India the epicenter of global pulses market

10 August 20207 min reading

Guruswamy Chandrashekhar Economist Senior Policy Commentator

“Indian agriculture in general and pulses cultivation in particular is fragile and vulnerable. Our crops are at the mercy of the weather gods. Even a single bad monsoon can result in a farm disaster. This vulnerability should be recognized.  Therefore, to insulate the country from future shocks (such as the one faced in 2015-2016) India should continue to stay in the global value chain, and not shut itself out completely. This means there is scope for easing of restrictions on pulses import.”

As the world’s largest producer, processor, importer and consumer of a variety of pulses, India is always the focus of attention for the global pulses market participants. Given its dominant position, developments in India impact the world market; and there have been a number of developments in India lately.

Domestic production of pulses has significantly expanded in recent years. From a low of 16.3 million tons in 2015-16, pulses output has taken a quantum leap to the 22-24 million ton range since 2016-17 as can be seen from the table alongside.

India cultivates pulses in two seasons – Kharif planted during June/July and harvested in Sept/Oct where major pulses grown are pigeon pea (tur/arhar), black matpe (urad) and green gram (moong). Rabi crop is planted in Nov/Dec and harvested in March/ April where major pulses are chickpea (chana) and lentil (masoor) as also smaller quantities of urad and moong (about 500,000 tons each).

A substantial expansion of production has brought its own problems including low domestic prices that hurt growers. Every season the government announces a minimum support price (MSP) for major pulse crops which becomes a benchmark for growers and for the market.

However, in the last two years, more often than not, prices have been ruling below the MSP, necessitating government intervention. State agencies purchase pulses from growers as a measure of price support. But the size of such price support operations in most cases is unequal to the volume of production and so, market prices tend to continue to rule below the MSP. This discourages pulse growers. It may be observed that in the last two years, the country’s pulses output has stagnated at 22-23 million tons and actual production has fallen short of the target set by the government.

A combination of large production and low prices has resulted in a contraction of India’s import volumes. From a record 6.6 million tons seen in 2016-17 import has declined to 3.0 million tons in 2019-20. While production data are maintained on crop year basis (October to September) by the Ministry of Agriculture, import data are recorded on financial year basis (April to March) by the Ministry of Commerce.

Be that as it may, even with higher domestic production and lower import volumes, India continues to garner the attention of major exporting countries such as Canada, Australia, Myanmar, Ukraine, USA and East African nations. Some of these origins cultivate pulses with India as the target market. But because of low domestic prices Indian government has restricted pulses import through quantitative ceiling and import duties.

Since 2017, import of pigeon pea (tur/arhar), black matpe (urad) and green gram (moong) is subject to quantitative restriction (QR). For 2020-21, a quantity ceiling of 1.1 million tons has been allowed for the above pulses. Import of lentil and chickpea is unrestricted but attracts customs duty. Yellow pea import is currently restricted in terms of both quantity and tariff.

Some exporting countries have lodged a complaint at the WTO against India’s QR. The Indian government argues that QR is a temporary measure to support growers and prop up low prices in the domestic market.

Amid national lockdown since March 25 in these times of the Covid-19 pandemic, the government has made a significant decision. Nearly 180 million families that are financially vulnerable will receive every month one kilogram of pulses free of cost for nine months – from April to November this year. Approximately 1.6 million tons of pulses (mainly whole chickpea or chana) will be distributed. The move is not only humanitarian but would help increased consumption of pulses in the country especially among poorer sections of the society.

Indian policymakers believe the country has reached self-sufficiency in pulses. I would like to say India’s claim of self-sufficiency is a myth. The per capita availability of pulses in the country is only 14 kilograms per person per year whereas nutritionists recommend consumption of at least 20 kilogram per capita. In order to achieve 20 kg per capita consumption, India’s pulse production will have to rise by 25-30 percent from the current levels to reach 30 million tons. It is a far cry on current reckoning.

India still suffers from pervasive under-nutrition and acute protein deficiency. My research shows that pulses provide the most economical vegetable protein and pulses consumption should be expanded considerably through appropriate policies. Higher consumption of pulses will help fight protein deficiency and advance the country’s nutrition security.

Importantly, Indian agriculture in general and pulses cultivation in particular is fragile and vulnerable. Our crops are at the mercy of the weather gods. Even a single bad monsoon can result in a farm disaster. This vulnerability should be recognized.

Therefore, to insulate the country from future shocks (such as the one faced in 2015-2016) India should continue to stay in the global value chain, and not shut itself out completely. This means there is scope for easing of restrictions on pulses import.

Currently, India is in the midst of 2020-21 Kharif planting season. The normal planted area for pulses this season is 12 million hectares. As of July 17, it is estimated that 8.2 million hectares have been planted showing a one-third increase from 6.2 million hectares planted this time last year. Timely onset of southwest monsoon and satisfactory progress so far has encouraged growers to start planting early.

Estimate of season’s final acreage for pulses will be available by end-July. Although it is a little early to estimate the crop size, an informed guess is that it would be around 8.0 million tons - plus or minus 5 percent, not much changed from last two years.

Recently, the government announced a series of agri-marketing reforms which are expected to enhance marketing freedom for growers. Private markets have been allowed to operate. In addition to the traditional State-controlled marketing yards, growers will now have a choice of going to private markets too. .

Additionally, a legal framework for contract farming has been announced. This is expected to encourage corporate houses, processors, aggregators, exporters and the like to enter into contract farming agreement with groups of growers. While the growers will enjoy a captive market, the sponsors (processors etc) will be have easy raw material sourcing – a win-win for all. Importantly, in the agriculture sector, about $ 14 Billion is proposed to be invested in post-harvest marketing infrastructure over a four year period. It will cover construction of warehouses, silos, grading and sorting facilities, cold chains and similar projects.

Corporate India has welcomed these reforms as they are going to advance the ‘Ease of Doing Business’. Investments are expected to flow into setting up of private markets, infrastructure development, strengthening of post-harvest logistics and supply chain.

Following the reforms, there is significant domestic and overseas investor interest in Indian agribusiness and food processing sector. As for pulses, there are value-addition opportunities to produce pulse-based foods and snacks targeted at school children, women, senior citizens, sportspersons and the like.

So, India is a not only a developing country, but the Indian story is a rapidly unfolding story. Rising incomes and large population combine to drive food consumption up. Pulses have a special place in the food plate of any average Indian as it is a basic ingredient of diet for a vast majority of the population and provides a perfect mix of biological value when mixed with cereals. We eat dal-roti (pulses with wheat bread) or dal-chawal (pulses with rice).

Indian pulse processing mills, called dal mills, are also an area of investment interest, domestic and overseas. For investors India can be a perfect hub for producing milled pulses or value-added pulses for marketing within the country or for export.

(G. Chandrashekhar, Economist, Senior Editor and Policy Commentator, is a global agribusiness and commodities market specialist. Views are personal. He can be reached at

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