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CHAPTER- V

INDIA’S FOREIGN TRADE AND AGRICULTURE EXPORTS

5.1 Introduction

The ‘outward looking’ exports promotion strategy adopted in 1991, led to significantly faster

growth of production and exports in India since then. The increased domestic competition in

international economic environment owns to formation WTO and other global economic

crises. The trade to GDP ratio in 1990-91 was around 11percent which has increased to more

than 30 percent in 2008-09 in India indicated tremendous growth in trades (economic survey,

2009-10). This clearly indicates greater degree of openness of Indian Economy. The present

chapter discusses growth and composition of India’s foreign trade, it further discusses growth

and composition of agriculture export in India since economic liberalization.

5.2 GDP growth rate in India

Indian economy recorded a high growth path triggered mainly by macroeconomic reforms

and expansion of economic activities across the sectors. However, there are some serious

concerns about a number of imbalances in the growth scenario inter-sectoral, interregional

and inter-state. As a result, the average productivity has remained very low as compared to

developed and other developing countries.

Table 5.1: Contribution of Different Sectors in National Income1980-81 to 2008-09

Year Primary sector (percentage)

Secondary sector (percentage)

Tertiary sector (percentage)

1980-81 41.8 21.6 36.6

1990-91 33 27 40

2000-01 28.1 24.8 47.1

2007-08 17.2 26.8 56

2008-09 17.1 25.9 57

Source: statistical outline of India2007-08, Monthly Economic report, March 2009

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The table 5.1 shows that national income up to 1980-81 contribution of primary sector had

more percentage than other two sectors. But after a decade it is just reversed tertiary sectors

has taken up the position, this has due to international demand to primary and secondary

sectors. This trend continued and was maintained during the year 2008-09 also i.e. 57 per

cent more than three times and more than two times of primary and secondary sectors. With

growth in GDP, the issue of rural-urban divide, regional divides and rich-poor divide became

evident, which brought “inclusive growth” on high priority. The Indian economy has been

growing at a faster rate in recent decades than it did earlier. Table 5.2 shows average rate of

growth in real GDP highest was observed during the year 2007-08, i.e. 9.2 percentage.

Table 5.2: Average Rate of Growth of Real GDP in India (1990-2010)

Source: CSO, Govt. of India, 2010

While the growth rate of the Indian economy has been increasing in recent times, though,

with fluctuation but one phenomenon which was observed was that the growth performance

of the three major sectors of the economy, namely, agriculture, industry and services, has

been diverse. The growth in the agriculture sector has been the most volatile and also the

least among the three sectors. While the growth in the industrial sector has remained more or

less constant with upward bias, growth rate in services sector has risen sharply. The

consequence of diverse growth rate in the three sectors has resulted in a structural change and

change in contribution of the sectors in the total GDP. The share of agriculture sector in

overall GDP has declined more or less consistently since economic liberalization,

Period Growth percentage

1990-2008 6.39

2000-2008 7.19

11 th plan period (2007-12)

2007-08 9.2

2008-09 6.7

2009-10 7.2

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Table 5.3 India’s Total Exports and Imports (1990-91 to 2007-08)

Source: Economic Survey 2010-11& Centre for Monitoring Indian Economy Sep, 2010

The total India’s Exports, Imports and their share in Gross Domestic products is given Table

5.3; the share of total exports in the total GDP was 5.72 percent in the year 1990-91, which

increased to 13.89 percent during 2007-08. Similarly, the share of total imports in the total

GDP was 7.39 percent, which increased to 21.28 percent in the same period. Almost similar

increase have been observed during the year 1995-96 and 2000-01 it was 8.92, 10.29 percent

and 9.58, 10.86 percent respectively. Thus it is clear from table that the last decade has seen

acceleration in growth of exports as well as imports compared to previous decades. The

import growth has been faster compared to growth of export resulting in widening of trade

deficit. On account of liberalization, privatization and globalization of the Indian economy,

the growth rate of GDP (at the factor cost at 1993-94prices) has increased in the post reform

period. Particularly since 2001- 02 onwards due to Indian economy adopting itself to

implementation of WTO and increased competition resulting in increased competitiveness of

Year

Total GDP

Rs. Crores Total

exports

Percentage share of total exports in

GDP Total Imports

Percent share of total Imports in

GDP

1990-91 515032 32558 5.72 42095 7.39

1995-96 1083289 106352 8.92 122678 10.29

2000-01 1925017 201350 9.58 228307 10.86

2001-02 2097726 209018 9.17 245200 10.76

2002-03 2261415 255137 10.39 297206 12.11

2003-04 2538170 293367 10.65 359108 13.04

2004-05 2971464 375340 11.92 501065 15.91

2005-06 3389621 456418 12.73 660409 18.41

2006-07 3952241 571779 13.85 838048 20.3

2007-08 4581422 655864 13.89 1005159 21.28

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economy. India has done fairly well in comparison to other regions and economies of the

world as shown in table 5.4 with regards to growth of GDP. The growth of export as well as

imports is robust during this period in India. However, imports have increased faster than

export, widening the gap.

Table: 5.4 GDP and Merchandise Trade by Region (2006-08) Annual percentage change at constant prices

GDP Exports Imports

2006 2007 2008 2006 2007 2008 2006 2007 2008

World 3.7 3.5 1.7 8.5 6.0 2.0 8.0 6.0 2.0

North America (a) 2.9 2.1 1.1 8.5 5.0 1.5 6.0 2.0 -2.5

United States 2.8 2.0 1.1 10.5 7.0 5.5 5.5 1.0 -4.0

Europe 3.1 2.8 1.0 7.5 4.0 0.5 7.5 4.0 -1.0

European Union (27) 3.0 2.8 1.0 7.5 3.5 0.0 7.0 3.5 -1.0

Commonwealth of Independent

States (CIS)

7.5 8.4 5.5 6.0 7.5 6.0 20.5 20.0 15.0

Africa 5.7 5.8 5.0 1.5 4.5 3.0 10.0 14.0 13.0

Middle East 5.2 5.5 5.7 3.0 4.0 3.0 5.5 14.0 10.0

Asia 4.6 4.9 2.0 13.5 11.5 4.5 8.5 8.0 4.0

China 11.6 11.9 9.0 22.0 19.5 8.5 16.5 13.5 4.0

Japan 2.0 2.4 -0.7 10.0 9.5 2.5 2.0 1.5 -1.0

India 9.8 9.3 7.9 11.0 13.0 7.0 8.0 16.0 12.5

Newly industrialized

economies (4)(b)

5.6 5.6 1.7 13.0 9.0 3.5 8.0 6.0 3.5

Source: WTO Secretariat & Economic Review 2009

a. Includes the Caribbean. b. Hong Kong, China; Republic of Korea; Singapore and Chinese Taipei.

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Thus, table 5.4 clearly indicates slowdown in economic activity around the world. Among

world economies China and India have emerged the fastest growing ones. Obviously

appropriate policy framework is required to reduce adverse impacts of global slowdown.

5.3 General trends in trade performance

Since 1991, India has transformed itself from one of the most closed large economies of the

world to a relatively more open one, with trade as a percentage of GDP reaching 47percent in

2006 and 46 percent in 2007 as shown in Table 5.5. The average annual real growth rate of

India’s exports of goods and services for the 1995-2007 periods was 12 percent well above

the world average growth of 7 percent.

Table 5.5 Total trade as a percentage of GDP (percentage)

Year

1990

1995

2000

2001

2002

2003

2004

2005

2006

2007

GDP (percentage

16

23 27 26 30 31 40 43 47 46

Source: World Development Indicators. & Organization for Economic Co-operation and Development, 2009

As discussed above, the shares of manufacturing in both the value added and total exports are

lower in India but this is not necessarily because the manufacturing sectors internationally

uncompetitive but because it has an unusually small share in the domestic economy. In fact,

according to Gaullier et al. (2005), up to 54.4 percent of manufacturing value-added was

exported in 2004.Nevertheless, despite its is relative abundance in skilled labor and capital,

India’s manufacturing exports are highly concentrated in low-technology goods and the share

of high-technology manufactured goods in its total exports has barely changed since the mid-

1990s. The table 5.6 provides data related to Share of India's goods and services trade in

world total, it shows service export and import has much higher than Merchandise export and

import.

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Table 5.6 Share of India's goods and services trade in world total

Export/Import 1995 2000 2005 2006 2007

Merchandise exports 0.6 0.7 1 1 1.1

Merchandise imports 0.8 0.8 1.3 1.4 1.4

Services exports 0.5 1.1 2.2 2.7 2.7

Services imports 0.8 1.2 2 2.4 2.4

Source: WTI (2008).

India’s current merchandise export structure remains heavily skewed towards petrol products,

jewelry, furniture, chemical products and textiles and wearing apparel, the structure of India’s

exports seems a little more concentrated in 2005 than in 1996 but this is largely driven by the

emergence of exports of petroleum products. In general, it is not easy to classify the direction

of changes in the structure of top Indian exports. On the one hand a few more sophisticated

products such as motor vehicle parts made it to the top 25 products in 2005. On the other

hand several traditional manufacturing products such as gems and jewelry, wearing apparel

and certain food products that already dominated Indian exports in 1996 have not gained in

importance in 2006. This suggests that India has not integrated into the global production

networks of high technology products to an extent. The strength of services provided an

impetus to, and now plays an important role in, India’s overall trade. The table 5.7 shows

Share of India's goods and services trade in world in 1995 merchandise exports was 0.6

percent compare to import share.8 percent, Services exports &Services imports was 0.5 & 0.8

percent respectively, it has reached 1.1 & 1.4 percent merchandise exports& imports in the

year 2007. Services exports &Services imports was 2.7 & 2.4 percent respectively in the

same period. The data reveals that share of trade of India’s to world trade has more than

doubled since the formation of WTO.

