Day 35 – Q 3.What are the challenges being faced by the exporters of food products in India? What measures have been taken by the government to promote the export of food products? Discuss.

3. What are the challenges being faced by the exporters of food products in India? What measures have been taken by the government to promote the export of food products? Discuss.   

भारत में खाद्य उत्पादों के निर्यातकों को किन चुनौतियों का सामना करना पड़ रहा है? खाद्य उत्पादों के निर्यात को बढ़ावा देने के लिए सरकार ने क्या उपाय किए हैं? चर्चा करें।

Introduction:

Agricultural export constitutes 10% of the country’s exports and is the fourth-largest exported principal commodity. However in the global trade, the share of India is only close to 2%. To achieve the true potential and export a greater share of what is being produced in India, there is an immediate need to address the export challenges. Some of them are discussed below –

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Challenges being faced by the exporters of food products in India 

• Seasonal deficiency and high cost of raw materials constitute one of the most important constraints affecting the exporters of food products. 
• Storage Constraints is the main hazard faced by the Indian small-scale enterprise.
• Transportation and logistics constraints are hurting export of perishable food items.
• Low Automation and processing of food – only ~ 10% of the food is processed. This leads to lots of wastage and reduces export capacity. 
• High competition due to many players in the organized, in addition to, unorganized sectors.
• Sanitary and Phytosanitary Measures – In the year 2016, the India’s share in EU’s imports of fresh and processed food products was 2.9 per cent, which was lower than that of other developing countries including Brazil (7.8 per cent), China (4.9 per cent), Turkey17 (4.5 per cent) and Vietnam (3.4 per cent). Border rejections as a percentage of total notifications raised are the highest for India, when compared to other developing countries.
• High Tariffs and Protectionist Policies – India has the highest average applied tariff of any G20 country and among the highest bound tariff rates in the WTO.
• Lack of synergy between the state and central government as agriculture is a state subject, while the state’s role for exports is undefined

Measures taken by the government to promote the export of food products

The Department of Commerce also has several schemes to promote exports of agricultural products – Trade Infrastructure for Export Scheme (TIES), Market Access Initiatives (MAI) Scheme and Merchandise Exports from India Scheme (MEIS). 

In addition, assistance to the exporters of agricultural products is also available under the Export Promotion Schemes of Agricultural & Processed Food Products Export Development Authority (APEDA), Marine Products Export Development Authority (MPEDA), Tobacco Board, Tea Board, Coffee Board, Rubber Board and Spices Board. These organisations also seek to promote exports through participation in international fairs & exhibitions, taking initiatives to gain market access for different products in different markets, dissemination of market intelligence and taking steps to ensure quality of exported products.

Conclusion

Agriculture plays a vital role in India’s economy. Over 58% of the rural households depend on agriculture as their principal means of livelihood. Hence enabling export of food products can become strategy for rural prosperity and inclusive development.