INDIA has abolished all import tariffs on lentils from any origins but the US in a move that will bolster the Australian lentil sector.
The decision, effective immediately, was announced over the weekend and could unlock millions of dollars of value for Australian lentil exporters.
India decided to cut tariffs to curb raging food price inflation.
"A poor pigeon pea crop, combined with general tightening of global lentil stocks on the back of Canada's poor harvest has meant retail lentil prices have skyrocketed," Pulse Australia's chief executive Nick Goddard said.
"Food inflation in India topped 18.3pc in December, driven largely by price increases in edible oils and pulses, particularly, lentils."
The subcontinental nation is by far the biggest market for lentils in the world but Australia has largely sold to other destinations since 30 per cent tariffs were imposed on Aussie product in 2017.
Last year there was a drop to 10pc tariffs in response to low Indian domestic production while this week the tariffs were suspended.
In technical trade terms the duty being removed is a cess, a levy raised to go outside general government revenue, rather than an import tariff as removed as the import duty was already zero as of July last year..
The Indian government had previously reduced the basic customs duty on lentil imports, apart fro the US, from 10 per cent to zero from last July.
However, Aussie exporters were still effectively paying a levy of 11pc, made up of theAgriculture Infrastructure Development Cess of 10pc, as well as a social welfare surcharge, calculated at a rate of 10pc of aggregate duties, taxes and cesses, totalling another percent and taking total payments to 11pc.
Australian pulse industry officials are working to assess the exact ramifications of the Indian news.
While Australia had undertaken free trade agreement discussions with India last week this was purely coincidental and not a factor in the Indian government decision.
Local farmers welcomed the news.
Grain Producers Australia chair, Barry Large said the move would help Australian growers capture more value for their product.
"The reduction of this tariff now is a welcome, positive step towards rebuilding trust and confidence in this important export market, to help optimise this high value crop's potential," Mr Large said.
Part of the reason the tariffs were implemented was the powerful Indian farmer lobby wanting to protect sales.
Mr Large said GPA understood the local sensitivities involved but hoped there would be greater certainty for Australian producers in the future.
"Trying to remove this market risk and curtail volatility will help support better planning and decisions by Australian growers and our industry, providing more stability and potential long-term growth opportunities and benefits from our trading relationship."
Mr Goddard said domestic politics were at play in this decision.
"With key state elections looming, and the next Federal Election fast approaching in 2024, the ruling BJP Party is conscious of the damage rampant inflation will have on voter sentiment," he said.
"The removal of tariffs until September 30 should serve to bolster domestic supplies with the aim of reducing price pressure."
There was also some less positive news out of the Indian government over the weekend, albeit for a much smaller industry in Australia, the mung bean sector.
The Indian government confirmed the quantitative restrictions on mung beans, suspended in late December will cease effective Marcy 30..
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