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Table: 5.7 Trade performance Volumes and Unit Values Annual per cent change

Year

Exports Imports Terms of Trade

Value Value

Rs. USD VOL Unit Val Rs. USD VOL Unit

Val Net Income

2001-02 2.7 -1.6 0.8 1 6.2 1.7 4 2.8 -2.1 -1.3

2002-03 22.1 20.3 19 2.9 21.2 19.4 5.8 14.3 -9.8 7.4

2003-04 15 21.1 7.3 7.5 20.8 27.3 17.4 3.1 3.6 11.2

2004-05 27.9 30.8 11.2 14.9 39.5 42.7 17.2 18.9 -3.5 7.3

2005-06 21.6 23.4 15.1 6.1 31.8 33.8 16 14 -6 8.2

2006-07 25.3 22.6 10.2 13.7 27.3 24.5 9.8 15.1 -1.3 8.8

2007-08 14.7 29 7.9 5.1 20.4 35.5 14.1 1.9 2.6 10.7

2008-09 28.2 13.6 9 16.9 35.8 20.7 20.2 13.8 2.5 11.7

2009-10 0.6 -3.5 -1.1 1 -0.8 -5 9.9 -10 12.3 11

Source: Computed from DGCI&S, Economic Survey, 2010-11

Thus, table: 5.7 Shows trade performance volumes and unit values annual per cent change

during the year 2001-02 values was in rupees 2.7 imports was in rupees 6.2 unit value was 1,

it has reduced to .6 and -0.8 in the year 2009-10 net income was positive I.e. 12.3and 11 but

earlier period it was negative i.e. -2.1and -1.3. The deceleration in export growth in rupee

terms in 2009-10 was not only due to a large deceleration of growth in unit values to 1.0 per

cent compared to 16.9 per cent in 2008-09 but also due to actual decline in quantum by 1.1

per cent compared to the 9 per cent growth in 2008-09. This was mainly due to the negative

growth in both volume and unit value of manufactured goods. Export volume of food and

food articles like rice, coffee, spices, and oilseed cake also fell (though their unit values (-)

8.0 per cent growth for the Association of South East Asian Nations (ASEAN) and the (-) 5.8

per cent growth for North America which are among our major trading partners and the high

negative growth of 22 percent for the Commonwealth of Independent States (CIS)

contributed to this fall in quantum of exports.

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Similarly a dissection of the import unit value indices, region-wise, shows that the negative

growth for the first time in the decade was due to the negative growth of unit values in

imports from all the regions, with the South African Development Community being the

exception. The deceleration of imports in rupee terms in 2009-10 was mainly due to the high

negative growth of unit value indices even while volume growth was moderately high. This,

in turn, was due to the high negative unit value growth in chemicals and related products

despite the moderate quantum growth; negative unit value growth of machinery and transport

equipment coupled with the low quantum growth; negative unit value growth in

miscellaneous manufactured articles and mineral fuels and nonfuel crude materials, despite

their positive quantum growths. The net terms of trade, which measures the unit value index

of exports as a proportion of unit value index of imports, improved by 12.3 per cent.

This was despite the very marginal positive growth in unit value index of exports as the

growth of unit value index of imports was negative for the first time in this decade at 10 per

cent. Income terms of trade, reflecting the capacity to import, grew at 11 percent like in the

two previous years. But unlike the earlier two years this was due to the high favorable growth

in net barter terms of trade while export volume growth was negative for the first time in this

decade.

5.4 India’s Export –Import

India’s primary products export during 1990-91 was US$ 4324 Million recorded increases to

US$ 7256 Million in 1995-96. The export has finally reached to US$ 27523.42 million in

2007-08. The increase in export and import raised the proportion of trade in agricultural GDP

from less than 5 percent in the beginning of reforms to close to nine and a half percent by

1995-96. After 1996-97, value of export started shrinking as international prices started

falling (Chand 2003). Due to falling international prices imports into the country became

more attractive and were facilitated due to liberalization of imports followed due to WTO

commitments. This way the net earnings from agriculture trade in the post WTO period

dropped to a very low level. The post WTO period showed increase in ratio of imports to

GDP whereas ratio of exports to GDP for agriculture sector followed small decline. This

shows that post WTO period has been adverse to export but favorable for imports. This

pattern shows sharp contrast with the first five years of reforms period when share of exports

in GDP experienced sizable increase.

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Marine products are the most important items of agricultural exports from India and oil

meal/cake remained the second most important item in most of the years (Table 4.8). Export

of marine products got a big boost with economic reforms in the initial years. During the post

WTO period marine products export did not show much increase. India has registered its

presence in a very big way in rice export in some years however these exports show very

large year-to-year fluctuations. Marine products export during 1990-91 was US$ 535 Million

recorded a increases to US$ 1010.8 Million in 1995-96. The export has finally reached to

US$ 1720.5 Million in 2007-08. Export of oil meal increased from US $ 339 Million in

1990-91 to US $ 702 Million in 1995-96 since then export has fallen to less than half. In the

case of commodities like cotton, wheat, and sugar, India occasionally export large quantity

but there is no consistent trend in these exports.

Exports of traditional items from India like spices, tea and coffee and groundnut could not

keep pace with the past after 1997-98. Export of horticultural products maintained upward

trend during post WTO period but total export of these products is low. In case of

manufactured goods export it has increased from US $ 12996.4 Million in 1990-91 to US $

23747 Million in 1995-96, finally in the year 2007-08 it has reached US $ 102944 Million.

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Table: 5.8 Exports of Principal Commodities – US Mn Dollar

Commodity/Year 1990-91

1995-96

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

I. Primary products 4324 7256.9 7126.2 7163.6 8706.1 9901.8 13553.3 16377.4 19686 27523.4 A. Agriculture and allied products 3354.4 6081.9 5973.2 5901.2 6710 7533.1 8474.7 10213.8 12683.5 18403.6 1. Tea 596.4 350.1 391.5 360.5 341.4 356.3 409.6 390.9 435.3 505.3 2. Coffee 140.6 449.3 259.4 229.6 205.4 236.3 237.9 358.8 435.1 465 3. Rice 257.2 1365.7 641.8 665.6 1204.9 907 1506.5 1405.2 1554.9 2918.7 4. Wheat 17.3 109.6 90.9 278.9 363.6 520.4 324.9 125.9 7.8 0.1 5. Cotton raw including waste 471.4 60.8 48.4 9 10.4 205.1 94 656 1349.8 2202 6. Tobacco 146.8 133.6 189.8 169.4 211.4 238.6 279.2 300.6 372.4 479.8 7. Cashew including cashew nut shell liquid 249.1 369.9 449.5 376.2 426 371 554 585.8 553.9 555.1

8. Spices 130.4 237.2 354.1 313.9 342.1 336 419.1 477.9 697.9 1044.3 9. Oil meals 339.1 702.1 447.6 474.5 307.3 728.7 707.2 1101.1 1216.4 2022 10. Fruits and vegetables 118.9 157.7 184.6 221.1 245.5 389.9 398.7 481.9 681.1 761.6

11. Processed fruits, juices, miscellaneous processed items 118.5 265.4 288.4 259.3 306.7 305.2 284.3 359 405.8 530.5

12. Marine products 535 1010.8 1393.8 1236.8 1431.6 1328.7 1439.8 1589.2 1768.2 1720.5 13. Sugar and mollases 20.9 151.4 110.6 373.6 374.9 269 34.5 135 720.6 1406.5 14. Meat and meat preparations 77.9 187.4 321.7 250.2 284.6 373.1 424 621.2 732.4 931.3 15. Others 134.7 530.8 801.2 682.8 654.3 967.8 1360.9 1625.3 1751.6 2861

The export of agricultural products such as tea has decreased during 1990-91 to 2008-09 periods. For primary products, overall the exports

increased to 5 times during same period, for agricultural products it increased but not in the same trend. Total exports increased in the post WTO

period as well as in the Pre WTO period not in linear trend (ref Table: 5.8).

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Table: 5.8 Exports of Principal Commodities – US Million Dollar (Cont…) Table: 5.8 Exports of Principal Commodities – US Million Dollar (Cont…)

Source: Directorate General of Commercial Intelligence and Statistics. 2007 & RBI Handbook, 2008

Commodity/Year 1990-91 1995-96 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

B. Ores and minerals 969.6 1174.9 1153 1262.4 1996 2368.7 5078.6 6163.6 7002.5 9119.8

II. Manufactured goods 12996.4 23747 34335.2 33369.7 40244.5 48492.1 60730.7 72562.8 84920.6 102944

A. Leather and manufactures 1449.2 1752.2 1944.4 1910.1 1848.3 2163 2421.6 2697.7 3016.7 3502.5

B. Chemicals and Related products 1728 3597 5885.9 6051.8 7455.3 9445.9 12443.7 14769.5 17335.5 21176.7

C. Engineering goods 2250.4 4391 6818.6 6957.8 9033 12405.4 17348.3 21718.8 29567.2 37352.8

D. Textile and textile products 4342.6 8031.6 11285 10206.5 11617 12791.5 13555.3 16402.1 17373.2 19420.1

E. Gems and jewellery 2924.1 5274.8 7384 7306.3 9029.9 10573.3 13761.8 15529.1 15977 19678.7

F. Handicrafts (excluding handmade carpets)

223.9 433.9 661.5 549 785.3 499.7 377.4 462 438 508.2

G. Other manufactured goods 78.2 266.5 355.8 388.3 475.6 613.3 822.6 983.7 1213 1304.5

III. Petroleum products 522.7 453.7 1869.7 2119.1 2576.5 3568.4 6989.3 11639.6 18678.7 28363.1

IV. Others 302.2 337.3 1229.2 1174.3 1192.3 1880.3 2262.6 2510.7 3128.8 4302.1

Total exports 18145.2 31794.9 44560.3 43826.7 52719.4 63842.6 83535.9 103091 126414 163132

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Trends in export show that India has not been able to maintain steady flow of export of

commodities like non-basmati rice, wheat, cotton, sugar. In the post WTO period export of

oil, groundnut, spices, tea, and coffee has been affected adversely. In the case of high value

horticultural and livestock products, exports, in general, maintained rising trend even during

the post WTO period of depressed international prices.

Export of guar gum meal, castor oil shows the possibility of exploiting inches in export.

Trend in export of castor oil is a pointer to the important role of technology that enabled India

to raise castor yield in some states, which equipped it with advantage in export. Uncertain

production in agriculture is also due to its dependence on monsoon; however, exports from

agricultural sector depend on surplus production and policy of Government regarding

exports.

