Work Distribution of Trade Division

I. Formulation of export and import policy recommendations relating to agricultural commodities in coordination with the concerned subject Divisions.

II. Identification of potential foreign markets and agricultural and agro based commodities for export.

III. Formulation/implementation of exports development and export promotion measures.

a) This includes monitoring of market intelligence regarding the commodities in collaboration with subject matter Divisions for purposes of organising export production.

b) Coordination with the Ministry of Commerce regarding export promotion for agricultural commodities. This includes recommendations regarding participation in fairs and exhibitions, sponsoring of Trade delegations, joint ventures in third countries, recommendations on export incentives etc.

IV. Coordination work with respect to the recommendations of Department of Agriculture and Farmers' Welfare in respect of Export and Import of Agricultural Commodities.

V. Monitoring Imports of important agricultural commodities keeping in view the interests of the producers/growers.

VI. Coordination with different Divisions in matters concerning policy matter on Foreign Direct Investment.

VII. Coordination with the Ministry of Commerce in taking follow up action on the implementation of GATT/ World Trade Organization Treaty.

VIII. Coordination with various Divisions for suggestions in respect of modifications in custom/ excise duties to be conveyed to the Ministries of Commerce and Finance.

IX. Collection, compilation and analysis of basic data on import/ export, international/domestic prices of agricultural commodities etc.

X. Compilation of information on all bi-lateral/pluri-lateral trade agreements concerning India and identification of commodity-wise market access opportunities available to India as part of these Agreements.

XI. Promotional work pertaining to geographical indications.

XII. Budget proposals including suggestions in respect of modification in customs duties and GST.

XIII. Coordination with the Ministry of Commerce for development of agro-logistics.

3. India’s Agriculture Trade

3.1 Agri-Export:

3.1.1 Export of agricultural commodities has helped producers to take advantage of wider international market which, in turn, has incentivized their domestic production. Crops exported in large quantities viz. rice, sugar, and spices have witnessed significant increase in area coverage and growth rate of production. India has emerged as a significant Agri-exporter in crops likerice, spices, cotton, oil meal cake, castor oil, coffee, cashew, tea, fresh vegetables and sugar.

3.1.2 As per available WTO’s Trade Statistical Review (2022), the share of India’s agricultural exports and imports in the world agriculture trade in 2021 were 2.4% and 1.7%, respectively. India was in the top 10 ranking of the global Agri exporters.

3.1.3 The share of agricultural exports in India’s total merchandise exports was 11.90% in2021-22.

3.1.4 As compared to previous year (2020-21), the Agri and Allied exports in the year 2021-22increased by 20.79% to Rs. 3,74,611.64 crores. The increase in Agri and Allied exports during 2020-21was primarily on account ofincreased exports ofcommodities like Wheat (279.71%), Dairy Products (98.40%), Guergam Meal (71.41%), Sugar (66.17%), Cashew Nut Shell Liquid (64.84%), Other Cereals (56.00%), Cotton Raw Incld. waste (50.39%), Milled Products (48.54%), Coffee (42.59%), Misc Processed Items (36.11%) and Pulses(36.66%), which witnessed high growth in the year 2021-22 as compared to previous same period.

3.1.5 Major destinations of exports for India’s Agri and Allied commodities were Bangladesh, United States of America, China, Vietnam, United Arab Emirates, Indonesia, Saudi Arabia, Malaysia, Nepal, Egypt, Sri Lanka, Netherlands, Iran, Iraq,United Kingdom, Japan and Thailand.

3.1.6 The export of Agri-allied sector during last 5 years is as below:

3.1.7 India’s top 10 agricultural export commodities (in terms of value) for the year 2017-18 to 2021-22are given in the Table-1 below:

3.2 Agri-Imports:

3.2.1 As compared to previous year (2020-21), the Agri and allied imports in the year 2021-22 increased by 50.56%to Rs239189.50 crore. Increasein value of Agri and Allied imports during 2020-21were primarily on account of increase inimports of Vegetables Oil (72.34%), Fresh Fruits (16.35%), Pulses (39.29%), Spices (20.00%), Cashew (24.66%), Natural Rubber (66.73%), Oil Meals (346.33%), Other Oil Seeds (98.94%), Cotton Raw Incld. Waste (45.72%), Misc Processed Items (50.15%), Cocoa Products (34.27%), Cereal Preparations (26.04%), Coffee(17.07%), Processed Fruit and Juices (50.51%), Jute Raw (150.66%), etc. Similarly, the total merchandise imports increased more significantly, therefore the share of Agri and Allied imports has decreased from 5.45% in 2020-21 to 5.23% in 2021-22.

