INDIA

 

Indiais a leading producer of wheat, rice, coarse grains, and cotton and has beenlargely self-sufficient in food and fiber production, with occasional importsand exports in years of shortages or surpluses.  Under a complex set ofinterventions, India has achieved impressive growth in food production in thelast four decades.

 

Onthe domestic front, the government of India has provided input subsidies alongwith support prices for most agricultural commodities.  A significant portion of governmentfunds have been allocated to subsidizing production inputs such as fertilizers,seed, power, and irrigation.  Thefertilizer subsidy alone has more than doubled in the last decade, increasingfrom 60 billion rupees ($1.25 billion) in 1992/93 to 140 billion rupees ($2.88billion) in 2001/02. Overall, India provides annual subsidies of $12 billionfor food storage and distribution, fertilizer, water, and electricity.

 

The government alsobuys agricultural products from farmers at announced support prices. Thegovernment has maintained these domestic policies with a series of restrictivetrade policies such as import licensing, tariffs, quotas, and state trading.However, the Indian government has been removing many licensing and quotarestrictions and is replacing them with high tariffs as part of their WorldTrade Organization (WTO) commitments.

 

Corn and Sorghum

        2006/07 minimum supportprice (MSP) for corn is Rs. 5,400/MT ($3.02/bu).

        The TRQ for cornimports has a quota of 500,000 MT/year (19.7 million bu), subject to an in-quotatariff of 15% and above quota tariff of 50%.

        MSP for sorghum is Rs.5,400/MT ($3.02/bu) for the current marketing year.

 

Cotton

        A minimum support priceis set for seed cotton at the beginning of every marketing season (Rs.17,700/MT in 2006/07 or a lint equivalent of about $0.55/lb). Severalgovernment agencies and research institutions engage in cotton development,seed distribution, crop surveillance, integrated pest management, and extensionactivities for cotton. The Cotton Technology Mission supports improving cottonyields, reducing cultivation costs, and improving quality through modernizationof existing facilities.

        The statutory hank yarnpolicy requires that 50% of a mill's output of yarn meant for the domesticmarket be produced for use by the handloom industry. Export oriented yarn isexempt from this obligation. The Indian government also subsidizes the sale ofhandloom products. There is an interest rate subsidy on loans intended tomodernize the textile industry.

        In 2006, India loweredthe peak tariff on cotton textile products from 15% to 12.5%. A countervailingduty of 4% was added to the existing 10% tariff on imports of cotton and cottonyarn (including sewing thread).

        The government providesvarious incentives to promote the export of value-added cotton textiles.  Export oriented units and firmsimporting against an advance license get a duty drawback (zero duty for exportoriented units and duty discounts for others) on imports of raw materials forthe export of value-added goods. 

        Imports of capitalgoods and machinery are allowed at reduced duty rates against exportobligations (zero duty for a 100 percent export oriented unit).

 

Rice

        The MSP for commonpaddy (unmilled) rice is Rs. 6,100/MT ($6.10/cwt) for 2006/07.

        Since April 2000, thegovernment of India has applied import duties of 70-80% to keep imports low.

 

Soybeans

        MSP is 1020 Rs/quintal($6.11/bu) for yellow soybeans and 900 Rs/quintal ($5.39/bu) for black soybeansin 2006/07.

        India has a boundtariff rate of 100% for soybeans and an applied tariff rate of 30.6%.

        India has not importedany soybeans in recent years due to high tariffs and phytosanitaryrestrictions.    

 

Sugar

        The MSP for sugarcaneis Rs. 802.5/MT in 2006/07 (about $0.06/lb raw sugar equivalent).

        The import duty on rawand refined sugar is 60% ad-valorem on the CIF value, plus a countervailingduty of $19.50/MT (about $0.009/lb) in lieu of the local taxes and fees imposedon domestic sugar.

        Imported sugar is subjectto non-tariff barriers and other local regulations applicable to domesticsugar.  Mills are allowed to importraw sugar at a zero duty against a future export commitment (mills can refineimported raw sugar and sell it in the domestic market, but must re-export 1 MTof refined sugar for every 1.05 MT of raw sugar imported within a specifiedperiod).

 

Wheat

        The MSP for wheat in2006/07 is Rs. 7,500/MT ($4.49/bu).

        India has eliminatedwheat export subsidies that previously made it a major exporter of wheat,particularly in the South- and South East-Asian markets.

        Import tariff is 50%for wheat imports by private traders. Recently the government of India haslowered the tariff on private imports because of a tight supply situation.