The Netherlands has emerged as India’s third-largest export destination, ahead of China and Bangladesh. It has moved up two spots in the list of India’s top ten export destinations since FY22, thanks to a 106% surge in dispatches until August this fiscal from a year before to $7.5 billion.

 

The Other Surprises:

What comes as a greater surprise is that Brazil, which occupied the 21st spot in FY22, is now India’s 8th biggest export market. Similarly, Indonesia has moved up seven notches to grab the 7th position. However, amid a demand slowdown, only two European nations—the Netherlands and the UK–are among India’s top ten markets, against 4 in FY22. Germany and Belgium, which featured in the list last fiscal, are out of it now.

 

Meanwhile, the US and the UAE continue to be the largest and second-largest export destinations, respectively, for India. The exports to the US climbed 18.3% until August to $35.2 billion, while those to the UAE shot up 27.3% to $13.8 billion.

 

The Main Constituents:

India’s exports to the Netherlands were driven mostly by a 238% jump in dispatches of oil products until August this fiscal to $3.67 billion. Even supplies of chemicals ($513 million) and pharmaceuticals ($219 million) remained substantial.

 

Meanwhile, exports to Indonesia jumped 43% to $4.8 billion. The supplies to this ASEAN country were dominated by petroleum products, which jumped 144% on year up to August this fiscal to $1.8 billion. The other key products were cereals, sugar and chemicals.

 

The shipment to Brazil swelled 70.9% in the first five months of this fiscal to $4.7 billion. The exports were driven by a 299% jump in supplies of petroleum products to $2.3 billion, followed by those of certain chemicals ($684 million) and automobiles, auto parts and allied products ($233 million).

 

While Bangladesh has restricted its imports to mainly essential products to conserve dollars in the wake of a foreign exchange crisis there, even then exports to Bangladesh rose 8.7% to $5.8 billion.

 

China-Concern:

China is still battling the pandemic. So, India’s exports to China contracted sharply by 35.6% until August this fiscal to $6.8 billion. In contrast, India’s merchandise exports to all destinations grew 19.5% in the first five months of this fiscal to $196.5 billion.

 

India’s Export Performance: The Goods And Services Nexus:

The government aims at making India an export hub, to help boost job creation. The export-to-GDP ratio has risen fast since the early 1990s and now stands broadly at par with China. The large share of services in total exports however stands out: while India has performed very well in exporting IT services, exports of goods have lagged behind. Exports of labour-intensive manufacturing products could grow faster and contribute to job creation. The 2019 OECD Economic Survey of India discusses policies to make India’s exports more competitive.

 

Performance of services exports has been stellar. India’s share of world services trade more than quadrupled from 0.5% in 1995 to 3.5% in 2018 and India has become a major exporter of business services, notably in the Information, Communication and Technology (ICT) sector. Medical and wellness tourism is also performing well, with patients seeking high-quality medical treatment at competitive prices in some Indian hospitals.

 

Exports of goods have displayed mixed results. India has gained market shares for some skill- and capital-intensive goods, including pharmaceuticals and refined oil. However, performance in exporting textiles, leather and agricultural products has disappointed. Looking at the labour-intensive components of the textile sector (including garment) provides an illustration: Vietnam now has a larger market share.

 

India could make exports a new growth engine:

India’s trade prospects are relatively positive as it has specialised in sectors which will likely be in high demand in the future (e.g. ICT services, pharmaceuticals and medical devices) and in fast growing destinations (with a large share of its exports to emerging market economies). To unlock its potential to seize market shares in the labour-intensive manufacturing segment, India should modernise labour and land regulations, address infrastructure bottlenecks and open up further the services sector to trade and investment. Better and less expensive services – financial, marketing, distribution, legal, transport, etc. – will increase competitiveness in the manufacturing sector, boost job creation and meet the aspirations of women and new comers on the labour market.

The agricultural sector is one of the largest sources of livelihood in India. It employs 152 million Indians as of 2021, with a 4.1 per cent year-on-year growth. According to the Ministry of Commerce and Industry, agri-food exports from India increased 28 per cent in FY21 to around $30 billion, making up approximately 10 per cent of total exports.

