By IANS,
New Delhi : The Indian dairy industry has taken exception to the removal of fiscal benefits on the export of some value added products, saying the move was negating the objective of promoting processed farm goods.
“If the objective is to discourage exports, then why not stop the export of the products?” queried Animesh Banerjee, a veteran of the Indian dairy industry and former president of the Indian Dairy Association.
“Any benefit passed on to the value chain of the products has a cascading effect in lowering the product value and not increasing it vis-à-vis the price of the products,” Banerjee said, calling for reinstating the export benefits.
The benefits were given under the Vishesh Krishi Gram and Upaj Yojana introduced by the central government a few years ago to promote the export of farm products, especially those that had value addition.
Under the scheme, the exports of specified products qualify for some fiscal sops that may be used to import inputs or capital goods. Milk products were included under the scheme after a representation by the Indian Dairy Association.
The scheme calls for interest-free export credit of five percent of the value of exports and the association hada, in fact, asked for the quantum to be raised to 10 percent to counter the appreciation in the value of the Indian rupee.
The industry also questioned the rationale behind the ban on exports last year – eventually lifted – as a measure to stop price rise of liquid milk. The argument was milk powder could be reconstituted as liquid milk to meet demand.
“But it did not help at all,” said Banerjee, who was also associated with the National Dairy Development Board (NDDB) and was named the chair of the Planning Commission’s sub-group on dairy industry for the 11th Five Year Plan.
“On the contrary, for a short time, there was a fall in milk powder price, after which it started spiralling higher,” Banerjee said, adding that the ban was not called for when India was the world’s largest milk producer after the US.
Industry members said that the outgo for the exchequer in terms of revenue loss would also not be high since India was not expected to have imported more than Rs.10 billion worth of milk products in 2007-08.
After the success of “Operation Flood” in the 1990s to make India self-sufficient in milk, the export of products started in a modest manner and touched Rs.7 billion in 2005-06 only to fall to Rs.4.75 billion in 2006-07 due to the export ban.
With 185 million cattle and 95 million buffaloes that account for 51 percent of the Asian and 19 percent of the global bovine population, India is the largest producer of milk.
In fact, 68 percent of the output from livestock, estimated at Rs.1,733 billion, was accounted for by milk – which makes the output higher than that for paddy or wheat, as per the state-run Central Statistical Organisation.
“In terms of value of output, milk is the single largest agriculture commodity in India,” said the Indian Dairy Association, adding milk production is now estimated at 100 million tonnes per annum, growing at four to five percent per annum.