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Table: 5.9 Exports of Principal Commodities - Rupees (Rupees Crore)

Commodity/Year 1990-91

1995-96

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

I. Primary products 7758.4 24274 32556 34164.6 42133.3 45500.4 60896.9 72508.4 89078 110811 A. Agriculture and allied products 6018.7 20344 27288 28144 32473.3 34615.7 38078.1 45220.1 57392 74094.3 1. Tea 1070.1 1171.1 1789 1719.2 1652.1 1637.4 1840.3 1730.7 1969.5 2034.2 2. Coffee 252.2 1502.9 1185 1094.9 994 1085.9 1069.1 1588.7 1969 1872.3 3. Rice 461.6 4568.1 2932 3174.1 5831.2 4168 6768.9 6221.3 7035.9 11750.9 4. Wheat 31.1 366.8 415.1 1330.2 1759.9 2391.2 1459.8 557.5 35.4 0.2 5. Cotton raw including waste 845.9 203.5 221.1 42.7 50.3 942.4 422.6 2904.4 6107.8 8865.4 6. Tobacco 263.4 446.8 867.2 807.7 1022.9 1096.5 1254.6 1330.7 1685.2 1931.9 7. Cashew including cashew nut shell liquid 447 1237.2 2054 1793.9 2061.5 1704.8 2489.1 2593.4 2506.5 2234.8

8. Spices 233.9 793.5 1618 1497 1655.5 1544.2 1883.2 2116 3157.9 4204.5 9. Oil meals 608.5 2348.6 2045 2262.9 1487.4 3348.4 3177.6 4875 5504.3 8140.5 10. Fruits and vegetables 213.3 527.6 843.3 1054.6 1188.1 1791.6 1791.3 2133.5 3082.1 3066.4

11. Processed fruits, juices, miscellaneous processed items 212.7 887.8 1318 1236.7 1484.2 1402.4 1277.2 1589.4 1836.4 2135.8

12. Marine products 960 3381.1 6367 5898.3 6928.1 6105.6 6469.2 7035.9 8001 6926.7 13. Sugar and mollases 37.6 506.4 505.1 1781.9 1814.5 1236 155.1 597.9 3260.8 5662.8 14. Meat and meat preparations 139.8 627 1470 1193.3 1377.2 1714.4 1905.3 2750.2 3314 3749.5 15. Others 241.7 1775.6 3660 3256.5 3166.6 4447.2 6114.9 7195.6 7926.1 11518.4

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Table: 5.9 Exports of Principal Commodities-Rupees (Rupees Crore) (Contd…)

Source: Directorate General of Commercial Intelligence and Statistics. 2007 & RBI Handbook

Commodity/Year 1990-91 1995-96 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

B. Ores and minerals 1739.7 3930.1 5267.4 6020.6 9659.9 10884.6 22818.8 27288.3 31686 36716.9

II. Manufactured goods 23319.1 79433.3 156858.4 159146.4 194764.5 222828.8 272872.2 321260.8 384261.4 414457.7

A. Leather and manufactures 2600.3 5861.2 8883.1 9109.8 8945 9939.4 10880.6 11943.5 13650.4 14101.3

B. Chemicals and Related products 3100.5 12032 26889.2 28862 36080.3 43405.5 55911.4 65389.8 78442.1 85258.7

C. Engineering goods 4037.8 14687.7 31150.4 33182.9 43715.4 57004.9 77948.7 96156.9 133790.1 150384.9

D. Textile and textile products 7791.8 26865.4 51554.7 48676.6 56220.8 58778.8 60905.8 72617.8 78612.9 78186.6

E. Gems and jewellery 5246.7 17644.2 33733.4 34845.1 43700.7 48586.1 61833.7 68752.6 72295.2 79227.7

F. Handicrafts (excluding handmade carpets)

401.7 1451.5 3022.1 2618.1 3800.6 2296.1 1695.8 2045.3 1981.9 2046.2

G. Other manufactured goods 140.4 891.4 1625.6 1852 2301.7 2818.1 3696.3 4355 5488.8 5252.3

III. Petroleum products 937.8 1517.8 8541.7 10106.6 12469.2 16397.4 31404.2 51532.8 84520.1 114191.7

IV. Others 542.3 1128.2 5615.4 5600.4 5770.3 8640.1 10166.3 11115.9 13919.7 16402.9

Total exports 32557.6 106353.3 203571 209018 255137.3 293366.8 375339.5 456417.9 571779.3 655863.5

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The table 5.9 shows exports of principal commodities, in terms of rupees. India’s primary

products export during 1990-91 was Rs. 7758.4 crore recorded increase to Rs. 24274.1 crore in

1995-96. The export has finally reached to Rs. 110811 crore in 2007-08. Marine products export

during 1990-91 was Rs. 960 crore recorded a increases to Rs. 3381 crore in 1995-96. The export

has finally reached to Rs. 6926.7 Crore in 2007-08. Manufactured goods export during 1990-91

was Rs. 23319 crore recorded a increases to Rs. 79433 crore in 1995-96. The export has finally

reached to Rs. 414458 crore in 2007-08. Petroleum products export during 1990-91 was Rs.

937.8 crore recorded a increases to Rs. 1517.8 crore in 1995-96. The export has finally reached

to Rs. 114192 crore in 2007-08.

The issue of export promotion is particularly relevant at the present time when Indian economic

policies are undergoing a process of substantial reconsideration and revision.21 A commodity

wise export data as per (DGCIS) reveals that manufactured goods continued to maintain the

largest share at 67.2 percent followed by petroleum products 14.7 per cent and primary products

13.9 per cent. Above all the share of manufactured goods has increased along with the decrease

in share of petroleum products and primary products. Exports were largely neglected during the

first and second five-year plans, which were justified on the ground that demand for India export

was inelastic. In Table 5.8 shows export of India’s agriculture and allied products exports in

1990-91 was 6018.7 crore during 1995-96 it has reached to 20344 crore, but in the year 2001-

02 it reach to 27228.2 crore, finally 74094.3 crore in 2007-08. Among the primary products,

agriculture and allied products showed a decline of 4.9 per cent as against a high growth of 45.3

per cent during the year. Slowdown in agricultural and allied products export was mainly due to

the decline in exports of rice, cotton, marine products sugar and molasses and deceleration in

export growth of tea, coffee, and oil meal. Ores and minerals export declined by 14.5 per cent

during this period.

21 Export optimi sm and import liberalization Economic and political weekly vol. 20. (Jayati Ghosh Jan 198 5.)

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Table 5.10 India’s Exports of Principal Commodities Percentage share

Commodity Group 2006-

07

2007-

08

2008-

09

I Primary Products 15.6 16.9 13.9

Agri & Allied

products

10.0 11.3 9.6

Ores &Minerals 5.5 5.6 4.3

II Manufactured

Goods

67.2 63.2 67.2

Leather &

Manufacture

2.4 2.2 1.9

Chemical &

Related Products

13.7 13.0 12.4

Engineering Goods 23.4 22.9 25.9

Textiles & Textile

products

13.7 11.9 11.0

Gems & Jewelry 12.6 12.1 15.2

III Petroleum

Products

14.7 17.4 14.7

IV Others 2.5 2.5 4.2

Total Exports 100.00 100.00 100.00 Source: RBI Bulletin Nov2009

The table 5.10 shows that during 2008-09, exports of major commodity groups slowed down,

engineering goods showed a marginal growth, Gems and Jewelry showed substantially

accelerated growth. Export of agriculture and allied products, ores and minerals and petroleum

products declined. Leather, manufacture and textile products showed deceleration. Export of

manufactured goods showed a deceleration of 19.3 per cent from 21.3 per cent in the previous

year. Among manufactured goods export of engineering goods which was the largest item in

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India’s export comprising of transport equipment, iron & steel and electronic goods showed a

marginal increase of 26.5 per cent as it was 25.4 percent a year ago.

The share of engineering goods in total export has increased remarkably from 22.9 per cent to

25.9 per cent as a result of high growth manufactured by engineering goods in contrast with slow

down in most of other commodity groups. Chemicals and related products exports during 2008-

09 at US$ 22.6 billion showed a moderate growth of 6.8percent from 22.3percent during 2007-

08. Exports of textiles and textile products showed a sharp moderation in growth to 3.0 percent

from 11.8 percent. Gems and Jewelry exports during 2008-09 at US$ 27.7 billion recorded an

accelerated growth of 40.8 percent, as it was 23.2 percent. This is evidence of recessionary

condition prevailing in export destination of the country.

Table 5.11 India's Share in world Export (in US million dollar (1990-2008)

Commodity Year

1990

1995 2000 2007 2008 Meat & Preparation 0.2 0.7 0.9 1.1

Fish Preparation 1.6 2.7 2 1.7

Rice 6.4 10.2 17.8 14.3

Vegetable &fruits 0.8 1.3 1.1 1.2

Sugar &prep 0.1 0.9 3.6 4.8

Coffee substitute 1.7 2.3 1.9 2

Tea 22.1 14 8.6 9

Spices 7.7 10.3 14 14.5

U/M Tobacco 2.1 2.7 3.8 5.3

M Tobacco 0.3 0 0 0

Oilseeds 0.8 1.7 1.8 1.5

Iron ores 7.6 3.9 11.5 8.6

Medicine Pharmacy 1.2 1.2 1 0.9

Leather 4.8 2.3 3.1 3.5

Woven cotton fabrics 3.7 4.9 3.2 3.6

Pearls &stone 9.8 12 13 13

Total 0.5 0.7 1.1 1.1

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Source: United Nation: 2008, International Trade Statistics, Year Book, &Economic Survey 2010-11,

UN2009

However, during post-WTO period (1995-2008), the average share of edible oils increased to

45.4 per cent in India's agricultural imports. But the share of other items, i.e. pulses, cashew nuts,

sugar, wheat and cereal preparations, diminished marginally. India’s agricultural imports on an

average during post-WTO period. The major items, whose imports have been increased during

post-WTO period, were edible vegetable oils, spices, raw cotton, and raw jute. The share of these

four items in India's agro imports increased from 18.1 per cent during pre-WTO period to 54.6

per cent during post-WTO period on an average per annum. In fact, edible oils constituted more

than 50 per cent in India's agricultural imports during 1998-2004, except 2001-02. The major

items, whose share has been increased during post-WTO period, were rice other than basmati,

pulses, wheat, spices, groundnut, guar gum meal, castor oil, and sugar. On the other hand, the

share of agricultural products in India's global imports during post-WTO period has been

increased to 6.1 per cent-on an average per annum, as compared to 4 per cent during pre-WTO

period. The major items, whose share has been increased in India's global imports during post-

WTO period, were edible vegetable oils, raw cotton and spices. Thus, it is revealed that during

post-WTO period, India's global agricultural exports have diminished marginally; rather her

global agricultural imports have been increased.

