Voluntary Report - public distribution

**Date:** 8/6/2004

**GAIN Report Number:** IN4084

IN4084

**India**

**Agricultural Situation**

**Weekly Highlights & Hot Bites, #30**

**2004**

**Approved by:**

![](media/image1.wmf)Chad R. Russell

U.S. Embassy, New Delhi

**Prepared by:**

A. Govindan, Santosh Kr. Singh, Sayed Sarwer Hussain

**Report Highlights:**

\*India pushed food security on top of WTO agenda\*, \*Farmers hit out
at revised draft WTO framework\*, \*India\'s apex medical body expresses
concerns over GM foods\*, \*Retail boom tempts big businesses\*,
\*Reliance plans to do a Wal-Mart in India\*, \*India and Thailand ink
FTA pact\*, \*More FTAs waiting in the wings\*, \*Farm GDP growth may
fall\*, \*BANGLADESH: Dhaka welcomes WTO deal\*, \*BANGLADESH: Tk 271 cr
(USD 45 million) subsidy on imported fertilizers okayed\*.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled 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 in this report. Significant issues will be
expanded upon in subsequent reports from this office.

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 PUSHED FOOD SECURITY ON TOP OF WTO AGENDA

Commerce and Industry Minister, Mr. Kamal Nath said that the recent
framework agreement hammered out by WTO members in Geneva, for the first
time "enshrines" India's abiding concern on subsistence farmers, rural
development needs, and food security into the future WTO negotiations on
agriculture. He said the framework on agriculture fully meets India's
key demands designed to preserving the country's domestic policy space
by providing for special products, special safeguard mechanism, and a
special and differential treatment in respect to market access in
agriculture. He also stated that the developing countries also thwarted
the move to reduce even the minimal level of domestic support being
given to them, and as a result the issue was excluded from the agenda
for further negotiations in the Doha Round. (Source: Business Line,
08/04/04)

# FRAMERS HIT OUT AT REVISED DRAFT WTO FRAMEWORK 

The *National Kisan Panchayat* (an apex body of several farmers'
organizations) has criticized the revised WTO framework draft as against
the interests of Indian farmers. It said if the draft proposals are
accepted, it will devastate the livelihood security of 650 million
Indian farmers. It said the framework should have given a clear message
that all subsidies in agriculture that the developed countries provide
will be eliminated within a fixed timeframe for ensuring fair trade.
(Source: Financial Express, 08/02/04)

## INDIA\'S APEX MEDICAL BODY EXPRESSES CONCERNS OVER GM FOODS

In a study entitled 'Regulatory Regime for Genetically Modified Foods:
The Way Ahead', the Indian Council of Medical Research (ICMR), India\'s
apex body for the formulation, coordination, and promotion of biomedical
research, has raised concerns over the safety of genetically modified
(GM) food. It has urged for an overhaul of the existing regulatory
mechanism. The study has also expressed concerns relating to genetic
pollution and pollen movement, health safety, allergenicity, and
potential for gene transfer. But it also says that there has been no
report of any adverse health effect of GM foods and there are no
peer-reviewed publications on the health effects of GM foods in humans.
The study has also expressed concern over the possibility of transfer of
genetically modified DNA from plant to gut micro flora of humans and
animals. This study was circulated among concerned ministries and
departments of the government. (Source: The Financial Express, 7/26/04)

## RETAIL BOOM TEMPTS BIG BUSINESSES

Established businesses houses of India like Wadia, Godrej, Hero, and
Malhotras are forming strategies to enter the \$180 billion retail
market in India. The Hero group has plans to set up a chain of retail
outlets on the line of 7-11 stores. Wadia and Malhotras want to join the
mall mania. The Godrej group is targeting the food retailing segment by
acquiring an existing chain. A large dynamic young core of consumers and
the high growth of urbanization are fueling the interest of these
groups. The retail rush is also being spurred by the current glut in the
commercial real estate sector, as rentals have dropped 10 percent across
the country. A low penetration of the organized sector is another
reason. Although retail is the biggest industry in the country, the
organized sector accounts for only 2 percent of the total sales. Studies
estimate that the organized retail sector in India is set for
exponential growth, exceeding 35 percent in the next few years. An
international consulting firm estimates that the share of organized
sector in retail business will grow from the current 2 percent to around
15-20 percent by 2010. (Source: Times of India, 8/2/04)

