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

BOX 2.2 <strong>India</strong>n Agricultural Export Restrictions a
Export restrictions are one <strong>of</strong> several policy instruments the central government uses to address food price inflation
<strong>and</strong> maintain stockpiles <strong>of</strong> food to feed the poor through the Public Distribution System. Export restrictions are <strong>of</strong>
three types—export bans, minimum export prices (MEPs), <strong>and</strong> export taxes. Export bans prohibit the export <strong>of</strong>
products, regardless <strong>of</strong> international <strong>and</strong> domestic price levels. MEPs are prices below which exporters cannot sell
their product, making <strong>India</strong>n goods less competitive overseas. Export taxes are levied on the value <strong>of</strong> exports, again
making <strong>India</strong>n product less competitive.
In 2007, the <strong>India</strong>n government began significantly restricting exports <strong>of</strong> essential commodities as global food prices
increased <strong>and</strong> <strong>India</strong>n strategic food reserves, or stocks, declined below government target levels. Reportedly, these
export restrictions were also imposed because <strong>of</strong> the government’s desire to keep food prices low in the run-up to
the national elections in early 2009. Recent export restrictions for major commodities are described below.
Wheat. On February 9, 2007, the government banned exports <strong>of</strong> wheat <strong>and</strong> wheat products until
December 31, 2007, a prohibition that was later extended indefinitely.
Nonbasmati rice. Effective October 9, 2007, the government banned exports <strong>of</strong> all nonbasmati rice to ensure
adequate rice availability in the domestic market. On October 31, 2007, however, because <strong>of</strong> the dem<strong>and</strong>s <strong>of</strong> rice
exporters, the outright ban on exports was replaced by an MEP <strong>of</strong> $425 per ton, which was later increased to
$1,000 per ton on March 27, 2008. On April 1, 2008, the government again banned exports.
Basmati rice. Effective March 5, 2008, an MEP <strong>of</strong> $950 per ton was imposed, which was gradually increased to
$1,200 per ton on April 1, 2008. In addition, an export tax <strong>of</strong> Rs. 8,000 per ton was imposed at that time. On
January 20, 2009, the MEP was lowered to $1,100 per ton, <strong>and</strong> the export tax was abolished.
Corn. On March 5, 2007, the government banned exports <strong>of</strong> corn by the private sector <strong>and</strong> channeled exports only
through state trading enterprises for a period <strong>of</strong> six months. Effective July 3, 2008, the government banned exports
<strong>of</strong> corn through October 15, 2008.
Vegetable oils. On March 17, 2008, the government banned exports <strong>of</strong> vegetable oils. This prohibition was
extended to March 16, 2010.
Pulses. Effective June 22, 2006, the government imposed a ban on the export <strong>of</strong> pulses, with the exception <strong>of</strong>
kabuli chana (garbanzos).
Milk <strong>and</strong> milk products. On February 9, 2007, the government imposed a ban on exports <strong>of</strong> skimmed milk powder,
skimmed milk food for babies, whole milk, whole milk for babies, <strong>and</strong> other milk products until September 30, 2007.
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a Aradhey, <strong>India</strong>: Oilseeds <strong>and</strong> Products, April 16, 2009, 22; Govindan, <strong>India</strong>: Grain <strong>and</strong> Feed, February 20,
2009, 15; Govindan, <strong>India</strong>: Grain <strong>and</strong> Feed, February 20, 2008, 7; <strong>and</strong> Dhankhar, <strong>India</strong>: Dairy <strong>and</strong> Products,
November 5, 2008.
Exports by Product
Between 2003 <strong>and</strong> 2008, <strong>India</strong>n agricultural exports to the world grew more than
threefold, increasing from $6.1 billion in 2003 to $20.2 billion in 2008. Similarly, <strong>India</strong>n
agricultural exports to the United States increased steadily from $585 million in 2003 to
about $1.3 billion in 2008 (table 2.3). <strong>India</strong>n global agricultural exports are concentrated
in a few major commodities. During 2006–08, rice, soybean meal, <strong>and</strong> cotton represented
one-half <strong>of</strong> <strong>India</strong>n global agricultural exports, with sugar <strong>and</strong> frozen beef (mostly buffalo
meat) accounting for an additional 20 percent (fig. 2.6). Tobacco, nuts (mostly cashews
<strong>and</strong> peanuts), beverages (tea <strong>and</strong> c<strong>of</strong>fee), <strong>and</strong> spices are also exported by <strong>India</strong>.
Agricultural products exported by <strong>India</strong> to the United States include nuts <strong>and</strong> a wide
range <strong>of</strong> specialty products supplying ethnic grocery stores <strong>and</strong> restaurants.
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