Commerce ministry to move cabinet note to check export ban on processed food.

NEW DELHI: The commerce ministry will soon move a Cabinet note seeking to allow unrestricted exports of processed food, as it tries to skirt frequent squabbles between ministries over export of farm products.
"We have just started working on the note following discussions on the issue with key ministries, including that of food processing," an official told ET. The note will be circulated to all ministries concerned for their comments, the official added. The government imposes a ban on export of food items to prevent shortage in the domestic market.

The proposal is part of the commerce department's strategy to check frequent bans on export of food and agricultural items, a subject over which the ministries of agriculture, food and commerce are divided and one that has been criticised at international forums such as the WTO and the G-20 for fuelling food prices.

The country's processed foods industry has attracted foreign investments in items such as casein and dried milk, which are being produced mainly for export. The official said that frequent bans on export of such items harms business and discourages investors.

The commerce department is also working on a proposal to allow exporters of farm products to meet their export obligations even during domestic shortage, provided they import an agreed quantity of the same within a stipulated timeframe.

"While the plan on checking export ban on all agricultural products is at a discussion stage, we are hoping that we could soon place the proposal for exempting the processed food sector from export ban before the Union Cabinet," the official said.

The commerce department's proposals have the backing of the food processing ministry. "Our ministry is of the opinion that frequent bans on export of processed food hampers the growth of the industry. It is positive that the industry would grow much faster if there are no bans," a ministry official said.

Export earnings from processed food, including fruits, vegetables, meat and poultry products, more than doubled to Rs 38,950 crore in 2011-12, from Rs 15,816 crore in the previous year, as per provisional figures released by the Agricultural and Processed Food Products Export Development Authority of India.

Exporters of dehydrated onions, casein and milk powder have suffered the most from the government's recent ban on exports. Although casein can now be exported against licences, and the government has also lifted the ban on export of skimmed powder milk in June this year, exporters claim that they lose orders because of policy uncertainty.

Exporters of dehydrated onion say the product accounts for just a fifth of the country's total onion consumption and that exempting it from an export ban will not substantially impact domestic prices.

Source : economictimes.indiatimes.com