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

TABLE 4.2 <strong>India</strong>: Summary <strong>of</strong> central government’s key funding <strong>and</strong> regulations for agricultural production
Policy Policy description Policy effect Impact on U.S. exports
Minimum support prices
(MSPs)
Guarantees minimum price.
Higher levels <strong>of</strong> support are
given to rice <strong>and</strong> wheat.
Distort production decisions by
farmers toward rice <strong>and</strong> wheat.
Limit opportunities for
imports <strong>of</strong> rice <strong>and</strong> wheat
from all sources.
Farmer input support
programs (fertilizers,
irrigation, electricity, diesel,
seeds)
( a ) Encourage farmers to
overproduce, <strong>and</strong> prices drop.
Imports are less
competitive relative to
domestic production.
Farmer debt forgiveness ( a ) Lowers production costs,
increases production, <strong>and</strong>
increases food dem<strong>and</strong> by
farmer households.
Low-interest farmer loans ( a ) Lower production costs,
increase production, <strong>and</strong>
increase food dem<strong>and</strong> by farmer
households.
Undetermined. Lowers cost
<strong>of</strong> <strong>India</strong>n domestic
production relative to U.S.
production costs, but also
boosts food consumption
by farmers.
Undetermined. Lower cost
<strong>of</strong> <strong>India</strong>n domestic
production relative to U.S.
production costs, but also
boost food consumption by
farmers.
Rural employment
guarantee program
Payments are made to farm
laborers, principally for work on
water, forestry, <strong>and</strong> l<strong>and</strong>
development projects.
Increases labor costs, reduces
production, <strong>and</strong> increases food
dem<strong>and</strong> by rural households.
Encourages exports to
<strong>India</strong> from all countries,
including the United States,
through higher food
dem<strong>and</strong> <strong>and</strong> higher relative
costs <strong>of</strong> <strong>India</strong>n production.
Incentives for food
processing
The government sets up agrifood
export zones, gives dutyfree
treatment to capital goods
<strong>and</strong> raw materials, <strong>and</strong> <strong>of</strong>fers
income tax rebates for certain
producers.
Boost domestic food processing
sector, <strong>and</strong> encourage a wider
variety <strong>of</strong> food for consumers.
Increase dem<strong>and</strong> for inputs
that all exporters to <strong>India</strong>,
including the United States,
can supply.
Food safety regulations
Source: Compiled by Commission staff.
a
See policy column for description.
Food Safety <strong>and</strong> St<strong>and</strong>ards Act
<strong>of</strong> 2006 combined <strong>and</strong>
exp<strong>and</strong>ed several <strong>of</strong> the central
government laws together into
one comprehensive law.
Establish <strong>and</strong> enforce sciencebased
food safety regulations.
State implementation may
put additional requirements
on U.S. exporters (e.g.,
labeling), but U.S. exports
could benefit from uniform,
predictable enforcement.
4-8