Import Duty Raised On Chickpeas, ‘Efforts To Keep Domestic Price Above MSP’
Expected higher yields from the current crop of 2017-18 along with rising pressure from the opposition and farmers’ drove the government to rise the import duty on Chickpeas once again from 30 to 40 per cent. It may be the fastest route to appease farmers in Madhya Pradesh & Rajasthan in coming elections.
A ministry of finance body ‘Central Board of Excise and Customs (CBEC)’ has issued a notification on 6th of February, raising the import duty on chickpeas from 30 per cent to 40 per cent pro rata. Earlier to this government had issued a notification, imposing an import duty of 30 per cent on chickpeas and lentils with immediate effect on 31st December last year.
These measures are observed as part of a series of several restrictive import measures, both quantitative restrictions and raising import duties, on various pulse crops that had been taken since March 2017. Market sources report that imports of chickpeas had come to an alleged halt after the imposition of the 30 per cent import duty that largely affected supplies from Australia, Myanmar, several African countries (mostly central African), and of course the United States.
According to industry sources, "it is very obvious that the government’s decision to raise the import duty on chickpeas is to ‘stop’ imports as the local crop is set to harvest" during March to April and to be marketed from March to May. Sources report that they expect that the additional tariff increase will send a strong market signal to bolster the domestic price for chickpeas and keep it above the government’s minimum support price (MSP) with the arrival of the upcoming harvest.
Record Production May Become Challenging
It is believed that despite the imposition of the 30 per cent import duty in December, local chickpea prices continued to decline on the expectations of a bumper harvest for the upcoming 2017-18 crop. The said crop season which saw higher planting (10.6 million hectares compared to 9.8 million hectare last year) and favourable weather conditions may bring a better yield. Assuming normal weather conditions until the crop is harvested, market sources expect the 2017-18 chickpea harvest to be around a record 10 million metric tons (MMT) compared to previous year’s record 9.3 MMT.
The Political Angle
It is a tremendous pressure from domestic farmer interests and the political opposition why the government may have chosen to support pulse prices at levels above the MSP. The upcoming state elections in the major chickpea producing states of Madhya Pradesh and Rajasthan (the state which had also witnessed a loan waiver of 50, 000 Rs) in 2018. The declining domestic prices exacerbate the pressure on the government. The government has inadequate marketing and storage infrastructure and insufficient financial resources to undertake MSP pulse procurement operations or other price support operations.
