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India’s decision to ban exports of wheat and rice should be short-lived once food supply stabilizes in the country, said Sanjiv Puri, chairman of ITC Ltd.
The company, a major wheat exporter, saw its agriculture business revenue decline 25% in the April-June quarter, hit by the export bans, according to its quarterly earnings presentation.
Puri spoke to Bloomberg News on the sidelines of the B-20 Summit in New Delhi. The excerpts are lightly edited for clarity:
Outlook on India economy
Businesses that are indexed to Indian consumption are fairly resilient. Anything that is more integrated with global supply chains, whether it’s exports or certain commodities, there is volatility and some weakness there. What we are growing at without exports firing is a decent number.
The impact on consumption has been more inflation-led and inflation has actually been mostly imported. The second factor is climate emergency because it’s led to crop failures. As inflation is moderating the latest Nielsen numbers also show some green shoots of pick up in the rural economy. What is to be monitored is the El Nino bit and the global dynamic is still uncertain, but as the inflation is cooling off consumption is picking up.
Impact of export bans
It is impacting us. As businesses we have to be also responsible. People have to have food in the country. So we have to understand that and people have to be able to afford it. These are realities we must recognize.
I obviously hope that it is short lived. And what will enable us to export is our crops doing well, our agriculture producing more than is required so that we have the surpluses. As a responsible corporate this is what I would like to work with the farming community on and see how we can improve the produce.
Viability of agri business
My focus at this point of time is on value addition (rather than pure output growth that could impact prices and overall profitability). For example, we inaugurated the spices facility and we are now going to inaugurate the nicotine derivative products facility.
That’s the path we are on — building capacity in medicinal and aromatic plants, horticulture and aquaculture. These are the areas of value add we are focusing on as a company. And this is more value accretive than the commodity business in any case.