Fiscal year 2023-24 witnessed a decline in India’s overall F&B exports on account of several factors including the Red Sea crisis, Russia-Ukraine war. But the highlight of the year was domestic restrictions imposed on critical food commodities like rice, wheat, sugar and onion owing to concerns regarding food security.
However, processed food exports remain largely robust amidst all these challenges, showcasing a YoY growth of 13%. It is important for Indian processed and packaged food exporters to further build on this positive momentum and tap emerging global market trends.
India’s F&B exports have experienced a steady growth during the past few years. From US$ 33.4 billion in 2019-20, F&B exports reached US$ 48.6 billion in 2022-23, which was a record year for the industry. However, during FY 2023-24, the industry has experienced significant challenges, leading to a decline by 10.1% YoY to US$ 43.7 billion, with a 5-year CAGR of 5.5%.
Exports of prepared foodstuffs (HS 16-22) also showed a sharp decline by 23.4% YoY to reach US$ 8.1 billion in 2023-24. However, exports in this category still maintained an impressive 5-year CAGR of 12.6%. In this research analysis, we will closely examine the broad product-wise trends in India’s F&B exports overall, as well as the processed food category.
Several factors including the Red Sea crisis, the Russia-Ukraine war, and export restrictions on critical items such as rice, wheat, sugar, and onions, accounted for a drop in exports. Data from Ministry of Commerce & Industry reveals that year-on-year exports declined for various agri commodities including rice(other than basmoti), wheat, pulses, cashew, niger seeds, vegetable oils, castor oil, other oil seeds, shellac, sugar, mollases, dairy products and marine products.
Top ten agri-commodities that exhibited negative growth in exports
% Growth
Source: DGCI&S; export data in US$ million
In FY 2024, wheat exports declined significantly by over 96% YoY, followed by other cereals that declined by -56.64%; sugar exports fell by -51% while rice xports decreased by -28%.
However, amidst the decline in export of various agri products there were also some significant segments that witnessed growth over the previous year. These included fruits & vegetables, meat, poultry products, beverages (tea, coffee and alcoholic beverages), groundnuts, spices, and oil-meals.
Top ten agri-commodities exported from India
(US$ million)
% growth YoY
Source: DGCI&S
Exports of fresh vegetables in FY 2024 witnessed the highest YoY growth of 144.32%, followed by fresh fruits (32.6%), and basmati rice (22.1%).
Notably, F&B exports worth over US$ 5-6 billion were impacted in the last fiscal year owing to export restrictions. Concerns over domestic availability and food inflation triggered restrictions on exports of rice, wheat, onions and sugar, which are the key components of India’s F&B exports basket.
The Government of India banned wheat exports in May 2022 (after a heatwave led to lower output). Export restrictions on sugar were imposed in June 2022. As a result, exports of wheat declined by about 96.3% YoY to US$ 56.74 million in FY 2024. On the other hand, exports of sugar decreased by 51% YoY to reach US$ 2.8 billion in 2023-24.
Exports of non-basmati rice were restricted in July 2023 to cater to domestic requirements. A 20% duty was imposed on parboiled non-basmati rice exports, and minimum export price (MEP) on basmati rice was imposed on August, 2023. The MEP was originally set at US$ 1,200 per tonne but later in October, it was lowered to US$ 950 per tonne. Despite that, the exports of Basmati Rice have shown growth as mentioned earlier.
In order to curb price rise, the export of onions was banned for about four months last December. In May this year, the government lifted ban on exports of onion but placed very high MEP with 40% export duty. A minimum export price (MEP) of US$ 550 per tonne was set. So, the effective minimum price for onion shipments was set at US$ 770 per tonne.
Though sugar production seems to be now more stable and there are sufficient stocks this year, the government is not considering sugar exports. Domestic consumption, sufficient balance for around three months and achieving ethanol blending targets continue to remain a priority for the government.
