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Consolidating
AEZs
The
Exim policy announced on March 31, 2003 has proposed to facilitate
and promote association of Corporates in the implementation of AEZs
to accelerate exports, Dr AR Patel explains…
Agro-Export
Zones
 India’s
farm exports have increased from $3.5 billion in 1990-91 to $6 billion
in 2000-01 reflecting a 71.4 per cent increase during the period.
India’s future looks bright as a prime player in farm exports, recognizing
this the Commerce Ministry introduced the concept of Agro- Export
Zone (AEZ) to provide undivided attention for enhancing quality
and level of farm productivity. Making a beginning by sanctioning
three AEZs, one each for pineapple, gherkin and lychee in 2001,
17 more AEZs were sanctioned in 2002 covering vegetables, fruits,
meat, and beverages. As of today 45 AEZs covering 17 states have
been notified.
The
concept of AEZ has been a step in the right direction for boosting
farm exports. However, certain critical issues need to be sorted
out on a war footing in order to enable AEZs to achieve their missions
of accelerated growth.
Critical
Issues
-
Farm exports are being severely and adversely affected because
of the emergence of trading blocks like the European Economic
Area, North America Free Trade Agreement and Asian Free Trade
Area. Imposition of non-tariff barriers by developed countries
on imports from developing countries and provision of heavy subsidies
for production, procurement, processing and export of farm products
by developed countries also should be taken into consideration.
These issues can be satisfactorily resolved through political
diplomacy and bilateral agreement with individual countries and
role-effectiveness of our embassies abroad
- Commitment
of State Governments, with few exceptions, is practically absent
for creating the required infrastructure and providing utility
services and tax benefits to corporate houses
- Financing
banks and institutions have been saddled with huge non-performing
assets under Hi-tech and export oriented unit (EOU) projects of
farm sector, as a result of which their confidence in supporting
farm export projects is shaken
-
Corporate houses have been experiencing innumerable problems in
taking up projects under farm sector from State Governments, financing
banks and agencies established for supporting farm exports, besides
their balance sheets are not transparent. This issue needs to
be sorted out through discussions with willing corporate houses,
financing banks and State Governments inorder to arrive at a consensus
While
a monitoring system has been established for formulating projects
for AEZs involving 120 activities and agencies have been identified
for this, an attempt is made here to appreciate the lessons learnt
by commercial banks and financial institutions which have been supporting
export oriented units for quite some time. There is a need for detailed
study and analysis of these lessons and incorporating the remedial
measures while establishing an AEZ itself to make it technically
feasible and financially viable to yield expected/targeted results.
Lessons
Learnt
- Number
of processing units in the fruits and vegetable sector increased
from 4270 in 1994 to 5198 in 1999 with the small cottage and household
enterprises accounting for 74 per cent. While installed capacity
increased from 12.6 lakh tonne to 20 lakh tonne, the capacity
utilization has dissapointingly remained below 50 per cent during
the same period
- There
are about 130 small, medium and large tissue culture units in
India. Their combined installed capacity is around 300 million
plantlets whereas their combined capacity utilisation is 25 to
30 per cent only due to technical and marketing related problems
-
Grossly inadequate infrastructure in respect of approach roads,
cold chains, handling, storage and cargo facilities at air ports,
utility services of water, electricity, transport, communication
- Freightrates
in India are 50 to 100 per cent higher than that of competing
countries which reduces India’s competitive advantage
- Strict
rules on compliance of Sanitary and Phyto-Sanitary measures and
quality standards for export of products covered by Hazard Analysis
Critical Control Point which poses serious threat to our exports
-
In case of eggs failure, to capitalize the egg processing capacity,
due to our inability to produce eggs of international standards
-
Even though we have world class poultry meat facilities, the export
performance is handicapped by poor quality and high cost of raw
materials
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