 

The country ranks second globally in agricultural production, at $367 billion, yet India’s share in global agri-produce exports is negligible. As global value chain diversification becomes a priority for the world, India has an excellent opportunity to scale up agri exports and rapidly turn around the agri economy to help millions of farming-dependent families thrive and prosper.

 

Effective action at multiple levels, from farm inputs, quality assurance, traceability and certification, to building connections to global value chains (GVCs) will help India reach the $100 billion milestone in agri-food exports in the next few years.

 

Empowering the farmer to improve quality

Over 95 per cent of India’s farm produce is consumed domestically. Therefore, exports haven’t been an avenue explored by many farmers. Currently, only a few Indian farmers have the scale and financial capacity to fulfil export compliances and connect with the GVCs.

 

Quantity and quality of yield are still hampered by a lack of good farm inputs and equipment. Most farmers also struggle with access to cold chains and other logistical infrastructure and thus are not able to maintain export standards and compliance metrics.

 

To solve the resource challenge, bringing farmers together and helping them partner with the right service provider is crucial. Today, FPOs and FPCs in India have made unprecedented progress in helping farmers scale up the production of food. It’s important for govt and non-govt agencies to empower the FPOs with the right agri-tech that expands their access to developed markets.

 

Training about export standards and compliance are already available online through nodal organisations such as APEDA. Pairing these with digital tools that check and measure quality, while also ensuring traceability and certification of the produce will go a long way in making our farm produce export-competent.

 

Branding produce from export clusters

The government of India has established export clusters for certain crops. For example, the Anantpur cluster in Andhra Pradesh for banana exports or the Nagpur cluster in Maharashtra for orange exports. The farmers from the clusters have benefitted from export-oriented policy support.

 

Yet, they lag behind due to a lack of organised marketing and branding support for their products, which would ease their entry into international retail chains. Products such as Zespri Kiwi, Washington Apples, and California Almonds have benefitted greatly from marketing and branding, helping the farmer-producers get fair compensation for their produce.

 

Promote niche Indian products

Traditional wisdom and nutritional value of niche Indian food products, such as Indian variants of millets, fruits, rice, and oilseeds make them excellent export choices. India’s GI-tagged Alphonso mango, Indian gooseberry, tribal millets, and other niche products are already reaching new markets through the Indian immigrant community.

 

Government support in promoting these products in international markets and platforms, conceptually similar to the International Yoga Day initiative, will go a long way in making niche Indian products stand out in international markets.

 

Apart from the niche products, organic, sustainably grown, and environmentally positive plant-based products also need to be highlighted, as international consumers are willing to pay a premium for these.

 

Connect to GVCs and importers from other markets

Possibly the most important gap that needs to be addressed immediately is the FPOs' connection with the global value chains and importers from other markets. The front-end support to put Indian produce on the map and assure assuring the importers from other markets about quality standards and predictable, timely supply is urgently required.

 

Government organisations such as APEDA have helped ease this journey to a large extent, but here, agri-tech platforms are also playing a constructive role in getting the FPOs and FPCs market-ready.

 

Traceability, transparency in pricing, quality compliance, packaging, branding, and marketing support provided by agri-tech platforms will boost India’s food exports to a new milestone soon.

 

In short, India definitely has the potential to feed the world and become one of the top food exporters by 2030. We should not let this opportunity go to waste by acting now and turning our vast potential into reality.

The meeting was co-chaired by Narendra Singh Tomar, Union Minister for Agriculture and Farmers Welfare. Agriculture Ministers of Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam also took part in the meeting.

 

Tomar, in his opening remarks during the meeting, reiterated PM Narendra Modi's vision of keeping ASEAN at the center of India's Act East Policy. He also emphasized on mutually close regional cooperation with ASEAN to ensure sustainable and inclusive growth for agricultural development in the region.

