India:Trade expects new agri policy to give impetus to sector

Date:12-11-2018

The new trade policy for agriculture, which aims to double India’s farm exports to more than $60 billion by 2022, will give a fillip to agro trade and industry, said companies and exporters. They anticipate policy measures such as support for infrastructure and logistic, focus on clusters and greater involvement of state governments to open new avenues for investment, apart from ensuring remunerative rates for farmers.

The union cabinet, on Thursday, approved the Agriculture Export Policy, 2018 that imposes no restrictions on export of organic and processed products. However, the government will keep a check on the movements of price- and supply-sensitive commodities through periodic reviews on a case-to-case basis. 

Till date, India’s agriculture exports were more opportunistic or accidental in nature without proper policy backup, which did not necessarily create additional value for farmers, said exporters. With the new policy measures, they are confident of having better predictability for exports of agri and agri-based produces.

“This is a welcome step in doubling farmers’ income by ending restrictions for exports, providing institutional ways for market access and settling quality claims,” said Ashok Sharma, managing director of Mahindra Agri Solutions.

As one of India's largest grape exporters, Sharma said the government’s plan to develop export-specific rural clusters was a good initiative. Mahindra Agri Solutions is exploring export of pomegranate and ginger from the Northeast. “Opening of market access with China, Canada and Southeast Asian countries has helped grow exports by 12-15% in the past one year,” he said. Sharma said while it would be difficult to project export growth, the policy was in the right direction to boost export significantly.

Agri companies and exporters said the export policy must be in sync with the domestic agriculture policy. While increase in the minimum support price of agri commodities is very much required to align with the larger vision, it also makes India less competitive in the global marketplace, said an exporter who did not wish to be named.

India’s share in global exports of agriculture products rose to 2.2% in 2016 from 1% a few years ago. It is currently ranked ninth among exporters globally.

Stable policy framework will allow all stakeholders to build business models with medium- to long-term plans, said Anil Jain, vice-chairman of Jain Irrigation, one of the largest exporters of processed fruits and vegetable from India. 

“New policy initiatives will increase private sector investment in the agriculture value chain. Diversification of markets may offer Indian farmers crucial additional source of income,” he said. Jain, however, said the policy should not encourage exports of water-intensive crops as our country was suffering of inadequate resources. “There should be no restrictions on export of processed items. We should also renegotiate trade agreements with countries or trade blocs so as to reduce tariff and non-tariff  barriers for India agri products," he said.

“A policy in place along with desire to put Indian agriculture produce on the global map will surely yield results. We expect export incentives for organic and processed food companies to touch 10% from the current 5%. Further, we expect reimbursement on pesticide residual testing charges, which is compulsory for organic produce,” said Pankaj Agarwal, managing director of Just Organik, an organic food products company. 

India’s largest exporter of buffalo meat, Allanasons, estimates the new policy to help more than double its export potential. “Market access to China, Thailand and Turkey will further boost exports from the country. Also, we are the only sector under agri exports with zero fiscal support, and getting a 5% benefit under the Merchandise Exports from India Scheme will be a relief,” said director Fauzan Alavi. 

As one of the largest dairy products exporters from the country, Amul expects opening of the China market for Indian dairy to be good. “Indian farmers are producing more milk than what the country can consume, so export will improve domestic prices which can help double the farmers’ income,” managing director RS Sodhi said.