Govt plans crackdown to ensure fair pricing in besan market

The Union government made yellow pea imports duty free in December 2023 to stabilize the prices of pulses, but its utilization pattern has shown unintended consequences.

Given India’s demand for besan to make batter, sweets, bread and snacks, duty-free yellow pea imports have surged to 2.2 million tonnes in the December 2023-September 2024 period. Yellow pea imports were negligible prior to December 2023.

“The Centre is now working on a plan that will require manufacturers to clearly disclose the ingredients on besan packaging, ensuring that consumers benefit from lower prices, as besan made from yellow peas is much cheaper than that made from whole chana,” the people cited above said.

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“The ministry will also be writing to the food regulator, the Food Safety and Standards Authority of India (FSSAI), to ensure that the labelling requirements for besan made from yellow pea and chana are strictly enforced across the industry,” the first of the two persons mentioned above said.

“Although yellow peas are safe for consumption, consumers deserve to know whether they are paying for a premium product or a cheaper alternative.”

“The concern is that traders should not make excessive profits from it. Ideally, mixed besan should be available in retail at below ₹50 per kg—not at the current ₹110 per kg,” this person said.

The high margins raked in by gram flour manufacturers can be gauged from the fact that while yellow pea costs ₹35 per kg, the chana dal price averages ₹74 per kg. In comparison, besan is being sold in the retail market at ₹110 per kg.

“It has come to our notice that an adequate quantity of yellow peas is being used to make besan, so consumers should benefit from lower prices. Why should traders make such huge profit margins?” the second person said.

“Testing of besan samples to check for yellow pea mixing is currently underway. All major players will be instructed to lower their prices accordingly,” this person said.

“The government’s decision to allow duty-free import of yellow peas until the end of this year may have discouraged farmers from growing this variety of pulses,” said Bimal Kothari, chairman, India Pulses and Grains Association.

“Since the duty-free import is for a limited time, big companies may have hesitated to introduce yellow pea besan separately, as they could face a shortage of raw material once the duty-free import facility is lifted. It’s a substitute for pulses like chana and tur, and everyone is taking advantage of it,” he said.

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“Last year, the total production of yellow peas and green peas was around 1 million tonnes, and this will decrease further due to cheaper imports. It is estimated that by the end of the year, total imports will reach around 3.3 million tonnes,” Kothari said.

“The duty-free import was allowed to stabilize the prices of pulses, which are a key ingredient in food inflation. It’s because of yellow peas that the prices of pulses have remained under control,” the second person said.

In terms of chana production, the figures have shown a downward trend, from 13.5 million tonnes in FY22, to 12.2 millon tonnes in FY23, and 11 million tonnes in FY24.

In May, the government extended the duty-free import of yellow peas by four more months, allowing it until October. Imports are permitted without the minimum import price (MIP) and port restriction conditions. However, this duty-free period was further extended until the end of December in September.

The import duty on yellow peas was implemented in November 2017 at 50%. India primarily imports yellow peas from Canada and Russia. As a significant consumer and producer of pulses, India fulfills part of its consumption requirements through these imports.

According to the findings of a Crisil report, the prices of pulses, which account for 9% of the vegetarian thali cost, rose by 14% due to a drop in production in 2023. This led to a lower opening stock this year, further contributing to the uptick in thali prices, the Crisil report said.

India’s retail inflation rose to 3.65% in August from a five-year low of 3.54%. Food inflation, making up half of the Consumer Price Index basket, increased to 5.66%.

Queries emailed to consumer affairs ministry remained unanswered till press time.

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