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Agri reforms In India

The Indian government has proposed a major overhaul of the 1958 legal framework under which there has been little private investment in the food supply chain. The consequences have been economic sluggishness and severe malnutrition in India. The main points:

1. Easing of the “Essential Commodities Act” to permit private warehousing and associated services to operate without quantity limit of 300-500Mt that existed. So private companies can built large crop cleaning, storage, processing facilities.

2. Contract farming permitted enabling companies to buy from farmers and organise farming supply to their needs.

3. Removal of restrictions on sale of farm produce. Currently each area has a local market “mandi” and only a licensed buyer could buy from the farmer. Now anyone can trade. Even outside mandis.

4. Future plan: Creating a Digital stack of registering each farm and each farm owner so that delivery of goods and payments can be electronically tracked. Tradeable Electronic depository receipts to be given to farms against delivery of crops in the collection centres.

5. Proposed : Removal of all current restrictions on prices, quantities and movements of goods inter state to create a Single electronically enabled market place.

6. Funding : approx 100 billion INR fund (USD14 billion) to help private business build infrastructure for storage, processing, and handling of crops. Help will be given thru reduced interest rates on loans or land cost or other means.

7. Similar plan in animal husbandry business and also in fisheries.

8. Specialised Clusters to be set up for organic farming or food processing or horticulture etc.

9. Legal framework for electronic trading and settlement of contracts outside of courts.

10. Central database on all aspects of food industry and farming activity to be set up and monetised by selling information to private sector. To help them also make better decisions.

11. GST council to be roped in to rationalise taxes for all stages of food business. Multiple taxes at present.


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