On 31st March 2021, the Union Cabinet approved the Central Sector Scheme - 'Production Linked Incentive Scheme for Food Processing Industry (PLISFPI)' with an outlay of Rs. 10,900 crores, to be implemented from 2021-22 to 2026-27. The scheme consists of three components: incentivizing manufacturing in four major food product segments (Ready to Cook/ Ready to Eat foods, Processed Fruits & Vegetables, Marine Products and Mozzarella Cheese), promoting Innovative/Organic products of SMEs, and supporting branding and marketing abroad for Indian brands. Additionally, the PLI Scheme for Millet-based Products (PLISMBP) was launched in the FY 2022-23 with an outlay of ?800 crore, utilizing the savings under PLISFPI.

 

Under the scheme, 158 applications have been approved for availing incentives. As per the information received, the beneficiaries have invested 7,427.22 crore (as on 31st March 2023) under the scheme. So far, incentive of 517.604 Crore has been disbursed for the Financial Year 2021-22.

 

The Government is fully aware of the potential issues that could arise from the PLISFPI scheme. To ensure its effectiveness and fairness, proactive measures were taken during the scheme formulation stage. Various stakeholders were actively engaged, and an extensive consultative process was followed, involving large-scale manufacturers, SMEs, etc. As a result, the scheme guidelines ensure the scheme benefits all stakeholders, including farmers.

 

Category-II of the PLI scheme, with a specific focus on Innovative and Organic products, is exclusively for eligible MSMEs. 16 applications have been selected under this particular category. Additionally, 22 applicants (out of 30 selected applicants) selected to participate under PLI Scheme for Millet-based products are MSMEs. Apart from the PLI scheme, the government has introduced several other schemes to offer support across entire food value chain, which also helps SMEs in meeting international quality and safety standards for their food products.

 

The scheme guidelines specify that the entire manufacturing process, including primary processing, of the food products eligible for coverage under the scheme must occur in India, with the exception of additives, flavors, and edible oils. This approach aims to foster a strong value chain that benefits farmers and supports domestic production. These guidelines ensure farmer inclusivity, particularly for small-scale farmers, by guaranteeing remunerative prices for farm produce and higher income.

 

This information was given by Union Minister of State for Ministry of Food Processing Industries

 

Shri Prahlad Singh Patel in a written reply in the Lok Sabha.

The Indian government aims to achieve USD 2 trillion total export by 2030, one trillion each in merchandise and services.

 

Santosh Sarangi, IAS, Director General, Directorate General of Foreign Trade, New Delhi, Government of India, today said that currently India's export is USD 450 billion, and to reach USD one trillion mark, the country needs to grow at year-on-year rate of 12%. 'Similarly, in service sector we need to grow at 16.6 percent on an average every year,' Sarangi said at the World Trade Day 2023 programme in Bhubaneswar organised jointly by World Trade Centers in four cities, viz. Mumbai, Bhubaneswar, Jaipur and Goa.

 

The event focused on creating awareness about international trade's impact on the State's economy and regional growth. The event was marked by a discussion on the theme 'International Trade - Growing Business Across Borders'.

 

'Odisha needs investment in Pharmaceuticals and Plastics sectors to grow its export scenario. Majority of the exporters are from places like Mumbai, Delhi, Chennai, Gujarat etc and not from interior places of the state like Sambalpur, Bolangir, Raygada etc even though there is huge potential from such places. In order to bridge the gaps, DGFT shall organize workshops focused on e-commerce in collaboration with the State Government. These workshops shall provide end-to-end assistance on on-boarding, payment gateways etc. We will also ensure the facilitation of Export Incentives like RODTEP are made accessible. We have recently signed three FTAs (Free Trade Agreement) and working towards signing more FTAs with countries in near future.' Sarangi added.

 

In his view, the country's 'World Trade Centers' can help the exporters of the state by handholding them and acting as a bridge between the central as well as the state government to ensure Odisha has a better trade footprint on the global map.

