Share this
Summary
India's decisions on pulse import policies have far-reaching effects across global markets. Recent developments, including the lapse of duty-free yellow peas imports and varying policies for other pulses, signal a complex balancing act between supporting domestic farmers and ensuring adequate supplies. This article examines the current policy landscape and potential implications for traders, processors, and global pulse markets.
Indian Government Decision on Imports Holds the Key to Prices of Pulses in the Global Market
Prices in the global pulses market will depend significantly on India's import duty decisions, production forecasts, and demand patterns. Last weekend, with India not issuing any notification on extending the duty-free regime on yellow peas, the pre-December 2023 situation has been reinstated.
This reimposition means India will permit yellow peas imports only through Kolkata port, with a minimum import price of Rs 200 per kg. The imports will attract a duty of 30 percent plus a 10 percent Agriculture Infrastructure Cess, bringing the total duty to 33 percent. Additionally, the bill of lading must have been issued before February 28, 2025, and shipments must reach Indian shores by March 31, 2025.
The reimposition of import duty was anticipated as India imported over 3 million tonnes (MT) of yellow peas in 2024. Most shipments have been priced around $500 per tonne, down from over $700 when India permitted duty-free imports in December 2023. The duty-free regime was extended periodically until it was allowed to lapse on February 28, 2025.
Before reinstating the duty on yellow peas, India made two significant policy decisions. First, it extended duty-free imports of pigeon peas (arhar/tur) until March 31, 2026. Second, it decided to reimpose the import duty on lentils (Masoor).
These decisions leave uncertainty regarding desi chickpeas and black matpe (urad), whose duty-free import provisions expire on March 31, 2025.
Industry Perspectives and Government Dilemma
The pulses industry has expressed concerns over duty-free imports, claiming they adversely affect domestic growers. Industry representatives have been noting that "peas is taking away our peace" and with the duty reintroduction "a big monkey is off its back."
What will be the Indian government's policy concerning urad and desi chickpeas? Industry experts expect duty-free imports of black matpe to continue, as India's domestic production is estimated at 1.75 million tonnes, requiring an additional 0.9-1 million tonnes of supply from abroad, primarily Myanmar, which has recorded a bumper black matpe crop. Even with approximately 1 million tonnes of black matpe imports, India's carryover stocks will approach zero. To prevent price volatility, the Indian government may need to maintain black matpe import allowances.
The Indian government faces a challenging balancing act. Prices of key pulses including pigeon peas, chickpeas, black matpe, lentils, dry peas, and moong are currently below the minimum support price (MSP). With Finance Minister Nirmala Sitharaman announcing a six-year National Pulses Mission to achieve self-sufficiency, can India afford to have prices below MSP? Furthermore, attractive pulse prices are essential to incentivize farmers to cultivate legume crops during the upcoming kharif season.
Conversely, Indian chickpea production is projected to exceed last year's output, reaching over 9.45 million tonnes. With likely imports of 0.75 million tonnes, carryover stocks could surpass half a million tonnes, compared to 0.11 million tonnes last year.
Given this surplus outlook, the Indian government may reintroduce import duties on chickpeas.
However, India is experiencing unpredictable weather conditions, and the Agriculture Ministry's estimates of the winter (rabi) crop will be crucial in shaping government policy decisions. The prevailing view suggests that the Indian government might opt to reimpose duties and reassess the situation later in the year.
Conclusion
India's pulse import policies represent a delicate balance between ensuring food security, supporting farmer livelihoods, and managing inflation. For global traders and market participants, understanding these policy dynamics is essential for strategic planning. The coming weeks will likely bring more clarity on India's approach to pulses imports, particularly for urad and desi chickpeas. As the world's largest consumer of pulses, India's decisions will continue to reverberate throughout global supply chains, affecting everything from planting decisions in exporting nations to price trends in international markets. For traders and processors, staying informed about India's evolving pulse policies remains crucial for navigating this dynamic market landscape.