India may find the going tough in FTA talks with UK on agri front

India may be in for some tough negotiations on the agriculture front while trying to reach an agreement on its proposed free trade agreement with the UK, if one were to go by a House of Commons Committee (HCC) report.

In its fifth report of the 2022-23 session, the HCC has suggested to the UK government to not accede to India’s demand for cutting the duty (tariff) on milled rice, bring imports of unmilled brown rice into the UK under tariff as it is allowed duty-free now and resist India’s efforts to weaken UK pesticide protections.

Other suggestions include seeking a cut in Indian tariff for dairy imports or getting tariff rate quota (TRQ), doing away with the 100 per cent agricultural infrastructure cess for alcohol and looking at “labour abuses in the tea sector”. 

Undermining £900 m/year sector

The HCC said, “India has a notable offensive interest as regards removing the UK’s tariff on milled rice. The UK Rice Association, which represents the processing industry, has argued that removing this tariff will not reduce retail prices (which are already low) but will undermine a sector worth £900 million per year that provides employment in several English regions.” 

The report pointed out the rice association’s argument, along with the Food and Drink Federation, that the UK should instead extend the list of varieties of unmilled (brown) basmati rice allowed to enter tariff-free. It said tariff rate quotas should be granted for other types of brown rice.

Key pesticide residue issues

The HCC, referring to a trade commentator’s argument, said allowing imports of more milled rice would result in quality and safety checks being carried out at the borders with attendant costs.

The report said there were significant issues around pesticide residues in Indian rice. Campaign groups have suggested that “it is unlikely that the UK has the infrastructure and resources required to adequately test produce imported from India for pesticide residues”. 

HCC said UK’s Pesticide Action Network had said India’s pesticide protections are significantly weaker than the UK’s. There are shortcomings in the observance and enforcement of India’s rules. Consequently, India would have “much to gain by negotiating to weaken UK standards on pesticide residues so that Indian growers are able to access the UK market and export produce that wouldn’t currently be permitted,” it said. 

Also read: Not speed but substance important in India-UK FTA: UKIBC

Other interests

However, changes to the UK SPS standards and rules can only be achieved through legislation. It is, therefore, unlikely that any negotiated agreement would see a reduction in UK SPS standards, the report said. “Meat and dairy producers indicate that the UK has interests regarding India’s sanitary and phytosanitary checks, which these sectors regard as overly burdensome,” the HCC said. 

Another significant UK offensive interest is in respect of removing India’s 150 per cent tariff on alcoholic beverages, which includes 100 per cent agriculture infrastructure development cess.  

Other UK interests include reducing India’s dairy tariffs or securing generous tariff rate quotas. India’s argument is that allowing dairy imports could impact micro, small and medium enterprises across a wide range of sectors, including agri-food. 

‘Labour abuses’

It is advocating safeguards, appropriate liberalisation timeframes and potential designation of affected sectors as “sensitive”, the report said.

The HCC said the Confederation of Indian Alcoholic Beverage Companies had, reportedly, argued that, in exchange for tariff concessions on UK whisky that is imported in bulk and bottled in India, “the UK must remove technical barriers to Indian whisky imports”. 

The Confederation has argued that the UK “must remove its condition that spirit must be matured for a minimum of three years to be called a whisky because that effectively rules out the bulk of exports from India”.

The HCC referred to the Business and Human Rights Resource Centre (BHRRC) drawing attention to “ongoing violations of human rights and labour rights in India”. These include “labour abuses in tea supply chains that include forced labour, failure to pay the minimum wage, gender discrimination and suppression of freedom of association,” it said. 

2 months’ time

The BHRRC has made it a case for trade liberalisation under an FTA being “conditional on the mutual ratification and effective implementation of core UN and ILO (International Labour Organization) human rights conventions”, the report said. 

“India has not ratified the core ILO conventions on Freedom of Association and Collective Bargaining. Neither has it signed the UN Convention Against Torture,” the HCC quoted the BHRRC. 

The Rishi Sunak government in the UK has two months’ time to respond to the House of Commons Committee Report. However, the HCC has welcomed the development that “no longer” puts arbitrary deadlines on trade negotiations. “While (the) Diwali date was unrealistic, it is positive that the (UK) Government has adopted an approach that evaluates the benefit of trade deal before finalising any agreement,” the report said.