Voluntary Report - Public distribution

**Date:** 10/19/2007

**GAIN Report Number:** IN7102

IN7102

**India**

**Agricultural Situation**

**Weekly Highlights & Hot Bites, #42**

**2007**

**Approved by:**

![](media/image1.wmf)Oliver Flake

U.S. Embassy

**Prepared by:**

A. Govindan, Santosh Singh

**Report Highlights:**

\*India okay with WTO draft \...\*, \*\...CPM grills government on WTO
negotiations\*, \*Non-basmati rice prices crash on export ban\*, \*CPM
blames UPA for grain shortage\*, \*India-Australia tie up for wheat
research program\*, \*American apples may come under scrutiny\*, \*Now,
anti-retail lobby plans to target south\*, \*Protect retail chains:
Central Government to States\*, \*McDonald\'s to invest rs. 3 billion in
expansion\*, \*India has 100,00 millionaires\*, \*Import bills set to
surge on use of vegetables oils as biofuels\*, \*Ethanol promotion move
fails to enthuse sugar mills\*.

Includes PSD Changes: No

Includes Trade Matrix: No

Annual Report

New Delhi \[IN1\]

\[IN\]

Welcome to Hot Bites from India, a weekly summary of issues of interest
to the U. S. agricultural community. The report includes information
that has been garnered during travel within India, reported in the local
media, or offered by host country officials and agricultural analysts.
Press articles are included and summarized in this report. Significant
issues will be expanded upon in subsequent reports from this office.
Minor grammatical changes have been made for clarification.

DISCLAIMER: Any press summary contained herein does NOT reflect USDA's,
the U.S. Embassy's, or any other U.S. government agency's point of view
or official policy.

# INDIA OKAY WITH WTO DRAFT ...

India has conveyed to the U.S. that the draft texts currently in
circulation in Geneva could be the basis for discussions towards an
agreed outcome in further liberalization on agriculture and industrial
tariffs under the Doha Development Round that remains in a limbo. In a
telephone conversation with President Bush, Indian Prime Minister Dr.
Manmohan Singh said reassuringly that the text gives broad indications
of the range of possibilities on most issues, although there were gray
areas in the text and specific numbers remained to be agreed upon. While
maintaining that India could by and large live with what is on the
table, the Prime Minister said that the country has concerns only on
agriculture and would try to help in reaching a compromise. He said the
key to the success of the round remains agriculture and emphasized the
importance of taking care of the vulnerability of two-thirds of the
Indian population. As such, he said, India needed some degree of
protection through special products and safeguards on which greater
clarity is needed. (Source: Business Line, 10/17/07)

**...CPM GRILLS GOVERNMENT ON WTO NEGOTIATIONS**

The Communist Party of India (Marxist)- CPM -- expressed reservations
over Prime Minister Singh's statement on removal of trade barriers
saying developed countries, particularly the U.S., are seeking further
concessions from developing nations without committing anything in
return. CPM Politburo member Sitaram Yechury said India has been
critical of the Agricultural text and it was difficult to understand
this sudden turn of India's stand on NAMA and the Agricultural text. He
warned the government against any "compromise or concessions" concerning
agriculture saying that it would be disastrous to millions in India and
demanded that the broad consensus evolved by developing countries, as
reflected by the NAMA II group, must be strictly adhered to as the basis
for further negotiations in the Doha round. (Source: Economic Times,
10/19/07)

# NON-BASMATI RICE PRICES CRASH ON EXPORT BAN

The government's ban on exports of all non-basmati rice has lead to a
crash in prices of premium aromatic varieties, such as Pusa-1121, which
are still to be officially notified as 'basmati'. Since October 9, the
day the decision was taken by the Cabinet Committee on Economic Affairs,
prices of Pusa-1211 paddy in major grain markets in Haryana have fallen
from Rs. 20,400 per ton to Rs. 19,000. Harvesting of the other premium
non-notified variety - CSR-30- is yet to start, with market arrivals
slated from the first week of November. "The sentiment is bearish and
will turn more so, now that the ban has been officially notified," trade
sources said. The irony is that this time around 50 percent of the
country's area under basmati has been sown under Pusa-1121 and another
25 percent under CSR-30, both non-notified basmati. That leaves just 25
percent under officially notified basmati varieties, including Pusa
Basmati -- 1 (20 percent) and traditional tall cultivars (5 percent).
"If the ban is rigorously implemented, there will be a more than
three-fourths drop in basmati exports," trade sources noted. (Source:
Business Line, 10/17/07)

