WITH USA SANCTIONS OFF, INDIA- MAYANMAR TRADE FOR PULSES IMPORTS CAN BE EASIER

INDIA-MYANMAR TRADE WITH SPECIAL REFERENCE TO IMPORT OF PULSES

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I had spoken about the subject with Power Point Presentation (PPT) on 30th October 2013  in the

Business Meeting with H E Mr Mynit Hlaing,

Minister for Agriculture and Irrigation, Myanmar

Kindly use the link below for having a look at PPT

https://docs.google.com/file/d/0B8hpJYZJkIQOTF9KTnVNMDNOclE/edit

BELOW  I have condensed my views ---

FORMALISE INDO-MYANMAR TRADE TO BENEFIT DIRECT IMPORT OF   PULSES

Tejinder Narang

FICCI (Federation of Indian Chambers of Commerce and Industry, New Delhi) organised a business meeting with H E Mr Mynit Hlaing Minister for Agriculture and irrigation Myanmar and his team on 30^th October 2013. Myanmar is opening up for direct business with India. USA sanctions and prohibition on dollar trade stand revoked from August 2013 onwards from Myanmar.   

India’s annual export is $300 million (Engineering, pharmaceuticals, iron and steel)   and imports of $1000 million (pulses and wood) from Myanmar. Seeds and agricultural devices are the prime requirement of Myanmar. It also needs proposals, equipment and investments for food processing plants.

Burma is a country rich in jade and gems, oil, natural gas and other mineral resources with GDP of $53 billion and growing at 5.5%. China also has large formal and informal trade with this country. Stronger trade ties are seen vital for Indo-Myanmar bilateral business to balance their intimacy with China.

Participants in the FICCI meeting urged visiting Minister to resolve the matter with OFAC (Office of Foreign Assets Controls of USA) for still not having repealed all the sanctions, though food, pharmaceuticals, medical equipment category always remains excluded on humanitarian grounds. But confusion at the banking level remains. Businesses still route transactions via Singapore/Dubai. There still exists some difference in official and unofficial rate of US Dollars due to which cash deals are preferred. That will eventually disappear as Myanmar economy is fully channelized in freely tradable hard currency. Recently some Indian exporters have successfully transacted business in US dollar letter of credits opened by Myanmar Banks on SBI.

India is the only country in the world that desperately needs 4-5 million tons of imported pulses in addition to its yearly output of 18-19 million tons. Lentils and Chana are cheapest source of vegetable protein for millions of Indians for improving nutritional intake. Such a specific demand of protein intensity is missing elsewhere in the world. Despite program of accelerated production of pulses under National Food Security Mission (NFSM) of 2010—the supply- demand disparity is widening. 

Our annual imports are about 2 million tons of lentils (raw/unprocessed dals) and 2 million tons of peas/chana. Myanmar supplies the largest tonnage of 1 million tons of Tur (pigeon peas), Urad (black matpe), Moong (green gram). Tanzania, Malawi, Ethiopia provide additional supplies of about 0.4 million tons. They are cheaper by about 15-20 per cent than Myanmar due to lower/different quality parameters.

Gap of about half a million tons of imported lentils remains and that is bound to amplify in coming years.  Any short supplies of lentils in India can witness high price volatility akin to vegetables like onions, tomatoes etc.

Normally trade avails 6 months suppliers’ credit from Canadian, Australian or French sellers of peas/chana but with Myanmar prior remittance formula is pursued. Singapore or Dubai traders generally remit advance dollar payments to Myanmar parties. This takes the risk off from Myanmar private parties who are financially fragile and can renege from the contracted understandings. As can be seen from the chart above there is hardly any surplus availability of pulses from Myanmar unless they improve their production capabilities.

In 2008 Government authorised Food Ministry to finalise G to G deal with Myanmar for import of pulses that failed to crystallize. That was perhaps an inopportune moment due to USA sanctions. Now the time is ripe for renewal of that initiative to enlarge Indo-Myanmar agro-cooperation both in the terms of investments, assisting them in higher yield/production of pulses and finalizing mechanism for “direct trade” both by sea and land route. That would include identification of official or private counterparties with whom Indian trade can transact business, setting up banking arrangements on solid footing and define dispute resolution mechanism under Indian law or GAFTA London arrangements/Singapore laws. Opening of land route to North East states /West Bengal will economise freight cost and will put African pulses in healthy competition with Myanmar.

Though African supplies are a great source of relief, but they may also be exposed or subjected to ad-hocism of domestic demand pull of the growing regions. Thus traditional supplier like Myanmar should be strengthened even if it may take a few years to switch off third country routes of Singapore/Dubai.