Pulses importers in India and exporters around the world – mainly Canada, US, Australia and Myanmar - are on tenterhooks, worried over a possible Budget proposal to impose customs duty on imports. India is the world’s largest market for pulses and the target market for growers in advanced economies.
Fearing a slowdown in India’s purchases in the event of duty, overseas suppliers are keen to ship out as much as possible to this destination. Developments here are keenly tracked by market participants around the world as India is the world’s largest producer, processor, importer and consumer of pulses.
At the same time, Indian importers want to take no chances and are scurrying to receive as much cargo as possible before the month-end. Imposition of duty will force a price rise in the domestic market and deliver windfall gains to large inventory holders.
The country’s pulses imports are set to scale a new high in the current fiscal, easily topping the 40 lakh tons mark and possibly reaching 45 lakh tonnes with foreign exchange outgo exceeding ₹15,000 crore.
In the first eight months of the current fiscal (till November 2014), arrivals aggregated 30.3 lakh tonnes, 25 percent higher than during the corresponding period in the previous year (24.2 lakh tonnes). The value of imports so far this fiscal is an estimated ₹11,137 crore.
The month of November registered a record of sorts with arrivals of 6.6 lakh tons as traders scurried to bring in as much possible to beat the threat of customs duty exemption for gram or chana or desi chickpea that expired on December 31, 2014. A day before the expiry was to come into force, New Delhi extended the duty exemption for chana by three months to March 31, 2015.
Currently, duty exemption granted to all pulses is valid till March 31. Whether the upcoming Budget will hold any surprises for the pulses market remains to be seen.
Because of aberrant weather and lower acreage, the country’s pulses production in 2014-15 is likely to decline to 175-180-lakh-tonne levels compared with the production target of 195 lakh tonnes and previous year’s actual production of 193 lakh tonnes. Agriculture Ministry officials are not averse to levy of customs duty on this essential commodity of mass consumption; but trade representatives feel the levy of duty will trigger a price rise. Interestingly, pulses contributed negatively to food inflation the whole of 2014.