*Post Comment:* The GOI notification banning exports of non-basmati rice
is available at: <http://164.100.9.245/exim/2000/not/not07/not3807.htm>

# CPM BLAMES UPA FOR GRAIN SHORTAGE

Even though the government has announced a number of programs for *aam
aadmi* (the common man) in recent times, an influential section of the
CPM has once again accused the government of "punishing the poor". As
the issue of grain shortages in ration shops in West Bengal snowballs
into violence against dealers, CPM Politburo member Brinda Karat, in a
letter to Agriculture Minister Sharad Pawar, has cited "huge cuts in
allocations of food grains for Above Poverty Line (APL) card holders" as
the main reason for the shortage. Karat, a Rajya Sabha (Upper House of
the Parliament) member said, "such drastic measures by the central
government are punishment for the poor, which include a large number of
APL card-holders, for no fault of theirs." Karat's letter comes after
her duel with Pawar over wheat imports. According to party insiders,
this signals that the Left will not spare any opportunity to attack the
government on issues concerning the common people. (Source: Business
Standard, 10/15/07)

# INDIA-AUSTRALIA TIE UP FOR WHEAT RESEARCH PROGRAM

Farm scientists from Australia and India have joined hands for a
collaborative five-year research program aimed at improving drought and
temperature tolerance, disease resistance and quality of wheat. As part
of the program, a three-day joint workshop on sustainable wheat
production through use of marker-assisted breeding and other
biotechnological tools was recently held in New Delhi. The Australian
High Commissioner to India, Mr. John McCarthy, said the workshop will
determine the objectives for a series of collaborative research
projects, bringing together world-class wheat research experts of both
countries. "There is a long history of successful collaboration through
the Australian Center for International Agricultural Research (ACIAR),
including the identification and development of yellow rust resistant
strains of wheat, and we look forward to building on this," he said.
(Source: Business Line, 10/13/07)

## AMERICAN APPLES MAY COME UNDER SCRUTINY

The Commonwealth Agriculture Bureau International (CABI) has listed 184
pests occurring in apples grown in the U.S., of which 94 are not present
in India, and thus require phytosanitary measures if the U.S. apples are
to be imported into India. A senior government official said that if the
observation of the CABI is correct, there is a need to safegaurd
India\'s quarantine interest in line with international norms. A senior
official from the National Bureau of Plant Genetics Resources alleged
that Indian quanrantine measures are weak when compared to other
countries. However, an official of the Ministry of Agriculture
responsible for plant quarantine said that they will examine the issue
as it is the first time that such an allegation has been brought to
their notice. (Source: Business Standard, 10/15/07)

*Post Comment:* The GOI has clarified that there is no threat of pests
entering India with the apples being imported from the U.S. and that
procedures in accordance with international norms are being followed
before permitting the import of apples into India. For details on GOI
comments see: www.pib.nic.in/release/release.asp?relid=32010

## NOW, ANTI-RETAIL LOBBY PLANS TO TARGET SOUTH

The anti-retail lobby is planning to target the southern states by
staging demonstrations against emerging organized retail chains. The
Save Retail Agriculture and Livelihood Campaign will stage protests in
Bangalore against Metro-Cash & Carry, which has been accused of
indulging in retail trade in the garb of wholesale cash & carry
business. The western and southern states have so far been relatively
peaceful compared to northern and eastern states, and thus the
anti-retail lobbyists want to make a mark here. (Source: Financial
Express, 10/18/07)

