Effective implementation of new Agro Export Policy imperative for increasing India’s global footprint

Impact: Positive (agro Commodities, agro ancillary industry, Trade Balance)

Brief: Agriculture sector accounts for 14.8% in India's overall GDP and 12.6% in its overall exports. Understandably so, among its peers, India's agricultural share to overall GDP is highest. Despite this however, the sector has a miniscule footprint with a share of only 2.2% in global agro market. The government is mulling over to set up Agro Specific Zones to promote farm sector exports. These zones will be utilized in producing and processing agro commodities that is intended for exports. We believe that this move will help in increasing India's global footprint of the sector, increasing systemic efficiencies in the process.

Agriculture sector accounts for 14.8% in India's overall GDP and 12.6% in its overall exports. Understandably so, among its peers, India's agricultural share to overall GDP is highest. Despite this however, the sector has a miniscule footprint with a share of only 2.2% in global agro market. It is known that the global market size of the sector is close to $1.7 trillion in 2017 and India therefore has a huge scope to expand its agricultural exports. Also worth noting is the fact that the country's exports are predominantly oriented towards Asia region, where it sends 60% of its tradable produce. The situation relegates the Indian exporters to a lower segment of the overall value chain.

Europe and the United State, on the other hand, are the bigger markets for the agricultural commodities in the world. These two regions are destination for almost 50% (39 + 10%) of global agriculture exports and singlehandedly influence agro prices. However, strangely, they imports only 4.7% of their overall agro imports from India. Lack of global standard in the food quality is the main constraint for the Indian farm sector and accessing the world's largest markets remains farfetched.

As a remedy, Indian government has proposed bringing out a new agriculture export policy in rider to promote agro exports in an effort to double farmers' income by 2022. The government is mulling over to set up Agro Specific Zones to promote farm sector exports. These zones will be utilized in producing and processing agro commodities that is intended for exports. We believe that this move will help in increasing India's global footprint of the sector, increasing systemic efficiencies in the process.

  Share in Global Imports India's share in country's imports
EU 39.1 1.2%
US 10.1 3.5%
China 8.2 1.1%
Japan 4.2 1.4%
Canada 2.7 1.3%
Mexico 2 0.0%
Hong Kong 1.9 0.8%
India 1.9 NA
Source: Acuité Research, CMIE, FOAUN

Our exciting journey started in 2005 with rating of bank borrowers most of whom were small and medium enterprises. At that time, credit rating was a concept known only to large issuers of capital market instruments. Since then, like a caterpillar transforms itself into a beautiful butterfly, we transformed to rate bonds, bank facilities of large corporates and issuers across industries. Along came many achievements - SEBI Registration in 2011, RBI accreditation in 2012, 50,000 ratings in 2018, 5,000 Bond and Bank Loan Ratings in 2017, launch of India's first Android and iPhone app to disseminate rating, tamper-proof QR-code-enabled rating rationales, and SMERA Terminal to name a few.

Now is the time to re-emphasize our increasing footprint across all segments of ratings through the launch of our new name - 'Acuité'.

The name has changed. The spirit of upholding highest standards of analytical rigour, continuous improvement, excellence in our processes and quest for innovation remains the same. We would like to re-emphasize that we will continue to work hard to provide independent, unbiased and timely opinion of highest standard.

Acuité means 'sharpness and clarity of thought and vision'. Let our research and ratings help you take decisions with confidence.


Sankar Chakraborti
CEO