The UK and India have now started negotiating a free trade deal. In this article, we consider the implications for agriculture.
An Enhanced Trade Partnership (ETP) between the UK and India was agreed upon in May 2021, with investment from India creating jobs in the health and technology sectors in the UK and lowering non-tariff barriers of UK fruit and medical device exports. Negotiations for a UK-India Free Trade Deal (FTA) were formally launched on 13 January, with talks due to start the following week.
"India and the UK are committed to delivering a comprehensive and balanced free trade agreement (FTA) by the end of this year along with an interim deal for early gains, Foreign Secretary Harsh Vardhan Shringla"
What’s the current situation?
Metals and machinery are the leading UK goods exported to India, with refined oil and clothing the main UK imports from India. Agriculture accounted for 16% of India’s economy (value-added) in 2019, after the industrial sector, which makes the highest contribution to India’s GDP at almost 25%. In contrast, agriculture comprises 0.6% of the UK economy (2019), with the services sector the primary contributor at over 70%.
Top Indian food exports are rice, marine products (fish/seafood), spices and buffalo meat.
The table below compares UK and Indian trade in red meat, dairy and cereals.
India is a net exporter in value terms for most of the products shown and is largely self-sufficient.
What’s the potential for agri-food trade between UK and India?
There is not much, if hardly any, trade between the UK and India for the sectors shown above. The current tariff rates will be crucial, with India’s average tariff rates on most products, including food, higher than those for the UK. India also has a higher number of non-tariff measures, such as sanitary and phytosanitary conditions (SPS), quantitative restrictions and safeguards compared to the UK, and so an FTA between the UK and India could provide benefits for the UK if there is some relaxation on this front from India. Sanitary and phytosanitary standards are complex and challenging for agri-food firms wishing to export to India. The FTA will seek to enhance access to agri-food by increasing transparency of SPS standards to help UK firms trade more efficiently.
From a UK perspective, there is certainly potential in the Indian market for value-added dairy products such as cheese. Although fresh dairy products are more widely consumed in India, there has been growth in demand for value-added dairy products. While demand for higher-value dairy products is relatively low, the growing middle class and huge population in India provide opportunities.
There may also be some potential for UK sheepmeat exports to India. At the end of 2018, India gave access to British sheep meat imports for the first time. As with value-added dairy products, although Indian sheep meat consumption is relatively low, this market is an opportunity to grow.
Source: The article is an adaptation of the original article from AHDB
