Why in the News?
India achieved record exports of $820.93 billion in FY25, rising 6.5%, but faced growing trade deficits as agriculture lagged, growing only 2.3% yearly despite employing half the workforce.
What was India’s trade performance in FY25?
How will Trade deals bring opportunities for Indian agriculture?
|
Why did agri-export growth slow down over the last decade?
- Frequent Export Bans and Restrictions: Domestic policies often imposed export bans or curbs on essential commodities like rice, wheat, sugar, and onions to control inflation, disrupting export momentum. Eg: Restrictions on broken rice exports and duties on Basmati rice led to a 27% fall in rice export volume in FY24.
- Global Price Fluctuations: Agri-exports are heavily influenced by global price trends — when world prices fall, Indian exports lose competitiveness and earnings. Eg: Rice export values declined despite volume recovering after lifting restrictions, due to price volatility.
- Declining Productivity and Competitiveness: Lack of investment in research, technology, and resource-efficient farming practices lowered growth compared to earlier periods of rapid expansion. Eg: Average annual agri-export growth dropped from 20% (FY05–14) to just 2.3% (FY15–25).
How did rice export restrictions impact trade and prices?
- Export Volume Decline: Restrictions like export bans, duties, and minimum export prices caused a sharp drop in rice export volumes. Eg: Rice exports fell by 27% from 22.3 million metric tonnes (MMT) in FY23 to 16.3 MMT in FY24.
- Global Price Spike: Reduced supply due to restrictions pushed up global rice prices, affecting international markets. Eg: Imposition of export duties and minimum export price (MEP) on Basmati rice led to a spike in global rice prices.
- Value Impact Less Severe than Volume: Despite the fall in export volume, the value of exports dropped only slightly because of higher prices. Eg: Rice export value fell by only 6% even as volumes dropped 27%, showing price effects cushioned revenue loss.
What are the environmental risks of rice exports?
- Water Resource Depletion: Rice cultivation requires large amounts of water, which can strain local water supplies. Eg: In regions like Punjab, intensive rice farming has led to groundwater depletion and lowered water tables.
- Methane Emissions: Flooded rice paddies emit methane, a potent greenhouse gas contributing to climate change. Eg: In Southeast Asia, vast rice fields are significant sources of methane emissions impacting global warming.
- Soil Degradation and Pollution: Continuous rice farming with chemical fertilizers and pesticides can degrade soil quality and contaminate water bodies. Eg: Excessive use of agrochemicals in rice fields in Vietnam has caused soil salinization and river pollution.
What is the status of edible oil imports?
The recent reduction in edible oil imports is very small. So, we need to take more steps to further cut down these imports. How can India cut edible oil import dependence?
|
Way forward:
- Strengthen Oilseed Ecosystem: Enhance productivity through quality seeds, MSP support, and targeted R&D under national missions like the Oil Palm and Oilseeds Mission.
- Build Agro-Processing Capacity: Invest in decentralized, modern oilseed processing units to reduce wastage, improve value addition, and boost farmer income.
Mains PYQ:
[UPSC 2023] What are the direct and indirect subsidies provided to farm sector in India? Discuss the issues raised by the World Trade Organization(WTO) in relation to agricultural subsidies.
Linkage: Agricultural subsidies are a key area of contention in international trade negotiations, particularly within the WTO. Trade deals often involve discussions around reducing or reforming subsidies, which presents both a challenge (potential reduction of support for farmers) and an opportunity (creating a more level playing field or accessing new markets if other countries also reduce subsidies) for Indian agriculture.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
