Dairy players oppose free trade pact with EU

March 26, 2021

Rutam Vora | HBL

AHMEDABAD — Even as the Centre is inching closer to sign a Free Trade Agreement (FTA) deal with the European Union (EU), India’s dairy sector has flagged some concerns involving livelihood scores of Indian farmers.

The inclusion of dairy products in the FTA is feared to hamper farmers’ interests and stymie Government’s efforts to boost dairy exports from India, they claimed.

Dairy major and Amul marketer Gujarat Cooperative Milk Marketing Federation Ltd (GCMMF) has written a letter to the Union Commerce Ministry stating that opening up Indian market for European dairies will result in subsidising elite consumers at the cost of Indian farmers.

“Our biggest concern is that the EU has an export subsidy for their dairies, thereby providing double subsidy to farmers and dairies. If they enter the Indian market under FTA, it will hurt the Indian dairy farmers. We have written to the Union Ministry seeking to keep dairy out of the FTA negotiations,” RS Sodhi told BusinessLine.

In the letter dated March 22, GCMMF has said that there is no case to further subsidise import of dairy products such as Skimmed Milk Powder (SMP) as it is already allowed for import under Tariff Rate Quota (TRQ) of 10,000 tonnes at 15 per cent duty against the prevailing 60 per cent.

“SMP is a dried form of milk and is a direct substitute of milk. Hence it has a direct impact on the milk produced in India,” the letter argued.

Cheese imports
On the possibility of cheese imports from Europe, Sodhi stated that while its imports are allowed at 30 per cent duty without any restrictions, a majority of this is gourmet cheese variety. “Against this, similar products are produced by over 15 crore poor dairy farmers of India for their livelihoods. Thus, any concession in high-end products like cheese would prove to be a concession given to elite consumers at the cost of poor farmers,” Sodhi said in the letter.

Leading private dairy player Parag Milk Foods Ltd’s Chairman Devendra Shah said the FTA move will hurt dairy producers’ interests as it will result in dumping of the cheaper dairy products from Europe.

“When there would be cheaper supplies of cheese available in the international markets, there would be a temptation for other private players to source directly from there. This will eventually hurt India’s own dairy farming,” Shah said, adding that the move needed a reconsideration.

On the one hand, the Government has encouraged dairy products exports with mozzarella cheese through performance-linked incentive schemes, on the other, it has allowed duty concessions for import of cheese thus defeating the very purpose of the scheme.

India refrained from signing RCEP because of a similar threat of import of dairy products from Australia and New Zealand. “EU is five times bigger producer and controls similar market share in the global dairy trade. Hence, India should completely oppose import of any of the dairy products under the HS code 0401 to 0406,” he added in the request to the Government.

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