India to lose groundnut export competitiveness as markets tighten quality rules

Groundnut exports are set to get tougher for India with now Indonesia tightening rules for groundnut imports in terms of quality. One of the biggest groundnut export markets for India, Indonesia has been raising quality issues with India on groundnut which could impact future export orders.

Since last couple of years there have been several quality related complaints by countries who import from India .

Last April, Vietnam, the second largest importer of groundnut, had banned the Indian batch for almost a year resulting in India's overall export to decline by 28 per cent to 428,561 tonnes in April to January 2015-16 from 592,675 tonnes in corresponding period in 2014-15.

With Indonesia now joining the bandwagon, industry experts believe India could face more challenges if quality issues are not addressed at the earliest. Indonesia has nearly 27 per cent market share in total groundnut export from India.

"For a while it is become quite challenging to convert export orders due to quality issues. However, in the long run, the move will be ultimately beneficial for Indian groundnut exporters as a good business practice for all," said Rajesh Bheda, managing director of Talakshi Lalji and Company.

Exporters said that, since last couple of years, several complaints have been raised, thereby blurring India's image in the international markets as far as groundnut exports are concerned. "If we do not address quality issues the country will have to face more challenges," Bheda said.

However, industry players are of the view that the quality issues are prevalent with only a part of the industry, though the same is impacting the whole.

"We must follow the quality rules and if we do not do this, India will lose further business and will also lose export competitiveness to other countries mainly from the African region," said Mukund Shah, leading peanut producer and exporter from Gujarat.

In past, Indian Oilseeds and Produce Export Promotional Council (IOPEPC) has done exercises to channelize the business from farm level when ever quality related issues have risen by the importing countries. But result was not expected.

A source from IOPEC said, "The council had several times asked exporters and peanut units to maintain the quality but they are not following the rules and as result importing countries tight the rules for India. We have to understand that it is a food item and no countries will allow sub standard food for their people."