 

Underlining the importance of millet (nutritional-cereals) as a nutritious food and the international nutritional-cereal year 2023, Tomar urged the ASEAN member nations to support India’s efforts in increasing the production, processing, value addition, and consumption of millets.

 

He said that India will promote nutritious cereal products for the health and nutrition of the people. Nutritious cereals help in the creation of nutritious, with low resource requirements and more efficient agri-food systems.

 

The progress in the implementation of various programs and activities under the Medium-Term Action Plan of ASEAN-India Cooperation (Year 2021-2025) was reviewed during the meeting. The meeting also hailed the 30th anniversary of ASEAN-India relations.

 

Besides this, the commitment to ASEAN-India cooperation in agriculture and forestry was reiterated. It was said that in order to mitigate the unprecedented impact of the pandemic by ensuring a seamless flow of safe and nutritious agricultural products to ASEAN and India, it is important to take continuous measures under ASEAN-India cooperation for the implementation of post-pandemic recovery.

 

Tomar reiterated to strengthen India's cooperation with ASEAN in food security, nutrition, climate change adaptation, digital farming, nature-friendly agriculture, food processing, value chain, agricultural marketing and capacity building.

In a yet another boost to promote the traditional, non-commercial heritage and indigenous products, the Agricultural and Processed Food Products Export Development Authority (APEDA) facilitated the first time export of Peda from Baidynath Dham from Deoghar of the State to the Kingdom of Bahrain.

 

It is believed that Baidyanath Dham Peda has a unique taste and fragrance. Nowhere around the Country can the same essence for this particular sacrament can be reproduced. The key to make this Peda lies in its preparation and the time invested in getting the right texture and feel of the Khowa.

 

Unlike other Pedas prepared across India, this Peda has very little Sugar approximately only 1/10th measures of the measure of the Khowa. The excellent quality milk and Khowa makes this Peda extraordinary apart from those made in other parts of the Country.

 

One of the APEDA registered exports from Kolkata namely M/s DM Enterprises has sent the first commercial consignment of 32 kgs of Peda  sourced from Medha Dairy to M/s Aljazira Group BSC, the Kingdom of Bahrain through Netaji Subhash Chandra Bose International Airport, Kolkata.

 

The shipment was virtually fallged off by the Director APEDA in the presence of Assistant Collector, Deoghar, Secretary APEDA, Managing Director, Medha Dairy and Deputy General Manager, APEDA.

 

During the programme, dignitaries appreciated the joint efforts of the stakeholders in the supply chain. This flag off has also ignited the concern for taking up more agricultural products for exports from the Eastern Region specially Jharkhand.

 

The association with Medha Dairy in this entire project will provide the benefit to the farmers directly who are supplying the milk for this sweet delicacy.

 

Thus the visionary approach of the Prime Minister to double farmer’s income is getting materialised.

 

Because of its unique taste and massive demand in the international market, there are huge opportunities for expanding exports of Baidyanath Dham Peda to various countries. This was just a beginning and we are expecting more no. of orders.

With huge piles of paddy still lying in the mills, the Union Government has extended the deadline for Telangana to deliver the custom-milled rice (CMR) to the Central pool.

 

The State can now deliver the rice from the Kharif Marketing Season 2021-22 to the Food Corporation of India (FCI) till November 30, 2022.

 

Responding to a request from the State Government, the Union Ministry of Consumer Affairs, Food and Public Distribution, however, has cautioned the State government to ensure no ‘recycling’ of rice into the system.

 

Caution on recycling

Recycling is a dubious method where millers re-channelise the rice disbursed under the public distribution system back into the system by procuring it back at a lesser price and selling it at a premium.

 

The CMR activity hit a roadblock in June with the FCI stopping the procurement, citing irregularities in milling and the State’s stoppage of distribution of PMGKAY (PM Garib Kalyan Anna Yojana) rice after lifting rice from the Centre.

 

It, however, agreed to resume procurement after six weeks. This lag has resulted in a huge pile-up of paddy in the mills and godowns.

 

Sources said stocks of up to 50 lakh tonnes of paddy are to be milled. 'We need some more time to clear the backlogs,' a miller said.

