Govt may exempt processed products from export bans

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SummaryMinistry officials said these ad-hoc measures also deter the exporter from investing susbstantially in processing sector.

In an apparent attempt to shield processed or value-added agricultural products from “ad hoc” or “knee jerk reactive bans”, the government is all set to allow the export of such products even in the event of ban on export of basic farm produce like wheat, milk, onions, ground nuts and other cereals.

The Cabinet Committee on Economic Affairs is likely to consider a proposal to provide this exemption to exports of processed agricultural produce from short-term measures like restricting or banning and changing tax rates.

The CCEA is considering exempting over a dozen value-added agricultural products — wheat flour, other cereal flour, meal pellets, milk products like casein, butter and other fat derivatives from milk, cheese and curd, peanut butter among others — falling under 14 different harmonised system product categories from any blanket ban.

The government, which has been resorting to short-term bans of exports of wheat, rice, onions or other basic farm produce during times of price spikes in the domestic market, has had the practice of imposing blanket ban on exports of basic as well as processed products.

Agriculture Minister Sharad Pawar, in the past, had objected to the government’s ad-hoc policy banning the export of value-added agricultural products, pointing out that they adversely effect their exports in long-term because they disrupt long-term supply chains and commercial contracts firmed up for exports. The Agriculture Ministry, in fact, has been highlighting that even when the short-term export bans are lifted, the exporters tend to suffer in the global market by taking a hit as not being a reliable supplier and had to forge new supply chain to gain markets.

Ministry officials said these ad-hoc measures also deter the exporter from investing susbstantially in processing sector.

Given that the processed agricultural products constitute a minuscule portion of the overall agricultural exports, the government is learnt to have decided to exempt these products because their exports are likely to not materially effect the domestic availability of basic farm produce.

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