India used to be a top importer of Canadian peas but after the imposition of a new duty last year, the trade value has halved to $500 million.
New Delhi: When Canadian Prime Minister Justin Trudeau and his delegation finally meet the top brass of the Indian government, they’ll have a lot things on their plate. But prime among them will be peas.
Canada is the world’s largest exporter of pulses and India is one of its top importers. India used to be a huge destination for Canadian peas – green and yellow – with the total trade value (in 2016-17) being about $1.1 billion, about one-fourth of the total amount of India’s imports from Canada (roughly $4.1 billion).
However, these imports were halved to about $500 million in 2017-18 due to the imposition of an import duty by India, which made Canada scramble for a solution.
“Talks are on to resolve the pulses import duty hike issue with India,” Amarjeet Sohi, Canadian Minister of Infrastructure and Communities, said Tuesday at the Indian Chamber of Commerce in Kolkata.
Why did India impose the duty?
India saw a bumper production of pulses in 2017, which dragged down prices, since demand is muted. In the last two years combined, the consumption of pulses in India has been 45 million tonnes, as against a supply of 58 million tonnes (23 million tonnes per annum production, six million tonnes per annum imports).
In 2018, the Centre is expecting a production of 22.9 million tonnes of pulses, almost the same as last year.
Hence, the government took a decision to impose a 50 per cent duty on the import of yellow peas, which form the largest share in Canada’s export basket, so that domestic farmers do not suffer. The new duty made imports of pulses from Canada fall to $500 million in 2017-18.
Even the percentage share of Canada in the total import of peas has been showing a downward trend since 2014-15. India got 77.54 per cent of its imported peas from Canada in 2014-15, but only 47.37 per cent in 2017-18 (April to November). Other countries from where India imports peas are Russia ($142.1 million), Ukraine ($100 million), Romania ($52.85 million), Australia ($34.21 million) and France ($29.36 million).
Lately, India has been facing criticism on adopting protectionist measures by raising customs duty on several products in the Budget. The US and Germany have already raised concerns.
In this context, it remains to be seen if the issue of pulses can be resolved through talks between the Canadian and Indian governments.
The methyl bromide argument
In the past, Canada used methyl bromide as a pesticide for its pulses, but was planning to phase it out due to concerns over the depletion of the ozone layer. However, India objected to this, saying methyl bromide was the only effective treatment against pulse pests. The government argued that Indian exporters followed the requirements of other countries, and that Canadian exporters should do the same.
Earlier, to sidestep these differences, India had allowed Canada to treat pulses for pests after shipping. However, in 2017, both sides’ insistence put their old agreements in trouble.