 

Exporters settling their trades in rupees will soon be able to avail of export incentives and duty rebates under India’s foreign trade policy, in a move that promises to boost shipments to countries like Russia. According to a government official aware of the matter, the Directorate General of Foreign Trade (DGFT) is expected to issue a clarification in this respect shortly, following approval by the Union finance ministry.

 

Currently, incentives to exporters in the form of duty drawbacks, export promotion capital goods (EPCG) incentives, and rebates on duties and taxes under different government schemes like Rebate of State and Central Taxes and Levies (ROSCTL) and Remission of Duties and Taxes on Export Products (RODTEP) are available only if payments or export realizations come in freely convertible currencies including the dollar, British pound, euro and yen, while the rupee is not a freely convertible currency. With the clarification, the foreign trade policy (FTP) will be suitably amended to enable exporters to claim export benefits for settling trade in rupees.

 

'We will come out with a clarification soon… It is a valid issue raised by exporters. This is an enabling provision. We are working with the ministry of finance towards the clarification,' the government official cited above said on the condition of anonymity.

 

Queries emailed to the department of commerce remained unanswered till press time.

 

According to reports, Russia’s Gazprombank has opened a special rupee account with state-owned UCO Bank. In July, the Reserve Bank of India introduced a rupee settlement system for international trade, where invoicing, payment, and settlement of exports and imports to all countries, on the central bank’s approval, can be in Indian rupees. Banks will need RBI approval to use the mechanism. Under this mechanism, exporters and importers can use a Special Vostro account linked to the correspondent bank of the partner country for receipts and payments denominated in rupees.

 

RBI last month said it has received a good response from four-five countries and many banks for settling bilateral trade in the rupee, and it is taking time as the process involves a lot vetting at the levels of banks, central banks and of the governments.

 

According to a study by India’s apex trade promotion body Federation of Indian Export Organisations (FIEO), India’s shipments to sanctions-hit Russia could grow by another $5 billion once the rupee settlement mechanism becomes functional. It said that agro products, food, pharma, and engineering equipment are the key areas where India could see a boost in exports to Russia.

 

With supplies from the European Union nearly coming to a halt, especially for industrial and engineering goods, this could be a big opportunity for India.

 

The mechanism is also aimed at facilitating trade with countries under sanctions like Iran and Russia. India’s exports to Russia have seen the contraction ease to 4.72% in August from the previous year, from a decline of 13.1% in July. New Delhi’s exports to Moscow saw a 24% decline in the April to August period to $992 million.

 

'We hope that the government will clarify benefits on such exports in rupee, which is hitherto only granted for exports payments received in foreign currency,' said A. Sakthivel, president of FIEO. 

 

Exporters have been asking the government to also extend the export benefits from incentive schemes like RODTEP and EPCG to be available in case the trade is settled in rupees.

 

Imports from Russia grew by 414% in the first five months of the current fiscal to $17.23 billion. Although crude oil imports accounted for 85% of total imports from Moscow, shipments of sunflower oil, fertilizers, silver, printed books, coriander seeds, and furniture items reported a sharp spike, suggesting that New Delhi was steadily forging trade ties with Russia.

 

According to trade experts, RBI’s move to allow international business transactions in rupees could also ease the flow of trade with BRICS nations—Brazil, Russia, China and South Africa—and sanctions-hit Iran but the new settlement mechanism may not be easy to implement.

President Joe Biden’s trade chief defended an economic agreement the US is negotiating with 13 other countries, saying it will build relationships with countries in the Indo-Pacific and address the world’s current challenges by strengthening supply chains.

 

The Indo-Pacific Economic Framework, or IPEF, is a better fit for today than the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP, according to US Trade Representative Katherine Tai. The latter deal was reached among 11 nations that were forced to change their original pact after President Donald Trump withdrew the US from it in 2017.

 

Countries are looking for solutions to supply chain snarls caused by the coronavirus and the effects on world energy and food markets from Russia’s invasion of Ukraine, Tai said on Wednesday night at a dinner in New York.