## 

## PROTECT RETAIL CHAINS: CENTRAL GOVERNMENT TO STATES

With several states witnessing violent protests by local traders against
organized retail chains, a worried central government has reached out to
state governments seeking adequate security for their outlets as well as
action against vested interests that are harming legitimate businesses.
Reliance Fresh, an organized retail chain, has been forced to shut or
scale down operations in several states after their stores were
vandalised. Most state governments have either chosen to remain a mute
spectator or joined hands with the protestors by issuing closing down
instructions in the interest of law and order. The Union Home Ministry
is concerned that such state government apathy is hurting legitimate
business interests of those who have entered the organized retail market
with all due government clearances. The ministry has advised the state
police chiefs to provide adequate security to retail chains and
discourage unlawful assembling to prevent build up of mobs. (Source:
Economic Time, 10/15/07)

# MCDONALD'S TO INVEST RS. 3 BILLION IN EXPANSION

McDonald's India said it would pump in Rs. 3 billion (\$76 million) in
the next three years to fund expansion, which includes extending its
services to airports, railway stations, and highways. "We are aiming to
triple the number of our outlets in the next three to five years, while
investing Rs. 300 crores (three billion) by 2010 for setting up new
outlets and expanding the back-end supply chain," said Mr. Vikram
Bakshi, Managing Director, McDonald's India (North and East). The
initial focus of the company would be the airports at the metro cities
including Delhi, Mumbai, Kolkata, and Chennai. (Source: Business Line,
10/16/07)

# INDIA HAS 100,000 MILLIONAIRES 

India's High Networth Individuals (NHIs) population has touched the
100,000 mark at the end of 2006. HNIs are those with net financial
assets of at least \$1 million, excluding their primary residence and
consumables. Indian HNIs posted the second fastest growth of 20.5%, says
the Asia Pacific Wealth Report released by Merrill Lynch and consulting
firm Capgemini. "Robust economic growth and strong financial markets,
along with gains in income and credit expansion which drive private
consumption, were the key drivers of growth in India's HNI population,"
DSP Merrill Lynch's Head of Global Private Client, Pradeep Dokania said.
(Source: Times of India, 10/18/07)

## IMPORT BILLS SET TO SURGE ON USE OF VEGETABLE OILS AS BIOFUELS

There is a growing concern in India\'s vegetable oil industry against
global usage of vegetable oils for fuel purposes which has scaled up
vegetable oil prices by 50 to 130 percent over last year. Since India
imports over 40 percent of its vegetable oil requirements (12.5 million
tons), India\'s vegetable oil import bills are expected to increase from
Rs. 120 billion in 2007/08 to Rs. 200 billion in 2008/09. The Solvent
Extractors Association said that withdrawal of 5-10 percent of vegetable
oils for non-food usage will seriously impact its prices and
availability. They want the government to take steps to create public
opinion at national and international levels to discourage the use of
edible vegetable oils for fuel purpose, and instead use non-edible and
biomass for fuel purpose. (Source: Economic Times, 10/17/07)

## ETHANOL PROMOTION MOVE FAILS TO ENTHUSE SUGAR MILLS

The government\'s move to allow sugar mills to directly convert
sugarcane to ethanol is hardly going to benefit the industry given the
current sugarcane pricing policy. Due to the high state advised prices
for sugarcane, the cost of production of ethanol is going to be higher
than the price at which the oil marketing companies are buying ethanol
for blending. Taking the example of one of the leading sugarcane
producing states of Uttar Pradesh, the high state advised price for cane
has driven the cost of ethanol production to Rs. 26 per liter against
the ethanol procurement price of Rs. 21.50 per liter announced by the
oil marketing companies. (Source: Financial Express, 10/16/07)

##### RECENT REPORTS SUBMITTED BY FAS/NEW DELHI 

  ----------- --------------------------------------- -------------------
  **REPORT    **SUBJECT**                             **DATE SUBMITTED**
  \#**                                                

  IN7098      Weekly Highlights & Hot Bites, #41      10/12/07

  IN7099      India -- Wheat Update October           10/15/07

  IN7100      India -- Dairy and Products Annual      10/15/07
  ----------- --------------------------------------- -------------------

# 

# WE ARE ON THE NET

Visit our headquarter's home page at www.fas.usda.gov for a complete
selection of FAS worldwide agricultural reporting.

# 

# FAS/NEWDELHI EMAIL

To reach FAS/New Delhi, email us at Agnewdelhi@usda.gov.