3.2.2 Major sources of import of India’s Agri and Allied commodities are Indonesia, Malaysia, Argentina,Ukraine, United States of America, Brazil, Nepal, Thailand, Myanmar, Singapore, Afghanistan, Tanzania,Vietnam, United Arab Emirates, Bangladesh, China, Canada, Netherlands, Sri Lanka and Australia.

3.2.3 The import of agri-allied sector during last 5 years is as below:

3.2.5 India’s top 10 agriculture import commodities in terms of value for the year 2017-18 to 2021-22are given in the Table 2 below:

3.2.6 Share (in value terms) of top 10 exported and imported agricultural commodities during 2021-22. Agriculture sector posted positive balance of payment like earlier years. The import was dominated bysingle commodity namely vegetableoil.

Import share in 2021-22 (Top-10 Items) Export share in 2021-22 (Top-10 Items)

4 Goods and Services Tax

4.1 GST envisages a single tax on supply of goods and Services or both, by amalgamating all the central indirect taxes (excise duty, countervailing duty and service tax) and state indirect taxes (VAT, luxury tax, entry tax, octroi, etc).

4.2 GST rates on most of the raw agricultural items are at 0% (zero per cent). Apart from this, most of the agricultural activities and services are also exempted from imposition of GST. However, for primary processed agriculture items, GST rate is 5% and for secondary/tertiary processed products, the GST rate is 12%. On some farm machinery/component and fertilizers, the GST rate is in the range of 12-18%.

4.3 Considering the representations/inputs from various stakeholders/firms/associations/farmers etc, this Division has been taking up GST related issues with the GST council, Department of Revenue, Ministry of Finance from time to time.

5. Trade Agreement:

5.1 FTA/CECA/CEPA/CECPA

5.1.1 Free Trade Agreements/ Preferential Trade Agreements/ Comprehensive Economic Cooperation Agreements/ Comprehensive Economic Partnership Agreements / Comprehensive Economic Cooperation &Partnership Agreements provide opportunities for exports with the trading partners at preferential duties. India has signed agreements with number of regional trading blocs/ countriesnamely, South Asia Free Trade Area (SAFTA), Asia Pacific Trade Agreement (APTA), Association of South East Asian Nations (ASEAN), Afghanistan, MERCOSUR (trade block of countries viz. Argentina, Brazil, Paraguay and Uruguay), Japan, South Korea, Malaysia, Singapore, Thailand, Bhutan, Nepal, Chile, and Sri Lanka. The recently concluded Trade agreements are with UAE and Australia.

5.1.2 The trade agreement negotiations with European Union, Thailand,BIMSTEC, Peru, Israel, Iran, Mauritius, New Zealand, Canada, UK, Korea and Indonesia are also in various stages of discussion.

6 WTO Meetings/Notifications:

6.1 WTO Meeting: The Committee on Agriculture oversees the implementation of the Agreementon Agriculture. Its key responsibility is to monitor WTOmember’s complianceto their commitments/obligations. The committee, composed up of all WTO members, usually meets three or four times a year. Officers of Trade Division participate in the Meetings of the Committee on Agriculture (CoA) at World Trade Organisation in Geneva, Switzerland. Issues related to India’s Pulses Policy, short-term loan, inputs subsidies and Minimum Support Price (MSP)were responded in coordination with Department of Commerce. Officials will also participate in Ministerial Conference in WTO in 2021.

