Adverse impact on agricultural exports due to sluggish global demand and export restrictions

NEW DELHI: India's agricultural exports have been adversely affected by sluggish global demand coupled with the government's ban on grain exports to improve domestic supply. During the April-July period of the financial year, there was a year-on-year decline of 12.47% to $8.39 billion.

Shipments of agricultural items and processed food, which were resilient in the last few fiscal years, have seen exports of grains fall by 22 percent in the first four months of current FY24. This situation is due to the ban on export of white rice, shipment duty on rice and ban on export of wheat since May last year.

Since the ban on wheat shipments was imposed on May 17, 2022, exports are allowed only on a government-to-government basis. In the current financial year, only 0.3 million tonnes of wheat shipment has been approved for Nepal in July.

According to the Directorate General of Commercial Intelligence and Statistics, Basmati rice exports increased by 13.19% to $1.7 billion in the first four months. In FY24, non-basmati rice shipments fell 2.7% year-on-year to $2.02 billion.

Basmati rice shipments are also expected to decline during the August-September period, after the government last month implemented a minimum export price of $1,200 per tonne till October 15. Exports of non-basmati rice are likely to decline in the next few months.

The government in recent months banned shipments of white rice and imposed a 20% export tax. Livestock products, dairy and agricultural and processed food products are a key segment in the export development authority basket, which declined by 8.8% year-on-year to $1.3 billion during April-July this fiscal year compared to the previous fiscal year.

Shipments of other processed foods, including groundnut and guar gum, declined marginally to $1.47 billion in FY24 compared to the corresponding period of the previous fiscal. However, exports of fresh fruits and vegetables increased by 16% in the first four months of FY24.