Agriculture in India is crucial to the livelihood of its people, employing over 45% of the population and contributing 18% to the GDP. Moreover, food security and self-sufficiency are critical for the world’s most populous country, India, with 1.42 billion people. India’s agricultural production is largely consumed domestically to feed its massive and growing population, unlike developed economies where major production is sold in international markets. Indian agriculture is characterised by fragmented landholdings, high vulnerability to climatic fluctuations, low productivity, and market inefficiencies. Despite these challenges, India has emerged as the world’s largest producer of various agro-commodities such as milk, pulses, jute, rice, sugarcane, wheat, cotton, etc.
India has come a long way from being a net importer of agricultural commodities like foodgrains to the world’s largest exporter of rice, accounting for about 40% of the world market share. India’s agro-exports grew impressively from $7.5 billion in 2000-01 to $53.1 billion in 2022-23 at a compound annual growth rate (CAGR) of 8%, despite restrictions imposed from time to time in terms of quantity or minimum export prices on commodities such as rice, sugar, and wheat.
Over the years, India has been heavily dependent on imports of edible oils and pulses, which in value terms exerts considerable drag on India’s trade balance in agri-trade. In 2024, India’s agricultural exports increased by 6.5%, whereas imports surged by 18.7%, leading to a rise in India’s agri-trade deficit. Major agri-exports such as marine products, non-basmati rice, sugar, basmati rice, and spices contribute over 50% of India’s total agro-exports.
Key Challenges to Agro-Exports:
FAO indices on agri-commodity prices and World Bank commodity price indices indicate a declining trend in agri-commodity prices in real terms. The World Bank forecasts about a 7% decline in world food prices in 2025, followed by a further 1% decline in 2026. This makes it imperative to make Indian agriculture competitive at every stage of the value chain to ensure agri-produce is globally competitive in international markets.
The perishable nature of agri-food products faces significant challenges from supply chain bottlenecks, especially related to cold-chain, storage, transportation, and processing. Indian agriculture suffers from systemic issues that need to be addressed holistically. Supply chain constraints owing to inefficient storage and transportation lead to considerable post-harvest losses of about 15-20%.
Developed markets are increasingly protectionist, erecting insurmountable non-tariff barriers in the form of stringent quality standards, restrictions on fertilizers and pesticides, and sustainability requirements.
Need for a Comprehensive Strategy and Meticulous Implementation:
To harness India’s full potential in agro-exports, it is essential to address supply chain inefficiencies and reduce wastage both on farms and across the supply chain. Focus should be on value addition and processed food exports rather than commodities with little value addition. Identifying and diversifying into new markets in light of emerging geopolitical sensitivities should form an integral part of India’s agro-export strategy.
India needs to improve productivity significantly, reduce the phased use of agro-chemicals, shift towards organic production, and use water efficiently while ensuring production volume gains. This requires the efficient integration of innovative scientific techniques for production and water harvesting, leveraging AI technology and next-generation agricultural technologies.
India must also shift focus from foodgrain production and exports towards horticulture and value-added products with longer shelf lives and higher margins.
India’s One District One Product (ODOP) strategy requires effective implementation, leveraging inherent efficiencies and synergies.
Both state and central governments need to develop schemes facilitating these objectives at the farm and supply chain levels, integrating various agencies. Government departments should function in a coordinated, holistic exports promotion strategy rather than in silos.
India must be cautious in entering new trade agreements to ensure market access benefits with clarity on non-tariff barriers. Considerable efforts are needed to upgrade quality to meet emerging trade barriers and minimise rejection of consignments at destination markets.
Special caution is warranted as developed countries such as the USA, EU, Australia, and New Zealand are keenly eyeing India’s vast consumer market of 1.42 billion people.
The recent unpredictable US tariff regime—with a 26% tariff on India and differential reciprocal tariffs on other countries—has complicated international trade analytics. Under this regime, tariffs on Vietnam and Thailand increased, making Indian rice more competitive, but later all tariffs were paused.
The international market is becoming more complex with differential reciprocal tariffs, especially higher tariffs on China, which may reduce China’s dependence on US agro-imports and compel US producers to find alternative markets. This necessitates timely monitoring of import tariffs across countries, especially competitors and major markets. Governments, promotional agencies, and exporters alike need to vigilantly track international markets and adopt dynamic trade strategies.
(Writer is Vice Chancellor, Indian Institute of Foreign Trade, New Delhi)