A Look Into India’s Food Exports
India is one of the largest agricultural producers in the world. It ranks at #2 for both wheat and rice production. The only country that produces more of these staples is China.
Although India consumes a major portion of its agricultural output, significant volumes are exported. In 2016–17, agricultural exports stood at US$33.86 billion, comprising 12% of the country’s total exports.
In the first five months of the current financial year, exports totaled US$7.26 billion. The category-wise break up is as follows:
+----------------------------------------+---------------------+
| Product | Percentage to total |
+----------------------------------------+---------------------+
| Exports of cereals and animal products | 45% |
| Livestock products | 23% |
| Other processed foods | 18% |
| Fresh fruits and vegetables | 7% |
| Processed foods and vegetables | 6% |
| Floriculture and seeds | 1% |
+----------------------------------------+---------------------+Source — Indian Brand Equity Foundation
Some of the other highlights of Indian agricultural exports are:
- India’s basmati rice is very popular in the international market. It is expected that in 2017–18, exports of this product will total US$3.45 billion.
- There is great demand for Indian spices. In the period from April to December 2016, exports of spices totaled US$1.87 billion.
- Shrimp production for export is booming. It is expected that total seafood exports will be US$6 billion in 2017–18.
Agri export zones
In an effort to promote agricultural exports, the government has promoted 60 Agri Export Zones (AEZ) across the country. The objective of this exercise is to:
- Provide exporters with a comprehensive package that helps them to develop and source raw materials.
- Assist with processing and packaging.
- Furnish the support required for the export of the final product
Growth prospects
One area of concern for Indian exporters is the realisation of their sale proceeds from overseas buyers. Fortunately, they can access invoice factoring services that allow them to receive an upfront payment for the goods that they have shipped. In most instances, 80% of the invoice value is paid by the factoring company to the exporter within days of the shipment.
There is great scope for increasing export volumes in the agricultural sector. India has a large livestock base and a well-developed meat processing sector. Additionally, the country’s proximity to several key export destinations provides it with an advantage.
It is likely that in the coming years, agricultural exports, especially basmati rice, spices, seafood, and meat products, will see a steady increase in export volumes.
About Drip Capital
Drip Capital is a trade finance company headquartered in California, USA. We offer finance to Indian exporters selling to buyers in North America, Europe, Middle East and Asia Pacific. Established in 2014, Drip Capital has built a strong presence across India having financed hundreds of shipments across industries such as textiles and garments, packaged and frozen foods, metals and engineering goods. With focus on SMEs, we have provided our clients timely access to working capital and helped them grow their exports by as much as 60% in less than a year.