 

Saswat Mishra, IAS, Principal Secretary, MSME Department, Government of Odisha, spoke about the digital initiatives being undertaken by the state for facilitating the exporters. He announced Air Cargo services starting in September to boost Odisha's exports. 'Stakeholder Meeting has been scheduled where exporters from the state shall discuss with the officials of Indigo Airlines on various export related aspects', he added.

 

Petula Thomas, CEO of Indo-Australian Chamber of Commerce, highlighted the potential for trade collaborations between India and Australia in various sectors like metals & mining, food processing, and educational services. She highlighted how WTC can act as a great platform for such collaborations where both the countries can work towards better trade relations and surge in bilateral trade.

 

Vijay Kalantri, Chairman, World Trade Center Mumbai, said, in a statement, 'As India aspires to become a five trillion dollar economy, MSMEs have a major role to play in realising this vision. In terms of economy, we stand at 5th position. In the next 5 years, India aspires to be placed in 3rd position and we need to work towards the goal in a substantial manner which can be achieved through integration with ASEAN, BRICS, BIMSTEC etc. We have potential in sectors like IT, ITes and Pharmaceuticals'.

The International Monetary Fund has said it would 'encourage' India to remove restrictions on export of a certain category of rice, which, it said, would have an impact on global inflation.

The Indian government on July 20 had banned the export of non-basmati white rice to boost domestic supply and keep retail prices under check during the upcoming festive season. This type of rice constitutes about 25 per cent of total rice exported from the country.

 

There would be no change in export policy of par-boiled non-basmati rice and basmati rice, which forms the bulk of exports, the food ministry had said in a statement.

 

In the current environment, these types of restrictions are likely to exacerbate volatility on food prices in the rest of the world. They can also lead to retaliatory measures, Pierre-Olivier Gourinchas, Chief Economist, International Monetary Fund (IMF), told a press conference here.

 

'So, they are certainly something that we would encourage the removal of these types of export restrictions, because they can be harmful globally,' he said in response to a question.

 

The total exports of non-basmati white rice from India was $4.2 million in 2022-23 as against USD 2.62 million in the preceding year. Major destinations of India's non-basmati white rice exports include the US, Thailand, Italy, Spain and Sri Lanka.

 

In order to ensure adequate availability of non-basmati white rice in the domestic market and to allay the rise in local prices, the government has amended the export policy from 'Free with export duty of 20%' to 'Prohibited' with immediate effect. The IMF in its latest economic update released here on Tuesday projected India's growth rate to be 6.1 per cent for fiscal year 2024, which is slightly up from 5.9 per cent estimated projection for the same period in April.

 

'India remains an economy that is growing quite strongly. I mean, it's coming down from really a very strong year in 2022, at 7.2 per cent. That was also revised upwards, by the way -- but still slow down, but still fairly strong growth and fairly strong momentum,' Gourinchas said.

 

Later in an interview, when asked about India's rice export ban, Daniel Leigh, Division Chief, IMF Research Department, told PTI that the context is clearly, an environment of declining inflation around the world.

 

'That's important because then it allows monetary policy to ease up and not to start increasing interest rates, which means currencies move around,' he said.

 

'We see it in the interest of the overall global community to keep that food and energy inflation trend down. Now the challenge is that if we see restrictions in other countries as well as India, we've been very clear that in our view we understand the domestic consideration, but if you see that global impact, then that would go against the reduction in inflation. So our perspective is that such restrictions should be phased out as soon as feasible,' Leigh said.

 

He also said that India's digital public infrastructure is really world class and it is enabling efficiency gains for businesses.

 

'Really what is great to see is India sharing its experience with the other members of the G20. Under its presidency of the G20, India is helping to spread the understanding and the opportunities and the risks that we need to talk about when it digitises more generally,' he said.

 

The Indian economy, Leigh said, has already been very robust. 'But the reforms when it comes to female labour force participation to make it easier for women to stay in the workforce, for the youth to find the kind of training that they need. This is a very dynamic economy. The question is how to maximize the potential,' he said.

