Nil import duty on pulses likely for one more year

Move seen to tackle prices and augment domestic supply

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The finance ministry may extend duty-free import of pulses for one more to March 2014 to stabilise prices and boost supply.
The current nil duty on pulses ends on March 31, 2013. There are no export of pulses as India is a net importer of pulses.
India imports around 3 million tonnes of pulses which is roughly three-fourths of world production. Incidentally even as fifty per cent of total production of pulses is in India, it is used for captive consumption.

Pulses are categorised as essential commodities and the government sells them at subsidised rates under its public distribution system.

As per official data, India’s pulse import rose by 23 per cent to 3.31 million tonnes worth $1,821.95 million (about Rs 10,149.5 crore) in the last fiscal. The country has prohibited export of pulses till March 2013, but the ban does not apply to kabuli chana or chickpea, whose exports were freed in March 2007.

Last year in October, the National Agricultural Cooperative Marketing Federation of India (Nafed) kept kharif oilseeds, pulses and cotton under alert for extending its price support scheme (PSS).

The arrangement provides for Nafed to procure these crops at the minimum support price (MSP), if the market price of the crops falls below the MSP.

PSS is a market intervention mechanism of the government under which government agencies procure crops from the market, if the prices fall below the minimum support price (MSP) prescribed by the agriculture ministry for that season. In order to enable PSS, the agriculture ministry has reverted to its old scheme of full reimbursement of the extra cost borne by procurement agencies such as Nafed and the National Cooperative Consumers’ Federation (NCCF), in procuring the crop at MSP and selling below market price.. For the past two years, the subsidy reimbursement for Nafed was capped at 15 per cent of the total amount, while the rest is yet to be sorted out between the states and the Centre. Therefore, this time, the government has reinstated the old system without the cap before the start of the procurement season.

The price of pulses has gone up sharply over one year since 2012. For instance, green gram dal (moong) has witnessed prices going up from Rs 4,900 in Jan-Mar 2012 to a high of Rs 7,200 per quintal in March 2013. In January 2013, it was Rs 7,000 per quintal. According to the first advance estimates of 2012-13 season, kharif pulses output is estimated lower by 14.6 per cent at 5.26 million tonnes compared with 6.16 mn tonnes last year.

Earlier, the Commission for Agriculture Costs and Prices (CACP) had suggested 10 per cent import duty on pulses to encourage domestic production. According to the commission, imposing 10 per cent duty on imports would enhance domestic output by bringing more irrigated areas under pulses. Indirectly, such a move would help save fertiliser subsidy as pulses are nitrogen fixing and help in stabilising production.