As for wheat, the Centre has ruled out lifting the ban despite the fact that production this year is higher and availability is expected to be about 10 million tonnes more when compared to last year. This decision has been taken to make wheat available in the domestic market and at reasonable prices as well. (The focus of the government is to replenish wheat reserves in state-run granaries, which hit a 16-year low recently. Wheat stocks in government warehouses as on May 1, were lower by about 10.3% year on year.)
As for rice, India will continue to be a leading player in the world rice market despite export restrictions, according to a recent projection by the United States Department of Agriculture (USDA). (During April to mid-May 2024 India exported 1.75 mt of rice, due to restrictions on rice exports, down from 2.35 mt during the same period last year. According to official data, the country exported 15.7 mt rice in FY24, as compared to 21.8 mt in FY23.)
Nonetheless, India has supplied rice, wheat and onions to the neighboring countries like Afghanistan, Bangladesh, Bhutan, Nepal and Sri Lanka, and major trade partners, like the United Arab Emirates (UAE), Indonesia, Vietnam, Singapore, Malaysia, and the Philippines, on a case-to-case basis.
Even as commodity exports face challenges, it is interesting to note the performance of prepared food stuffs (HS 16-22), as these are a key priority area for the government and industry. An overview of export figures in this segment is as below:
India’s exports of prepared food stuffs
Source: DGCIS, figures in US$ milion
As can be seen, processed food exports remain robust for the most part, with the exception of Sugar and sugar confectionery (HS 17). The two key categories that have shown a decline in this are: Othr refnd sugar includng centrifugal sugr (HS 17019990, -41.42% YoY); Other cane sugar excl. those specified in note 2 (HS 17011490, -74.25% YoY) These two categories alone account for over 90% of India’s sugar exports.
If we consider India’s processed food exports excluding sugar, processed F&B exports actually shows a YoY increase of 13%, showcasing a robust performance. This is a positive development, as processed food exports provide a strong impetus to value addition, foreign exchange earnings, employment and also increased farm incomes.
Food inflation and domestic food security still remains a prime concernfor the government. So, India may not have any immediate plans to remove export restrictions on food products. Inflation in the food basket was at 8.7% in April, as against 8.52% in March.
Recently, concerns have been raised regarding the safety of the spices being exported from India. The country exports around US$ 4 billion worth of spices, accounting for about 12% of global spice exports. However, the government and all stakeholders are taking proactive measures to address this challenge and prevent the incidence of such issues in the future. The coming months will provide a more accurate picture of the impact of this incident on India’s spices exports.
Packaged food exporters need to keep a keen eye on emerging global consumer trends, which promise new areas of growth. The world is witnessing a strong growth in consumer awareness pertaining to healthy food choices, better quality products, more accurate labelling, and environment-friendly packaging.
In a recent survey by Innova Market Insights, it was revealed that more than half of consumers globally are willing to compromise on indulgence for healthier food. The survey notes a 14% increase in indulgent products with active health claims over the past five years. One in three also claim to be prioroitising prevention, thereby being interested in products that help them take care of their well being. In another finding, one in three consumers admitted that they always look at ingredients of interest on product packs, with protein being most sought after (by 42% of consumers). As mentioned, India is witnessing good momentum when it comes to processed and packaged F&B exports, and it is important that the industry builds on it further.
TPCI is organising the 8th edition of Indus Food during January 8-11, 2025 at India Expo Centre Mart, Greater Noida. Indusfood is Asia’s premier F&B trade fair that provides participating exhibitors a grand opportunity to engage with visiting buyer delegations from across the globe – importers, distributors, supermarkets, retail chains, e-commerce players, hospitality firms, airline/cruise line caterers, cloud kitchens, etc. Moreover, with a strong representation of buyers from India, the show provides companies with an excellent prospect for exploring business growth opportunities in India’s lucrative F&B market. For more details and exhibition opportunities, visit indusfood.co.in.
You must be logged in to post a comment.
Stay ahead in the dynamic world of trade and commerce with India Business & Trade's weekly newsletter.