Observers feel the country may begin lowering lentil, pea and chickpea import duties once a new government is elected
Pulse industry pundits believe there could be a softening of India’s import restrictions in the wake of the national election.
Votes for India’s 2019 general election were scheduled to be tallied May 23, which is past The Western Producer’s production deadlines for this issue.
Greg Simpson, chief executive officer of Simpson Seeds, expects there will be less political incentive to restrict trade following the election.
Attempting to appease the country’s hundreds of millions of farmers by propping up crop prices is always front-of-mind for Indian politicians such as incumbent Prime Minister Narendra Modi.
“There has been a lot of political pressure placed on Modi to increase the internal markets inside of India by restricting imports,” said Simpson.
Once the election is over, he expects there will be less pressure on Modi or his replacement to maintain tariffs and quotas on pulse imports.
“We hope there will be some relief on tariffs,” he said.
The government has placed a 33 percent import tariff on lentils, 50 percent on peas and 66 percent on chickpeas. There is also a 150,000 tonne import quota on peas between April 1, 2019, and March 31, 2020.
Vivek Agrawal, director of JLV Agro, an Indian commodity brokerage firm, said rumours are already circulating that the government will be increasing the pea import quota.
“I just talked to government officials and they said, ‘we can revise the situation in September,’ ” he said.
The government will be allotting quota to importers on June 10. It has already received 6,000 applications for quota, said Agrawal.
Government officials will reassess the situation after imported cargo starts arriving to see if any more quota is required. He believes the government has already decided to increase it by 50,000 tonnes in September.
“This is just a start,” said Agrawal.
Duties will also start to come down if pulse price inflation occurs. The crop to watch is pigeon peas, he said.
The Indian government pegs the recently harvested kharif pigeon pea crop at 3.68 million tonnes, which is 18 percent below its target.
Agrawal and others believe the crop is much smaller than the government’s estimate due to drought in Maharashtra and Karnataka, the two main pigeon pea growing states.
Pigeon pea prices are on the rise, and when that happens, Indian consumers tend to switch to eating red lentils, he said. Green lentils are a good substitute for pigeon peas, but red lentils are cheaper.
If pigeon pea prices continue to increase, Agrawal believes the government will consider reducing the duty on lentil imports, but it will be two to three months before that happens.
Gord Bacon, chief executive officer of Pulse Canada, is also eagerly awaiting the conclusion of India’s general election.
Nothing was happening on the policy front in the months leading up to the election, and it may take another month following the election for the old or new government to get its bearings and appoint a new agriculture minister, he said.
Bacon hopes there will then be some progress on a number of impediments to trade with India, including the pulse fumigation issue.
India and Canada were supposed to reach a permanent agreement on the fumigation issue by December 2018, but in January 2019, India requested an undefined extension.
India has agreed to a derogation allowing exporters to pay a fee upon a shipment arriving in India rather than fumigating at home. Canadian exporters are paying US$12 per tonne.
Bacon hopes the issue can be resolved before the derogation expires June 30. Industry officials from India and Canada will be attending the Global Pulse Confederation convention in Brazil June 10-13.
He agreed with Agrawal that price inflation will be the main driver behind the government reducing import duties.
“Nothing will stand in the way of India buying pulses when they’re hungry and they need them,” said Bacon.