Exploring the drivers of Indian agricultural exports: a dynamic panel data approach

This study delves into dynamics and determinants of agricultural exports from India. India's agricultural export basket is heavily reliant on a limited range of commodities, including basmati rice, buffalo meat, spices, tea, coffee, and marine products. Such concentration poses risks, making the sector vulnerable to price fluctuations, changes in global demand, and challenges in accessing specific markets. Furthermore, the declining ratio of export value to import value in recent years indicates an unfavourable trade imbalance. To address these challenges and foster sustainable growth in the agricultural export sector, policymakers must gain a comprehensive understanding about the determinants for agricultural exports. So, this study utilizes panel data encompassing 40 agricultural export items over an 11-year period. The researchers employ the system Generalized Method of Moments (GMM) estimation and the findings showed positive and significant impact of past export performance on current export decisions. Moreover, the study highlights the positive and significant influences of gross output of agriculture, value-added activities in agricultural sector, gross domestic product, trade openness, foreign direct investment, water use efficiency, corruption index and exchange rate dynamics on quantum of agricultural exports. However, higher consumer prices have a negative effect on export quantities, emphasizing the importance of price competitiveness in international markets. The findings of this study provide valuable insights for diversifying the export basket, enhancing productivity, value addition, and sustainability. Addressing challenges related to trade imbalances and price competitiveness is crucial for driving growth in India's agricultural sector, benefiting farmers, the economy, and the nation as a whole. This study sheds light on the dynamics and determinants of agricultural exports from India, offering valuable insights for policymakers and stakeholders. By analyzing a panel dataset of 40 agricultural export items using the system Generalized Method of Moments (GMM) estimation, the study uncovers key factors influencing export performance. The findings underscore the importance of past export momentum, agricultural output, economic factors, water use efficiency, corruption levels, population size, and consumer prices in shaping agricultural exports. Importantly, the study highlights the need for diversifying India's agricultural export portfolio to mitigate risks associated with concentration on a few commodities, address trade imbalances, and enhance export competitiveness. The recommendations provided, including focusing on sustainable growth, enhancing productivity, value addition, trade policy reforms, attracting foreign investment, and investing in skill development, are crucial for fostering long-term growth and stability in India's agricultural export sector. Despite certain limitations, this study lays a solid foundation for future research and policy interventions aimed at ensuring sustainable development and resilience in India's agricultural exports.