Agri Export Zones

Presented by
Rishika Mittal (09020242030) Sachin Lakade (09020242032) Sadanand Kadam (09020242033) Saurabh Walke (09020242034) Yogesh Sharma (09020242035) Susrita Sen (09020242036) Raj Saxena (09020242037)

MBA- AB 2009 – 2011 Symbiosis Institute of International Business

The Concept of Agri Export Zone
• Under chapter 16 of Exim Policy 2001, a new concept of Agri Export Zone (AEZ) has been inserted by Govt. of India on 11.05.2002 and its valid till 11.05.2012. • An Agri Export Zone or AEZ is a specific geographic region in a country demarcated for setting up agri based processing industries, mainly for export. • The term is widely used mainly in India. • APEDA has been nominated as the Nodal Agency to coordinate the efforts on the part of Central Govt. negotiations.

The Concept of Agri Export Zone
• The concept of agri export zone thus attempts to take a comprehensive look at a particular produce/product located in a contiguous area for the purpose of developing and sourcing the raw materials, their processing/packaging, leading to final exports.

Need for AEZ
• • • • • Lack of adequate storage facilities. Lack of suitable processing. Lack of promotion of products. Lack of marketing, To overcome all this barriers with the help of APEDA ,AEZ was launched..

Objective
In a fast changing international trade environment and with a view to providing remunerative returns to the farming community in a sustained manner, efforts will be made to provide improved access to the produce/ products of the Agriculture and Allied sectors in the international market.

Measures envisaged to promote exports from AEZ

i.

Financial Assistance

ii. Fiscal Incentives

Financial Assistance
• Both Central as well as State Government and their agencies are providing a variety of financial assistance to various agri export related activities. These extend from providing financial assistance for Training and Extension, R&D, Quality Upgradation, Infrastructure and Marketing etc.

• All these facilities would have to be dovetailed and extended to promote agri exports from the proposed Zones in a coordinated manner. • Some additional features like providing grants from Market Access Initiative fund could also be considered.

Fiscal Incentives
• The benefits under Export Promotion Capital Goods Scheme, which were available only to direct exporters, have now been extended to service exporters in the AEZ. • Service provided to ultimate exporters will be eligible for import of capital goods at a concessional duty for setting up of common facilities. • They shall fulfil their export obligation through receipt of foreign exchange from ultimate exporters who shall make the payments from their EEFC account. • Exporters of value added agri products will be eligible for sourcing duty free fuel for generation of power, provided the cost component of power in the ultimate product is 10% or more and the input-output norms are fixed by the advance licencing committee of the DGFT. • Similarly, input-output norms can also be fixed for sourcing other inputs, like fertilizer, pesticides etc. duty free for cultivation purpose.

India’s export contribution

Anticipated benefits
i. ii. Strengthening of backward linkages with a market oriented approach. Product acceptability and its competitiveness abroad as well as in the domestic market.

iii. Value addition to basic agricultural produce. iv. Bring down cost of production through economy of scale. v. Better price for agricultural produce.

vi. Improvement in product quality and packaging. vii. Promote trade related research and development. viii. Increase employment opportunities.

Operation of the Concept
• The entire approach of promoting the Agri Export Zone would have to be taken on a project mode. • The State Governments would need to identify potential export products which could be selected for development with a cluster approach. • The States will forward such project proposals to APEDA which will conduct the initial scrutiny of the proposals. • If found feasible ,APEDA may provide necessary guidance in preparing the detailed project report.

Operation of the Concept
• This report, after preliminary scrutiny, will be placed before the Steering Committee which has been constituted under the chairmanship of Commerce Secretary with the following members:
– – – – – – – – Director General of Foreign Trade, Member Joint Secretary (EP Agri Division, DOC) Member Joint Secretary (Deptt. of F.P.I.,MOA) Member Joint Secretary [Infrastructure Division, DOC] Member Executive Director , NHB Member Representative of DG, ICAR Member Director (Finance, Deptt. of Commerce) Member Chairman, APEDA Convenor

Operation of the Concept
• Once the project proposal of a State has been approved by the Committee, an MOU would be signed between APEDA (on behalf of the Central Government) and the State Government for providing possible assistance at each stage of the project. • The responsibilities of the State government would also be defined in the MOU, a draft of which is under preparation.

