NEW DELHI: With the government having already banned the export of rice, cut duty drastically for edible oil imports and announced the possibility of wheat imports should the need arise, there was little that the foreign trade policy could do to boost trade in the farm sector.
So, it falls sorrily between two stools: addressing inflation/ supply side constraints hampering the agri and horticulture sectors one the one hand and boosting exports on the other. In the case of sugar, which is currently in surplus, the policy actually disincentivises exports under the Focus Market Scheme (FMS). The trade policy document demonstrates how policy makers are only able to view agricultural trade in the piecemeal.
Trade watchers reckon that sugar exporters could be denied a potential competitive price advantage of around Rs 2000/tonne, thanks to its being dropped in the current year under the Focus Market Scheme (FMS).
The Scheme entitles exporters of products to notified countries to duty free scrip equivalent to 2.5% of the FOB value of exports for each licensing year commencing April 1, 2006.. Along with sugar, cereals of all types have also been dropped from the list.
The policy announced an additional duty -free credit scrip of 2.5% ( in addition to the existing level(5%/3.5%)in the Vishesh Krishi and Gram Udyog Yojana (VKGUY)) for specified flowers, fruits and vegetables (listed in table 13 of appendix 37), aimed at neutralising the high transport cost disadvantage suffered by exporters; it withdrew benefits under the Duty Entitlement Pass Book (DEPB) scheme on the export of rice, edible oils and pulses with a view to curbing inflation in essential commodities and hiking domestic supply.
It has also allowed duty free import of specified specialised inputs/chemicals and flavouring oils to the extent of 1% of FOB value of the preceding financial year’s export under the VKGUY scheme .But trade analysts expected that to be pegged at no less than 3%. The additional duty-free credit scrip of 2.5% on select f&v and flowers is viewed as a positive move.
The food group carries a weightage of only 14% in the WPI but its political and economic impact far outweighs its weightage. Within the group, fruit and vegetable prices have shot up more significantly compared to cereals over the last several weeks.
So, the move is viewed as positive. India exports grapes, mango, lychees, headed cabbage, spinach, bitter gourd,, beans and cauliflower among others. Roses and tulips dominate flower exports but bulb imports ( in a trade where rapid changes dictate preferences ) crucial to quality produce, has not been addressed.
Under the VKGUY, there is a pathetic attempt to “incentivise” rural infrastructure. The policy allows import of capital goods/equipment against exports by Status Holders in 2008-09 (w.e.f from April 1). On the face of it, this could help retail houses, food processing companies and farmer coops given that cold storage units, pre-cooling units etc are involved. Duty free credit scrip equal to 10% of the FOB value of agricultural exports is allowed, but there’s a key catch: the total benefits of all status holders put together should not exceed Rs 100 crore.
So, it falls sorrily between two stools: addressing inflation/ supply side constraints hampering the agri and horticulture sectors one the one hand and boosting exports on the other. In the case of sugar, which is currently in surplus, the policy actually disincentivises exports under the Focus Market Scheme (FMS). The trade policy document demonstrates how policy makers are only able to view agricultural trade in the piecemeal.
Trade watchers reckon that sugar exporters could be denied a potential competitive price advantage of around Rs 2000/tonne, thanks to its being dropped in the current year under the Focus Market Scheme (FMS).
The Scheme entitles exporters of products to notified countries to duty free scrip equivalent to 2.5% of the FOB value of exports for each licensing year commencing April 1, 2006.. Along with sugar, cereals of all types have also been dropped from the list.
The policy announced an additional duty -free credit scrip of 2.5% ( in addition to the existing level(5%/3.5%)in the Vishesh Krishi and Gram Udyog Yojana (VKGUY)) for specified flowers, fruits and vegetables (listed in table 13 of appendix 37), aimed at neutralising the high transport cost disadvantage suffered by exporters; it withdrew benefits under the Duty Entitlement Pass Book (DEPB) scheme on the export of rice, edible oils and pulses with a view to curbing inflation in essential commodities and hiking domestic supply.
It has also allowed duty free import of specified specialised inputs/chemicals and flavouring oils to the extent of 1% of FOB value of the preceding financial year’s export under the VKGUY scheme .But trade analysts expected that to be pegged at no less than 3%. The additional duty-free credit scrip of 2.5% on select f&v and flowers is viewed as a positive move.
The food group carries a weightage of only 14% in the WPI but its political and economic impact far outweighs its weightage. Within the group, fruit and vegetable prices have shot up more significantly compared to cereals over the last several weeks.
So, the move is viewed as positive. India exports grapes, mango, lychees, headed cabbage, spinach, bitter gourd,, beans and cauliflower among others. Roses and tulips dominate flower exports but bulb imports ( in a trade where rapid changes dictate preferences ) crucial to quality produce, has not been addressed.
Under the VKGUY, there is a pathetic attempt to “incentivise” rural infrastructure. The policy allows import of capital goods/equipment against exports by Status Holders in 2008-09 (w.e.f from April 1). On the face of it, this could help retail houses, food processing companies and farmer coops given that cold storage units, pre-cooling units etc are involved. Duty free credit scrip equal to 10% of the FOB value of agricultural exports is allowed, but there’s a key catch: the total benefits of all status holders put together should not exceed Rs 100 crore.
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