The most important determinant of the distribution of gains from trade is the Terms of Trade.

Terms of trade are the important measure of gains to individual country from international trade.

During post-WTO period the gains from trade may not be evenly distributed among WTO

members. Table 5.11 shows that India enjoyed favorable terms of trade during pre-WTO period

(1990-95) except for 1991-92, when new economic policy of liberalization was launched. During

1991-92, export unit value of coffee, tobacco and sugar was cheap and import unit value of rice

and milk and cream was higher. India's commodity terms of trade were turned out to be highly

favorable during 1994-95. On an average per annum during pre-WTO period, India's agricultural

terms of trade were favorable by 18.6 per cent. During post-WTO period also, India enjoyed

favorable agricultural terms of trade except for 1995-96, when import prices of edible oils,

cashew nuts and raw cotton were higher. However, India experienced favorable agricultural

terms of trade during 1996-2004. On an average per annum during post-WTO period, India

enjoyed favorable agricultural terms of trade by 11.15 per cent, as the export unit value index

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was higher by 52.74 per cent, but the import unit value index was higher by 37.42 per cent.

Nevertheless, on an average per annum, the gains from agricultural trade were lower during the

post-WTO period, as compared to Pre-WTO period. On the whole, it can be said that India's

agricultural terms of trade have not deteriorated. Rather, India has marginally gained in her

global agricultural trade during the post-WTO period. But the gains from agricultural trade in the

post-WTO regime have been much less than expected.

5.5 Imports of Principal Commodities

Trends in India's Imports

The trends in India's imports for the period 1990-91 and 1995-96 as compared with the

corresponding period of the previous year are reflected in Import of items under bulk category as

a whole comprising inter-alia Fertilizers, Cereals, Sugar, Edible Oil, Iron and Steel and

Petroleum Crude and Products recorded a substantial increase during 2003-2004 compared with

the corresponding period of the previous year. It is notable that the commodity group recording

the highest growth in imports was Machinery. India’s Bulk Imports during 1990-91 was US$

10848 Million recorded increases to US$ 14314 Million in 1995-96. The export has finally

reached to US$ 112749 Million in2007-08. As far as import of individual items is concerned,

significant growth was registered by Paper Board and Manufactures (47.59percent) followed by

Iron & Steel (43.76 percent), Crude Rubber including Synthetic (43.31 percent), Edible Oil

(36.71 percent), Non-ferrous Metals (33.07 percent), News Print (29.72 percent), Fertilizer

(15.60 percent) Pulp & Paper Waste (13.76 percent), Metalli ferrous Ore & Scrap (11.66 percent)

and Petroleum Crude and Products (4.44 percent). India’s non-bulk Imports during 1990-91 was

US$ 13224 Million recorded a increases to US$ 22361 Million in 1995-96. The export has

finally reached to US$ 138691Million in2007-08 (table: 5.12). Import of some items during this

period registered a fall. These included Crude oil, Fertilizer (25.55 percent). Import of Rice &

Wheat came down to nil during the period under review. Imports of food and related items

increased at a very sharp rate during post WTO period also, which raised the imports from $ 1.1

billion in 1995-96 to $2.7 billion during 1998-99. In the last two years some check has been put

on these imports

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Table: 5.12 Imports of Principal Commodities - Us Dollar

Commodity/Year 1990-91 1995-96 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

I. Bulk imports 10848 14314 20816 20263.1 24299.5 29461.5 42400.7 61086.1 84434.2 112748.5

A. Petroleum, crude and products 6028.1 7525.8 15650 14000.3 17639.5 20569.5 29844.1 43963.1 57143.6 79644.5

B. Bulk consumption goods 556.5 969.7 1443 2043.2 2411 3072.8 3104.6 2766.6 4294.2 4599.4

C. Other bulk items 4263.3 5818.9 3722 4219.6 4249 5819.2 9452 14356.5 22996.5 28504.6

II. Non-bulk imports 13224.6 22361 29721 31150.2 37112.6 48687.6 69116.7 88079.6 101315 138690.7

A. Capital goods 5835.6 10330 8941 9882.2 13498.2 18278.9 25135 37666.2 47069.2 70840.6

B. Mainly export related items 3680 5257.5 8059 8260 10313.7 12716.8 17095.5 18641 17871.7 20783.5

C. Others 3709 6773.3 12721 13008 13300.7 17691.9 26886.2 31772.4 36374.2 47066.5

Total imports 42217.7 36675 50537 51413.3 61412.1 78149.1 111517 149165.7 185735 251654

Source: Directorate General of Commercial Intelligence and Statistics. 2007 & RBI Handbook,2008

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Thus, Import of edible oil accounts for major increase, in food import. Till 1994-95 import of

edible oil did not exceed $200 million. During 1998-99 and 1999-2000, edible oil import has

risen to more than $1.8 billion (Ref. table 5.12). This has raised Indian’s dependence on import

for edible oil close to 40 per cent and is causing adverse impact on domestic oilseed growers.

Import of cotton (raw and waste) has also witnessed quantum jump after 1998-99. Despite

having large surplus of sugar for export, India witnessed import shock whenever tariffs on sugar

imports were low. The trend in India’s import and export during reforms period, show that,

decline in India’s agricultural exports after 1997, is consistent with the trend in global trade in

agricultural products largely attributable to decline in the international prices. However, India’s

farm imports rose sharply during post WTO period despite decline in global agricultural trade.

Thus India’s agricultural imports during post WTO period did not follow the trend in the global

trade. Second, in the post WTO period trade liberalization has led to sharp rise in import of

edible oil and cotton. Horticulture sub sector has seen favorable impact on export during the

decade of reforms.

5.6 Import by major product categories:

During the year 1990 the total import of Fertilizers increased to Rs. 2742 crores from Rs. 2372

crores in the corresponding period of 1995 recording an increase of 15.60 percent. However

import of Crude Fertilizer decreased by 25.55 percent. The import of Petroleum Crude &

Products was valued at Rs. 67920 crores during 2001-05 as against Rs. 62059 crores during

2005-2008 showing a growth of 9.44 percent. Import of Pearls and Precious and Semi-precious

Stones increased by 5.55 percent to Rs. 23109 crores during year 1990 as compared to Rs. 21893

crores during the corresponding period of the previous year. Import of Capital Goods, largely

represented by machinery, including Transport Equipment as well as Project Goods recorded a

notable increase during year 1990 over the same period of last year. Machine Tools segment saw

a significant rise of 64.03 percent in imports. Import of Project Goods, however, decreased from

Rs. 1807 crores in year 1990 to Rs. 1221 crores in year 1990 registering a fall of 32.43 percent.

Other items that showed positive import growth were Transport Equipments (62.06 percent)

Non-Electrical Machinery (24.17 percent), Electric Machinery (19.34 percent), and Professional

Instruments (1.56 percent). Organic and Inorganic Chemical Materials and Medicinal and

Pharmaceuticals Products constituted the major components of imports under this category. The

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imports of organic and inorganic chemicals increased to Rs. 13,149 crores during year 1990 from

Rs. 10,794 crores during year 1990, registering a growth of 21.82 percent. Import of medicinal

and pharmaceutical products marginally declined to Rs. 2073 crores during year 1990 from

Rs.2087 crores during the corresponding period of last year registering a fall of 0.67 percent. The

total import of sensitive items for the period 2006 has been Rs 14,472 crore as compared to Rs

12,959 crore during the corresponding period last year thereby showing an increase of 11.7 per

cent. The gross import of all commodities during same period of current year was Rs 598287

crore as compared to Rs 46,4866 crore during the same period of last year. Thus import of

sensitive items constitutes 2.8 per cent and 2.4 per cent of the gross imports during last year and

current year respectively. Imports of fruits & vegetables (including nuts), cotton & silk, spices

and tea & coffee have shown a decline at broad group level during the period. Imports of items

viz. edible oil, food grains, products of SSI, rubber, marble & Granite, Alcoholic beverages and

milk & milk products have shown increase during the period under reference. In the edible oil

segment, the imports have increased from Rs 6,753 crores last year to Rs 7,558 crores for the

corresponding period of this year. A significant feature of edible oil import is that import of

crude oil has gone up by 20.5 per cent and that of refined oil have gone down by 44.9 per cent.

The growth in edible oil import is mainly due to significant increase in import of Crude Palm Oil

and its fractions, which has gone up by 44 per cent.

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Table: 5.13 shows Imports of bulk commodities –in terms of rupees during 1990-91 was Rs.

19,464.3 crore recorded a increases to 47881.1 crore in 1995-96. The export has finally reached

to Rs. 453933 crore in 2007-08. Non-bulk products Imports during 1990-91 were Rs.

23,728crore recorded a increases to Rs. 74,797 crore in 1995-96. The export has finally reached

to Rs. 55,8,378 crore in 2007-08.

5.7 Composition of India’s Import

Financial crisis in U.S., which began in the second quarter of 2007, adversely affected India's

merchandise exports to U.S. with negative effects becoming pronounced from october 2008

onwards. A likely explanation for this lag is that India's exports grew at a much higher rate to the

world as compared to US since 2005. Also, the share of U.S. in India's exports has declined over

the years. India’s export basket in terms of its composition has diversified over time and shares

of traditional exports have declined in the export basket. This has led to reduced dependence on

few exportable products and helped moderate the impact of reduced demand of exports.

However, there exists large scope for further diversification.

Over a period of time, the significance of South-South trade for India is increasing with the share

of developing countries increasing from 17 percent in 1990-91 to 42 percent in 2007-08. In

particular, the direction of India's exports is slowly shifting towards Asian developing countries.

