15th Finance Commission’s HLEG on Agricultural Exports submits a report

15th Finance Commission’s HLEG on Agricultural Exports submits a report

The High-Level Group (HLEG) on Agricultural Exports set up by the Fifteenth Finance Commission to recommend measurable performance incentives for States to encourage agricultural exports and to promote crops to enable high import substitution, has submitted its report to the Commission

After intensive research and consultations and taking inputs from stakeholders and the private sector through intensive consultations, the HLEG has made its recommendations, major among which are :

• Focus on 22 crop value chains – demand-driven approach.
• Solve Value Chain Clusters (VCC) holistically with a focus on value addition.
• Create a State-led export plan with participation from stakeholders.
• Private Sector should play an anchor role.
• The center should be an enabler.
• The robust institutional mechanism to fund and support implementation.

The Group in its report has recommended a State-led Export Plan -  a business plan for a crop value chain cluster, that will lay out the opportunity, initiatives, and investment required to meet the desired value chain export aspiration. These plans will be action-oriented, time-bound, and outcome-focused.  The Group has also said that for the success of the State led Export Plan, the following factors needed to be considered:-

• Plans should be collaboratively prepared with private sector players and Commodity Boards.
• Leveraging of state plan guide and value chain deep dives.
• The private sector should play an anchor role in driving outcomes and execution.
• The center should enable state-led plans. 
• Institutional governance should be promoted across the state and center. 
• Funding through the convergence of existing schemes, Finance Commission allocation, and private sector investment.

The Group was of the view that the private sector players had a pivotal role to play in ensuring demand orientation and focus on value addition; ensuring project plans are feasible, robust, implementable and appropriately funded; providing funds for technology based on the business case and for creating urgency and discipline for project implementation. 

The HLEG feels that-

• India’s agricultural export has the potential to grow from USD 40 billion to USD 70 billion in a few years.
• The estimated investment in agricultural export could be in the tune to USD  8-10 billion across inputs, infrastructure, processing, and demand enablers.
• Additional exports are likely to create an estimated 7-10 million jobs.
• It will lead to higher farm productivity and farmer income.

The Terms of Reference of the HLEG include:

• To assess export & import substitution opportunities for Indian agricultural products (commodities, semi-processed, and processed) in the changing international trade scenario and suggest ways to step up exports sustainably and reduce import dependence.
• To recommend strategies and measures to increase farm productivity, enable higher value addition, ensure waste reduction, strengthen logistics infrastructure, etc. related to Indian agriculture, to improve the sector's global competitiveness.
• To identify the impediments for private sector investments along the agricultural value chain and 3 suggest policy measures and reforms that would help attract the required investments.
• To suggest appropriate performance-based incentives to the state governments for the period 2021-22 to 2025-26, to accelerate reforms in the agriculture sector as well as implement other policy measures in this regard.