Business of Agriculture March April 2019 Edition | Page 34

India’s agri-
commodity
exports are
right now
all about
untapped
potential.
A key
consideration
for the
government
should be
de-linking
populism from
trade
The new export policy, with its focus on indigenous
and organic crops, could help in this regard.
However, given that these are not yet large-scale
crops, it will take years for the effect to be felt in
a meaningful manner in India’s exports. That being
said, the government’s decision to focus on such
products is a positive sign for the future.
It’s not all about the Indian government and farmers,
either – exports are also governed by the buyers.
Increased protectionism in the US means higher
duties and more stringent guidelines for exporters
from India. The recent announcement, that the US
would remove India from the GSP (Generalised
System of Preferences), means that Indian exporters
of specific goods will have to pay higher duties. While
it appears that the removal of GSP may have a limited
impact on Indian exporters, it is a stark reminder that
the US is willing to resort to protectionism to save
its market while demanding that other countries
end protectionism! The biggest sigh of relief to be
taken is that India’s agri-commodity exports are not
dependent on the US alone. India also exports agri-
commodities to countries such as: Africa; West Asia;
and South Asia, which should help offset the damage
caused by the decision taken by the US.
India’s agri-commodity exports are right now all
about untapped potential. A key consideration for
the government should be de-linking populism from
trade. For instance, the minimum support price
that is offered to farmers is a stumbling block in
international trade because it keeps prices artificially
34 Business of Agriculture | March-April 2019 • Vol. V • Issue 2
high. But the government cannot afford to lower the
Minimum Support Price (MSP) fearing its effect on
the farmers’ income. It’s a tough balancing act which
needs to be addressed.
There’s also the other tricky issue of bargaining
in global forums like the WTO. So far, India has
managed to protect its farmers. But as the country
grows economically, it may not be able to bargain
for the same protection that it could get as a
weaker nation. At the same time, there are wealthy
and powerful nations that are getting increasingly
protectionist and India will have to deal with those
as well. The recent GSP announcement was, in
some senses, a warning shot. How the government
manages this, will, in many ways, dictate its future
export policy.
* Pushkar Mukewar is the Co-Founder and Co-
CEO of Drip Capital. At Drip, he is responsible
for defining the strategic direction and managing
product, business development and operations of
the company. In his 13 years’ career, he has worked
across various geographies and has an in-depth
understanding of the global financial services industry.
Pushkar realised the huge potential of addressing the
working capital gap for SMEs in emerging economies
like India by using technology. This turned out to be
the inspiration behind the foundation of Drip Capital
in 2015. Drip offers a unique trade financing product
targeted towards SMEs engaged in cross-border
trade by making the underwriting and financing of
international B2B transactions seamless.