs, quotas, and other non-tariff barriers. India has
signed several trade agreements with various countries and regional
blocs, including the ASEAN, EU, and SAARC.
• Impact of Free Trade Agreements (FTAs)
FTAs have led to increased competition for Indian farmers, as they have
to compete with foreign producers who can offer their products at
lower prices. This has led to a decline in the prices of Indian agricultural
products, which has negatively impacted the income of farmers.

20. • Impact of Regional Trade Agreements (RTAs)
RTAs have led to increased market access for Indian agricultural products in the
partner countries. However, they have also led to increased imports of
agricultural products from these countries, which has negatively impacted the
domestic producers of these products.
• Impact of WTO Agreements
The WTO agreements have led to the liberalization of trade in agricultural
products, which has increased competition for Indian farmers. The removal of
tariffs and other trade barriers has led to an increase in imports of agricultural
products, which has negatively impacted the domestic producers of these
products.
• Impact of Bilateral Trade Agreements
Bilateral trade agreements have led to increased market access for Indian
agricultural products in the partner countries. However, they have also led to
increased imports of agricultural products from these countries, which has
negatively impacted the domestic producers of these products.

21. CASE STUDY
• Rice Export Issue
• India's rice exports have been facing several challenges in recent years. One of
the major issues is the lack of infrastructure and logistics facilities to transport
rice to other countries. This often leads to delays and damages to the rice during
transportation, reducing its quality and value. Additionally, the high cost of
transportation and packaging also makes Indian rice less competitive in the global
market.
• Another challenge faced by Indian rice exports is the strict quality standards
imposed by importing countries. Many countries have set stringent regulations
on the maximum residue levels (MRLs) of pesticides and other chemicals in rice,
which India often fails to meet. This results in rejections and bans of Indian rice in
many countries, affecting the country's export revenue and reputation.

22. Mango export Issue
• India is the largest producer of mangoes in the world, with an annual production
of over 20 million metric tons. However, its share in global mango exports is only
around 1%. In recent years, India has faced several challenges in exporting
mangoes, including quality issues, high transportation costs, and strict
phytosanitary regulations in importing countries.
• Quality issues: Indian mangoes have been found to have a high incidence of pests
and diseases, which can lead to rejection by importing countries.
• High transportation costs: The cost of transporting mangoes from farms to ports
is high due to poor infrastructure and logistics, resulting in higher prices for
consumers in importing countries.
• Phytosanitary regulations: Many importing countries have strict regulations on
the import of fresh fruits and vegetables, including mangoes, to prevent the
spread of pests and diseases. Indian exporters need to comply with these
regulations, which can be a time-consuming and expensive process.

23. Spices export Issue
India is known for its rich variety of spices, which are exported to many
countries around the world. The country is the largest producer, consumer
and exporter of spices globally. In 2019-20, India exported 1,10,720 tonnes
of spices worth Rs. 4,189.68 crore.
The major spices exported from India include pepper, cardamom, ginger,
turmeric, and cumin.
• Competition from other countries like Vietnam, Indonesia, and China.
• Quality issues due to lack of proper grading and sorting facilities.
• Lack of awareness about international quality standards and regulations.
• Inadequate infrastructure and logistics facilities for storage and
transportation.

24. Recommendations for Improvement
• Increase Government Support
The Indian government should increase funding and support for the agriculture sector, including subsidies for
farmers, investment in infrastructure and technology, and research and development programs.
• Improve Export Infrastructure
The government should invest in improving export infrastructure, including transportation and storage facilities, to
ensure that Indian agricultural products can reach international markets in a timely and cost-effective manner.
• Address Trade Barriers
The Indian government should work with other countries to address trade barriers that limit the export of Indian
agricultural products. This could include negotiating trade agreements and addressing non-tariff barriers such as
quality standards and certification requirements.
• Promote Sustainable Agriculture
The government should promote sustainable agriculture practices, including organic farming and crop
diversification, to improve the quality of agricultural products and reduce the environmental impact of farming.
• Encourage Value Addition
The government should encourage value addition in the agriculture sector by promoting food processing and other
forms of value addition, such as packaging and branding, to increase the competitiveness of Indian agricultural
products in international markets.

25. CONCLUSION
• India's agriculture sector has immense potential for growth and development, but faces several
challenges in terms of import and export. While the country is the world's second-largest
producer of agricultural products, its export potential is limited due to various barriers such as
trade restrictions, lack of infrastructure, and quality standards. On the other hand, India also faces
challenges in importing certain agricultural products due to phytosanitary regulations and other
trade barriers imposed by other countries.
• Despite these challenges, there are opportunities for the Indian agriculture sector to grow and
expand. The government has implemented various policies and programs to support farmers and
increase productivity, and there is growing interest in organic farming and sustainable agriculture.
Additionally, market opportunities exist for Indian agricultural products, particularly in the areas
of food processing and value addition.
• However, to fully realize the potential of the agriculture sector, there is a need for continued
investment in research and development, as well as improvements in infrastructure and logistics.
The government should also work towards addressing the various barriers to import and export,
and negotiate favorable trade agreements that support the growth of the sector.
• In conclusion, the Indian agriculture sector has a long way to go in terms of improving its import
and export capabilities, but with the right policies and investments, it has the potential to become
a major player in the global agricultural market.

26. REFERENCES
• Ministry of Agriculture and Farmers' Welfare. (2021). Agriculture in
India. Retrieved from https://agricoop.gov.in/.
• Ministry of Commerce and Industry. (2021). India's Export Import
Data. Retrieved from https://commerce-app.gov.in/eidb/.
• Federation of Indian Export Organizations. (2021). Export Barriers.
Retrieved from
https://www.fieo.org/view_section.php?lang=0&id=0,17.
• The Economic Times. (2021). Agriculture Imports. Retrieved from
https://economictimes.indiatimes.com/topic/agriculture-imports.