DELHI: Exporters of agricultural goods have petitioned the central government to reinstate the Transport and Marketing Assistance (TMA) initiative, which had a budget of Rs 200 crore, amid rising international and domestic transportation expenses as a result of the Russia-Ukraine conflict. The initiative benefited low-value agricultural items, particularly vegetables. Air freight charges are often greater than the cost of vegetables, according to exporters, and a 200-600 percent increase in freight rates in the last two years has exacerbated the problem.
The termination of the TMA scheme, according to the Federation of Indian Export Organizations (FIEO), has been a “setback” for Agri exporters, with small businesses bearing the brunt of the impact. FIEO requested that the updated TMA program, which had an allocation of around 150-200 crore, be implemented as soon as possible because many exporters had factored in freight benefits when completing contracts.
However, according to a government official, the project has been stalled due to a lack of funding. “Due to a lack of money, the initiative was halted. The system cannot be implemented unless new allocations are made, and no new allocations have been made as of yet,” the official said on condition of anonymity.
India’s agricultural exports exceeded $50 billion in FY22, the highest level ever, owing to a boom in demand for agricultural commodities. High freight charges, on the other hand, are impacting profitability, according to exporters.” Neither the buyers nor the consumers are absorbing the entire rise in freight,” stated FIEO DG Ajay Sahai.
“Logistics accounts for about a quarter of the total cost of exports. In comparison to several industrialized countries, it is far greater. “Government help to reduce logistical costs is not only a step in the right direction, but it is also WTO-compliant because there is no service discipline at WTO,” stated ICRIER’s Prof. Arpita Mukherjee.
Several countries, including Vietnam, have found success with the value chain approach. “For example, South Korea is not a significant producer of zinc but is a top exporter of the commodity due to lower logistics costs along the value chain,” she continued. Rice exports increased from 1.3 percent in FY10 to 3 percent in the previous fiscal year. In recent years, India has had to apply the WTO’s peace clause after exceeding the 10% cap for rice farmer support. In addition, Sahai stated that the WTO has not raised any objections to the TMA plan.
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