Agro exports up but can it continue?

Mon, 5 May Pre-Open

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Since some time, the Indian economy has been facing challenges on various fronts. The declining rupee, slowing GDP growth, rising deficit, etc. have led to concerns about India's growth prospects. But there is some light at the end of the tunnel. And this has been the improvement in the country's agro exports.

As per an article in Economic times - Indian agro products exports have witnessed a sharp increase in over the last few years. The exports have increased to US$ 45 bn in 2013-14 from $25 bn in 2011-12. This increase is on back of various reasons Vis; good harvest on back of good monsoons, government policies, increasing activeness of small and medium term enterprises (SMEs) and also because of depreciating rupee.

However the question now is whether the trend will continue?

Recently, there has been an ongoing debate on the export of mangoes to the European Union (EU). The EU informed India during March 2014 that shipments of the premium Indian Alphonso mangoes would be blocked from May until December 2015. This action came after authorities in Brussels found consignments infested with fruit flies.

According to various sources, UK imports nearly 160 lakh mangoes from India and the market for this fruit is worth nearly 6 million pounds a year. One should note, the EU is one of the important markets for India's mango supplies and the said ban will hit the Indian exports badly. Already, post the ban, the price of Indian mangoes has started falling. These instances can negatively impact overall growth and also the image of the country.

Undoubtedly, there have been attempts by the government Vis; steady investments in technology development, improving irrigation infrastructure, emphasis on modern agricultural practices and provision of agricultural credit and subsidies. These factors have helped in growth of the industry so far. However there are still many areas where the Indian authorities will have to put in more efforts.

In our view, more efforts need to be put into making Indian exports more competitive in foreign markets. Development of a strong infrastructure is critical for the growth of agro industries sector and export of agricultural products. This will help to reduce post harvest losses caused due to spoilage and also ensure quality production of agro products. Better infrastructure will also help in quicker transportation of various perishable goods. Over and above this, better packaging and quality improvements too can help boost exports.