| open house
New Delhi, Nov. 8: The commerce ministry plans to seek cabinet approval for a more liberal foodgrain marketing policy where exporters can compete with the Food Corporation of India (FCI) to make purchases directly from the market.
The ministry is of the view that under the current system exporters are excessively dependent on FCI stocks. Dealings with the FCI often tends to get caught in red-tape and exporters end up missing their contract schedules.
The liberal foodgrains policy also envisages a freight subsidy for foodgrains exports which is considered WTO-compatible. This subsidy is proposed to be paid to exporters once they provide shipping bills of export consignments as proof.
The official thinking is that the current functioning of the FCI is still based on the food shortage era of the Indian economy.
However, times have now changed and with a regular foodgrain surplus each year the country has the potential to emerge as a strong exporting nation. The increase in rice and wheat exports in recent years is cited as a case in point.
FCI has had to take recourse to selling its foodgrains at prices that are lower than what it paid to farmers merely to dispose of excess stocks and reduce its burgeoning carrying charges.
With exporters directly making their purchases, the procurement burden on FCI is also expected to be reduce. Senior officials are of the view that this would also help to lift the market in states where the FCI does not operate.
Indian foodgrain exporters find it extremely difficult to compete with the Cairns group of countries which have well-developed road networks and highly-mechanised port infrastructure to ensure quick deliveries. Similarly, the US and EU nations have a highly subsidised system of agriculture with which the Indian farm sector cannot compete. This has been the subject of endless rounds of WTO negotiations with no clear end in sight.
The commerce ministry is also seriously concerned over the tea sector as prices have been falling in recent years with demand falling short of supply. Cheap tea from Vietnam and Indonesia has emerged as a major factor in depressing prices.
It has already moved a proposal to reduce interest rates on loans advanced to tea plantations to 6 per cent. Quality is another major area of concern and various steps such as the promotion of a proper product-mix are required to be taken on a war- footing.