However, developed countries, like EU and US, are still India's major export markets. In terms

of exports of services, there has been exponential rise overtime with CAGR of about 24percent

during 2001-2008. U.S. remains the major export market for India's services and software

exports remain the major exportable service with 40percent share. India's import growth has

declined during the slowdown but the decline has been lower than the decline in exports. Non-oil

import growth declined from 29 percent in 2005-06 to 13 percent in 2007-08 while oil imports

declined from 47percent in 2005-06 to 17 percent in 2008-09. Unlike growth rate of exports, the

growth rate of imports has remained positive. Agricultural trade during 2008-09 shows a healthy

balance, which can be boosted further if the export of traditional and new agricultural products

like marine products, rice (basmati), other cereals, tea, coffee, cashew nuts, oil meals,

floriculture, cotton, Niger seed, etc., can be increased further.

The post Uruguay round experience has been a mixed one for agricultural trade in India. While

exports in certain areas, have registered a high growth, in certain other areas, the growth rate has

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not been satisfactory. Exports of rice (basmati and non-basmati), coffee, tobacco, dairy and

poultry products, spices, groundnut, guar gum meal, oil meal, fresh fruits and vegetables, meat

and its preparations, raw cotton including waste, and paper/wood products have shown

significant growth. Exports of pulses, castor oil, and marine products have not shown significant

growth. At the global level, average bound tariffs have been reduced in the Uruguay round

However, measures like, tariff escalation, variable Tariffs, complex tariffs and also certain

nontechnical barriers still persist. Domestic support and export subsidies continue to remain high

in a few developed countries. For most high-value agricultural products, including fruits and

vegetables, fish, beef, poultry products, and Spices, many importing countries have developed

new standards, besides tightening existing standards. These factors have acted as inhibiting

forces in actualizing the export growth potential of the country. Other factors that have led to

limited exports include infrastructure inadequacies, poor quality awareness, and poor post-

harvest management. Globalization has led to increased competition from international markets

and pressure to dismantle protectionist instruments. Since agriculture in India is more a matter of

livelihood than a commercial venture, it is necessary to build capacities in the system so that it is

able to withstand the forces of globalization and compete wherever possible. While there are a

large number of issues to be addressed at the micro and macro levels, the Capacity Building to

Enhance the Competitiveness of Indian Agriculture and Registration of Organic Products Abroad

scheme aims to address some of the limited micro-level capacity creation issues. The capacity

building under this scheme may be in the form of academic, relevant research, market surveys

(domestic and international), or in the form of creation of physical assets critical to agriculture in

the international context.

The EC-India Joint Working Group on Agriculture and Marine Products has been setup in the

Department of Agriculture and Cooperation for facilitating and promoting agricultural trade

between India and the European Union. The 3rd meeting of the Joint Working Group was held in

New Delhi on 14October 2009 to discuss agricultural policies, growth in bilateral trade, and

issues of mutual interest related to agricultural trade.11.9 Negotiations on PTAs/FTAs are at

various stages of progress with MERCOSUR (Brazil, Argentina, Paraguay, and Uruguay),

BIMSTEC (Bangladesh, Bhutan, Myanmar, Nepal, Sri Lanka and Thailand), the Gulf

Cooperation Council (Kuwait, Bahrain, Qatar, Oman, Saudi Arabia, and the United Arab

Emirates), Thailand, and the European Union. India has signed the Trade in Goods Agreement

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with ASEAN countries and comprehensive Economic Partnership Agreement with South Korea

in 2009. Agricultural commodities which are vulnerable to global competition and which are

crucial for food and livelihood security have been kept out of the purview of these agreements.

Besides, stringent rules of origin norms and built-in safeguards have been put in place to protect

the interest of farmers.

5.8 India’s Agriculture Export –Import

Agriculture and allied products comprises a wide variety of agricultural products covering

Cereals, Pulses, Tobacco, Spices, Nuts and Seeds, Oil Meals, Guargum Meals, Castor Oil,

Shellac, Sugar and Molasses, Processed Food, Meat and Meat Products, etc. During 1990-2008

the exports of this group recorded an increase of Rs. 6018.7 crores to Rs. 74094.3 crores Cereals

(except Rice) Groundnuts, Guar gum Meals, Shellac, Processed Food & Spirit & Beverages

registered growth in exports. The exports of Marine Products stood at Rs. 960 crores during

1990-91 recording a decline of 11.7 percent over Rs. 6926 crores during 2007-2008. The USA,

EU and Japan continued to be the major destination of marine exports from India. As regards the

composition of India's global agricultural trade, the major items of her exports were oil meals,

tea, coffee, rice, cashew, raw cotton, spices, fruits and vegetables, marine products, etc. The

major items of her agricultural imports were edible oils, cashew nuts, pulses, wheat, sugar, raw

cotton, etc. As per economic review 2009, the share of major items in India's agricultural trade

during pre-WTO and post-WTO period. During pre-WTO period, the major export items and

their respective share in total exports were Meat & prep 0.2 percent and 0.7 percent in the year

1990 & 2000 finally it stood at 1.1 percent during the year 2008, oil seeds 0.8 percent share it

reached to 1.5 percent share in 2008, Tea’s percentage share in 1990 was 22.1 percent, it

reached to 14, & 9 percent during the year 2000 and 2008. In case of rice 6.4 percent&10.2

percent and 1.1 percent in the same period, coffee percentage share in1990 was 1.7, it reached

to 2.3 &2 percent during the year 2000 and 2008. Spices export was in said period

7.7,10.3and14.5percent Tobacco both Manu and u/Manu together share was 2.4 during 1990 in

the year 2000 it marginally gain of .3 percent oil seeds exports share was 0.8 percent during the

year 1990 it has reach to 1.5percen in year 2008. These eight items accounted for 78.9 per cent in

India's agricultural exports during 1990-95 on an average per annum. However, the situation

changed during post-WTO period. During 1995-2004, the share of these eight major items in

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India's agricultural exports diminished to 67 percent on an average per annum. Whose exports

have been increased during the post-WTO period, were rice other than basmati, pulses, wheat,

coffee, spices, sesamum seed, groundnut, guar gum meal, castor oil and sugar. The share of these

ten items in India's global agricultural exports increased from 17.9 per cent during pre-WTO

period to 32.7 per cent during post-WTO period on an average per annum. The removal of export

restrictions on rice in 1994 has been a factor in growth of rice exports during post-WTO period.

5.9 India’s Total Exports vs. Agri Exports (US Billion Dollars)

India’s total exports vs agri exports has shown in Table 4.14 by the figure it was clearly seen

that, Export of agriculture products increased from US$ 6.0 bn in 2000-01 to US$ 11.2 bn in

2006-07. However, the share of agriculture and allied products in total exports has come down

from 13.6 percent to 8.9 percent during the same period. During the period 2000-01 to 2006-07,

India’s overall exports grew faster than agro exports.

Table 5.14 India’s Total exports vs. Agriculture exports

Year Total export Agri and allied Export

Growth in Total export

Growth in Agri and allied

Export 2000-01 44.1 6.0 20.1 6.6 2001-02 43.8 5.9 -1.7 -0.7 2002-03 52.7 6.7 20.3 13.6 2003-04 63.8 7.6 21.1 13.4 2004-05 83.5 8.4 30.9 10.5 2005-06 103.1 9.6 23.5 14.3 2006-07 126.3 11.2 22.5 16.7

Source: CMIE, India Trade data base, 2008

India is among the 15 leading exporters of agricultural products in the world. As per

International Trade Statistics, 2009, published by the WTO, India's agricultural exports

amounted to US$ 21.37 billion, with a share of 1.6 per cent of world trade in agriculture in 2008.

Agricultural exports have shown an increasing trend. Agricultural exports have increased from

Rs. 79,039.72 crore in 2007-08 to Rs. 85,961.82 crore in 2008-09, registering a growth of about

8.76 percent

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The most significant positive aspect of our agricultural exports is that a majority of the items in

the agriculture export are net foreign exchange earners, with negligible import content unlike

high import content in many manufactured products. Export of agriculture products increased

from US$ 6.0 bn in 2000-0 1 to US$ 11.2 bn in 2006-07. However, the share of agriculture and

allied products in total exports has come down from 13.6percen to 8.9% during the same period

(Ref Table 5.14). During the period 2000-01 to 2006-07, India’s overall exports grew faster than

agro exports. The difference has always been substantial except in 2001-02 where both

experienced negative growths.

India’s major agro exports (apart from marine products) include rice, oil meals, cashew, spices,

tea, and wheat. The non-traditional exports include horticulture and floriculture products such as

vegetables, fruits and their processed products. Star performers have in fact been the traditional

agro exports like basmati rice, oil meals and castor oil. To be precise, share of oil meals in

India’s agriculture exports jumped to 8.6percen in 2004-05 from 4.6percent during 2001-02.

Share of basmati rice also shot up from 6.3percent to 7.6 percent during the same period. This

was due to a significant average growth rates experienced over the last three years of 62 percent

and 22 percent, respectively. This trend clearly reflects increasing importance of traditional agro

exports, necessitating the need to diversify into non-traditional export products.

5.10 Direction of India’s Agricultural Exports

The agricultural commodities from India are mainly exported to many of the developed and

emerging economies. Destination wise analysis shows that during 2008-09 developing countries

and OECD countries were the major markets for India’s export accounting for 37.6 percent, 37.4

percent share respectively. Another major contributor was OPEC with 21.2 percent shares.

Country-wise the UAE become the single largest destination for India in 2008-09 with a share of

13.1 percent in. India’s total exports by replacing the U.S which remained India’s largest export

market for a number of years UAE was followed by the US (1 1.4percent), China (5. 1 percent),

Singapore (4.5 percent), Honkong (3.6 percent) and UK (3.6 percent). The detail of India’s

direction of exports to principal countries in rupees is shown in table 5.15, Tea export was

Rs.30.1 crores during 1990-91 in 1995-96 it has reached to Rs. 131.3crores finally it stood at

286.6 for UAE in the year 2007-08,followed by Russia in the same year almost same value.

Incase of Germany the value wise export not very impressive from the year 1990-91 to 2007-08.

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Coffee was main export for India that was Rs.17 crores during 1990-91 in 1995-96it has reached

to Rs. 197.7 crores finally it stood at 464.5 for Italy in the year 2007-08,followed by Russia in

the same period Rs.146 crores to Rs.156.5 crores value. In case of USA the value wise export

from the year 1990-91 to 2007-08 was Rs 6.9 to Rs 40.5 crores.

