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Steps soon to protect coffee sector from removal of QRs

Fakir Chand in Bangalore

The Union commerce ministry is working out several measures to protect the beleaguered coffee plantation sector from the onslaught of global competition with effect from April 1, 2001, when the total removal of quantitative restrictions comes into force as part of the WTO pact.

Disclosing this in Bangalore on Monday, Union commerce secretary Prabir Sengupta told rediff.com that a special committee was working on the tariffs and other measures to be taken to protect the domestic market, including the coffee growers, curers, and traders from the WTO's impact.

"The ministry has set up a committee to address the issue. It has already held a couple of meetings, and will formulate a report in the next two months. The objective will be to minimise the hardship growers and traders in the sector will face once global products enter the domestic market to compete with local coffee products," Sengupta stated.

The secretary, however, declined to specify the measures, as enforcing import tariffs was the prerogative of the finance ministry, and a part of the Budget exercise for the ensuing financial year (2001-02). "Being in the commerce ministry, I will not be able to comment on the tariff aspect."

Sengupta also advised the media not to use the term non-tariff barriers for 'other measures' being considered by the ministry as the use of such a term would amount to 'national disservice'.

"You can write tariffs and other measures as other countries can object to use of such a term by me."

Asked whether the measures against removal of QRs would be announced as part of the Export-Import (Exim) policy for the next financial year, Sengupta said that the modalities have not yet been worked out.

"As it will be an instrument for regulation of imports into the country, we have to finalise it in consultation with other ministries such as finance and law."

The commerce secretary also declared that a decision on the introduction of the coffee retention scheme was under the active consideration of the ministry, and would be announced sooner than expected.

"The ministry is seized of the matter. The proposal of the coffee board is now before an inter-ministerial group for finalisation. As the scheme, advocated by the Association of Coffee Producing Countries, involves funding, including credit facilities from banks to growers, the finance ministry is also looking into the aspect," Sengupta claimed.

The secretary, however, cautioned the coffee sector not to bank too much on such a short-term marketing strategy as the implementation of the retention scheme in October by Brazil, Colombia, and Vietnam has not resulted in arresting the downslide of coffee prices in the international auctions.

"Though India exports 70-75 per cent of its produce annually, they constitute only 4.3 per cent of the global exports. It remains to be seen what impact such a scheme will have on our growers even as they will be piling up the stocks. It is imperative to ensure that India does not allow other producing countries to encroach upon its global market space."

When asked whether the decision on the scheme was held up on account of Union Commerce Minister Murasoli Maran's prolonged illness, Sengupta said it was not so. "Consultations are going on, and the government of India is expected to take a decision very soon. As I'm not the government, I'm afraid, I will not be able to give any time-frame for it as it involves a thorough study of the scheme, its structure, implementation, and the sourcing of its funds," he asserted.

Earlier, delivering the presidential address at the International Scientific Symposium on Coffee, organised by the Bangalore-based Coffee Board, Sengupta announced that the ministry was also considering a medium-term strategy for stepping up exports and boost the domestic consumption of the beverage, which has been stagnant over the years.

"The ministry is keen on a comprehensive medium-term marketing strategy. As it has to take into account the implications of the impending removal of QRs, a mechanism has to be evolved to ensure that the lot of the growers improves, and the unit realisation of their produce is protected.

In order to boost the domestic consumption, the medium-term marketing has to be innovating and rewarding. The strategy will include enhancement of productivity factor, product diversification, and qualitative difference in the taste of its varieties.

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