Farmers, food units biggest gainers of India-UK FTA

Farmers and food processing units are the biggest beneficiaries of the India-UK comprehensive economic and trade agreement (CETA) as basmati rice, millets, cotton, groundnut, fruits, vegetables, onion, pickles, spices, tea and coffee, among other items, will be exempt from duties when exported to the UK.

Agriculture and food processing will have a 14.8 per cent and 10.6 per cent share, respectively, of the agreed products under the CETA that was signed in London at an event attended by Prime Minister Narendra Modi and his UK counterpart Keir Starmer.

Food processing — fruit juices, jams, sauces, vegetable processing, canned fruits, salad dressings, meat products and beverages — are the biggest gainers as the tariff drops from 70 per cent to zero.

In the farm sector, Punjab, Haryana, J&K and Uttarakhand are the major producers of basmati rice, millets, vegetables and fruits. Cotton is another crop grown across the plains in northern states while fruits form a chunk of the Himachal Pradesh’s economy.

The pact does not allow concessions on the import of dairy products, apples and edible oils. This means that apple growers in Himachal Pradesh and J&K stand protected and so are milk cooperatives like Verka, Vita, Amul and Mother Dairy. Farmers and politicians from both states had been vocal in seeking “no exemption” on apple imports.

Indian craft drinks like feni from Goa, artisanal wines from Nashik and toddy from Kerala will now enjoy Geographical Indication (GI) protection and shelf space in high-end UK retail and hospitality chains.

A duty-free access unlocks premium UK markets for Indian farm and food processing units as the tariffs will match or be lower than that for exporters from Germany, the Netherlands and other EU nations.

Over 95 per cent of the “tariff lines” agreed upon in the CETA will attract zero duties on Indian agricultural and processed food. India has calculated that this duty-free access is expected to increase agri exports by over 20 per cent in the next three years, contributing to the goal of $100 billion agri exports by 2030 and putting more money in the hands of rural households.

In agriculture, Indian exports are worth $36.63 billion globally, while the UK imports are worth $37.52 billion, but the UK imports from India are worth just $811 million. The UK is a high-value market for tea, mangoes, grapes, spices, marine products.

In the food processing sector, India exports $14.07 billion worth of goods globally, while the UK imports $50.68 billion worth of goods. So far, Indian products make up for just $309.5 million of UK imports.

The CETA means that preserved vegetables, fruits, nuts and fresh vegetables originating from India will get a lower tariff that those applied to Pakistan, Turkiye, the US, Brazil, Thailand and China.

Fisheries will be another growth sector. There will be zero duty access for 99 per cent exports. Shrimp, tuna, fishmeal and feeds — currently taxed between 4.2 and 8.5 per cent — will become completely duty-free. India’s current share in the UK marine imports is only 2.25 per cent, leaving massive room for expansion. The UK is a high-value consumer of Indian frozen seafood, especially shrimp and white fish, due to the large Indian diaspora and demand for processed seafood.

The UK absorbs 1.7 per cent of India’s coffee, 5.6 per cent tea and 2.9 per cent spices. Duty-free access will help compete with other European suppliers of instant and value-added coffee such as Germany, Spain and the Netherlands.

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