Taxing
travails
In
order to boost food exports the tax structure needs to be revisited
and bought at par with competing nations, says M Rafeeque Ahmed
It
is estimated that India is the second largest producer of food products
in the world. However, its exports are roughly 0.9 per cent of the world
food trade despite the inherent strengths the country has in tea, spices
and other processed foods. The significance of the export sector in
the growth of the economy hardly needs any emphasis.
Although
exports of food products registered an impressive growth rate during
the post reform period in India, its share in the world exports is reportedly
less than 1 per cent. There is, therefore, a need to raise the share
of India’s exports of food products thereby ensuring that the contribution
of the Indian exporters to the growth of the economy is further enhanced.
The
world market is fast changing and consequently Indian exporters are
attempting to penetrate into the new markets of Europe and South East
Asia. It is believed that India’s exports to most of the developed countries
except the US have been falling of late. Reportedly, exports to Japan
have declined by an annual compound rate of 8.1 per cent from $699.5
million in 1996 to $423.7 million in 2002-03. Exports to Netherlands
have fallen by an even higher rate of 9.6 per cent annually compounded
during the period.
Similarly
exports to Russia, Germany and the UK, India’s main trading partners,
have fallen by an annual compound rate of 12.7 per cent, 2.1 per cent
and 1.5 per cent respectively, during the same period. A part of the
fall in exports to developed countries was, however, compensated for
by higher exports to the developing countries. Bangladesh has become
India’s third biggest destination of food exports now.
Exports
to Bangladesh have grown by an annual compound rate of approximately
25.5 per cent from about $100 million in 1996-97 to $393 million last
year. It has been reported that in 2001-02, 20 per cent of the total
exports comprised of marine products alone and meat and meat preparations
and processed fruits and vegetables have recently shown strong growth
potential.
Despite
the advantage of diverse agroclimatic conditions and production of a
great variety of products in various seasons, India’s exports potential
has as of now not been adequately utilised. The primary reason being
poor infrastructure, low level of processing, grading, quality control
and poor or lack of quality branding and packaging.
Infrastructure
specific to food exports, such as storage and fast-track inland and
mechanical port handling facilities, is also a limiting factor. There
is a large opportunity in exports of processed foods, but unfortunately
we do not have a long term or medium term policy for the same.
According
to a report submitted by a Subject Group on Food Industries under the
Prime Minister’s Council on Trade and Industry, about 20 per cent of
all foods produced in India are wasted and the Government estimates
the cost of such wastage to be over six times the amount spent on food
subsidies. Only 25 per cent of processed food grains utilise scientific
and modern storage facilities.
Annual
post-harvest losses are estimated to total 10 per cent of total food
grain production – an amount equal to Australia’s annual food grain
production. Though India produces a wide range of both topical and temperate
fruits and vegetables and is the world’s largest producer, less than
2 per cent of production is processed, and about 25 per cent is lost
as ‘wastage’.
WTO
and its implications
Though
the Cancun Summit held at Mexico during September 10-24, 2003 failed
in its official version, it has displayed the united
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TO
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