The Indian dairy industry is seeking an export subsidy of Rs 25 a kg on milk powder to compete with subsidised products from the US and European Union (EU) in the international market. The Indian Dairy Association (IDA) has made a representation to the union agriculture ministry in this regard.
The annual outgo on this subsidy could be to the tune of Rs 200 crore based on the quantity of 80,000 tonnes that was exported in the milk year 2007-08 (October-September), the industry has indicated. However, export in the current year so far is just 30,000 tonnes due to lower demand. India produces 195,000 tonnes of milk powder annually.
The industry has suggested a cut in subsidies given to meat exports to fund this subsidy. The subsidy outgo on meat export from two schemes-Duty Entitlement Passbook Scheme and Vishesh Krishi and Gram Udyog Yojana-is Rs 550 crore.
“Dairy export incentive programme was introduced in the US recently, under which they will cover 68,201 tonnes of powder and 10,000 tonnes of butter fat. Subsidies by the EU and US have depressed international prices. EU subsidy is equivalent to Rs 24 a kg in milk powder,” the IDA has said.
R G Chandramogan, chairman and managing director of the Chennai-based Hatsun Agro, which is an IDA member, said the EU has further hiked its subsidy on milk powder export by 10 per cent to Rs 26.40 a kg following the announcement of US subsidy this month.
He added that there is a surplus of 80,000 tonnes in milk powder, which needs to be exported. “If this is not exported, the dairy plants will scale down powder production and consequently production of fat, which is the raw material for ghee or butter oil will come down. This will lead to a shortage and prompt imports to the disadvantage of domestic industry,” he said.
The shortage of butter oil is already being felt. Last year the country imported 15,000 tonnes of butter oil. For the current year, imports of 10,000 tonnes have already been contracted, according to industry estimates.
Source : Business Standard