Guidelines for State Governments
• Identification of a agricultural produce (cash crop) which would be developed for export through a cluster approach. • This would, obviously, be based on concentration of production of a given product or a set of products in a particular area which could be promoted as an Agri Export Zone. • The Zone could be a block/group of blocks or a district/group of districts. • An Agricultural University would need to be identified which will assist in the R&D work relating to development of the project. Such University should preferably be in the vicinity of the Zone. • In case of horticulture based projects, an exporter should be identified who would source produce from 100-200 orchards in a contiguous area. In case there are more exporters/ farmers interested in exports, then a single pack house operator or a processing unit to serve the exporters/farmers may be identified.

Guidelines for State Governments
• Efforts should be made to ensure enough production crops to enable the unit to run round the year. • The proposal should indicate the entire range of activities involved in the process, list out interventions being provided by the State Governments at different levels and also suggest the facilitations that can be provided by the Central Government. Interventions from the Centre could be, interalia in areas of feasibility studies, setting up backward linkages, training and extension, pre and post harvest activity, packaging, transportation, market promotion, etc.

Responsibilities of the State Government
i. Identification of a State Government institutions/agency which will be responsible for implementation and coordination of the entire activity. ii. Single window problem solving desks should be created in the offices promoting zonal approach to agriculture exports. iii. Adequate availability of infrastructure, inputs, electricity, etc. iv. Redeployment of extension officers in the Export Zones who would interact regularly with APEDA and organise training/activity on a regular basis with a definite action programme.

EPCG Scheme
• Agriculture exporters shall be eligible for the facility of EPCG scheme as described in Chapter-6 of the Policy. • The licence holder shall not be required to maintain the average level of exports • Exporter shall have the facility to move or to shift the capital goods within the zone, provided he maintains accurate record of such movements. • Such equipments shall not be sold or leased by the licence holder. • This facility shall also be available to service providers, setting up common infrastructural facilities such as sorting, grading, polishing, packaging, cold storage, transport equipment/ refrigerated vans, vapour treatment heat treatment plant, X-ray screening facility etc.

Status
The agri exporter shall be eligible for recognition as Export House/Trading House/Star Trading House/ Super Star Trading House on achieving the performance level as mentioned next slide

Status
Category Average FOB value FOB value during the Average NFE earnings NFE earned during the during the preceding made during the preceding preceding three licensing year, in preceding three licensing year, in licensing years, Rupees licensing years, in Rupees in Rupees Rupees

(1) EXPORT HOUSE

(2) 4 crores

(3) 6 crores

(4) 3 crores

(5) 5 crores

TRADING HOUSE

20 crores

30 crores

15 crores

25 crores

STAR TRADING HOUSE

100 crores

150 crores

75 crores

125 crores

SUPER STAR TRADING HOUSE

300 crores

450 crores

225 crores

375 crores

Information Requirements
A database on agricultural products and markets including aspects of commercial intelligence relevant to exports will be established. Assistance shall be provided to the exporters, growers’ organisations, trade association for conducting surveys/ feasibility studies, market studies etc

Schemes OF APEDA
• Schemes for Market Development
Components Scale of Assistance
1. Activity for development of packaging Maximum amount in case of standards and design. sharing with exporters / organization is Rs.5 lakhs 2. Assistance to exporters for use of 30% subject to ceiling of Rs.1.50 lakhs packaging material as per standards per and specifications developed or adopted beneficiary. by APEDA. 3. Development and dissemination of market information data base on products, infrastructure, markets and pre-feasibility surveys / study etc. 100% to be implemented by APEDA

Schemes for Market Development
Components
Assistance to exporters, growers organizations, trade associations for conducting surveys, feasibility studies etc. Supply of material samples, product literature, development of web site advertisement etc, for publicity and market promotion for fairs / events organised / sponsored by APEDA.

Scale of Assistance
50% of the total cost subject to ceiling of Rs.2.00 lakhs per beneficiary.