 

The desire among nations to promote resilience, sustainability and inclusion is 'quite different from the pressures and the aspirations that we were pursuing just five, seven, ten years ago when we were negotiating what is now the CPTPP,' Tai said at the event hosted by the National Committee on US-China Relations.

 

IPEF is the most significant US economic engagement in the region since Trump abandoned the Trans-Pacific Partnership, negotiated under President Barack Obama. But some lawmakers and business executives criticized Biden’s new effort earlier this year for stopping short of reducing tariffs, as the CPTPP did.

 

US allies in Asia would also have preferred a more traditional trade deal that offered greater access to US markets like the CPTPP did, but have signed on to the IPEF as the Biden administration’s offer.

 

By keeping tariff changes out of the IPEF, the administration likely can avoid the necessity of seeking a congressional vote to put it into place. That would sidestep one of the biggest obstacles for the TPP, which become a political punching bag for Trump as well as for candidate Bernie Sanders during the 2016 US election.

 

Describing India as an 'economic superpower', Britain said on Wednesday that it was working towards the 'best' Free Trade Agreement (FTA) that is beneficial to both the countries.

 

India and Britain launched negotiations for the FTA in January with an aim to conclude talks by Diwali but the deadline was missed due to a lack of consensus on issues.

 

'We have already closed the majority of Chapters and look forward to the next round of talks shortly,' Secretary of State for International Trade Greg Hands said while replying to a question from Nick Thomas-Symonds, Shadow international trade secretary.

 

A 'strong FTA can strengthen the economic links between UK and India, boosting the UK economy by more than 3 billion pounds by 2035, helping families and communities,' he said.

 

He said that the FTA can cut red tapes, make it cheaper for UK companies to sell into India's dynamic market , helping drive growth and support jobs across every nation and region.

 

Greater access could help UK businesses over a billion more consumers including India's growing middle class estimated to reach a quarter of a billion by year 2050 and give them a competitive edge over other countries that don't have a deal with India.

 

An FTA with India that supports the Government growth strategy by taking advantage of the UK's status as an independent trading nation, championing free trade that benefits the whole of the UK, he said.

 

'We remain clear that we are working towards the best deal that is beneficial to both sides and won't sign until we have a deal that is fair, reciprocal and ultimately in the best interest of UK people and UK economy,' he said.

 

At the outset, he said India is of course an 'economic superpower' projected to be the world's third largest economic power by 2050.

 

'To improve access to this dynamic market, a huge opportunity for UK businesses, building on a trading relationship worth more than 24 billion pounds in 2021. That is why we are negotiating a trade agreement that works for both the countries,' he added.

 

Symonds also asked Hands to agree home secretary Suella Braverman has 'completely undermined the UK government's negotiations' and asked whether she will withdraw those comments - and whether a future target date for the deal has been agreed.

 

Hands responded by saying the majority of the chapters on the deal - 16 chapters across 26 policy areas - have been agreed so far.

 

On Braverman's visa comments, he said she was referring to mode 4 arrangements, which relate to business visas not for permanent settlement. 'That remains an area of active negotiation', he added.

 

The India-UK free trade deal, which has missed the Diwali deadline, is likely to get the much-needed impetus with Rishi Sunak taking over as Britain's first Indian-origin Prime Minister as experts see political stability in the UK giving momentum to negotiations.

 

Sunak, in his previous role as Chancellor of the Exchequer, had expressed support for the FTA as he saw enormous opportunities for both countries in the fintech and insurance sectors.

 

According to the experts, political stability in the UK now would help fast-track the negotiations for the pact, which could potentially double bilateral trade by 2030.

 

The total trade between India and the UK stood at USD 17.5 billion in 2021-22.

 

India has in recent times signed trade deals with the United Arab Emirates and Australia but talks with the UK had hit a snag over easier access to Indian skilled workers.

 

New Delhi is also seeking to claw back payments made by Indian workers towards Britain's social security system as part of the deal.

