India-UK FTA shields farmers, boosts exports

India has protected the interest of domestic farmers by excluding dairy products, edible oils and apples in the free trade agreement (FTA) with the UK while securing zero duties on 95 per cent of agriculture and processed food items.

No tariff concession has been allowed on oats as well in the FTA, which was signed on Thursday.

On the other hand, Indian staples like turmeric, pepper, cardamom; processed goods like mango pulp, pickles, and pulses; and marine products such as shrimp and tuna will enjoy duty-free access in the UK market.

In agriculture, the UK imports USD 37.52 billion worth products, but imports from India are just USD 811 million.

"India's farmers are poised to be the biggest winners of the FTA, which unlocks premium UK markets for their produce, matching or exceeding the benefits already enjoyed by exporters from Germany, the Netherlands, and other EU nations," a commerce ministry official said.

More than 95 per cent of agricultural and processed food tariff lines will attract zero duties on fruits, vegetables, cereals; pickles, spice mixes, fruit pulps; and ready-to-eat meals and processed foods.

This will lead to reduction in landed cost of these Indian products in the UK market, boosting India's export and enhancing income of domestic farmers.

"Duty-free access is expected to increase agri exports by over 20 per cent in the next three years, contributing to India's goal of USD 100 billion agri-exports by 2030," the official said.

The FTA would also give a boost to exports of emerging products such as jackfruits, millets, and organic herbs.

With regard to the benefits for the blue economy, the FTA provides for zero-duty access for 99 per cent of exports, including shrimp, tuna, fishmeal, and feeds. These are currently taxed in the range of 4.2-8.5 per cent.

"Despite the UK's USD 5.4 billion marine import market, India's share remains at just 2.25 per cent, underscoring a significant untapped export opportunity," the official pointed out.

The FTA would also help India's export of high-margin branded products like coffee, spices, beverages, and processed food.

Stating that the UK consumes 1.7 per cent of India's coffee, the official said duty-free access will help Indian instant coffee compete with EU exporters like Germany and Spain.

The UK is a major buyer of Indian tea (5.6 per cent), while spices have a 2.9 per cent share. The zero tariffs will help enhance the country's market share.

"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," the official said.

The FTA is set to help India's food processing sector. India exports USD 14.07 billion of processed agriculture and food products globally per year. The UK imports USD 50.68 billion worth of processed items, but Indian products make up for a mere USD 309.5 million.

Farmers of various states in the country are likely to benefit from the FTA. The major beneficiaries are Maharashtra (grapes, onions), Gujarat (groundnut, cotton), Punjab and Haryana (basmati rice), Kerala (spices), and NE states (horticulture).