Farmers and food-processing units are set to benefit from the India-UK free trade agreement (FTA) as basmati rice, cotton, groundnut, fruits, vegetables, onion, pickles, spices, tea and coffee, etc, would be exempt from duty when exported to the UK.AdvertisementPunjab, Haryana, Jammu and Kashmir and Uttarakhand are major producers of basmati rice, vegetables and fruits. Cotton is another crop grown across the plains in northern states while fruits form a chunk of Himachal Pradesh’s economy.Also, the FTA allows no tariff concessions on import of dairy products, apples, oats and edible oils. It means apple-growers in Himachal Pradesh and Jammu and Kashmir stand protected. Farmers and politicians from both states had been vocal in seeking ‘no exemption’ on apple imports.Agriculture and food processing will have a 14.8 per cent and 10.6 per cent share, respectively, of the agreed products under the FTA, that is scheduled to be signed in London on Thursday.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, streamlined trade protocol, and protection for India’s agriculture is part of the FTA and it sets the stage for growth in agri exports and value-added products. It unlocks premium UK markets for Indian farm and food-processing units as tariffs would match, or be lower in some cases, with benefits enjoyed by exporters from Germany, the Netherlands, and other EU nations.Agriculture and food processingOver 95% of ‘tariff lines’ agreed upon in the FTA will attract zero duty on Indian agricultural and processed food. India has calculated that this duty-free access is expected to increase agri exports by over 20% 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 the food-processing sector, India exports $14.07 billion worth of goods globally, while the UK imports $50.68 billion of goods. So far, Indian products make up just $309.5 million of UK imports.In agriculture, India exports $36.63 billion globally, while the UK imports $37.52 billion, but the UK’s imports from India are just $811 million.The UK is a high-value market for niche Indian agri-products such as tea, mangoes, grapes, spices and marine products. Indian farmers can fetch better prices for their products in the UK market.India can outcompete major global players in crucial segments. For example, in processed food preparations, India would have to gain ground over the US, China and Thailand. In bakery items, Indian produce would be more competitive than those from the US, China, Thailand and Vietnam. In case of preserved vegetables, fruits, nuts, fresh vegetables and Indian produce would get a lower tariff than that applied to Pakistan, Turkiye, the US, Brazil, Thailand and China.Marine exportsFisheries would be another growth sector. Andhra Pradesh, Odisha, Kerala and Tamil Nadu will see dramatic expansion through access to the UK’s $5.4 billion marine import market.There will be zero-duty access for 99% of exports. Shrimp, tuna, fishmeal and feeds, currently taxed between 4.2–8.5%, will become completely duty-free. India’s current share in the UK marine imports is only 2.25%, 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.Coffee, tea and spicesThe FTA seeks to lay the foundation for India’s move into high-margin, branded exports, especially in coffee, spices, beverages and processed food. The UK absorbs 1.7% of India’s coffee, 5.6% of tea and 2.9% of spices.Duty-free access on instant coffee will help Indian businesses compete with other European suppliers of instant/value-added coffee such as Germany, Spain and the Netherlands.India expects that the UK market will enable Indian oilseed exporters to expand their consumer base.
India-UK FTA: Basmati, fruits, cotton exports exempted from tariff; no relaxation on import of dairy, apples and edible oils
