Order on pulses stock limit not trade distortion, India tells US

India has said that the recent order that removed "stock limit exemptions" for pulses held by importers as part of its effort to address the shortage of pulses and prevent undue hoarding is "not a trade distortion".

The issue was raised by the American side during the US-India Trade Policy Forum meeting here after the US pulses advocacy groups and lawmakers alleged that Indian government's move will effectively close India's pulse import trade as the recommended stock limit is only 350 metric tonnes.

"It was a peculiar, typical circumstance, which necessitated that order. It is not a trade distortion," said Union Commerce Minister Nirmala Sitharaman, who co-chaired the meeting along with her US counterpart Mike Froman.

Explaining the reason behind such a decision at a time when prices of pulses are sky rocketing, Sitharaman describe to them of the typical situation that arise in India.

"I explained that India does not produce adequate pulses. Our consumption, demand is far higher than what we produce. As a result we import from countries like US and Canada," she said, adding that this year the expected output of pulses was not achieved resulting in a sense of shortage since June.

"The Government also went into global tendering process beginning from June, although even in the global market the supply is not adequately available to obtain as much as we want. Import of pulses in India was happening, but we had a feeling that the imported pulses were not entering the market. In other words they were getting hoarded," she said.

Due to the persuasion of the Centre, State Governments had to conduct raids and in just one day of raid about 10 days ago, nearly 35,000 tonnes of pulses was recovered.

As a result, particularly in an environment where the prices were reaching "really unacceptable" limits, the Government had to limit the stocks that the importers can keep, Sitharaman explained.

Earlier a group of influential US lawmakers wrote a letter to the Agriculture Secretary Tom Vilsack and Commerce Secretary Penny Pritzker against the recent Indian Government's order in this regard.

In the letter dated October 27, Senators Steve Daines and Jon Tester and Congressman Ryan Zinke alleged that the Indian Government's order "will effectively close India's pulse import trade entirely as the central government's recommended stock limit is only 350 metric tonnes."

Indian importers receive shipments of thousands of metric tonnes at one time in the normal course of business, they said.

"This directly threatens US pulse exports to India that total over 100,000 metric tonnes annually. Additionally over 200,000 metric tonnes of pulse are currently being held at Indian ports and their status is currently uncertain," the Montana lawmakers said in their statement.

"We request that USDA and Commerce engage with the Indian government to resolve this situation as quickly as possible and provide pulse producers in Montana and across the country the certainty they deserve," the letter said.