India’s farm exports held up until August this fiscal, despite a ban on the outbound shipments of wheat in May and curbs on the despatches of sugar. Between April and August, despatches of agricultural items rose almost 20% on year to $23 billion, marginally higher than the growth in the overall merchandise exports, showed the data sourced from the DGCIS.
However, such exports may come under pressure in the second half of this fiscal once the full impact of the restrictions, imposed in different months, start to bite after a time lag, analysts said. Moreover, the government had banned exports of wheat products on August 27 and broken rice on September 8, the fallout of which will be captured in the trade data in the coming months. Easing commodity prices may also impact export realisation.
The latest data showed, wheat exports in the first five months of FY23 shot up 170% to $1.43 billion (mainly due to massive despatches before the ban was slapped) and basmati supplies jumped 37% to $1.97 billion. However, exports of non-basmati rice rose only 13% until August to $2.72 billion and those of marine products 8% to $3.4 billion, partly due to unfavourable base effect.
Meanwhile, cotton exports crashed by 59% to just $420 million until August, as a shortage substantially lifted domestic prices, making exports unattractive.
Farm exports had hit a record $50.2 billion in FY22, defying supply-chain woes in the wake of the pandemic. The exports were buoyed by a resurgence in despatches of marine products and a sustained rise in non-basmati rice supplies.
Sustained growth in farm exports, which have often performed below par, remains critical to the country realising its ambitious merchandise export target of $470 billion for FY23. This is because demand for industrial commodities has started to falter due to a recession in advanced economies like the US and the EU.
However, given the heightened risks to food inflation, the Centre has already resorted to curbs or ban on select products. It banned exports of wheat on May 13 and followed up with curbs on wheat products and broken rice. Similarly, it had capped sugar exports in late May at 10 million tonne for the marketing year through September, although it eased the limit later to 11.2 MT.