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CONSUMER AFFAIRS, FOOD & PUBLIC DISTRIBUTION

Domestic Market to be Integrated for Agriculture Products

New Delhi: October 18,2012

The Government is working on the issues for internal trade reforms and making a common market for agriculture products across the country. A high power committee is being set up by the Ministry of Consumer Affairs, Food and Public Distribution in this regard. This was stated by Prof. K.V. Thomas, Minister of Consumer Affairs, Food and Public Distribution while addressing the seminar on “Inter-State Trade Barriers –Concerns & Solutions” organised by ASSOCHAM here today. The minister said the Govt. is aware of all the issues and challenges for integrating domestic markets for goods and services. Efforts have to be made to remove all restrictions and barriers for this purpose and tackle the issue in a systematic manner, he added.

Full text of the minister’s Speech is as follows:-

It gives me immense pleasure to be amongst all of you at the seminar on “Inter-State Trade Barriers – Concerns & Solutions” being organized by the ASSOCHAM with The Institute of Cost Accountants of India and the ITC Limited as partners to understand the issues and challenges being faced by the Trade and Industry including concerns of the supply chain domain. The issues are quite complex as they encompass a vast area that include laws, which most of you feel are outdated, problems being faced by transporters of goods as they traverse through different States and Union Territories, with each region having its own sets of rules and regulations on trade and industry, not to mention environmental issues that pose a challenge, rightly so if seen from its angle, to economic development.

The Government is quite aware of all these issues and the challenges they post to a vibrant economic order in the country. I could only recall what our Hon’ble Prime Minister had said while inaugurating the Agriculture Summit 2005, when he emphasized that an important commitment of the Government was to integrate the domestic market for all goods and services. He further said that the time had come for us to consider the entire country as a common or single market for agricultural products and added that we had to systematically remove internal controls and restrictions to enable direct marketing between farmers and NGOs, Cooperatives and Private Companies. You will agree with me that what holds good in respect of agriculture will equally hold good in respect of other economic sectors of the nation as well. What needs to be done is finding ways and means of doing that in a systematic manner so that we ensure a vibrant industrial and economic development in the country through cooperation and coordination with all agencies concerned, especially the State Governments and the Union Territories.

You will agree that the setting up of the National Spot Exchanges, like the National Spot Exchange of India Limited and the NCDEX Spot Exchange Limited, was an important landmark towards creation of the single market in the agricultural commodities in pursuance of the national agenda given by the Prime Minister in his above mentioned address. The Department of Consumer Affairs had taken the above initiative to create an alternative marketing channel which would facilitate a transparent system of direct marketing. It was felt that direct marketing will ensure that there is no credit and quality risk resulting in low transaction costs. It was also to integrate the physical market spatially and temporally by integrating it with the futures market.

Now, a word about the Essential Commodities (Amendment) Act, 2006. The Act, enacted in December, 2006 and which came into effect from 12.02.2007, prescribe Stock Limits as ‘temporary measure’ during periods of price rise due to a shortfall in the domestic availability of the relevant commodities. Stock limit has been presently imposed only on a few commodities like rice, paddy, pulses, edible oils/oilseeds and sugar. The limit is withdrawn when the availability and price situation improves as in the case of wheat. The result is that these measures ensure that transport barriers are not created.

One more important initiative taken by my Ministry of Consumer Affairs, Food and Public Distribution concerns The Warehousing (Development and Regulation) Act, 2007. The Act provides for the establishment of a Warehousing Development and Regulatory Authority for the development and regulation of warehouses, negotiability of warehouse receipts and to promote orderly growth of the warehousing business. Negotiable Warehouse Receipts (NWRs) issued by warehouses registered under the Act would help farmers to avoid distress sale of their produce by ensuring finance against their produce stored in registered warehouses. It will improve the bargaining capacity of farmers. The pledging/collateralization of agricultural produce with a legal backing in the form of NWR will lead to increase inflow of credit to the rural areas, reduce the cost of credit and will spur other related activities like standardization, grading, packaging and insurance services in the agricultural sector. I am sure, this will, to a great extent, limit the concerns of the industry insofar as putting in place a vibrant and improved system of marketing techniques of farm produce is concerned.

Similarly, the Ministry of Agriculture had formulated a model law on agricultural marketing in consultation with the State Governments. The draft model legislation provides for establishment of private markets/yards and direct purchase centres. The law will also facilitate Consumer/Farmers market for direct sale and promotion of public private partnership in the management and development of agricultural markets in the country. It is gladdening that as on date, most of the State Governments have either amended their APMC Acts or have initiated action in this direction. The Ministry of Agriculture is also working on formulation of an Inter-State Agricultural Produce Trade and Commerce (Regulation) Bill to make provisions for development and regulation of Inter-State Trade and Commerce of agricultural produce and other related commodities.

You may also recall that the Government of India had worked with the State Governments in the introduction of State level VAT to establish a uniform tax structure throughout the country and that VAT had been introduced by all the States/UTs now.

I have just put forth some of the major initiatives undertaken by the Government of India in agriculture and allied sectors to ensure that trade barriers between different States and the Union Territories do no strangulate an efficient and vibrant structure of trade transactions among different parts of the country. It is quite a complex issue, which as I said earlier, needs to be tackled in a systematic manner that would offer permanent solutions. It cannot be denied that State Governments and Union Territories have their own concerns as the issues involve revenue generation.

I hope this would be opportune to mention here, as many of you would have already heard, that the Union Cabinet had recently entrusted my Ministry to look into all Issues connected with internal trade reforms with a view to suggest necessary modifications. We have started working out the modalities, including the terms of reference of the high powered committee to be set up under the Consumer Affairs Minister. I look forward to having constructive interaction with all stakeholders once the committee starts its operations.

With these words, I conclude my speech and hope that that the deliberations that we are going to have now will throw light on all important issues under discussion, enabling the Government and other connected agencies to formulate cogent and forceful policies in future.


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