Rice export are also very important for India, Export of rice to Bangladesh followed by Saudi

Arabia was Rs951 crores and Rs. 519crores during 1995-96 it has reached to Rs. 2646 crores &

Rs. 1433 crores. Tobacco export has second position for UAE i,e Rs 223.2 crores., during the

year 2007-08, but in 1990-91only it was Rs. 3.4 crores. First position was Belgium Rs. 17.8

crores. In 1990-91 it reached to Rs. 246.1 crores in the year 2007-08 (Ref Table 5.15).

Table: 5.15 Exports of Select Commodities to Principal Countries - Crore Rupees

Commodity 1990-

91 1995-

96 2000-

01 2001-

02 2002-

03 2003-

04 2004-

05 2005-

06 2006-

07 2007-

08

Tea

Germany 42.2 75.5 92.9 86.5 95.3 125.5 119.2 112.8 101.1 109.2

Iran 61.8 5.4 53.2 39.4 11.8 8.5 113.1 80.9 100.6 171.7

Russia 597.3 476.6 479 403 287.1 260 234 237.8 279.1 285.2

U.A.E. 30.1 131.3 270.2 238 247.4 261.9 271.8 242.2 177.4 286.6

Total 1070.1 1171.

1 1788.7 1719.2 1652.1 1637.4 1840.3 1730.7 1969.5 2034.2

Coffee

Italy 17 197.7 126.9 145.9 171.5 197.6 228.2 366.3 450.9 464.5

Russia 146.2 341 288.2 318.5 223.6 211.5 181.8 298.4 230.5 156.5

U.K. 1.1 14.2 26.9 16.3 7.3 8.6 10 12.2 12.3 10.9

U.S.A 6.9 165 78.1 50.6 22.8 17.7 32.6 24.7 38.1 40.5

Total 252.2 1502.

9 1184.9 1094.9 994 1085.9 1069.1 1588.7 1969 1872.3

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Rice

Bangladesh 0 951.8 297.6 80.9 564.9 904.3 836.7 552.6 489.3 2646.8

Saudi Arabia 143.3 519.1 1269.6 1309.4 1245 1098.2 1236 1892.9 1874.1 1433.8

Singapore 1.1 8 32.8 51.2 91.6 39.2 38.4 65.2 56.4 68.4

U.A.E. 25.7 182.7 113.2 83.9 140.7 236.5 368.5 399.9 542.4 1516.7

U.K. 38.4 119.8 306.2 196.3 208.6 223.2 284.2 228.4 228.7 320.6

Total 461.6 4568.

1 2932.2 3174.1 5831.2 4168 6768.9 6221.3 7035.9 11750.

9

Tobacco

Belgium 17.8 23.5 62 114.3 114.1 95.8 117.4 162.6 206.1 246.1

Netherlands 4 9.5 46.4 22.3 40.8 62.5 52.2 50.1 53.3 76.3

Russia 105 75.2 126.9 104.9 116.6 96 142.9 173.8 130.7 116.6

U.A.E. 3.4 23.2 70 60 103.4 107.2 72.3 98.7 166.6 223.2

Total 263.4 446.8 867.2 807.7 1022.9 1096.5 1254.6 1330.7 1685.2 1931.9

Spices

Bangladesh 19.5 43.5 70.8 50.2 49.9 62.6 76.2 47 173.6 198.8

U.A.E. 5.3 61.6 94.9 69.7 68.2 92.8 92.9 108.7 155.4 211.1

U.K. 10.5 47.2 112.6 116.1 118.7 103.1 115.7 140.1 188.2 224.9

U.S.A 38.5 172.5 344.6 345.3 380 330 387.3 457.9 591.2 830.1

Total 233.9 793.5 1617.7 1497 1655.5 1544.2 1883.2 2116 3157.9 4204.5

Source: Directorate General of Commercial Intelligence and Statistics. 2007 & RBI Handbook, 2008

UAE in the same period the value wise export was Rs. 273.8crores, In case of Netherlands the

value wise export was impressive from the year 1990-91 to 2007-08 i.e. Rs. 65.7 crores to Rs.

243.8 Crores. Marine Products export was very impressive Japan, China was major importer

from India the value of export was Rs.475 crores during 1990-91 in 1995-96it has reached to Rs.

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1393 crores finally it reduced to Rs. 1083 crores for Japan, for the same period it was. Followed

by China the value of export was in 1995-96 it was to Rs. 46 crores finally it stood at Rs.

673.2crores, exports of select commodities to principal countries - (Rupees crore) are shown

Table: 5.16. The Cashew including cashew nut shell liquid export was Rs. 57 crores during

1990-91 in 1995-96, it has reached to Rs. 349.3 crores finally it stood at Rs. 798.6 crores for

USA in the year 2007-08.

Table: 5.16 Exports of Select Commodities to Principal Countries - Rupees (Rupees crore)

Commodity 1990-91

1995-96

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07 2007-08

Cashew including cashew nut shell liquid

Netherland 65.7 209.2 380.1 255.6 248 205 320.1 410.7 378.2 243.8

SaudiArabia 0.1 11 37.7 28.5 43.3 30.6 54.9 60.8 67.1 68.4

U.A.E. 5.4 38.4 83.7 61.8 89.4 92 134.7 189.2 207.7 273.8

U.S.A 57 349.3 924.4 889.9 1086.1 828.8 1172.7 984.7 975.3 798.6

Total 447 1237.

2 2053.5 1793.9 2061.5 1704.8 2489.1 2593.4 2506.5 2234.8

Oil Meals

Indonesia 1.7 339.5 313.4 387 159.4 590.6 367.9 637.7 694.1 851.3

Korea 0 284.5 210.2 224 261.5 236.3 339.6 607.3 729.8 886.5

Thailand 30.1 213.8 158.6 349.1 17.8 275.1 216.4 289.8 364.9 615.4

Total 608.

5 2348.

6 2044.7 2262.9 1487.4 3348.4 3177.6 4875 5504.3 8140.5

Marine Products

China 0 46 529.1 404.9 571.5 408.2 495.5 666.9 516.1 673.2

Japan 475. 1393.

2329.3 1641.8 1555.2 1112.8 1225 1133.6 1278.2 1083.6

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2 1

Spain 59.7 155.9 203.8 288.2 385.8 302.4 459.3 516 569.9 633.6

U.A.E. 9.6 337.7 325.1 206.8 167.6 155.5 211.8 246.5 278.5 236

U.S.A 113.

4 329.4 1091.7 1294.1 1885.8 1888.4 1512.8 1555.8 1289.3 886.1

Total 960 3381.

1 6367.3 5898.3 6928.1 6105.6 6469.2 7035.9 8001 6926.7

Iron Ore

China 2.1 232.3 593.7 986.5 1976 3784.4 12061 14490 15083 21485

Japan 671.

5 926.2 542.9 522.8 1491.8 822.8 1125.7 1634.3 1489.7 1016.2

Korea 116.

7 158.4 101.1 97.2 253.6 123 292.1 228.5 381.5 264.4

Total 1049

.1 1721 1633.8 2033.6 4200.4 5173.3 14726 16829 17656 23400

Source: Directorate General of Commercial Intelligence and Statistics. 2007 & RBI Handbook, 2008

Table: 5.17 shows direction of foreign trade (Rupees crore) the export and import for OECD

countries during 1990-91 export was Rs. 18,3,89.3 crore & import Rs. 24712.6 crore, it has

reached to Rs 10,3,119.7 crore Rs 98,4,39.1 crore in 2001-02 further in 2007 -08 it reached to

Rs. 25,2,205 crore & Rs. 352061crore. For Eastern Europe countries during 1990-91 export

was Rs. 5819.2 crore & import was Rs. 3377.2crore it has reached to Rs 5984.2crore Rs 4515.6

crore in 2001-02 further in 2007 -08 it reached to Rs. 13622.5 crore & Rs. 21191.9crore. In

OPEC countries during 1990-91 export was Rs. 1830.9crore & import was Rs. 7040.7 crore, it

has reached to Rs 24916.5crore Rs 14144.4crore in 2001-02, further in 2007-08 it reached to

Rs.107379 crore & Rs. 306286.7crore, but in case of developing countries during 1990-91

export was Rs. 5560 crore & import Rs. 8057.1crore it has reached to Rs 64553.2 .5crore Rs

60933.3 crore in 2001-02 further in 2007 -08 ,it reached to Rs. 28, 0102 crore & Rs. 32,

4694.3 crore.

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Table: 5.17 Direction of Foreign Trade (Rupees crore)

Group/ Country 1990-91 1995-96 2000-01 2001-02

Exports Imports Exports Imports Exports Imports Exports Imports

I.OECDcountries 18389.3 24712.6 59223 64254.2 92090.3 103119.7 98439.1

A.EU 8950.8 12680.4 29129 34463.9 47560.9 48015.4 46956.9 49773.9

B.NorthAmerica 5077.1 5803.9 19487 14191.4 45508.9 15587.9 43390.9 17546.1

C.Asia and Oceania 3400.5 4825.7 8870.4 11880.7 10341.3 13633 9493.9 16857.7

D.Other OECD countries 961 1402.5 1736.5 3718.2 3826.7 14853.5 3278.1 14261.5

II.OPEC 1830.9 7040.7 10299 25570.2 22156.9 12283.6 24916.5 14144.4

III.Eastern Europe 5819.2 3377.2 4482.2 5598.7 6020.4 3884.2 5984.2 4515.6

IV.Developing countries 5560 8057.1 30768 27245 59447.1 50966.4 64553.2

A.Asia 4683.1 6050.2 24444 21494.7 45857.6 38646.7 49278.4 44185.3

a)SAARC 957.1 235.8 5755.3 858 8810.4 2128 9662.4 2725.7

b) Other Asian developing countries

3726 5814.4 18689 20636.7 37047.2 36518.7 39616 41459.7

B.Africa 706.2 1027.6 5060 3785.6 8937.8 9119 10782.8 11934.6

C.Latin American countries 720.7 170.8 1264.1 1964.7 4651.7 3200.7 4492 4813.4

V.thers/unspecified 958.2 5.3 1580.4 10 8708.7 71648.3 10444.4 67167.4

Totaltrade 32557.6 43192.9 106353 122678.1 203571 230872.8 209018 245199.7

Cont…

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Group/ Country 2002-03 2003-04 2004-05

