India: Effects of Tariffs and Nontariff Measures on U.S. ... - USITC

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<strong>India</strong>’s central <strong>and</strong> state governments formulate policies (in this case, agricultural policies) in response to a policy environment linked to historical events <strong>and</strong> current social, demographic, <strong>and</strong> political factors. This environment leads <strong>India</strong>n <strong>of</strong>ficials to articulate broad policy objectives, which in turn generate specific policy instruments influencing either macroeconomic factors (e.g., inflation rates, interest rates, <strong>and</strong> trade deficits) or microeconomic ones (e.g., industrial sectors <strong>and</strong> business investment). <strong>India</strong>n trade policies are only one set <strong>of</strong> those policy instruments. A simplified framework for <strong>India</strong>n domestic <strong>and</strong> trade policies in the agricultural sector appears in figure 1.2; the diagram flows from the policy environment to policy objectives <strong>and</strong> finally to <strong>India</strong>’s specific policy instruments. 16 FIGURE 1.2 <strong>India</strong>: Agricultural policy framework Policy Environment History <strong>of</strong> famines <strong>and</strong> food shortages Large population <strong>of</strong> poor farmers Constitutional authority <strong>of</strong> central <strong>and</strong> state governments Politically powerful farm sector Food security Food self-sufficiency Income support for farmers Policy Objectives Policy Instruments Minimum support prices Input subsidies Regulated markets Food subsidies for consumers Trade policies Source: Compiled by Commission staff. 16 The examples in figure 1.2 are intended to be illustrative, not comprehensive. 1-6
Policy Environment As figure 1.2 shows, <strong>India</strong>’s agricultural policy is based on a number <strong>of</strong> historical economic, social, <strong>and</strong> legal considerations. 17 They include a history <strong>of</strong> famines, a large population dependent on the agricultural sector for its livelihood, millions <strong>of</strong> poor people who must spend most <strong>of</strong> their incomes on food, a strong farm lobby with millions <strong>of</strong> rural voters, <strong>and</strong> a constitutional structure that vests certain powers over agricultural policy in state governments. <strong>India</strong>’s agricultural policies are based, in part, on a history <strong>of</strong> periodic famines, such as the famine <strong>of</strong> 1943 <strong>and</strong> chronic food shortages after independence in 1947 <strong>and</strong> into the 1950s. 18 The response <strong>of</strong> the <strong>India</strong>n government was to achieve greater security in food supply, especially food grains. The set <strong>of</strong> policy instruments employed for these efforts, <strong>and</strong> the resulting expansion in <strong>India</strong>n agricultural production, is generally known as the Green Revolution. 19 More than one-half <strong>of</strong> <strong>India</strong>’s population <strong>of</strong> 1.2 billion depends on farming for its livelihood. Although the overall <strong>India</strong>n economy has grown significantly, most <strong>of</strong> the rural population has not benefited. 20 The <strong>India</strong>n farm sector has very low labor productivity, 21 about one-sixth the level <strong>of</strong> other sectors <strong>of</strong> the economy, which the Organisation for Economic Co-operation <strong>and</strong> Development (OECD) has identified as a major factor contributing to low living st<strong>and</strong>ards <strong>and</strong> poverty in rural areas. 22 Although overall poverty has declined nationwide, more than one-third <strong>of</strong> the population, mostly rural <strong>India</strong>ns, still live on less than $1 per day. 23 This persistent poverty is a major factor driving government agricultural policy. The <strong>India</strong>n constitution provides the states with primary authority over the agricultural sector. The role <strong>of</strong> the central government is to develop overarching policies <strong>and</strong> regulatory guidelines, while the states hold most <strong>of</strong> the legislative <strong>and</strong> implementation authority so that they can address local needs. 24 This constitutional structure is the result <strong>of</strong> historical factors, including the desire <strong>of</strong> states to have control over the local food supply. Central government <strong>and</strong> state jurisdiction over <strong>India</strong>n agricultural matters are described in appendix G. 17 Throughout most <strong>of</strong> <strong>India</strong>’s history as an independent country, starting in 1947 <strong>and</strong> continuing until 1991, <strong>India</strong>’s economy was dominated by central planning characterized by extensive regulation, trade protectionism, <strong>and</strong> public ownership <strong>of</strong> heavy industry. <strong>India</strong>’s first government under Prime Minister Jawaharlal Nehru fashioned the economy on a Soviet socialist model <strong>and</strong> similar to other planned economies. Vestiges <strong>of</strong> central planning can be found in <strong>India</strong>’s economy. For example, <strong>India</strong>’s government still produces five-year plans for major portions <strong>of</strong> the economy, including agriculture. Lalwani, August 15, 2007, 1–2; Poddar, 4. 18 The famine <strong>of</strong> 1943 is widely known as the Bengal Famine; an estimated 4 million people died in eastern <strong>India</strong>. 19 Information on the Green Revolution’s effect on <strong>India</strong>’s agricultural production can be found in chapter 4. 20 Government <strong>of</strong> <strong>India</strong>, Planning Commission, Eleventh Five Year Plan: 2007–12, vol. 3, 2008, 3. 21 World Bank, Agriculture for Development: World Development Report, 2008, 2007, 141, 202. 22 OECD, Agricultural Policies in Emerging Economies 2009, 98. 23 European Commission, <strong>India</strong>’s Role in World Agriculture, 2; OECD, Agricultural Policies in Emerging Economies 2009, 98. 24 WTO, Trade Policy Review, 2007. 1-7
Page 1 and 2: United States International Trade C
Page 3 and 4: U.S. International Trade Commission
Page 5: Abstract This report describes <str
Page 8 and 9: TABLE ES.1 India:
Page 10 and 11: U.S. agricultural products face str
Page 12 and 13: U.S. Foreign Direct Investment U.S.