100% of the cost

Schemes For Development of Infrastructure Components Scale of Assistance
Establishment of common infrastructure 100% grant-in-aid facilities by APEDA or any other Government or Public Sector agency like Airport Authority of India or Port Trust etc. Assistance for purchase of specialised transport units for animal products horticulture and floriculture sector. Mechanisation of harvest operation of the produce. Setting up of sheds for intermediate storage, grading, cleaning & ripening operation of produce. 25% of the cost subject to a ceiling of Rs.2.50 lakhs per beneficiary. 25% of the cost subject to a ceiling of Rs.5.00 lakhs per beneficiary 25% of the cost of equipment subject to a ceiling of Rs.5.00 lakhs per beneficiary

Schemes For Development of Infrastructure
Components
Setting up of pre cooling facilities etc. with proper air handling system/ cold storage for storing the produce

Scale of Assistance
25% of the cost of equipment subject to a ceiling of Rs.10.00 lakhs per beneficiary

Providing facilities for pre-shipment treatment such as fumigation, X-ray screening, hot water dip treatment, Water softening Plant

25% of the cost of equipment subject to a ceiling of Rs.10.00 lakhs per beneficiary

Assistance for setting up of environment 25% of the cost subject to a ceiling of control system e.g. pollution control, Rs.25 lakhs per beneficiary effluent treatment etc.

Schemes for Quality Development
Components Scale of Assistance
Assistance to exporters, producers, 50% of the total cost subject to a ceiling of trade associations, public institutions etc. Rs.5 lakhs per beneficiary. for setting up / strengthening laboratories. Upgradation and recognition of labs for export testing. For upgradation upto 50% of cost for private labs and upto 100% of the cost for Central /State Government / University laboratories subject to a maximum of Rs.50 lakhs.

Assistance to exporters & producers for 50% of the cost subject to a ceiling of Rs.2 installing quality management, quality lakhs per beneficiary for each system assurance and quality control system such as ISO series, HACCP, TQM etc. including consultancy, quality improvement and certification for these.

Schemes for Quality Development
Components
Testing of water, soil residues of pesticide, veterinary drugs, hormones, toxins contaminants in agricultural produce / products.

Scale of Assistance
50% of the cost of tests subject to a ceiling of Rs.2000 per sample. Payment shall be made direct to laboratories and not to individual exporter.

Schemes for Research and Development
Components Scale of Assistance
Assistance to support Research and 100% APEDA’s internal scheme . development for export efforts through R & D organizations in Government sector . Assistance to exports, Trade Associations , Cooperative institutions etc. to support relevant research & development for export enhancement through R & D organizations in cooperative/ private sector . Upto 50 % of the total cost of the project subject to a ceiling of Rs. 10 Lakhs.

Statement Of Actual Investment And Exports From Sanctioned AEZ
State West Bengal Karnataka Punjab Uttar Pradesh Maharashtra AEZ Project
Pineapple, Lychee, Potatos, Mango, Vegetables, Darjeeling Tea Gherkins, Rose Onion, Flowers, Vanilla, Vegetables, Potatoes, Basmati rice, Potatoes, Mangoes and Vegetables, Basmati Rice Grape and grapewine, Mango (Alphonso), Kesar Mango, Flowers, Onions, Pomegranate, Banana, Oranges Mango Pulp & Fresh Veg., Mango & Grapes, Gherkins, Chilli Apple, Walnuts,

March 2008

Actual Exports (Rs. Cr.) 85.65 1544.79 1523.83 19.96 1166.34

Actual Investments(Rs. Cr.) 83.47 91.04 49.48 39.32 365.32

Andhra Pradesh

2852.59

206.88

Jammu & Kashmir

676.93

20.85

Statement Of Actual Investment And Exports From Sanctioned AEZ
State Tamil Nadu Bihar Gujarat Kerala Assam Madhya Pradesh Rajasthan AEZ Project
Flower, Mangoes, Cashewnut Lychee, Vegetables & Honey Mango and Vegetables, Value added Onion, Sesame Seed Horticulture Products, Medicinal Plant Fresh & Processed Ginger
Potatoes Onion Garlic, Seed Spices, Wheat, Lentil and Grams, Oranges

March 2008

Actual Exports (Rs. Actual Investments (Rs. Cr.) Cr.)
102.29 5.87 302.14 28.78 20.10 30.31

2277.79 2.17
75.42

3.10 3.15
60.80

Coriander, Cumin

49.94

71.86

Current Status of AEZ
• At present, APEDA has set up 60 Agri-Export Zones (AEZs) spread over 230 districts in 20 states. • The total investment committed under the AEZ programme by all agencies stands at Rs.1, 724 crore, including private investments of Rs.970 crore. • In all, 35 crops were identified for promotion in these zones.