Exports Imports Exports Imports Exports Imports

I.OECDcountries 127679 112766 136151 135888.6 163977 179680.5

A.EU 55763.3 60696 63827 67627.1 78807.9 84080.1

B.NorthAmerica 56109.7 24245.4 56306 26471.4 65746.3 34943.6

C.Asia and Oceania 11788.6 15726.2 10934 24794.5 13216.1 32295.1

D.Other OECD countries 4017.6 12098.9 5084.5 16995.7 6206.4 28361.8

II.OPEC 33318.2 16838.5 43858 25775 59342.7 45032.4

III.Eastern Europe 6040.1 5516.4 7147.3 7484.9 7998.8 11296.5

IV.Developing countries 86445.2 75923.4 104697 94509.7 141971 128523.1

A.Asia 67661.4 54704.9 84674 74762.4 112187 101461.1

a)SAARC 13183.5 2477.7 19061 3073.2 19952.7 4269.3

b) Other Asian developing countries

54477.9 52227.2 65613 71689.1 92234 97191.7

B.Africa 12465.2 16203.6 14219 14262.7 20123 17660.1

C.Latin American countries 6318.6 5014.9 5804.5 5484.6 9660.7 9401.9

V.thers/unspecified 1654.6 86161.2 1513 95449.4 2050.9 136532

Totaltrade 255137 297206 293367 359107.7 375340 501064.5

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Cont…

Group/ Country 2005-06 2006-07 2007-08

Exports Imports Exports Imports Exports Imports

I.OECDcountries 202936 229323 235333 289771.8 252205 352061.3

A.EU 99106.1 111354 116549 128651.6 132301 148201

B.NorthAmerica 81351 45932 90393 61148.1 88482.1 92565.3

C.Asia and Oceania 15249.5 40845.1 19416 53708.4 20783.9 58362.9

D.Other OECD countries 7229.2 31191.8 8975.8 46263.7 10637.8 52932

II.OPEC 67482.8 49458.4 93668 253759.3 107379 306286.7

III.Eastern Europe 8767.9 16796.7 11354 22682.6 13622.5 21191.9

IV.Developing countries 175927 167754 229705 270569.6 280102 324694.3

A.Asia 137165 134815 170190 214319.6 207251 258238.7

a)SAARC 24561.4 6257.2 29274 6820.7 38719.7 8500.6

b) Other Asian developing countries

112603 128558 140916 207499 168531 249738

B.Africa 25231.5 20994.6 40182 30785.2 50301.7 41693.1

C.Latin American countries 13530.9 11944.5 19333 25464.8 22549.6 24762.5

V.thers/unspecified 1304.5 197077 1719 3722.9 2555.5 8077.6

Totaltrade 456418 660409 571779 840506.3 655864 1012312

Source: Directorate General of Commercial Intelligence and Statistics. 2007 & RBI Handbook, 2008

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5.11 Performance of India’s Agricultural Export

Table 4.17: shows major agricultural exports and their share in total agricultural export, before

independence; India exported raw materials and foodstuffs and imported finished goods. Exports

were decreased due to partition and India announced policy of self-sufficiency. There was

neglect to traditional agricultural export and active discouragement of exports in first two plan

periods. Increase in exports was observed in 1970-71 due to export promotion policies, rise in

price etc. Stagnation in Indian Agricultural exports was observed from 1980 to 1990 due to

stagnation in world trade flow. During 1960-61 to 2008-09 whole period almost no changes in

coffee i.e. 2.5 Percentage Share, Maximum percentage reduced in case of Tea & mate i.e. 43.6

to 3.1. But all agri. & allied products export increased from 596 US $ million to 16,914 US $

million during the same period (ref table 5.18).

Table 5.18: Major Agricultural Exports and their Share in Total Agricultural Export Percentage Share, (US $ million) Commodities 1960-61 1970-71 1980-81 1990-91 2000-01 2008-09 Coffee 2.5 5.1 10.4 4.0 4.1 2.6 Tea & mate 43.6 30.4 20.7 16.9 6.2 3.1 Oil cakes 4.9 11.3 6.1 9.6 7.1 12.0 Tobacco 5.7 6.7 6.8 4.2 3.0 4.0 Cashew kernels 6.7 11.8 6.8 7.1 7.2 3.4 Spices 6.0 7.9 0.5 3.8 5.7 7.4 Sugar & Molasses 10.1 6.1 1.9 0.6 1.8 5.3 Raw Cotton 4.2 3.0 8.0 13.4 0.8 3.3 Rice - 1.1 10.8 7.3 10.2 13.0 Fish & Fish Products

1.7 6.2 10.5 15.2 22.2 8.2

Meat & Meat products

0.3 0.6 2.7 2.2 5.1 6.2

Fruits,veg & pulses 2.2 2.5 3.9 3.4 5.0 5.2 Mis. Processed items

0.3 0.6 1.7 3.4 4.5 4.5

All Agri. & allied products

596 644 2,601 3,521 6,256 16,914

Total (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) CAGR - 0.78 15.0 3.07 5.92 13.24 Source: Computed from the Data obtained from Economic Survey, 2009-10

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From 1991 due to economic liberalization and trade reforms, exports show increasing trend.

Exports grew by a CAGR of 5.92 percent during 1991 to 2000. After 2001, there was increase in

agricultural exports. Exports grew by a CAGR of 13.24 percent from 2001 to2009. This growth

was due to export of cotton raw, castor oil and cereals.

India’s export was of the order of Rs 860 billion in 2008-09, as compared to Rs. 60 bn. in 1990-

91, Rs. 286 bn in 2000-01 and Rs.790 bn. In 2007-08 The agro exports from the country

constituted 18.49 percent of the total exports of India in 1990-91. This share came down to about

14.23 percent in 2000-01 and to 10.22 percent in the year 2008-09 Ref. Table4.18.

5.12 India’s Balance of Trade: Total and Agricultural

The Balance of Trade from agriculture remains always positive since 1991. The surplus

generated in agricultural trade would help enhancing non-agricultural imports, which would

promote growth in all sectors of the economy. The main destination of India’s agricultural

exports include Saudi Arabia, UAE, Bangladesh, Malaysia, USA, UK, Kuwait, Iran, Vietnam,

Indonesia etc. The products that have registered higher growth (CAGR) are-cotton raw including

waste, castor oil, other cereals, oil meals, gaur gum meal, poultry and dairy products, meat and

reparations, spices, fruits and vegetables etc. The products having high instability inexpert are

sugar, groundnut, jute, cotton raw including waste, rice other than basmati, wheat, other cereals

etc.

5.13 Trend in India’s Agricultural Exports and imports: 1990-91 to 2008-09

Total Agricultural exports show a continuous increasing trend since 1990-91 to 2008-09.

However the year 1999-2000 shows decrease in exports by 0.01percent, due to fall in export of

rice other than basmati, wheat, and cotton etc. We observe high growth of exports 1991-92,

1993-94, 1995-96, 2006-07, and 2007-08 due to rise in export of marine products, oil meal etc.,

whereas slow growth was observed in the year 1999-00, 1997-98 and 1998-99. Percentage share

of exports was maximum in the year 1995-96, 1996-97and 1997-98, and that was minimum in

2008-09. In the similar way trend analysis of 35 agricultural commodities was done to

understand the prospects of export.

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As regards imports, the years 1992-93, 1995-96, 2000-01, 2005-06 and 2008-09 show negative

growth and the growth in imports was high in the year 1994-95. Percentage share of imports was

maximum in 1998-99, 1999-2000 and minimum in 2008-09 as world prices were much higher

than Indian prices. By using least squares method to compute the regression coefficients and

through regression model we can predict exports for the given year.

For total agricultural exports the linear trend during 1990 to 2009 has been estimated to be as Y

= 3747.8 X- 4980.7

This indicates that export was rising at an annual rate of 3747.8 crores. The Compound Annual

Growth rate has been 17.92 %

During this period, besides the average annual value of export during 1990 to 2001 has been

estimated to be Rs 17962.24 & that in

y = 3747.8x - 4980.7

y = 1723.1x - 3145.2

The period 2001 to 2009 was Rs 52497.8. The standard deviation and coefficient of variation

have been estimated to be 8326.87, 46.24 respectively for 1990 to 2001, 21112.61, and 40.23

respectively for 2001-09. As regards imports, the linear trend during1990 to 2009 has been

estimated to be Y = 1723.1 X – 3145.2 which shows that imports were rising at an annual rate of

Rs.1723.1crores.

5.14 CAGR and Instability Index for Agricultural Exports 1990-09

The period from 1990-91 to 2008-09 is split into different sub-periods, viz., the period from

1990-91 to 2000-01, and from 2001-02 to 2008-09. Growth rates are used to measure the past

performance of exports of commodities (Table 4.19). The growth is analyzed by

Using Compound Growth Rate r = (Antilog b – 1) * 100

Instability can be measured by Ix = C.V. √ 1- R 2 Where, CV is the coefficient of variation and R 2 is corrected coefficient of determination of the trend function of export earnings adjusted by the number of degrees of freedom. Here for 1990-01, degrees of freedom are 10, for 2001-09 it is 7 and for 1990-09 it is 18.

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Table 5.19 CAGR and Instability Index for Agricultural Exports 1990-2009

CAGR% Instability Index

1990-2001 2001-2009 1990-2009 1990-2001 2001-2009 1990-2009

Total Agri Products 17.33 17.11 13.84 14.46 6.8 15.53

Total National Exports 18.55 21.93 17.92 9.46 2.71 9.68

Source: Calculated from secondary data.

The growth rate for total exports is higher than agricultural exports during 1990-2009. The

instability index in agricultural exports is higher than the total National exports. Therefore more

risk is observed in exports of agricultural products.

5.15 Prospects for India

India has a competitive advantage in several commodities for agricultural exports because of

self-sufficiency of inputs, relatively low labor costs and diverse agro-climatic conditions. These

factors have enabled export of several commodities such as cereals, cashew, tea, coffee, spices,

oil meals, fruits and vegetables and tobacco. An analysis of growth rates using trend analysis,

Compound Annual Growth rate and instability index reveals following trends for the last decade

Steady growth items: marine products, spices, fruits and vegetables, cashew and basmati rice.