Page 15 and 16: CONTENTS Page Abstract ............
Page 17 and 18: CONTENTS―Continued Chapter 6 <str
Page 19 and 20: CONTENTS―Continued Figures 1.1. <
Page 21 and 22: ACRONYMS AND TERMS AAY Antodaya Ann
Page 23: ACRONYMS AND TERMS—Continued RGGV
Page 26 and 27: TABLE 1.1 India: A
Page 28 and 29: FIGURE 1.1 India:
Page 32 and 33: Despite their weak economic pr<stro
Page 34 and 35: Approach Current India</str
Page 36 and 37: Bibliography Birner, Regina, Surupt
Page 38 and 39: World Bank. Agriculture for Develop
Page 46 and 47: premium); (2) India</strong
Page 48 and 49: include government export restricti
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Page 57 and 58: CHAPTER 3 Domestic Consumption Over
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Page 61 and 62: more likely to have been exposed to
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Page 67 and 68: are expected to see income growth <
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Page 71 and 72: Regional Variation Geographic <stro
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Food processing in India</s
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BOX 4.1 The Central Government’s
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BOX 4.2 Does the Minimum Support Pr
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August 3, 2009, New Delhi announced
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known as zamindars, have doubled or
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that the PFA Act was strictly enfor
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———. Bharat Nirman: A Time-Bo
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Organisation for Economic Co-operat
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CHAPTER 5 TARIFFS Overview
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sensitive. They include vegetable f
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wholly milled rice and</str
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The Indian governm
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India also reporte
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Reference Prices Reference prices,
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Landing Fees <stro
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Simulated Effects
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and nuts” by $0.
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5-19 TABLE 5.4 India</stron
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Bibliography Acharya, Keya. “Thor
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Indian Express.com
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CHAPTER 6 Nontariff</strong
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foreign sources. 6 For example, SPS
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BOX 6.1 Milk and M
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BOX 6.2 Wheat—Continued Yet, <str
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perpetuated continuously. The impor
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notices that must be integrated wit
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import corn under the TRQ is too bu
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Customs Procedures India</s
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Corruption Interests within <strong
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TABLE 6.2 India: E
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Bibliography American Apparel <stro
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Mattson, Jeremy W., Won, W. Koo, <s
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———. 2009 National Trade Esti
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TABLE 7.1 India: C
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First Point of Sal
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Private mandis Som
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approximately 65 million households
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7-10 TABLE 7.2 India</stron
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poor communications infrastructure
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limited popularity with farmers bec
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The lack of infras
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found that 39 percent of</s
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Bibliography Banerjee, A. Dairying
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Tiwari, Shri Rajendra Kumar. “Pos
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FDI Regulations and</strong
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TABLE 8.2 India: A
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Food Processing and</strong
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There is not necessarily a strong l
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For processing of
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BOX 8.3 Restrictions on Foreign Joi
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Under certain circumstances, FDI ca
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commenced. States tend to be quick
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Bibliography Bahn, Niti, an
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International Center for Alcohol Po
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Structure of the <
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BOX 9.1 The UPOV System for Plant V
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that the public sector in I
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Whether this situation will soon ch
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The U.S.-India Bus
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eggplant, which began field trials
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Maskus, Keith E. “Intellectual Pr
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APPENDIX A REQUEST LETTER
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The Honorable Sham L. Arano
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cprice-sewell on PRODPC61 with NOTI
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APPENDIX C HEARING WITNESSES
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ORGANIZATION AND WITNESS: Tuttle Ta
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Summary of Views <
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advertising and pr
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highest in the Asia-Pacific region.
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to U.S. exports to India</s
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transparent sanitary regulations th
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hotel and catering
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Western Pistachio Association 26 In
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APPENDIX E POTENTIAL FOR U.S. AGRIC
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E-4 TABLE E.1 India</strong
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APPENDIX F INDIAN AGRICULTURAL PROD
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TABLE F.1 India: A
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FIGURE F.1 India:
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is in nonirrigated areas with yield
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Consumption India
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efrigeration. This characteristic i
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70 percent of tota
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eportedly preferred in southern <st
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Cotton During MY 2003/04-2007/08, <
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Government of <str
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APPENDIX G UNION AND STATE/UNION TE
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certain agricultural goods in the p
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Bibliography Chaulan, Shri U.K. “
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Simulation Framework The effects <s
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Producers determine the optimal sup
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Applied ad valorem tariff equivalen
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We considered the possibility that
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Estimation of <str
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Bibliography Anderson, Kym, Mariann
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