Export performance of agricultural trade in India

Introduction

International trade has emerged as a fundamental driver of economic growth and structural transformation across nations. It enables countries to specialize according to their comparative advantage, promotes efficient allocation of resources, facilitates capital accumulation, and enhances technological progress. Over the past few decades, many developing economies, particularly in Asia, have experienced rapid economic expansion largely attributed to their increasing integration into global trade systems. Trade liberalization, coupled with domestic economic reforms, has played a pivotal role in accelerating growth, reducing poverty, and improving living standards. In the context of India, the evolution of trade policy reflects a gradual shift from a highly regulated and inward-looking regime to a more open and market-oriented system. In the initial decades following independence, India adopted a protectionist approach, emphasizing self-reliance and import substitution.

The primary objective during this period was to achieve food security and reduce dependence on external markets, particularly in the agricultural sector, which served as the backbone of the economy and the principal source of livelihood for a large proportion of the population. India's agricultural trade has witnessed notable changes in recent years. The agricultural sector has also demonstrated resilience in the face of global economic uncertainties and domestic challenges. Despite fluctuations in global markets, the sector has maintained a positive trade balance, indicating that exports have consistently exceeded imports. India's agricultural export landscape over the past decade reflects substantial growth, though uneven across commodity groups. Changes in comparative advantage and evolving global market conditions continue to shape export performance, while also influencing the future potential for expanding agricultural exports (Suresh and Mathur, 2016) [7] . This highlights the sector's potential as a stable contributor to www.extensionjournal.com economic growth and foreign exchange earnings. The significance of this study lies in its potential to contribute to policy formulation and strategic planning in the agricultural sector.

Objective

To assess performance of agricultural trade in India

Material and Method

The data regarding Agricultural trade and export of major agricultural product collected through various government publications and websites; Where, CV = Coefficient of variation 𝑅 2 = Coefficient of determination of the trend regression Adjusted R 2 = Coefficient of regression adjusted by the degrees of freedom.

Index number

An index number is statistical measure design to show changes in variables or group of related variables with respect to the time. Index number were calculated by using initial triennium average (2005 to 2007) as a base year. The following formula used to estimate the index number.

Index number =

Current year value

Result and Discussion

Over the years, India's agricultural exports and imports have undergone significant changes due to factors such as economic liberalization, implementation of the World Trade Organization (WTO) Agreement on Agriculture, changing global demand, technological advancements, price fluctuations, and various regional and bilateral trade agreements. Therefore, an assessment of the performance of agricultural trade is essential to understand its growth pattern, composition, direction, and overall contribution to the national economy. In this context, the present section examines the trends and performance of India's agricultural exports and imports during the study period (2005 to 2024) using appropriate statistical measures and analytical tools to provide a comprehensive understanding of the country's agricultural trade dynamics.

India's share in world agriculture trade An analysis of India's share in world agricultural trade provides valuable insights into its contribution to global markets and its changing position in international agricultural commerce. The India's share in world agriculture trade in per cent is presented in Table 1. On the import side, India's share in world agricultural import quantity increased from 0.79 per cent in 2005 to 2.38 per cent in 2024, while the import value share rose from 0.82 per cent to 2.05 per cent during the same period. The import quantity share was highest in 2024 (2.38 per cent), whereas the maximum import value share was also recorded in 2024 (2.05 per cent). The gradual rise in import shares reflects increasing domestic demand for selected agricultural commodities. The export quantity recorded the highest growth rate of 6.95 per cent, followed by import quantity (4.82%), import value (4.23%), and export value (2.34%), indicating that the expansion in trade was driven more by growth in physical volumes than by trade value. The Coefficient of Variation (CV) reveals that export quantity exhibited the highest variability (42.69%), followed by import quantity (33.74%), import value (26.28%), and export value (20.29%), suggesting that trade quantities fluctuated more than trade values over time. Similarly, the Cuddy-Della Valle Instability Index (CDVI), which measures instability after accounting for the trend, showed that export quantity experienced the highest instability (27.06%), followed by import quantity (21.49%), export value (15.95%), and import value (14.54%). India's export share rises mainly through volume-driven, price-competitive surges (2012-13, 2021-22)often triggered by policy liberalization or restriction removal, surplus stocks from good harvests, global supply shocks (Ukraine war, pandemic) that open market gaps, and currency depreciation. But value share consistently lags quantity share, indicating India remains a supplier of relatively low-value bulk commodities rather than high-value processed agricultural exports.

