Exporters and importers put pressure on the government to do something about how abruptly its policies can change
Canada and other pulse-exporting nations are pushing for more transparency in India’s import tariff and quota policies.
Discussions between the exporters and the importer kicked off on World Pulses Day in February 2020.
“We have started to lay the groundwork for at least just having these discussions,” said Mac Ross, director of market access with Pulse Canada.
“And it has become abundantly clear that these discussions need to happen on a multi-lateral basis.”
Pulse exporters from around the world are frustrated that India keeps changing its import tariffs and quotas for crops like peas and lentils on short notice.
Rav Kapoor, chief executive officer of ETG Commodities, a Canadian exporter of pulses, said last June India dropped the tariff on lentils to 11 percent from 33 percent for three months.
It then extended that reduction for two more months and then another two months before raising it back to 33 percent in the new year.
“It is very difficult for an exporter to price commodities and find buyers when tariffs are up in the air,” he said.
He would prefer to see India adjust the tariff for a six-month stretch from June through December to allow companies like ETG to better plan sales and logistics.
Kapoor said the Indian government is hearing the same message from importers and that likely has more sway with politicians.
“The Indian government is going to listen to their domestic participants more than international participants,” he said.
Balasubramanian Mani, founder of Nava Star, an international commodity brokerage firm located in India, provided an importer perspective on the issue in a story published on the Global Pulse Confederation’s (GPC) website.
He said some countries have complained to the World Trade Organization about India’s trade policies.
His concern is that India’s pulse production is too variable to be deemed fully self-sufficient. There will be years where the country has to rely on imports, so the government can’t afford to alienate exporters.
“Sudden decisions and short-term measures hurt buyers and sellers in India and abroad,” he told the GPC.
“An unanticipated ban on imports leads to cancellation of contracts. Buyers default and sellers suffer losses.”
Mani said his company went through “a rollercoaster” following the 2017 restriction on pulse imports. Buyers defaulted on contracts but he was forced to honour his commitments to the sellers, resulting in financial losses.
Ross said exporters from around the world want India to develop and publish guidance on how its pulse trade policy will operate in the long-term.
“Consideration needs to be given to the volatility in global pulse prices and global pulse supply,” he said.
There needs to be more forums where the Indian government and the pulse trade gather to exchange information on pulse supply and demand.
“We feel that these more frequent consultations would allow pulse supplying countries to appropriately plan our levels of production to meet their import requirements,” said Ross.
He said India also needs to start making provisions for shipments that are in transit when it suddenly makes changes to its tariffs and quotas.
Planned discussions were derailed by COVID-19 and by farmer protests in India over three new farm acts passed by the Parliament of India in 2020.
Ross hopes they will start up again this summer.
Kapoor believes the Government of Saskatchewan could play a role in improving the flow of information by using its offices in India to gather accurate on-the-ground information about the size and condition of India’s pulse crops and relaying that information back to Canadian farmers and exporters.
“It would be highly beneficial to the industry as a whole,” he said.