India exported agricultural products worth $50 billion in 2022, but value-added products accounted for only $4-5 billion, that is, 10% of the total exports. This statistic, therefore, points to a huge unexplored opportunity in the processing of raw agricultural commodities into higher-value products. The world is moving towards processed and quality food items and this is the right time for India to increase its agricultural income and expand its market share in the international market. Let us examine the economic advantage, sectors of opportunity, infrastructure, quality, and policy measures that could be deployed to enhance India’s export through value-added agro products.
Exporting value-added products has a lot of merits in terms of economic returns. On the other hand, while raw commodities are characterized by fluctuating prices and low-profit margins, value-added products are expensive. For example, value-adding activities such as transforming raw spices into spice blends or essential oils increase the profit line. Likewise, processing raw milk into cheese, yogurt, or ghee can also generate handsome revenues by catering to the potential markets that always have a high demand for quality and processed products.
Value addition also enables market diversification to be carried out in the most effective way possible. Organic, gluten-free, and convenience foods are the trends of the present era; thus, Indian exporters can diversify their portfolios to embrace these markets. This diversification not only helps to spread the risk but also to decrease the dependence on several main commodities, which in turn stabilizes the revenues. Moreover, value-added products are relatively less sensitive to the volatile global signals and therefore, offer a relatively better income security to the producers.
India is one of the largest producers of fruits and vegetables, but the problem of post-harvest losses persists. These losses can be managed by investing in processing technologies for fruit juices, purees, and dried fruits. For example, the international market for mango pulp and dried mango slices is large which creates a good export market. Also, the development of frozen vegetable products can serve markets with long storage and convenient preparation needs.
India has the largest dairy industry in the world and there is a huge scope for value addition in this sector. Products such as cheese, yogurt, and flavored milk can benefit from international markets where consumers are always looking for different varieties of dairy products. The increasing demand for Indian traditional dairy products in the international markets is a good opportunity. For instance, ghee and paneer have gained a large market among the countries that are home to South Asian immigrants. Moreover, new product developments like probiotic yogurt and lactose-free milk can meet health-wise consumers worldwide.
This is because India has already established a near monopoly in the export of spices and therefore there is a need to concentrate on processed spice products. Seasoning mixes, prepared pastes, and oils are suitable for the busy lives of today’s consumers and cooks, placing Indian spices in the higher category of spices on the shelves of stores around the world. For instance, the export of turmeric has increased and now there are products such as turmeric capsules and ready-to-drink turmeric lattes. Thus, a set of spices unique for each area can be considered as a weapon to enter various markets.
India has a great opportunity in the global market since people are shifting their preference to organic products. Given the large area under agriculture and a favorable climate for organic farming India can export value-added certified organic products like flours, pulses, and beverages which the health-conscious consumers across the globe are willing to pay a premium for. Organic processed foods such as organic snacks and cereals and baby foods are on the rise, especially in the US and European markets.
The major constraint to the scaling up of value-added agro exports is the issue of infrastructure. Hence, cold storage infrastructure, efficient processing facilities, and a strong transportation system are required. If invested in these areas, then the post-harvest losses and quality of the products can be well managed throughout the chain. A solid structures platform with efficient transport and supply systems for value-added agro products is a necessity for the development of the country’s infrastructure framework. Additionally, one may find that there is a way in which technology improves the packaging and therefore the shelf life and appearance of the products.
It is important to conform to International Quality Standards and gain the necessary certifications to be able to enter the market and be competitive. Small and medium enterprises in particular consider this to be overwhelming. The support and simplification of certification procedures can be beneficial for the development of these businesses. Thus, a high standard of quality control and product quality must be maintained in order to gain consumers’ confidence in the world markets. Also, labels like organic, non-GMO, and Fair Trade could also prove to be beneficial for the Indian value-added products.
Policies and incentives are some of the most critical factors that support value addition. The use of subsidies, tax incentives, and ease of doing business can play a huge role in encouraging entrepreneurs to invest in the agro-processing business. The policies that play a major role in sustaining the growth include those that relate to technology, communication, and training. For example, policies such as Production-Linked Incentives (PLI) for food processing can help in increasing investment and development. In addition, the setting of export promotion councils and providing market intelligence can assist the exporters in facing the global markets more effectively.
The new direction of value-added products is a great prospect for India to boost agricultural exports and for sustainable economic development. Hence, by emphasizing on processing, quality improvement, and product differentiation, India can add value and turn agriculture into a value-added sector. It also holds the potential to generate more export earnings, improving the quality of life of farmers and increasing the global competitiveness of countries. The key elements that are highlighted for achieving this potential and branding India as a preferred destination for value-added agro products include investing in infrastructure, maintaining high-quality standards, and effective branding.
“We had provided training to representatives of 30 cooperative societies on processing value-added agricultural products at a programme in Kumarakom a few months ago. The government provided an agricultural infrastructure fund of Rs 2 crore each to the cooperative societies in association with Nabard for development of facilities like cold storage and processing. The loan has been extended for a term of seven years at an interest rate of 1%,” Cooperation Minister V N Vasavan said on Kerala Cooperatives Department shipping 12 tonnes of agricultural value-added products processed by cooperative societies in the state to the US.
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