6.2 WTO Notifications: As part of India’s commitments to the WTO, India needs to notify any new or modified domestic agricultural support measures applied by India during a year and this needs to be notified to the WTO on an annual basis in the form of Domestic Support-1 and Domestic Support-2 Notifications. In this regard, DA&FW has provided requisite inputs to Department of Commerce for preparation and filing of India’s DS notification to WTO. The filed/submitted notifications are available online and can be assessed at the WTO website http://agims.wto.org/.

6.3 Trade Policy Reviews under WTO: WTO conducts Trade Policy Review of its members at regular intervals with a view to reviewing member country’s trade policies and practices under multilateral trade disciplines, to make an assessment of compliance with country obligations. India’s last Trade Policy Review was held in 2020. The review is an extensive exercise requiring inter-ministerial coordination and detailed preparation. The submission of report is followed by detailed question answer sessions which requirecompilation ofhuge trade related documents/data.DA&FW is required to furnished relevant inputs/information to Department of Commerce for compilation and forwarding to the WTO Secretariat as a part of India’s Trade Policy Review (TPR) at WTO.

7. Strengthening India’s Agri Export –Creation of Agri-Cells in nations abroad At the insistence of DA&FW, Agri-cells were created, by Ministry of External Affairs, in 15 Indian Missions viz., Vietnam, USA, Bangladesh, UAE, China, Saudi Arabia, Iran, Malaysia, Japan, Nepal, Indonesia, Argentina, Singapore, Ukraine and Brazil to help bring focus on agricultural exportsand optimize potential available in those countries for Indian products. The Agri Cells also compile information on demand supply of various commodities in the host countries which could be utilized by the exporters.

8 Export Promotion Forum (EPF):

8.1 Product specific Export Promotion Forums (EPF) for eight agri products i.e. Grapes, Mango, Banana, Onion, Rice, Dairy Product, Pomegranate and Floriculture have been created by DOC under the aegis of APEDA at the insistence of DA&FW. They will work on promoting the export of identified potential products in a focused manner.

8.2 Each Export Promotion Forum is having exporters of the related commodity as its members along with official members from DOC, DA&FW and MOFPI along with relevant expert institutions and State Governments. Presently, Chairman APEDA is the chairman of each of these forums. The forums are required to meet regularly to discuss/ make recommendations on issues pertaining to export of the respective commodity and invite experts etc. to the meeting for interaction, as required. The Forums will constantly monitor and identify/anticipate developments in the external/internal situation pertaining to the production and export of their respective commodity and recommend /intervene for taking the necessary policy/ administrative measures.

3. India’s Agriculture Trade

a. India has emerged as a significant Agri-exporter in a few crops viz. rice, cotton, sugarcane, cashew nut, castor seed and groundnut. As per WTO’s Trade Statistics, the share of India’s agricultural exports and imports in the world agriculture trade in 2017 were 2.27% and 1.90%, respectively.

b. Agricultural exports as a percentage of agricultural GDP has increased from 8.71% in 2015-16 to 9.00 % in 2017-18. During the same period, Agricultural imports as a percentage of agricultural GDP has decreased from 5.68% to 5.47%.

Agricultural Exports and Imports

a. Export of agricultural commodities has helped producers to take advantage of wider international market which, in turn, has incentivized their domestic production. Crops exported in large quantities viz. rice, cotton, castor have witnessed significant increase in area coverage and growth rate of production.

b. Agricultural exports increased from Rs. 2,15,396 crores in 2015-16 to Rs. 2,50,273 crores in financial year 2017-18 registering a growth of nearly 16.19%. Agricultural exports during 2017-18 was primarily on account of higher exports of rice (basmati), rice (non-basmati), raw cotton, guargum meal. oil meals, castor oil etc. The share of agricultural exports in India’s total exports increased from 12.56% in 2015-16 to 12.80% in 2017-18.

