“We had forwarded the policy to the Prime Minister’s Office (PMO) some time back, and after ministerial consultations, it is now expected to be taken up by the Cabinet soon,” a senior commerce department official said. The PMO believes the policy to have wide political ramifications as well, months before the nation goes to polls, senior sources averred.
The commerce and industry ministry had released the draft policy in March but had clashed with the agriculture ministry over various issues, most notably the proposed changes to the model APMC Act.
The new norms envision an institutional mechanism for tackling market access barriers. “This has been India’s focus over the past few years in most bilateral negotiations. We need to create a better environment for farm export to flourish,” a senior commerce ministry official said. The policy asks for reforming the APMC laws across states.
The result of these, says the ministry, is that agri wholesale markets have been prey to inefficiency and cartelisation. For decades, farmers have been under compulsion to sell at these official market yards, which might not offer the best price and restrict private players from setting up markets and investing in infrastructure, it concedes.
The draft policy paper points out that between 2012-13 and 2016-17, the country’s agri trade dwindled from $36 billion to $31 billion, a 5 per cent annual drop. India’s export basket is led by marine products ($5.8 billion), meat ($4 billion), and rice ($6 billion), together making up 52 per cent of the total trade in agri products.
Despite India occupying a leading position in global trade of these products, the total agri export basket still accounts for only a little over 2 per cent of world agri trade, estimated at a massive $1.37 trillion.
In such a scenario, the target of doubling agri export to $60 billion by 2022 is ambitious — exports have dipped in the past few years and may require consistent tweaking of rules in other sectors as well.
The policy has, in a significant move, suggested zero restrictions in the form of a minimum export price (MEP), export duty or bans on processed agri products or organic products. However, the door has been kept open for restrictions on commodities considered essential for food security. “Given the domestic price and production volatility of certain commodities, there has been a tendency to utilise trade policy as an instrument to attain the short-term goals of taming inflation, providing price support to farmers, and protecting the domestic industry,” the draft policy says.
Examples are MEPs on onion and rice shipments. Sudden changes in policy regarding shipment of commodities such as onion, rice, wheat, oilseed, pulses or sugar have a long-term impact on economic and foreign relations with many developing nations, the policy warns.
“For example, there is a lot of scope for marine products and processed food; also in high-value products. We need to rectify domestic policies and remove transport bottlenecks. The cost of transporting many products from hinterland to ports is higher than the cost by sea; also, air cargo needs to be made affordable,” a senior official of the Agricultural & Processed Food Products Export Development Authority said.
To boost high-value and value-added exports, the government will focus on perishables. The policy has also identified 50 district-wise clusters for developing export-oriented infrastructure.