The moves surprised the market, as New Delhi typically tries to protect consumers’ interests during the peak festival season. However, this year, it prioritised supporting farmers, setting aside inflationary concerns.
Here are some facts about policy initiatives on rice, vegetable oils, wheat, onions and yellow peas:
EASING EXPORT CURBS
India has removed a floor price for basmati rice exports to help farmers boost overseas sales of the premium grade. Last year New Delhi set a floor price, or minimum export price (MEP), of $1,200 a metric ton and later cut the MEP to $950 a ton.
India and Pakistan, the only growers of basmati, compete for global market share for the premium rice.
New Delhi also removed the $550 a metric ton MEP on onions, one of the most ubiquitous food items in India.
The world’s biggest onion exporter also slashed export tax to 20% from 40%.
IMPOSING TARIFFS
India, the world’s biggest edible oil importer, imposed a 20% basic customs duty on key edible oils, to help protect farmers reeling from lower oilseed prices.
Effective import duty on crude palm oil, crude soyoil and crude sunoil rose 27.5% from 5.5% as they are also subject to India’s Agriculture Infrastructure and Development Cess and Social Welfare Surcharge.
India also raised the import tax on refined palm oil, refined soyoil and refined sunflower oil to 35.75% import, from 13.75%.
India meets more than 70% of its vegetable oil demand through imports and palm oil constitutes more than 50% of total imports.
STATE ASSEMBLY ELECTIONS
Analysts say the moves were aimed at gaining the support of farmers in Maharashtra and Haryana. Maharashtra is a major producer of onions, sugar, and soybeans, while Haryana is a leading grower of basmati rice.
Prime Minister Narendra Modi’s ruling Bharatiya Janata Party (BJP) will pull out all the stops to retain power in Haryana, one of India’s breadbasket states in the north.
Haryana’s voters will elect a new assembly on Oct 5.
BJP will also try to claw back support among farmers from the western state of Maharashtra where assembly election is due later this year.
Earlier this year, the BJP lost nearly 75 rural seats in India’s general election.
TIGHTENING RULES FOR WHEAT TRADERS, PROCESSORS
India has lowered the limit of wheat stocks that traders and millers can hold.
Traders can now hold only 2,000 tons of wheat against 3,000 tons earlier.
India extended the allowed duty-free import of yellow peas until December 2024, from the previous deadline of the end of October.