VALUE=12.56

c. India’s top 10 agricultural export commodities in terms of quantity and value for the year 2015-16 to 2017-18 are given in the table 1 below:

Table 1: India’s top 10 agricultural commodities (Exports)

[Value in Rs. Crores]

Source: Department of Commerce

d. India’s agricultural imports increased from Rs. 1,40,311 crore in 2015-16 to Rs 1,52,061 crore in 2017-18 registering a growth of nearly 8.37 %. Increase in value of agricultural imports during this period was primarily on account of imports of vegetable oils, pulses, fresh fruits, cashew nuts, spices, sugar, cocoa, cotton etc. Share of agricultural imports in the total imports decreased from 5.64 % in 2015-16 to 5.07 % in 2017-18.

e. India’s top 10 agriculture import commodities for the year 2015-16 to 2017-18 are given in the table 2 below:

Table 2: India’s top 10 agricultural commodities (Imports)

[Value in Rs crores]

Source: Department of Commerce

f. Share of top 10 exported and imported agri-commodities during 2017-18 is as follows:

Source: Department of Commerce

4.1 Hundred percent FDI has been allowed in development and production of seeds and planting material. In addition, 100% FDI is allowed for floriculture, horticulture and cultivation of vegetables and mushrooms under controlled conditions. Also, hundred percent FDI is allowed in animal husbandry (including breeding of dogs), pisciculture, aquaculture and services related to agro and allied sectors. Similarly, hundred percent FDI is allowed in the planation sector namely tea, coffee, rubber, cardamom, palm oil tree and olive oil tree.

4.2 From April 2000 to December 2018, FDI inflows of Rs. 13,508 crores have been received in agriculture sector (i.e. agriculture services including agriculture machinery) (Source :DIPP). The investments were made in development and production of seed and planting material, horticulture and nursery services, agriculture machinery, plant protection services, cattle breeding and livestock rearing, cold storage and warehousing.

5 Goods and Services Tax:

5.1 Government has rolled out a new tax regime namely Goods and Services Tax (GST) with effect from 1st July 2017. GST envisages to introduce a single tax on supply of goods and Services or both, by amalgamating all the central indirect taxes (excise duty, countervailing duty and service tax) and state indirect taxes (VAT, luxury tax, entry tax, octroi, etc). GST is more comprehensive, compliable, simple, harmonized and development oriented tax system. The GST, unlike the earlier system, will allow the supplier at each stage to set-off the taxes paid at previous levels in the supply chain. It is essentially a tax on value added at each stage. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages (GOI).

5.2. Impact of GST on Agricultural Sector: The impact of GST on agricultural sector is foreseen to be positive. It has been observed that the fitment of rates of items in the food segment is done in a manner that it would not increase inflation. It has been done on the principle that GST rate would be more or less at par with current indirect tax regime.

Mostly all services activities relating to agriculture are currently exempted from the levy of service tax under GST.

6. PTA/FTA, WTO, Agri-cells

6.1 PTA/ FTA/ RCEP

Negotiations on India-Peru Trade Agreement, India-Israel FTA Negotiation, India Mauritius Comprehensive Economic Cooperation & Partnership Agreement (CECPA), Regional Comprehensive Economic Partnership (RCEP) is under consideration. Rules of Origin chapter in the proposed Economic and Technical Cooperation Agreement (ETCA) between India and Sri Lanka is also under consideration in this year.

6.2. WTO Meetings

Officer for Agriculture Trade Policy Division has participated in 87th Meeting of Committee of Agriculture, World Trade Organisation at Geneva, Switzerland. Issues related to quantitative restriction on pulses was replied and inputs were also shared with Department of Commerce.

6.3 Strengthening India’s Agri Export – Creation of Agri-Cells in nations abroad

Agri-cells were created and officials were nominated by Ministry of External Affairs in the top 10 agriculture produce export destinations, to robust agri-export, handle agri –trade and related issues. Till now Agri-Cell is formed in 6 countries namely UAE, USA, Saudi Arabia, Vietnam, China and Nepal.

7 Phasing out of Foreign Investment Promotion Board (FIPB):

As per Government’s decision, the Foreign Investment Promotion Board (FIPB) under Ministry of Finance will be phased-out in 2017-18 as at present 91-95% FDI inflow happens through the automatic route. The move to phase out the FIPB is aimed at making India more attractive FDI destination and increasing FDI inflows by providing greater ease of doing business and promoting the “Maximum Governance and Minimum Government” principal. The work relating to processing of applications for FDI approval shall now be handled by the concerned Ministries/ Department in consultation with DIPP.