Voluntary Report - public distribution

**Date:** 5/14/2004

**GAIN Report Number:** IN4048

IN4048

**India**

**Agricultural Situation**

**Weekly Highlights & Hot Bites, #18**

**2004**

**Approved by:**

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

U.S. Embassy, FASNEWDELHI

**Prepared by:**

A. Govindan, Santosh Kr. Singh, V. Shunmugam

**Report Highlights:**

\*WTO consistent grain export subsidy unlikely\*, \*Handle with care -
Have a public debate on GM crops\*, \*Swami\'s far-fetched dreams of
autonomous regulator\*, \*India fifth among 30 emerging global retail
markets\*, \*Retail industry sector may be split for FDI inflow\*.

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.

**WTO CONSISTENT GRAIN EXPORT SUBSIDY UNLIKELY**

According to trade sources, large-scale direct procurement of grain for
exports by private trade is unlikely as the government is not expected
to announce to the WTO-compatible grain export subsidy before June. By
that time, the Food Corporation of India and other government
procurement agencies would have procured most of the marketable surplus.
There are indications that private traders have kept a low profile in
wheat procurement, as out of the total wheat arrivals of 14.5 million
tons through April, the private trade purchased only 732,000 tons. This
is despite the fact that major wheat surplus states of Punjab and
Haryana exempted the private trade from all state levies, excluding the
2.5 percent commission to the *arthiyas* (commission agents), while
government agencies continue to pay all the state levies and commission,
totaling 11.5 percent. (Source: Financial Express, 05/10/04)

# HANDLE WITH CARE -- HAVE A PUBLIC DEBATE ON GM CROPS

Commenting on the recommendations of the MS Swaminathan Panel on
Agriculture Biotechnology for the formation of an autonomous single
window facility for clearance of genetically engineered crops, a leading
financial daily editorial said that it would lead to simplification of
procedures and a transparent system for the approval or rejection of GM
crops in India. The report criticized the present regulatory system as
completely ad hoc and its case-by-case basis approval shrouded in
mystery. Hence, the autonomous body would definitely be a superior
arrangement to the existing system as it would leave such critical
decision making power to an expert body than to a bunch of poorly
informed bureaucrats, so said the editorial. (Source: Economic Times
5/10/04)

# SWAMI'S FAR-FETCHED DREAMS OF AUTONOMOUS REGULATOR

A key concept of an autonomous regulatory body for approving
agricultural bioengineered products, as proposed in the recent
Swaminathan Panel report, appears more ideal than feasible. The
editorial continues, that vital issues relating to transgenic crop
technology require in-depth analysis. The suggestion of a single window
approval system doing the job does not appear to be logical. Though
countries like Thailand and Australia appear to have such a system, the
regulatory power is shared by a number of government entities. The
article was also critical of vesting the India Council of Agricultural
Research, which is part of the Ministry of Agriculture, with the final
authority to approve a bioengineered product for commercial release. The
author cited a conflict of interest, as the ICAR will also be a likely
applicant for approval of its pipeline products.

# INDIA FIFTH AMONG 30 EMERGING GLOBAL RETAIL MARKETS

India now ranks fifth amongst 30 emerging retail markets in developing
countries, and moving fast to emerge as world's major investor
destination in the retail sector. The organized retail sector is
estimated to grow from the current 2 percent to 20 percent of the total
retail industry by the end of the decade. About 25 million square feet
of organized retail space will be coming up across the country by 2005.
These are the findings of a survey conducted by one of the international
property consultancies operating in India. The study claims that the
organized retail sector is growing at 8.5 percent annually, estimated at
rs. 195 billion ((\$4.3 billion) in 2002/03. Consumer spending has
increased at an average annual growth of 11.5 percent. (Source: Tribune
5/7/04)

# RETAIL INDUSTRY SECTOR MAY BE SPLIT FOR FDI INFLOW

The government is planning to carve out a new sector "organized retail
business", where foreign direct investment (FDI) can be allowed. This
will ensure that foreign companies do not drive the neighborhood stores
out of business. The government will establish a threshold level for
minimum investment and a scale of operation for potential investors in
the organized retail business. Despite the ban on foreign investment in
retailing, companies like Marks & Spencer, McDonald, and Subway are
already present in India through the franchisee route. This has forced
the government to look at the issue of FDI in the retail sector. Some
ministries are pushing for allowing up to 26 percent FDI in certain
retail activities, while insisting on complete management and control
with an Indian partner. (Source: Business Standard 5/11/04)

*Post Comments*: The newly elected government is likely to reverse the
policy moves of the previous government with regard to liberalizing FDI
in retail sector.

# RECENT REPORTS SUBMITTED BY FAS/NEW DELHI

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

  IN4043      Weekly Highlights & Hot Bites, #17      05/07/04

  IN4044      Cotton Voluntary                        05/10/04

  IN4045      Coffee & Products Annual                05/12/04

  IN4046      Oilseeds & Products Annual              05/14/04

  IN4047      Cotton & Products Annual                05/14/04

  BG4004      Bangladesh -- Cotton & Products Annual  05/14/04
  ----------- --------------------------------------- -------------------

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worldwide agricultural reporting.

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