Ahead of the upcoming Union Budget, representatives of farmer associations and agricultural experts met with Union Finance Minister Nirmala Sitharaman on Friday in New Delhi. The primary focus of the discussion was the removal of export restrictions on various agricultural commodities. This issue was strongly advocated by the farming community. The meeting, which lasted for two hours, was also attended by Union Minister of State for Finance Pankaj Chaudhary, the Finance Secretary, and senior officials from the Ministry of Agriculture. MJ Khan, Chairman of the Indian Chambers of Food and Agriculture, emphasized the urgency of lifting these bans during the deliberations.
India’s Agriculture Export Challenges and Solutions
“Our agri-export share is only 2 percent in global agri exports. Due to the ban on some agricultural products, our exports have fallen,” said MJ Khan. India faces a USD 4 billion cut in agricultural exports due to trade restrictions on staples like wheat, rice, and sugar. Khan stressed that India needs to avoid knee-jerk reactions and focus on creating export hubs. Agricultural economist and distinguished professor at ICRIER Ashok Gulati highlighted the surplus in rice stocks held by the Food Corporation of India (FCI), suggesting that opening up rice exports should be prioritized. He also stressed the need to lift the ban on onion exports immediately. Badri Narain Chaudhary, President of the Bhartiya Kisan Sangh, called for a long-term agricultural policy and improved data collection in the agriculture sector.
“We don’t have any agriculture policy. The government should start collecting data on the agriculture sector,” he said. According to the Agricultural and Processed Food Products Export Development Authority (APEDA), there has been a noteworthy 9 percent decline in exports under its ambit. The export bans undertaken by the Government of India aim to balance consumer affordability and support the agricultural industry amidst rising retail prices.
The Impact of Export Bans
The export bans on staples like wheat, rice, and sugar have significantly impacted India’s agricultural sector. These restrictions were initially implemented to control rising retail prices and ensure domestic availability. However, they have also resulted in a substantial decline in agricultural exports. India’s share in global agri exports is a mere 2 percent, and the country faces a USD 4 billion cut in agricultural exports due to these trade restrictions.
Ashok Gulati pointed out that the Food Corporation of India (FCI) holds a surplus of rice stocks. He suggested that opening up rice exports should be prioritized to take advantage of this surplus. Additionally, lifting the ban on onion exports was highlighted as an immediate need. Onions are a crucial commodity for many farmers, and the export ban has affected their income significantly.
The Need for a Long-term Agricultural Policy
Badri Narain Chaudhary emphasized the need for a long-term agricultural policy. He stated that the government should start collecting data on the agriculture sector to make informed decisions. Accurate data collection is essential for understanding the challenges faced by farmers and devising effective policies to address them.
The Agricultural and Processed Food Products Export Development Authority (APEDA) reported a 9 percent decline in exports. This decline underscores the need for a comprehensive agricultural policy that supports farmers and promotes exports. By focusing on creating export hubs and reducing trade restrictions, India can enhance its agricultural exports and boost the income of its farmers.
Leveraging Technology and Innovation
The meeting also highlighted the importance of leveraging technology and innovation in agriculture. Modern agricultural practices and technology can help improve productivity and reduce the reliance on export restrictions. By adopting advanced farming techniques and efficient supply chain management, India can ensure a steady supply of agricultural commodities for both domestic and international markets.
Ashok Gulati suggested that the government should invest in research and development to promote sustainable farming practices. This includes developing drought-resistant crop varieties and efficient irrigation systems. By investing in technology and innovation, India can enhance its agricultural productivity and reduce the impact of export restrictions.
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Building Export Hubs
MJ Khan emphasized the need to focus on creating export hubs to boost agricultural exports. These hubs can facilitate the efficient movement of agricultural commodities from farms to international markets. By establishing export hubs, India can streamline the export process and reduce the impact of trade restrictions.
Export hubs can also provide farmers with access to global markets and better prices for their produce. This can significantly enhance the income of farmers and promote sustainable agricultural practices. By focusing on creating export hubs, India can strengthen its position in the global agricultural market and boost its agricultural exports.
Government Support and Policy Reforms
The representatives and experts called for government support and policy reforms to promote agricultural exports. They urged the government to revise the qualifying turnover criterion for mandatory registration of companies on the invoice discounting platform TReDS. Subhrakant Panda suggested revising it to over Rs 250 crore from Rs 500 crore currently.
Additionally, they recommended leveraging the account aggregator (AA) framework for MSME lending. This would involve reviewing the legal and compliance issues that prevent joint and corporate accounts from the scope of AA. Simplifying TDS provisions and easing the capital gains tax regime were also among the key suggestions.
Conclusion
The meeting between farmer associations, agricultural experts, and Union Finance Minister Nirmala Sitharaman highlighted the urgent need to remove export restrictions on agricultural commodities. The representatives emphasized the importance of creating export hubs, leveraging technology and innovation, and implementing policy reforms to promote agricultural exports. By addressing these challenges, India can enhance its agricultural exports, boost the income of its farmers, and strengthen its position in the global agricultural market.