Commodity export bans wont cover processed foods sector

Written by Sandip Das | New Delhi | Updated: Jul 18 2012, 08:33am hrs
Indias burgeoning processed foods firms can breathe easy. Occasional clampdowns on agri-commodity exports which cover processed foods as well will no longer be applicable to them. A formal announcement is expected shortly.

India has banned exports of onions, wheat, non-basmati rice and milk at various times in the last few years to boost domestic stocks. Since there is no policy distinction between raw and processed items, this has hit exports of dehydrated onions, casein milk protein extracts, and rice and flour-based products. Not surprisingly, the global share of Indias R60,000-crore proces-sed foods industry, growing at a CAGR of 7%, has remained tiny. Freeing export restrictions could help lift this share.

Many foreign buyers are reluctant to enter into deals with Indian exporters due to the governments power to suspend exports of a particular commodity at short notice, a dehydrated onion exporter told FE.

We want to ensure the processing industry meets its export commitments notwithstanding restrictions on any commodity, a senior government official said.

The countrys agriculture and processed foods exports (including basmati rice, fresh fruit, and dairy and meat products, among others) stood at Rs 82,480 crore in 2011-12, 97% more than the previous year. The country exported processed vegetables worth Rs 1,056 crore during 2011-12.

On December 22, 2010, the commerce ministry banned exports of all types of onions, following a spike in domestic prices. The ban hit the Rs 500-crore domestic onion dehydration industry, which has 50% global share.

Similarly, the government had banned exports of casein and milk powder in February last year. Early this year, agriculture minister Sharad Pawar wrote to Prime Minister Manmohan Singh that the Centres policy on milk and milk products has been ambivalent and demanded opening of exports of skimmed milk powder and casein, which the government announced last month. India exported dairy products worth 608 crore last fiscal.

Since lifting the export ban on non-basmati rice last September, India has exported nearly five million tonnes to countries in Africa and South Asia. The volume of total exports had crossed Rs 8,000 crore last fiscal.

Recently, the government lifted a four-year ban on wheat exports. Wheat product exports have been allowed since last year.

Fifteen countries including Saudi Arabia, United Arab Emirates, United Kingdom, Bangladesh and South Africa account for more than 63% of Indias exports of fruits, vegetables and other agri-products.