India’s Implements Measures To Placate Farmers

Photo: Reuters/Avijit Ghosh

NEW DELHI, (REUTERS) – The Narendra Modi government has implemented a series of measures to facilitate the exports of certain farm goods and limit imports of vegetable oils ahead of local elections in two states where farmers form an influential voting bloc.

The moves surprised the market, as New Delhi typically tries to protect consumers’ interests during the peak festival season. However, this year, it prioritized supporting farmers, setting aside inflationary concerns.

India has removed a floor price for basmati rice exports to help farmers boost overseas sales of the premium grade. India and Pakistan, the only growers of basmati, compete for global market share for the premium rice.

Modi’s government has also removed the $550 a metric ton MEP on onions, one of the most ubiquitous food items in India. The world’s biggest onion exporter also slashed export tax to 20% from 40%.

India, the world’s biggest edible oil importer, imposed a 20% basic customs duty on key edible oils, to help protect farmers reeling from lower oilseed prices.

Effective import duty on crude palm oil, crude soyoil and crude sunoil rose 27.5% from 5.5% as they are also subject to India’s Agriculture Infrastructure and Development Cess and Social Welfare Surcharge.

India also raised the import tax on refined palm oil, refined soyoil and refined sunflower oil to 35.75% import, from 13.75%.

India meets more than 70% of its vegetable oil demand through imports and palm oil constitutes more than 50% of total imports.

Analysts say the moves were aimed at gaining the support of farmers in Maharashtra and Haryana. Maharashtra is a major producer of onions, sugar, and soybeans, while Haryana is a leading grower of basmati rice.