Agri Export Zones in Maharashtra
 Mango (Alphonso): Ratnagiri, Singhudurg  Mango (Kesar) : Aurangabad, Jalna, Beed, Latur Ahmednagar and Nashi  Grapes : Nashik, Pune, Ahmednagar, Sangli, Latur, Osmanabad  Onion : Nasik, Pune, Satara, Ahmadnagar,  Orange : Amravati and Nagpur  Pomegranate : Nasik, Solapur, Pune,  Banana : Jalgaon, Dhule, Hingoli, Buldhana & Wardha Nanded,Parbhani,

MAHAMANGO
• State has announced the creation of an AEZ (Agri Export Zone) for Alphonso Mangoes in the Districts of Sindhudurg, Ratnagiri, Raigadh and Thane. • The MSAMB has been named as nodal agency. • A Detailed Project Report (DPR) submitted by the MSAMB has been approved. • GoM signed a MoU with the GoI to implement the AEZ project (on 12 February 2002).  Pre-cooling, cold storage and pack house facility of Mahamango at Kudal has been upgraded for export to China. Maharashtra State Agricultural Marketing Board in coordination with State agricultural department, Local APMC and cooperative societies continousely arraning training and demonstration programs in rural area to increase export quality production.

• • •

During the year 2003-04, 1656 farmers were trained in 35 one-day training programs. During the year 2004-05, 617 farmers were trained in 11 one day training programs. during the year 2005-06, 1469 farmers were trained in 22 one day training programs. In the current year 2006-07 from august 2006 onwards 115 farmers were trained . Investment- MSAMB with the help of APEDA, New Delhi and Devgad mango growers co-operative society has developed Mango export facility center at Jamsande at Nachane, dist- Ratnagiri. These both facilities have following different unitsPrecooling= 5 Mts. Cold storage= 25 Mts. Ripening Chamber= 5 Mts. mechanical Handling System= 1.5 Mts/hr.

NABARD Initiatives in Promotion of AEZs Financial Initiatives:• NABARD has extended 100% refinance scheme to all client institutions. (CBs, RRBs, SCBs, SCARDBs with NPA not exceeding 5%) • Minimum repayment period of 3 years for all activities in AEZs • Preparation of crop specific credit plans for AEZs • Sanctioned a scheme for cultivation and processing of Gherkins in Karnataka under cofinancing scheme.

Promotional Initiatives
• Investors conferences for Agri-Exports in four regions along with APEDA and EXIM Bank to explore the possibilities of higher investment in agri exports by Corporate Sector. • Inter Institutional meetings of NABARD, APEDA and EXIM Bank were held during 2002-03, 2003-04 and 2004-05 to review the progress of implementation in AEZs and to consider further policy changes. • NABARD Regional Offices have been conducting State Level Review meetings on AEZs involving all stakeholders to address the challenges iimplementation of AEZs.

Refinance support by NABARD
• Disbursement of refinance to the tune of Rs.111094 lakh under AEZ for various crops during theperiod 2002-03 to 2005- 06 • Disbursement under AEZ since the inception of the programme is furnished below Year
2002-2003 2003-2004 2004-2005 2005-2006 Total from 2002 to 2006

Total (Amt Rs Lakh)
4539 34316 43714 28525 111094

The Road Ahead
• Inadequacy of infrastructure facilities in most of the AEZs is another area,which needs immediate attention. • NABARD can support infrastructure development projects in AEZ areas through Rural Infrastructure Development Fund. • Promotional initiatives in the marketing of Indian crops and patenting product based on geographical indications.

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