## RELIANCE PLANS TO DO A WAL-MART IN INDIA

The Reliance Industries, a Fortune 500 Company, is looking at a huge
retailing push, which could wind up as India\'s equivalent of Wal-Mart.
The group is planning to set up shopping malls and hyper malls across
the country, catering to not only the high-end consumers but also to the
mass market. They are looking to source goods from domestic producers of
consumer nondurables and also through imports. (Source: Business
Standard, 7/30/04)

## INDIA AND THAILAND INK FTA PACT

The Indian Commerce Minister announced that the negotiations of the
Indo-Thailand FTA have been completed and the formal signing will take
place in the next two months. He said that there will be staggered
(50-75 percent) reduction of duties on some 82 items over the next two
years, and a complete removal of all tariffs by September 2006. The list
includes apples, mangoes, durum wheat, grapes, crabs, amongst others.
The FTA stipulates a value addition (rule of origin) of at least 40
percent in Thailand to become eligible for import duty concessions.
(Source: Business Line, 7/31/04)

# MORE FTAS WAITING IN THE WINGS

The finalization of modalities for the implementation of the
India-Thailand free trade agreement (FTA) sends out clear signals that
the United Progressive Alliance (UPA) government is not averse to FTAs.
Although Prime Minister Manmohan Singh had earlier stated that the
existing FTAs negotiated by the previous government should be reviewed
and analyzed, this cannot be interpreted as the new government's
unwillingness to pursue these agreements. There are at least ten FTAs in
the pipeline, which include agreements with Singapore, Mauritius,
Mercosur, South Asia, China, Gulf Cooperative Council, Iran, and South
Africa Custom Union. (Source: Financial Express, 08/03/04)

# FARM GDP GROWTH MAY FALL 

Despite recent rains, India's agricultural GDP is expected to decline by
2.5 percent in FY 2004/05, according to Crisil's Center for Economic
Research (a private organization). The decline in agricultural growth is
likely to reduce the overall GDP growth rate to 5.6 percent from its
earlier estimate of 6.2 percent. The impact of the poor monsoon is also
being felt on the inflation front, with Crisil revising its annual
inflation forecast to 5.6 to 6 percent. (Source: Hindustan Times,
08/05/04)

**BANGLADESH: DHAKA WELCOMES WTO DEAL** [\
]{.underline}

The government of Bangladesh welcomed the latest framework agreement of
World Trade Organization that will allow the least developed countries
(LDCs) to provide domestic support for agriculture. On Wednesday, the
Ministry of Commerce announced that Bangladesh would benefit from
special and differential treatment. Bangladesh will send its feedback to
the WTO headquarters by September 22, officials said. (Source: The New
Age, 08/05/04)

**BANGLADESH: TK 271 CR (USD 45 MILLION) SUBSIDY ON IMPORTED FERTILIZERS
OKAYED\
**\
The government approved a Tk 271-crore (USD 45 million) agricultural
subsidy to provide three types of imported fertilizer to the flood
affected farmers. The funds will be used to compensate the private
traders to sell imported fertilizers at 25-percent reduced prices to
farmers. The government will also continue to subsidize urea at the
level of Tk 400 crore (USD 67 million). (Source: The Daily Star,
08/02/04)

# 

# RECENT REPORTS SUBMITTED BY FAS/NEW DELHI

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

  IN4082      Weekly Highlights & Hot Bites, #29      07/30/04

  IN4083      Tree Nuts Voluntary                     08/04/04
  ----------- --------------------------------------- -------------------

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