From Competition at Home to Competing Abroad: A Case Study of India’s Horticulture

India is a large, low cost agricultural producer. Yet its share in global agriculture exports is insignificant and its domestic market is protected. In global trade negotiations, India’s efforts have been directed more towards retaining the right to protect than towards eliminating distortions at home and abroad. The study seeks a solution to this puzzle by examining the horticulture sector, one of the most dynamic segments of Indian agriculture and international trade. It undertakes an integrated analysis of the sector–from farm to retail–based on primary surveys of farmers, agents and exporters across fifteen different Indian states. The study identifies three major impediments to exports: The ‘logistical tax’ imposed by high farmer-to-consumer delivery costs, which erodes the production cost advantage enjoyed by Indian farmers. The ‘standards gap’ between the stringent health, safety, and quality requirements of governments and buyers, especially in richer countries, and the weak standards and conformity assessment mechanisms in India; and  The trade policy barriers faced by Indian exporters in foreign markets.  The study proposed two priorities for policy reform: creating an integrated and competitive domestic agricultural market; and improving communication, transport, storage, distribution, and agricultural support services. Radical reform in services is desirable not just for its own sake but for the transformation of India’s agricultural trade. Providing farmers improved access to services will enhance the economic gains and strengthen the political case for agricultural trade liberalization. A willingness to reform its own trade regime will enable India to take a more forceful position in the WTO negotiations, seeking not only just significantly lower levels of foreign protection, but also greater transparency, simplicity, and predictability in foreign trade regimes. This report will be of interest to policymakers, trade negotiators, trade analysts, aid institutions, NGOs, and readers interested in trade and development. Students, teachers, and researchers in development economics and agriculture will also find it a useful resource.