Per cent share of India's Agriculture trade in India's national trade

The analysis provides an understanding of the contribution of the agricultural sector to India's overall trade performance and examines how its share has changed over time in response to economic growth, trade liberalization, global market conditions, and agricultural trade policies. The per cent share of India's agriculture trade in Indian national trade is presented in Table 2. It is observed from Table 2 that, agriculture consistently contributed a significant, though fluctuating, share to India's overall merchandise trade. The share of agricultural exports in total national exports varied between 5.98 per cent and 10.84 per cent during the study period. It increased from 6.53 per cent in 2005 to a peak of 10.84 per cent in 2013, reflecting robust growth in agricultural exports driven by higher production, favourable global demand, and improved export competitiveness. Thereafter, the export share exhibited a gradual declining trend, falling to 6.81 per cent in 2024, indicating that the growth of non-agricultural exports outpaced agricultural exports in recent years. On the import side, the share of agricultural imports in total national imports remained relatively lower and more stable, fluctuating between 4.78 per cent and 7.75 per cent. The highest import share was recorded in 2009 (7.75 per cent), while the lowest was observed in 2023 (4.78 per cent). The declining share of agricultural imports in recent years suggests that India's overall imports have become increasingly dominated by nonagricultural commodities such as petroleum, machinery, electronics, and other manufactured products. www.extensionjournal.com

The Compound Growth Rate shows a marginal positive growth of 0.20 per cent in the share of agricultural exports, indicating a slight increase in agriculture's contribution to the country's total exports over time. In contrast, the share of agricultural imports recorded a negative growth rate of -1.27 per cent, suggesting a gradual decline in agriculture's contribution to India's total imports. The Coefficient of Variation values reveal relatively low variability in both export (16.22%) and import (15.31%) shares, indicating that the proportion of agricultural trade in national trade remained fairly consistent over the study period. Similarly, the Cuddy-Della Valle Instability index values of 16.16 per cent for exports and 13.30 per cent for imports indicate low instability after removing the long-term trend, reflecting a stable pattern in the contribution of agricultural trade to India's overall trade.

Index number of India's agricultural trade

The index numbers of India's agricultural trade are used to measure the relative changes in the value, quantity, and unit value of agricultural exports and imports over time with reference to a base year. These indices provide a clear understanding of the growth pattern, price movements, and overall performance of India's agricultural trade during the study period. Index number of India's agricultural trade is presented in Table 3 Similarly, the import quantity index showed a gradual upward movement, reaching around 300 in 2017 and again in 2024, whereas the import value index increased considerably from around 150 in 2005 to nearly 700 in 2017 and subsequently exhibited fluctuations. A particularly sharp increase was observed after 2021, with the import value index reaching approximately 1,200 in 2022 and about 1,300 in 2024, the highest level recorded during the study period. The substantially higher increase in the value indices compared with the quantity indices for both exports and imports indicates that the expansion in the value of agricultural trade was influenced not only by changes in physical quantities but also by changes in international prices and the commodity composition of trade. The comparative movement further showed that agricultural imports experienced a stronger increase in value during the later years than exports.

