India losing edge in the absence of long-term export policy

SANDIP DAS, Financial Express
Posted: Thursday, May 03, 2012
New Delhi: In the absence of a long-term exports policy for the agricultural produce, India is unable to tap the global market, which would have ensured better price realisation.

In a bid to control rising domestic prices of agricultural commodities, especially rice, sugar and onion, the government has been cautious in opening up the exports during the last few years. The fear is that a rise in domestic prices could push up inflation.

“Our exports policy on some key agricultural products such as rice, sugar and onion has been conservative as the focus is on keeping the domestic prices under control,” a top commerce ministry official told FE.

During 2008-11, India could not tap non-basmati exports market because of the ban imposed on its shipment. Earlier to the imposition of the ban on non-basmati exports in 2008, India used to export non-basmati worth more than R8,000 crore annually.

Since the lifting of rice exports ban in September 2011, the non-basmati shipment is set to cross the 4 million tonne (mt) -mark for the fiscal just gone by. Including the shipment of aromatic basmati, rice exports last fiscal are expected to cross 6.5 mt, which would make the country emerge as the top rice exporting country in the world.

Thailand and Vietnam have been biggest rice producers since 2008, when India imposed ban on non-basmati export for curbing domestic price rise. Exporters say most of the exports of non-basmati had been to Africa and Indonesia.

“We can earn close to R20,000 crore annually from rice exports if we continue to export the commodity without any restriction,” an official with Agricultural and Processed Food Products Export Development Authority (Apeda) said.

Against the buffer stock and strategic reserve norms of 21.1 mt of grain, mostly rice and wheat, the Food Corporation of India (FCI) has 53.3 mt of grain on April 1.

Similarly, for sugar, the food ministry had been cautious in allowing exports. “Due to restricted permission for exports, international buyers do not usually depend on Indian supplies,” an exporter said.

With onion prices stabilising because of bumper rabi (winter crop), the government has mooted a proposal to lift minimum export price (MEP) regime for the next two months for boosting exports. “We are cautious in lifting the MEP regime and we want to maintain sufficient supplies in the domestic market,” a key commerce ministry official said.

Meanwhile, agri-product exports under the Apeda basket is expected to cross R60,000 crore in 2011-12, which would be a 38% rise compared to the last fiscal.