The revival of the Indian economy is facing a new risk of Unpredictable Trade Policies. The brunt of this uncertainty is being felt both nationally and internationally. Frequent amendments in Indian Trade policies have corroded the trust of foreign buyers while the Indian exporter is made to pay for delays. Be it pulses, sugar or cotton, exporters have no respite.
India is the largest producer of pulses in the world, yet it is also the largest importer of pulses. There is a strong felt need to boost production of pulses to help India to become self sufficient by meeting domestic requirement and generating a surplus for export. CII, a prominent industry chamber, strongly believes that India can achieve a production revolution in pulses. An analysis by the Tata Strategic Management Group has also shown that by adopting best practices and increasing yield to the highest levels, India can increase production by 13 mt a year.
Over the years, ban on export and re-export of pulses by the government adversely effected the Indian pulses processing units. The Government of India declared a ban on exports of sugar, pulses and wheat on June 28, 2006 until the next harvest, due to domestic shortages. Export of pulses since then has been banned time and again. And now again recently the government has extended the prohibition on export of pulses for a year till March 2013, allowing only export of Kabuli Chana, Organic Pulses and lentils with a ceiling of 10,000 MTs per annum, and subject to certain conditions. This instability of policies have impacted country’s economy in a big way. Rakesh Bharti Mittal, Chairman, CII National Council on Agriculture and Vice Chairman and MD, Bharti Enterprises Ltd, says, “It is imperative today to develop a long term strategy for timely sourcing and distribution of pulses and to meet the demand and supply deficit of pulses in the country.”
Describing about the inconsistent trade policies, Ajay Shriram, Chairman, CII National Committee on Sugar and, Chairman and Senior Managing Director, DCM Shriram Consolidated Ltd. says, “India has always been in International sugar trading. International Sugar Prices are influenced by India’s trade decisions. The volume of exports and imports are based on surplus or shortfall anticipated between production and consumption. On the basis of assessments made by the Government they decide the export / import policy and the Industry has to abide by this policy.”
“Due to inconsistent trade policy on sugar and late decision making, the industry has suffered severely either by paying higher prices for imports or getting lower prices for its exports, eventually resulting in loss to the economy,” he describes. “Sugar industry needs a stable and proactive trade policy which will maintain domestic prices, stocks, reducing excessive fluctuations of sugar market and paying timely and remunerative sugarcane price to farmers,” emphasises Shriram.
According to Gokul Patnaik, Chairman CII National Task force on Agri-marketing and Ex-Chairman, APEDA, (Agricultural and Processed Food Products Export Development Authority), Recent ban on export of various agricultural commodities such as cotton, pulses, sugar, casein have eroded the credibility of India as a dependable exporter. Foreign importers have been asking “Is India only a fair weather friend?” Indian exporters are being dubbed unreliable. It will be in national interest if Government of India takes a long term view and export-import is not regulated by “switch on switch off” policy. Tariff control would be a more effective and acceptable way of dealing with temporary shortages rather than quantitative restrictions.”
Consistent trade policies help create a reliable outlook. The returns would be positive for brand India internationally. To achieve this, Indian trade policy needs to shift from gate keeping on export policies towards more consistent, reliable and transparent standards for export of agricultural commodities. Only then will exporters face certainty and be able to build and leverage brand India internationally and remain competitive.