Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Exporting agri-inputs

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Urea import and export by India

Mains level : Paper 3- Self reliance in agri-inputs

Some changes could make India exporter of agri-inputs. The article examines bottlenecks that holds India back and suggests the policy changes in key agri-inputs-seeds, fertilisers and machinery.

Context

In the following 3 key agri-inputs India has the untapped potential. What is needed is policy changes.

1) Seeds

  • India can emerge as an important seed producer and a large exporter of seeds to many developing countries in South and South-east Asia as well as Africa.
  • The country can produce very competitively-priced seeds for hybrid rice, hybrid corn, hybrid Bt HT cotton, and several vegetables including tomato, potato and okra.
  • For this to happen, we have to set our regulatory system right.
  • Let’s use the case of cotton.
  • India’s decision in March 2002 to allow Bt cotton made India the largest producer of cotton in the world and the second-largest exporter of cotton by 2013-14.
  • But due to policy changes since 2014-15 and issues such as trait fees companies stopped the introduction of new generation of seeds
  • Now there is an “illegal” spread of Bt HT cotton in Maharashtra.
  • This is partly because our regulatory system is complex.
  • And more so because the present government has ideological blinkers against modern science.
  • This is the biggest bottleneck holding India back from becoming the seed capital of the developing world.

2) Fertilisers

  • India has been a net importer of fertiliser nutrients (NPK) for almost two decades.
  • In 2019-20, India imported fertilisers worth $6.7 billion, topping the list is urea $2.9 billion.
  • We are totally dependent on imports and likely to remain so in case of MOP and in the case of DAP.
  •  In the case of urea, India wants to be atmanirbhar by opening up five new urea plants in the public sector with a total capacity of 6.35 MMT.
  • Almost 70 per cent of the gas being used in urea plants is imported at a price much higher than the price of domestic gas.
  • The cost is going to be more than $400/tonne when the international price generally hovers between $250-300/tonne.
  • The government should allow existing private sector urea plants to expand and produce at a much lower cost.
  • The best way to achieve self-reliance in fertilisers is to change the system of fertiliser subsidies.

Suggestion on changes in fertiliser subsidies

  • 1) Deposit equivalent cash directly into farmers’ accounts, calculated on a per hectare basis.
  • 2) Free up fertiliser prices.
  • 3) Allow the private sector plants to compete and expand urea production in a cost-competitive manner.

3) Farm machinery

  • Before the Green Revolution, India produced only 880 tractor units.
  • It increased to about 9,00,000 units in 2018-19.
  • So, India is the largest tractor manufacturer in the world.
  • India also exported almost 92,000 tractors, largely to African and ASEAN countries.
  • Though Green Revolution gave tractor production a push, the real break-through came after de-licensing in 1991.
  • The new class of entrepreneurs and start-ups are coming up with special apps for “Uberisation of tractor services”.
  • In an economy of small landholders, owning a tractor is a high-cost proposition as it is not fully utilised.
  • This needs to be made more efficient by creating a market for tractor services.

Consider the question “Despite having the potential to transform itself into the exporter of agri-inputs, India ends up being the importer of some of them. In light of this examine India’s potential to become the exporter of agri-input products and suggest the measures to achieve this.”

Conclusion

The private sector is our strength. The only thing the government has to do is to unshackle them from the chains of controls and webs of unnecessary regulations. They will make an Atmanirbhar Bharat.

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KS Abhinav
24 days ago

How advisable it is to write a sentence like this in exam: “the present government has ideological blinkers against modern science”?

Mayank Shakya
23 days ago
Reply to  KS Abhinav

They actually copied sentence directly from ”Indian Express” article, I was also surprised. We should ignore that point. (https://indianexpress.com/article/opinion/columns/atmanirbhar-bharat-self-reliance-indian-agriculture-6513827)

Last edited 23 days ago by Mayank Shakya