India’s spice exports need to grow at 19.5% to meet $10 billion target by FY27

To support and achieve $ 10 billion exports by FY 2027, a revised target set by Piyush Goyal, Indian spices should be the torchbearer for agro products to boost the prominence of ‘Brand India’ worldwide. Fetching an annual growth rate of 19.5% is crucial to attaining this goal, says a new report.

However, merely relying on organically rising global demand fueled by higher disposable incomes and inflation won’t be enough to stay ahead of the curve. Constant and strategized efforts are required to shake up the market and widen the use cases for Indian spices, says a report by Drip Capital.

India is the largest exporter of spices globally. As per the Directorate General of Foreign Trade (DGFT), India exported $ 4.1 billion worth of spices in FY 2021-22. From this share, $ 1.8 Bn constituted core spices - dried chilli, cumin, and turmeric, followed by over US$ 1.2Bn exports of mint products, spice oils, and oleoresins.

While the Y-o-Y export performance of the industry in FY 2022 declined, India’s spice exports (in volumes) in FY 2021 stood at estimated 1.78Bn tonnes, a 37% increase against 1.2Bn tonnes in FY 2020. The growth can be mainly attributed to trends that emerged after Covid-19, fueling a new wave of appreciation for Ayurveda and ethnic Indian food, the demand for convenience, and the desire of people to experiment with different flavors.

Pushkar Mukewar, CEO/Founder of Drip Capital, said, “India produces 75 of the 109 varieties of spices listed by the International Organization for Standardization, of which 80% is for captive usage while only 15-20% get exported. Given that covid-19 pandemic has already opened new opportunities, the time is ripe for India to develop complex spice products to better cater to international markets and help strengthen ‘Brand India.’”

“Another industry trend India can capitalize on is emphasizing the medical properties and potential health benefits that spices like turmeric, ginger, cinnamon, etc. offer. Identifying countries with an increasing influence of Ayurveda and natural remedies will reveal new opportunities for Indian spice exporters. Likewise, the pharmaceutical and nutraceuticals manufacturing industry can promote using natural attributes like spices instead of relying on synthetic chemicals,” added Mukewar.

Statewise, Gujarat, Andhra Pradesh, and Kerala alone account for almost 50% of the country’s total spices exports. However, of the three, Gujarat witnessed a quicker and higher export growth with a CAGR of 19%, compared to the southern states. But for chilli specifically, Andhra Pradesh and Telangana contributed to over 60% of India’s chilli exports in FY 2021. Besides these states, in the same year, even Uttar Pradesh and Maharashtra were among the leading spice exporting territories.

Globally, India holds first place in chilli, cumin, and turmeric exports. In FY 2022, China and the US formed a substantial market for India’s overall spices. While China is India’s top importer of chilli, cumin, and various mint products, the US primarily imports curry powders and pastes, spice oils, and oleoresins. Moreover, India exports turmeric and ginger to Bangladesh and some core spices like small cardamom to Saudi Arabia and the UAE. These regions collectively comprise over 50% of India’s spice export market.

Mukewar shared, “Besides the traditional markets, India’s spice traders need to focus on R&D and innovate their spice mixes to curate customized products for different geographies. Considering the growing demand for convenience, localized adaptation will help exporters establish a strong footing, especially in newer markets, and increase Indian spices exports.”

Mukewar adds that globally, India holds first place in chilli, cumin, and turmeric exports. However, Spain, Mexico, and the Netherlands account for the largest export market share for fresh chilli (fruits of the genus capsicum or pimenta), a near-substitute for India’s dried chilli.

Russia is emerging as a new threat to India’s coriander exports because of the low pricing it offers compared to the Indian coriander. China is the market leader for ginger exports and competing with this export powerhouse isn’t an easy feat. In Cardamom, Guatemala is the global leader in exports. Most of India’s exports go to the Middle East and Bangladesh, where Guatemala has a dominant foothold. In Pepper, Vietnam, Brazil, and Indonesia have given fierce competition to Indian whole pepper in terms of pricing.

“India's export basket comprises mainly machinery, minerals, gems, jewelry, etc., whereas spices account for a minuscule share. For spices to build a dominant share in India’s exports, spice exporters must capitalize on the covid-induced trends and growth opportunities and become the torchbearer for agro products to boost the prominence of ‘Brand India’ worldwide,” says Mukewar.

Initially, agro exports from India were focused on a few commodities like cereals. These products usually lack distinctive qualities that would make India a stand-out player in the export market. But, with the global market for spices and seasonings projected to grow from $ 17.8 billion in 2021 to $ 24.2 billion in 2028 at a CAGR of 4.55%, Indian exporters need to do a lot more than what they are currently doing, Drip Capital says.

“The current uptick in spices demand could partly be attributed to spices being perceived as immunity boosters during the pandemic. However, its demand will likely stabilize to a certain extent below the current highs in the medium term,” says Mukewar.