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India’s dairy sector raised concern on Free Trade Agreement with EU

India's dairy sector raised concern on Free Trade Agreement with EU

Even as the Centre moves closer to signing a Free Trade Agreement (FTA) with the European Union (EU), India’s dairy sector has raised some concerns about the livelihoods of thousands of Indian farmers.

They claim that including dairy products in the FTA will harm farmers’ interests and stymie the government’s efforts to increase dairy exports from India.

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

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‘Our main concern is that the EU has export subsidies for their dairies, resulting in a double subsidy for farmers and dairies. If they enter the Indian market under FTA terms, it will be detrimental to Indian dairy farmers.’  We have written to the Union Ministry, requesting that dairy be excluded from the FTA negotiations,’ RS Sodhi mentioned.

In a letter dated March 22, GCMMF stated that there is no reason to further subsidise the import of dairy products such as Skimmed Milk Powder (SMP) because it is already allowed for import under a Tariff Rate Quota (TRQ) of 10,000 tonnes at 15% duty instead of the current 60%.

Sodhi stated that while cheese imports from Europe are permitted at a 30% duty rate with no restrictions, the majority of these are gourmet cheese varieties. ‘In contrast, similar products are produced for a living by over 15 crore poor dairy farmers in India. As a result, any concession in high-end products such as cheese would be a concession given to elite consumers at the expense of poor farmers,’ Sodhi wrote in his letter.

Devendra Shah, Chairman of leading private dairy player Parag Milk Foods Limited, stated that the FTA move will harm dairy producers’ interests because it will result in dumping of cheaper European dairy products.

‘When cheaper supplies of cheese become available in international markets, other private players may be tempted to source directly from there. This will eventually harm India’s dairy farming,’ Shah said, adding that the decision needed to be reconsidered.

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On the one hand, the government has encouraged dairy product exports of mozzarella cheese via performance-linked incentive schemes, but on the other hand, duty concessions for cheese imports have effectively defeated the scheme’s purpose.