 

In a free trade agreement, two countries either eliminate or significantly reduce customs duties on the maximum number of goods traded between them, besides easing norms for promoting investments and services trade.

 

The UK is also a key investor in India. New Delhi attracted foreign direct investment of USD 1.64 billion in 2021-22. The figure was about USD 32 billion between April 2000 and March 2022.

The 7th ASEAN-India Ministerial Meeting (AIMMAF) on Agriculture and Forestry was held virtually today. The meeting was co-chaired by the Union Minister for Agriculture and Farmers Welfare, Shri Narendra Singh Tomar. Agriculture Ministers of Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam also participated in the meeting.

 

Union Minister Shri Narendra Singh Tomar, in his opening remarks during the meeting, reiterated Prime Minister Shri Narendra Modi's vision of keeping ASEAN at the center of India's Act East Policy> He also emphasised on  mutually close regional cooperation with ASEAN to ensure sustainable and inclusive growth for agricultural development in the region. Referring to the importance of millet (nutritional-cereals) as a nutritious food and the international nutritional-cereal year 2023, Shri Tomar urged the ASEAN member countries to support the efforts of India in increasing the production, processing, value addition and consumption of millets. Shri Tomar said that India will promote nutritious cereal products for the health and nutrition of the people. Nutritious cereals help in the creation of nutritious, with low resource requirement and more efficient agri-food systems.

 

In the meeting, the progress in implementation of various programs and activities under the Medium Term Action Plan of ASEAN-India Cooperation (Year 2021-2025) was reviewed. The meeting also welcomed the 30th anniversary of ASEAN-India relations. In the meeting, the commitment to ASEAN-India cooperation in agriculture and forestry was reaffirmed. It was said in the meeting that in order to mitigate the unprecedented impact of the COVID-19 pandemic by ensuring a seamless flow of safe and nutritious agricultural products to ASEAN and India, It is necessary to take continuous measures under ASEAN-India cooperation for the implementation of post-pandemic recovery. Union Minister Shri Tomar committed to enhance India's cooperation with ASEAN in food security, nutrition, climate change adaptation, digital farming, nature-friendly agriculture, food processing, value chain, agricultural marketing and capacity building.

PLI schemes for different sectors will help reduce dependence on imports over time, and technical regulations framed for products such as toys, electronics, chemicals and fertilizers will check sub-standard imports, says government official

 

India’s trade equation with China has been improving in recent years with outbound shipments rising faster than imports, whose growth is being driven largely by vital raw materials and to meet demand from high-growth sectors such as telecom and power, a senior government official said.

 

China is one of India’s large trading partners, with trade flows between the two countries having grown 59% from about $72 billion in 2014-15, to hit $115.4 billion in 2021-22.

 

'Since India-China trade started picking up, the growth in exports to China has been much higher than the import growth,' a Commerce Ministry official told The Hindu.

 

From $11.9 billion in 2014-15, India’s exports to China had risen 78.1% to $21.25 billion last year, while imports stood at $94.16 billion, 55.8% over the $60.4 billion recorded in 2014-15. By contrast, imports from China had increased 192% between 2006-07 and 2013-14, when they had crossed$51 billion, he pointed out.

 

Intermediate goods account for more than a third of India’s imports from China, while capital goods constitute another 19.3%, with telecom and power sector equipment being the key drivers, which helped meet domestic demand in these fast-expanding sectors, the official said.

 

 

The major items of import from China are electronic components, computer hardware and peripherals, telecom instruments, organic chemicals, industrial machinery for dairy, residual chemicals and allied products, electronic instruments, bulk drugs and intermediates.

 

'India’s dependence on such Chinese goods can be attributed largely to the gap between the domestic production and demand, and China being a manufacturing hub and having price competitiveness due to economies of scale and subsidies provided by its government to Chinese industry,' the official noted.

 

The production-linked incentive schemes for different sectors will help reduce the dependence on such imports over time, even as technical regulations framed for products such as toys, electronics, chemicals and fertilizers will check sub-standard imports, he emphasised.