How will it help India’s agri-exports?
The new five-year Exim Policy (2002-2007) that has taken effect from the first of April has attempted to provide a major thrust to agricultural exports. The sops provided for the sector include:

• Lifting of quantitative restrictions on exports of all commodities except onion and jute.
• Providing transport subsidy for exports of fresh and processed fruits, vegetables, floriculture, poultry, dairy products and products of wheat and rice.
• Removal of registration requirements, earlier necessary for farm exports.
• Removal of the minimum export price condition.
• Removal of packaging restrictions on whole and infant milk food, butter, wheat and wheat products, coarse grains, groundnut oil, and cashew exports to Russia under the Rupee Debt Repayment Scheme.
• Proposal of chalking out a suitable transport assistance scheme for export of accumulated stocks of rice and wheat from the FCI to encourage exports. For this an internal transport subsidy on movement of foodgrains from the FCI godowns to the nearest port is being envisaged.
• 20 agri-export zones (AEZs) have been sanctioned, covering mainly horticultural products.
• Three per cent special duty entitlement passbook (DEPB) rate offered for primary and processed foods exported in retail packaging of 1 kg or less.
• The threshold for obtaining a status certificate as an export house has been brought down to Rs.5 crore for agri-exports alongside cottage, SSI, handloom and handicraft units.

• Export houses have welcomed the removal of the restrictions and extension of transport subsidies to agri-exports as positive steps.
• The announcement of the creation of the AEZs is expected to realize the farm to port approach and will definitely provide a boost for agri-exports.
• Lowering of the threshold limit for agri-export ventures for obtaining status certificate as export house will allow small agri-goods exporters to access the license, priority finance for medium and long term capital requirement as per RBI conditions, exemptions from compulsory negotiations of documents and other concessions given to status holders far more easily than before.
• The Union Commerce Minister, Murasoli Maran, while explaining the rationale for giving special attention to agri-exports in turning round the country’s economy, pointed out that every 1 per cent switch in the terms of trade in favour of agriculture would lead to a diversion of about Rs.8,500 crore to the agricultural sector from the non-agricultural sector. This is expected to infuse purchasing power and step up effective demand in the rural areas, allowing farmers to get remunerative prices locally.
• Provision of transport subsidy for export crops will lead to diversification of agricultural production, as more farmers will now move into export-oriented horticulture, floriculture, dairy and poultry farming etc. from foodgrains, as now they will find this shift profitable.
• The Commerce Ministry expects that the transport subsidy to foodgrains exporters will reduce the ballooning stocks with FCI.
• However, while some of these changes will have a positive impact, the picture may not be so optimistic for the Indian agri-export sector.
• Many fears that the transport subsidy will fall under the category of subsidies prohibited by the WTO on the ground that these can distort trade. However, during the implementation period (till 2004), developing country members are exempted from making commitments on subsidies including those on internal and international transport and freight, which reduce the costs of marketing exports of agricultural products. And experts feel that even after these relaxations go, the Indian government can structure transport subsidies in a way to make it WTO compatible, hence making it eligible to be placed in the Green Box. For example, the government can officially show that it is releasing the stocks for export directly at the ports.
• More importantly, a subsidy to take care of the costs of transportation alone will not suffice to give Indian agri-exports a boost. Quality is an important consideration when it comes to product export. Indian foodgrains have often been rejected in outside markets on account of poor quality, and no subsidy can help exporters sell “poor” quality products abroad. Investment on cultivation techniques and facilities, proper storage facilities etc. need to be developed simultaneously if India wants to increase exports. For example, floriculture exports can rise only if air-conditioned storage and carriage facilities are made available.
• The setting up of AEZs, which are expected to make Indian agri-exports a success story, hinges on cooperation from the states and local authorities, as well as co-ordination among various ministries of the central and state governments. Many states have imposed various restrictions on movement, marketing and storing of agricultural produce. Unless these restrictions are lifted, growers from such states may find it difficult to export their produce despite all the subsidies and other benefits they can get under the Exim Policy 2002-2007.
• Steps also need to be taken to facilitate direct from growers, and eradicate the middlemen who walk away with most of the profits made from the sale of the produce, both in the domestic and the international market.
• Finally, creation of product-specific AEZs in different states may lead to the neglect of other agricultural products in the state. All farmers in the AEZ may shift to growing a particular crop to make use of the concessions granted in their AEZ. As a result, there may be a growth in monoculture farming, which could devastate the entire community in case of the failure of the crop.
• · To conclude, the Exim Policy 2002-2007 is not an unmixed blessing for the agricultural community. There are many pitfalls if adequate safeguards are not put in place. In addition, despite the Exim Policy, a lot of complementary plans and policies have to be implemented before exporters can actually derive benefits from it.

Courtesy: Kisanwatch