New Delhi: Indian agro-exports valued $38.74 billion have a potential to grow to $100 billion by 2022 — if the export sector capitalises the opportunity opened up with the trade war between the US and China and SMEs start exporting directly to the overseas buyers.
While increasing the import tariffs for products from the US, China has reduced tariffs on many agricultural products from its Asia Pacific Trade Agreement partners comprising India, Sri Lanka, Bangladesh, South Korea and Laos. This could result in increasing the agro exports from India.
According to a study by the commerce ministry, the ongoing trade war has opened a window of opportunity for India to push for higher exports in 171 items, ranging from textiles to marine products. This opens up an additional outbound shipment potential of up to $8.7 billion a year. A large chunk of this export revenue can come from agri commodities and agro-based products.
“China has imposed a 25 per cent tariff on US produced soybean, while removing all tariffs on imports through APTA countries. China’s annual soybean import is of around 100 million tonnes. This presents opportunity for Indian soybean producers to export to China. Similarly, China is world's biggest importer of rice with import of more than five million tonne per year.
Recently, it has allowed exporting of non basmati rice from India. Total of 24 rice mills have been cleared for exporting rice. India is the world's top rice exporter with 12.7 million tonne export last fiscal. So, the potential to export rice to China is huge,’ said Pawan Gupta, founder of Connect2India.
The agro-products items that will help India make inroads into the American market include shrimps and prawns, yarn, fabrics, garlic, berries, sugar confections, oilcake, leather, rubber and wooden products.
Further, there are products like fresh grapes which were being exported to China. After China increased its tariffs for such products from US, our exports stand to gain significantly. Products such as fresh and dried oranges, corn, durum wheat and grain sorghum are not currently exported to China. India can grab a good share of the $10 million US exports of these products.
“In the short to medium term, trade war opens up an opportunity. Besides capitalising this opportunity, if our small and medium enterprises start exporting directly to overseas customers, our $38.74 billion agri-exports can grow to $100 billion by 2022,” said Gupta.
According to him, only one per cent of the 65 million SMEs are exporting directly to buyers abroad. They lack global visibility, awareness and competitiveness and hence end up selling their products to merchant exporters.
“They have to share a good portion of the profits with the merchant exporters and so they cannot become competitive in the market. They also are not aware of the demand in the international market nor can they plan production according to the demand. Once they get directly in touch with the buyers, their margins will improve, their visibility in the global market will become better and awareness levels also will increase. This will help them double their exports,” he said.
Connect2India is currently serving as a platform for the SMEs to reach out to their overseas buyers. Among the SMEs who have come on board largely deal with agro commodities and products.
“If India has to touch $2 trillion trade by 2025 as envisaged by the government, the direct exports by SMEs will have to grow to at least 10 per cent from the current one per cent,’ he added.