 

'India's economy is growing strongly and also inflation is in the range of the central bank target. So those are positive things and the growth forecast itself is for growth of 6.1 per cent this year. This means that basically 16 per cent of the world economy, one in six of the world's economic growth is coming from India,' he said, Referring to the upward revision of the Indian growth projections, Leigh said this is mainly because of what happened at the end of last year. More government investment, more private investment, give it the economy boost and that has a knock on effect for this year, he said.

 

'Now we do see growth continuing to be above six next year as well, 6.3 per cent and in the medium term about six per cent. This is the kind of above average growth for the region that is really going to help economic well being,' Leigh said.

 

Noting that the IMF expects India's inflation to be at 4.9 per cent and then 4.5 per cent next year, he said the monetary policy action really deserves a lot of the credit for this 250 basis point increase in the interest rate since May of last year. 'There's also though the fortunate decline that all of the countries are benefiting from in food and energy prices globally. This is also driving inflation down,' Leigh said.

India and the UK have held detailed draft treaty text discussions in nine policy areas in the just concluded eleventh round of Free Trade Agreement talks. The commerce and industry ministry said that technical discussions were held across nine policy areas over 42 separate sessions.

 

On July 18, 2023, the two concluded the eleventh round of talks for the UK-India FTA.

 

'As with previous rounds, this was conducted in a hybrid fashion - a number of Indian officials travelled to London for negotiations and others attended virtually,' it said.

 

Commerce and industry minister Piyush Goyal visited the UK on July 10-11 where he discussed with UK’s Secretary of State for Business and Trade, Kemi Badenoch and Minister of State for International Trade, Nigel Huddleston, ways to make progress on the FTA negotiations and wider trade and investment opportunities for the UK and India.

 

As per the statement, commerce secretary, Sunil Barthwal also visited the UK during the round where he met with senior UK trade officials and took stock of the progress made in the eleventh round of negotiations.

 

'The twelfth round of negotiations is due to take place in the coming months,' the ministry said.

 

The Centre has proposed to double land customs stations in the Northeast to 50 by the end of this financial year, following a surge in the smuggling of narcotics in the region over the past 12 months.

 

The Central Board of Indirect Taxes and Customs (CBIC), the country's apex indirect taxes body, has identified many porous spots along the country’s borders with Myanmar and Bangladesh.

 

India shares borders with four countries in the northeast and has 25 land customs stations, of which 20 are fully functional and only 15 have electronic facilities.

 

'We are planning to take the number to at least 50 by the end of this fiscal,' a senior official told ET on condition of anonymity. All the land customs stations will be equipped with advanced technology infrastructure, artificial intelligence and real-time reporting to stop the smuggling, said another official.

 

While gold, cigarettes and opium were always smuggled via northeast, the official said there has been a sharp increase in smuggling of psychotropic drugs, both in the form of tablets and syrups.

 

Generally, decongestant and antihistamine are sent to Myanmar, where they produce methamphetamine tablets and smuggle them back into India, said the official. In 2022, the Guwahati Police alone seized drugs worth `407 crore, out of which psychotropic tablets alone were worth about Rs 200 crore, the official said.

Basmati exporters are hopeful of steady returns after the UAE-India currency trade agreement. This will likely give a boost to Iran window via Dubai reducing the risk of a payment default. Iran is an important destination of Indian Basmati, remaining among the top five destinations.

 

Basmati rice shipments increased to 4.56 million tonnes (mt) worth $4.79 billion (?38,524 crore) during the 2022-23 fiscal from 3.94 mt in 2021-22. The unit value realisation from export went up last year to $1,050 a tonne from $897 in 2021-22. Besides, global uncertainties due to Ukraine-Russia conflict, partial restrictions on the export of non-Basmati rice — ban on broken variety and 20 per cent duty on non-parboiled rice — also had some influence over Basmati prices.

 

'Business with Iran will definitely get a boost,' said Vijay Setia, a former president of All India Rice Exporters Association (AIREA) referring to the current trade agreement. He said Iranian businessmen sitting in UAE prefer barter as they have establishments in both countries. 'Currently, many Iranian businessmen are facing problems to clear payments despite the rupee trade in place. With the new agreement, re-export of Basmati to Iran from Dubai will increase,' Setia said.

