Reduce tariff on agro inputs, not on agro produce

Updated: Feb 22 2002, 05:30am hrs
Customs duty on all forms of inputs required in agriculture and capital goods in agro industries, processing and packaging technologies should not be more than 15 per cent. This will bring the tariff on these items at par with those of China and help the agro processing industry and the agriculture sector to be competitive globally.

Fiscal incentives in the form of reduced excise and custom duty on technology and machinery needed in the industry can also help in upgradation and foster better backward and forward integration.

At the same time, customs duty on agro produces and finished products must not be reduced, as most of the imports are highly subsidised. The government must not create an unfair situation for agriculture to compete. It is also important to upgrade agriculture production system. A strategy should be evolved to provide all support systems and proper inputs and only then open up the market by reducing tariff barriers. Unless this is done, rural India will face serious social and political unrest.

Further, loose, unhygienic food is tax-free in India whereas hygienically processed and packaged food is taxed at 16 per excise duty and up to 25 per cent sales tax. The common man is therefore forced to consume unhygienic food, which also puts pressure on limited healthcare services. Therefore, processed and packaged foods must not be taxed by the Centre as sales tax and local taxes are already high on these food products.

The quarantine system is very weak in India and poses serious threat to domestic agriculture and livestock. With the increase in imports of agriculture products from infected countries, Indian agriculture and livestock are at a risk from new and exotic diseases. Due to lack of infrastructure facilities at ports and airports, unchecked consignments are entering into the country. This poses a serious challenge and threat for the future of Indian agriculture and public health at large. The government must see that quarantine facilities are upgraded and allocate more financial support.

Developed countries, where the contribution of agriculture is less than 5 per cent of GDP, are giving maximum support to agriculture and are not willing to reduce their support under any pressure. Why is India not serious about developing agriculture in a systematic manner to face the existing competition at the global level

Agriculture is not only important for economic growth but also for maintaining political and social stability. The one billion plus population not only needs basic nutritious and hygienic food but also work to earn a livelihood. The challenge for policymakers should be to provide meaningful and constructive employment to, at least, one member of each family. A more challenging task is to provide employment to uneducated and unskilled human resources. Therefore, profitable agriculture and agro industries are the major options.

(The writer is the Executive Director of Centre for International Trade in Agriculture and Agro-based Industries)