Read this in tandem. India has drastically reduced import duties on edible oils and rice in a bid to check rising inflation. While the import tariff on rice has been brought down to zero, the duty on all types of edible oil in crude form has been removed and the duty on the refined form of edible oil has been slashed to 7.5 per cent. Besides, there will be no customs duty on import of maize upto five lakh tonnes. 

The US President George Bush said last week: “We are willing to make serious concessions on the agricultural front, but we expect other nations to open up their markets.” Just to remind you in what context this statement was made, the US and the European Union have been under pressure to make deeper cuts in their agricultural subsidies and tariffs, but are looking for major countries like India and Brazil to open their markets in exchange. 
India has taken the first step. It has lowered the duties. And by doing so it has sent the right signal to President Bush. 

Well, you might still be thinking that the Doha Round of the World Trade Organisation (WTO) has remained struck for seven years now and there seems to be no movement at all. Let me correct you. This is because we have not been following the negotiations so carefully. In mid-March, Brazil’s chief negotiator, Roberto Azevedo, was quoted as saying that the Doha Round was closer than ever to an agreement. Negotiators have been working round-the-clock towards a possible ministerial level meeting either in April or May, where a breakthrough seems possible.  

The duty cut has been enormous. Besides crude palm oil, the government has also cut import duties on all refined edible oils to 7.5 per cent. The WTO will now forfeit India’s right to restore its import duties, which means that India will in future have to maintain the maximum level of duties to 20 per cent or so. 

Let us now move beyond the WTO argument. The decision to bring the import duties on rice to zero and cut in duty on edible oils comes at a time when the import duty on wheat and pulses have already been reduced to zero. These four major agricultural commodities, including the three most important food crops, have now been left highly vulnerable to the vagaries of an unjust international trade. In any case, with the international prices of wheat and rice hitting the roof, there seems to be no justification for reducing the import tariff to zero. 

Intriguingly, the decision to remove the import duties on wheat, rice and pulses (along with a massive cut in duties on edible oils) comes at a time when a Rs 8,000-crore National Food Security Mission has been launched with the aim to increase productivity of these four commodities. By the end of the 11th Plan, the target is to increase the production of rice by 10 million tonnes, wheat by eight million tonnes and pulses by two million tonnes.  I fail to understand how can you increase the productivity of rice or wheat for instance in the next five years by keeping the doors open for imports at the same time. 

This is surely going to be counter-productive. In fact, setting up a time-bound Food Security Mission for enhancing production of wheat, rice, pulses and edible oils comes at a time when the government itself is lowering the custom tariff thereby allowing cheaper imports. Take the case of edible oils. India was almost self-sufficient in edible oils in 1993-94. Ever since the government began lowering the tariffs, edible oil imports have multiplied turning the country into world’s biggest importer. 

Because of cheaper imports, India has failed to raise productivity of oilseed crops. Small farmers growing oilseeds and that too in the rainfed areas of the country had to abandon production in the light of cheaper imports.

Cheaper imports have a tendency to destroy livelihoods. Look at edible oils for instance. Compared to the import of 1.02 million tones of edible oil in 1997-98, the imports have reached a mammoth 5.98 million tonnes. In 1999-2000, India imported five million tones of edible oil thereby once again emerging as one of the biggest importer of edible oils. If we want to reverse the trend, there is no alternative but to stop cheaper imports and then provide the right environment for the oilseed farmers to increase production. 

In the years to come, the remaining import tariff on edible oils will also be removed. The government is already committed to bring down the import duties on edible oils to zero under the Free Trade Agreement with the Association of South East Asian Nations (ASEAN) countries. For wheat, rice, and pulses – the crops that are considered crucial for food security – the import duties are already zero.

We know that cheaper imports negatively impacts food security. Allowing zero duty imports at a time when a National Food Security Mission has been launched to increase production is counter-productive. There is no sensible rationale behind this policy. India must restore the import duties on these four crops if it intends to remain food self-sufficient. Otherwise, it seems the government seems keen to import food insecurity.