The immediate post-reform buoyancy in agricultural exports was in large measure due to a sharp increase in the export of rice. As Chart 1 shows, rice exports which were mildly buoyant during 1992-94, registered a huge jump in 1995-96, with exports rising five-fold by more than four million tonnes in that one year. Almost all of that increase was a result of the export of non-basmati varieties which, because of export restrictions in earlier years, did not feature as a major export from India . As Chart 3 shows the buoyancy in rice exports was almost wholly responsible for the buoyancy in foodgrains exports. However, the rice export boom of 1995-96 proved to be exceptional. It was followed by a sharp fall over the next two years. Though there are signs of a second revival in 1998-99, with rice exports estimated at 4.7 million tonnes as compared with the 1995-96 peak of close to 5 million tonnes, there are reasons to believe that such buoyancy may not be sustained.
Chart 1 >> Chart 2 >> Chart 3 >>

Consider for example trends in the domestic and export prices (f.o.b.) of rice . The period since 1992-93 has on average been characterised by a widening of the price differentials between domestic and exports sales. As a result, when the government permitted export of non-basmati varieties, the higher price to be garnered from the export market encouraged a diversification of supplies to the world market, strengthening the view that India had substantial comparative advantages in rice production. However, in absolute terms international prices have been falling during the later part of this period. According to the Commission for Agricultural Costs and Prices, the unit value realised for export of non-basmati rice declined from Rs. 9677 ($272.6) per tonne in 1996-97, to Rs. 9603 ($258.4) in 1997-98 and further to Rs. 9429 ($221.9) in 1998-99 (April-Nov.). These prices were in fact less than the economic cost of providing rice incurred by the FCI and only about 10-20 per cent higher than the levy prices in the many states. This suggests that so long as the rate of increase in support prices is higher than any depreciation in the value of the rupee, the price advantage that Indian rice exporters enjoy could be eroded.
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Rice has dominated foodgrain exports because of the restrictions that apply on exports of wheat and coarse grains. While the export of rice is permitted freely, wheat and coarse grain exports require a licence and are subject to quantitative restrictions. The ceiling for exports of these commodities are determined based on domestic availability and were, for example, set at one lakh tonnes each in 1998-99. So long as these ceilings remain in place, export trends do not reflect India's competitive advantage in these areas, but relative price comparisons suggest that in the case of wheat , the advantages that prevailed during the period 1993-94 to 1995-96 have since been lost.
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Another crop which was considered a major agricultural exportable from India is raw cotton. Hitherto, cotton exports have been regulated under a policy which provided for exports of about 5 lakh bales (of 170 kg each) a year. In practice, export volumes are influenced by domestic supply conditions and have tended to vary substantially. During the 1990s, exports touched a peak of 16.8 lakh bales in cotton year 1996-97 , when production was also at a record high of 178 lakh bales. What is noteworthy however is the buoyancy in cotton imports in recent seasons, with imports rising from a low of 0.3 lakh bales in 1996-97 to 4 lakh bales in 19987-98 and a projected record level of 6.5 lakh bales and an estimated actual export of around 5 lakh bales in 1998-99. Interestingly, as Chart 8  shows, in two of these three years (1997-98 and 1998-99) the price differential between comparable Indian and foreign varieties of cotton have (in the one case cited) virtually disappeared. In all previous years during the 1990s, international prices have consistently ruled higher than domestic prices. The erosion of the price differential is more due to the decline in international prices rather than any significant rise in domestic prices, suggesting that international price trends in the case of this commodity, considered a potential foreign exchange earner for India, have moved in directions which have undermined India's competitive advantage.
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