4th March 2025 (14 Topics)
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India’s Agricultural Trade
Context
India’s agricultural exports increased by 6.5 percent in April-December 2024 compared to the same period in 2023. However, agricultural imports grew much faster—by 18.7 percent—leading to a decline in India’s trade surplus in farm products. This means that while India still exports more farm goods than it imports, the gap between exports and imports is narrowing.
What is happening?
- Agricultural exports grew from 2 billion to USD37.5 billion in April-December 2024.
- Agricultural imports rose sharply from 6 billion to USD29.3 billion in the same period.
- As a result, India’s agricultural trade surplus fell from USD10.6 billion to USD8.2 billion in just one year.
Why is the Trade Surplus Shrinking?
- Exports Are Fluctuating
- Global Prices Matter: When international food prices were high after COVID-19 and the Ukraine war, India’s exports boomed. But now that prices have fallen slightly, exports have also declined.
- Government Policies: India restricted exports of wheat and sugar to protect domestic supply, which reduced export earnings.
- Some Commodities Still Growing:
- Basmati rice, spices, coffee, and tobacco are doing well due to strong global demand.
- Marine exports (shrimp and seafood) have declined, especially in the US and China.
- Sugar exports have dropped significantly due to government limits.
- Imports Are Rising
- Edible Oils: India depends heavily on imported cooking oils like palm oil and soybean oil.
- Pulses (Lentils, Chickpeas, etc.): Due to a poor domestic harvest, imports have surged.
- Cotton: Once an exporter, India is now importing more cotton than it sells abroad.
What This Means for India
- India remains a net agricultural exporter, but rising imports are a concern.
- Government policies play a key role in balancing exports and domestic supply.
- Future trends will depend on global commodity prices and India’s agricultural production.
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