Whalesbook
The Export Value Conundrum
India's trade deficit widened to $110 billion in FY26, with exports falling behind imports. A key issue is the decreasing unit value of major agricultural exports. Basmati rice, for example, saw its unit value drop by 11% to $868 per tonne in April-February FY26, costing over $650 million in export value despite steady volumes. Non-basmati rice also experienced a 15% fall in unit realization, contributing to a $1 billion decline in export value. This is concerning as India holds over 40% of the global rice market share.
Global Models for Value Capture
To address this, India is looking at strategies used by countries like Malaysia and Indonesia, which tax crude palm oil exports to encourage higher-value refined products. Ghana and Côte d'Ivoire also use export taxes on raw commodities such as cocoa and cashew nuts to boost domestic processing and value addition, capturing more value within their own economies.
Missed Opportunities in Key Commodities
Despite a rise in crude oil prices, which usually benefits guar gum, its per-unit export value has paradoxically fallen by $145 per tonne. For natural honey, the government's decision to lower the Minimum Export Price (MEP) came when opportunities existed to secure higher revenue. These cases highlight the need for better export pricing management to maximize foreign exchange inflows.
Expanding the Forex Horizon
Experts suggest the Commerce Ministry should proactively identify and leverage other commodities where India has a competitive edge. This includes focusing on buffalo meat, pulses, processed vegetables, fresh fruits, honey, mango pulp, processed meat, organic products, cashew nuts, spices, and poultry. Developing these sectors and implementing smart pricing strategies could potentially add billions to India's foreign exchange reserves.