Union government is at risk in tackling the problem of low agri commodity prices and high imports.
Indian market lacks intelligence to take informed decisions on international tariff changes.
What are the concerns with Indian agri Imports?
Major imports include vegetable oils, pulses, fresh fruits and vegetables, raw cashew as also wheat and sugar from time to time.
Over the last three years these products were worth Rs.17-19 lakh crore (about $ 30 billion).
The import of essentials such as edible oil and pulses is inevitable for Indian population.
The Indian oilseeds and oils market is well integrated with the global market through the trade route, any change in world market prices will get reflected here.
What are the issues with government polices?
Export-Import policy ignores India’s role in the global marketplace.
Exim policy for oilseeds and oils is being counter-productive because India is import-dependent for edible oil.
This makes frequent tariff changes seem like a logical alternative.
On the pulses front, the Government is planning trade and tariff changes to lift the price of domestic pulses, but this is not a viable solution.
A hike in customs duty on imported oils has had no effect on oilseed rates in India.
A long credit period 90 to 150 days encourages over-trading and many importers are delayed due to ‘import debt trap’.
What needs to be done?
Trade policy must be fixed by considering international sensitivities and trade relations.
A progressive foreign trade policy is one where export and import windows both are open.
In the case of vegetable oil, it is possible to restrict trade without imposing trade or tariff barriers.
Excessive import can be curbed by reducing the credit period for payment against imports.
Imposing a maximum credit period of 30 days will remove the incentive to indulge in over-trading.
Affirmative action in the form of strong procurement, and distribution of pulses (after milling) through the PDS is a best available option before the government.
Holistic approach covering production, processing, consumption and trade will address the issues.
