India’s Policies Hamper Growth Of U.S. Agricultural Exports, Says USDA’s Foreign Agriculture Service
In the pursuit of self-sufficiency for many staple commodities, India maintains politicized export controls and a highly restrictive import regime, says Foreign Agriculture Service (FAS) of US. According to the WTO, India’s average tariff on agricultural products is nearly 36 percent. High Indian agricultural tariffs hinder many U.S. agricultural exports, such as fresh and dried fruits, vegetables, some nuts, and various processed food products and food ingredients.
Many experts also attribute India’s high rates of malnutrition to its domestic self-sufficiency policies that restrict food imports. According to the World Bank, India has one of the world’s highest demographics of children suffering from malnutrition. The International Food Policy Research Institute’s Global Hunger Index also reported fifteen percent of Indian children under age five are underweight for their height, and 15 percent of the total population is undernourished. As India’s population continues to expand the government may be forced to relax import restrictions to meet the demand for inexpensive foodstuffs for the marginalized, undernourished population, adds FAS.
Does Chicken Add to US Agenda!
FAS says, for some products that India produces, such as poultry, rising consumer demand will encourage more imports. India’s minimal poultry imports include prepared or preserved turkey mainly from EU countries and Thailand. The tariffs applied are 30 percent basic tariff on imports of most poultry products, but 100 percent for cuts and offal of fowl species (global agriculture information network). The growth in the broiler segment is expected to remain strong with consumer preference for chicken meat, increasing income levels and changing food habits. While demand for meat grows and evolves, Indian consumers will require more production and more choice, thereby pressuring domestic capacity to expand and government-imposed import restrictions to adjust.
A Confused Approach to GOI’s policies
For poultry FAS though says, the India market is currently closed to U.S. poultry exports pending resolution of a WTO case. It says, ‘On November 8, 2016, the Indian Government withdrew currency notes of INR 500 and INR 1,000 from circulation. According to Euromonitor International, while this led to a currency crunch and a loss of economic momentum, the government saw this as a catalyst for the growth of card/online payments and a reduction in the dependence on cash transactions.
The growth in online transactions led to a nearly 80 percent growth in online retail orders. However, traditional grocery outlets still account for more than 90 percent of packaged food sales in India. The advancement of online sales, however, has steered traditional retailers to supply more quality products to satisfy changing consumer demand. U.S. agricultural exports to India are anticipated to flourish in the future as growing demand from its population exceeds production capabilities. A steadily rising number of middle and high-income households along with improved access to credit will all support India’s consumer demand.
Changing Opinions
In the endnotes to the part of its report FAS says ‘Further, the recent appreciation of the rupee will increase purchasing power, thus driving import growth. Another great example of India’s future trade potential is that according to Euromonitor International, in an effort to boost trade, the Indian government is constructing seven new ports at a cost of USD 7.6 billion’.