Others that have shown high growth are sesame and Niger seeds, meat preparations and paper

and wood products. Negative growth items: Tea, coffee, shellac, nuts and seeds whose export

values have declined over this period New high growth items: Basmati rice, oil meal, castor oil,

processed fruits and juices, floriculture products, meat and meat preparations etc. Other items

with inconsistent growth: Exports of the items which have been fluctuating are sugar and

molasses, cotton raw including waste, rice other than basmati, wheat, other cereals, gaur gum

meal etc. The following products have good export potential Basmati Rice, oil meal,

Floriculture, marine products, spices, processed food, fresh vegetables, fresh fruits, poultry

products, dairy products, processed meat, etc. India can concentrate more on nontraditional

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exports. The production has to be increased, as there is huge demand for it from various

European and Gulf countries.

This position continued in 2009-10 and the first half of 2010-11. This is mainly due to India’s

exports and imports of gems and jewellery items followed by POL to the UAE. In both2009-10

and 2010-11, India’s exports to the UAE were higher than imports, while India’s exports to

China are lower than imports. The high and rising trade with the UAE may also be due to

circular trading to some extent.7.36 Export-import ratios in Table 5.20 show that among its top

15 trading partners, India had bilateral trade surplus with five countries, namely the UAE, USA,

Singapore, the UK, and Hong Kong in 2009-10and the first half of 2010-11. India’s trade deficit

with the USA and Singapore in 2007-08, turned into trade surplus thereafter. The export-import

ratio fell in 2008-09 in the case of Hong Kong, though it recovered in2009-10. India’s export-

import ratio in the case of China is not only low but has been stagnating at around 0.3 though it

increased to 0.4 in 2009-10, to again fall to 0.3 in the first half of 2010-11.7.37 The UAE has

displaced the USA as the topmost destination of India’s exports in 2008-09 and 2009-10 with an

export share of 13.2 percent and 13.4 per cent respectively. In 2009-10, India’s exports to the top

two destinations, i.e. the UAE followed by the USA, registered growth of (-) 2.1, and (-) 7.6,

percent respectively.

The top 15 trading partners increasing by 5.5 percentage points to 60.3 percentage in 2007-08

compare to 2001-01, again first half of 2010-11 it has come down to 59.8 percent. During the

year 2007-08 USA was first position, in the passage of time UAE becoming largest trading

partner followed by China during the year 2008-09.22 Table 5.19 shows India’s export from

1990-91 to 2007-08 OECD country has reduced from 56.5 percent to 38.8 percent; OPEC

countries increased the share from5.6 percent to 16.5 percent. Most interesting point is that

developing countries increased the share from 17.1 to 42.3 percent.

22 Economic survey page 169

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Table: 5.20 Share of Region/Country in India’s Exports: 1990-91 to 2007-08

Source: Estimated from RBI “Handbook of statistics on Indian Economy”, Directorate General of Commercial Intelligence and Statistic, Economic Review 2009

Group/ country 1990-91 1995-96 2000-01 2005-06 2007-08 I. OECD 56.5 55.7 52.7 44.5 38.8 A. EU 27.5 27.4 23.4 21.7 20.2 B. North America 17.8 13.8 1 Canada 0.9 1.0 1.5 1.0 0.8 2 U.S.A 14.7 17.4 20.9 16.8 13.0 C. Asia &Oceania 5.1 3.3 3.1 1 Australia 1.0 1.2 0.9 0.8 0.7 2 Japan 9.3 7.0 4.0 2.4 2.2 D. Other OECD

countries 1.9 1.6 1.7

II OPEC 5.6 9.7 10.9 14.8 16.5 1 U.A.E. 2.4 4.5 5.8 8.3 9.7

III Eastern 17.9 4.2 3.0 1.9 2.1 1. Russia 16.1 3.3 2.0 0.7 0.6 0.0 0.0 0.0

IV. Developing countries

17.1 28.9 29.2 38.5 42.3 A. Asia 14.4 23.0 22.5 30.1 31.5 a) SAARC 2.9 5.4 4.3 5.4 5.7 b) Other Asian

country 17.6 18.2 24.7 25.8

B. Africa 2.2 4.8 4.4 5.5 7.6 C. Latin American 0.5 1.2 2.3 3.0 3.2

V. Others / un-specified 2.9 1.5 4.3 0.3 0.4 Total Trade 100.0 100.0 100.0 100.0 100.0

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State-wise exports as reflected in the data on state of origin of exports of goods show clear

domination of Maharashtra and Gujarat. Tamil Nadu, Karnataka, and Andhra Pradesh fall in the

second rank of exporting States. In 2009-10, the growth of exports from all the States was

negative, except Haryana, Kerala, Goa, and Rajasthan. High negative export growth was

registered by Delhi, followed by Uttar Pradesh, West Bengal, and Karnataka. In the first half of

2010-11 export growth to all destinations was positive except for Kerala (Table 5.21). To

encourage exports outlay under the Assistance to States for Developing Export Infrastructure and

Allied Activities (ASIDE) scheme for the Eleventh Five year plan was increased to 3793 crore.

BOX 5.1 Indian Agricultural Export Restrictions

Export restrictions are one of several policy instruments the central government uses to address

food price inflation and maintain stockpiles of food to feed the poor through the Public Distribution

System. Export restrictions are of three types—export ban, minimum export prices (MEPs), and

export taxes. Export ban prohibit the export of sensitive nature of agricultural commodities,

government is required to monitor their price and availability in the economy on regular basis. This

entails ordering restrictions of import and export of various agriculture items.

Products, regardless of international and domestic price levels. MEPs are prices below which

exporters cannot sell their product, making Indian goods less competitive overseas. Export taxes

are levied on the value of exports, again making Indian product less competitive. In 2007, the

Indian government began significantly restricting exports of essential commodities as global food

prices increased and Indian strategic food reserves, or stocks, declined below government target

levels. Reportedly, these export restrictions were also imposed because of the government’s desire

to keep food prices low in the run-up to the national elections in early 2009.

Wheat. On February 9, 2007, the government banned exports of wheat and wheat products until

December 31, 2007, a prohibition that was later extended indefinitely.

Non basmati rice. Effective October 9, 2007, the government banned exports of all non basmati

rice to ensure adequate rice availability in the domestic market. On October 31, 2007, however,

because of the demands of rice exporters, the outright ban on exports was replaced by an MEP of

$425 per ton, which was later increased to $1,000 per ton on March 27, 2008. On April 1, 2008, the

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Before economic liberalization Primary sectors had more percentage share than other two sectors

in world trade. During 1990-91 Tertiary sectors high growth rate and growth trend is still

continued upto 2008-09. The growth in the agriculture sector has been the most volatile and also

the least among the three sectors. The share of total exports in the total GDP was 5.72 percent in

the year 1990-91, which increased to 13.89 percent during 2007-08. Similarly, the share of total

imports in the total GDP was 7.39 percent, which increased to 21.28 percent in the same period.

Export volume of food and food articles like rice, coffee, spices, and oilseed cake’s are in

negative growth rate.

government again banned exports.

Basmati rice. Effective March 5, 2008, an MEP of $950 per ton was imposed, which was

gradually increased to $1,200 per ton on April 1, 2008. In addition, an export tax of Rs. 8,000 per

ton was imposed at that time. On January 20, 2009, the MEP was lowered to $1,100 per ton, and

the export tax was abolished.

Corn. On March 5, 2007, the government banned exports of corn by the private sector and

channeled exports only through state trading enterprises for a period of six months. Effective July

3, 2008, the government banned exports of corn through October 15, 2008.

Vegetable oils. On March 17, 2008, the government banned exports of vegetable oils. This

prohibition was extended to March 16, 2010.

Pulses. Effective June 22, 2006, the government imposed a ban on the export of pulses, with the

exception of kabuli chana (garbanzos).

Milk and milk products. On February 9, 2007, the government imposed a ban on exports of

skimmed milk powder, skimmed milk food for babies, whole milk, whole milk for babies, and

other milk products until September 30, 2007.

Source: Aradhey, India: Oilseeds and Products, April 16, 2009, 22; Govindan, India: Grain and

Feed, February 20,2009, 15; Govindan, India: Grain and Feed, February 20, 2008, 7; and

Dhankhar, India: Dairy and Products, November 5, 2008.

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The post WTO period showed increase in ratio of imports to GDP whereas ratio of exports to

GDP for agriculture sector has decline. The post WTO period has been adverse to export but

favorable for imports. India’s manufacturing exports are highly concentrated in low-technology

goods and the share of high-technology manufactured goods in its total exports has barely

changed since the mid-1990s. Exports of traditional products from India like spices, tea and

coffee and groundnut could not maintain upward trend. But in the case of horticultural Export

maintained upward trend during post WTO period, but total export of these products is low

among the primary products, agriculture and allied products showed a decline of 4.9 per cent as

against a high growth of 45.3 per cent during the same period.

The share of agricultural products in India's global imports during post-WTO period has been

increased to 6.1 per cent per annum, as compared to 4 per cent during pre-WTO period. The

major items, whose share has been increased in India's global imports during post WTO period,

were edible vegetable oils, raw cotton and spices due to economic liberalization and trade

reforms.

Destination wise analysis shows that during 2008-09 developing countries and OECD countries

were the major markets for India’s exports accounting for 37.6 followed by OPEC. Country-wise

the UAE become the single largest destination for India in 2008-09 with a share of 13.1 percent.

During the post Uruguay round experience has been a mixed one for agricultural trade in India.

While exports in certain areas, have registered a high growth. Exports of rice (basmati and non-

basmati), coffee, tobacco, dairy and poultry products, spices, groundnut, guar gum meal, oil

meal, fresh fruits and vegetables, meat and its preparations, raw cotton including waste, and

paper/wood products have shown significant growth. Exports of pulses, castor oil, and marine

products have not shown significant growth Exports grew by a CAGR of 5.92 percent during

1991 to 2000. After 2001, there was increase in agricultural exports. Exports grew by a CAGR of

13.24 percent from 2001 to2009. State-wise exports as reflected in the data on state of origin of

exports of goods show clear domination of Maharashtra and Gujarat. How Gujarat agriculture

performed