Agricultural Markets and Food Trade in India

With more than 1.2 billion citizens, India is the second most populous country in the world, right below China and just above the United States. However, India has a smaller size than both China and the US respectively, with a total area of 3.3 million square kilometers. Therefore, India has a huge domestic demand for agricultural products and food security is a constant struggle facing its society. Nevertheless, India’s territory is rich in fertile soils as well as abundant in water resources, particularly during the season of the Monsoon rains. Furthermore, India remains a major world economy, with a gross domestic product (GDP) above US$8 trillion, and an important agricultural industry. The national economy is divided into 17% agriculture, 30% manufacturing, and 45% services; the remaining 8% accounts for the country’s informal or uncategorized economic sectors. This article explores the status of the agricultural industry in India.

Agricultural Markets and Food Trade in India

India’s main trading partners are China, the United Arab Emirates, and the US. Meanwhile, the country’s main agricultural products include cereals, rice, wheat, oilseed, cotton, tea, sugarcane, lentils, onions, potatoes, dairy products, sheep, goats, and poultry. Even though an alarming number of Indians still live in poverty, the main driver behind the country’s economic development and market size growth is its rapidly expanding middle class. In fact, India’s annual GDP growth has exceeded 7% for the last several years. Furthermore, the country is actively implementing business friendly legislation in an attempt to incentivize foreign direct investment and spur the growth of domestic industries.

Within the domestic food retail market, India’s largest sectors throughout the last several years have been dairy products, eggs, cereals, and bread, the ensemble of which accounted for US$160 billion in consumer expenditure during 2015. Likewise, similar to other developing nations, India’s population is becoming increasingly urban and its tastes are evolving towards more international food preferences. Therefore, India represents an important emerging market for agricultural producers worldwide, particularly exporters of consumer food products. During 2015, the US was the largest supplier of consumer food products into the Indian market accounting for more than 15% of all imports in this specific sector or US$758 million. Within the fish and seafood products sector, the US represented the third largest supplier in 2015 with 18% of the market share, while Vietnamese products totaled 25% of all fish and seafood imports into India, and Bangladesh accounted for 37% of this market sector.

Finally, in terms of investment and development, India has great potential for market growth in several sectors within agribusiness and food processing as well as supply chain integration and distribution channel optimization. India’s geopolitical position is particularly strategic given the fact that the country projects into the Indian Ocean, which connects the Middle East, East Africa, and Southeast Asia. Furthermore, throughout its more than 7.500 kilometers of coastline, India has major world-class ports, such as Mumbai, Cochin, and New Mangalore on the west coast as well as Chennai, Vishakhapatnam, and Kolkata on the east coast.

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