Rising imports threaten local producers while exports face hurdles
Recent projections regarding the India-EU Free Trade Agreement (FTA) suggest a complex scenario for the nation's agrarian economy. While government officials maintain that the deal safeguards the interests of Indian farmers, trade experts and industry analysts are flagging serious concerns about the long-term impact on domestic markets.
Official narratives highlight the deal as a win-win, covering nearly a quarter of the global economy. Authorities have assured that the India-EU Free Trade Agreement creates a safety net for the agricultural sector. However, a closer look reveals that while staple crops like rice, soybeans, and foodgrains are excluded from tariff cuts, the agreement opens the floodgates for premium European products.
Impact on Processed Foods and Oils
A major point of contention is the food processing industry. India currently processes only about 10 per cent of its total agricultural output. Experts warn that slashing duties on European fruit juices, wines, and processed items will stifle local growth. Imported brands already hold significant market power, and further reduced customs duty could make it impossible for nascent domestic companies to compete.
The situation is equally precarious for the edible oil sector. India relies on imports for over 60 per cent of its needs. Lowering duties on premium oils, such as olive oil, could allow European exporters to capture the high-end market, sidelining local alternatives. Farmer groups point to previous trade deals, such as the one with New Zealand, which hurt apple growers in Himachal Pradesh, as a warning sign of what might come.
Lack of Consultation
Unlike the European process, which requires parliamentary approval and often faces legal scrutiny, the agreement in India is likely to be implemented without a detailed parliamentary debate. Critics argue that while the services and industrial sectors were consulted, domestic farmers and agricultural stakeholders were largely left out of the negotiation room.
Export Challenges
Proponents of the deal argue it will boost exports, but the reality is stark. The European Union has offered no concessions on key Indian exports like sugar, dairy, and rice. Furthermore, they have maintained strict food safety and phytosanitary standards. This means that expanding exports of fresh vegetables or grapes will be difficult for anyone other than large corporations capable of meeting these rigorous European norms.
The Bottom Line
While the agreement protects basic cereals, India’s horticultural production—now larger than its foodgrain output—is vulnerable. With multinational corporations already dominating segments like baby food, the India-EU Free Trade Agreement appears to favor the services and industrial sectors, leaving the rapidly evolving agricultural economy to face stiff global competition with limited protection.
Image Source: Rural Voice
