Export Policy Changes Disrupt Supply Chains

New Delhi, Jan 29 (PTI) The Economic Survey on Thursday said trade policy in agricultural exports is used to meet short-term objectives amid price and production volatility, but frequent policy changes disrupt supply chains, create uncertainty, push foreign buyers elsewhere, and make lost export markets hard to regain.

It said that agricultural exports are influenced by a range of supply-side factors, including food security, processing facilities, infrastructure bottlenecks, and various regulations.

However, given the volatility in domestic prices and production of certain commodities, trade policy has often been employed to achieve short-term domestic objectives, such as managing inflation through product-specific interventions, including ad hoc export bans or the imposition of minimum export prices, it said.

Although these measures, it said, may temporarily stabilise domestic prices, they risk longer-term reputational costs, particularly as India is widely regarded as a source of high-quality agricultural products.

"Frequent policy changes can significantly disrupt export supply chains, create market uncertainty and cause foreign buyers to switch to other sources. Export markets once lost are not easily recovered," it added.

According to estimates, the country has the potential to reach USD 100 billion of combined exports of agriculture, marine products and food and beverage in the next four years.

The Survey said that measures such as subsidised distribution of essential food items via the public distribution system, managing buffer stocks and intervening in the market via an open market sale scheme are the policy options available to ensure availability of agricultural products at fair prices for the domestic market.

It is possible to stabilise domestic availability and prices while enabling farmers to tap global markets for better incomes, the Survey 2025-26 added.

By maintaining a delicate balance between fulfilling domestic demand and harnessing its export potential, it noted that India's remarkable achievements in agricultural production can translate into export-led growth, enabling the country to achieve its goal of USD 100 billion in agricultural exports.

"Exports also make farmers more productive and competitive by fostering knowledge accumulation and market feedback," it said.

It also said that as an aspirational economy, India will see its imports rise steadily and that is the global experience over centuries.

"India must explore all opportunities to increase its export earnings to pay for the import needs of a growing economy. Agricultural exports are a low-hanging fruit with immense export potential," it said, adding they carry international leverage for India and policies should be aligned with this imperative. PTI RR RR DR

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