 

Under the agreement between the RBI and the UAE Central Bank, both the agencies will establish a framework to promote the use of local currencies (rupee and dirham) for cross-border transactions. Another MoU, also between the two central banks, is aimed at interlinking the 'payment and messaging systems'.

 

Less fluctuations

When currency (USD) appreciates, exporters face loss and when it depreciates, there is gain. By shifting to local currency such fluctuations can be avoided, which is very important for Basmati trade, said Vinod Kaul, executive director of AIREA.

 

'Transaction will definitely become much easier. However, it is too early to get a clear picture as the agreement has just been announced,' he said. There are several more steps to be decided including nominating a bank or more than one bank, opening Vostro account and also setting up a corpus, he said.

 

Further, Kaul said the risk of payment default (from Iran) will likely reduce. 'Exports will be fast-tracked and possibility of higher shipments to Iran will always be there,' he added.

 

The export of Basmati rice to UAE was 3,15,313 tonnes and to Iran was 9,98,879 tonnes in 2022-23.

India and the UK have held detailed draft treaty text discussions in nine policy areas in the just concluded eleventh round of Free Trade Agreement talks. The commerce and industry ministry said that technical discussions were held across nine policy areas over 42 separate sessions.

 

On July 18, 2023, the two concluded the eleventh round of talks for the UK-India FTA.

 

'As with previous rounds, this was conducted in a hybrid fashion - a number of Indian officials travelled to London for negotiations and others attended virtually,' it said.

 

Commerce and industry minister Piyush Goyal visited the UK on July 10-11 where he discussed with UK’s Secretary of State for Business and Trade, Kemi Badenoch and Minister of State for International Trade, Nigel Huddleston, ways to make progress on the FTA negotiations and wider trade and investment opportunities for the UK and India.

 

As per the statement, commerce secretary, Sunil Barthwal also visited the UK during the round where he met with senior UK trade officials and took stock of the progress made in the eleventh round of negotiations.

 

'The twelfth round of negotiations is due to take place in the coming months,' the ministry said.

 

India's contracting exports have prompted the government to introduce incentives for startups and new exporters, and relax compliance norms for the existing exporters.

 

Under the Market Access Initiatives (MAI) Scheme, startups and new exporters have been made eligible for airfare reimbursement to participate in overseas events while the ceiling for this incentive for existing exporters has been raised 20%.

 

India's goods exports shrank the most in three years, at 22% on-year, in June to $32.97 billion. Under the scheme, financial assistance is provided for export promotion activities.

 

Earlier, new exporters and startups didn't get such incentives but now those with Rs 50 lakh annual turnover in the domestic market will get some support.

 

The benefits of higher airfare reimbursements will also apply to the exporters when they host foreign buyers in reverse buyer-seller meets in India.

 

'Incentives are important as mega trade fairs are being thought of and there is a need to scale up our exhibitions and invite foreign companies to exhibit here,' said an official.

 

India plans mega trade fairs for food, textiles and auto components, on the lines of Messe Frankfurt, Gulf Food and Canton Fair, to achieve 12% growth in good exports by 2030.

 

'The coverage of new entrepreneurs with nil exports for airfare support under the scheme is well conceived and pragmatic to encourage startups to enter into exports field particularly as we are looking towards a $1 trillion exports by 2030,' said Ajay Sahai, director general, Federation of Indian Export Organisations (FIEO).

 

Benefits under the MAI scheme are availed through activities organised by the government, states, export promotion councils and commodity boards, among others.

There is an increased demand for Kashmiri vegetables across different markets in the country and exports have increased as compared to the previous years.

Due to the floods that have hit northern India, there has been an increased demand for Kashmir vegetables outside the Union Territory and consequently soaring prices in the local market.

Director Agriculture Kashmir, Chowdhary Mohammad Iqbal said there is a huge demand for the local Kashmir vegetables in the country.

