Cash subsidies to now directly reach farm exporters’ bank accounts
The government has decided to directly transfer cash subsidies into bank accounts of farm produce exporters, in an attempt to make Indian agricultural produce globally competitive and boost exports of branded farm products, officials with direct knowledge of the matter said on condition of anonymity.
The scheme came into effect on March 1 and will be valid till March 31, 2020. Depending on the response, it could be extended, the officials added.
In order to make the process transparent and plug any leakages in distribution of the subsidy, the government has decided that the scheme will provide transportation and marketing assistance through direct bank transfer, the officials said.
The scheme covers freight and marketing assistance for exports via sea and air routes. The assistance amount will, however, be reimbursed only if payments for exports are received in foreign exchange through normal banking channels, said a commerce ministry official, one of the officials cited above.
The scheme, “Transport and Marketing Assistance” covers the export of specific agriculture and farm produce, and to specific markets.
The products covered include marine and plantation products as covered under chapters 1 to 24 of the Harmonized System of Nomenclature (HSN). The scheme, however, excludes certain items including live animals, meat, shrimps and prawns, milk, butter, cheese, curd, onion, shallot, garlic, wheat, rice, lac, gums, resins and vegetable saps, the commerce ministry official added.
The scheme will benefit only exports to specified markets including the European Union, West Asia, North America, South America, Russia, China, and certain ASEAN countries.
While a break-up of agricultural exports to these countries wasn’t immediately available, the cabinet in December last year approved an agriculture export policy to achieve $60 billion exports by 2022 and $100 billion “in next few years” from the current level of $30 billion.
The scheme will help in mitigating the disadvantage of higher costs for transportation and marketing of India’s agricultural products to specified overseas markets, the commerce ministry official said.
The Cash financial assistance will vary according to the region of exports, mode of transport (sea or air) and size of the container. The amount of the assistance ranges from Rs 8,400 per twenty-foot equivalent unit (TEU) of normal shipping container for the Gulf region to Rs 28,700 per TEU for shipping to North America. For air transport, the rate ranges from Rs 840 per tonne for West Africa to Rs 2,800 per tonne for North America.
The list of specified countries includes, United States of America, Canada, United Kingdom, France, Germany, Greece, Hungary, Italy, the Netherlands, Portugal, Spain, Sweden, Switzerland, Turkey, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, United Arab Emirates, Mexico, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam, Japan, North Korea, South Korea, Australia, New Zealand, Hong Kong, Taiwan, Argentina, Brazil and Venezuela.
Exporters must be registered with the relevant export promotion council to avail the benefits offered under the scheme, the commerce ministry official said.
Farmers’ leader and Punjab State Farmers’ and Farm Workers’ Commission chairman Ajay Vir Jakhar said, “It is a good move. It is easy to give freight subsidy on the basis of weight, but providing the marketing support appears difficult. There must be explicit and transparent eligibility criteria so that benefits can reach to all and not just some influential exporters”.
Amritsar-based agriculture economist and senior fellow, Institute of Social Sciences, SS Chhina said that the move would not benefit the farmer. “The public money will go to the companies and exporters and not to the farmers, who are indirect, but real partners of the exporters. All farm sector export incentives must also help the farmers, the real stakeholders,” he said.