Is protectionism really helping India's food and agricultural industries?

DELHI, India - Dec. 31, 2018 - PRLog -- The opening of the Indian economy in 1991 ushered in a new age of progress. Indian markets evolved from being a seller's hub to a consumer's market, prompting foreign direct investment into India that subsequently increased job opportunities at the ground level, and improved the standard of living for many of its citizens.

So, if globalization brings these benefits, why does it appear that the entire world is becoming more protectionists? The rise in protectionism is evident globally, and India is no exception:  everyone is working on conservative hard-lines of "we must protect our farmers, growers, and industry." Governments around the world are offering more sops to their farming community rather than investing in technology transfers that would be hugely beneficial to this sector.  India is no exception, as its farmers still face an agrarian crisis due to a multi-layer procurement system, over-production, or the inability to receive and act on timely market signals.

Notwithstanding all this, it is indisputable that our farmer needs backing. The question under deliberation is what sort of support should farmers receive? We are in dire need of an immediate transformation where government intervention is focused on providing the farming sector with firm market analysis and timely market signals on everything ranging from weather forecasts, crop production cycles, the availability of agricultural irrigation, upcoming trends in supply and demands, new technologies, export opportunities, and import vulnerabilities.

The basic rule of economics applies to all businesses and, needless to say, industries grow when they adapt to a competitive environment. We must not forget the simple mantra that neither India nor any other country can produce everything on its own.  While some would point out that Indian Basmati rice, Morels from Kashmir or Darjeeling teas as cannot be sourced from anywhere but India, where does that leave us when considering Feta cheese from Greece, Manuka honey from New Zealand, or Iberico Jamon from Spain?  While the inward-looking approach may help in the short-run, in the long run, it causes huge market disruptions that ultimately hurt farmers and consumers, alike.  Greater global synergy will go a long way in addressing the issues of food security and malnutrition.

The absence of competition creates monopolistic trade practices. On the contrary, exposure to competition can actually help produces become more competitive.  We have great examples like that of apple growers from Himachal Pradesh and Jammu and Kashmir, who benefited tremendously after they improved the quality of their production and marketing techniques in response to the arrival of imported apples into the Indian market. We are also known for indigenizing world cuisine, whether it is the Manchurian or pink pasta, or an aloo tikki burger, which makes the Indian consumers' aspiration fulfilled by the zest of the entrepreneur or the national or international company. Our economy is big and large enough to handle products from any country in the world, making sure that someone in India has the aptitude to "Make in India" at a price and quality which is unheard of.

Ironically, we are missing out on these success stories because of measures that actually increase the cost of international products in Indian waters, including increased basic customs duty, quantitative restrictions, and other technical barriers to trade. As a result of these actions consumer benefits are being compromised and he/she is forced to buy a product which might not be the right value proposition. While we are focusing on protecting India's interests, we should not let healthy products like pulses/ legumes, tree nuts, dry fruits, fruit juices, protein products, and fresh fruits be banned from consumers' shopping basket.

We need to be mindful that, despite India being one of the fastest growing economies in the world, the country is also home to the largest number of malnourished children. It is imperative, and not advisable, to abandon globalization as localization, privatization, and globalization not only can help us improve the economic status of stakeholders, but can also help improve our citizenry's health profile. India needs to abandon its fear psychosis of losing markets to the international players and, instead, welcome the arrival of international goods as an opportunity for consumer fulfillment and also as a mechanism to educate stakeholders about best practices in the global marketplace.

Mr. Amit Lohani, Founder & Director, Forum of Indian Food Importers said, "As an apex chamber representing Indian f&b business,  we have showcased numerous times how international products-primarily food and beverages, have benefited the domestic industry - from increased price realization for domestic fresh apples, to the availability of healthy nuts throughout the year. We have numerous health issues, which need our immediate attention and positive government intervention will assist the Indian businesses to offer the products at a consumer-friendly price."