Agriculture is very important to the Indian economy, contributing nearly 30 percent to gross domestic product and providing employment to about two-thirds of the population. India is a net exporter of agricultural goods, shipping $6.7 billion in 1998/99, more than twice the $3.3 billion in imports. Traditional export items pose very little competition to U.S. exports. India’s main export products are: tea, coffee, spices, cashews, basmati rice, and seafood. India has begun to exploit export opportunities for several new products, however, which pose some competition to U.S. exports. Examples are soybean meal, fruits and vegetables, processed food products, and dairy and poultry products. Although direct export subsidies have been gradually phased out, the Government places strong emphasis on export promotion and marketing assistance. Annual funding, although expanding, is relatively small compared with the United States and several other countries; it is estimated at $13 million in 1998.

The Ministry of Commerce oversees market development. In 1963, the Indian government established a Marketing Development Assistance (MDA) fund to stimulate and diversify exports. Typically, the government levies a fee on the free-on-board value of exports of various agricultural products, such as coffee, tobacco, seafood, and spices. India’s export promotion and market development support comes primarily from this fund, allocated by the ministry, to various commodity boards and export promotion organizations. Total disbursal of funds during 1998/99 was about $46 million. In addition to the government grants, some of these export organizations augment their funds through membership support.

Agricultural and Processed Food Products Export Development Authority (APEDA), the government’s main agricultural export development body, was established in 1986. APEDA promotes mostly processed or value-added food products. It provides air freight subsidies on exports of certain horticultural products to targeted markets. A major share of its funding comes from a ministry grant, totaling $7.8 million during FY 1998/99. APEDA also receives limited funding from the sale of publications and export registration fees. Expenditure for market promotion is estimated at $5 million.

APEDA participated in international trade fairs, seminars and conferences. It continued its efforts to build markets for Indian buffalo meat in Indonesia, South Africa, and the Commonwealth of Independent States (CIS). Target markets include floriculture and seed to the United States, the Netherlands, Germany, France, Japan; fruits and vegetables to Malaysia, the United Arab Emirates (U.A.E.), Saudi Arabia, Bangladesh, the United Kingdom, Germany and the United States; animal products to Malaysia, U.A.E., Philippines, Iran, Oman; rice to Saudi Arabia, Kuwait, the United States, the United Kingdom, U.A.E., Sri Lanka, South Africa, Bangladesh and Russia; and wheat to Yemen, U.A.E., Turkey and Korea.

The Cashew Export Promotion Council, funded by Ministry of Commerce grants, membership fees, and trade contributions, spent approximately $120,000 in 1998, targeting the United States, Europe, Japan, and the Middle East.

India continues to operate commodity boards, under its department of commerce, for tea, coffee, spices, and tobacco. Boards are responsible for production, development, and export promotion activities. The Tea Board was set up in 1953 to promote exports and domestic consumption. Its activities include processing development, providing extension services, research, and promotion. Through its overseas offices, the board arranges participation in trade fairs, organizes trade delegations, and buyer liaisons. Promotions aim to popularize the high-quality Darjeeling, Assam, and Nilgiris teas. It also participates in generic promotion programs conducted by tea councils in the United Kingdom, Germany, the United States, and Canada. Market promotion expenditures in 1998 are estimated at $2 million. In comparison, market promotion expenditures by the spices, coffee, and tobacco boards were just over $1 million.

Several private trade organizations promote exports: the Soybean Processors Association of India for soymeal; the Solvent Extractors Association of India for rapeseed meal, sunflowerseed meal, and rice bran extraction; the Groundnut Extraction Export Development Association for peanut meal; the Indian Oil and Produce Exporters Association for peanuts and sesame seeds; the All India Cotton Seed Crushers Association for cottonseed meal; and the All India Rice Exporters Association for rice. Historically, these associations had the government authority to charge a fee for registering exports, which was their primary funding source, besides membership fees. The government discontinued the compulsory export registration requirement in 1995. Without this major funding source, all have so far continued to operate with membership fees and other industry contributions. They have, however, curtailed export promotion budgets. FAS estimates export promotion expenditures at $60,000.

Last modified: Monday, August 29, 2005