TOWARDS AN INDIAN COMMON MARKET:

REMOVAL OF RESTRICTIONS
ON INTERNAL TRADE
IN AGRICULTURE COMMODITIES

Submitted to:
THE NATIONAL COMMISSION OF FARMERS
MINISTRY OF AGRICULTURE, GOVERNMENT OF INDIA, NEW DELHI


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Food and Agriculture Organization of the United Nations (FAO)
Rome, 2005

ABSTRACT

The key objective of the National Commission on Farmers (NCF), Government of India, is to arrive at a comprehensive medium-term strategy for food and nutrition security in the country to move towards the goal of universal food security over time.

The current study has been undertaken by FAO at the request of the NCF through Government of India, Ministry of Agriculture to study the possibilities of emergence of a farmer centric Indian common market catering to both over a billion consumers within the country and consumers abroad. The technical project has been initiated to study the possibilities of removal of unnecessary restrictions on the movement of agriculture products both within and between States in India and measures that could be taken for better market integration. In this process at the request of the Commission, the FAO studied the European Union market integration experience, and looked into the legislative, political and economic measures taken during the process. The European experience is described not as much to establish any direct applicability but to understand the political processes and the economic measures that led to adoption of a common and eventually a single market in that region

The goal of the report is to recommend policies that would enhance farmers’ access to markets through the removal of barriers to trade within and between states and ultimately international trade in primary products in India. One of the major potential impacts of removing the inter-state barriers would be enhanced competition in the buyers market due to entry of newer stakeholders. This would serve as an enabling device for Indian farmers towards realization of better prices, with the reduction of the distance between them and the final consumers. However other enabling conditions like credit, transport infrastructure, facilities for storage and processing have to be available for farmers, especially small farmers who dominate the Indian scene, to reap maximum benefits from measures to facilitate trade through removal of barriers.

The designations employed and the presentation of material in this information product do not imply the expression of any opinion whatsoever on the part of the Food and Agriculture Organization of the United Nations (FAO) concerning the legal or development status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. The mention of specific companies or products of manufacturers, whether or not these have been patented, does not imply that these have been endorsed or recommended by FAO in preference to others of a similar nature that are not mentioned.

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