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Demand for Indian Agricultural Products from the Middle East Market

IBEF, Knowledge Centre

Feb 10, 2021 06:36

Introduction

India’s agricultural exports stood at US$ 28.49 billion in FY21 (April–December), according to the Directorate General of Commercial Intelligence and Statistics (DGCIS) Annual Report. The market is estimated to reach ~US$ 60 billion by 2022, driven by strong demand from markets such as the Middle East and China. Between April and November 2020, India achieved trade surplus worth US$ 9.71 billion, an increase of 24.3% YoY.

India exports ~ 70% of its commodities and agricultural products to neighbouring countries including the Middle East, Africa and other regions in Asia Pacific, and the remaining to Europe and the Americas.

In 2020, India strengthened its position as the leading rice exporter (notably, in the Middle East, contributing to ~70% of the total rice imports).

Exports for Major Indian Agricultural Products in the Middle East

Overview by country

Top five countries in the Middle East (the UAE, Saudi Arabia, Iran, Iraq and Egypt) contributed ~20% to the total exports of principal agricultural commodities from India between April and December 2020.

In FY21 (April-December), UAE led the Middle East market for agricultural product imports from India (US$ 1.32 billion), followed by Saudi Arabia (US$ 1.09 billion), Iran (US$ 940.52 million), Iraq (US$ 620.15 million) and Egypt (US$ 344.49 million).

Key Middle East countries

FY21 (April-December)

Quantity (in MT)

Value (in US$ million)

UAE

1,214,194.19

1,317.87

Saudi Arabia

1,137,300.63

1,086.67

Iran

1,541,245.07

940.52

Iraq

734,153.82

620.15

Egypt

169,750.24

344.49

Qatar

378,044.36

299.75

Kuwait

285,171.4

297.21

Oman

304,283.55

279.38

Turkey

194,006.85

163.11

Jordan

175,286.64

147.26

Israel

77,993.07

88.87

Source: Directorate General of Commercial Intelligence and Statistics (DGCIS) Website

Trends

Basmati rice and meat are the key products exported to the Middle East market

  • Basmati Rice

In FY20, five Middle Eastern countries (Iran, Saudi Arabia, Iraq, the UAE and Kuwait) accounted for ~70% (US$ 3 billion) of the total basmati rice imported from India.

FY20

Quantity (in MT)

Value (in US$ million)

Iran

1,319,156

1,246.02

Saudi Arabia

974,122

955.89

Iraq

465,889

433.92

UAE

208,518

209.17

Kuwait

197,103

201.05

Source: Directorate General of Commercial Intelligence and Statistics (DGCIS) Website

  • Sheep/goat meat

In FY20, five Middle Eastern countries (the UAE, Qatar, Kuwait, Saudi Arabia and Oman) accounted for ~95% (US$ 88.37 million) of the total sheep/goat meat imports from India.

FY20

Quantity (in MT)

Value (in US$ million)

UAE

9,883

64.3

Qatar

1,307

8.79

Kuwait

1,304

8.75

Saudi Arabia

597

3.93

Oman

445

2.6

Source: Directorate General of Commercial Intelligence and Statistics (DGCIS) Website

  • Buffalo meat

Egypt was the third-largest country (at 10%) to import buffalo meat (US$ 335.36 million) from India in FY20, followed by Iran (~5%).

Increasing demand from the UAE and Saudi Arabia

  • Cashew

UAE was the largest country (at 21%) to import cashew (US$ 117.98 million) from India in FY20, followed by Saudi Arabia (~10%).

  • Dairy products

UAE was the second-largest country (at 15%) to import dairy products (US$ 40.87 million) from India in FY20, followed by Saudi Arabia (~6%).

  • Non-basmati rice

UAE was the third-largest country (at 6%) to import non-basmati rice (US$ 130.92 million) from India in FY20.

Middle East is the largest market for Indian tea and sugar exports

  • Tea

Iran was the largest country (at 24%) to import tea (US$ 198.12 million) from India in FY20, followed by UAE (~5%).

  • Sugar

Iran was the largest country (at 16%) to import sugar (US$ 307.76 million) from India in FY20.

Demand for other Indian agricultural products

  • Oil meals

Iran was the third-largest country (at 9%) to import oil meals (US$ 76.37 million) from India in FY20.

  • Processed fruits & juices

Saudi Arabia was the third-largest country (at 9%) to import processed fruits & juices (US$ 59.52 million) from India in FY20.

Opportunities

Policy support from Iran

Iran has lifted the restriction on Basmati rice imports from India, which would correspond to India's improved cereal export output in 2021.

In FY20, India’s basmati rice export to Iran stood at ~1.32 million tonnes (est. value: US$ 1,246.02 million).

Increasing milk production in India

The key export destinations for Indian dairy products are Turkey, the UAE, Egypt, Bangladesh, Bhutan, the US, Saudi Arabia and Malaysia. In FY20, India exported 111,146 tonnes of dairy products (worth US$ 280 million).

The estimated milk production in India is pegged at 208 MT in FY21, up from 198 MT in FY20.

For the 2025 dairy sector roadmap, the Indian government plans to enhance value-added goods from 23% to 40% and India's global export share from 0.36% to 10%.

Government Initiatives and Policies

New agriculture export policy

In December 2018, a new agriculture export policy was approved by the government to increase exports from India. The government targets to increase India’s agricultural export to over US$ 60 billion by 2022.

Agriculture Infrastructure Fund (AIF) to enhance infrastructure

In the Union Budget 2021-22, Finance Minister Nirmala Sitharaman announced that Agricultural Produce Marketing Committees (APMCs) would become eligible beneficiaries to utilise the Rs. 1 lakh crore (US$ 13.72 billion) financing under the Agriculture Infrastructure Fund (AIF) to enhance infrastructure at regulated markets. Policy support for infrastructure development at regulated markets is expected to enhance income for farmers and support other stakeholders (e.g., agri-entrepreneurs, start-ups, etc.) across the value chain.

Conclusion

India's agricultural exports are expected to continue as strong output in the coming year. The market is projected to expand ~US$ 60 billion by 2022. Indian exporters have impeccable food order booking positions including processed food, which is a strong indication that 2021 will be a positive year for exports of agriculture and food.

The demand for Indian agricultural products in the Middle East is expected to increase owing to the rise in availability of quality Indian agricultural products at discounted price. Also, Iran has lifted the ban on import of Basmati rice from India, which will lead to India's improving cereal export volume to the Middle East market in 2021.
 

 

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