Compound Growth Rate and Instability index of India's agricultural trade

The analysis of compound growth rate and instability index provides a comprehensive assessment of the long-term growth performance and year-to-year fluctuations in India's agricultural trade. While the compound growth rate measures the average annual rate of increase in exports and imports, the instability index evaluates the consistency and variability of trade performance for overall agricultural trade and major commodities such as rice, wheat, and cotton during the study period. The Compound growth rate and Instability index of India's agricultural trade is presented in Table 4. It is revealed from Table 4. that, the India's overall agricultural trade recorded positive and statistically significant growth in both exports and imports. The compound Growth Rate indicated a significant positive growth in agricultural exports throughout the study period. Export quantity grew at an annual rate of 10.34 per cent during Period I, 8.29 per cent during Period II, and 6.09 per cent over the overall period, with all estimates being statistically significant at the one per cent level. Similarly, export value recorded even higher growth rates of 19.41 per cent, 13.98 per cent, and 9.88 per cent during Period I, Period II, and the overall period, respectively, suggesting that, export earnings increased faster than export volumes, mainly due to higher export prices and improved value realization. On the import side, import quantity registered significant annual growth of 7.11 per cent during Period I and 5.98 per cent over the overall period, whereas the growth during Period II (0.55 per cent) was statistically insignificant, indicating a temporary slowdown in import expansion. Import value grew significantly throughout the study period, recording annual growth rates of 17.62 per cent, 13.16 per cent, and 11.89 per cent for Period I, Period II, and the overall period, respectively. The relatively higher growth in import value compared to import quantity reflects increasing international prices and higher import costs. The Coefficient of Variation (CV) revealed moderate to high variability in agricultural trade. Export quantity exhibited moderate variability, with CV values ranging from 31.64 to 41.34 per cent across the three periods. Export value showed relatively higher variability, particularly during Period I (53.84 per cent) and Period II (48.17 per cent), indicating considerable fluctuations in export earnings. Import quantity was comparatively more stable during Period II, with the lowest CV of 15.07 per cent, while the overall variability remained moderate (36.29 per cent). Import value recorded the highest variability among all trade indicators, increasing from 47.33 per cent in Period I to 50.95 per cent in Period II and reaching 72.50 per cent during the overall period, indicating substantial fluctuations in import expenditure over time. The Cuddy -Della Valle Instability Index (CDVI) further confirmed the extent of trade instability after accounting for long-term growth trends. Export quantity recorded moderate instability, with CDVI values of 26.69, 20.16, and 23.69 for Period I, Period II, and the overall period, respectively, indicating an improvement in export stability during the second period. Export value also showed moderate instability, with the highest instability observed during the overall period (27.99 per cent). Import quantity remained relatively stable throughout the study period, with CDVI values ranging between 15.88 and 18.43 per cent. Import value exhibited the greatest instability during Period II (31.49 per cent), although the instability moderated to 24.91 per cent over the overall period. These results suggested that, while India's agricultural trade experienced sustained growth, fluctuations in international prices, domestic production, policy interventions, and changing global market conditions contributed to moderate levels of instability, particularly in trade values.

Conclusion

1. The study concludes that India's agricultural trade witnessed substantial expansion during 2005-2024, with a marked improvement in the country's position in www.extensionjournal.com global agricultural markets. 2. India's share in world agricultural export quantity increased from 0.96 per cent in 2005 to 3.63 per cent in 2024, while the share of import quantity increased from 0.79 per cent to 2.38 per cent, showed growing integration with international agricultural markets. 3. Agricultural exports and imports recorded positive and statistically significant growth over the study period, with export quantity and value growing at 6.09 and 9.88 per cent annually, respectively, while import quantity and value increased by 5.98 and 11.89 per cent, respectively. 4. The substantially faster growth in trade values than quantities showed that international price movements and higher unit value realisation played an important role in the expansion of agricultural trade. 5. The index analysis further confirms a considerable increase in both export and import values, particularly during 2021-2024, although this expansion was accompanied by considerable fluctuations in trade values. 6. Despite the overall positive growth, the relatively high coefficient of variation and Cuddy-Della Valle instability index for trade values showed that India's agricultural trade remains vulnerable to international price fluctuations, domestic production conditions, policy interventions, and global market shocks. 7. Hence, India has strengthened its presence in global agricultural trade. however, greater emphasis on value addition, export diversification, processed agricultural products, market stability, and measures to reduce exposure to global price and supply shocks would be essential for achieving sustained and resilient agricultural trade growth.

References

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