On Monday, some 30-40 trucks of vegetables were exported from Jammu and Kashmir and the vegetables are fetching good prices and farmers are also happy.   

'Out of 2,16,785 Metric Tonnes of vegetables grown between June and July, more than 80,719 Metric Tonnes were exported,' the director said.

He said despite the challenges on Srinagar-Jammu highway which poses a challenge in export they have been able to send 100MT of vegetables this week only.

The agriculture department expects to produce 2,42,000 MT of vegetables in the month of August which add to the economy of the farmers.

'This year there is sustainability among the people for the crops. Although there are rains, that would not affect paddy or vegetable crops. However, sometimes rains delays maturity in vegetables,' he said.    

The director also said this year some 32,000 metric tonnes of garlic was exported from Kulgam and Shopian districts of south Kashmir alone.

The global rice market has turned precarious following India’s ban on white rice exports. It has totally become a seller’s market with prices of even cargoes in transit being hiked by $50-100 a tonne, said traders.

 

'No offers are coming from Thailand or Pakistan. Sales have not been happening for the past four days. For consignments in transit, prices have been raised by $50-100 and renegotiated,' said a trade source from Bangkok, on the condition of anonymity. 

 

Prices of consignments on sail are being raised with traders taking the risk of even cancelling it, said an Indian trader. 

 

Frantic calls from Gulf

'There are frantic calls from the Gulf seeking supplies of Sona Masuri or Ponni rice. They are enquiring as far as Singapore as traders there usually have six months stock. This means these rice varieties are commanding prices at par with Basmati,' said another trader.

 

This is because many Indian non-residents, especially from South India, rely on these varieties for their daily consumption. 'The rice market has become precarious. Almost all traders are in a wait and watch mode but towards the middle of the week, we could see a significant rise in prices. Already, some varieties are quoted at $600 a tonne,' sadi VR Vidya Sagar, Director, Bulk Logix. 

 

The rice market is in turmoil after July 20 when India banned exports of white rice that makes up 40 per cent of its annual 17.5 million tonnes (mt) non-Basmati rice shipments. It has led to fears that the move could result in global food inflation with wheat prices rising after Russia backed out of the Black Sea Grain Initiative. The initiative ensure Ukraine wheat, sunflower and corn reached nations that depended on Kyiv supplies.

 

Resons for ban

The Indian government’s decision to ban white rice shipments came after the progress in the sowing of paddy was tardy. Though the acreage has turned positive, the Centre is wary about the damage caused by floods in rice-growing regions of Punjab and Haryana. 

 

In addition, its rice stocks have dropped to a six-year low with the Centre supplying rice instead of wheat to the poor through ration shops and rates of the cereal in the global market soaring to a five-year high. 

 

Research agency BMI, a unit of Fitch Solutions, said the Indian government’s decision to promptly ban white rice exports was the rise in food inflation during June.   

 

Besides these factors, Thailand has said its rice production could be lower by 6 per cent this year due to the El Nino weather phenomenon affecting its paddy. Vietnam’s paddy crop will likely be hit by the weather factor, resulting in rice stocks being at a historic low, a Delhi-based analyst  said. 

 

Vietnam courts more buyers

'Most buyers are queuing up before Vietnam, whose offerings are lower than Thailand. Traders say it has received 20 per cent additional enquiries,' said S Chandrasekharan, a New Delhi based trade analyst.

 

Vietnam is not committing itself as it is getting ready to conclude a 'big' deal with the Philippines. Hanoi will supply Manila an assured quantity to ensure its food security.

 

In return for this, Vietnam will access the Philippines market for its fruits, Chandrasekaran said. 

 

On the other hand, China has begun to aggressively scout for rice and this would put additional pressure on the market, Chandrasekaran said. 

 

Neighbouring Bangladesh has only 2 mt of rice stock and it has begun speeding up its purchases. 'Though it needs parboiled rice only, its prices are rising after the Indian ban on white rice since some buyers are seeing it as an alternative,' he said.