The domestic dairy industry has opposed inclusion of milk products within the ambit of the proposed India-New Zealand Free Trade Agreement (FTA).
“We want Chapter 4 (of the Customs Tariff dealing with dairy produce) to be kept out of the FTA. Any plan to grant New Zealand preferential access to the Indian dairy market in exchange for a more liberal visa and employment regime for our professionals is totally unacceptable,” said Mr R.S. Sodhi, Managing Director, Gujarat Cooperative Milk Marketing Federation (Amul).
New Zealand's population of 43 lakh, he noted, is less than Ahmedabad's and its 12,000-odd dairy farmers are a fraction of the 15 crore small, marginal and landless milk producers in India. “It is not desirable that the Government barters the interests of millions of poor milk producers to gain visa access for a handful of professionals”, Mr Sodhi added.
New Zealand, which exports 95 per cent of its milk production, today controls over 35 per cent of the global trade in dairy products. Opening up the Indian market for Fonterra, New Zealand's dairy monopoly and the world's top exporter, is said to have figured prominently in discussions over a bilateral FTA during the Prime Minister, Mr John Key's five-day India visit late last month.
TRQ limit
Dairy imports into India are currently governed by a tariff rate quota (TRQ) mechanism. Under it, up to 30,000 tonnes of milk powder and 15,000 tonnes of butter oil/milk fat are importable at zero duty. Imports beyond these quotas attract higher basic customs duty – 60 per cent for powder and 30 per cent in the case of butter oil/milk fat.
One of the suggestions apparently being mooted now is to raise the TRQ limit by an additional 15,000 tonnes in respect of milk powder, which will make possible imports of up to 45,000 tonnes at zero duty.
Need for imports?
“It is one thing to import for meeting temporary supply shortfalls and quite another to become permanently import-dependent, which is what an FTA may result in. There is enough milk in the country. What we require is not imports, but organised efforts at procuring and marketing this milk”, noted Mr R.G. Chandramogan, Managing Director of Hatsun Agro Product Ltd, the country's largest private sector milk handler.
His counterpart at the Delhi-based Sterling Agro Industries Ltd, Mr Kuldeep Saluja, claimed there is no need to import any quantity beyond the existing TRQ levels. During 2010-11, India imported 30,000 tonnes of powder, as against which it exported 70,000 tonnes (28,000 tonnes of powder and 15,000 tonnes of casein equivalent to 42,000 tonnes of powder).
“In all, we were a net exporter to the tune of 40,000 tonnes. For this fiscal, however, the Government has banned all exports of powder and casein, which means we will be a net importer of 30,000 tonnes. The case for any additional imports arises only if exports are allowed again,” he pointed out.
According to Mr Saluja, the landed price of imported skimmed milk powder from New Zealand would currently be around $ 3400 a tonne or Rs 151 a kg. After adding port handling and other charges, it would cost Rs 165, which is below the Rs 180 price for domestically manufactured powder.
The same is the case in butter oil, where the imported material would cost $ 4700 a tonne or Rs 255 a kg after adding all expenses. This is as compared with the ruling Rs 265-plus price of ghee here.